BrightView Holdings Inc Aktie

Good day, everyone, and welcome to today's BrightView Earnings call. [Operator Instructions] Please note this call may be recorded. [Operator Instructions]

It is now my pleasure to turn the conference over to Mr. Chris Stoczko, Vice President of Finance and Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining BrightView's Third Quarter 2026 Earnings Call. Dale Asplund, BrightView's President and Chief Executive Officer; and Brett Urban, Chief Financial Officer, are on the call.

I will now refer you to Slide 2 of our presentation, which contains our safe harbor disclaimer. Our presentation includes forward-looking statements subject to risks and uncertainties. In addition, during today's call, we will refer to certain non-GAAP financial measures. Please see our press release and 8-K issued yesterday for a reconciliation of these measures.

With that, I'll now turn the call over to Dale.

Thank you, Chris, and good morning, everyone. Our third quarter results reflect the continued progress of our ongoing transformation. The investments we've made in our employees, customer service and operational excellence are translating into stronger operational performance and positioning BrightView for long-term success. The underlying fundamentals of our business continue to improve, and we are well positioned to deliver sustainable, profitable growth over the long term.

Q3 marked our second consecutive quarter of organic Land Maintenance revenue growth, with revenue increasing 2.3% year-over-year. This performance was underpinned by another quarter of growth in our land contract book of business, which has now grown 4% from Q2 2025 and represents a 100 basis point improvement over the prior quarter. Growth in our contract book provides increased visibility into the trajectory of our highly resilient and predictable land maintenance business.

During the quarter, we experienced 2 nonroutine expenses related items impacting our profitability. The first, as discussed on our last call, was heightened fuel costs. We are happy that we were able to offset a portion of that through mitigating efforts, which I will discuss in a few minutes. Secondly, as we continue to solidify the foundation of the business and position it for the long term, we have made the prudent decision to take a nonroutine self-insurance adjustment, which Brett will talk about in more detail shortly.

The basis of this adjustment is heavily weighted towards the adverse development of claims prior to 2024, and by addressing these issues now, this allows us to close out lingering claims that mask some of the progress we have been making. Encouragingly, if you exclude the impact of the prior year self-insurance adjustment, our business was able to largely offset the noncomparable fuel headwinds while continuing to invest in our sales force.

Before moving on, I'd like to take a moment to remind everyone that we continue to focus on managing this business for the long term. We have a resilient business model that is poised for sustained growth. The intense focus our team have on delivering best-in-class service to improve customer retention, coupled with our continued investment into our sales force, will continue to build momentum in our Land Maintenance business, which is why we are reaffirming our previously raised land revenue guidance of 2% to 3%.

Our outlook remains strong, and these efforts support sustainable, profitable top line growth in both the near and long term, driving meaningful shareholder value and positioning BrightView as the investment of choice.

Turning to Slide 5. We continue to drive year-over-year improvement in both frontline turnover and customer retention in the quarter, with frontline turnover coming down about 7 percentage points and customer retention improving about 250 basis points versus the previous year. Our transformation strategy is underpinned by investing in our employees, by focusing on safety, providing industry-leading benefits and delivering consistent service hours. We've differentiated BrightView as the employer of choice.

This has reduced turnover, enabling us to reinvest savings back into the business and continue strengthening our competitive advantage. Lower employee turnover translates into more consistent service, delivering and quality of care for our customers, driving higher retention and supporting sustained growth in our contract book of business. We remain focused on managing this business for the long term. The recent macroeconomic pressures that have driven fuel prices higher does not change that approach.

Our commitment to our customers or our view of the long-term outlook of this company. We made the deliberate decision not to implement short-term fuel surcharges on existing contracts, and our priority remains preserving long-term customer partnerships rather than reacting to what we believe are temporary cost headwinds.

As you can see on Slide 6, this strategy has delivered meaningful progress across our branch network, though there still is significant room for improvement. We've shown this slide in prior quarters using different retention quartiles with the bottom tier below 70% and the top tier above 90%. As we continue to improve performance across the portfolio, our expectations have positively evolved. Our focus is now on branches below 75% retention while we're increasingly looking to replicate the best practices of branches delivering greater than 95% retention.

Typically, our branches grow when they achieve mid-80% plus retention. And in 2024, just 40% of our branches were above this level, while only 5% of our branches were in the top quartile. Now over half of our branches are above 85% retention, and we continue to reduce the number of underperforming branches, shifting a higher number of branches to our top quartile. The momentum we built gives us confidence in our strategy, but we believe there is still significant runway to improve as we continue transforming BrightView.

This is why we remain disciplined in our approach, keeping our customer at the center of everything we do rather than reacting to short-term pressures. We believe long-term customer relationships are built through consistency and our customers know why they can count on BrightView to deliver for them in any economic environment.

Turning to Slide 7. We continue to emphasize the importance higher customer retention has on the ability to grow our Land business. Looking at the chart on the right-hand side of the slide, you can see that branches with 95% plus retention are growing north of 10% on a trailing 12-month basis and branches with 85% to 95% retention are growing on average 6 percentage. Conversely, branches with less than 75% retention are shrinking 10% on average.

We continue to evaluate those branches and have actively made changes over the past several quarters, which is why we believe there is still plenty of runway to drive overall company retention to 90-plus percent. As previously mentioned, our focus remains on continuing to move our underperforming branches into the upper quartiles as retention truly is a key catalyst for driving sustainable profitable growth in the mid- to upper single digits in 2027 and beyond.

Moving to Slide 8. We delivered another quarter of positive net new business, our fifth consecutive quarter since accelerating our sales force expansion in the second half of 2025. The equation at the top of the page captures the simple formula behind our growth, higher customer retention, plus a larger and more productive sales force drives growing net new sales, expands our contract book and ultimately fuels revenue growth.

As shown in the chart on the left, we're seeing the benefit of the 2 key drivers of our growth strategy coming together. Continued improvements in customer retention, combined with a growing and increasingly productive sales force have driven positive net new sales and 4% growth in our contract book of business since the second half of 2025. The third quarter also represents the highest net new results since the start of my tenure at BrightView.

This growing contract book continues to translate into top line results. With approximately 1 point of Land Maintenance revenue growth in the first half of the year and 2.3% growth in the third quarter. Looking at the components of that growth, contract revenue increased 3%, reflecting the growth in our contract book reported in the previous quarter. Ancillary revenue grew about 2% as we look to balance price with customer acceptance. The progress we're making in improving the underlying drivers of our contract book positions us to continue growing Land revenue in both the near and long term.

On to Slide 9. We continue to build momentum in our sales organization. As of the end of the third quarter, we have hired an incremental 200 net new sellers versus the end of 2024. As a reminder, this includes a mix of new business sellers responsible for going out and finding new Land Maintenance contracts and customer-facing sellers who focus on selling ancillary work to both existing customers and customers outside our base.

Our first cohort of sellers have now reached the 1-year mark, and we are seeing an acceleration in new contract sales, now up approximately 20% year-to-date versus the same time last year. As previously mentioned, this continues to feed the top of the funnel, and our contract book of business has grown for 5 consecutive quarters, translating to top line growth in our Land business.

Turning to Slide 10. I'd like to spend a few minutes discussing the impact of elevated fuel prices during the quarter as they had an adverse effect on results. But we partially mitigated by a few proactive measures we took to reduce consumption and drive efficiency in our business. First, let's set the stage on the left. Back at our Q2 call in May, we disclosed that April fuel prices were about $1 higher than they were the previous year.

And we said if that trend were to continue the entire quarter, we'd see about a $4.5 million impact on the P&L. During May, we continued to see increasing levels of fuel prices. And during the month of June, they began to come down, all of it still at a higher level than the previous year. All told, our fuel prices averaged about $1 higher than the third quarter of 2025. So as expected, elevated fuel prices created a headwind to our bottom line during the quarter, but our teams took proactive steps to mitigate a portion of the impact.

We placed significant focus on reducing fuel consumption by leveraging route-based technology to improve daily scheduling and reduce idle time, while also benefiting from the continued refresh of our fleet with newer, more fuel-efficient vehicles. Together, these initiatives reduced fuel consumption by 10% even as revenue has grown compared to the prior year. We placed significant focus on reducing fuel consumption by leveraging route-based technology to improve daily scheduling and reduced idle time, while also benefiting from the continued refresh of our fleet with newer, more fuel-effective vehicles.

Together, these initiatives reduced fuel consumption by 10% even as revenue has grown compared to the prior year. We also continue to utilize our fuel application to direct drivers to the lowest cost fueling location, helping us manage fuel costs across our branch network. In addition, as mentioned on the last call, we proactively hedged a portion of our fuel needs, which provided a benefit as elevated fuel prices persisted throughout the quarter.

Collectively, these actions reduced our fuel headwinds by approximately $2 million in the third quarter, and we expect them to remain important tools for managing fuel volatility going forward. As previously noted, we have the ability to price ancillary daily, but continue to make sure we are balancing customer acceptance with market prices. We continue to manage this business for the long term and remain focused on building lasting customer relationships.

The actions we've taken and will continue taking to mitigate elevated fuel prices allow us to navigate these transitional headwinds. We believe that a customer-first approach supports stronger retention, continued growth in our contract book and ultimately sustained Land growth over the long term.

As I wrap up on Slide 11, I think it's worth taking a step back to recognize how far we've come over the last few years. Our focus in 2024 and 2025 was on solidifying the foundation of our business by prioritizing our frontline employees, delivering best-in-class customer service and unlocking our size and scale as the industry's largest commercial landscaper. This strategy has delivered meaningful improvements in employee turnover, customer retention and margin expansion since the end of fiscal 2023.

With that foundation in place, we accelerated investments in our sales force in the second half of 2025 and remain committed to our initial plan of adding an incremental 500 sellers. Along with continued improvements in customer retention, our sales force is the engine that will power top line growth. And we're already beginning to see the returns on those investments with 2 consecutive quarters of organic Land Maintenance revenue growth.

By continuing to expand our sales organization, we believe we're well positioned to deliver profitable top line growth in both the near and long term, creating meaningful value for our shareholders.

Before I hand the call over to Brett, I'd like to thank our 18,000-plus employees for their continued dedication and hard work. This quarter presented challenges as we asked them to drive operational efficiencies across our business while navigating a more complex macroeconomic environment, and they rose to the occasion. Their unwavering dedication to our customers and consistent service delivery reinforces our position as the provider of choice.

I also want to assure you that the self-insurance adjustment we took in the quarter was nonroutine and is not something that should be viewed as reoccurring in nature. We continue building on the foundation we've established. It's this customer-first mindset and commitment to operational excellence that gives us confidence in BrightView's long-term future.

With that, I'll now turn the call over to Brett. Brett?

Thank you, Dale, and good morning, everyone. Our third quarter results demonstrate the continued momentum we're building across the business with improvement in our contract book driving a second consecutive quarter of Land Maintenance revenue growth. While we experienced headwinds from elevated fuel costs and a nonroutine self-insurance adjustment during the quarter, our underlying results reflect the strength of our business and the progress we're making against our strategic priorities.

As Dale mentioned, we are hyper-focused on the long-term success of the business and the actions we're taking today position BrightView to deliver sustainable, profitable top line growth for years to come.

With that, let's turn to Slide 13 to discuss top line results in the quarter. Total revenue was $718 million, representing a 1.3% increase driven by Land revenue growth, partially offset by a decline in snow revenue. Land Maintenance continued to be a key driver of our performance during the quarter, increasing 2.3% year-over-year and marking the second consecutive quarter of growth. This was driven by continued expansion of our contract book and growth in our ancillary business.

The highly resilient and recurring nature of this segment gives us confidence in its ability to continue delivering profitable growth through the fourth quarter of 2026 and well beyond. Development revenue increased modestly in the quarter, reflecting the return of some previously delayed projects. This rebound signals the long-term stability of this business, even though backlog and timing of projects can be choppy.

Moving to Slide 14. We would have achieved another quarter of adjusted EBITDA growth, excluding fuel headwinds and a nonroutine self-insurance adjustment, which I'll touch on in greater detail on the next slide. Excluding these nonroutine costs, EBITDA would have been $116 million at a margin of 16.2%. This would have represented an increase of $3 million and 20 basis points of margin expansion versus the prior period as we drive efficiencies in the business, realize incremental flow-through from growing Land revenue and continue to invest in our sales resources.

As Dale touched on earlier, fuel expense was a headwind in the quarter as continued macroeconomic uncertainty drove prices higher than the third quarter of 2025. While we were able to mitigate some of this impact through operational efficiencies and hedges, we experienced a $4 million headwind in the quarter related to elevated fuel costs. We also recorded a $16 million adjustment related to self-insurance expenses in the quarter. After all said and done, our reported adjusted EBITDA was $96 million at a margin of 13.3%.

Let's turn to Slide 15 to discuss the self-insurance adjustment recorded in the quarter, why it occurred and what we have done to mitigate potential impacts going forward. For context, the self-insurance we are discussing today represents costs related to general liability, workers' compensation, automobile and health insurance. I would first like to state that this is a nonroutine expense, and we would not expect this to reoccur in future periods.

Since Dale started in 2024, we have relentlessly focused on our employee-first culture, including outfitting all employees with quality PPE, including a proper pair of reliable and safe work boots. Additionally, we have offered employee wellness programs and PTO to ensure they have the time and affordability to get to a doctor. Additionally, we have upgraded our fleet of vehicles, which now boast new safety technologies, and we also outfitted our vehicles with two-way cameras to assist with safe driving and insurance claim protections.

This safety culture has resulted in 25% less claims since 2023 and has seen sequential improvements in lowering claims from 2024 to 2025 and again from 2025 to 2026. This culture and the subsequent lowering of claims through safer behavior will have a positive impact on our insurance costs over the long term. To specifically address the $16 million adjustment in the quarter, with our new internal insurance leadership and partnering with our new actuary, we are resolving new claims more timely.

And more importantly, we are being prudent in closing out the older claims before they can continue to develop. A large portion of the $16 million adjustment was ongoing adverse development from prior period claims, specifically from 2023 and prior years when claims went unresolved and developed adversely over time. This development negatively impacted total cost of these claims by approximately 20%. I'm happy to report at the end of Q3, we have now closed over 85% of these 2023 and prior year claims.

A smaller portion of the $16 million adjustment is to ensure we can finalize the closeout of the remaining 2023 and prior year claims. These programs involve numerous claims across many years and the longer these claims remain outstanding, the more difficult it would be to predict adverse development and ultimately the final costs. We have been able to close out 50% more claims year-to-date 2026 versus prior year, and we are aggressively resolving claims specifically from prior years before these become a more significant issue.

Let's now turn to Slide 16 for our updated 2026 guidance, where we are reaffirming our Land revenue guidance that we raised in May. Total revenue is now expected to be in the range of $2.75 billion to $2.78 billion, representing a 3.5% increase at the midpoint versus 2025. The land revenue assumption is unchanged at 2% to 3% growth for the year, while the updated development assumption reflects similar levels of growth as in the third quarter.

Moving to adjusted EBITDA. We are revising our guidance to reflect the impact of elevated fuel costs in the back half of the year as well as the nonroutine self-insurance adjustment we took during Q3. This guide reflects the assumption that fuel headwinds will persist through the rest of this fiscal year.

I'd like to remind everyone that excluding the impacts of higher fuel costs and the self-insurance adjustment, our adjusted EBITDA guidance would be approximately $365 million to $370 million, within the guided range we reaffirmed back in May and would have represented another record year of adjusted EBITDA. We also updated our adjusted free cash flow guidance to $70 million to $80 million to reflect the impact on EBITDA from headwinds in fuel and the nonroutine self-insurance adjustment.

Turning to Slide 17. I'd like to cover the steps we've taken to reinforce our balance sheet and further strengthen our financial flexibility. During the quarter, we extended all 3 of our debt tranches. As discussed on our last call, during the month of May, we extended our revolving credit facility. Subsequent to this extension, we extended both our AR facility and our term loan in June.

An important item to note and a testament to the strength of our balance sheet and the recent transformational success of the business, while extending the term loan, we received more than 2x the amount of financial commitments towards this extension. These transactions not only extend the maturities of our debt tranches, but they also provide an additional $100 million of capacity to support future liquidity needs.

Moving to Slide 18 to wrap up. I'd like to remind everyone of the tremendous progress we've made since the implementation of our One BrightView strategy. After experiencing several years of organic Land revenue declines, EBITDA contraction and margin erosion following our IPO, we refocused the business on breaking down silos, localizing our sales force, leveraging our scale, refreshing our fleet, investing in our employees and delivering a better experience for our customers.

This has resulted in a return to Land revenue growth, EBITDA growth and continued margin expansion. After adjusting for the headwinds related to fuel and self-insurance, our guidance implies about $70 million in EBITDA growth and 300 basis points of margin expansion since 2023. This success, combined with the continued strength we're seeing in our underlying operating metrics, reinforces my confidence in the trajectory of our business and our ability to deliver sustainable, profitable top line growth and meaningful long-term value for our shareholders.

With that, I'll turn the call back over to Dale.

Thanks, Brett. Before we turn to questions, I'd like to reiterate that our trajectory remains strong, and we are on track to deliver upon our long-term targets despite the headwinds we experienced this quarter. These results are underpinned by the continued progress we have made in employee turnover, customer retention, operational excellence and sales force execution.

Our path remains undeterred, and this is made possible by our people who are at the center of everything we do and the driving force behind our transformation. And I am increasingly encouraged by our underlying results and our ability to deliver in the long term.

With that, operator, you can open the call up for questions.

[Operator Instructions] We'll go first this morning to Scott Schneeberger of Oppenheimer.

A lot to discuss, I'd like to hone in on Land Maintenance. Fifth consecutive quarter of contract book growth, second consecutive quarter revenue growth. A lot of momentum here into the end of the year. Anything we should be thinking about specifically in the fourth quarter, good or bad as maintained guidance, it looks like you're probably trending pretty well against that.

And how should we think, I guess, Dale, about how it may flow into next year given ancillary is growing, you're building the sales force and you have a lot of momentum. Just curious the trickle over looking into the out quarters.

