10q10k10q10k.net

What changed in BrightView Holdings, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of BrightView Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+294 added−276 removedSource: 10-K (2023-11-16) vs 10-K (2022-11-17)

Top changes in BrightView Holdings, Inc.'s 2023 10-K

294 paragraphs added · 276 removed · 237 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

33 edited+1 added−1 removed78 unchanged
Biggest changeBrightView has undergone an organizational transformation recentered around a branch-centric model, empowering leaders at the local and regional levels, and supporting branch locations with appropriate back office functions and an effective corporate framework. In July 2018, we completed the initial public offering of our common stock (the “IPO”).
Biggest changeIn 2016, we reconstituted our senior leadership team and refocused our strategy to realign with the fundamental strengths of our business. BrightView has undergone an organizational transformation recentered around a branch-centric model, empowering leaders at the local and regional levels, and supporting branch locations with appropriate back office functions and an effective corporate framework.
Similarly, our mobile quality site assessment application, which is designed for account managers to capture and annotate customer feedback, provides us with the ability to “walk the site” with our customers, confirm our understanding of their needs 14 Table of Contents and highlight future enhancement opportunities.
Similarly, our mobile quality site assessment application, which is designed for account managers to capture and 14 Table of Contents annotate customer feedback, provides us with the ability to “walk the site” with our customers, confirm our understanding of their needs and highlight future enhancement opportunities.
These laws also impose liability for the costs of investigating and remediating, and damages resulting from, present and past releases of hazardous substances, including releases by us or prior owners or operators, at sites we currently own, lease or operate, customer sites or third-party sites to which we sent wastes.
These laws also impose liability for the costs of investigating and remediating, and damages resulting from, present and past releases of hazardous substances, including releases by us or prior owners or operators, at sites we currently own, lease or operate, customer sites or third-party sites to which we sent hazardous substances.
We benchmark our performance against ten- and thirty-year averages. Intellectual Property We, primarily through our subsidiaries, hold or have rights to use various service marks, trademarks and trade names we use in the operation of our businesses that we deem particularly important to each of our businesses.
We benchmark our performance against ten-, fifteen-, and thirty-year averages. Intellectual Property We, primarily through our subsidiaries, hold or have rights to use various service marks, trademarks and trade names we use in the operation of our businesses that we deem particularly important to each of our businesses.
As the number one player in the highly attractive and growing $83 billion commercial landscape maintenance and snow removal market, we believe our size and scale present several compelling value propositions for our customers, and allow us to offer a single-source landscaping services solution to a diverse group of commercial customers across all 50 U.S. states.
As the number one player in the highly attractive and growing $96 billion commercial landscape maintenance and snow removal market, we believe our size and scale present several compelling value propositions for our customers, and allow us to offer a single-source landscaping services solution to a diverse group of commercial customers across all 50 U.S. states.
Fleet Our highly visible fleet of approximately 16,000 trucks and trailers foster the strong brand equity associated with BrightView. We manage our fleet with a dedicated centralized team, as well as regional equipment managers, who together focus on compliance, maintenance, asset utilization and procurement. We believe we have the largest fleet of vehicles in the commercial landscape maintenance industry.
Fleet Our highly visible fleet of approximately 15,000 trucks and trailers foster the strong brand equity associated with BrightView. We manage our fleet with a dedicated centralized team, as well as regional equipment managers, who together focus on compliance, maintenance, asset utilization and procurement. We believe we have the largest fleet of vehicles in the commercial landscape maintenance industry.
We primarily sell our services to businesses, commercial property managers, general contractors and landscape architects through our professionally trained core sales force. We have a field-based sales approach driven by our growing team of more than 210 business developers that are focused on winning new customers at a local level.
We primarily sell our services to businesses, commercial property managers, general contractors and landscape architects through our professionally trained core sales force. We have a field-based sales approach driven by our growing team of more than 160 business developers that are focused on winning new customers at a local level.
During fiscal 2021, there were no material capital expenditures for environmental control facilities. Information Technology We have invested in technology designed to accelerate business performance, enhancing our ability to support standard processes while retaining local and regional flexibility.
During fiscal 2023, there were no material capital expenditures for environmental control facilities. Information Technology We have invested in technology designed to accelerate business performance, enhancing our ability to support standard processes while retaining local and regional flexibility.
We serve a geographically diverse set of customers through our strategically located network of branches in 34 U.S. states and, through our qualified service partner network, we are able to efficiently provide nationwide coverage in all 50 U.S. states, as illustrated below.
We serve a geographically diverse set of customers through our strategically located network of branches in 36 U.S. states and, through our qualified service partner network, we are able to efficiently provide nationwide coverage in all 50 U.S. states, as illustrated below.
Our Company We are the largest provider of commercial landscaping services in the United States, with revenues approximately 6 times those of our next largest commercial landscaping competitor. We provide commercial landscaping services, ranging from landscape maintenance and enhancements to tree care and landscape development.
Our Company We are the largest provider of commercial landscaping services in the United States, with revenues approximately 5 times those of our next largest commercial landscaping competitor. We provide commercial landscaping services, ranging from landscape maintenance and enhancements to tree care and landscape development.
We operate through a differentiated and integrated national service model which systematically delivers services at the local level by combining our network of over 290 branches with a qualified service partner network.
We operate through a differentiated and integrated national service model which systematically delivers services at the local level by combining our network of over 280 branches with a qualified service partner network.
Approximately 4% of our employees are covered by collective bargaining agreements. We have not experienced any material interruptions of operations due to disputes with our employees and consider our relations with our employees to be satisfactory.
Approximately 5% of our employees are covered by collective bargaining agreements. We have not experienced any material interruptions of operations due to disputes with our employees and consider our relations with our employees to be satisfactory.
We also have a separate 24-member sales team that is focused on targeting and capturing high-value, high-margin opportunities, including national accounts. Within our Maintenance Services segment, every customer relationship is maintained by one of our more than 700+ branch-level account managers, who are responsible for ensuring customer satisfaction, tracking service levels, promoting enhancement services and driving contract renewals.
We also have a separate 14-member sales team that is focused on targeting and capturing high-value, high-margin opportunities, including national accounts. Within our Maintenance Services segment, every customer relationship is maintained by one of our more than 600+ branch-level account managers, who are responsible for ensuring customer satisfaction, tracking service levels, promoting enhancement services and driving contract renewals.
Our programs are structured to meet the diverse needs of our employees and their families. Among other things, we offer comprehensive health and wellness plans, retirement savings plans, and the opportunity to earn short-term and long-term incentive awards to eligible employees.
Our programs are structured to meet the diverse needs of our employees and their families. Among other things, we offer eligible employees comprehensive health and wellness plans, retirement savings plans, continuing education support, and the opportunity to earn short-term and long-term incentive awards.
The chart below illustrates the diversity of our Maintenance Services revenues: (1) Reflects the fiscal year ended September 30, 2022. 8 Table of Contents In addition to contracted maintenance services, we also have a strong track record of providing value-added landscape enhancements, defined as supplemental, non-contract specified maintenance or improvement services which are typically sold by our account managers to our maintenance services customers.
The chart below illustrates the diversity of our Maintenance Services revenues: 2023 Maintenance Services Revenue by End Market (1) (1) Reflects the fiscal year ended September 30, 2023. 8 Table of Contents In addition to contracted maintenance services, we also have a strong track record of providing value-added landscape enhancements, defined as supplemental, non-contract specified maintenance or improvement services which are typically sold by our account managers to our maintenance services customers.
As of September 30, 2022, we had marks that were protected by registration (either by direct registration or by treaty) in the United States.
As of September 30, 2023, we had marks that were protected by registration (either by direct registration or by treaty) in the United States.
Despite being the largest provider of commercial landscaping services, we currently hold only a 2.5% market share, representing a significant opportunity for future consolidation. According to the 2021 IBISWorld Report, there are over 600,000 enterprises providing landscape maintenance services in the United States.
Despite being the largest provider of commercial landscaping services, we currently hold only a 2.1% market share, representing a significant opportunity for future consolidation. According to the 2022 IBISWorld Report, there are over 600,000 enterprises providing landscape maintenance services in the United States.
Presents commercial landscaping services and commercial snowplowing services as a share of the overall U.S. market at rates constant with IBISWorld figures for 2021. 10 Table of Contents In addition to its stable characteristics, the industry is also highly fragmented.
Presents commercial landscaping services and commercial snowplowing services as a share of the overall U.S. market at rates constant with IBISWorld figures for 2022 and 2023, respectively. 10 Table of Contents In addition to its stable characteristics, the industry is also highly fragmented.
(August 2021) (2) Source: IBISWorld-Snowplowing Services in the U.S. (April 2021) Steady growth in the commercial property markets has underpinned the commercial landscaping industry’s growth. Unlike individual residential customers, HOAs and military housing managers possess the same sophistication and expectation of high-quality services as corporations, and thus are more inclined to outsource landscaping needs to professional, scaled companies.
(June 2022) (2) Source: IBISWorld-Snowplowing Services in the U.S. (June 2023) Steady growth in the commercial property markets has underpinned the commercial landscaping industry’s growth. Unlike individual residential customers, HOAs and military housing managers possess the same sophistication and expectation of high-quality services as corporations, and thus are more inclined to outsource landscaping needs to professional, scaled companies.
We employed approximately 2,100 seasonal workers in 2022, and 2021, through the H-2B visa program. 12 Table of Contents Safety We care about our employees and we believe that our commercial success is linked to a safe and healthy workforce.
We employed approximately 1,900 and 2,100 seasonal workers in 2023 and 2022, respectively, through the H-2B visa program. 12 Table of Contents Safety We care about our employees and we believe that our commercial success is linked to a safe and healthy workforce.
Our top ten customers accounted for approximately 10% of our fiscal 2022 revenues, with no single customer accounting for more than 2% of our fiscal 2022 revenues. Our business model is characterized by stable, recurring revenues, a scalable operating model, strong operating margins, limited capital expenditures and low working capital requirements that together generate significant Free Cash Flow.
Our top ten customers accounted for approximately 12% of our fiscal 2023 revenues, with no single customer accounting for more than 3% of our fiscal 2023 revenues. Our business model is characterized by stable, recurring revenues, a scalable operating model, strong operating margins, limited capital expenditures and low working capital requirements that together generate significant Free Cash Flow.
For example, a representative maintenance services branch typically serves 25-100 customers across 50-200 sites, generating between $5 million and $15 million in annual revenues. Each branch is led by a branch manager, who focuses on performance drivers, such as customer satisfaction, crew retention, safety and tactical procurement.
For example, a representative maintenance services branch typically serves 25-100 customers across 50-250 sites, generating between $2 million and $22 million in annual revenues. Each branch is led by a branch manager, who focuses on performance drivers, such as customer satisfaction, crew retention, safety and tactical procurement.
Human Capital Employees As of September 30, 2022, we had a total of approximately 21,000 employees, including seasonal workers, consisting of approximately 20,300 full-time and approximately 700 part-time employees in our two business segments. The number of part-time employees varies significantly from time to time during the year due to seasonal and other operating requirements.
Human Capital Employees As of September 30, 2023, we had a total of approximately 21,000 employees, including seasonal workers, consisting of approximately 20,400 full-time and approximately 600 part-time employees in our two business segments. The number of part-time employees varies significantly from time to time during the year due to seasonal and other operating requirements.
In 2021, commercial landscape maintenance, including snow removal, represented an $83 billion industry that is characterized by a number of attractive market drivers. The industry benefits from commercial customers’ need to provide consistently accessible and aesthetically-pleasing environments.
In 2022, commercial landscape maintenance, including snow removal, represented a $96 billion industry that is characterized by a number of attractive market drivers. The industry benefits from commercial customers’ need to provide consistently accessible and aesthetically-pleasing environments.
Over the next five years, the overall U.S. landscape maintenance industry is projected to be supported by rising construction and economic activity. According to the 2021 IBISWorld Report, private non-residential construction is forecasted to grow at an annualized rate of 3.6% over the five years leading to 2026.
Over the next five years, the overall U.S. landscape maintenance industry is projected to be supported by rising construction and economic activity. According to the 2022 IBISWorld Report, private non-residential construction is forecasted to grow at an annualized rate of 1.3% over the five years leading to 2027.
We generally experience our highest level of employment during the spring and summer seasons, which correspond with our third and fourth fiscal quarters. The approximate number of full-time employees by segment, as of September 30, 2022, is as follows: Maintenance Services: 17,300; Development Services: 2,700. In addition, our corporate staff is approximately 300 employees.
