BV

• Transformation Strategy Progress

  • Fifth consecutive quarter of positive net new land maintenance business, with the highest net new results since CEO Dale Asplund's tenure began. The contract book has grown for five straight quarters following accelerated sales force expansion in H2 2025.
  • 200 net new sellers added since the end of 2024, on track to hit the target of 500 incremental sellers. New contract sales are up 20% year-to-date compared to 2025, with the first cohort of new hires now hitting full productivity after one year.
  • Over half of all branches now achieve 85%+ customer retention, up from just 40% in 2024. Branches with 95%+ retention average 10%+ trailing 12-month growth, while branches with 85-95% retention average 6% growth, confirming retention as a core growth driver. The company targets overall 90%+ retention long-term.
  • Frontline employee turnover decreased 7 percentage points year-over-year, and customer retention improved 250 basis points year-over-year, driven by investments in employee safety, benefits, consistent hours and fleet upgrades. Claims frequency has dropped 25% since 2023.

• Fuel Cost Mitigation

  • Average fuel prices were $1 per gallon higher than Q3 2025, creating a $4.5 million headwind. The company declined to implement short-term fuel surcharges on existing contracts to preserve long-term customer relationships.
  • Proactive mitigation (route optimization technology, fleet refresh with fuel-efficient vehicles, lower-cost fuel routing, partial fuel hedging) cut fuel consumption by 10% and reduced the total headwind by $2 million, offsetting roughly 44% of the incremental fuel cost.

• Non-Routine Items

  • A one-time $16 million non-recurring self-insurance adjustment was recorded, almost entirely for adverse development of unresolved claims from 2023 and prior years. Over 85% of these legacy claims have now been closed, and management does not expect a similar adjustment to reoccur.
  • Excluding the fuel headwind and self-insurance adjustment, adjusted EBITDA would have been $116 million (16.2% margin), representing $3 million growth and 20 basis points of margin expansion year-over-year. Reported adjusted EBITDA was $96 million (13.3% margin).

• Balance Sheet Improvement

  • The company extended all three debt tranches, adding $100 million of additional liquidity capacity and pushing out long-term maturities, demonstrating strong lender confidence in the transformation progress.

• Full-year 2026 land maintenance revenue growth guidance is maintained at 2% to 3%, reaffirming the prior upward revision from May.
• Full-year 2026 total revenue guidance is updated to $2.75 billion to $2.78 billion, representing a 3.5% increase at the midpoint compared to 2025, reflecting modest development growth in line with Q3 performance.
• Adjusted EBITDA guidance is revised downward to incorporate the Q3 non-routine self-insurance adjustment and sustained elevated fuel costs in the back half of 2026. Excluding these two one-time items, adjusted EBITDA would be $365 million to $370 billion, matching the prior guidance range from May.
• Adjusted free cash flow guidance for 2026 is revised to $70 million to $80 million to reflect the impact of the headwinds and one-time adjustment.
• Q4 2026 land maintenance growth is expected to land in a 3% to 6% range, with the variance driven entirely by fluctuations in ancillary revenue demand and customer acceptance of ancillary pricing.
• Management expects the sequential growth momentum in land maintenance to continue into 2027 and beyond, with a long-term target of 3% to 6% annual land growth and mid-to-upper single-digit profitable growth by 2027.

1. Land Maintenance: Total Q3 revenue grew 2.3% year-over-year, marking the second consecutive quarter of organic growth. Contract revenue increased 3% year-over-year, while ancillary revenue grew 2% year-over-year. The overall land maintenance contract book has grown 4% since Q2 2025, contributing approximately 90% of total company revenue growth for the quarter. This segment is the firm's primary recurring, high-resilience revenue driver.
2. Development: Revenue increased modestly quarter-over-quarter, reflecting the return of previously delayed projects. The segment is experiencing choppy project backlog and timing but showed early signs of stabilization and momentum in Q3.
3. Snow: Revenue declined in Q3, partially offsetting land maintenance growth and creating a $3 million headwind from customer credits.

• Sustained elevated fuel prices create ongoing near-term margin headwinds, even with mitigation efforts. Fuel price volatility also impacts customer willingness to approve discretionary ancillary work, creating near-term revenue uncertainty.
• Development segment revenue and backlog remain choppy due to project timing delays, and new development investments have a multi-year lead time before converting to recognized revenue.
• Legacy unresolved insurance claims created an unplanned non-routine expense in Q3, though management has closed the vast majority of these legacy claims and does not expect similar future adverse development.

Q: What is the outlook for sequential growth momentum in land maintenance heading into Q4 2026 and 2027, given the current strong contract book growth? / A: Management expects Q4 land growth to land between 3% and 6% as existing contract book growth flows through to revenue. Sequential momentum has been building: after a 1% normalized decline in Q1 2026, land grew 2% in Q2, 2.3% in Q3, and the 4% cumulative contract book growth over five quarters creates predictable, sustained momentum for 2027 and beyond barring unforeseen macro events. The core predictable contract growth base supports continued long-term growth in line with prior targets.

Q: What is the timing of annual contract renewals, and how is the company approaching contract pricing for renewals amid elevated fuel costs? / A: The primary renewal periods are Q4 (October-December) for southern, year-round markets and March-April for northern seasonal markets, with smaller renewal activity ongoing throughout the year. The company continues to prioritize long-term customer relationships over short-term surcharges for existing contracts, but will communicate cost pressures to customers during upcoming 2027 renewals to align pricing with current market conditions, while balancing customer acceptance with margin goals. Existing operational efficiencies (route technology, updated fleet) continue to mitigate ~30% of incremental fuel costs.

Q: What drives the wide 3% to 6% range for Q4 2026 land growth, and how should we expect 2027 free cash flow to perform after this year's headwinds? / A: The entire range variance stems from ancillary revenue: the core contract book growth is predictable, but ancillary (discretionary customer work) fluctuates based on customer acceptance of current pricing, which has been sensitive to fuel price movements. A 2% ancillary growth outcome lands growth at the low end of the range, while 5% ancillary growth hits the high end. For 2027 free cash flow, capital expenditures will decline as the fleet refresh nears completion, and after removing this year's non-recurring items, higher operating income will drive improved cash conversion; management expects free cash flow generation to meaningfully increase in 2027, with a target of 40%+ conversion by 2030.

Q: What is the productivity ramp for new development sellers, and how is the development pipeline progressing? / A: New development sellers have a longer ramp-up period than land sellers, as development projects have multi-year sales pipelines (often 2 years from initial bid to contract signing) and focus on large, multi-million dollar projects. The company has added 10 new development sellers recently, paired with an experienced mentorship program from tenured branch leadership to speed up productivity. The cold start expansion initiative now has 8 open new development branches building backlog, and management expects increasing project conversions as these investments mature.