bv-10q_20191231.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Registrant’s Common Stock outstanding as of January 31, 2020 was 104,845,327.

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements” within the meaning of the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts included in this Form 10-Q, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends and other information, may be forward-looking statements.

Words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” or “anticipates,” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, or guarantees of future performance and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth under the heading “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Some of the key factors that could cause actual results to differ from our expectations include risks related to:

We caution you that the risks, uncertainties, and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits, or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances, any change in assumptions, beliefs or expectations or any change in circumstances upon which any such forward-looking statements are based, except as required by law.

	December 31, 2019			September 30, 2019
Assets
Current assets:
Cash and cash equivalents	$	10.3		$	39.1
Accounts receivable, net		363.9			333.7
Unbilled revenue		84.9			107.6
Inventories		28.4			26.5
Other current assets		55.1			44.5
Total current assets		542.6			551.4
Property and equipment, net		268.6			272.4
Intangible assets, net		242.2			251.5
Goodwill		1,823.0			1,810.4
Operating lease assets		65.0			—
Other assets		45.5			42.9
Total assets	$	2,986.9		$	2,928.6
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	109.3		$	99.8
Current portion of long-term debt		10.4			10.4
Deferred revenue		66.5			49.1
Current portion of self-insurance reserves		41.7			37.4
Accrued expenses and other current liabilities		111.5			136.0
Current portion of operating lease liabilities		23.3			—
Total current liabilities		362.7			332.7
Long-term debt, net		1,132.5			1,134.2
Deferred tax liabilities		60.3			64.4
Self-insurance reserves		84.7			87.1
Long-term operating lease liabilities		48.0			—
Other liabilities		15.6			26.4
Total liabilities		1,703.8			1,644.8
Stockholders’ equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued or outstanding as of December 31, 2019 and September 30, 2019		—			—
Common stock, $0.01 par value; 500,000,000 shares authorized; 104,845,000 and 104,700,000 shares issued and outstanding as of December 31, 2019 and September 30, 2019, respectively		1.0			1.0
Treasury stock, at cost; 91,000 and 52,000 shares as of December 31, 2019 and September 30, 2019, respectively		(1.7	)		(1.0	)
Additional paid-in-capital		1,452.3			1,441.8
Accumulated deficit		(158.9	)		(146.3	)
Accumulated other comprehensive loss		(9.6	)		(11.7	)
Total stockholders’ equity		1,283.1			1,283.8
Total liabilities and stockholders’ equity	$	2,986.9		$	2,928.6

The accompanying notes are an integral part of these unaudited consolidated financial statements.

	Three Months Ended December 31,
	2019			2018
Net service revenues	$	570.7		$	526.0
Cost of services provided		427.7			394.1
Gross profit		143.0			131.9
Selling, general and administrative expense		130.3			110.2
Amortization expense		13.5			15.1
(Loss) income from operations		(0.8	)		6.6
Other income (expense)		0.7			(1.5	)
Interest expense		17.4			17.1
(Loss) before income taxes		(17.5	)		(12.0	)
Income tax benefit		4.9			3.2
Net (loss)	$	(12.6	)	$	(8.8	)
(Loss) per share:
Basic and diluted	$	(0.12	)	$	(0.09	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

	Common Stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Treasury			Total Stockholders’
	Shares		Amount		Capital		Deficit			Loss			Stock			Equity
Balance, September 30, 2019		104.7	$	1.0	$	1,441.8	$	(146.3	)	$	(11.7	)	$	(1.0	)	$	1,283.8
Net (loss)		—		—		—		(12.6	)		—			—			(12.6	)
Other comprehensive income, net of tax		—		—		—		—			2.1			—			2.1
Capital contributions and issuance of common stock		0.2		—		2.3		—			—			—			2.3
Equity-based compensation		—		—		8.2		—			—			—			8.2
Repurchase of common stock and distributions		—		—		—		—			—			(0.7	)		(0.7	)
Balance, December 31, 2019		104.9	$	1.0	$	1,452.3	$	(158.9	)	$	(9.6	)	$	(1.7	)	$	1,283.1

	Common Stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Treasury			Total Stockholders’
	Shares		Amount		Capital		Deficit			Loss			Stock			Equity
Balance, September 30, 2018		104.5	$	1.0	$	1,426.3	$	(189.6	)	$	(10.4	)		—		$	1,227.3
Net (loss)		—		—		—		(8.8	)		—			—			(8.8	)
Other comprehensive loss, net of tax		—		—		—		—			(2.5	)		—			(2.5	)
Capital contributions and issuance of common stock		0.5		—		—		—			—			—			—
Equity-based compensation		—		—		5.9		—			—			—			5.9
Adoption of ASC 606		—		—		—		(1.1	)		—			—			(1.1	)
Balance, December 31, 2018		105.0	$	1.0	$	1,432.2	$	(199.5	)	$	(12.9	)	$	—		$	1,220.8

The accompanying notes are an integral part of these unaudited consolidated financial statements.