We generally experience our highest level of employment during the spring and summer seasons, which correspond with our third and fourth fiscal quarters. The approximate number of full-time employees by segment, as of September 30, 2023, is as follows: Maintenance Services: 16,900; Development Services: 3,200. In addition, our corporate staff is approximately 300 employees.
For the year ended September 30, 2022, in Development Services, we generated net service revenues of $698.8 million and Segment Adjusted EBITDA of $73.7 million, with a Segment Adjusted EBITDA Margin of 10.5%. Our History In 2013, affiliates of KKR acquired our predecessor business, Brickman Holding Group, Inc. In 2014, we acquired ValleyCrest Holding Co.
For the year ended September 30, 2023, in Development Services, we generated net service revenues of $758.0 million and Segment Adjusted EBITDA of $82.8 million, with a Segment Adjusted EBITDA Margin of 10.9%. Our History In 2013, affiliates of KKR acquired our predecessor business, Brickman Holding Group, Inc. In 2014, we acquired ValleyCrest Holding Co.
Our diverse customer base includes approximately 9,500 office parks and corporate campuses, 7,500 residential communities, and 550 educational institutions.
Our diverse customer base includes approximately 8,800 office parks and corporate campuses, 7,100 residential communities, and 550 educational institutions.
For the year ended September 30, 2022, we generated net service revenues of $2,774.6 million, net income of $14.0 million and Adjusted EBITDA of $287.9 million, with a net income margin of 0.5% and an Adjusted EBITDA margin of 10.4%. 7 Table of Contents Our Operating Segments We deliver our broad range of services through two operating segments: Maintenance Services and Development Services.
For the year ended September 30, 2023, we generated net service revenues of $2,816.0 million, net loss of $7.7 million and Adjusted EBITDA of $298.7 million, with a net loss margin of 0.3% and an Adjusted EBITDA margin of 10.6%. 7 Table of Contents Our Operating Segments We deliver our broad range of services through two operating segments: Maintenance Services and Development Services.
Our common stock trades on the New York Stock Exchange under the symbol “BV”. Our principal executive offices are located at 980 Jolly Road, Suite 300, Blue Bell, Pennsylvania 19422 .
In July 2018, we completed the initial public offering of our common stock (the “IPO”). Our common stock trades on the New York Stock Exchange under the symbol “BV”. Our principal executive offices are located at 980 Jolly Road, Suite 300, Blue Bell, Pennsylvania 19422 .
For the year ended September 30, 2022, in Maintenance Services, we generated net service revenues of $2,082.0 million, including $256.3 million from snow removal services, and Segment Adjusted EBITDA of $278.8 million, with a Segment Adjusted EBITDA Margin of 13.4%.
For the year ended September 30, 2023, in Maintenance Services, we generated net service revenues of $2,066.5 million, including $209.0 million from snow removal services, and Segment Adjusted EBITDA of $277.9 million, with a Segment Adjusted EBITDA Margin of 13.4%.
Highlighting the consistency of this growth, the combined industry is expected to grow at a 3.5% CAGR from 2017 through 2026, as depicted in the chart below: (1) Source: IBISWORLD-Landscaping Services in the U.S. (August 2021) IBISWorld—Snowplowing Services in the U.S. (April 2021).
Highlighting the consistency of this growth, the combined industry is expected to grow at a 3.0% CAGR from 2018 through 2027, as depicted in the chart below: Growth in the U.S.
Our care and concern for employee wellbeing is enhanced by the BrightView Landscapes Foundation, a nonprofit organization used to support employees during periods of personal and financial stress. BrightView continues to demonstrate our commitment to preventing the spread of COVID-19 by continuing to adhere to the CDC guidelines and meet or exceed local government mandates.
Our care and concern for employee wellbeing is enhanced by the BrightView Landscapes Foundation, a nonprofit organization used to support employees during periods of personal and financial stress.
Removed
In 2016, we reconstituted our senior leadership team, including hiring a new chief executive officer and a new chief financial officer. Our management team refocused our strategy to realign with the fundamental strengths of our business.
Added
Commercial Landscaping and Snow Removal Services Industry (US$ in billions) (1) (1) Source: IBISWORLD - Landscaping Services in the U.S (June 2022), IBISWorld - Snowplowing Services in the U.S (June 2023).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

73 edited+33 added−17 removed195 unchanged
Biggest changeOur certificate of incorporation provides, subject to limited exceptions, that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee or stockholder of our company to the Company or our stockholders, creditors or other constituents, (iii) action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the Delaware General Corporation Law, or the DGCL, or our amended and restated certificate of incorporation or our 27 Table of Contents amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine.
Biggest changeOur certificate of incorporation provides, subject to limited exceptions, that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee or stockholder of our company to the Company or our stockholders, creditors or other constituents, (iii) action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the Delaware General Corporation Law, or the DGCL, or our amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine. 27 Table of Contents Our certificate of incorporation further provides that, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the United States federal securities laws.
Any of our competitors may foresee the course of market development more accurately than we do, provide superior service, have the ability to deliver similar services at a lower cost, develop stronger relationships with our customers and other consumers in the landscape services industry, adapt more quickly 16 Table of Contents to evolving customer requirements, devote greater resources to the promotion and sale of their services or access financing on more favorable terms than we can obtain.
Any of our competitors may foresee the course of market development more accurately than we do, provide superior service, have the ability to deliver similar services at a 16 Table of Contents lower cost, develop stronger relationships with our customers and other consumers in the landscape services industry, adapt more quickly to evolving customer requirements, devote greater resources to the promotion and sale of their services or access financing on more favorable terms than we can obtain.
With respect to our Development Services segment, a significant portion of our revenues are derived from development activities associated with new commercial real estate development, including hospitality and leisure, which has experienced periodic declines, some of which have been severe, including recent and sustained declines associated with the COVID-19 pandemic.
With respect to our Development Services segment, a significant portion of our revenues are derived from development activities associated with new commercial real estate development, including hospitality and leisure, which has experienced periodic declines, some of which have been severe, including sustained declines associated with the COVID-19 pandemic.
While we seek to manage price and availability risks related to raw materials, such as fuel, fertilizer, chemicals, road salt and mulch, through procurement strategies, these efforts may not be successful and we may experience adverse impacts due to the rising prices of such products.
We seek to manage price and availability risks related to raw materials, such as fuel, fertilizer, chemicals, road salt and mulch, through procurement strategies, these efforts may not be successful and we may experience adverse impacts due to the rising prices of such products.
Recent increases in raw material costs, fuel prices, wages and other operating costs, and changes in our ability to source adequate supplies and materials in a timely manner, have adversely impacted our business, financial position, results of operations and cash flows.
Increases in raw material costs, fuel prices, wages and other operating costs, and changes in our ability to source adequate supplies and materials in a timely manner, have adversely impacted our business, financial position, results of operations and cash flows.
The process of integrating an acquired business may create unforeseen difficulties and expenses, including the diversion of resources away from our operations; the inability to retain employees, customers and suppliers; difficulties implementing our strategy at the acquired business; the assumption of actual or contingent liabilities (including those relating to the environment); failure to effectively and timely adopt and adhere to our internal control processes, accounting systems and other policies; write-offs or impairment charges relating to goodwill and other intangible assets; unanticipated liabilities relating to acquired businesses; and potential expenses associated with litigation with sellers of such businesses.
The process of integrating an acquired business may create unforeseen difficulties and expenses, including the diversion of management’s attention or resources away from our operations; the inability to retain employees, customers and suppliers; difficulties implementing our strategy at the acquired business; the assumption of actual or contingent liabilities (including those relating to the environment); failure to effectively and timely adopt and adhere to our internal control processes, accounting systems and other policies; write-offs or impairment charges relating to goodwill and other intangible assets; unanticipated liabilities relating to acquired businesses; and potential expenses associated with litigation with sellers of such businesses.
Some factors that may impact our stock price include: results of operations that vary from the expectations of securities analysts and investors or from those of our competitors; changes in expectations as to our future financial performance, including estimates and 28 Table of Contents investment recommendations by securities analysts and investors; changes in market valuations, stock prices, or earnings and other announcements by peer companies or companies in the service sector; announcements by us, our competitors, and our suppliers related to significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments; investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives; the public’s response to press releases, SEC filings or other public announcements by us or third parties, including our filings with the SEC; guidance, if any, that we provide to the public, and any changes in or our failure to meet this guidance; and the development and sustainability of an active trading market for our stock.
Some factors that may impact our stock price include: results of operations that vary from the expectations of securities analysts and investors or from those of our competitors; changes in expectations as to our future financial performance, including estimates and investment recommendations by securities analysts and investors; changes in market valuations, stock prices, or earnings and other announcements by peer companies or companies in the service sector; announcements by us, our competitors, and our suppliers related to significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments; investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives; the public’s response to press releases, SEC filings or other public announcements by us or third parties, including our filings with the SEC; guidance, if any, that we provide to the public, and any changes in or our failure to meet this guidance; and the development and sustainability of an active trading market for our stock.
In addition, certain provisions of our certificate of incorporation and bylaws may be amended only by the affirmative vote of at least 66 2 ⁄ 3 % of shares of common stock entitled to vote generally in the election of directors if the Sponsor and its affiliates cease to beneficially own at least 40% of shares of common stock entitled to vote generally in the election of directors.
In addition, certain provisions of our certificate of incorporation and bylaws may be amended only by the affirmative vote of at least 66 2 ⁄ 3 % of shares of common stock entitled to vote generally in the election of directors if KKR and its affiliates cease to beneficially own at least 40% of shares of common stock entitled to vote generally in the election of directors.
Evolving stakeholder expectations and regulatory obligations and our efforts to manage these issues, report on them, and accomplish our goals present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material adverse impact, including on our reputation and stock price.
Evolving stakeholder expectations, regulatory obligations, economic conditions and our efforts to manage these issues, report on them, and accomplish our goals present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material adverse impact, including on our reputation and stock price.
We perform landscape services, the demand for which is affected by weather conditions, including impacts from climate change, droughts, severe storms and significant rain or snowfall, all of which may impact the timing and frequency of the performance of our services, or our ability to perform the services at all.
We perform landscape services, the demand for which is affected by weather conditions, including impacts from climate change, droughts, severe storms, significant rain or snowfall and other severe weather conditions or events, all of which may impact the timing and frequency of the performance of our services, or our ability to perform the services at all.
If any participant or group of participants with a significant portion of the 25 Table of Contents commitments in our Revolving Credit Facility fails to satisfy its or their respective obligations to extend credit under the facility and we are unable to find a replacement for such participant or participants on a timely basis (if at all), our liquidity may be adversely affected.
If any participant or group of participants with a significant portion of the commitments in our Revolving Credit Facility fails to satisfy its or their respective obligations to extend credit under the facility and we are unable to find a replacement for such participant or participants on a timely basis (if at all), our liquidity may be adversely affected.
See “Business—Regulatory Overview—Employee and Immigration Matters.” 20 Table of Contents Termination of a significant number of employees in specific markets or across our company due to work authorization or other regulatory issues would disrupt our operations, and could also cause adverse publicity and temporary increases in our labor costs as we train new employees.
See “Business—Regulatory Overview—Employee and Immigration Matters.” Termination of a significant number of employees in specific markets or across our company due to work authorization or other regulatory issues would disrupt our operations, and could also cause adverse publicity and temporary increases in our labor costs as we train new employees.
Certain of these proposals involve an increase in the domestic corporate tax rate, which if implemented could have a material impact on our future results of operations and cash flows.
Certain of these proposals involve an increase in the domestic corporate tax rate, which when implemented could have a material impact on our future results of operations and cash flows.
Our level of debt could have important consequences, including making it more difficult for us to satisfy our obligations with respect to our debt, limiting our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions, or other general corporate requirements, requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments or acquisitions and other general corporate purposes, increasing our vulnerability to adverse changes in general economic, industry and competitive conditions, exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the credit agreement dated December 18, 2013 (as amended, the “Credit Agreement”), are at variable rates of interest, limiting our flexibility in planning for and reacting to changes in the industries in which we compete, placing us at a disadvantage compared to other, less leveraged competitors, increasing our cost of borrowing and hampering our ability to execute on our growth strategy.
Our level of debt could have important consequences, including making it more difficult for us to satisfy our obligations with respect to our debt, limiting our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions, or other general corporate requirements, requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments or acquisitions and other general corporate purposes, increasing our vulnerability to adverse changes in general economic, industry and competitive conditions, exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the Credit Agreement, are at variable rates of interest, limiting our flexibility in planning for and reacting to changes in the industries in which we compete, placing us at a disadvantage compared to other, less leveraged competitors, increasing our cost of borrowing and hampering our ability to execute on our growth strategy.