Yes. Thanks, Scott. Great question. I think it's something we've been pushing towards for the last several years, getting that momentum, which I think is the word that best describes what you're asking, the momentum of continuing to build our book of business so we can drive land maintenance, not just in the current quarter, but for many quarters to come.

You heard me say in my script that the Land book of business that we continue to show growth in, which is now up 4% over the last 4 -- 5 quarters, is the key lever to making that predictable land revenue as we go. In Q4, as we note in the investor deck on Slide 23, we see somewhere between 3% and 6% land growth in Q4 as we see the momentum continue to flow through with that book of business that we've grown entering the quarter.

And Scott, I would say barring anything crazy, we continue to see that momentum into 2027 and beyond. That business, as I said, is very predictable as we manage that book of business. So I think what we're seeing in Q4 in the updated guidance that we're giving is going to probably repeat itself as we go into 2027.

But Brett, do you want to add to that?

Yes, Scott, great question. I think momentum is the key word there. As Dale said several times, the momentum is building. It's what we've been working on since One BrightView launched at the beginning of 2024 and taking care of our employees to take care of our customers and driving the customer retention rate to where it is now. And what we did last year was adding our first cohort of sellers in Q3 of 2025 is now starting to pay dividends in that contract book in 2026.

And I'll just add some context to the sequential momentum we're seeing in the Land business. As you think about Q1 and Q2, we said on last call, just to remind everybody, we had about a $6 million shift of Land revenue out of Q1 into Q2, just given timing of snowfall. But if you normalize for that and you kind of think about the sequential quarters of growth, Q1 '26 Land business shrunk about 1%. But then in Q2, when you normalize for that $6 million, it grew 2%. And now in Q3, the Land business is growing 2.5%, and we're guiding in Q4 somewhere between 3% and 6%. So that sequential momentum is building as you think about not only in Q4, but what's ahead of us in 2027 and beyond.

We go next now to Bob Labick with CJS Securities.

I want to start with kind of just to dig a little deeper on the fuel and pricing. And on the May call, you said you discussed you didn't want to kind of instantly jack up fuel surcharges. And today, you reiterated the reasoning because long-term customer relationships are far more important than short-term transient costs. And all of that makes sense.

So I kind of want to look forward. And could you talk about contract pricing? What happens on annual renewals as it relates to fuel and other expenses? And when are annual renewals typically in your book of business?

Yes. Great topic, Bob. Thanks for the question. So yes, we still believe, as I said in my script many times, we're managing this business for the long term. And we've seen that develop with our continued progress with our growth in retention now at 84.6% as reported in the quarter. And with that amount of retention, we will see annual renewals come into play in 2 different time periods, mainly.

Number one is in our southern markets that have more annual landscape needs. We see those contracts come up for renewal towards the end of the calendar year, call it, in Q4 of the calendar year, October through December, where people go more on a renewal cycle. In the northern markets, that we see more of the weather-related business, the seasonal markets, we typically will see those contracts come in for renewal March and April time frame.

We do sell work all year long. So we are out there constantly looking at renewals throughout the year, but the primary 2 periods that we're going to see the opportunity to renew contracts are going to be Q4 calendar year and then once again as we get to the spring. So that -- it's a great topic because I think all that we've done to service our customers better, everything we've heard from our customers, the work we've done to not implement a short-term fuel surcharge, we'll communicate with them as we go through 2027 to make sure they understand some of these headwinds.

And we are still optimistic as many people are, as we all see in the news every day, that fuel could back off at any time. And we did see a little bit of that in early July, and then we've seen it bounce up a little more. But it's going to continue to bounce around. And we just want to make sure everything we're doing for our customers is about putting them at the center of what we're doing.

But Brett, what do you want to add?

No, I would agree, Bob. Big opportunity next year in pricing, as Dale mentioned, those 2 time periods. But Dale and I have the pleasure today to take this call from our Salt Lake City branch. And we're sitting here in Utah and we get to see several stretch and flexes in the morning in our teams dispatch. And as you think about taking care of our employees and taking care of our customers, just seeing the efficiency we're getting from our new fleet as they roll out of our yards and seeing the teams operate with new route-based technology, trying to get them the most efficient route to their jobs and using fuel applications, for example, on this topic to get to the most efficient gas stations.

So as we talk about it, we see it in the results, and we're able to mitigate things we can control, about 30% of the fuel impact in the quarter. It is great to see it firsthand as we sit here today in Salt Lake and really see the crews rolled out using all this new technology and becoming more efficient as we speak.

We'll go next now to Andy Wittmann with Baird.

Great. I guess I wanted to build a little bit more on the first question that was asked. And I understand here that you've got your -- I guess, on Slide 23 here, you've got your outlook for the fourth quarter. You talked about the momentum. The 3% low end of Land growth seems realistic given the organic growth rate that you put up this quarter and you've got the benefit of the sellers maturing and all of that.

But the 6% seems like a pretty big number, but you kept it in the range, Dale. So I'm trying to understand like what needs to happen for that to be in play? Is that just like the difference in ancillary and you need a big ancillary year to pick up? It's just trying to understand why that number is still in play for you guys.

Yes. Look, I think it's a great question, Andy. I think, yes, it's going to come down to the ancillary levels that we can get here in Q4. Obviously, our Q4 is our second largest land quarter that we're going to see Q3 being our largest. And ancillary is a big part of that. We showed that ancillary trailed a little bit behind the contract book growth being up 2% versus the 3%.

But what I will say and not trying to give any inter-quarter guidance, but I would say, as we saw fuel prices come down, we did see an uptick in our customers' acceptance early in July. So I think it's all going to come down to how hard we're willing to pull the lever, Andy, on the price we get as we build in the fuel costs and how willing we are to take more volume. We want to partner with our customers and drive ancillary. And depending on where ancillary finishes, that could easily get us up to 6% or it could keep us at the low end of 3%.

So you are absolutely right. Our contract book, very predictable, and we've seen that. We updated you that we've now grown that 4% over the last 5 quarters and our ancillary is the part, the customers are going to make that decision as our account managers are out talking to them every day. So that is exactly right, and that could easily swing and the difference between getting in the quarter, call it, 3% to 6%, whether we grow ancillary again 2% or whether we grow at 5% in the quarter.

Andy, I would just add, we continue to say we feel very confident in the trajectory of the business and the long-term goals that we set forth in our Investor Day 1.5 years ago in February '25, where we've laid out '27 growth at somewhere between a range of 3% to 6% in Land. And we continue to build the momentum in the book, as Dale mentioned, and obviously, ancillary is an attachment to that book. But we continue to look long term and focus on the long-term trajectory of the business.

And we feel great about the goals we laid out in Investor Day, especially when it comes to a Land growth perspective. So that momentum is building as we continue to use that word. And ancillary could be a lever up and down here in Q4, whether it's you get to the 3% to 4% range or you get more ancillary and you get to the 5% to 6% range. But we still feel great about the long-term growth goals we've set for that Land business.

Okay. Just a quick follow-up here, Brett. Just on cash flow here. We heard your explanation for the reduction in fuel prices and cash payments on the insurance settlement. So I understand that's the case for your updated '26 guide. But as we look forward to '27, obviously, fuel is anyone's guess and all of us here on the buy side and the sell side are going to be wrestling with what do we do with your profit margins on the fuel assumption.

But like -- I mean, does the '27 free cash flow guidance then kind of look more like the -- I guess, you'd call it the old '26 guidance because you don't have the big impact from the insurance settlements or -- and then hopefully presumably get a little bit of growth. I think if you could just comment a little bit on how 2027 could play out from a cash flow perspective? I think that would be helpful for everyone.

Yes, absolutely. And I'll comment as much as I can here in Q3, we're -- obviously, on our next call in November, we'll give 2027 guidance for both revenue, profitability and cash flow. If you think about cash flow, look, our original guide was $100 million to $115 million, about 30% free cash flow conversion. This business is a highly generative cash business, it can be once we get through the refreshing of the fleet, which we do expect to take another step down in capital next year.

So that will add more free cash flow conversion as we think about that CapEx coming back down the end of the bell curve. And as we try to put on Slide 18, the new jump-off point isn't the $340 million to $345 million. It's something like $365 million to $370 million when you normalize for these noncomparable nonroutine items. So -- and we put a '27 bar out there that you can look is higher than that number. So you think about more operating income coming in the business, less CapEx in the business, I think you're going to see BrightView really start to shine when it comes to free cash flow generation starting next year.

Still a little bit of fleet refresh to go in '27, but you're really going to start to see that cash flow conversion tick up. And then we're going to get to a much higher pace than that as you think about '28, '29 CapEx returns to normal levels, which is really 3.5%, 4% of revenue, somewhere in that range.

The other thing I would just add there because obviously, very proud of this in the quarter. We've also added a significant amount of liquidity to the business. We added $100 million additional liquidity by extending and amending our 3 debt tranches.

That's also in the presentation we put forward. And it just gives the business the financial flexibility with no long-term maturities now in your sight to continue to invest in the business, whether it's that final year of fleet refresh in '27 or continue to invest in our sales force, continue to invest in our employees, continue to invest in technology, et cetera. So we feel great where the balance sheet is heading, and we do expect cash flow conversion to be higher next year.

We'll go next now to Greg Palm with Craig-Hallum.

If I'm doing my math right and I add back some of those items that are more, call it, nonrecurring in nature, I think the flow-through on Land Maintenance was actually quite good in the quarter. So I wonder if you can confirm that. And just -- I don't know, as we think about next year, just give us some sense on what that might look like if we assume this sort of mid-single-digit growth rate sort of continues or if that's the right growth rate next year?

Yes. Look, I think we are happy with the flow-through, Greg. There's a lot of moving pieces in the quarter on the revenue bridge that we gave you on Slide 13. And we specifically carved out, as everybody knows, as we went through the first 6 months, snow was a huge benefit to us. So we did see a little bit of noise in the quarter on snow, and we pointed that out with a $3 million headwind from some credits we wrote customers.

But when I really look at development, we're at our team in Salt Lake, like Brett said, one of our best development branches. And our development group, despite having $1 million of incremental revenue, had solid flow-through on that with a couple of million dollars of benefit. And on the Land side, this is probably the more optimistic part. We've always said we're targeting somewhere around 20% to 22% flow-through. We saw roughly 25% flow-through in that Land revenue. So the $12 million incremental revenue, Greg, produced roughly $3 million of incremental EBITDA.

So look, we had some nonroutine items that hit us in the quarter, and Brett covered those in his script, and we believe they are absolutely not something that we're worried about repeating next year. We had to get all lingering claims behind us, and I think we've taken the prudent actions to get that behind us so we can truly reflect all the progress we're making in the business.

We have made our employees safer. We've given them better vehicles. We are doing a much better job with our sales organization to put indemnification language that makes sense in contracts. So we limit our liabilities. So I am fully confident, Greg, that what we get through here in Q3, by the time we come out in November and let everybody know what 2027 looks like, we are once again returning to margin expansion and long-term profitable growth, and we are 100% committed to finding a way to make sure we hit those 2030 goals that we keep reminding everybody out there. And that goes to Andy's last question. That includes getting free cash flow conversion to 40-plus percent over the next 3 to 4 years. So all positive that we're moving on.

Brett, do you want to add anything?

Nothing to add, Greg, great question. I would just reiterate the fact that what Dale said, we saw some noise in snow that was really offset by some favorable job closeouts and development. But as you think about the long-term health of the business and not only revenue growth but margin expansion, we've always said Land is going to come through at 20% plus margin flow-through. And we saw a number more like 25% in Q3. So that just gives us even more confidence as we look towards our long-term goals that not only is that Land growth going to continue, but that margin and that flow-through is going to come with it.

We'll go next now to Stephanie Moore with Jefferies.

I have -- I guess my first question, I appreciate the commentary that you provided and the momentum you're seeing on the organic growth front in Land and the path from low to mid-single-digit growth. One follow-up, though. Can you talk about the makeup of the new business? Are you seeing growth on the contractual side? Is it more so ancillary side? I'm just trying to get a sense of the overall stickiness of that Land growth and some of the gains you're seeing?

And then my second question actually is on the development side. Could you talk a little bit about how that development pipeline has increased and what you think it takes to convert from pipeline to actual go-live on those projects? So 2 there.

Great, Stephanie. Thanks. Yes. Look, I think where we see the most upside right now continues to be in that book of business growth on the contract side. I mentioned and Andy brought up what would need to be true to get to the high end of that Q4 range, which we said is going to be the choppiness on the ancillary side. Ancillary is something that we're pricing every day, and that does have the fluctuation that can occur as we get more aggressive in pricing or we can get less aggressive if we see things like commodities or fuel prices come down.

But I would tell you, if you really look at what's building that momentum, it's definitely on the contract side. And when we talked about all the investments we've made and we continue to make in our sales organization, adding 200 sellers like we note on Slide 9. What that's done is driven our new sales contract volume up 20% year-to-date. So you just -- you put more into the top of the funnel with more new sales, and we keep driving retention and lose less out the bottom, it's just going to have a great multiple effect as we continue to build that contract book.

And yes, ancillary will be choppy. We'll see the gives and takes of that throughout the year. But the good news is, like I said, early July, we actually saw some benefits as fuel pulled back and our customers were more willing to spend on that discretionary spend. So short term, we continue to push on that contract book. Long term, we believe both levers are going to keep coming.

And I remind everybody, the longer we partner with a customer, this is why retention is so critical. The longer we partner with a customer, the more they'll spend with us on ancillary. Typically, in year 1, they spend about 25% of their contract value on ancillary. By year 4 and 5, they're spending 50% to 60%. So we continue to believe partnering for the long term is key. Ancillary will ebb and flow just like development is doing. But at the end of the day, it's going to drive long-term growth.

Look, you asked about development. What are we seeing in development? My teams in development, like I said earlier, I'm sitting in Salt Lake City with one of my best teams, and it's been a great conversation this week as I've spent time with them. We have numerous quotes out there right now on the street. Like ancillary, customers might be a little hesitant to sign, but they are very optimistic of what they're going to be booking over the next 4 to 5 months.

So I would tell you, we've seen a lot of opportunity on some very big jobs. We have some pretty good paper out there right now, but I think the guys are getting more conversations happening about getting those contracts signed. So I see like we saw in the third quarter, continued momentum in development, just like we've started building in the Land side as we go through Q4 and into 2027 to get that business once again returning to growth.

But Brett, do you want to add anything?

Yes. Just to add a couple of math points maybe on this. As you think about the Land business and the contract business on Page 8, and Stephanie, we said this publicly out of the $1.7 billion Land Maintenance business, it's about 2/3 contract, 1/3 ancillary. You kind of do rough math on the contract, leaves with $1.150 billion of contract revenue.

And if you look at over the last 5 quarters, the contract book growing 4%, you do some math on that, that's roughly $40 million to $45 million of growth in that contract book. It may be a quarter or so lag as it works its way into the P&L. But that 3% growth we announced last quarter, which is now 4% of the contract book resulted on Page 8 in the bottom right corner of the chart, 3% of contract revenue in the P&L. So we're seeing the math come through the P&L from a growth rate perspective in the Land business, and we expect that to continue, as Dale mentioned.

And then on the development side of things, we're controlling the things we can control. It is a little bit of a choppy business. This quarter was -- showed some slight growth. We are implying and guiding next quarter to show some more growth. But as you think about that business, we've mentioned our cold start initiative. Last quarter, we said we had 6 cold starts open and operating, meaning they've sold business.

It doesn't necessarily mean they put it in the ground yet and we realize the revenue, but they're building the backlog. We've added 2 more cold starts here in Q3. So now we're up to 8 new branches open in development to have sold and booked revenue and will eventually make its way through the P&L. So we're excited about that initiative as well.

We'll go next now to Jeffrey Stevenson with Loop Capital.

This is Zack Pacheco on for Jeff. Last quarter, you guys talked about how the accelerated pace of new hires, new sales hires could potentially weigh on back half margins. Any way to quantify if this margin impact occurred during the quarter and maybe if it's meaningful in future quarters?

Yes. I think -- so I would go to Slide 14 of the investor deck that we have, and you can see the impact right there. We note that we had $4 million of headwind by the adding of sellers Zack. So if you actually look at the deck, this is down a little bit from the $6 million we had last quarter as we start lapping the resources we added last year.

But we're trying to be 100% transparent for you to make sure every quarter, you get a lot of visibility into exactly how much we're spending because this is an investment in the future. And when we see the continued sales growth volume we get and the continued retention benefit, it's a double win for us.

But Brett, do you want to add?

Yes. I would just add that it's been about 60 bps in the quarter, right, the $4 million and $718 million, so 60 bps of margin impact from making those sales investments, absolutely the right thing to do for the long-term health of the business, as we've been saying for several quarters.

And year-to-date, the first 2 quarters were $6 million each, that's $12 million. And you add the $4 million for Q3, that's [ $16 million ] a total. So far that we've invested year-to-date is $16 million on revenue of about $1.97 billion. So it's about an 80 basis point impact, Zack, as you think about the year-to-date impact on margins. Again, absolutely the right thing to do for the long-term health of the business.

We'll go next now to Ryan Gilbert with BTIG.

I had a question on the seller additions to the development business and the sales curve that you gave or the productivity run rate for the Land contract business was really helpful to understanding how revenue could ramp as you add new sellers. So I'm wondering if you could provide something similar on the development side, like what a typical productivity run rate looks like for a new development seller?

Yes. Look, great question, Ryan. What I would say is, I would say they take a little longer to get up to speed is the ability for a development seller, but they usually partner with our experienced branch managers, and that helps them get up to speed. When we bid development work, it's a much longer pipeline. It's relationships usually with general contractors, and we're getting in at the early stages on the project.

So lots of times, the jobs they start working on, they might actually not come to contracts for 2 years, but it's about making sure they're building a pipeline. That's why when we talked about opening those 10 cold starts and getting a nice pipeline out there and getting people quoted. The work that you're putting out to the bid for the development team, yes, it takes longer for them, but they're much, much bigger projects.

So our development group is out there selling work that's anywhere from, call it, $2 million to $3 million all the way up to $20 million to $30 million. So longer pipeline to get them up to selling and closing deals, but it's usually a much bigger when they hit that hurdle, it has a much bigger impact on the business.