	Three Months Ended December 31,
	2019			2018
Cash flows from operating activities:
Net (loss)	$	(12.6	)	$	(8.8	)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Depreciation		20.2			19.3
Amortization of intangible assets		13.5			15.1
Amortization of financing costs and original issue discount		0.9			0.9
Deferred taxes		(4.9	)		(3.8	)
Equity-based compensation		8.2			5.9
Other non-cash activities, net		2.3			0.2
Change in operating assets and liabilities:
Accounts receivable		(29.6	)		18.3
Unbilled and deferred revenue		40.3			9.6
Inventories		(1.7	)		(1.2	)
Other operating assets		(12.4	)		(0.5	)
Accounts payable and other operating liabilities		(16.9	)		(48.6	)
Net cash provided by operating activities		7.3			6.4
Cash flows from investing activities:
Purchase of property and equipment		(14.5	)		(17.3	)
Proceeds from sale of property and equipment		1.0			1.8
Business acquisitions, net of cash acquired		(18.4	)		(1.9	)
Other investing activities, net		—			0.2
Net cash used in investing activities		(31.9	)		(17.2	)
Cash flows from financing activities:
Repayments of finance lease obligations		(1.5	)		(1.5	)
Repayments of debt		(12.6	)		(5.2	)
Proceeds from receivables financing agreement		10.0			—
Other financing activities, net		(0.1	)		—
Net cash used in financing activities		(4.2	)		(6.7	)
Net change in cash and cash equivalents		(28.8	)		(17.5	)
Cash and cash equivalents, beginning of period		39.1			35.2
Cash and cash equivalents, end of period	$	10.3		$	17.7

The accompanying notes are an integral part of these unaudited consolidated financial statements.

BrightView Holdings, Inc. (the “Company” and, collectively with its consolidated subsidiaries, “BrightView”) provides landscape maintenance and enhancements, landscape development, snow removal and other landscape related services for commercial customers throughout the United States. BrightView is aligned into two reportable segments: Maintenance Services and Development Services. Prior to its initial public offering completed in July 2018 (the “IPO”), the Company was a wholly-owned subsidiary of BrightView Parent L.P. (“Parent”), an affiliate of KKR & Co. Inc. (“KKR”). The Parent and Company were formed through a series of transactions entered into by KKR to acquire the Company on December 18, 2013 (the “KKR Acquisition”). The Parent was dissolved in August 2018 following the IPO.

These consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim reporting and are unaudited.

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, including normal, recurring accruals that are necessary for a fair presentation of the Company’s operations for the periods presented in conformity with GAAP. All intercompany activity and balances have been eliminated from the consolidated financial statements. The consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year.

The consolidated balance sheet as of September 30, 2019, presented herein, has been derived from the Company’s audited consolidated financial statements as of and for the fiscal year ended September 30, 2019, but does not include all disclosures required by GAAP, for annual financial statements. For a more complete discussion of the Company’s accounting policies and certain other information refer to the audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2019, filed with the Securities and Exchange Commission (“SEC”).

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. On an ongoing basis, management reviews its estimates, including those related to allowances for doubtful accounts, revenue recognition, self-insurance reserves, estimates related to the Company’s assessment of goodwill for impairment, useful lives for depreciation and amortization, realizability of deferred tax assets, and litigation based on currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from estimates.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The updated accounting guidance requires lessees to recognize all leases on their balance sheet as a right-of-use asset and a lease liability with the exception of short-term leases. For income statement purposes, the criteria for recognition, measurement and presentation of expense is largely similar to previous guidance, but without the requirement to use bright-line tests in the determination of lease classification. In July 2018, the FASB issued ASU No. 2018-11, Leases: Targeted Improvements, which allows entities the option to adopt this standard using the modified retrospective transition method and include required disclosures for prior periods. This update added a transition option which allows for the recognition of a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption without recasting the consolidated financial statements in periods prior to adoption.

On October 1, 2019, the Company elected to adopt the standard using the modified retrospective approach applied to lease arrangements that were in place on the date of initial adoption. Results for reporting periods beginning October 1, 2019 are presented under the new standard, while prior-period amounts are not adjusted and continue to be reported in accordance with historical accounting under ASC 840, Leases.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. As an accounting policy election, the Company excluded short-term leases (term of 12 months or less) from the balance sheet and accounts for non-lease and lease components in a contract as a single component for all asset classes.