Continued state by state introduction of privacy laws could lead to significantly greater complexity in our compliance requirements, which could result in complaints from data subjects and/or action from regulators.
Continued state by state introduction of privacy laws could lead to significantly greater complexity in our compliance requirements, which could result in increased compliance costs, complaints from data subjects and/or action from regulators.
These rules and regulations have increased our legal and financial compliance costs and made some activities more time-consuming and costly. Our management devotes a substantial amount of time to ensure that we comply with all of these requirements, diverting the attention of management away from revenue-producing activities.
These rules and regulations have increased our legal and financial compliance costs and made some activities more time-consuming and costly. Our management devotes a substantial amount of time to ensure that we comply with all of these 29 Table of Contents requirements, diverting the attention of management away from revenue-producing activities.
In addition, we closely monitor wage, salary and benefit costs in an effort to remain competitive in our markets. Attracting and maintaining a high quality workforce is a priority for our business, and as wage, salary or benefit costs increase, including as a result of minimum wage legislation, our operating costs will continue to increase.
In addition, we closely monitor wage, salary and benefit costs in an effort to remain competitive in our markets. Attracting and maintaining a high quality workforce is a priority for our business, and as wage, salary or benefit costs increase, including as a result of minimum wage legislation or increased competition for employees, our operating costs will continue to increase.
Also, our business strategies may change 17 Table of Contents from time to time in light of our ability to implement our business initiatives, competitive pressures, economic uncertainties or developments, or other factors. Future acquisitions or other strategic transactions could negatively impact our reputation, business, financial position, results of operations and cash flows.
Also, our business strategies may change from time to time in light of our ability to implement our business initiatives, competitive pressures, economic uncertainties or developments, or other factors. Future acquisitions or other strategic transactions could negatively impact our reputation, business, financial position, results of operations and cash flows.
These provisions provide for, among other things, our Board of Directors to issue one or more series of preferred stock; advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; certain limitations on convening special stockholder meetings; the removal of directors only upon the affirmative vote of the holders of at least 66 2 ⁄ 3 % of the shares of common stock entitled to vote generally in the election of directors if the Sponsor and its affiliates cease to beneficially own at least 40% of shares of common stock entitled to vote generally in the election of directors.
These provisions provide for, among other things, our Board of Directors to issue one or more series of preferred stock; advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual 26 Table of Contents meetings; certain limitations on convening special stockholder meetings; the removal of directors only upon the affirmative vote of the holders of at least 66 2 ⁄ 3 % of the shares of common stock entitled to vote generally in the election of directors if KKR and its affiliates cease to beneficially own at least 40% of shares of common stock entitled to vote generally in the election of directors.
If we fail to comply with applicable laws and regulations, including those referred to above, we may be subject to investigations, criminal sanctions or civil remedies, including fines, penalties, damages, reimbursement, injunctions, seizures or disgorgements of the ability to operate our motor vehicles.
If we fail to comply with applicable laws and regulations, including those referred to above, we may be subject to investigations, criminal sanctions or civil remedies, including fines, 21 Table of Contents penalties, damages, reimbursement, injunctions, seizures, disgorgements or the loss of the ability to operate our motor vehicles.
Despite our level of indebtedness, we and our subsidiaries may incur substantially more debt, including off-balance sheet financing, contractual obligations and general and commercial liabilities. This could further exacerbate the risks to our financial condition described above. We and our subsidiaries may incur significant additional indebtedness in the future, including off-balance sheet financings, contractual obligations and general and commercial liabilities.
We and our subsidiaries may incur substantially more debt, including off-balance sheet financing, contractual obligations and general and commercial liabilities. This could exacerbate the risks to our financial condition described above. We and our subsidiaries may incur significant additional indebtedness in the future, including off-balance sheet financings, contractual obligations and general and commercial liabilities.
In this competitive environment, our business could be adversely impacted by increases in labor costs, which may include increases in wages and benefits necessary to attract and retain high quality employees with the right skill sets, increases triggered by regulatory actions regarding wages, scheduling and benefits; increases in health care and workers’ compensation insurance costs; and increases in benefits and costs related to the COVID-19 pandemic and its resurgence.
In this competitive environment, our business could be adversely impacted by increases in labor costs, which may include increases in wages and benefits necessary to attract and retain high quality employees with the right skill sets, increases triggered by regulatory actions regarding wages, scheduling and benefits, and increases in health care and workers’ compensation insurance costs.
Our variable rate indebtedness subjects us to interest rate risk, which has caused our debt service obligations to increase significantly. Borrowings under our Credit Agreement and Receivables Financing Agreement are at variable rates of interest and expose us to interest rate risk.
Our variable rate indebtedness subjects us to interest rate risk, which has caused our interest expense to increase significantly. Borrowings under our Credit Agreement and Receivables Financing Agreement are at variable rates of interest and expose us to interest rate risk.
Additionally, in the event we were to withdraw from some or all of these plans as a result of our exiting certain markets or otherwise, and the relevant plans are underfunded, we may become subject to a withdrawal liability. The amount of these required contributions may be material.
Additionally, in the event we were to withdraw from some or all of these plans as a result of our exiting certain markets or otherwise, and the relevant plans are underfunded, we may become subject to a withdrawal liability.
The IRA also creates a number of potentially beneficial tax credits to incentivize investments in certain technologies and industries which may be applicable to our business. Certain provisions of the IRA will become effective beginning in fiscal 2023.
The IRA also created a number of potentially beneficial tax credits to incentivize investments in certain technologies and industries which may be applicable to our business. Certain provisions of the IRA became effective beginning in fiscal 2023.
Given our commitment to ESG, we actively manage these issues and have established and publicly announced certain goals, commitments, and targets which we may refine or even expand further in the future. These goals, commitments, and targets reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.
Given our commitment to ESG, we actively manage these issues and have established and publicly announced certain goals, commitments, and targets which we may refine further 28 Table of Contents in the future. These goals, commitments, and targets reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.
As of September 30, 2022, we had approximately 21,000 employees, approximately 4% of which are represented by a union pursuant to collective bargaining agreements.
As of September 30, 2023, we had approximately 21,000 employees, approximately 5% of which are represented by a union pursuant to collective bargaining agreements.
The Biden administration has announced in 2021 and 2022, and in certain cases has enacted, a number of tax proposals to fund new government investments in infrastructure, healthcare, and education, among other things.
The Biden administration has announced, and in certain cases has enacted, a number of tax proposals in the past three years to fund new government investments in infrastructure, healthcare, and education, among other things.
We employed approximately 2,100 seasonal workers in 2022 and 2021 through the H-2B visa program. If we are unable to hire sufficient numbers of seasonal workers, through the H-2B program or otherwise, we may experience a labor shortage.
We employed approximately 1,900 seasonal workers in fiscal year 2023 and approximately 2,100 in fiscal year 2022 through the H-2B visa program. If we are unable to hire sufficient numbers of seasonal workers, through the H-2B program or otherwise, we may experience a labor shortage.
Recent increases in interest rates have resulted in increases to the cost of servicing our debt under our Credit Agreement and Receivables Financing Agreement. For the year ended September 30, 2022, our interest expense was $53.3, compared to $42.3 for the year ended September 30, 2021.
Recent increases in interest rates have resulted in increases to the cost of servicing our debt under our Credit Agreement and Receivables Financing Agreement. For the year ended September 30, 2023, our interest expense was $97.4 million, compared to $53.3 million for the year ended September 30, 2022.
In accordance with accounting principles generally accepted in the United States of America (“GAAP”), goodwill and indefinite lived intangible assets are evaluated for impairment annually, or more frequently if circumstances indicate impairment may have occurred. As of September 30, 2022, the net carrying value of goodwill and other intangible assets, net, represented $2,183.1 million, or 66.0% of our total assets.
In accordance with accounting principles generally accepted in the United States of America (“GAAP”), goodwill and indefinite lived intangible assets are evaluated for impairment annually, or more frequently if circumstances indicate impairment may have occurred. As of September 30, 2023, the net carrying value of goodwill and other intangible assets, net, represented $2,153.7 million, or 64.2% of our total assets.
Since then, our common stock has been relatively thinly traded and at times been subject to price volatility. Recently, from October 1, 2021 to September 30, 2022, the closing price of our common stock on the New York Stock Exchange ranged from $7.65 to $17.32 per share.
Since then, our common stock has been relatively thinly traded and at times been subject to price volatility. Recently, from October 1, 2022 to September 30, 2023, the closing price of our common stock on the New York Stock Exchange ranged from $5.17 to $9.17 per share.
To the extent we are subject to a higher frequency of claims, are subject to more serious claims or insurance coverage is not available, our liquidity, financial position and results of operations could be materially adversely affected. We are also responsible for our legal expenses relating to such claims. We reserve currently for anticipated losses and related expenses.
To the extent we are subject to a higher frequency of claims, are subject to more serious claims or insurance coverage is not available, our liquidity, financial position and results of operations could be materially adversely affected. 22 Table of Contents We are also responsible for our legal expenses relating to such claims.
While our hedging strategy is designed to minimize the impact of increases in interest rates applicable to our variable rate debt, there can be no guarantee that our hedging strategy will be effective, and we may experience credit-related losses in some circumstances.
We have entered into interest rate swap instruments to limit our exposure to changes in variable interest rates. While our hedging strategy is designed to minimize the impact of increases in interest rates applicable to our variable rate debt, there can be no guarantee that our hedging strategy will be effective, and we may experience credit-related losses in some circumstances.
KKR and its affiliates are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.
The Affiliated Investors and their respective affiliates are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.
Our business and growth strategies benefit from the continuation of a current trend toward outsourcing services. Customers will outsource if they perceive that outsourcing may provide quality services at a lower overall cost and permit them to focus on their core business activities.
Our business and growth strategies benefit from customers and prospective customers continuing to outsource services. Customers will outsource if they perceive that outsourcing may provide quality services at a lower overall cost and permit them to focus on their core business activities.
Moreover, borrowings under our Credit Agreement and Receivables Financing Agreement bear interest at a rate per annum based on a secured overnight financing rate (SOFR), which replaced LIBOR as the reference interest rate, plus a margin.
Moreover, borrowings under our Credit Agreement and Receivables Financing Agreement bear interest at a rate per annum based on a secured overnight financing rate (SOFR), plus a margin.
Each financial institution which is part of the syndicate for our Revolving Credit Facility is responsible on a several, but not joint, basis for providing a portion of the loans to be made under our facility.
We have access to capital through our Revolving Credit Facility, which is governed by the Credit Agreement. Each financial institution which is part of the syndicate for our Revolving Credit Facility is responsible on a several, but not joint, basis for providing a portion of the loans to be made under our facility.
Our financial performance has been adversely affected by increases in our operating expenses, including fuel, fertilizer, chemicals, road salt, mulch, wages and salaries, employee benefits, health care, subcontractor costs, vehicle, facilities and equipment leases, insurance and regulatory compliance costs, all of which are subject to historic continuing inflationary pressures.
Our financial performance has been adversely affected by increases in our operating expenses, including fuel, fertilizer, chemicals, road salt, mulch, wages and salaries, employee benefits, health care, subcontractor costs, vehicle, facilities and equipment leases, insurance and regulatory compliance costs.
We may be unable to satisfactorily meet evolving standards, regulations and disclosure requirements related to ESG. Such matters can affect the willingness or ability of investors to make an investment in our Company, as well as our ability to meet regulatory requirements, including proposed rules related to greenhouse gas emissions.
Such matters can affect the willingness or ability of investors to make an investment in our Company, as well as our ability to meet regulatory requirements, including proposed rules related to greenhouse gas emissions.
However, ultimate results may differ from our estimates, which could result in losses over our reserved amounts. 22 Table of Contents Tax increases and changes in tax rules may adversely affect our financial results As a company conducting business with physical operations throughout North America, we are exposed, both directly and indirectly, to the effects of changes in U.S., state and local tax rules.
Tax increases and changes in tax rules may adversely affect our financial results As a company conducting business with physical operations throughout North America, we are exposed, both directly and indirectly, to the effects of changes in U.S., state and local tax rules.
Customer and consumer demand for our services may be impacted by weak economic conditions, recession, equity market volatility or other negative economic factors in the U.S. or other nations.
We face risks related to heightened inflation, geopolitical conflicts, recession, financial market disruptions and other economic conditions. Customer and consumer demand for our services may be impacted by weak economic conditions, recession, equity market volatility or other negative economic factors in the U.S. or other nations.
Although we use E-Verify and require all new employees to provide us with government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers.
