Segments

9 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segments

14.Segments

The operations of the Company are conducted through two operating segments: Maintenance Services and Development Services, which are also its reportable segments.

Maintenance Services primarily consists of recurring landscape maintenance services and snow removal services as well as supplemental landscape enhancement services.

Development Services primarily consists of landscape architecture and development services for new construction and large scale redesign projects. Development Services also includes our tree and nursery division, which grows and sells trees as well as manages removal and installation of specimen trees as part of many development projects.

The operating segments identified above are determined based on the services provided, and they reflect the manner in which operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to allocate resources and assess performance. The CODM is the Company’s Chief Executive Officer. The CODM evaluates the performance of the Company’s operating segments based upon Net Service Revenues, Adjusted EBITDA and Capital Expenditures. Management uses Adjusted EBITDA to evaluate performance and profitability of each operating segment.

The accounting policies of the segments are the same as those described in Note 2 “Summary of Significant Accounting Policies” in the notes to our consolidated financial statements in the Annual Report on Form 10-K for the fiscal year ended September 30, 2019. Corporate includes corporate executive compensation, finance, legal and information technology which are not allocated to the segments. Eliminations represent eliminations of intersegment revenues. The Company does not currently provide asset information by segment, as this information is not used by management when allocating resources or evaluating performance. The following is a summary of certain financial data for each of the segments:

	Three Months Ended June 30,						Nine Months Ended June 30,
	2020			2019			2020			2019
Maintenance Services	$	460.0		$	492.1		$	1,295.1		$	1,358.0
Development Services		149.1			166.3			445.5			424.7
Eliminations		(1.0	)		(1.2	)		(2.7	)		(2.8	)
Net service revenues	$	608.1		$	657.2		$	1,737.9		$	1,779.9
Maintenance Services	$	84.0		$	91.1		$	172.9		$	204.8
Development Services		21.1			27.0			53.9			55.0
Corporate		(14.1	)		(16.2	)		(45.2	)		(46.7	)
Adjusted EBITDA(1)	$	91.0		$	101.9		$	181.6		$	213.1
Maintenance Services	$	8.0		$	24.4		$	34.0		$	54.4
Development Services		1.6			3.2			9.5			9.9
Corporate		1.2			7.0			2.4			12.9
Capital expenditures	$	10.8		$	34.6		$	45.9		$	77.2

(1) Presented below is a reconciliation of Net (loss) to Adjusted EBITDA:

	Three Months Ended June 30,					Nine Months Ended June 30,
	2020			2019		2020			2019
Net (loss) income	$	(2.4	)	$	31.7	$	(35.5	)	$	19.3
Interest expense		15.4			18.4		49.9			54.4
Income tax (benefit) expense		(0.3	)		11.0		(11.9	)		6.6
Depreciation expense		20.9			20.9		60.4			61.9
Amortization expense		13.6			13.9		40.6			42.9
Establish public company financial reporting compliance (a)		—			1.1		0.9			2.8
Business transformation and integration costs (b)		8.2			4.5		25.8			13.3
Offering-related expenses (c)		2.6			0.1		4.1			0.1
Equity-based compensation (d)		4.9			0.3		18.2			11.8
COVID-19 related expenses (e)		4.0			—		5.0			—
Changes in self-insured liability estimates (f)		24.1			—		24.1			—
Adjusted EBITDA	$	91.0		$	101.9	$	181.6		$	213.1

(a) Represents costs incurred to establish public company financial reporting compliance, including costs to comply with the requirements of Sarbanes-Oxley and the accelerated adoption of the revenue recognition standard (ASC 606 – Revenue from Contracts with Customers) and other miscellaneous costs.

(b) Business transformation and integration costs consist of (i) severance and related costs; (ii) rebranding of vehicle fleet; (iii) business integration costs and (iv) information technology infrastructure, transformation costs, and other.

(c) Represents expenses incurred for IPO related litigation and subsequent registration statements. 

(d) Represents equity-based compensation expense and related taxes recognized for equity incentive plans outstanding, including $1.9 and $5.8 million of equity based compensation expense related to the IPO in the three and nine months ended June 30, 2020, respectively.

(e) Represents expenses related to the Company’s response to the COVID-19 pandemic, principally related to temporary and incremental cleaning and supply purchases, salary and related expenses, and other.

(f) Represents expenses related to changes in estimates and actuarial assumptions associated with the Company’s self-insured liability amounts for workers’ compensation, general liability, auto liability, and employee health care insurance programs, to reflect uncertainties associated with the current environment, including the COVID-19 pandemic.