The Company recorded a lease liability of $76.3 and a corresponding right-of-use asset of $70.6 upon adoption of the new lease standard at October 1, 2019. The right-of-use asset and lease liability recorded as of October 1, 2019 include, respectively, amounts previously classified as deferred rent obligations and exit/disposal liabilities, and prepaid rent, totaling approximately $5.7. The Company’s finance lease assets and liabilities, which are disclosed in Note 11 “Leases”, remain largely unchanged under the lease accounting standard. The standard did not have a material impact on the Company’s results of operations or liquidity. The guidance did not have a material impact on its debt covenant compliance.

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. These ASUs require entities to account for expected credit losses on financial instruments including trade receivables. The guidance is effective for the Company in the first quarter of fiscal 2021 and early adoption is permitted. The Company is currently evaluating the impact of the updated guidance on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reason for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. 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 guidance is effective for the Company in the first quarter of fiscal 2021. Early adoption is permitted for any removed or modified disclosures and adoption of the additional disclosures can be delayed until the effective date. The Company does not currently expect the adoption of ASU 2018-13 to have a material impact on its consolidated financial statements and disclosures.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740; Simplifying the Accounting for Income Taxes which simplifies the accounting for income taxes. The ASU removes specified exceptions and adds requirements to simplify the accounting for income taxes. The guidance is effective for the Company in the first quarter of fiscal 2022 and early adoption is permitted. The Company is currently evaluating the impact of the updated guidance on its consolidated financial statements.

The Company’s revenue is generated from Maintenance Services and Development Services. The Company generally recognizes revenue from the sale of services as the services are performed, typically ratably over the term of the contract(s), which the Company believes to be the best measure of progress. The Company recognizes revenues as it transfers control of products and services to its customers. The Company recognizes revenue in an amount reflecting the total consideration it expects to receive from the customer. Revenue is recognized according to the following five step model: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenues when a performance obligation is satisfied. The Company determined that for contracts containing multiple performance obligations, stand-alone selling price is readily determinable for each performance obligation and therefore allocation of the transaction price to multiple performance obligations is not necessary. The transaction price will include estimates of variable consideration, such as returns and provisions for doubtful accounts and sales incentives, to the extent it is probable that a significant reversal of revenue recognized will not occur. In all cases, when a sale is recorded by the Company, no significant uncertainty exists surrounding the purchaser’s obligation to pay.

The Company’s Maintenance Services revenues are generated primarily through landscape maintenance services and snow removal services. 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 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. 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 the Company’s recurring fixed fee landscape maintenance and snow removal services are recorded under the series guidance. The right to invoice practical expedient, defined below, 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. 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.

For 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. 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 following table presents the Company’s reportable segment revenues, disaggregated by revenue type. The Company disaggregates revenue from contracts with customers into major services lines. The Company has determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in the business segment reporting information in Note 14 “Segments”, the Company’s reportable segments are Maintenance Services and Development Services.

Remaining performance obligations represent the estimated revenue expected to be recognized in the future related to performance obligations which are fully or partially unsatisfied at the end of the period.

As of December 31, 2019, the estimated future revenues for remaining performance obligations that are part of a contract that has an original expected duration of greater than one year was approximately $388.2. The Company expects to recognize revenue on 62% of the remaining performance obligations over the next 12 months and an additional 38% over the 12 months thereafter.

In accordance with the disclosure provisions of ASU 2014-09, the paragraph above excludes the following, i) estimated future revenues for performance obligations that are part of a contract that has an original expected duration of one year or less, ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance and iii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

When a contract results in revenue being recognized in excess of the amount the Company has invoiced or has the right to invoice to the customer, a contract asset is recognized. Contract assets are transferred to accounts receivable, net when the rights to the consideration become unconditional. Contract assets are presented as Unbilled revenue on the consolidated balance sheets.

Contract liabilities consist of payments received from customers, or such consideration that is contractually due, in advance of providing the product or performing services such that control has not passed to the customer. Contract liabilities are presented as Deferred revenue on the consolidated balance sheets.

Changes in deferred revenue for the three month period ended December 31, 2019 were as follows:

There were $33.8 of amounts billed during the period and $11.1 of additions to our unbilled revenue balance during the three month period from October 1, 2019 to December 31, 2019.

The Company offers certain interest-free contracts to customers where payments are received over a period not exceeding one year. Additionally, certain Maintenance Services and Development Services customers may pay in advance for services. The Company does not adjust the promised amount of consideration for the effects of these financing components. At contract inception, the period of time between the performance of services and the customer payment is one year or less.