However, use of E-Verify does not guarantee that we will successfully identify all applicants who are ineligible for employment. Although we use E-Verify and require all new employees to provide us with government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers.
The severity and length of time that a downturn in economic and financial market conditions may persist, as well as the timing, strength and sustainability of any recovery from such downturn, are unknown and are beyond our control. While U.S.
The severity and length of time that a downturn in economic and financial market conditions may persist, as well as the timing, strength and sustainability of any recovery from such downturn, are unknown and are beyond our control. For example, the U.S. experienced significantly heightened inflationary pressures in 2022, which have continued into 2023.
In the future, we may also issue equity securities in connection with investments or acquisitions. The number of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock.
The number of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.
Droughts could cause shortage in the water supply and governments may impose limitations on water usage, which may change customer demand for landscape maintenance and irrigation services. There is a risk that demand for our services will change in ways that we are unable to predict.
Droughts could cause shortage in the water supply and governments may impose limitations on water usage, which may change customer demand for landscape maintenance and irrigation services.
If interest rates continue to increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, our ability to refinance some or all of our existing indebtedness may be impacted and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. 24 Table of Contents Our debt agreements contain restrictions that limit our flexibility in operating our business.
If interest rates continue to increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, our ability to refinance some or all of our existing indebtedness may be impacted and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. 24 Table of Contents We utilize derivative financial instruments to reduce our exposure to market risks from changes in interest rates on our variable rate indebtedness and we will be exposed to risks related to counterparty credit worthiness or non-performance of these instruments.
In addition to past limitations on our operations as a result of governmental orders or restrictions, the COVID-19 pandemic has caused, and may continue to cause, disruptions to our business and operations as a result of any social distancing measures, restrictions on or consumer reluctance to travel and labor shortages as a result of illness and possible delays in H2-B visa processing in connection with government orders and regulations related to immigration.
The COVID-19 pandemic profoundly and adversely affected worldwide economic activity and caused disruptions to our business and operations as a result of social distancing measures, construction delays impacting our development services, decreased consumer spending on certain ancillary landscape services, restrictions on or consumer reluctance to travel and labor shortages as a result of illness and possible delays in H2-B visa processing in connection with government orders and regulations related to immigration.
Any unauthorized disclosure of confidential information could damage our reputation, interrupt our operations and could result in a violation of applicable laws, regulations, industry standards or agreements and potentially subject us to costs, penalties and liabilities.
Geopolitical instability, including overseas conflicts, may increase the risk that we will experience cyber-attacks or 23 Table of Contents cyber-intrusions. Any unauthorized disclosure of confidential information could damage our reputation, interrupt our operations and could result in a violation of applicable laws, regulations, industry standards or agreements and potentially subject us to costs, penalties and liabilities.
Although we maintain insurance coverage for various cybersecurity risks, there can be no guarantee that all costs incurred will be fully insured. 23 Table of Contents Our failure to comply with data privacy regulations could adversely affect our business.
The occurrence of any of these events could have a material adverse impact on our reputation, business, financial position, results of operations and cash flow. Although we maintain insurance coverage for various cybersecurity risks, there can be no guarantee that all costs incurred will be fully insured. Our failure to comply with data privacy regulations could adversely affect our business.
In addition, government agencies may make changes in the regulatory frameworks within which we operate that may require either the corporation as a whole or individual businesses to incur substantial increases in costs in order to comply with such laws and regulations. 21 Table of Contents Compliance with environmental, health and safety laws and regulations, including laws pertaining to the use of pesticides, herbicides and fertilizers, or liabilities thereunder, as well as the risk of potential litigation, could result in significant costs that adversely impact our reputation, business, financial position, results of operations and cash flows.
Compliance with environmental, health and safety laws and regulations, including laws pertaining to the use of pesticides, herbicides and fertilizers, or liabilities thereunder, as well as the risk of potential litigation, could result in significant costs that adversely impact our reputation, business, financial position, results of operations and cash flows.
Climate change may increase in the frequency, duration and severity of extreme weather events and make weather patterns change or more difficult to predict. Such changes may impede our ability to provide services or make it difficult for us to anticipate customer 18 Table of Contents demand.
There is a risk that demand for our services will change in ways that we are unable to predict. 18 Table of Contents Climate change may increase in the frequency, duration and severity of extreme weather events and make weather patterns change or more difficult to predict.
We have made certain commitments to mitigate against climate change, but it may take us longer than expected to meet these commitments, or we may not meet them at all. The continued effects of the COVID-19 pandemic could adversely impact our business, financial condition and results of operations.
We have made certain commitments to mitigate against climate change, but it may take us longer than expected to meet these commitments, or we may not meet them at all.
We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing confidential information of our customers, employees and third parties. Unlawful or unauthorized activities by third parties, and failures in systems, software, encryption technology, or other tools may facilitate or result in a compromise or breach of these systems.
We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing confidential information of our customers, employees and third parties.
The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.
The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value. On August 28, 2023, we issued 500,000 shares of Series A Preferred Stock to One Rock for an aggregate purchase price of $500 million.
In addition, we may incur certain costs as we pursue our growth, operational and management initiatives, and we may not meet anticipated implementation timetables or stay within budgeted costs. As these initiatives are undertaken, we may not fully achieve our expected efficiency improvements or growth rates, or these initiatives could adversely impact our customer retention, supplier relationships or operations.
In addition, we may incur certain costs as we pursue our growth, operational and management initiatives, and we may not meet anticipated implementation timetables or stay within budgeted costs.
If the financial institutions that are part of the syndicate of our Revolving Credit Facility fail to extend credit under our facility or reduce the borrowing base under our Revolving Credit Facility, our liquidity and results of operations may be adversely affected. We have access to capital through our Revolving Credit Facility, which is governed by the Credit Agreement.
If new debt is added to our current debt levels, the related risks that we now face could intensify. 25 Table of Contents If the financial institutions that are part of the syndicate of our Revolving Credit Facility fail to extend credit under our facility or reduce the borrowing base under our Revolving Credit Facility, our liquidity and results of operations may be adversely affected.
In addition, we may encounter problems or delays in completing the 29 Table of Contents remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report.
Any material weaknesses could result in a material misstatement of our annual or quarterly consolidated financial statements or disclosures that may not be prevented or detected. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report.
Our business could be adversely affected by a failure to properly verify the employment eligibility of our employees. We use the U.S. government’s “E-Verify” program to verify employment eligibility for all new employees throughout our company. However, use of E-Verify does not guarantee that we will successfully identify all applicants who are ineligible for employment.
The amount of these required contributions may be material. 20 Table of Contents Our business could be adversely affected by a failure to properly verify the employment eligibility of our employees. We use the U.S. government’s “E-Verify” program to verify employment eligibility for all new employees throughout our company.
We are subject to risks caused by data breaches and operational disruptions, particularly through cyber-attack, cyber-intrusion or ransomware attacks, including by computer hackers, foreign governments and cyber terrorists. Geopolitical instability, including overseas conflicts, may increase the risk that we will experience cyber-attacks or cyber-intrusions.
We are subject to risks caused by data breaches and operational disruptions, particularly through cyber-attack, cyber-intrusion, ransomware attacks, phishing attempts or other social engineering attempts to fraudulently induce the transfer of company funds, including by computer hackers, foreign governments and cyber terrorists.
Our future success depends to a significant degree on the skills, experience and efforts of our executive management and other key personnel and their ability to provide us with uninterrupted leadership and direction. The failure to retain our executive officers and other key personnel or a failure to provide adequate succession plans could have an adverse impact.
Our future success depends to a significant degree on the skills, experience and efforts of our executive management and other key personnel and their ability to provide us with uninterrupted leadership and direction. From time to time, there may be changes in our senior management team resulting from the hiring or departure of executives.
The market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities. In the future, we may also issue equity securities in connection with investments or acquisitions.
KKR and its affiliates also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
KKR or One Rock and their respective affiliates also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
Variability in the frequency and timing of snowfalls creates challenges associated with budgeting and forecasting for the Maintenance Services segment.
However, there can be no assurance that these regions will receive seasonal snowfalls near their historical average in the future. Variability in the frequency and timing of snowfalls creates challenges associated with budgeting and forecasting for the Maintenance Services segment.
We periodically evaluate and adjust our claims reserves to reflect trends in our own experience as well as industry trends.
We reserve currently for anticipated losses and related expenses. We periodically evaluate and adjust our claims reserves to reflect trends in our own experience as well as industry trends. However, ultimate results may differ from our estimates, which could result in losses over our reserved amounts.
See Note 10 “Fair Value Measurements and Derivative Instruments” to our audited consolidated financial statements included in Part II. Item 8 of this Form 10-K. Risks Related to Ownership of Our Common Stock Future sales, or the perception of future sales, by us or our affiliates, could cause the market price for our common stock to decline.
See Note 10 “Fair Value Measurements and Derivative Instruments” to our audited consolidated financial statements included in Part II. Item 8 of this Form 10-K. Our debt agreements contain restrictions that limit our flexibility in operating our business. The Credit Agreement imposes significant operating and financial restrictions.
The occurrence of any such event could prevent us from providing services and adversely affect our business, financial position and results of operations. We face risks related to heightened inflation, recession, financial market disruptions and other economic conditions.
The occurrence of any such event could prevent us from providing services and adversely affect our business, financial position and results of operations. Our business, financial condition and results of operations have been, and could in the future be, adversely affected by a pandemic, epidemic or other public health emergency.
A significant portion of our assets consists of goodwill and other intangible assets, the value of which may be reduced if we determine that additional assets are impaired. On December 18, 2013, an affiliate of KKR indirectly acquired a controlling interest in our company and on June 30, 2014, we acquired ValleyCrest Holding Co.
A significant portion of our assets consists of goodwill and other intangible assets, the value of which may be reduced if we determine that these assets are impaired. Accounting for our numerous historical acquisitions has resulted in the generation of various amounts of goodwill.
As of September 30, 2022, we had total indebtedness of $1,342.7 million, and we had availability under the Revolving Credit Facility and the Receivables Financing Agreement of $250.9 million and $76.6 million, respectively. See Note 9 “Long-term Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K.
See Note 9 “Long-term Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K.
Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you. 26 Table of Contents KKR BrightView Aggregator L.P. has the ability to exert significant influence over us and its interests may conflict with ours or yours in the future. As of September 30, 2022, KKR beneficially owns 54% of our common stock.
KKR and One Rock have the ability to exert significant influence over us and their interests may conflict with ours or yours in the future. As of September 30, 2023, the Affiliated Investors beneficially own approximately 71.6% of the combined voting power of our outstanding shares of preferred stock and common stock.
In the past ten- and thirty-year periods, the regions that we service have averaged 3,865.0 inches and 3,755.0 inches of annual snowfall, respectively . However, there can be no assurance that these regions will receive seasonal snowfalls near their historical average in the future.
The regions that we service averaged 2,208.9 inches of annual snowfall in calendar year 2022, 2,600.0 inches of annual snowfall in calendar year 2021, and 3,020.4 inches of annual snowfall in calendar year 2020. In the past ten- and thirty-year periods, the regions that we service have averaged 2,889.6 inches and 2,971.4 inches of annual snowfall, respectively .
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income and a 1% excise tax on share repurchases.
Beginning in 2024, the Inflation Reduction Act of 2022 (“IRA”) will impose a 15% minimum tax on global adjusted financial statement income for corporations with three-year average annual adjusted financial statement income exceeding $1 billion. The IRA also imposes a 1% excise tax on certain repurchases (including certain redemptions) of stock by publicly traded domestic corporations.
As a result, we may lose business opportunities, have reduced revenues or have difficulty collecting payments from clients, which could have a material adverse impact on our business, financial condition and results of operation. The COVID-19 pandemic has resulted in reduced demand for our ancillary services which has, as a result, led to a decline in ancillary revenues.
In addition, if the U.S. economy enters a recession in fiscal 2024, we may experience sales declines and may have to decrease prices for our services, all of which could have a material adverse impact on our business, financial condition, and results of operations.
Removed
The ongoing effects of the public health crisis caused by the COVID-19 pandemic and efforts to mitigate the health impact of the pandemic have profoundly and adversely affected economic activity.
Added
While inflation and supply chain pressures have eased in recent months, further increases in, or sustained elevation of, inflation rates or disruptions to our supply chain will adversely affect our financial performance.
Removed
In addition, the COVID-19 pandemic has caused and may continue to cause disruptions in the business and operations of the general contractors with which we work and our suppliers. We may be unable to timely obtain the supplies we need to provide our services, which could have a material adverse impact on our ability to operate our business.