But Brett, do you want to add anything?

No, I think that's well said. It is a longer lead time for these projects are bigger in nature. They could be multimillion dollars over a long period of time. We do disclose our remaining performance obligation metric. That's the reason why because some of these are lasting more than a year. Now I would just mention and reiterate and said this before, we believe we have by far the best development group of branch managers out there in the business, a lot of experience and tenure. We've set up a great mentor program for our cold start initiatives.

So when we do open up new branches and we add new sellers to the business that they have an experienced and tenured development branch manager to help them hit the ground running. So we've done that as well. And yes, I think as we get into future quarters and we start to see some of these bigger projects land from our investments in development, we'll be transparent like we always are and share those success.

Yes. Real quick, Ryan, let me try to give you some detail. We have added resources on the sales side. In fact, if you look at over the same time period, we've added 10 resources in our development group for new sellers. So that probably gives you a little more specific. So it's up 10 different people that we've got in our branches across the country to help us get new business.

And they partner so close with our branch leadership because like we said, with our estimating team, with our selling team and our branch leadership team, it's truly a group effort to get those big projects that, that team focuses on, and they do a great job doing it. So we've added some people to be out in the street. But more importantly, I think we've added resources for estimating and we've added the branches to help us be at more locations to provide more input to some of these GCs. So momentum we're seeing every day.

Ladies and gentlemen, that is all the time we have for questions this morning. Mr. Asplund, I'd like to turn things back to you, sir, for your closing comments.

Thank you, operator. Look, I want to close today by reminding everybody that our transformation continues to get momentum. We built a strong foundation at BrightView by bringing the organization together, unlocking our size and scale and making disciplined investment in our people, customer service and the sales organization.

The progress we're seeing across key metrics like Land Maintenance growth, contract book and customer retention, employee turnover continue to provide benefits to the company. As we look ahead, we'll remain well positioned to build on these foundations, and we continue to be optimistic about the future.

So with that, operator, you can now end the call.

Thank you, Mr. Asplund, and thank you, Mr. Urban. Again, ladies and gentlemen, that will conclude today's BrightView Third Quarter Earnings Conference Call. We'd like to thank you all so much for joining us this morning, and wish you all a great day. Goodbye.

Good day, everyone, and welcome to today's BrightView Earnings call. [Operator Instructions] Please note, this call may be recorded. [Operator Instructions]

It is now my pleasure to turn the conference over to Mr. Chris Stoczko, Vice President of Finance and Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining BrightView's Second Quarter 2026 Earnings Call. Dale Asplund, BrightView's President and Chief Executive Officer; and Brett Urban, Chief Financial Officer, are on the call.

I will now refer you to Slide 2 of our presentation, which contains our safe harbor disclaimer. Our presentation includes forward-looking statements subject to risks and uncertainties. In addition, during the call, we will refer to certain non-GAAP financial measures. Please see our press release and 8-K issued yesterday for a reconciliation of these measures.

With that, I will now turn the call over to Dale.

Thank you, Chris, and good morning, everyone. Our second quarter marked a key inflection point for BrightView as our transformation strategy centered around prioritizing our employees and putting the customer at the center of everything we do has begun to yield meaningful returns and inflect sustainable and profitable top line land growth.

While this is a pivotal moment for BrightView and our ongoing transformation, our momentum is building as we continue accelerating investments in our go-to-market teams as we manage the business for the long term.

Total revenue grew 6% in the quarter, highlighted by a robust 4% increase in Land revenue, reaffirming that our transformation strategy is working and positions the business for sustained momentum. We also delivered record second quarter adjusted EBITDA of $79 million with a record margin of 11.3%, underscoring the strength and scalability of our business.

From day 1 of my tenure, my focus has been on solidifying the foundation of our business through improving frontline turnover, driving higher customer retention and unlocking our size and scale as the industry's largest commercial landscaper. These initiatives continue to strengthen the foundation and have allowed us to accelerate investments back into our sales force, resulting in the continued momentum in our contract book of business.

Now we are seeing the expanded contract book drive revenue growth in our Land segment. This, combined with outsized snow performance in the quarter positions us to raise our 2026 revenue guidance and reaffirm our commitment to delivering a third consecutive record EBITDA year. While the broader macroeconomic environment remains uncertain, we've built a resilient business model designed to perform through cycles.

The recurring nature of our contract revenue, combined with disciplined pricing and cost management position us to continue driving sustained profitable growth in both the near and long term. While we're enthusiastic by the progress we've made this quarter, this marks just the beginning of our journey to drive sustained, profitable top line growth in both the near and long term supported by continued investments in our frontline employees, a growing sales force and the realization of efficiencies from our size and scale, driving meaningful shareholder value and positioning BrightView as the investment of choice.

Turning to Slide 5. We continue to reduce frontline turnover with an approximately 5 percentage point improvement over the previous quarter and 35% since the start of our One BrightView initiative. Our focus remains, as it has since day 1, on prioritizing our frontline employees by creating a safe and rewarding environment, offering industry-leading benefits and providing reliable, consistent schedules. This continues to differentiate BrightView from its competition as the Employer of Choice, driving improved turnover and unlocking cost efficiencies that we're reinvesting into our frontline.

Moving to Slide 6. I've said in the past, the longer we retain frontline employees, the more consistent our service delivery is. And as a result, customer retention continues to improve. Since bottoming at approximately 79% in 2023, retention has increased by approximately 550 basis points as of Q2 2026, now approaching IPO levels of 85%. This sequential improvement reflects the commitment of our frontline teams, our focus on service quality and our continued investment in the business which together are strengthening our underlying contract book and setting the foundation for sustained land revenue growth.

Over the past 2-plus years, we have strengthened relationships with our customers by delivering best-in-class service and earning their trust. In light of recent macroeconomic uncertainty and rising fuel costs, our priority remains on maintaining long-term relationships with our customers and not reacting to potential short-term headwinds. As I've said since day 1, we are managing this business for the long term and customer retention remains a top priority to delivering sustainable, profitable growth.

Continuing to Slide 7. I'd like to highlight the progress we've made in improving customer retention across our branch network with approximately 35% of our branches now achieving best-in-class 90-plus percent retention, a significant improvement since 2024. At the same time, the share of underperforming branches has declined with only 10% of our branches now under 70% retention. We know the branches with higher retention are yielding growth and our improvement reflects meaningful progress. But let me be clear, there is still plenty of runway for improvement as we continue to transform this business.

Now to Slide 8, where we see the significant byproduct of our transformation continuing to materialize through accelerated momentum in our Land Contract book. The equation is simple: improved customer retention and the accelerated ramping of our sales force are generating growth in our net new sales, a metric that factors in both customer retention and new contract sales. As previously mentioned, customer retention has improved through our ongoing initiatives.

The second part of the equation has been ongoing since the back half of 2025 and really accelerated in the first quarter of 2026. Now as our increased sales force is ramping up their productivity, we are starting to realize the true momentum that has been building over the past few quarters. The combination of these 2 metrics improving in [ unison ] has contributed to 4 consecutive quarters of net new sales growth driving 3% growth in our Land Contract book of business, a key leading indicator of future top line growth and in the recurring Land Maintenance business.

Now as we move to Slide 9, we are reaching an inflection point where the momentum built in our contract book over the past year is translating into measurable results. Land Maintenance revenue grew 4% in the quarter and approximately 1% year-to-date, making the first year-over-year increase in the segment since the third quarter of 2023. This growth has been made possible by the steps we've taken to solidify the foundation of our business by investing in and prioritizing our frontline employees delivering consistent, reliable service to our customers and unlocking our size and scale as the industry's largest commercial landscaper. These efforts have driven sequential improvement in employee turnover, customer retention and margin expansion, all of which are strengthening the core foundation of our business and will continue to be key focus areas for the future.

On top of this, we will continue to focus on driving profitable top line growth through accelerated sales force investments. This will be key to continuing contract book growth, providing a runway for heightened ancillary sales and increasing density within existing and adjacent service lines. As we grow our business organically, we continue to evaluate M&A opportunities that either complement our core business or help drive expansion in greenfield markets.

Last quarter, I highlighted our expectation for Land growth in the back half of 2026. The acceleration in our contract book, along with other key underlying metrics give us the confidence to raise our 2026 Land revenue guidance, which Brett will discuss in more details in a few minutes.

Before turning the call over to him, I want to express my gratitude to our nearly 18,000 employees. During the month of April, we celebrated Employee Appreciation Week. It was great to see pictures and hear stories of how the branches celebrated their teams. Their unwavering commitment to delivering consistent, high-quality service reinforces our position as the Provider of Choice and is just the beginning of our journey ahead. It is the customer-first mindset and relentless focus on service that defines BrightView. And we thank our employees for their continued commitment to excellence.

With that, I will now turn the call over to Brett.

Thank you, Dale, and good morning, everyone. Our second quarter results reflect the continued momentum we are building across the business with solid execution driving another strong quarter of record financial performance, most notably in our Land Maintenance segment, where revenue grew 4%. The strategic investments we have made over the past 2-plus years in our employees, customer experience and sales force are translating into tangible results as evidenced by our improving retention, strengthening demand and encouraging results from our expanded sales efforts.

We are increasingly excited about the trajectory of the business and continued momentum towards future sustainable growth. This is reflected in our updated guidance, which raises total revenue and Land revenue and reaffirms a third consecutive year of record adjusted EBITDA.

Let's now turn to Slide 11 to discuss profitability in the quarter. We delivered record Q2 adjusted EBITDA and margin of $79 million or 11.3%. This represented an increase of $6 million and 8% higher than prior year as we continue to realize efficiency in our business. Higher revenue in the quarter drove incremental flow-through, while fleet refresh initiatives, enhanced procurement-driven purchasing power and continued G&A savings drove efficiencies. These benefits were partially offset by the acceleration of the investments in our sales force, which was funded by a portion of the incremental benefit from the outsized snowfall in the quarter.

These revenue-generating resources underpin our growth strategy as evidenced by the 4% growth in our Land business, which was driven by our continued momentum in our Land Contract book.

At the segment level, Maintenance margins grew 110 basis points, supported by the higher revenue flow-through and continued efficiencies in the business. In development, margins contracted in the quarter as a result of the timing and mix of projects. As a reminder, the margins in this segment benefited the most over the past 2 years as we implemented our One BrightView strategy and are still significantly above pre- One BrightView.

Moving to Slide 12. Revenue for the second quarter was $703 million, representing a 6% increase driven by Land revenue growth and above-average snowfall in the quarter. Land revenue was a major bright spot, growing $13 million, representing a 4% increase from the prior year. This marks the much anticipated inflection in Land revenue growth, the recurring and highly resilient revenue stream of our business, driven by the continued momentum in our growing contract book and rising demand across the segment.

We are highly encouraged that this result demonstrates the successful execution of our transformation strategy with benefits expected to continue in the back half of 2026 and beyond. These benefits are reflected in our updated Land revenue guidance, which I will discuss in a bit.

Snow once again was a major benefit in the quarter, increasing 30% from the prior year as we saw higher-than-average snowfall in the Mid-Atlantic and Northeast geographies, slightly offset by lower snowfall in the Rocky Mountain and Pacific Northwest regions.

In the Development segment, revenue decreased 13%, driven by project timing delays. To be clear, the headwinds we experienced here were timing related and should not be viewed as lost revenue over the long term.

Building on that, let's turn to Slide 13 to look into our growth prospects in the Development segment. The segment was unable to get some work in the ground this quarter due to adverse weather. However, our strategic initiatives provide a balanced runway for continued long-term success. As we are building our sales force in the Maintenance segment, we are doing the same in Development, where we have about 50% more sellers versus this time last year. These sellers are already contributing to the business' underlying momentum, and we've grown development bookings roughly 15% year-to-date.

This metric is the leading indicator of future development growth and drives our confidence in the long-term health of this business as we continue to sell into 2027 and beyond. At the same time, we are also enhancing our market position by leveraging our existing footprint through development cold starts with 6 currently opened and 5 more underway. These new branches located in markets where we already serve for maintenance will drive incremental development activity and result in multi-segment growth.

Moving to Slide 14. I'd like to touch on snow as the winter season is now primarily behind us. Snow was a major benefit to revenue for the first half of 2026, growing approximately $85 million or 40% from the previous year as we saw record snowfall across core snow markets. This came in $70 million above the high end of our original guidance, enabling us to fund accelerated investments into our sales force, which will further drive sustained profitable top line growth.

While snow was certainly a benefit in 2026, our current contract structure leans 60-40 variable versus fixed revenue contracts, and this creates a degree of unpredictability when forecasting revenue as snowfall can vary year-to-year. Since our February 2025 Investor Day, we've made progress increasing our mix of fixed tiered contracts. This shift towards a higher mix of fixed contracts will enhance revenue predictability, mitigate the impact of light snowfall and enable us to service our customers year-round.

Turning to Slide 15. I'll provide a brief update on the strategic actions we've taken to fortify our balance sheet. Subsequent to quarter end, we extended our revolving credit facility, enhancing our liquidity position and extending our maturity profile. This transaction also includes a 25 basis point reduction in pricing and provides an additional $100 million of capacity to support future liquidity needs. This further strengthens our financial flexibility and reflects our continued proactive management of the balance sheet.

Let's turn to Slide 16 for our updated 2026 guidance, which we have provided a reconciliation on Slide 21 in the appendix of the presentation today. Our updated guide is highlighted by raising total revenue and raising Land Maintenance revenue for the year.

Total revenue guidance is now in the range of $2.745 billion to $2.795 billion, representing a 4% increase at the midpoint versus 2025 and a 3% increase versus our prior guidance. This guidance assumes Maintenance Land growth of 2% to 3%, a 100 basis point increase at the midpoint of our previous guidance. This also assumes snow revenue of approximately $290 million, an increase of approximately $70 million versus the original high end of the guide. Development guidance has also been updated to reflect timing impact of projects.

Moving to adjusted EBITDA. We are reaffirming our guided range of $363 million to $377 million, which represents another year of record adjusted EBITDA and margin expansion of roughly 20 basis points at the midpoint. Included within this guidance are costs related to our accelerated investments into our sales force, which we expect to continue at a similar pace, but does not include the potential impact of fuel price volatility, which I will touch on in a minute.

It's important to note that at the midpoint of our margin guidance implies an approximate 300 basis point improvement over the last 3 years, reflecting the incredible progress made on our transformation. We are also reaffirming our adjusted free cash flow guidance of $100 million to $115 million, providing us with significant financial flexibility to continue to reinvest in the business.

In total, this guidance reflects a third consecutive year of record-breaking adjusted EBITDA, continued margin expansion and the continuation of Land revenue growth.

To wrap up, let's move to Slide 17 to describe the potential impact of higher fuel costs in the back half of the year and the actions we're taking to mitigate against this. Through the first half of the year, fuel prices were relatively consistent with prior year. But amid recent macroeconomic uncertainty, prices have moved higher and are fluctuating daily. Given that roughly 60% of our fuel consumption occurs in the second half of the year, continually higher prices has the potential to create cost headwinds.

While approximately 1/4 of our remaining fuel consumption is hedged, the unhedged portion remains exposed to market volatility. Given the volatility in the price of oil, this could mean varying impacts based on how long prices remain elevated. That said, there are mitigating factors within our control that will help us offset a portion of this impact as the year progresses.

Pricing power remains a key lever for us. Ancillary work, representing approximately 1/3 of our total land revenue is priced daily and adjust in real time to reflect cost increases. Additionally, all new bids and annual contract renewals incorporate these higher costs. Alongside pricing, we are working on our own efficiencies on reducing fuel consumption through improved route density, minimizing idle time and leveraging technology to identify the most cost-effective fuel options.

Before turning the call back over to Dale, I want to underscore my confidence in the momentum of the business and the ability to deliver sustainable, profitable top line growth. Our investments continue to drive measured improvements in employee turnover and customer retention and are now powering top line growth in the Land Maintenance segment, a trend we expect to build upon in both the near and long term to deliver meaningful value for our shareholders.

With that, I'll turn the call back to Dale.

Thanks, Brett. Before we turn to questions, I want to express my enthusiasm for the trajectory of our business, underpinned by the inflection of Land Maintenance revenue in the quarter, continued growth in our contract book and sequential improvement in our core KPIs as we execute upon our strategic objectives. This progress has been made possible by our people who are at the center of everything we do and the driving force behind our transformation. While we're encouraged by these results, this marks just the beginning of our journey to deliver sustainable, profitable top line growth and create meaningful long-term shareholder value.

With that, operator, you can open the call up for questions.

[Operator Instructions] We'll go first this morning to Tim Mulrooney with William Blair.

It be hard to limit myself to one question here, but I'll do my best. I guess I want to ask about the Land Maintenance growth because it feels like we've been -- what we've all been waiting for is finally here, inflecting in a positive territory here and a positive 4% at that, which was well above our expectations. We were actually expecting organic revenues to decline a little bit in the quarter and that's a pretty big variance relative to our expectations. So was some of this just weather related? Or how would you characterize the main drivers of this result so that we can get comfortable with underwriting, I don't know, a similar level of growth in the second half here?

Yes. Thanks, Tim. I'll start off and I'll let Brett add. 30 months. 30 months, we've been waiting for this inflection point, Tim. And you are right. We have done everything right to build the foundation for getting us ready for growth. And even though last quarter, we had some headwinds from weather where we actually reported a slight decline in Land. We were able to actually see some of that come back. We had said roughly $6 million of Q1's decline was just temporary. We saw some of that benefit return in Q2. And then even with the weather that we saw in Q2, the outsized snow, we still saw our Land business show growth. Some of that was our ancillary revenue.

But I think the big important topic in answering the second half of your question is what we see that builds momentum. When you look at everything we talked about in Q1, where we talked about our book of business being up 2%, we just reiterated that by saying at the end of Q2, now we're up 3%.

Just let me do some math for everybody on the call. Our book of business is roughly $1.15 billion. If we have a 3% growth in that book of business, that means we're growing our contract book by roughly $35 million. 60% of our Land revenue will occur over the next 6 months. So that means we have $20 million of tailwind built into our updated guide going from 1% to 2% Land growth to 2% to 3% Land growth.