As permitted under the practical expedient available under ASU No. 2014-09, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which we have the right to invoice for services performed.

Accounts receivable of $363.9 and $333.7, is net of an allowance for doubtful accounts of $5.6 and $5.0 and includes amounts of retention on incomplete projects to be completed within one year of $47.8 and $43.2 at December 31, 2019 and September 30, 2019, respectively.

	Useful Life	December 31, 2019		September 30, 2019
Land	—	$	54.1	$	54.1
Buildings and leasehold improvements	2-40 yrs.		42.0		40.1
Operating equipment	2-7 yrs.		197.1		199.8
Transportation vehicles	3-7 yrs.		240.3		236.5
Office equipment and software	3-10 yrs.		61.4		63.3
Construction in progress	—		8.3		8.2
Property and equipment			603.2		602.0
Less: Accumulated depreciation			334.6		329.6
Property and equipment, net		$	268.6	$	272.4

Construction in progress includes costs incurred for software and other assets that have not yet been placed in service. Depreciation expense related to property and equipment was $20.2 and $19.3 for the three months ended December 31, 2019 and 2018, respectively.

Identifiable intangible assets consist of acquired customer contracts and relationships, trademarks and non-compete agreements. Amortization expense related to intangible assets was $13.5 and $15.1 for the three months ended December 31, 2019 and 2018, respectively. These assets are amortized over their estimated useful lives of which the reasonableness is continually evaluated by the Company.

Intangible assets as of December 31, 2019 and September 30, 2019 consisted of the following:

		December 31, 2019					September 30, 2019
	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Customer relationships	6-21 yrs.	$	643.8	$	(406.6	)	$	639.6	$	(393.3	)
Trademarks	4-12 yrs.		4.8		(1.7	)		4.8		(1.7	)
Non-compete agreements	5 yrs.		2.7		(0.8	)		2.7		(0.6	)
Total intangible assets		$	651.3	$	(409.1	)	$	647.1	$	(395.6	)

The following is a summary of the activity for the periods ended September 30, 2019 and December 31, 2019 for goodwill:

In connection with the KKR Acquisition, the Company and a group of financial institutions entered into a credit agreement (the “Credit Agreement”) dated December 18, 2013. The Credit Agreement consisted of seven-year $1,460.0 term loans (“First Lien Term Loans”) and a five-year $210.0 revolving credit facility. All amounts outstanding under the Credit Agreement were collateralized by substantially all of the assets of the Company.

On August 15, 2018, the Company entered into Amendment No. 5 to the Credit Agreement (the “Amended Credit Agreement”). Under the terms of the Amended Credit Agreement, the Credit Agreement was amended to provide for: (i) a $1,037.0 seven-year term loan (the “Series B Term Loan”) and (ii) a $260.0 five-year revolving credit facility. The Company used the net proceeds from the Series B Term Loan to repay all amounts outstanding under the Company’s First Lien Term Loans. An original discount of $2.8 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 2.5%. Debt repayments for the Series B Term Loan consisted of contractual payments per the Credit Agreement and totaled $2.6 for the three month period ended December 31, 2019.

The Company has a five-year $260.0 revolving credit facility (the “Revolving Credit Facility”) that matures on August 15, 2023 and bears interest at a rate per annum of LIBOR plus a margin ranging from 2.00% to 2.50%, with the margin determined based on the Company’s first lien net leverage ratio. The Revolving Credit Facility replaces the previous $210.0 revolving credit facility under the Credit Agreement. The Company had no outstanding balance under the Revolving Credit Facility as of December 31, 2019 and September 30, 2019. There were no borrowing or repayments under the facility for the three months ended December 31, 2019 and December 31, 2018.

On April 28, 2017, the Company, through a wholly-owned subsidiary, entered into a receivables financing agreement (the “Receivables Financing Agreement”). The Receivables Financing Agreement provided a borrowing capacity of $175.0 through April 27, 2020. On February 21, 2019, the Company entered into the First Amendment to the Receivables Financing Agreement (the "Amendment Agreement") which increased the borrowing capacity to $200.0 and extended the term through February 20, 2022. All amounts outstanding under the Receivables Financing Agreement are collateralized by substantially all of the accounts receivables and unbilled revenue of the Company. During the three months ended December 31, 2019, the Company borrowed $10.0 against the capacity and voluntarily repaid $10.0. During the three months ended December 31, 2018, there was no activity under the Receivables Financing Agreement.