Added
As these initiatives are undertaken, we may not fully achieve our expected efficiency improvements or growth rates, or these 17 Table of Contents initiatives could adversely impact our customer retention, supplier relationships or operations.
Removed
In addition to the risks specifically described above, the continuing impact of COVID-19 is likely to implicate and exacerbate certain risks, including those related to our customers, demand for our services, reliance on workers, suppliers, our indebtedness, and potential additional impairment of our goodwill and other intangible assets.
Added
Such changes may impede our ability to provide services or make it difficult for us to anticipate customer demand. The uncertainties caused by weather conditions could negatively impact our ability to execute on our business strategy, which in turn could harm our business, financial condition, and results of operations.
Removed
As a result of the KKR and ValleyCrest acquisitions, we applied the acquisition method of accounting. Since 2017, we have completed an additional 36 acquisitions. Accounting for these transactions has involved various amounts of goodwill.

… 43 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeSegment (1) Owned Facilities Leased Facilities Maintenance Services 33 239 Development Services 3 17 Total 36 256 (1) 19 facilities are shared between our segments and each is counted once, in the Maintenance Services segment, to avoid double counting.
Biggest changeSegment (1) Owned Facilities Leased Facilities Maintenance Services 33 232 Development Services 3 18 Total 36 250 (1) 21 facilities are shared between our segments and each is counted once, in the Maintenance Services segment, to avoid double counting.
Our branches are strategically located to optimize route efficiency, market coverage and branch overhead. The following chart identifies the number of owned and leased facilities, other than our headquarters listed above, used by each of our operating segments as of September 30, 2022.
Our branches are strategically located to optimize route efficiency, market coverage and branch overhead. The following chart identifies the number of owned and leased facilities, other than our headquarters listed above, used by each of our operating segments as of September 30, 2023.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings The information set forth in Note 14 “Commitments and Contingencies” to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data,” is incorporated herein by reference. Item 4. Mine Safe ty Disclosures Not applicable. 30 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings The information set forth in Note 14 “Commitments and Contingencies” to our consolidated financial statements under Part II, Item 8, “Financial Statements and Supplementary Data,” is incorporated herein by reference. 30 Table of Contents Item 4. Mine Safe ty Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−1 removed3 unchanged
Biggest changeThe comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. 31 Table of Contents Note: In prior reports, the Company has referenced the Russell 2500 Environmental Maintenance and Security Services Index. That index was discontinued and merged into the Russell 2500 Waste & Disposal Services Index.
Biggest changeThe comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. Item 6. Removed and Reserved
As of September 30, 2022 there were 298 holders of record of our common stock. This stockholder figure does not include a substantially greater number of holders whose shares are held of record by banks, brokers, and other financial institutions. Dividend Policy We do not intend to pay cash dividends on our common stock in the foreseeable future.
As of September 30, 2023 there were 282 holders of record of our common stock. This stockholder figure does not include a substantially greater number of holders whose shares are held of record by banks, brokers, and other financial institutions. Dividend Policy We do not intend to pay cash dividends on our common stock in the foreseeable future.
Stock Performance Graph This performance graph shall not be deemed “soliciting material” or “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act.
Company Repurchases of Equity Securities None. 31 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act.
The graph below presents the Company’s cumulative total stockholder returns relative to the performance of the Russell 2000 (“R2000”) Index and the Russell 2500 Waste & Disposal Services (“R2500 Services”) Index from June 28, 2018 (the Company’s initial day of trading) through September 30, 2022.
The graph below presents the Company’s cumulative total stockholder returns relative to the performance of the Russell 2000 (“R2000”) Index and the Russell 2500 Waste & Disposal Services (“R2500 Services”) Index from September 30, 2018 through September 30, 2023.
We did not declare or pay dividends to the holders of our common stock in the year ended September 30, 2022. Unregistered Sales of Equity Securities None. Company Repurchases of Equity Securities None.
We did not declare or pay dividends to the holders of our common stock in the fiscal year ended September 30, 2023. Unregistered Sales of Equity Securities There were no unregistered sales of equity securities in fiscal year 2023 that have not been previously reported on a Current Report on Form 8-K or Quarterly Report on Form 10-Q.
Removed
The graph above includes the full history for the Russell 2500 Waste & Disposal Services Index. Item 6. Removed and Reserved

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

115 edited+23 added−19 removed97 unchanged
Biggest changeFiscal Year Ended September 30, (In millions) 2022 2021 Net service revenues $ 2,774.6 $ 2,553.6 Cost of services provided 2,099.8 1,902.8 Gross profit 674.8 650.8 Selling, general and administrative expense 534.9 508.0 Amortization expense 51.5 52.3 Income from operations 88.4 90.5 Other expense (income) 15.5 (2.7 ) Interest expense 53.3 42.3 Income before income taxes 19.6 50.9 Income tax expense 5.6 4.6 Net income $ 14.0 $ 46.3 Adjusted EBITDA (1) $ 287.9 $ 302.3 Adjusted Net Income (1) $ 100.9 $ 126.3 Cash flows from operating activities $ 106.9 $ 148.4 Free Cash Flow (1) $ 6.7 $ 96.7 (1) See “Non-GAAP Financial Measures” below for a reconciliation to the most directly comparable GAAP measure. 36 Table of Contents Fiscal Year Ended September 30, 2022 compared to Fiscal Year Ended September 30, 2021 Net Service Revenues Net service revenues for the fiscal year ended September 30, 2022 increased $221.0 million, or 8.7%, to $2,774.6 million, from $2,553.6 million in the 2021 period.
Biggest changeFiscal Year Ended September 30, (In millions) 2023 2022 Net service revenues $ 2,816.0 $ 2,774.6 Cost of services provided 2,137.1 2,099.8 Gross profit 678.9 674.8 Selling, general and administrative expense 533.4 534.9 Amortization expense 44.5 51.5 Income from operations 101.0 88.4 Other expense 6.7 15.5 Interest expense 97.4 53.3 (Loss) income before income taxes (3.1 ) 19.6 Income tax expense 4.6 5.6 Net (loss) income $ (7.7 ) $ 14.0 Less: dividends on Series A convertible preferred shares 3.2 — Net (loss) income attributable to common stockholders $ (10.9 ) $ 14.0 (Loss) earnings per share: Basic and diluted (loss) earnings per share $ (0.12 ) $ 0.14 Adjusted EBITDA (1) $ 298.7 $ 287.9 Adjusted Net Income (1) $ 61.4 $ 100.9 Cash flows from operating activities $ 129.9 $ 106.9 Free Cash Flow (1) $ 80.2 $ 6.7 (1) See “Non-GAAP Financial Measures” below for a reconciliation to the most directly comparable GAAP measure.
Landscape maintenance services that are primarily viewed as non-discretionary, such as lawn care, mowing, gardening, mulching, leaf removal, irrigation and tree care, are provided under recurring annual contracts, which typically range from one to three years in duration and are generally cancellable by the customer with 30-90 days’ notice.
Landscape maintenance services that are primarily viewed as non-discretionary, such as lawn care, mowing, gardening, mulching, leaf removal, irrigation and tree care, are provided under recurring annual contracts, which typically range from one to three years in duration and are generally cancellable by the customer with 30-90 days’ notice.
Snow removal services are provided on either fixed fee based contracts or per occurrence contracts. Both landscape maintenance services and snow removal services can also include enhancement services that represent supplemental maintenance or improvement services generally provided under contracts of short duration related to specific services.
Snow removal services are provided on either fixed fee based contracts or per occurrence contracts. Both landscape maintenance services and snow removal services can also include enhancement services that represent supplemental maintenance or improvement services generally provided under contracts of short duration related to specific services.
Revenue for landscape maintenance and snow removal services under fixed fee models is recognized over time using an output based method. Additionally, a portion of our recurring fixed fee landscape maintenance and snow removal services are recorded under the series guidance.
Revenue for landscape maintenance and snow removal services under fixed fee models is recognized over time using an output based method. Additionally, a portion of our recurring fixed fee landscape maintenance and snow removal services are recorded under the series guidance.
The right to invoice practical expedient, defined within Note 4 “Revenue” to our audited consolidated financial statements, is generally applied to revenue related to landscape maintenance and snow removal services performed in relation to per occurrence contracts as well as enhancement services.
The right to invoice practical expedient, defined within Note 4 “Revenue” to our audited consolidated financial statements, is generally applied to revenue related to landscape maintenance and snow removal services performed in relation to per occurrence contracts as well as enhancement services.
When use of the practical expedient is not appropriate for these contracts, revenue is recognized using a cost-to-cost input method. Fees for contracted landscape maintenance services are typically billed on an equal monthly basis.
When use of the practical expedient is not appropriate for these contracts, revenue is recognized using a cost-to-cost input method. Fees for contracted landscape maintenance services are typically billed on an equal monthly basis.
Adjusted EBITDA represents net income before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net income including interest and depreciation, and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions and the removal of the discrete tax items.
Adjusted EBITDA represents net (loss) income before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net (loss) income including interest and depreciation, and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions and the removal of the discrete tax items.
Fees for fixed fee snow removal services are typically billed on an equal monthly basis during snow season, while fees for time and material or other activity-based snow removal services are typically billed as the services are performed. Fees for enhancement services are typically billed as the services are performed.
Fees for fixed fee snow removal services are typically billed on an equal monthly basis during snow season, while fees for time and material or other activity-based snow removal services are typically billed as the services are performed.
(h) Represents expenses related to distinct initiatives, typically significant enterprise-wide changes. Such expenses are excluded from the measures disclosed above since such expenses vary in amount based on occurrence as well as factors specific to each of the activities, are outside of the normal operations of the business, and create a lack of comparability between periods.
(i) Represents expenses related to distinct initiatives, typically significant enterprise-wide changes. Such expenses are excluded from the measures disclosed above since such expenses vary in amount based on occurrence as well as factors specific to each of the activities, are outside of the normal operations of the business, and create a lack of comparability between periods.
The discussion around results of operations for the fiscal year ended September 30, 2020 and a comparison of our results for the fiscal years ended September 30, 2021 and 2020 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for fiscal year ended September 30, 2021, filed with the SEC on November 17, 2021 and is incorporated by reference herein ( Fiscal Year Ended September 30, 2021 10-K ).
The discussion around results of operations for the fiscal year ended September 30, 2022 and a comparison of our results for the fiscal years ended September 30, 2022 and 2021 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for fiscal year ended September 30, 2022, filed with the SEC on November 17, 2022 and is incorporated by reference herein ( Fiscal Year Ended September 30, 2022 10-K ).
Our Segments We report our results of operations through two reportable segments: Maintenance Services and Development Services. We serve a geographically diverse set of customers through our strategically located network of branches in 34 U.S. states, and, through our qualified service partner network, we are able to efficiently provide nationwide coverage in all 50 U.S. states.
Our Segments We report our results of operations through two reportable segments: Maintenance Services and Development Services. We serve a geographically diverse set of customers through our strategically located network of branches in 36 U.S. states and, through our qualified service partner network, we are able to efficiently provide nationwide coverage in all 50 U.S. states.
Our effective tax rate may vary from quarter to quarter based on recurring and nonrecurring factors including, but not limited to the geographical distribution of our pre-tax earnings, changes in the tax rates of different jurisdictions, the availability of tax credits and nondeductible items.
Our effective tax rate may vary from period to period based on recurring and nonrecurring factors including, but not limited to the geographical distribution of our pre-tax earnings, changes in the tax rates of different jurisdictions, the availability of tax credits and nondeductible items.
Segment Results for the Fiscal Years Ended September 30, 2022 and 2021 The following tables present Net Service Revenues, Segment Adjusted EBITDA, and Segment Adjusted EBITDA Margin for each of our segments. Changes in Segment Adjusted EBITDA Margin are shown in basis points, or bps.
Segment Results for the Fiscal Years Ended September 30, 2023 and 2022 The following tables present Net Service Revenues, Segment Adjusted EBITDA, and Segment Adjusted EBITDA Margin for each of our segments. Changes in Segment Adjusted EBITDA Margin are shown in basis points, or bps.
The Company’s leases have remaining lease terms of one month up to 11.3 years. See Note 12 “Leases” to our audited consolidated financial statements included in Part II. Item 8 of this Form 10-K for additional information, including the maturity schedule of future principal and interest payments associated with our finance and operating lease portfolios.
The Company’s leases have remaining lease terms of one month up to 10.4 years. See Note 12 “Leases” to our audited consolidated financial statements included in Part II. Item 8 of this Form 10-K for additional information, including the maturity schedule of future principal and interest payments associated with our finance and operating lease portfolios.