And on top of that, the most exciting part is with our continued momentum in retention getting up to almost pre-IPO levels at 84.5% roughly. That means the longer we keep customers, the more they're willing to work with us on ancillary services. So we are very confident. We saw this coming. We tried to give a little signal to that as we went through Q1's earnings. But now I think everybody sees the inflection point is behind us.

And Brett and I, I think both said the term several times, our focus is on sustained long-term profitable growth. And our Land business is key to that initiative.

So Tim, great question. It's probably the one thing Brett and I are the most proud of. We've done it the right way. We've stayed focused on getting the business to be able to start growing organically the right way. And then, look, you heard me mention. I've said to all of our team, you have to earn the right to do M&A. I think our quarter here on Land shows people are starting to earn the right for us to consider M&A again.

But Brett, do you want to add anything?

No, Tim, we're excited. Look, the inflection is here. I think we've been saying it's coming. They all said 30 months. You go back 2.5 years ago and investing in our employees, who invest in our customers and can drive that customer retention higher, the strategy is working. And now the strategy has evolved to investing in our sales force. We started that last year. We invested $6 million in our sales force in Q1, another $6 million in Q2. And I said it in the script, we're going to invest another $6 million probably in Q3 and another $6 million in Q4, because it's working.

The strategy we laid out on paper 30 months ago is now inflected growth in the Land business. If you look at the kind of the first half of the year, as Dale mentioned, it's about a 1% growth in the Land business, but we're entering into our busy season. We raised revenue guidance in Land. And the back half of the year implies a 3% to 4% growth in that Land business. So we couldn't be more excited, Tim, about the inflection being here.

We go next now to Greg Palm with Craig-Hallum.

Congrats again on the solid results. Can you maybe just talk about the competitive environment a little bit? Just -- I don't know, it seems like a lot of factors that are now coming together that would support at least the potential for not just share gains, but maybe significant share gains. So maybe you can talk about what your thoughts on that are.

Yes. Great question, Greg. I think we have said from day 1, customers require quality service and your commitment to putting the customer at the center of everything you do is what's going to drive our path forward. We have to take care of what we can take care of in our control, and we've done that. When I joined in the end of '23, our customer retention was a dismal 79%. We were never going to outrun that type of loss on an annual basis. So we did that foundational work to get our branches focused on quality service to the customer, making sure the customers we had, we kept.

And now after 2.5 years, we're amplifying that by bringing in more sellers. So you keep your customers you have and you grow the new sales because the environment out there, a lot of people might be getting reactionary with what's going on in the overall economy with fuel. And we just remain focused on we're going to take care of our business for the long term.

We're partnering with our customers. We're working with them to look at where we want to be over the next several years. At our Investor Day last February, we made a commitment that we're going to grow this business and the targeted mid-single digits for our Land business, and we are still committed to that. And I think the trajectory that we'll exit 2026 and go into 2027 with puts us on a path for that. So we couldn't be excited about what we've done.

Now what we've got to do, Greg, is continue to listen to customers. We've done great with snow this year, everybody saw. We had a big snow year, and we had a lot of customers turn to us to ask us if we can bail them out when we had a lot of snow coming down. That creates relationships and gives us the opportunity to partner with customers all year round. We want to take care of the customers we have. And when new customers come in, we want to do what we promise we're going to do. That's what's key. We've got to make sure whatever we commit to, that's what we do.

But Brett, do you want to add anything for Greg?

No, Greg, I would just say market share, the market grows about 1% to 2% a year. This year, implied in our guide, we're going to grow at 2% to 3% a year. So yes, you're saying we're taking market share. And look, it starts with the strategy. It starts with taking care of our employees, which the minute Dale stepped in here for all 18,000 employees in this company. We put them front and center, especially the folks that service our customers. And that's driven customer retention. Now it's time to invest in our sales force, which we've been doing, which is resulting in higher growth than the market.

And look, you go out into our operations, Dale mentioned we had Employee Appreciation Week not too long ago, and you see our employees with new boots, new safety equipment, new vests, new high vis safety gear. You see them with new trucks and trailers, just the business has drastically improved over the last 2.5 years. And obviously, our customers are seeing that with the result in customer retention. And now it's our time to take share, Greg, as you just said.

We go next now to Stephanie Moore with Jefferies.

I wanted to segue off of that last question, but I might ask it to be more specific here. So I mean, definitely really appreciate what you just outlined and certainly the color on improved labor and customer retention. But could you maybe talk about how you think about your long-term strategy while also navigating this heightened fuel environment? And maybe it would be helpful if you could kind of compare and contrast to 2022 and the strategy at that time, which was the last time fuel really spiked and how it's different from what you guys have outlined today?

Yes. Thanks, Stephanie. It's a great topic because, obviously, a lot of people, including some of our vendors, the initial reaction is try to pass on any fuel headwinds they get to their customers. The last time BrightView did that back in 2022 when we started the year with 83% customer retention, and by doing a haphazard fuel surcharge that we just pushed out blindly across the board, it resulted in exiting the year down 300 basis points with a customer retention level at 80%.

So we are going to make sure we put in the long-term view with our customers. We're going to communicate. Brett went through a litany of items we're doing to mitigate fuel. Let me give you some statistics of what we're doing that's in our control and not trying to pass along our challenges to our customers at a very volatile time. And for those of the people I'm sure that watch the news every morning, there was new news out this morning that has oil coming right back down at a rapid pace. But let's talk about what we can control.

First, Brett mentioned some of this stuff. I'll give you some statistics. We have made a considerable investment in our fleet, in our route density for our employees. What else is a byproduct of that is we anticipate and what we've seen year-to-date is our consumption of fuel is down across our network between 5% and 8% in our branches. All that new investments we made are helping us use less fuel. We have to reduce idle time. We have to reduce -- we have to increase route density and reduce wasted time to make sure we're being as efficient as we can using fuel.

Brett said it, we have ancillary services we're pricing every day. And this is a balance between us making sure we're still growing our ancillary business for our customers and showing them we respect them, yet pricing it at a fair level. So we have built in some fuel opportunity into our ancillary pricing. And in the back half of the year, we have roughly $300 million of ancillary work of roughly half of that, we have an opportunity to do spot pricing on. So we'll get some recovery with that.

When you look at the things we've done to mitigate, in the full year, we used 20 million gallons of fuel at BrightView. We're halfway through the year, just over 7 months now for BrightView. Roughly 60% of our fuel is used across the next 2 quarters. So if you do the math on that, that's 12 million gallons of fuel that we're coming into the season with that we're going to consume. Of that 12 million gallons, we've already hedged fuel at about 25% of that. So that takes us down to 9 million gallons. If you take the improvement we've seen in fuel, that takes us down to 8.5 million gallons that we think we are potentially trying to find out how we're going to make sure, we find an offset for.

In the month of April, we saw roughly $1 increase per gallon for that month, creating about $1.5 million headwind for us. But we believe we will see some recovery as we work through all the initiatives I mentioned and continue to focus on making sure as fuel prices come down, we don't damage customers long term. We are 100% focused, not on the next 90 days, but on the next several years. Our project to get to 2030 goals is still our North Star, and it's not the third or fourth quarter.

Brett, do you want to add?

I would just add, Stephanie, we are going to be better partners to our clients than that. And that's what we're demonstrating right now. This short-term headwind that you see in the market is very dynamic. It changes every day. There was articles out this morning that drove fuel down over 10%. But we are not going to manage this business for the short term. We've said that continuously now for the last 10 quarters. And we're going to stay on that long-term focus.

And back to the piggybacking on Greg's question, that's how we're going to be better partners to our customers. That's how we're going to gain market share. And I'll take one step further. If we see in our regional areas where other service providers are passing along fuel increases, we'll pick up that business without the fuel increase. So we are going to be better than that to our customers. We're going to continue to drive customer retention. We're going to continue to sell more business through our expanded sales force, and we're not going to manage this business for the short term. The best long-term decision is going to be taking care of those customers now. So 6 months from now, a year from now when this all blows over, that's what's going to be remembered that's going to continue to drive that customer retention and that Land revenue growth even higher.

We go next now to Bob Labick at CJS Securities.

On the quarter. We're viewing it as a beat and reinvest. And kind of with that team, you've talked about it a little bit. Can you talk about the decision to keep your foot on the pedal with the hiring of the salespeople? What have you learned so far from the recent hires that keeps you so encouraged? And where do you stand in your plan? I think you outlined a plan to increase the sales force 50% or so.

Yes. Yes. Great question, Bob, because it's what gives us the enthusiasm to keep looking at how much opportunity this business has. So it's a tough -- when you look at the investment to make in the sellers, we invested $6 million more year-over-year in Q1. We invested $6 million more year-over-year in Q2 in just the frontline sellers of our business.

Now the way I look at those new sellers, Bob, the first 6 months, they relatively produce very little. Some of them don't produce hardly any sales as they start making customer relationships. Between 6 and 12 months, their annual run rate is closer to $500,000 to $600,000. And once they get to a year plus, that's when they're starting to produce somewhere around $1 million. A fully matured seller has been with us roughly 18-ish months, and we target about $1.5 million of new sales.

Here's the exciting part. We've been able to cover that $12 million that we invested year-to-date. And we're seeing that net new growth every quarter, 4 consecutive quarters now. We started to add sellers in the back half of '25, and we really stepped on the gas pedal in Q1, and we continued it in Q2. So what gives me the confidence is it's working. We just put up 4% Land growth. We just raised our guide from 1% to 2% of Land for the year that on the last call, people questioned if we were going to be able to deliver to 2% to 3% growth. And we are optimistic that as we get into 2027, we can even do better than that.

So we are not going to pause. This is our future. Growing this business is how we're going to make BrightView the Investment of Choice for our investors. Long-term profitable growth is the key for us, and that's what we have to do by making sure we're bringing in new customers and getting our arms around our existing customers and keeping them as long as we can as a great partner.

Brett, do you want to add?

Yes, Bob, I only add the strategy is working. We're not going to slow down something that's showing positive signs and working for us. And we said during Investor Day around 15 months ago that we'd add 50% to our sales force, which is the starting point was about 1,000 in total sellers. We're well ahead of that pace. We've added just under 200 year-over-year right now. So call it, we're up to about 20% add of that 50% or 40% of the way there.

So we are making significant progress much sooner than anticipated. Dale mentioned, we had the benefit of heightened snowfall, which allowed us to move quicker and pay for them. But I would just say that the strategy is working, and we are going to go as quickly as possible to get these sellers on board, ramped up and productive.

We go next now to Greg Parrish with Morgan Stanley.

This is Yehuda Silverman on for Greg. Just have a quick question on the development cold starts that are opened and the 5 more underway. Just curious how bookings have been early on and how long you expect it will take to get to a normalized backlog book there? And what gives you confidence to have success in those regions?

Yes. Yes. It's great question, Yehuda. So look, I think one thing I've seen, we have -- and I've said this since the day I started, I met our teams in our development business, we have hands down some of the most talented development people in this industry.

Our Development business is the largest in the industry. The jobs we do just amaze me. So our team in Development, while it's a choppy business, they do unbelievable work. And the one thing I can assure you, where we have the ability to do quality development installations and long-term maintenance service, we are a better provider, a better partner to our customers. And our customers see that.

So a year ago, I said what we have to do is take those markets that we're so strong in that we have great Development and great Maintenance teams working side-by-side under our One BrightView initiative, and we have to make that in every market we can service. So we announced we're going to open 10. What we need to do to open a Development branch, we usually have real estate with our Maintenance branches. We try to get a branch manager, we get a seller into that market, and we go up.

What you see as us saying we have 6 that are open, it's because we have booked backlog. They vary. Some branches have gotten big jobs, but I will assure you, every branch has a nice pipeline of open quotes that they're trying to land. The 5 that we still say are in process of opening. We've hired people. We have sellers. We have them starting to work. We haven't closed any deals there yet, but we anticipate over the next several months, we will see those go to fully open branches.

We believe we need to have a Development resource helping our branches in every market that we service. And there's still so much open space for us to expand into through either M&A on the Maintenance side or through organic opportunities.

So look, I think we're happy with the progress we've seen. The business of Development is choppy, to say the least, especially with some of the weather that we just saw in Q2, you can get movement between quarter-to-quarter, but we're anticipating growth in the back half of the year in that business. And our teams are focused on continuing to go after the customers every day, and we're working with our partners. So the backlog is a little bit choppy in those, but every branch that we set are now open for those 6 have now booked orders.

Brett, do you want to add detail?

I would just echo Dale's comments. We do have the best teams, the best experts that produce unbelievable work in this business. It can be a bit choppy with timing. We saw the last 2 to 3 quarters, projects push out. But if you look at our bookings year-to-date, up 15%, you look at our remaining performance obligations, which is projects greater than 1 year, that's up 6% quarter-over-quarter. So the momentum is building in that business as well.

And, look, let's not discount the fact that when we have these cold starts and they open up business and sell new Development work, that's just a leading pipeline for more Maintenance Land revenue. So converting that work also is a big opportunity for us. But we're excited about the trajectory of the business. The momentum there is building. We haven't quite got the work in the ground and the timing we anticipated, but it's coming and the leading indicators are there to show growth. And that's what's implied in our second half guidance is growth in that business.

We'll go next now to Andrew Steinerman with JPMorgan.

This is Alex Hess on for Andrew. I hope everybody is having a lovely day. I actually have a multi-parter, so I hope you'll bear with me on this. But just a couple of items that haven't yet been touched on. On fuel costs, I know there was some discussion about how that might impact ancillary. But just to be clear, you're not flowing any fuel benefits through on revenue that you aren't also flowing through on costs, correct? Just maybe to start with.

Correct, Alex. We have said we didn't imply any assumptions for fuel cost outs and nor have we assumed anything on the revenue side. So you are absolutely right with that assumption.

Understood. Then on snow, can you provide us what was the EBITDA flow-through on that snow revenue? I know it was a little muted last quarter due to some of the contract dynamics. Just trying to understand how that shift to contract -- more contract book impacts the revenue and incremental margin of snow. And that's the third one to pull out.

Yes. So last quarter, we said we were under the 20% target that we had, Alex. While we don't have a fully loaded P&L for snow, obviously, we're sharing resources. We believe that our full year flow-through is about 20% right now on EBITDA for that business.

Now snow has been a great story, and I'm going to let Brett comment here in a few minutes. Snow is the markets we saw a lot of snow and the markets we didn't see any snow. So when you really break down the snow season that we went through, obviously, everybody on the Eastern Seaboard felt the impact of weather, some way or shape through the quarter and through the first half of the year. In fact, some of our ancillary benefits that we saw in Land, we saw freezing all the way into Florida that those teams had to do work as we went through Q2 after those deep freezes.

But the Eastern Seaboard, even the Carolinas, where we always have variable snow, saw a considerable amount of snow. On the opposite of that, Colorado had a very, very soft snow year as well as the Pacific Northwest. Both of those markets are traditionally more time and material/variable snow because of the volatility in their snow, what can do a little bit of a drag on those margins. But once again, long term, our goal is to be a better partner to our customers is our continued movement to get customers on more of an annual fixed snow agreement.

We want to keep pushing that, so customers know what they're going to spend for snow. And if we get a big year like we just had, yes, maybe it's not quite as profitable, but it allows us to manage the business with them over the long term, where years where we get less snow maybe in those markets, we do a little better.

So -- but Alex, to answer, it's about 20% is the way I'd look at it. I think that's a healthy margin for us and make sure we get our arms around our customers. Brett, do you want to add?

No, I think the takeaway there is this is our opportunity heading into next snow season with outsized snow in the Northeast and Mid-Atlantic regions to try to move more of those contracts to fixed. We are about 2/3, 1/3 variable. Now we're about 60-40 variable, so leaning towards variable. But as we have those conversations now and renewals for next season and selling into next season, this heightened snowfall, this is the opportunity for us to become more predictable in our snow model by shifting even more of that business to fixed.

We'll go next now to Ryan Gilbert with BTIG.

Great to see all the work on the revenue initiatives starting to play out in the landscape maintenance business. I think last quarter, we had talked about the potential for some of your customers' budgets to be stretched potentially due to the snowfall, and it seems like that fortunately did not materialize in the quarter. But I'm wondering if you could expand on what you're hearing from customers as to their appetite and ability to pay for landscaping services. And then just a quick housekeeping. I don't think I heard the number of sellers you added this quarter. So if you could quantify that, that would be great.

Yes. What Brett had said, Ryan, is we're roughly up 200 year-over-year. We had said we're up about 180 at the end of Q1. We're saying we're up about roughly 200 on the number of sellers. So it's fluctuating every day, obviously. We continue to keep the foot on the gas as we've gone through April. So that's just your quick housekeeping.

I would say what we're hearing is we talked last year as we went through Q3, some of the challenge we heard with the reactions from Liberation Day, we had heard pretty quickly from our customers how they were nervous about all the potential impact from tariffs or anything else that was coming out. Our teams are telling us there's plenty of work out there for them right now. They feel much more optimistic as we go into this summer. We have some customers that had severe snow costs. But for the most part, take that little bit of that noise out, people are much more optimistic as they're going into this summer for that discretionary spend.

A lot of people know they want their properties looking good. It's the spring time. It's the time for them to start making some investments. So I would tell you, we feel more optimistic as we sit here beginning of May 2026 than we did just 12 months ago as we were facing some headwinds. And look, we're looking forward to your conference this week, and we're excited about some of your investors, and we'll see you in New York this week. But Brett, do you want to add anything?

No, Ryan, I'd just add, that's what gave us confidence to raise our Land guidance in the back half of the year, right? If we're seeing any type of slowdown or softness, we'd be hesitant to do that. But the momentum in our contract book, that's now 3% up year-over-year, 4 sequential quarters of net new positive growth in our contract book. We're keeping customers longer, as Dale said earlier, those customers who stay with us longer, have more confidence in us to do ancillary, spend more money with us. So those things, including the ancillary outlook for the second half of the year, gave us the confidence to raise our Land guide in the back half.