The following are the scheduled maturities of long-term debt, which do not include any estimated excess cash flow payments:

The Company has estimated the fair value of its long-term debt to be approximately $1,169.1 and $1,166.6 as of December 31, 2019 and September 30, 2019, respectively. Fair value is based on market bid prices around period-end (Level 2 inputs).

Fair value is defined as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

The following hierarchy for inputs used in measuring fair value should maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available:

The carrying amounts shown for the Company’s cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to the short-term maturity of those instruments. The valuation is based on settlements of similar financial instruments all of which are short-term in nature and are generally settled at or near cost.

A non-qualified deferred compensation plan is available to certain executives. Under this plan, participants may elect to defer up to 70% of their compensation. The Company invests the deferrals in participant-selected diversified investments that are held in a Rabbi Trust and which are classified within Other assets on the consolidated balance sheets. The fair value of the investments held in the Rabbi Trust is based on the quoted market prices of the underlying mutual fund investments. These investments are based on the participants’ selected investments, which represent the underlying liabilities to the participants in the non-qualified deferred compensation plan.

The Company’s objective in entering into derivative transactions is to manage its exposure to interest rate movements associated with its variable rate debt and changes in fuel prices. The Company recognizes derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. The fair values of the derivative financial instruments are determined using widely accepted valuation techniques including discounted cash flow analysis based on the expected cash flows of each derivative. Although the Company has determined that the significant inputs, such as interest yield curve and discount rate, used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s counterparties and its own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2019 and September 30, 2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The following tables summarize the financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and September 30, 2019:

	December 31, 2019
	Carrying Value		Level 1		Level 2		Level 3
Other assets:
Investments held by Rabbi Trust	$	11.8	$	11.8	$	—	$	—
Total assets	$	11.8	$	11.8	$	—	$	—
Accrued expenses and other current liabilities:
Interest rate swap contracts	$	13.8	$	—	$	13.8	$	—
Other liabilities:
Obligation to Rabbi Trust		11.8		11.8		—		—
Total liabilities	$	25.6	$	11.8	$	13.8	$	—

	September 30, 2019
	Carrying Value		Level 1		Level 2		Level 3
Other assets:
Investments held by Rabbi Trust	$	11.1	$	11.1	$	—	$	—
Total assets	$	11.1	$	11.1	$	—	$	—
Accrued expenses and other current liabilities:
Interest rate swap contracts	$	6.3	$	—	$	6.3	$	—
Other liabilities:
Interest rate swap contracts		10.9		—		10.9		—
Obligation to Rabbi Trust

Delaware	46-4190788
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
980 Jolly Road Blue Bell, Pennsylvania	19422
(Address of principal executive offices)	(Zip Code)

Title of Each Class		Trading Symbol		Name of exchange on which registered
Common Stock, Par Value $0.01 Per Share		BV		New York Stock Exchange

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive (Loss) Income	3
	Consolidated Statements of Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures		35

	Three Months Ended December 31,
	2019			2018
Landscape Maintenance	$	363.3		$	344.5
Snow Removal		55.6			48.0
Maintenance Services		418.9			392.5
Development Services		152.8			134.4
Eliminations		(1.0	)		(0.9	)
Net service revenues	$	570.7		$	526.0

	Deferred Revenue
Balance, October 1, 2019	$	49.1
Recognition of revenue		(214.7	)
Deferral of revenue		232.1
Balance, December 31, 2019	$	66.5

	December 31, 2019		September 30, 2019
Finished products	$	7.1	$	6.8
Semi-finished products		10.5		11.0
Raw materials and supplies		10.8		8.7
Inventories	$	28.4	$	26.5

	Maintenance Services		Development Services		Total
Balance, September 30, 2018	$	1,572.4	$	194.4	$	1,766.8
Acquisitions		43.6		—		43.6
Balance, September 30, 2019		1,616.0		194.4		1,810.4
Acquisitions		12.6		—		12.6
Balance, December 31, 2019	$	1,628.6	$	194.4	$	1,823.0

	December 31, 2019			September 30, 2019
Series B term loan	$	1,019.2		$	1,021.7
Receivables financing agreement		140.0			140.0
Financing costs, net		(16.3	)		(17.1	)
Total debt, net		1,142.9			1,144.6
Less: Current portion of long-term debt		10.4			10.4
Long-term debt, net	$	1,132.5		$	1,134.2

	December 31,
2020	$	10.4
2021		10.4
2022		150.4
2023		10.4
2024 and thereafter		979.8
Total long-term debt		1,161.4
Less: Current maturities		10.4
Less: Original issue discount		2.2
Less: Financing costs		16.3
Total long-term debt, net	$	1,132.5