These lives are based on our previous experience for similar assets, potential market obsolescence and other industry and business data. Property and equipment and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances 44 Table of Contents indicate that the carrying amount of an asset may not be recoverable.
These lives are based on our previous experience for similar assets, potential market obsolescence and other industry and business data. Property and equipment and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
These acquisitions have allowed us to execute our 35 Table of Contents “strong-on-strong” acquisition strategy in which we focus on increasing our density and leadership positions in existing local markets, entering into attractive new geographic markets and expanding our portfolio of landscape enhancement services and improving technical capabilities in specialized services.
These acquisitions have allowed us to execute our “strong-on-strong” acquisition strategy in which we focus on increasing our density and leadership positions in existing local markets, entering into attractive new geographic markets and expanding our portfolio of landscape enhancement services and improving technical capabilities in specialized services.
As of September 30, 2022 , September 30, 2021, and September 30, 2020, we were in compliance with all of our debt covenants and no event of default had occurred or was ongoing.
As of September 30, 2023 , September 30, 2022, and September 30, 2021, we were in compliance with all of our debt covenants and no event of default had occurred or was ongoing.
See Note 9 “Long-term Debt” to our audited consolidated financial statements included in Part II. Item 8 of this Form 10-K. Income Tax Expense Income tax expense includes U.S. federal, state and local income taxes.
See Note 9 “Long-term Debt” to our audited consolidated financial statements included in Part II. Item 8 of this Form 10-K. 34 Table of Contents Income Tax Expense Income tax expense includes U.S. federal, state and local income taxes.
This section of this Form 10-K generally discusses the fiscal years ended September 30, 2022 and 2021 items and year to year comparisons between the fiscal years ended September 30, 2022 and 2021.
This section of this Form 10-K generally discusses the fiscal years ended September 30, 2023 and 2022 items and year to year comparisons between the fiscal years ended September 30, 2023 and 2022.
We may elect not to perform the qualitative assessment for some or all reporting units and perform the quantitative impairment test. The quantitative goodwill impairment test requires us to compare the carrying value of the reporting unit’s net assets to the fair value of the reporting unit.
We may elect not to perform the 45 Table of Contents qualitative assessment for some or all reporting units and perform the quantitative impairment test. The quantitative goodwill impairment test requires us to compare the carrying value of the reporting unit’s net assets to the fair value of the reporting unit.
Based on our most recent annual analysis as of July 1, 2022, the fair values for all three of our reporting units exceeded the carrying values, and therefore no indicators of impairment existed for those three reporting units; however, the fair value of the Maintenance reporting unit exceeded the carrying value by 7.8%.
Based on our most recent annual analysis as of July 1, 2023, the fair values for all three of our reporting units exceeded the carrying values, and therefore no indicators of impairment existed for those three reporting units; however, the fair value of the Maintenance reporting unit exceeded the carrying value by 4.7%.
Subsequent to the IPO, the estimation of our stock price is no longer necessary as we rely on the market price to determine the market value of our common stock. We use a Monte Carlo simulation to estimate the fair value of performance stock units granted to employees.
Subsequent to the IPO, the estimation of our stock price is no longer necessary as we rely on the market price to determine the market value of our common stock. We use a Monte Carlo simulation to estimate the fair value of performance stock units subject to a market condition that are granted to employees.
These losses are immaterial to current and historical 33 Table of Contents operations. Changes in job performance, job conditions and estimated profitability, including final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.
These losses are immaterial to current and historical operations. Changes in job performance, job conditions and estimated profitability, including final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.
In addition, we believe that Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow are frequently used by investors and other interested parties in the evaluation of issuers, many of which also present Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow when reporting their results in an effort to facilitate an understanding of their operating and financial results and liquidity.
In addition, we believe that Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted Weighted Average Number of Common Shares Outstanding and Free Cash Flow are frequently used by investors and other interested parties in the evaluation of issuers, many of which also present Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted Weighted Average Number of Common Shares Outstanding and Free Cash Flow when reporting their results in an effort to facilitate an understanding of their operating and financial results and liquidity.
Since the Maintenance reporting unit fair value did not substantially exceed the carrying value we may be at risk for an impairment loss in the future if forecasted trends assumed in the fair value calculation are not realized. As of September 30, 2022, there was $1,786.9 million of goodwill recorded related to the Maintenance reporting unit.
Since the Maintenance reporting unit fair value did not substantially exceed the carrying value we may be at risk for an impairment loss in the future if forecasted trends assumed in the fair value calculation are not realized. As of September 30, 2023, there was $1,797.6 million of goodwill recorded related to the Maintenance reporting unit.
Management uses Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow to supplement comparable GAAP measures in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures.
Management uses Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted Weighted Average Number of Common Shares Outstanding and Free Cash Flow to supplement comparable GAAP measures in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures.
We believe Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are helpful supplemental measures to assist us and investors in evaluating our operating results as they exclude certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business.
We believe Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and Adjusted Weighted Average Number of Common Shares Outstanding are helpful supplemental measures to assist us and investors in evaluating our operating results as they exclude certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business.
As a result of the repayment of the amounts outstanding under the Company's Amended Credit Agreement, the Company recorded a loss on debt extinguishment of $12.6 due to accelerated amortization of deferred financing fees and original issue discount included in the Other (expense) income line of the Consolidated Statements of Operations.
As a result of the repayment of the amounts outstanding under the Company's Amended Credit Agreement, the Company recorded a loss on debt extinguishment of $12.6 million due to accelerated amortization of deferred financing fees and original issue discount included in the Other expense (income) line of the Consolidated Statements of Operations for the year ended September 30, 2022.
Debt repayments for the Series B Term Loan totaled $1,006.3 and $10.4 for the fiscal years ended September 30, 2022 and September 30, 2021, respectively. In addition to scheduled payments, the Company is obligated to pay a percentage of excess cash flow, as defined in the Amended Credit Agreement, as payments to principal.
Debt repayments for the Series B Term Loan totaled $459.0 million and $1,006.3 million for the fiscal years ended September 30, 2023 and September 30, 2022, respectively. In addition to scheduled payments, the Company is obligated to pay a percentage of excess cash flow, as defined in the Amended Credit Agreement, as payments to principal.
September 30, (In millions) 2022 2021 Cash and cash equivalents $ 20.1 $ 123.7 Short-term borrowings and current maturities of long-term debt $ 12.0 $ 10.4 Long-term debt $ 1,330.7 $ 1,130.6 Total debt $ 1,342.7 $ 1,141.0 The Company is party to the Credit Agreement, a five-year revolving credit facility that, pursuant to the Amendment Agreement, currently matures on April 22, 2027 (the “Revolving Credit Facility”) and, through a wholly-owned subsidiary, a receivables financing 40 Table of Contents agreement dated April 28, 2017 (as amended, the “Receivables Financing Agreement”).
September 30, (In millions) 2023 2022 Cash and cash equivalents $ 67.0 $ 20.1 Short-term borrowings and current maturities of long-term debt $ — $ 12 Long-term debt $ 888.1 $ 1,330.7 Total debt $ 888.1 $ 1,342.7 41 Table of Contents The Company is party to the Credit Agreement, a five-year revolving credit facility that, pursuant to the Amendment Agreement, currently matures on April 22, 2027 (the “Revolving Credit Facility”) and, through a wholly-owned subsidiary, a receivables financing agreement dated April 28, 2017 (as amended, the “Receivables Financing Agreement”).
The Revolving Credit Facility replaced the previous $260.0 revolving credit facility under the Credit Agreement. The Company had no outstanding balance under the Revolving Credit Facility as of September 30, 2022 and September 30, 2021. There were $165.0 borrowings under the facility during the year ended September 30, 2022, of which, $165.0 were repaid during the same period.
The Revolving Credit Facility replaced the previous $260.0 revolving credit facility under the Credit Agreement. The Company had no outstanding balance under the Revolving Credit Facility as of September 30, 2023 and September 30, 2022. There were $33.5 million borrowings under the facility during the year ended September 30, 2023, of which, $33.5 million were repaid during the same period.
Cash Flows Information about our cash flows, by category, is presented in our statements of cash flows and is summarized below: Fiscal Year Ended September 30, (In millions) 2022 2021 Operating activities $ 106.9 $ 148.4 Investing activities $ (193.7 ) $ (158.7 ) Financing activities $ (16.8 ) $ (23.1 ) Free Cash Flow (1) $ 6.7 $ 96.7 (1) See “Non-GAAP Financial Measures” above for a reconciliation to the most directly comparable GAAP measure.
Cash Flows Information about our cash flows, by category, is presented in our statements of cash flows and is summarized below: Fiscal Year Ended September 30, (In millions) 2023 2022 Operating activities $ 129.9 $ 106.9 Investing activities $ (61.4 ) $ (193.7 ) Financing activities $ (21.6 ) $ (16.8 ) Free Cash Flow (1) $ 80.2 $ 6.7 (1) See “Non-GAAP Financial Measures” above for a reconciliation to the most directly comparable GAAP measure.
Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP.
Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted Weighted Average Number of Common Shares Outstanding and Free Cash Flow have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP.
The Company had $49.1 and $52.3 of letters of credits issued and outstanding as of September 30, 2022 and September 30, 2021, respectively. The weighted average interest rate on the Revolving Credit Facility was 2.3% for the years ended September 30, 2022 and 2021.
The Company had $42.6 million and $49.1 million of letters of credits issued and outstanding as of September 30, 2023 and September 30, 2022, respectively. The weighted average interest rate on the Revolving Credit Facility was 6.9% and 2.3% for the years ended September 30, 2023 and September 30, 2022, respectively.
Fiscal Year Ended September 30, (in millions) 2022 2021 Adjusted EBITDA Net income $ 14.0 $ 46.3 Plus: Interest expense, net 53.3 42.3 Income tax expense 5.6 4.6 Depreciation expense 98.9 84.7 Amortization expense 51.5 52.3 Business transformation and integration costs (a) 21.5 28.5 Offering-related expenses (b) 0.1 0.6 Equity-based compensation (c) 19.0 20.0 COVID-19 related expenses (d) 11.4 23.0 Debt extinguishment (e) 12.6 — Adjusted EBITDA $ 287.9 $ 302.3 Adjusted Net Income Net income 14.0 46.3 Plus: Amortization expense 51.5 52.3 Business transformation and integration costs (a) 21.5 28.5 Offering-related expenses (b) 0.1 0.6 Equity-based compensation (c) 19.0 20.0 COVID-19 related expenses (d) 11.4 23.0 Debt extinguishment (e) 12.6 — Income tax adjustment (f) (29.2 ) (44.4 ) Adjusted Net Income $ 100.9 $ 126.3 Free Cash Flow Cash flows from operating activities $ 106.9 $ 148.4 Minus: Capital expenditures 107.3 61.2 Plus: Proceeds from sale of property and equipment 7.1 9.5 Free Cash Flow $ 6.7 $ 96.7 (a) Business transformation and integration costs consist of (i) severance and related costs; (ii) business integration costs and (iii) information technology infrastructure, transformation costs, and other.
Fiscal Year Ended September 30, (in millions) 2023 2022 Adjusted EBITDA Net (loss) income $ (7.7 ) $ 14.0 Plus: Interest expense, net 97.4 53.3 Income tax expense 4.6 5.6 Depreciation expense 105.2 98.9 Amortization expense 44.5 51.5 Business transformation and integration costs (a) 23.7 21.5 Offering-related expenses (b) — 0.1 Equity-based compensation (c) 22.3 19.0 COVID-19 related expenses (d) 0.4 11.4 Debt extinguishment (e) 8.3 12.6 Adjusted EBITDA $ 298.7 $ 287.9 Adjusted Net Income Net (loss) income (7.7 ) 14.0 Plus: Amortization expense 44.5 51.5 Business transformation and integration costs (a) 23.7 21.5 Offering-related expenses (b) — 0.1 Equity-based compensation (c) 22.3 19.0 COVID-19 related expenses (d) 0.4 11.4 Debt extinguishment (e) 8.3 12.6 Income tax adjustment (f) (30.1 ) (29.2 ) Adjusted Net Income $ 61.4 $ 100.9 Free Cash Flow Cash flows from operating activities $ 129.9 $ 106.9 Minus: Capital expenditures 71.3 107.3 Plus: Proceeds from sale of property and equipment 21.6 7.1 Free Cash Flow $ 80.2 $ 6.7 (a) Business transformation and integration costs consist of (i) severance and related costs; (ii) business integration costs and (iii) information technology infrastructure, transformation and other costs.