We go next now to George Tong with Goldman Sachs.

This is Alex Lakritz on for George Tong. Can you provide an update on the conversion of Development contracts to recurring Maintenance contracts? And then how BrightView is tracking towards the 70% long-term target?

Yes. Look, I think what we're saying is Development is choppy. We saw continued momentum. Our teams are working better than they ever have. It's relatively consistent as we went from 2025 through into the first half of 2026. So we had very few projects closed here in the first half of the year, as you can see. We have a little softer development revenue. We'll see that as work gets finalized as we go through the back half of the year, we'll see more opportunity to convert that.

So it's a tough metric when all you're looking at is the development revenue, Alex, because what you actually got to really focus on how many jobs close. We had some pushouts here. We'll see those jobs close as we get into the back half of the year. And then it will create opportunity for us on the maintenance side. So we feel great about how the teams are working together.

But Brett, do you want to add?

Alex, I'd just say our teams are working together better than they ever have in our geographies, especially where we have Maintenance and Development branches together. Those teams are partnered at the hip now under One BrightView over the last 2.5 years, and they're working better together than they ever have. And you think about our cold start strategy, we have 6 cold starts opened with Maintenance branches, Maintenance employees, a reputation for Maintenance already in those markets. That's only going to supercharge that conversion opportunity as we open up development cold starts in those areas we already have Maintenance.

We'll go next now to Jeffrey Stevenson with Loop Capital.

Congrats on a nice quarter. You reported strong 110 basis points of maintenance margin expansion during the quarter, benefiting from the positive revenue flow-through on the landscaping side. So although you're taking Maintenance margins down due to continued accelerated pace of new sales hires during the back half of the fiscal year, do you believe the strong March quarter margin expansion shows that the One BrightView initiatives are driving improved underlying margins as landscaping demand returns positive?

Yes. Great question, Jeff. So 30 months ago, I realized we had to fix this business, and we have to get it growing. There is no question our future is about growing the top line organically, not just buying revenue, it's about organic growth for the business. And there is no question that when we can grow Land 4% through our existing branch network, that's going to create profitable margin expansion for us.

Now snow didn't really hurt us. It wasn't the reason that everything happened, but we firmly believe, Jeff, that Land organic growth and the flow-through that's going to produce is our future. And that's why we are so excited about what we're predicting for the back half of the year, increasing from 1% to 2% for full year to 3% to 4% or 2% to 3% in Land growth.

Just to give you a quick reference, our updated guide suggests we will grow our Land Maintenance business over the next 2 quarters between 3% and 4.5% in the back half of the year. And that's why we're excited. That's why there is no question. I am 110% committed to investing in our frontline teams and our sales force to go after market share. We have done everything needed to get the foundation of this business in a healthy spot. We're far from perfect. We need to keep pushing those customers -- those branches that don't have customer retention at 90-plus percent.

You've seen now 35% of our branches are at 90%, which is great, and I congratulate those, but we still have 10% below 70%. We are hyper focused on taking care of those branches. I want to talk about the day we don't have branches below 80%.

Taking care of our existing customers is my #1 priority. And on the backside of that, I am going to invest, invest, invest in growth. And there is not a reason that we should back off on our strategy because Brett said it, and I'll say it, it's working. It's producing the growth that we've been waiting for.

And I am so excited about what that means, not just for the back half of this year, but '27, '28, '29, future years. We have $130 billion end market, and we are just a fraction of that end market. We are going to take share. We are going to grow this business. We are 100% focused on becoming the Provider of Choice for our customers. And that's our focus. So Jeff, great question. Brett, do you want to add?

Yes. I would just add quickly. Look, you think about development margins for a second over the last 3 years since One BrightView, that business has expanded EBITDA margins over 500 basis points or around 500 basis points. So huge margin expansion in Development really getting pulled into the One BrightView strategy. And you said it, Jeff, now it's time for Maintenance implied in our back half of the guide and full year guide is margin expansion and Maintenance, 30 to 50 basis points while investing in the business. We're investing $6 million a quarter into our incremental sellers and sales force. About 90% of that is maintenance related. So even despite that investment, we are seeing the outsized benefit now start to come in Maintenance margins. and for the full year guide, still expected to expand 30 to 50 basis points.

And gentlemen, it appears we have no further questions this morning. Mr. Asplund, I'd like to turn things back to you, sir, for any closing comments.

Yes. Thank you, operator. Look, I'll close by reiterating our confidence in the path ahead. We had some great questions today, but our transformation is starting to take hold. That's what's critical for us. Over the past 2-plus years, we've built a stronger foundation at BrightView, bringing the organization together, unlocking efficiencies and achieving good financial results.

Through this period, we've consistently reinvested back into the business by refreshing our fleet, supporting our frontline teams and building a stronger, deeper sales organization. Even though we're still early in our transition, the investments we've made are translating into a growing contract book, which is the driving top line growth in our Land business long term.

So once again, we said it many times, everything we've done is with one focus in long term, continued profitable top line growth across this business and make it sustainable, so we will grow this business for years to come. So we look forward to talking to everybody come Q3. Thank you again for your attention, and we hope everybody has a good day.

Operator, you can now end the call.

Certainly. Thank you, Mr. Asplund, and thank you, Mr. Urban. And again, ladies and gentlemen, that concludes BrightView's earnings conference call. Again, thanks so much for joining us, everyone. We wish you all a great day. Goodbye.

Good day, everyone, and welcome to today's BrightView Earnings call. [Operator Instructions] Please note, this call may be recorded. I will be standing by if you should need any assistance.

It is now my pleasure to turn the conference over to Mr. Chris Stoczko, Vice President of Finance and Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining BrightView's First Quarter Fiscal 2026 Earnings Call. Dale Asplund, BrightView's President and Chief Executive Officer; and Brett Urban, Chief Financial Officer, are on the call.

I'll now refer you to Slide 2 of the presentation, which can also be found on our website and contains our safe harbor disclaimer. Our presentation includes forward-looking statements subject to risks and uncertainties.

In addition, during the call, we will refer to certain non-GAAP financial measures. Please see our press release and 8-K issued yesterday for a reconciliation of these measures.

With that, I'll now turn the call over to Dale.

Thank you, Chris, and good morning, everyone. We had a strong start to 2026, as we grew total revenue 3% and delivered improvements in EBITDA while accelerating investments in our sales force, adding 80 incremental sellers in the quarter. While the needs of our customers vary geographically during the quarter based on weather, our focus on our frontline employees and delivering reliable service to our customer drove another sequential quarter of improvement in employee turnover and customer retention.

Our intense focus on accelerating investments in our sales force, coupled with stronger customer retention, drove improvements in our underlying Land Contract book of business, one of the leading indicators of future revenue growth. More on this in a few minutes.

Our accelerated investment in the sales force is proving effective, and we remain on track to deliver on our 2026 guidance, which represents a return to land growth in the third consecutive year of record adjusted EBITDA, as we continue to transform our business and deliver value for shareholders.

We are well positioned to execute against our objectives. This quarter's progress reinforces my confidence in achieving our 2026 guidance, and our continued investment across the business positions us to deliver sustainable, profitable topline growth in both the near and long term. We have strengthened the foundation of the business, making significant strides in leveraging our size and scale, unlocking efficiencies and improving profitability over the past 2 years. Now, as we move forward, we will continue to cultivate a world-class sales organization to drive new sales to position BrightView as the investment of choice.

With that, let's move to Slide 5, where we continue to see sequential improvement in our frontline turnover. Since day 1, my focus has been prioritizing our frontline crew members. And with ongoing investments, we continue our journey toward becoming the employer of choice. We have seen a considerable decline in turnover with approximately 30% improvement in just 2 short years. As an example of our continued commitment to our frontline, this quarter, we implemented advance pay, allowing our employees to access a portion of their earned wages ahead of the typical pay cycle, providing them with financial stability and flexibility.

Our goal of becoming the industry's employer of choice has driven material cost savings that we've reinvested back into our frontline, and our continued improvement in employee turnover has created a more reliable workforce with consistent service levels for our customers.

Turning to Slide 6. I'd like to highlight the impact that consistent service levels continue to have on retaining our customers. After reaching a low of approximately 79% in 2023, customer retention has improved by approximately 450 basis points as of Q1 2026, driven by initiatives focused on delivering consistent service levels to our customers, prioritizing our frontline employees and investing record level of capital to refresh our fleet. This is a true reflection of the exceptional service our employees deliver each day.

Turning to Slide 7. We've also made significant progress across our branch network in driving retention improvements, in both the top and bottom quartiles. We have seen sequential improvement resulting in a 10% shift in both quartiles. While we are pleased with these results, we remain encouraged with the opportunities that still lie ahead. Our commitment to high-quality customer service has yielded significant improvement in customer retention. And, as we know, the longer a customer stays with us, the stronger relationship we build and ultimately results in us being able to provide a full suite of services over many years. The sequential improvement we have seen in this metric is a key contributor to now 3 consecutive quarters of positive net new sales in our Land Contract business, which I'll touch on in more details in a few moments.

Turning to Slide 8. I'd like to update you on the rapid progress we've made in strengthening our sales force. During Investor Day, we outlined plans to expand our sales organization by 50%, representing approximately 500 net new hires by 2030. In the second half of fiscal 2025, we added approximately 100 new sellers, followed by about 80 additions in the first quarter of fiscal 2026, which is an increase of approximately 20% since the beginning of 2025.

We are pacing ahead of our initial expectations, as this represents more than 1/3 of our progress toward the 2030 target. There are 2 categories of sellers, as shown in the bottom left, new business sellers focused on acquiring new customers and capturing a larger share of the total addressable market, while our customer-facing support team manages existing relationships and drives ancillary sales on top of contracted services. As new business sellers ramp their productivity and add new contracts, our customer-facing support team will further expand ancillary sales, helping to drive overall growth.

Hiring is pacing ahead of our original expectations, and we plan to continue to ramp our sales organization through 2026. Expanding our sales force is critical to driving growth. And with structured training and enhanced technology tools in place, we are encouraged by the early momentum we are seeing in new sales.

Turning to Slide 9. Now, I'd like to build on the topic of new sales and talk about a metric that's critical to Land Maintenance growth. This chart shows the improvement we made in our Land Contract book from Q2 2025, underpinned by a sequential improvement in our net new sales, a metric that factors in both customer retention and new sales. Ultimately, a growing contract book is an indicator of future Land Contract revenue growth.

In my first year, we have realigned the sales and ops structure and changed the incentive plan to reward sellers for driving profitable new sales. This resulted in our branch managers and sellers working in tandem to align on new sales and equip them with the appropriate go-to-market tools. As we solidify the foundation of our business through reductions in employee turnover and improvements in customer retention, we began ramping the sales force in the back half of 2025.

Since then, we have increased our sales force by approximately 180, or approximately 20%, and continue to see sequential improvements in customer retention, 2 key metrics needed to drive growth in our Land business. In Q3 2025, the momentum drove positive net new results, and we have seen 3 consecutive quarters of increased net new contract sales and growth in our Land Contract book of business of approximately 2%. This sustained momentum in improving customer retention and new sales growth gives me confidence that we will return to sustainable topline growth in the back half of fiscal 2026.

Moving now to Slide 10. I want to remind everyone of the progress we've made in solidifying the foundation of our business and our focus for 2026 and beyond. In my first 2 years, my focus was on investing in and prioritizing our frontline employees, delivering consistent and reliable service to our customers and unlocking our size and scale as the industry's largest commercial landscaper.

This has resulted in sequential improvement in employee turnover, customer retention and margin expansion, all key catalysts to help solidify the foundation of our business. Going forward, we will continue delivering in these key areas while also focusing on driving profitable topline growth in 2026 and beyond.

As I mentioned a few moments ago, accelerating investments in our sales force will allow us to capture a greater share of the market. Through new sales and a sustained commitment to quality service, we expect sustained growth in our contract book, allowing our customer-facing support teams to layer in additional ancillary sales. By continuing to solidify the foundation of our business and by making strategic investments in our sales organizations, we are well positioned to accelerate contract growth and deliver sustainable, profitable topline growth.

Before I turn it over to Brett, I want to express my appreciation to our more than 18,000 employees for their unwavering commitment to delivering consistent service and strengthening BrightView's position as the provider of choice. A recent example of this, although not an impact to the first quarter, was the team's readiness during the recent winter storms to safely and reliably service our customers. It is events like these that set us apart from other landscapers in the nation. Our ability to provide dependable service to our key customers was highlighted over the past few weeks. Once again, thank you to all our employees for putting the customer at the center of everything we do.

With that, I will now turn it over to Brett.

Thank you, Dale, and good morning, everyone. 2026 is off to a strong start with our financial results positioning us to deliver on our guidance, which implies Land revenue returning to growth and delivering a third consecutive year of record adjusted EBITDA. The strategic decisions we have made over the past 2 years to invest in our employees and customers has paid significant dividends, as you can see in our employee turnover and customer retention metrics. And now, our strategy to add to our sales force is already showing positive signs in our selling performance. I am continually encouraged by the momentum we are building in the business to deliver long-term profitable growth.

Let's turn to Slide 12 to discuss our results in the quarter. Total revenue for the first quarter was $615 million, which is a 3% increase, driven by heightened snowfall and continued improvement in underlying land metrics. Snow was a major benefit in the quarter, increasing 110% from the prior year, as we saw higher-than-average snowfall in the Mid-Atlantic, Northeast and Midwest geographies.

Maintenance land revenue was impacted by weather-related factors, including the year-over-year step over from the 2 named hurricanes in prior year Q1 and increased snowfall this quarter, which limited our ability to perform core land maintenance. However, as Dale just mentioned, we're highly encouraged by the trends we're seeing in employee turnover and customer retention, and now, net new positive contract sales, which is the catalyst for land growth in the back half of 2026.

In the Development segment, revenue decreased 7%, driven by timing and mix of projects. I want to be clear that the headwinds we experienced were timing related as we saw this impact start late in 2025 and should not be viewed as lost revenue over the long term.

Turning now to profitability on Slide 13. We delivered another quarter of adjusted EBITDA growth, as we continue to transform our business. Higher revenue was a benefit to flow-through, as we are continuing to see advantages of refreshing our fleet, unlocking purchasing power through procurement and realizing efficiencies across the business to drive G&A savings.

These benefits were partially offset by accelerated investments in our sales force, as our revenue-generating resources are up 180 employees or 20% over last year. This investment underpins the next leg of our sustainable growth journey.

Now, let's move to Slide 14 to discuss our strategic capital allocations focused on driving long-term shareholder value. Our strong balance sheet highlights this strategy, supported by ample liquidity and a favorable debt structure with no long-term maturities until 2029. We continue to accelerate our fleet strategy in 2026, which saw a significant improvement to the average age of our core mowers and production vehicles in 2025.

And now on to refreshing our fleet of trailers, this refresh has provided not only P&L benefits in the form of lower rental and repair and maintenance expense, but also intangible benefits through higher employee morale and customer satisfaction, which are major contributors to the improvement we've seen in frontline turnover and customer retention.

Additionally, at the start of 2026, we increased our share repurchase authorization from $100 million to $150 million, as we believe our current valuation does not fully reflect our earnings potential. This increase resulted in $14 million in share repurchases in Q1, essentially doubling the quarterly average from 2025, as we continue to see our shares as significantly undervalued. While we currently view our fleet refresh and share repurchases as an efficient use of capital, we remain poised to return to M&A when the time is right, and we've developed a robust pipeline focused on service line density and market expansion.

Moving to Slide 15. We felt confident by the first quarter results and underlying trends we are seeing in the business, and we are reiterating our 2026 revenue, EBITDA and free cash flow guidance. This represents the third consecutive year of record-breaking EBITDA, continued margin expansion and a return to Land revenue growth. Additionally, our free cash flow guidance, coupled with ample liquidity, provides significant financial flexibility to continue to reinvest in the business.

Before turning the call back over to Dale, I want to reiterate my conviction in the trajectory of BrightView and our ultimate goal, delivering sustainable, profitable topline growth while creating meaningful shareholder value. The investments we've made into our business have paid dividends, as evidenced in our employee turnover and customer retention. And now, we expect our investments into our sales force to do the same.

With that, I'll turn the call back to Dale.

Thanks, Brett. Before we turn to questions, I want to reinforce a core belief that our people are the foundation of our progress. By investing in our employees and building an employer of choice culture, our intense focus on delivering best-in-class service is at the forefront of everything we do.

Now, as we continue to ramp our sales organization, we are excited about the contributions the new 180 sellers are going to make. This, combined with leveraging our size and scale and strategically allocating capital, I'm confident in our ability to achieve sustainable topline growth and position the company to deliver long-term shareholder value.

With that, operator, you can open the call for questions.

[Operator Instructions] We'll go first this morning to Bob Labick of CJS Securities.

Congratulations on a great start to the year. Yes, I wanted to go back to the sales force investment, obviously. You mentioned you're ahead of pace. Does this mean you're going to pause? Or do you keep your foot on the accelerator? What's the target for the year? And what's the impact on the P&L? I guess, finally, like how long does it take until new salespeople break even and add to the top and bottom line?

Yes. Great question, Bob, because we're proud of the progress we've made. First, we're going to start off by saying we join you today from our team -- with our team down in Homestead, Florida location. So we're seeing weather all over, and our teams continue to embrace the need for more employees to communicate with our customers.

You saw in the quarter, Bob, we added 80 FTEs to support our growth levers. We are not going to slow down. We are seeing benefit. It's building our contract book, and we can talk through the effect it had on revenue in the quarter, as we saw outpaced snow across the country. But everything we've seen from the transition of moving our sales force to work directly with our branch managers is working.

Now, it's about making sure as our branch managers request additional go-to-market resources, we're supporting them and continuing to give them people to help us grow this business. The 80 people we added in the quarter on top of the 100 people that we brought in last year, we are going to keep going. Originally, we said we were looking to add another 100 this year on our goal to adding 500 before 2030. We're well ahead of schedule. We're at 80 as of the end of the year.