Under the terms of the Amendment Agreement, the existing Credit Agreement (as amended prior to but not including under the Amendment Agreement, the “Amended Credit Agreement”) was amended to provide for: (i) a $1,200.0 seven-year term loan (the “Series B Term Loan”) and (ii) a $300.0 five-year revolving credit facility (the “Revolving Credit Facility”).
Under the terms of the Amendment Agreement, the existing Credit Agreement was amended to provide for: (i) a $1,200.0 million seven-year term loan (the “Series B Term Loan”) and (ii) a $300.0 million five-year revolving credit facility (the “Revolving Credit Facility”).
The decrease was principally due to a $4.2 million decrease in the amortization of historical intangible assets recognized in connection with the KKR Acquisition and the ValleyCrest Acquisition, based on the pattern consistent with expected future cash flows calculated at that time, partially offset by a $3.4 million increase in amortization expense for intangible assets recognized in connection with our acquired businesses subsequent to the ValleyCrest Acquisition.
The decrease was principally due to a $5.0 million decrease in the amortization of historical intangible assets recognized in connection with the KKR and ValleyCrest Acquisitions, based on the pattern consistent with expected future cash flows calculated at that time, and a $2.0 million decrease in amortization expense for intangible assets recognized in connection with businesses acquired subsequent to the ValleyCrest Acquisition.
Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are provided in addition to, and should not be considered as alternatives to, net income or any other performance measure derived in accordance with GAAP, and Free Cash Flow is provided in addition to, and should not be considered as an alternative to, cash flow from operating activities or any other measure derived in accordance with GAAP as a measure of our liquidity.
Free Cash Flow is provided in addition to, and should not be considered as an alternative to, cash flow from operating activities or any other measure derived in accordance with GAAP as a measure of our liquidity.
In addition to our GAAP financial measures, we review various non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share (“Adjusted EPS”), and Free Cash Flow.
In addition to our GAAP financial measures, we review various non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share (“Adjusted EPS”), Adjusted Weighted Average Number of Common Shares Outstanding, and Free Cash Flow.
Purchase obligations include commitments for various products and services made in the normal course of business to meet operational requirements, including the procurement of capital assets. As of September 30, 2022 the Company had $48.1 million of operational purchase obligations, with $39.6 million payable within twelve months.
Purchase obligations include commitments for various products and services made in the normal course of business to meet operational requirements, including the procurement of capital assets. As of September 30, 2023 the Company had $51.9 million of operational purchase obligations, with $40.8 million payable within twelve months.
The Company adopted the guidance in the first quarter of fiscal 2022. The adoption of ASU 2019-12 did not have a material impact on the Company's consolidated financial statements and disclosures.
The Company adopted the guidance in the first quarter of fiscal 2023. The adoption of ASU No. 2021-08 did not have a material impact on the Company’s consolidated financial statements and disclosures.
On June 22, 2022, the Company entered into the Third Amendment to the Receivables Financing Agreement (the “Third Amendment”) which extended the term through June 22, 2025 and increased the borrowing capacity to $275.0.
Receivables financing agreement On April 28, 2017, the Company, through a wholly-owned subsidiary, entered into a receivables financing agreement. On June 22, 2022, the Company entered into the Third Amendment to the Receivables Financing Agreement (the “Third Amendment”) which extended the term through June 22, 2025 and increased the borrowing capacity to $275.0 million.
Fiscal Year Ended September 30, (in millions) 2022 2021 Severance and related costs $ 1.6 $ 0.3 Business integration (g) 8.2 14.0 IT infrastructure, transformation, and other (h) 11.7 14.2 Business transformation and integration costs $ 21.5 $ 28.5 39 Table of Contents (b) Represents transaction related expenses incurred for IPO related litigation and completed or contemplated subsequent registration statements.
Fiscal Year Ended September 30, (in millions) 2023 2022 Severance and related costs (g) $ 8.9 $ 1.6 Business integration (h) 6.2 8.2 IT infrastructure, transformation, and other (i) 8.6 11.7 Business transformation and integration costs $ 23.7 $ 21.5 40 Table of Contents (b) Represents transaction related expenses incurred for completed or contemplated subsequent registration statements.
Other Expense (Income) Other expense was $15.5 million for the fiscal year ended September 30, 2022 compared to $2.7 million of income in the 2021 period.
Other Expense Other expense was $6.7 million for the fiscal year ended September 30, 2023 compared to $15.5 million in the 2022 period.
Maintenance Services Segment Results Fiscal Year Ended September 30, Percent Change (In millions) 2022 2021 2022 vs. 2021 Net Service Revenues $ 2,082.0 $ 1,982.9 5.0 % Segment Adjusted EBITDA $ 278.8 $ 299.6 (6.9 )% Segment Adjusted EBITDA Margin 13.4 % 15.1 % (170) bps Maintenance Services Net Service Revenues Maintenance Services net service revenues for the fiscal year ended September 30, 2022 increased by $99.1 million, or 5.0%, compared to the 2021 period.
Maintenance Services Segment Results Fiscal Year Ended September 30, Percent Change (In millions) 2023 2022 2023 vs. 2022 Net Service Revenues $ 2,066.5 $ 2,082.0 (0.7 )% Segment Adjusted EBITDA $ 277.9 $ 278.8 (0.3 )% Segment Adjusted EBITDA Margin 13.4 % 13.4 % - bps Maintenance Services Net Service Revenues Maintenance Services net service revenues for the fiscal year ended September 30, 2023 decreased by $15.5 million, or 0.7%, compared to the 2022 period.
As a percentage of revenue, selling, general and administrative expense decreased 60 basis points for the fiscal year ended September 30, 2022 to 19.3%, from 19.9% in the 2021 period. Amortization Expense Amortization expense for the fiscal year ended September 30, 2022 decreased $0.8 million, or 1.5%, to $51.5 million, from $52.3 million in the 2021 period.
As a percentage of revenue, selling, general and administrative expense decreased 40 basis points for the fiscal year ended September 30, 2023 to 18.9%, from 19.3% in the 2022 period. Amortization Expense Amortization expense for the fiscal year ended September 30, 2023 decreased $7.0 million, or 13.6%, to $44.5 million, from $51.5 million in the 2022 period.
We incurred $8.2 million of integration costs during the fiscal year ended September 30, 2022, of which $5.3 million related to acquisitions completed prior to fiscal 2022 and $2.9 million related to acquisitions completed during fiscal 2022.
We incurred $6.2 million of integration costs during the fiscal year ended September 30, 2023, of which $5.2 million related to acquisitions completed prior to fiscal 2023 and $1.0 million related to acquisitions completed during fiscal 2023.
Income Tax Expense For the fiscal year ended September 30, 2022, income tax expense increased $1.0 million, or 21.7%, to $5.6 million, compared to $4.6 million in the 2021 period.
Income Tax Expense For the fiscal year ended September 30, 2023, income tax expense decreased $1.0 million, or 17.9%, to $4.6 million, compared to $5.6 million in the 2022 period.
Selling, General and Administrative Expense Selling, general and administrative expense for the fiscal year ended September 30, 2022 increased $26.9 million, or 5.3%, to $534.9 million, from $508.0 million in the 2021 period.
Selling, General and Administrative Expense Selling, general and administrative expense for the fiscal year ended September 30, 2023 decreased $1.5 million, or 0.3%, to $533.4 million, from $534.9 million in the 2022 period.
Development Services Segment Results Fiscal Year Ended September 30, Percent Change (In millions) 2022 2021 2022 vs. 2021 Net Service Revenues $ 698.8 $ 574.9 21.6 % Segment Adjusted EBITDA $ 73.7 $ 65.2 13.0 % Segment Adjusted EBITDA Margin 10.5 % 11.3 % (80) bps Development Services Net Service Revenues Development Services net service revenues for the fiscal year ended September 30, 2022 increased $123.9 million, or 21.6%, compared to the 2021 period.
Development Services Segment Results Fiscal Year Ended September 30, Percent Change (In millions) 2023 2022 2023 vs. 2022 Net Service Revenues $ 758.0 $ 698.8 8.5 % Segment Adjusted EBITDA $ 82.8 $ 73.7 12.3 % Segment Adjusted EBITDA Margin 10.9 % 10.5 % 40 bps Development Services Net Service Revenues Development Services net service revenues for the fiscal year ended September 30, 2023 increased $59.2 million, or 8.5%, compared to the 2022 period.
There were no borrowings or repayments under the facility for the year ended September 30, 2021. There is a quarterly commitment fee equal to either 1 ⁄4 of 1% or 3 / 8 of 1% of the unused balance of the Revolving Credit Facility depending on the Company’s first lien net leverage ratio.
There is a quarterly commitment fee equal to either 1 ⁄4 of 1% or 3 / 8 of 1% of the unused balance of the Revolving Credit Facility depending on the Company’s first lien net leverage ratio.
Net Income For the fiscal year ended September 30, 2022, net income decreased by $32.3 million, to $14.0 million, from $46.3 million in the 2021 period. The decrease in net income was primarily due to the changes noted above.
Net (Loss) Income For the fiscal year ended September 30, 2023, net income decreased by $21.7 million, to a net loss of $7.7 million, from net income of $14.0 million in the 2022 period. The decrease in net income was primarily due to the changes noted above.
During the fiscal year ended September 30, 2022, the Company acquired eight businesses and paid approximately $93.1 million in aggregate consideration, net of cash acquired.
During the fiscal year ended September 30, 2023, the Company acquired three businesses and paid approximately $13.8 million in aggregate consideration, net of cash acquired.
These losses have been immaterial in prior periods. Changes in job performance, job conditions, and estimated profitability, including final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.
The full amount of anticipated losses on contracts is recorded as soon as such losses can be estimated. These losses have been immaterial in prior periods. Changes in job performance, job conditions, and estimated profitability, including final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.
If during the measurement period (a period not to exceed twelve months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period the amounts are determined. 43 Table of Contents Significant judgment is required to estimate the fair value of intangible assets and in assigning their respective useful lives.
If during the measurement period (a period not to exceed twelve months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period the amounts are determined.
In our seasonal markets, the performance of our snow removal services is correlated with the amount of snowfall and number of snowfall events in a given season. We benchmark our performance against ten- and thirty-year cumulative annual snowfall averages.
However, such weather events may also negatively impact our ability to deliver our contracted services or impact the timing of performance. In our seasonal markets, the performance of our snow removal services is correlated with the amount of snowfall and number of snowfall events in a given season. We benchmark our performance against ten- and thirty-year cumulative annual snowfall averages.
Nevertheless, changes in healthcare costs, accident frequency and claim severity can materially affect the estimates for these liabilities. 45 Table of Contents Equity-based Compensation We account for equity-based compensation plans under the fair value recognition and measurement provisions in accordance with applicable accounting standards, which require all equity-based payments to employees and non-employees, including grants of stock options, to be measured based on the grant date fair value of the awards.
Equity-based Compensation We account for equity-based compensation plans under the fair value recognition and measurement provisions in accordance with applicable accounting standards, which require all equity-based payments to employees and non-employees, including grants of stock options, to be measured based on the grant date fair value of the awards.
All amounts outstanding under the Receivables Financing Agreement are collateralized by 42 Table of Contents substantially all of the accounts receivable and unbilled revenue of the Company. During the year ended September 30, 2022, the Company borrowed $392.0 against the capacity and voluntarily repaid $374.4.
All amounts outstanding under the Receivables Financing Agreement are collateralized by substantially all of the accounts receivable and unbilled revenue of the Company. During the year ended September 30, 2023, the Company borrowed $549.5 million against the capacity and voluntarily repaid $554.5 million.
An original issue discount of $12.0 was incurred when the Series B Term Loan was issued and is being amortized using the effective interest method over the life of the debt, resulting in an effective yield of 3.42%.
An original issue discount of $12.0 was incurred when the Series B Term Loan was issued and is being amortized using the effective interest method over the life of the debt, resulting in an effective yield of 3.42%. On August 28, 2023, the Company voluntarily repaid $450.0 million of the amount outstanding under the Company’s Amendment Agreement.
The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The Company adopted the guidance in the first quarter of fiscal 2021.
The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The Company adopted the guidance in the first quarter of fiscal 2021. The adoption of ASU No. 2018-13 did not have a material impact on the Company’s consolidated financial statements and disclosures.
Corporate expenses, including corporate executive compensation, finance, legal and information technology, are included in consolidated selling, general and administrative expense and not allocated to the business segments.
Corporate expenses, including corporate executive compensation, finance, legal and information technology, are included in consolidated selling, general and administrative expense and not allocated to the business segments. Amortization Expense Amortization expense consists of the periodic amortization of intangible assets, including customer relationships, non-compete agreements and trademarks.
We evaluate the performance of our segments on Net Service Revenues, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin (Segment Adjusted EBITDA as a percentage of Net Service Revenues). Segment Adjusted EBITDA is indicative of operational performance and ongoing profitability. Our management closely monitors Segment Adjusted EBITDA to evaluate past performance and identify actions required to improve profitability.
Segment Adjusted EBITDA is indicative of operational performance and ongoing profitability. Our management closely monitors Segment Adjusted EBITDA to evaluate past performance and identify actions required to improve profitability.
Adjusted EBITDA Adjusted EBITDA decreased $14.4 million for the fiscal year ended September 30, 2022, to $287.9 million, from $302.3 million in the 2021 period. Adjusted EBITDA as a percent of revenue was 10.4% and 11.8% for the fiscal year ended September 30, 2022 and 2021, respectively.
Adjusted EBITDA Adjusted EBITDA increased $10.8 million for the fiscal year ended September 30, 2023, to $298.7 million, from $287.9 million in the 2022 period. Adjusted EBITDA as a percentage of revenue was 10.6% and 10.4% for the fiscal years ended September 30, 2023 and 2022, respectively.
Revolving credit facility The Company has a five-year $300 revolving credit facility (the “Revolving Credit Facility”) that matures on April 22, 2027 and bears interest at a rate per annum of Term SOFR plus a margin ranging from 2.00% to 2.50%, or ABR plus a margin ranging from 1.00 to 1.50%, subject to SOFR and ABR floors of 0.00% and 1.00%, respectively, with the margin on the Revolving Credit Facility determined based on the Company’s first lien net leverage ratio.
The excess cash flow calculation did not result in any required payment due for the periods ended September 30, 2023, September 30, 2022, and September 30, 2021. 43 Table of Contents Revolving credit facility The Company has a five-year $300 million revolving credit facility that matures on April 22, 2027 and bears interest at a rate per annum of Term SOFR plus a margin ranging from 2.00% to 2.50%, or ABR plus a margin ranging from 1.00 to 1.50%, subject to SOFR and ABR floors of 0.00% and 1.00%, respectively, with the margin on the Revolving Credit Facility determined based on the Company’s first lien net leverage ratio.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
These purchase obligation amounts represent only those items for which we are contractually obligated as of September 30, 2023 . 44 Table of Contents Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Development Services Development Services revenue is primarily recognized over time using the cost-to-cost input method, measured by the percentage of cost incurred to date to the estimated total cost for each contract, which we believe to be the best measure of progress. The full amount of anticipated losses on contracts is recorded as soon as such losses can be estimated.
Fees for enhancement services are typically billed as the services are performed. 46 Table of Contents Development Services Development Services revenue is primarily recognized over time using the cost-to-cost input method, measured by the percentage of cost incurred to date to the estimated total cost for each contract, which we believe to be the best measure of progress.
While integration costs vary based on factors specific to each acquisition, such costs are primarily comprised of one-time employee retention costs, employee onboarding and training costs, and fleet and uniform rebranding costs. We typically anticipate integration costs to represent approximately 7%-9% of the acquisition price, and to be incurred within 12 months of acquisition completion.
While integration costs vary based on factors specific to each acquisition, such costs are primarily comprised of one-time employee retention costs, employee onboarding and training costs, and fleet and uniform rebranding costs.
Risk Management and Insurance We carry general liability, auto liability, workers’ compensation, professional liability, directors’ and officers’ liability, and employee health care insurance policies. In addition, we carry umbrella liability insurance policies to cover claims over the liability limits contained in the primary policies.
Risk Management and Insurance We carry general liability, auto liability, workers’ compensation and employee health care insurance policies. In addition, we carry other reasonable and customary insurance policies for a Company of our size and scope, as well as umbrella liability insurance policies to cover claims over the liability limits contained in the primary policies.
Risk Factors” and the “Special Note Regarding Forward-Looking Statements” sections of this Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Risk Factors” and the “Special Note Regarding Forward-Looking Statements” sections of this Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. 32 Table of Contents Overview Our Company We are the largest provider of commercial landscaping services in the United States, with revenues approximately 5 times those of our next largest commercial landscaping competitor.
We believe that the adjustments applied in presenting Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that we do not expect to continue at the same level in the future. 34 Table of Contents We believe Free Cash Flow is a helpful supplemental measure to assist us and investors in evaluating our liquidity.
We believe that the adjustments applied in presenting Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and Adjusted Weighted Average Number of Common Shares Outstanding are appropriate to provide additional information to investors about certain material non-cash or non-recurring items that we do not expect to continue at the same level in the future.
We typically use an income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets.
The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management, but are inherently uncertain. We typically use an income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets.
We operate through a differentiated and integrated national service model which systematically delivers services at the local level by combining our network of over 290 branches with a qualified 32 Table of Contents service partner network.
We provide commercial landscaping services ranging from landscape maintenance and enhancements to tree care and landscape development. We operate through a differentiated and integrated national service model which systematically delivers services at the local level by combining our network of over 280 branches with a qualified service partner network.
Recently Issued Accounting Pronouncements Measurement of Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments , which was amended in May 2019 by ASU No. 2019-04, Codification Improvements to Topic 326, Financial Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief .
When facts and circumstances change (including a resolution of an issue or statute of limitations expiration), these reserves are adjusted through the provision for income taxes in the period of change. 47 Table of Contents Recently Issued Accounting Pronouncements Measurement of Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments , which was amended in May 2019 by ASU No. 2019-04, Codification Improvements to Topic 326, Financial Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief .
Free Cash Flow represents cash flows from operating activities less capital expenditures, net of proceeds from sales of property and equipment. We believe Free Cash Flow is useful to provide additional information to assess our ability to pursue business opportunities and investments and to service our debt.
We believe Free Cash Flow is useful to provide additional information to assess our ability to pursue business opportunities and investments and to service our debt.
Segment Results We classify our business into two segments: Maintenance Services and Development Services. Our corporate operations are not allocated to the segments and are not discussed separately as any results that had a significant impact on operating results are included in the consolidated results discussion above.
Our corporate operations are not allocated to the segments and are not discussed separately as any results that had a significant impact on operating results are included in the consolidated results discussion above. 38 Table of Contents We evaluate the performance of our segments on Net Service Revenues, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin (Segment Adjusted EBITDA as a percentage of Net Service Revenues).
In markets that do not have a year-round growing season, which we refer to as our seasonal markets, the demand for our landscape maintenance services decreases during the winter months.
In markets that do not have a year-round growing season, which we refer to as our seasonal markets, the demand for our landscape maintenance services decreases during the winter months. Typically, our revenues and net income have been higher in the spring and summer seasons, which correspond with the third and fourth quarters of our fiscal year ended September 30.
In our Development Services business, we are typically hired by general contractors, with whom we maintain strong relationships as a result of our superior technical and project management capabilities. We believe the quality of our work is also well-regarded by our end-customers, some of whom directly request that their general contractors utilize our services when outsourcing their landscape development projects.
In our Development Services business, we are typically hired by general contractors with whom we maintain strong relationships as a result of our superior technical and project management capabilities.
Extreme weather events such as hurricanes and tropical storms can result in a positive impact to our business in the form of increased enhancement services revenues related to cleanup and other services. However, such weather events may also negatively impact our ability to deliver our contracted services or impact the timing of performance.
These less predictable weather patterns can impact both our revenues and our costs, especially from quarter to quarter, but also from year to year in some cases. Extreme weather events such as hurricanes and tropical storms can result in a positive impact to our business in the form of increased enhancement services revenues related to cleanup and other services.
Cash Flows used in Investing Activities Net cash used in investing activities was $193.7 million in the fiscal year ended September 30, 2022, an increase of $35.0 million compared to $158.7 million for the 2021 period.
This was partially offset by an increase in cash used by accounts receivable and an increase in net loss. Cash Flows used in Investing Activities Net cash used in investing activities was $61.4 million in the fiscal year ended September 30, 2023, a decrease of $132.3 million compared to $193.7 million for the 2022 period.
For example, snow events in the winter, hurricane-related cleanup in the summer and fall, and the effects of abnormally high rainfall or drought in a given market may impact our services. These less predictable weather patterns can impact both our revenues and our costs, especially from quarter to quarter, but also from year to year in some cases.
Weather Conditions Weather may impact the timing of performance of landscape maintenance and enhancement services and progress on development projects from quarter to quarter. For example, snow events in the winter, hurricane-related cleanup in the summer and fall, and the effects of abnormally high rainfall or drought in a given market may impact our services.

… 77 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−1 removed2 unchanged
Biggest changeA ten percent change in fuel prices would have resulted in a change of approximately $7.5 million in our annual fuel cost inclusive of the impact from the hedge contracts which expired on December 31, 2021. 47 Table of Contents We continue to monitor our exposure and the current pricing environment and may execute new fuel-based derivative instruments in the future.
Biggest changeDuring the year ended September 30, 2023 we purchased approximately 18.8 million gallons of fuel. A ten percent change in fuel prices would have resulted in a change of approximately $7.6 million in our annual fuel cost. We continue to monitor our exposure and the current pricing environment and may execute new fuel-based derivative instruments in the future.
See Note 10 “Fair Value Measurements and Derivative Instruments” to our audited consolidated financial statements included elsewhere in this Form 10-K.
See Note 10 “Fair Value Measurements and Derivative Instruments” to our audited consolidated financial statements included elsewhere in this Form 10-K.
Based on the debt outstanding and hedge contracts in place for the year ended September 30, 2022, a 100 basis point change in interest rates on our variable rate debt would result in a change to our fiscal 2022 interest expense by approximately $7.6 million inclusive of the impact from the active hedge contracts.
Based on the debt outstanding and hedge contracts in place for the year ended September 30, 2023, a 100 basis point change in interest rates on our variable rate debt would result in a change to our fiscal 2023 interest expense by approximately $5.7 million inclusive of the impact from the active hedge contracts.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk Interest Rate Risk We are exposed to interest rate risk as a result of our variable rate borrowings. We manage our exposure to interest rate risk by using pay-fixed interest rate swaps as cash flow hedges of a portion of our variable rate debt.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk Interest Rate Risk We are exposed to interest rate risk as a result of our variable rate borrowings. We manage our exposure to interest rate risk by using pay-fixed interest rate swap and collar contracts as cash flow hedges of a portion of our variable rate debt.
Substantially all of our outstanding variable rate debt was incurred under the Amended Credit Agreement and the Receivables Financing Agreement. Each of these loans bears interest based on SOFR plus a spread. We use interest rate swaps to offset our exposure to interest rate movements.
Substantially all of our outstanding variable rate debt was incurred under the Amended Credit Agreement and the Receivables Financing Agreement. Each of these loans bears interest based on SOFR plus a spread. 48 Table of Contents We use interest rate swap and collar contracts to offset our exposure to interest rate movements.
We manage our exposure through the execution of a documented hedging strategy. We have historically entered into fuel swap contracts to mitigate the financial impact of fluctuations in fuel prices when appropriate. We do not currently have any open fuel-based derivative instruments. During the year ended September 30, 2022 we purchased approximately 18.3 million gallons of fuel.
We manage our exposure through the execution of a documented hedging strategy. We have historically entered into fuel swap contracts to mitigate the financial impact of fluctuations in fuel prices when appropriate. We did not have any open fuel-based derivative instruments during the year-ended September 30, 2023.
We have historically targeted hedging between 30% and 50% of the principal amount outstanding under our Series B Term Loan. As of September 30, 2022, we had variable rate debt outstanding of $1.35 billion at a weighted average interest rate of 3.6% for the year ended September 30, 2022, excluding the impact of our outstanding hedge agreements.
We have historically targeted hedging between 30% and 50% of the principal amount outstanding under our Series B Term Loan. As of September 30, 2023, we had variable rate debt outstanding of $894.7 million at a weighted average interest rate of 7.5% for the year ended September 30, 2023, excluding the impact of our outstanding hedge agreements.
At September 30, 2022, we were a fixed rate payer on fixed-floating interest rate swap contracts that effectively fixed the LIBOR-based index which serves as a proxy for the SOFR-based index used to determine the interest rates charged on our SOFR-based variable rate borrowings.
These outstanding interest rate contracts qualify and are designated as cash flow hedges of forecasted SOFR-based interest payments. At September 30, 2023, we were a fixed rate payer on fixed-floating interest rate swap and collar contracts that effectively fixed (swap) or limited (collar) the SOFR-based index used to determine the interest rates charged on our SOFR-based variable rate borrowings.
Removed
These outstanding interest rate swaps qualify and are designated as cash flow hedges of forecasted SOFR-based interest payments.

Other BV 10-K year-over-year comparisons