I want to keep promoting to add resources across the whole network. So I feel great about the momentum. It is our future to grow this business. We've done so much to improve the foundation. Now, it's about adding resources. So we're not going to stop at the 100. If there's opportunity and the branches can absorb them, can go get more market share, I'm going to keep giving them those investments to help them grow their business.

Brett, do you want to add anything?

No. Bob, I would just say we're excited by it. We've made significant progress in a short period of time to ramp up our sales force. And you go back a little bit over 2 years, when Dale started as CEO, it was all about fixing the foundation, making sure we take care of our employees who in turn take care of our customers. And you look at that strategy now 2 years later, and that's paying huge dividends. Employee turnover is down significantly, over 30%, and customer retention is up significantly.

Now, the next leg of our journey is to make sure we can support our branches by getting customer-facing sellers out into the markets. And we're going to do that as quickly as possible. So I'd say, yes, it was higher than expected, but we couldn't be more excited about the progress we're making with adding those sellers to the business.

Okay. Yes, that's great. And, yes, you've done a remarkable job over the last 2-plus years in building the foundation for growth. And obviously, sales force acceleration is part of it right now. You mentioned a few other things. What are the remaining steps to building this core foundation to get the flywheel fully running? And how much longer do you think that part will take until you have the foundation where you want it and you start to see the acceleration in top line?

Yes. Great add-on, Bob. I think we made great improvements in taking care of our existing customer base. As I said in my prepared remarks, when I joined the company, our customer retention on an annual basis was running at 79%. It is very hard to grow a business when you're losing 21% of your customer base each year. I'm proud of the progress we made. And as we put in the deck, we're up 450 basis points over the last 27 months. So great progress. But what is the most beneficial? I'm so optimistic because we still have ample opportunity.

As we put in the deck on Slide 7, you can see we've shifted from 20% of our branches being below 70% customer retention and only 20% being above 90% to just 24 months later, we're at 30% above 90% and 10% below 70%. Now, I'm not going to be happy until none of our branches are below 80% customer retention because that's our path to growth. We cannot lose our existing customer base.

There's always reasons we might lose a few, but at the end of the day, we've got to make sure the service we provide our customers each and every day and support our employees that provide that service, make sure our customers recognize the value that we're trying to add to their businesses each day. So we're going to keep going, Bob. That retention is a critical number. We're going to invest in new sales, but we've got to keep chasing that retention number. We're at 83.5%, as we put in the deck. 85% is the next stop on our journey, I hope. Then, I'm not going to stop until I can say one day, we're keeping 90-plus percent of our business.

But Brett, do you want to add anything?

I'll just add a little context. Obviously, you could tell the excitement in our voices over here. It starts with taking care of our employees, as Dale said, will take care of our end customers. We've improved that customer retention metric significantly. We've improved our fleet and our go-to-market significantly, just the look and brand of BrightView.

And if you look at Page 9 of the deck, the strategy is starting to pay dividends. We continue to share more metrics on the business to give confidence of our ability to grow this in the back half of this year. And if you look at Page 9 of the deck, it's a new metric we're sharing, which is our Land Contract values that we have on the books at any given point in time. It's the annualized amount of these contracts.

And if you look over the last 3 quarters, a big piece of this 2% growth in our contract book is coming from that customer retention, but we're now also starting to see those sellers we added back in the last June quarter, right, producing some incremental positive wins in the business and adding to that Land growth. So we couldn't be more excited about the strategy actually paying dividends into the KPIs. And if you look at Page 9, this is the leading indicator that would predict growth in the back half of the year once we get into our busy season.

We'll go next now to Tim Mulrooney of William Blair.

So Maintenance Land, let's just start there. Yes, your Maintenance Land business was down a little more than 2% in the first quarter, but you maintained your guide for 1% to 2% growth for the full year. That implies about 2.5% growth for the remaining 3 quarters. And I know January is off to a snowy start, so if there's disruption in the second quarter here, then it looks like a lot of that growth in Maintenance Land is going to have to come from those last 2 quarters of the fiscal year. Can you just help us understand where you expect that growth to come from? Help bridge that gap for us.

Yes. Great question, Tim, because I think it's worth taking a look at the quarter and digesting it for a minute. As everybody saw, and we said in our prepared remarks, snow was very, very high in the quarter, almost a record level for the quarter, being up $36 million. So it's great. We were able to take care of our customers in the market that they needed.

If you look at our Land, we shrunk Land $8.9 million, Tim. So let me break apart that $8.9 million. First, we stepped over 2 named storms last year from 2 hurricanes that hit our southern markets, Milton and Helene. That was roughly $3.5 million. And then, $6 million of that other shrink is directly attributed to the markets that saw that outsized snow.

So if you think of $6 million that comes out of our Land business that we can't put into the ground with ancillary work, that will position us to roughly flat if we didn't step over the storm and we didn't have the outpaced snow. So we feel great, Tim. We feel like the business would have been flat, as we enter the winter season, and the business is going to be poised to grow, whether it's 2% or 3% as we go across our 2 busiest quarters come April and go through the summer.

So we are very optimistic that what you see on a headline for shrinking land, when you really break it down, it was impacted by the amount of snow that we had in those markets. And people saw we've had a very busy snow January based on everything in the news. But we're going to continue to take care of our customers each and every day based on what services they need.

And I will tell you, I have seen more positive comments from customers the last 2 weeks than I've seen in many months. They're all reaching out to realize anybody can talk about doing snow services in July, but only true people that invest in the people and the equipment are able to deliver the service when we have as much snow as we've seen over the last several weeks. So we're in a great position, Tim. We are not -- we didn't change our guide. Despite what we're seeing on snow, we are very confident that we will achieve that 1% to 2% Land growth very easily. So we are positioned very well.

But Brett, do you want to add anything?

No, I agree with Dale. January is off to a bit of a snowy start. We still have 2 heavy snow months in front of us, in February and March, which are still part of our total snow season. So we'll see how the quarter finishes out here. It is quite cold across most of the U.S. still. So we have optimism there. But as Dale said, look, if the $6 million that we were impacted by snow in Q1, even if we see a little bit of impact in Q2, given some more snowy weather, you'd have to grow the back half of the year north of 2%, like you said, Tim.

And we feel ultra confident, especially looking at the contract book growth that we show on Page 9. That is the key, right? That is the number of customers we have, the value of contracts we have, that annuity businesses within our Land business that gives us that confidence to be at that 2% plus growth in the back half of the year. And we'll update as we get through Q2. When we do finish the snow season, we get through February and March, we'll provide a full update on the guide as we enter into Q3.

All right. That's helpful color, Brett and Dale. Brett, maybe you and I can nerd out on that contract book number that you just highlighted for a second because up 2% does look promising. But honestly, we don't have much to compare this metric to. Can you help us understand what this metric looked like this time last year?

Yes. Absolutely. Well, look, last year, we were still fixing the foundation and making sure we took care of our employees and took care of our customers. So if you go back a year, this is a new metric, we haven't shared it, but you wouldn't see an increase in this metric, right? We were working through kind of some things in the past and getting to a point where we're really significantly improving that customer retention.

And now, like I mentioned before, with the sales force adds that we did 9 months ago, we're starting to see those sellers be productive. And we know it takes -- the first year to 6 months of a new seller, they're semi-productive, but not nearly fully ramped up. In that 6- to 12-month tenure range, they start to get ramped up and become productive and really start to sell. And then 12-plus months on, they would become fully productive. So that's why we're so excited about the adds we've made in Q1 to the sales force because that will pay dividends really later this year and really more importantly into '27 in the future. So we are investing in future growth.

But going back to Page 9, just to give you a little more detail, if you look at our Land business, we do about $1.7 billion in Land revenue. I'm just going to round some numbers here, $1.7 billion in Land revenue. We've said publicly 2/3 of that is our contract business and roughly 1/3 of that is our ancillary business. So, rough math here, 2/3 of our $1.7 billion would say we have $1.150 billion of contract value on the books.

So if you go back, Tim, a year ago, that number would have been less because obviously, the business hasn't been growing. But if you look at the last 3 sequential quarters now with the business growing, that contract value growing, 2% increase on, call it, $1.15 billion, roughly $22 million, $23 million. So that's what gives us the confidence, as we get into the busy season, right? 2/3 of our Land revenue happened between April and September, those last 6 months of the year. So this is definitely a leading indicator to what's going to come to the P&L in the back half of the year.

We'll go next now to Greg Palm of Craig-Hallum.

I wanted to maybe hit on the weather stuff a little bit more just given some of the recent events. So can you talk about kind of what you've seen quarter-to-date in terms of impacts, both positive and negative? And I guess, as I'm thinking about it, just given this elevated amount of snow in certain markets, are you using that as a way to maybe onboard new customers that you can maybe convert to annual Land Maintenance contracts as well?

Yes. Great question, Greg. Let me start off, and then, Brett can add. So I think, as everybody saw in our release, snow was very, very positive in the first quarter. In fact, we had a lot of questions I know on people asking, why didn't we think about increasing our expectations for snow from the $190 million to $220 million of our initial guide. But like I've said, since I've been in seat, we're only going to deliver good news on snow.

Let me give you a little bit of additional data. So January has been a very strong month with storms going from anywhere in Texas all the way out through the Northeast. And this past weekend, we saw some pretty good weather down in the Carolinas and Virginia, so -- but if you look at our typical Q2, let me just give you a statistic, February and March combined in the past has been anywhere from $60 million combined in snow revenue to $160 million combined in snow revenue. So while it's still early, and we are optimistic about where we're going to finish snow, we'll give everybody that upside once we get through Q2.

If I just did some quick math, Greg, and this is what we told a lot of our investors, if we did quick basic math, we did $173 million of revenue last year in Q2. We did $68.4 million this year. So you can assume that we're probably going to pace if we don't see any major warming happening. On the snow side, we're probably going to pace ahead of the top end of our range. But we'll update everybody come the end of Q2 once we get full visibility. And then, we'll decide how much of that benefit that we see from snow once we hit the end of Q2, we can reinvest back into the business.

So, we feel great about it, Greg. It's only going to be upside for us wherever we land the plane with snow. And we just don't think it's going to create a long-term headwind that our summer months, where we get 2/3 of our Land revenue, we won't be able to outrun to get the growth that we promised for land.

Yes. I'd just add to it, Greg. Look, Dale said it several times here in the last probably month or so. Any competitor and/or landscaper can say they can do snow in July. But when the flakes start flying and snow is hitting the ground, we've actually seen that be quite different. And we've had customers in our markets, especially the southeastern part of the United States in Texas through Georgia, the Carolinas, come to us and say, "Hey, guys, we need help. Can you guys help us in snow"?

And we've had a lot of customer outreach to the point of your second question of, is this going to lead to new customer acquisition? Yes, potentially. We're taking care of our customers first. We want to make sure the customers who have us for both land and snow and signed us up early in the season, that we're taking care of those customers first. But where we can and we have capacity, we're starting to pick up additional customers for snow, and now, having conversations with them about picking up their land contract, right? So if they're seeing some struggles from their incumbent landscaper on snow, they'll probably see the same struggles when it comes to landscaping. So that's creating an opportunity for us in the future to create more customer acquisition.

Greg, let me add a little more color. And remember, this is a tough metric because the way that we price snow is obviously either with time and materials and you don't know how much snow you're going to get or we had tiered pricing for our fixed contracts. My team, who's been working so hard through the first 4 months of the year, gave me some high-level numbers, and these are just high level. I would say they feel like we believe we're going to get somewhere around 5 incremental annual -- $5 million of incremental annual contract value in snow based on customers coming to us to support their business. And they're thinking there could be about the same amount, Greg, in emergency needs for us to go out and service customers because their existing provider failed.

Now, those all depend on the amount of volume we get in snow. But I will tell you, for us, that just shows the strength of people coming to us, asking us to do incremental services. So it comes down to making sure our team is prepared. Our team has the materials, our team has the equipment and our team is ready to do the work to take care of our customers. And we've seen that year-to-date. So we feel great that this is going to drive eventually more Land business because like I started off, anybody can talk about doing snow in July. But when you're getting 18 inches and you've got to have a parking lot clear, 24/7, you've got to have the equipment and people to make sure that you can service that property. So that's some more detail for you, Greg.

You answered 2 of my follow-up questions without doing, so I will -- I guess, I'll just pivot to something, maybe a little bit different, thinking back, I don't know, 6, 9 months ago about just sort of the overall discretionary spend environment. I know it's a tougher question in some of these seasonal markets like we're talking about. But overall, what are you seeing now versus that year ago period? And I'm just kind of thinking how this might impact some of the ancillary trends going forward.

Yes. Look, it's still early, Greg, in the year. And obviously, if we get a lot more weather across those southern markets, especially in the HOA communities, you could feel some headwind on the Land side just because people end up spending a lot more money on snow removal. Nothing we're alarmed of. I would go the opposite way and tell you, we've seen a lot of damage from ice, whether it's plant material dying or whether it's tree damage across the country.

We've dispatched tree crews out to many markets to try to make sure we can service our customers who have tree damage. So I would say there's always the possibility of headwinds, but we're seeing existing tailwinds. So I would say it's still too early to say are we going to see any noise from that. Once we get to the end of the second quarter, and we know exactly how much snow we had and where it was, we'll update everybody.

But the good news is the commitment we made to take care of our customers and get higher retention and create that relationship continues to promote them to turn to us to actually do more and more of their services. So Greg, we are positioned so well, still too early to say if there's going to be some noise, but I have no worry even if we have some noise, like Brett said earlier, we're going to hit our Land forecast that we gave you in November of growing 1% to 2%.

Gentlemen, we'll go next now to Andy Wittmann of Baird.

Slide 9, again, the contract book of business, 3 quarters up 2%, that's great. I just wonder like if there's some context here around like we're in the middle of winter right now. And I know that -- I guess, you guys have said that your selling season has become more of an all-year-round thing. But for those seasonal markets, I have to think that some of your customers are still thinking about what they want to do for the coming green season. So does the 2% more likely look better a quarter from now after you get through some of those people in the seasonal markets making the decision for the year? I'm just trying to understand if this is actually conservative, for lack of a better term, or if I'm making too much out of it.

No. I think, Andy, it's a great question. I don't think it's conservative because it's historic. So we're just giving you the facts of where we're at. You bring up a great question. We're starting to sell in our northern markets, even though it's a little bit of a challenge when you're getting as much snow as you're getting right now, but our customers are thinking about their April through October Land business. So absolutely, we sell Land contracts all year long.

And I will tell you, even to Greg's question a minute ago, when we get additional needs for snow, it gives us the foot in the door to get those Land contracts, as we go into the summer. So Andy, to answer it a different way to say it's not conservative, we feel that momentum will continue to show on this slide. Our goal is not to say we've grown our book 2%. We think with the additional 80 resources we added in sales, we think of the 180 we've added over the past year, we feel great that we're going to continue to see momentum in this metric.

Our goal is to keep adding resources to drive new contract book, and then, drive those customer-facing roles to drive all those ancillary services that those customers are going to need. So the teams in the field are very excited. Managing salespeople was a new thing to them a year ago, but now, they're all seeing the power of getting people out there, getting us new business so we can grow our business. And it's been a great journey, and I think 2026 will continue to show that momentum.

Brett?

I would just add, we continue to manage this business for the long term. The quicker we can get these sellers added, like we showed on Page 8 of the presentation, the more inflection we'll have on Page 9, the contract book. And we're starting to see those 60 sellers we added last April, May, June, starting to produce and be productive here in Q1 of 2026. So it takes a little bit of time. But as you think about the business, you think about the way we're managing it. The strategy really is, Andy, based on that long-term view of the business. And that's why we went as far as to put our 2030 goals back into this earnings presentation to show we're committed to getting there as quickly as possible. So yes, I agree with you. I couldn't be more excited about the progress we made on Page 9. Whether it's 2% or something north of 2%, we'll continue to kind of share that metric just to show the progression in that underlying contract annuity business that makes BrightView such an attractive investment.

I also wanted to ask about your IT tools. These have been some pretty big areas of investments that you guys have been making. Two of the bigger ones were around your HR IT system. I think that you guys are now -- have now gone live on a new system there. I think it was Workday that you put in. I want to know how that's gone, if there's been any disruption growing pains through that. And maybe even more importantly, though, I think you guys are now in the process of rolling out or more thoroughly rolling out your field management software that really kind of gives your guys the tools in the field for all sorts of different things. Maybe, Dale, could you just talk about how that's going? And how disruptive or not disruptive the field software is in particular?

Yes. I think it's a great question. I would say, first, let's start with the HRIS system. Our employees are our #1 asset, and we've got to make sure we've got visibility and ways to manage them. I think what that tool has given us is added benefit for all of our leaders and made their jobs easier. So from a transition, as we've started to migrate to that for visibility, and we'll continue to have phases, Andy, as we add different modules on to get away from the litany of IT systems we had and put it all in one system. But the field has embraced it. It continues to show benefit, and we'll continue to leverage the different modules as we go forward.

On the field service side, that's one that is really starting to take way. We've seen continued progress. We have over 1/3 of our branches on it. Our initial goal was sometime late March, early April was to get all of our branches on field service. The branches that have been on it for 30 to 60 days are seeing benefit in creating capacity with their labor. So that's a positive thing that the teams that are using it to help route and define how many hours for each job it's creating capacity. And that's key for us because I want to use not it as a labor savings tool. I want to use it to create capacity. So as we're growing this business this summer, we have the ability to service customers with the resources we have today.

Now, I would say this, Andy, we had a couple of branch managers send me an e-mail, and I'm always there to help them. Obviously, when you get as much snow in a couple of these markets and you have training scheduled, we pushed a couple of branches out because I recognize we've got to service our customers, and we just moved the training out for a few weeks, and we get our team to reassign a date. But we are making wonderful progress on both of those initiatives.

And like we said, our IT investments were behind schedule several years ago. These are the first 2 in a litany of different technologies we can help grow our business. So we're enabling our field. We're giving them tools, and our goal is to long term help them be more efficient and spend more time with their customers.

And Andy, I would just add, this is why it's so exciting, we have the balance sheet, liquidity and flexibility to do all these investments, which is fantastic, not only investing in our employees, in our customers, in our fleet, in our sales force, but also invest in technology. So Dale mentioned some of the tools that are rolling out, but that's all supported by the flexibility we have on the balance sheet, so we couldn't be more excited about the ability for us to grow the business, produce higher EBITDA than the year before and continue to invest back into the business.

We'll go next now to Stephanie Moore at Jefferies.

I wanted to circle back on maybe a question that was asked earlier, but I'm going to ask it a little bit differently. As you think about all of the success you've had thus far to start the year from the investment standpoint, obviously, the strong snow season, maybe just talk about the level of confidence you have in the guide, understanding it's obviously still early in the year and you need to get through your busy season? But I'm trying to understand what could maybe go wrong or in a more negative direction, which would make the guidance a little bit more difficult. So maybe downside scenarios that you guys walk through.

Yes. I think, like I said, I'll take it into some buckets. Obviously, snow, if we continue to add the volume of snow we saw in Q1 and we saw in January, that could create some delays in our ability to do Land Maintenance service here in the second quarter, especially when you're looking at markets that are getting extreme cold all the way down into Florida. I was out with my teams this week to start the day and dispatch our teams, and we had temperatures in the low 30s across Florida. So we could always get that, Stephanie, more snow. It gives us more upside in the Snow business we do, and then, it will give us some potential delays in our maintenance and our development business.

But, all these storms and the ice damage across the country, I would flip it the other way. I feel like long-term, as we go into our busy season with the summer, we had equally as much opportunity to see ancillary grow faster because of the tree work, because of the plant damage that's going to occur because once we get out of winter, people will want to make sure their properties look good.

So I feel like there could be some timing. There's no question that when you get as much snow as we've had over the first 4 months, it could create some noise in timing. But at the end of the day, I think there's going to be a lot of opportunity that comes out of a little bit rougher winter. And I think that even in the development business, okay, we're going to have some timing, like we saw in this quarter.

Our 3 biggest projects that we're doing right now are all in the northern markets. We could have done more work with them if they weren't under snow for the majority of the quarter. So we feel great, Stephanie. I don't -- you say what risks do we have? We always have risks in every environment, but I feel our upside is greater than our downside right now.

That's very helpful. And then, maybe switching to capital allocation priorities, obviously, you noted that the M&A pipeline remains robust, but you also have been very active in share repurchases. So maybe just talk through as you evaluate both options, what's more for the near-term priorities, when we might expect to see M&A start again. Any color there would be great.

Yes. Great question. I'll start off, and I'll give it to Brett. I remind my senior leaders that you have to earn the right to do M&A by growing your own business before you've earned the right to buy somebody else's business. And my guys remind me of that all the time because they're all on the verge of seeing that business grow. So they're all reminding me it's time to get back into M&A. And you saw it. We had a strong quarter of share repurchase. We're buying our equity back at 7.5x at the price that we averaged in Q1.

At 7.5x, we'd have a hard time getting a quality company like we have at BrightView for that multiple. We believe we've got a big robust pipeline, a quality company, so even if smaller is going to trade at 8 to 9x. Even if we get a turn on that based on synergies, we're still paying a price that some were higher than what we can buy our own shares back at.

So we know the quality of company we have at BrightView. We recognize we're significantly undervalued. So we're going to keep -- and our Board approved us to upsize our share repurchase and get more aggressive. So we feel great about the investments we're making. It's real simple, invest in our people and our fleet, invest in buying our shares back, and then, do M&A. But Brett, do you want to add anything?

No, I would just add that we're currently levered at 2.4x, essentially flat to where we were, very favorable debt structure, no long-term maturity in 2029. And we have plenty of liquidity, right around $0.5 billion to invest in the business of liquidity.

So to your question, Stephanie, and Dale's point, I think on Page 14, we've tried to lay out our priorities very clearly. And I think we're executing on those priorities. We've executed on a fleet refresh that has essentially seen all of our core mowers get to our targeted average age. Almost all of our production vehicles, by the end of this year, we feel like they'll be at the average targeted age. And we have some work to do on trailers. But this year is probably going to be our last year of elevated CapEx in the business. We're going to run about 6.5%.

And then, we'll come back down more to that 3.5%, 4% normal range as we get through our trailer refresh. But Dale said it well, buying a company comes with some inherent risk of integration and acquisition. And if our stock is going to trade at 7.5x multiple, definitely an accretive use of capital to buy our own shares.

And look, we feel like we should be in the 10-plus multiple trading range. So when we get there, and this business is growing, and we get there, we get a re-rate, there's absolutely a tremendous amount of opportunity to go down the acquisition trail. And I will tell you that the pipeline we're maintaining here is significant. So we have a pipeline of potential targets. When the time is right, we'll be able to pull that lever fairly quickly.

We'll go next now to Jeffrey Stevenson at Loop Capital.

How should we think about the cadence of development revenue growth this year after the segment was negatively impacted by project timing in the December quarter? And then, has there been any change in the timeline of the 4 to 5 large projects you're working on compared with prior expectations? Or is that in line with what you were expecting when you gave guidance last quarter?

Yes. We feel great about the progress we saw from Q4 into Q1 for development. It's definitely swinging back. Is there timing differences? Jeff, yes, like Brett said in the script, when you've got a lot of those big projects up in the northern climates and you get the amount of snow, they still grew, but they could have grown more. We had more opportunity. Those projects will still hit our timelines. It's going to be about when we can recognize it.

We feel great about what the customers are asking us to do, and we continue to work on them. So I'm not worried about the development business long term. We just got to stay on top of everything we're working on, take care of our customers, communicate to our customers and continue to keep driving forward with the development backlog, so we keep booking work each and every day.

Great. No, that's helpful, Dale. And sticking on the development business, I was wondering if you could provide an update on your cold start initiative and the timeline of that this year? And then, also, with the increase you've seen in the sales force, obviously, that's mainly on the maintenance side. But have any of the new hires been on your development business as well? And how will that help with growth over the coming years?

Yes. Look, I think it's a great question. We updated everybody that our goal is to get several new locations open for development. We have now opened 6 locations across North America that we're seeing green shoots out of. Some of it is markets that we traditionally did remote work in. So we had some development teams there that could do work. But Jeff, yes, about 10% of those new sellers in the quarter, that money that we spent went to the development team because our whole goal is when we add a location, make sure we've got a development sales rep out in the market to get us more and more work.

So yes, it's about 10%-90% for that $6 million that we talked about spending in the quarter on sales resources. And we've got 6 of the locations that we've gotten stand-alone P&Ls that they're operating independently versus they used to be doing work remotely. So great progress there, and we're going to continue to keep our foot on the gas and grow as fast as we can with new locations.

[Operator Instructions] we'll go next now to Greg Parrish at Morgan Stanley.

I'll just squeeze one in here. Maybe just help us think about snow margin, especially heading into the second quarter with how much we had, had in January, and we'll see how February, March play out. But how much of the snowfall so far is in fixed versus variable? And then, can you talk about the potential for some of these clients, as they move up in tiers, does that potentially add more margin upside in the Snow business in the second quarter?

Yes. Good question, Greg. I think, when you look at our -- we announced that we basically saw $3 million of improvement from the revenue in the quarter. If you digest that and you really break it down, you look at it and say $6 million of that incremental EBITDA came from that incremental snow revenue, where the shrinkage in development and land, there was about $2 million of negative EBITDA in land and $1 million in development giving us the $3-ish million of net benefit.

I would say you were head on. So we've got a big portion of our contracts, where, especially in the northern markets, we went to more fixed tier pricing. Now, as much snow as we saw, the Chicago market saw 3x the normal snow up and from New Jersey up to Boston saw double the normal snow in the first quarter. All those, when we have fixed tier pricing, kind of limit the margin that we're going to have until we start triggering those additional tiers.

As we trigger those additional tiers, it becomes more profitable. So we have always said our margin expectation on incremental snow is between 20% and 25%. We feel once we land the plane for the year and we exit Q2, we will be very comfortably in that range. I know Q1, $6 million of benefit on $36 million of revenue is slightly below that on flow-through, but we feel like a lot of that is just timing of how we see those fixed tier contracts.

We continue to see more and more customers go to fixed tier, especially after a year like this because some of the markets on the fringe that traditionally took more risk and tried to go to time and material are probably going to want to go look at fixed pricing again, so -- but yes, we feel great. We feel that we're going to get added benefit as we go through Q2, maybe as much on revenue, but more on profit because we're -- right now, it's all about just taking care of the customer.

And ladies and gentlemen, that is all the time we have for questions this morning. At this time, I'll turn things back to Mr. Asplund for any closing comments.

Look, I want to thank everybody again, and I apologize. I know we still had some questions in the queue. I think it was a great discussion. And operator, thank you.

But I'd like to close by reaffirming our confidence in the trajectory of the business, as we continue to work toward its transformation. Over the past 2 years, we fixed the foundation of this business, becoming a unified company and unlocking efficiencies to drive this business forward. All the while, we have started to reinvest back into our sales organization. I am beyond proud of how many resources we were able to add in the quarter, and we are going to benefit from them, not here in Q1, but throughout 2026 and position us for long-term growth.

So to all the employees, thank you. Everybody continue to be safe. To all of our investors, thank you for taking the time to listen in today. Everybody, be safe, and we'll talk to you again at the end of the second quarter. You can now end the call, operator.

Thank you, Mr. Asplund, and thank you, Mr. Urban. Again, ladies and gentlemen, that will conclude today's BrightView conference call. Again, thanks so much for joining us, and we wish you all a great day. Goodbye.

Good day, everyone, and welcome to today's BrightView earnings call. [Operator Instructions] Please note, this call may be recorded. [Operator Instructions] It is now my [indiscernible]

Thank you for joining BrightView's Fourth Quarter and Full Year Fiscal 2025 [indiscernible] contains our safe harbor disclaimer. Our presentation includes forward-looking statements subject to risks and uncertainties. In addition, during the call, we will refer to certain non-GAAP financial measures. Please see our press release and 8-K issued yesterday for a reconciliation of these measures.

With that, I will now turn the call over to Dale.

Thank you, Chris, and good morning, everyone, 2025 was another transformational year here at BrightView. We continue prioritizing our frontline employees by investing in consistent service levels. [indiscernible] Top line profitable growth in the near term. We ask 100 team members resulted in the highest ever adjusted EBITDA and margin. Our unwavering focus on delivering world-class service to our customers continues to yield meaningful momentum in customer retention improving about 200 basis points from the prior year and about 400 basis points since the beginning of my tenure in October of 2023.

I want to thank our team members for their continued efforts to put the customer at the center of everything we do and position ourselves as the service provider of choice. Additionally, as part of our disciplined approach to capital allocation and commitment to driving. We believe our current valuation is dislocated from the tremendous progress we have made over the past 2 years and the significant opportunities that lie ahead.

Our strong balance sheet and growth outlook gives me the confidence to expand the program and return capital to shareholders in a strategic and opportunistic way. As we turn the corner into fiscal 2026, I want to reemphasize my primary focus of delivering sustainable and profitable top line growth in the near and long term. I believe the investments we made and will continue to make such as consistent service levels and expanding our sales force, have strengthened the foundation of our business and will position us to inflect top line growth in 2026 as reflected in our guidance, which Brett will touch on in a bit.

Yes, coupled with ramping up our sales force and [indiscernible] this created inconsistent levels of service and required additional costs to hire and onboard new employees. Through continued investments in our employees, we've been able to drive meaningful improvement. The progress we've made continues to deliver cost savings, and we've reinvested into our frontline and well -- as well as more consistent service levels to our customers.

This has been the key to solidifying our foundation and will continue to be a priority moving forward as we position BrightView as the employer of choice.

Turning to Slide 6. I'd like to highlight the sequential improvement we've made in customer retention over the past 2 years, which is now approximately 83%, a 400 basis point improvement since the start of our transformation 2 years ago. This is a reflection of the exceptional service our employees deliver every day. Although we have seen great improvement there is even more opportunity across our branch network as best-in-class branches sit at 90-plus percent customer for retention.

As and providing best-in-class service. This formula -- it's important to note that the hiring of these sellers was more heavily investment into our sales organization. In the bottom right, you can see that our current 10 year is relatively new merely a function of ramping our salesforce, training of our new sellers takes time, and we typically see improved productivity after their first year.

However, we continue to invest in technology and training to help onboard and speed up the effectiveness of both our new and tenured sellers. As we move forward, expanding our salesforce, along with other key growth levers, which I will touch on in the next slide will be key to drive in unifying our business, enhancing operational efficiencies, investing for the future and continuing to prioritize teams are working together as a unified one BrightView, focused on cross-selling into future reoccurring maintenance work. Additionally, with our record capital spend last year, was an investment in over 30 new tree trucks, which more landing at branches in 2026. Investments like these will help bolster and expand our service offerings to our customers. Also by levering our national presence, we can effectively service large national accounts as a single point of contact provider.

These multifaceted levers along with the investments we are making in our sales force have positioned us to deliver top line profitable growth in 2026 and beyond and deliver value for all our stakeholders.

With that, I will now turn the call over to Brett.

Thank you, Dale, and good morning, everyone. I'll start by reiterating Dow's enthusiasm for the progress we've made over the past 2 years as we actively transformed this business. Our teams across the country continue to raise the bar, delivering exceptional service, driving operational excellence and strengthening the culture that makes BrightView poised for success.

Moving to Slide 10. We delivered another year of record adjusted EBITDA and margin, which was made possible by our streamlined operating structure and unlocking scale advantages as the #1 provider in our industry.

Fiscal '25 EBITDA was $352 million at a margin of 13.2%, representing a 260 basis point improvement from fiscal '23. We have made great progress in just 24 months, taking a business with shrinking margins and stagnated EBITDA to a business that has grown EBITDA over $50 million and delivered record margins all while investing at record levels back into the long-term success of the business.

Let's now move to Slide 11 to take a look at how we were able to improve profitability in fiscal '25. Adjusted EBITDA was a record $352 million, an increase of $28 million or 8% higher than fiscal '24. Adjusted EBITDA margin of 13.2% was also a record and expanded 150 basis points year-over-year, marking another consecutive year of margin expansion.

Operating efficiencies more than offset the revenue flow-through, and we saw the benefits from the record level of investments we made refreshing our fleet, centralizing procurement and continued efficiencies in G&A. As Dale mentioned, we are actively making investments back into expanding our sales organization, which will be one of the keys to sustainable top line growth.

Turning now to Slide 12. We've taken substantial overhead costs out of our business, improving SG&A expense as a percentage of revenue that we are using to reinvest into our employees, client satisfaction and more recently, our sales organization. Going forward, we expect to unlock additional efficiencies by leveraging our size and scale which are built into our long-term plan we presented last fiscal year during Investor Day.

Moving to Slide 13. We're encouraged by the progress we've made in our trajectory of land maintenance revenue over the past 2 years by aligning our sales on the near-term horizon. As Dow mentioned, we added 100 new sellers in fiscal '25. And going forward, we will continue to invest G&A savings back into our sales team that will ultimately be a driver of profitable top line growth.

In fiscal '26, we expect these investments, coupled with our development conversion strategy and enhanced ancillary which has generated multifaceted benefits since its introduction. To start, our fleet was severely aged 2023, given the lack of investment made previously into our core business. This led to a range of issues, including higher repair and maintenance expenses, higher rental expenses lower residuals, frustrated employees and unsatisfied customers. But over the past 2 years, we've invested over $300 million of capital to refresh our trucks, mowers and other equipment, bringing down the average life of these assets considerably.

The age of our core production vehicles have been reduced to just 5 years on average and our core mowers to 1 year. Another focus area for 2026 will be refreshing our fleet of trailers, which are about 11 years old on average. The investments we made have driven significant improvements in repairs, maintenance and equipment rental, all driving incremental margin.

Additionally, we found that the refresh fleet has improved employee morale and employee retention as frontline workers are able to service our customers with the confidence of having reliable equipment. In turn, our customers have been more satisfied as evidenced through our improvement in customer retention. In total, our fleet refresh strategy has delivered both financial and operational benefits that we will continue to realize as we invest further in by ample liquidity and a favorable debt profile with no long-term maturities until 2029.

Net leverage remained at 2.3x. We accelerated our fleet [indiscernible] we have increased our share repurchase authorization from $100 million to $150 million. We believe there is a significant disconnect in our current valuation versus our earnings potential. The profits and margins we've generated since 2023 have been exceptional. We remain confident in our long-term growth strategy and coupled with our shares trading at an attractive multiple believe that repurchases represent an accretive and efficient use of capital.

The proactive management of our strong balance sheet reinforces our ability to reinvest in the business, support profitable growth and create meaningful long-term value for shareholders.

Now I'll turn to Slide 16, where we outline our guidance for fiscal '26, which is under pinned by a return to revenue growth in land maintenance and translates to yet another record adjusted $7 million. Of course, a continued improvement in customer retention [indiscernible] to $220 million, reflecting a midpoint at our 5-year average basis points and margins in the Development segment to expand by 20 again to drive profitable growth. Important to note the midpoint of our margin guidance would imply a $310 million basis point improvement over the last 3 years, progress we've made in just 24 months and the tremendous opportunity we have ahead as we continue to transform this business for long-term success.

Also, I would like to express my gratitude to all of our committed team members. With that, I'll turn the call back to Dale.

Thanks, Brett. Before we open the call for questions, I'd like to reemphasize what I've said from day 1, transforming this business would not be possible without the commitment and dedication of our employees by investing in our people, and becoming the employer of choice, we will continue providing.[indiscernible]

Operator, you may now open the call for questions.

[Operator Instructions] We go first this morning to Tim Mulrooney [indiscernible]

And how you're feeling about the setup for land maintenance sitting here today, several weeks into the first quarter.

Yes, great question, [indiscernible]. I'll start off and Brett can add. First of all, we sit here today in our branch as I started at the game yesterday during GateShack and watched all the new fleet that Brett just talked about rollout and the cultural change it has on our frontline workers when we talk to them about the work they're going on to do, the feeling of our customers once again looking to return to those ancillary projects that were delayed when liberation they happened was very positive.

So look, it's going to be a daily grind. We had last year some 2 named storms that hit us, 1 at the end of September, 1 in October. The one at the end of September, as many people remember, was right from the panhandle of Florida all the way up to the Carolinas. So we're going to have to step over that. But we feel like the progress we saw right at through Q4 is an indication of why we said we're going to grow this business as we go quarters we could have some noise from the seasonality of the business.

But like I used in my opening, I'd like to remind everybody, everything we've done has created a foundation that the quarter, and most of that, as everybody heard in our Q3 call was discretionary related.

Brett, do you want to add anything?

I think they'll now in the head are seeing sequential improvement. We saw that in Q4. We do have to step over a couple of named storms having last year in Q1. But Q1 and Q2 is not really our busy land season do about 1/3 of our land revenue in the first half of the year, and we're doing everything we can -- and now to ramp up our sales force and make investments into the. Let me try to break it into this at a high level. And obviously, is, there's exceptions for everything. But usually, the first 6 months of new sellers, they're learning the business, they're trying to get their arms row. here. We see them get closer to what our seasoned sales reps would sell. And once they get over 18 months, we feel like they're in that normal stride of, call it, $1.5 million a year. And we will continue to make investments through and you look at what we're able to produce to the balance sheet with cash to invest in the business -- that's the beauty of where we are standing right now, why we're so excited.

We have the ability to invest in the business. And you can see in our EBITDA bridge in '25, our employee retention has improved significantly, and our customer retention has improved significantly. So now that, that foundation is set, that's why we're putting the gas pedal down right now.

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We'll go next now to Bob Ladik at CJS Securities.

Along the road map of improving employee retention? And how much more progress is there to make? And how can this continue -- at what point does this continue to influence or stop influencing your customer retention rate, we link those 2 together, but really with the employee retention goals and where can it go are the final steps.

Our goal is to make sure by far. which is an absolute amazing statistic when you think about it. I think, Bob, there's a our overall customer retention that we just have to keep thinking -- when they thank me for the new vehicle they have. So I fully believe -- they are the key to keep driving that customer retention. And I feel like we're only halfway ish on our journey of what we can accomplish with frontline turnover.

Okay. That's great. And then you talked, I think, about the $300 million of investment in fleet earlier on the call. Can you talk about how the new tax bill influences the rate of investment that you're going after? And how many more years of -- will it take to get to kind of a normalized range for your capital investment? Because obviously, you're getting rid of fully depreciated assets.

At some point, you'll get something back for those assets [indiscernible]

[indiscernible] 2025, we benefited from the 1 big beautiful bill where we did not pay any federal taxes and we took that money for cash savings and accelerated our fleet refresh, as you can see in the capital mowers, which is fantastic. We have our trucks right around 5 years old, our core production trucks.

We probably have 1 more year to go to continue to refresh our trucks to bring that age down just a little bit further. And then in 2026 and even into 2027, we're going to. We're able to invest back in the fleet. And Dale said it in about 1 minute, we're going to start seeing trucks roll out of the not be happier with some of the investments we're making into their offices into their trucks that they drive in every day into the fleet of mowers, the reliability they have to service to our customers.

So that's really where we're seeing this payoff.

We'll go next now to Andy Wittmann with Baird.

Obviously, 4% of revenue -- is it just kind of a new look at the fleet from kind of where you were at Analyst Day?

It's a great question. Look, I think I'll start by saying we are fortunate to have our balance sheet in a position now to continue to invest in the business and refresh our fleet. And -- as you look at employee retention and that metric continuing to get better, you look at customer retention, that metric continuing to get better. That's directly related to some of the fleet investments we're making so that we can service our customers with a reliability ability that they deserve.

And then secondly, as you -- as you think about the investment -- when you put very little of that cash was on our core business, right? You guys know the story about M&A, et cetera. So we're now investing cash back into our core business. So we're going to continue to do that. Now you think about the P&L side of the equation, our repair maintenance and rental expense, which was listed in our deck here, the $59 million a few years ago. We saw about a 15% reduction over the last 24 months, down about $51 million. We expect to see a reduction here in '26 and '27. And that number we said to an investor day, we could probably get half into the P&L as savings, and we expect to see more of that come through '26 and '27 as we move forward. Andy, let me add a little color to that. I think the word that I would use is today, we have flexibility that we didn't have 24 months ago.

We have the ability, if we see some reason to slow down capital, our fleet is at a level today that we could operate and customers would still see us as a great provider. -- we're going to continue to move that to the level that we want it to be, where we think that repair and maintenance will be on our opportunistic level. But right now, we do have flexibility.

Two years ago, we didn't have that, Andy. When I arrived, we didn't needed fleet refreshes. We needed to invest money. We were already keeping fleet way too long. Today, I feel like we have flexibility, and that's the key.

Yes. Okay. And then just, I guess, operationally, kind of a 2-part question probably for you, Dale. So there was a comment in the prepared remarks about new technology and training for sellers. I was just hoping maybe you could expand on that, how the tools that they're going to have in '26 are different from what's happened in the past? And then -- but -- you also mentioned in your comments, there's kind of the next round of efficiencies that are going to be able to fund some of those investments.

And but maybe if you could help us get a tangible sense of that, maybe some examples of things that you plan to do that you haven't yet done, they're going to forge you that opportunity.

Yes. So I'll start with the training side. In the back half of -- we brought in a new leader at our corporate level to drive trading across our organizations and her primary first focus is on our sales organization. We have a lot of content Andy, we have to continue to invest in those materials, especially as we grow that sales force. And then as you heard in my prepared remarks, we continue to invest in ancillary services. As an example, the 3 trucks we added we have to make sure that every 1 of our branches have the ability to give tree service access to our customers. And that takes making sure our sales reps understand what that service provider is and make sure that we have professionals that can work with our customers to get them the proper quotes and then we can do the work safely and efficiently.

So it's a lot of information gathering and when you have a dispersed salesforce, we have to have an easy way to make sure they can get to the content. Because what we found, Andy, when we look at it, our quickest sales rep to get up to speed to be able to produce are the ones that access that materials, not just the day they join, but when they access it multiple times, and they use it as a reference.

So making it visible, making it at the touch of a button is critical.

Yes, I would just add from an EBITDA standpoint, Andy, we are going to unlock more efficiencies in the business. We've seen significant efficiencies in our fleet strategy paying dividends. We've seen efficiencies and scale advantages by centralizing our procurement function. As you can see on Page 11 of our deck that we presented and the beauty of it is we are continuing to create that size and scale advantage as the #1 player in the industry, so we can reinvest back in the business. And we're reinvesting in our employees. As you see that, you're reinvesting in our fleet, as you talked about a minute ago.

We're also reinvesting technology. we're launching and digitizing Howe as 1 example in our field service management system, how we digitize and route our crews and we expect to add efficiency in the system by digitizing that, having it on your phone, being able to route and make adjustments throughout the day to add more service to customers as we go forward. So there's technology investments as well that's going to add to that efficiency.

We'll go next now to Jeffrey Stevenson at Loop Capital.

So Brett, following up on your point about the field service management system. Can you talk about the time line of the broad rollout across your branches for that? And whether you have any benefits this baked into your second half guidance this year?

Yes. Great question, Jeff. I'll start with that one because it's a project I'm very close to. And for those of you who visited our branches, we underinvested in the past in the use of technology. And with labor being 40% of our cost, there was no greater area than the management of our frontline crews. We did it far too manually with whiteboards -- we have implemented a tool that integrates into our CRM system, so we know what jobs to service everyday.

We have rolled that system out in every one of my geographical regions for a couple of branches in a couple of different markets to make sure that it was efficient and added value to the branches. We tweaked it -- we've gone back and started rolling it out to the masses across the whole company. We will be complete with that sometime after the new year, call it, in the first quarter of the new year or our second fiscal quarter. which is the time we want to do it in a lot of our markets where we have a little bit less land revenue, and that's the major focus is on our maintenance business.

But yes, Jeff, we are very excited about what it can do for us, what we have built into our forecast and what we tell people as we roll that tool out, that is not a savings tool. That is a capacity creation tool for us. We want our employees to be more efficient doing the work that they do every day. And when we're growing this business in the back half of the year, we want to make sure we get the flow through on that incremental revenue as we work into 2027.

[indiscernible] Short 24 months to make sure we can continue to invest in the business. The amount of EBITDA that we've generated over $50 million since Dallas started in his chair that we're able to use to reinvest into the business, the cash that we have on the balance sheet, we're able to use to reinvest in the business. And you hear some of it from ramping up our sales force, but technology is absolutely a big piece, and we're going to continue to invest in the business. And that's why I think we're so excited on this side of the table because we have the ability to invest and continue to invest in the business.

Got it. No, that's very helpful. And -- and then I was wondering if you could provide an update on the large project delays in your development business and how current segment backlogs.

Yes. Great question, Jeff. I mean the development business is a business that we see [indiscernible] in it. And a little softer in '25. In fact, if you really look at that business, even though Q4 looked a little soft, we did the same in 2025 as we did in Q4 2023. So a little bit of it is a comp issue of how well we were able to complete fleet jobs last year in Q4. I think on the cold start side, if you think about where we're at, we mentioned we're going to do 10 cold starts.

We have 5 of them that we're starting to try to get open the door now at existing real estate and starting to make productivity as we work through '26 in that area, we expect another 5 to be somewhere in the process within the end of 2026, hopefully, with leaders, with sales reps in those markets. The key of opening those development cold starts -- it allows us to service a broader base of jobs without trying to service big jobs in all markets from one branch. So Denver is a great market for us that we have a very large branch, but they're doing jobs all over the state of Colorado. We need another branch that can do work so that the Denver group can focus on just the Denver market.

So we made great progress, Jeff. We think that's why we feel confident we're going to return that business to growth this year and long term by having more branches and more markets, our branches will go after more work within each market, not just the big jobs going Jason, across the whole geographic area they can cover.

So I hope that answers it.

Yes. And I would definitely say if you look at kind of the trajectory of the development business, they've grown significantly, Jeff, over the last few years, credited the development teams and the branches we operate in. And that business has grown $60 million in '23. They grew $50 million in 2024, took a small step backwards here really towards the tail end due to some of that macro. But we're definitely coming down the other end of the bell curve. And if you look at kind of where Q4 came in at an 8% reduction in revenue quarter-over-quarter, Dow mentioned last Q4 was really impressive growth. But we're definitely coming down the other end of the bell curve. We expect it to be a little bit choppy here in the first half of the year that's just as those delays work its way through the system, and we're starting to see that free up here a little bit.

And definitely, this business will be back to growing and growing at a nice pace here in the second half of the year.

One other part of your question, Jeff, you asked about project delays. Let me just add this week for Pittsburgh airport, which has been a very big project for us, actually switched to the new terminal. We're not done with our work there, but we're proud of the work that we did do. But where you see those things accelerate where we did have the delays, Jeff, we have other projects that haven't even started yet that we were founding on in Q3 and Q4.

So there's always going to be give and take. There's a lot of noise out there, but there's plenty of work for our guys to go get. So we're motivating our development team. Let's get some new branches open. Let's all get more salespeople out there. Let's go get more work, because there's plenty of work for that team and the quality they do is second to none. So we're in great shape as we enter this year. We guided to 0% to 2% increase as we work through 2026 again. But great questions.

We'll go next now to Greg Palm of Craig-Hallum.

Maybe just dovetailing on the last question. I don't know if we can spend a minute on labor and any impacts from sort of the changing immigration policy. But have you seen any direct or maybe indirect impacts there? And I guess if the industry is seeing some impact. At some point, are you able to use this to your advantage to maybe accelerate share gains if some of your competitors are having issues?

Yes. Great question, Greg. Let me try to take that. So I believe that investing in our frontline people drives long-term customer retention and the quality of service that we deliver. But if I went back 2 years ago and I thought the challenges in the end labor markets due to immigration, we're going to be as hard as they are today. I would have made those same investments because today, the employees we have feel like BrightView care is more about them than ever. So I would tell you, as I talked to my operations team, what in the past was reactionary behavior every time somebody came to try to take one of our employees, our employees have seen the benefits, and we cover that on the trend that we showed of the improvement in turnover.

Things that we put in this past year like PTO have been a huge benefit for our employees that when we get rain days or when there's a sick day they need to take. So I would tell you, Greg, we are so well positioned with where we're at. And yes, I do believe some of what we're seeing with our new sales were availability. As everybody knows, we verify our employees. We are very proud of that to make sure we can provide a good company to work for, for proper documented employees in the United States, and we don't have a fear about all the noise that's going around in some of these markets with some of the immigration challenges, but we feel great. We think it's going to be a tailwind, not just where we felt so far, but as we work through '26, Greg.

Okay. Appreciate that color. And Dale, as you think about '26 in this sort of focus on growth. What are you -- what are the biggest near-term levers versus some of the stuff that I don't know, might trickle in a little bit and be more impactful in future years?

Yes. Look, it's -- we talked about it at our Investor Day talking about how we're going to get growth between now and 2030. It's the same levers, Greg. I am so proud of how far we've come on customer retention. We were up 400 basis points, granted from 79% to 83%. We are not done with that. Maybe the 200 basis points we've seen over the last couple of years, maybe it's low is down a little, but there's somewhere between 100 and 200 basis points. Branches had customer retention below 70%. As of the end of the year, only 10% of our [indiscernible] be a full service provider to our customers.

There's other -- so is with our existing customer base, we can do it for anybody, and our branches are starting to get more creative to go out and bid on work outside of their existing contract work to get more ancillary. So look, we have a lot of levers to pull here. That's why we're confident to say we're going to grow in 2026. Yes, we're always going to have a little noise. It's time for us to really [indiscernible] versus keep that customer retention, drive ancillary and let's go. I'm sick of talking about things in the past that create noise like a storm. We just be able to step over that stuff without any problem as we grow this business to mid-single digitsannually.

[Operator Instructions] [indiscernible]

[indiscernible] you talked about your fleet investment. I just wanted to get any sense for. [indiscernible] anything that would be helpful.

Yes. Look, we'll take the topic M&A. In a way, I think valued word that I would use. Our Board didn't approve the share increase in our share repo program. My boarding is a drastic change in our business. Our business is completely different than what it was 2 years ago.

And today -- and we're going to buy back our own stock. Is there a pipeline in M&A? Absolutely. Will we maybe look at something on the ancillary side, such as tree businesses, aquatic businesses, if I find the right one?

Yes, but we're not going to chase deals. Our Board is supportive of what we're doing here in the short term with the dislocation in the stock price, and we're going to take advantage and accelerate that program. So opportunities are there, but to get the companies that deserve to be part of BrightView, the multiples are well above what we are willing to buy right now considering our stock price.

We'll go next now to Toni Kaplan of Morgan Stanley.

This is Yehuda Silverman on for Tony Kaplan. Just had a quick question on the snow side. So you mentioned that you're working towards getting to a customer contract base that's more fixed than variable, heading into the upcoming snow season and looking into 2026, can you talk about the improvement in that area so far? And how this shift is expected to impact the business compared to a more variable heavy tactic?

Yes. Look, I mean there's always markets that is going to be very hard to switch to fix, take the Carolinas or Atlanta, where we saw some weather last year. So those will always be variable. But I would tell you, we focused on 2 things with our snow business. First, trying to get the majority of the customers that do land with us that need snow services to use us and limit us just providing snow removal services. We want to make sure we offer a full year service to our customer. And then go away from that riskier time and material, we've definitely seen an increase, which gave us the confidence to guide to that $1.80 to $2.10 or $2.05 midpoint of -- or $2.20, I'm sorry, the $2.05 midpoint that we guided to. We feel like we're in a great spot and we continue to push. Here's what I would tell you. This is why I can't really give you the exact number. In many markets that hasn't slowed yet. And some people don't like to refresh those snow deals until the flights start to fly. So we've got a lot of paper out there that people will finally commit to.

Once they know the storms are coming. We saw a little weather across the Midwest -- but we have opportunities yet across Colorado and the Northeast where we've yet to see weather. But our strategy is working. We feel like we're making it a much more predictable business. And we feel like as we go through '26, once again, there's going to be no excuses because of snow -- we told you guys what we believe is there. We think we can deliver on that. And if we can't deliver on it, it's not going to be a reason that we lower EBITDA. So we're committed to delivering this business and the forecast we put out there. And if snow is a little softer, we still think we can deliver the bottom line.

We'll go next now to George Tong of Goldman Sachs.

In your landscape maintenance business, can you provide some additional color on how you're has performed relative to ancillary, especially the per occurrence side of contracted revenues.

Yes. Great question, George. I think we feel -- because I track it every day, and I send it to my direct report. [indiscernible] Very, very, very predictable. I would tell you, I think some of the areas where we saw some of that discretionary for occurrence where areas we saw some of that snow like the Carolinas, like Georgia, we feel like a lot of that noise is behind us. We feel good about what we're feeling with contract revenue and expect that to continue to be a tailwind for us as we go through 2026.

Ancillary, like I started the [indiscernible] I'm out here in San Francisco, and I had one local branch managers come to me yesterday that gave me great news that he has signed two deals and I said that's great. Keep going. Let's keep the team motivated, keep going, get it and let me know what I can get you from fleet or person. Ancillary, we firmly believe will be up, and the investments we made [indiscernible]

And gentlemen, we have no further questions this morning. Mr. Asplund, I'd like to turn things back to you, sir, for any closing comments.

Thank you, operator. Guys, as I complete my second year with BrightView. I want to take a moment to thank all of our employees on the incredible progress we've made together. Over the past 2 years, we've strengthened our culture, sharpened our execution and advanced our transformation.

Together, we built a more efficient, stronger and significantly better foundational business to service our customers. My focus now is squarely on delivering consistent, profitable top line growth both in '26 and for years to come.

So once again, operator, I want to thank everybody for joining us today. Thank you for your interest in BrightView. We look forward to giving you our progress as we work through 2026, which is a year we are very, very excited about. And the team, as we just left our annual meeting feels like there's so much upside based on the foundation we've built.

So thank you, operator, and we'll talk to everybody in February.

Thank you, Mr. Asplund, and thank you, Mr. Urban. Again, ladies and gentlemen, that will conclude today's BrightView earnings conference call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.