BrightView Holdings, Inc. (Form: 10-Q, Received: 02/06/2020 06:13:01)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38579

BrightView Holdings, Inc.

(Exact name of Registrant as specified in its Charter)

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

Registrant’s telephone number, including area code: (484) 567-7204

Securities registered pursuant to Section 12(b) of the Act:

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

Securities registered pursuant to Section 12(g) of the Act: None

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

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

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

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

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

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

Table of Contents

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

•

general business economic and financial conditions;

•

competitive industry pressures;

•

the failure to retain current customers, renew existing customer contracts and obtain new customer contracts;

•

the failure to enter into profitable contracts, or maintaining customer contracts that are unprofitable;

•

a determination by customers to reduce their outsourcing or use of preferred vendors;

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the dispersed nature of our operating structure;

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our ability to implement our business strategies and achieve our growth objectives;

•

acquisition and integration risks;

•

the seasonal nature of our landscape maintenance services;

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our dependence on weather conditions;

•

increases in prices for raw materials and fuel;

•

product shortages and the loss of key suppliers;

•

any failure to accurately estimate the overall risk, requirements, or costs when we bid on or negotiate contracts that are ultimately awarded to us;

•

the conditions and periodic fluctuations of real estate markets, including residential and commercial construction;

•

our ability to retain our executive management and other key personnel;

•

our ability to attract and retain trained workers and third-party contractors and re-employ seasonal workers;

•

any failure to properly verify employment eligibility of our employees;

•

subcontractors taking actions that harm our business;

•

our recognition of future impairment charges;

•

laws and governmental regulations, including those relating to employees, wage and hour, immigration, human health and safety and transportation;

•

environmental, health and safety laws and regulations, including regulatory costs, claims and litigation related to the use of chemicals and pesticides by employees and related third-party claims;

•

the distraction and impact caused by litigation, of adverse litigation judgments and settlements resulting from legal proceedings;

•

increase in on-job accidents involving employees;

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any failure, inadequacy, interruption, security failure or breach of our information technology systems;

•

any failure to protect the security of personal information about our customers, employees and third parties;

•

our ability to adequately protect our intellectual property;

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occurrence of natural disasters, terrorist attacks or other external events;

•

changes in generally accepted accounting principles in the United States;

•

our ability to generate sufficient cash flow to satisfy our significant debt service obligations;

•

our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions, or other general corporate requirements;

•

restrictions imposed by our debt agreements that limit our flexibility in operating our business;

•

increases in interest rates governing our variable rate indebtedness increasing the cost of servicing our substantial indebtedness including proposed changes to LIBOR;

•

ownership of our common stock; and

•

costs and requirements imposed as a result of maintaining the requirement of being a public company.

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

iii

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

BrightView Holdings, Inc.

Consolidated Balance Sheets

(Unaudited)

(In millions, except par value and share data)

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

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

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BrightView Holdings, Inc.

Consolidated Statements of Operations

(Unaudited)

(In millions, except per share data)

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

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

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BrightView Holdings, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(In millions)

	Three Months Ended December 31,
	2019			2018
Net (loss)	$	(12.6	)	$	(8.8	)
Net derivative gains (losses) arising during the period, net of tax of $(0.1) and $(1.1), respectively		0.2			(3.0	)
Reclassification of losses into net (loss), net of tax of $0.7 and $0.3, respectively		1.9			0.5
Other comprehensive income (loss)		2.1			(2.5	)
Comprehensive (loss)	$	(10.5	)	$	(11.3	)

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

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BrightView Holdings, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended December 31, 2019 and 2018

(Unaudited)

(In millions)

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

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

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

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BrightView Holdings, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In millions)

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

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

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BrightView Holdings, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(In millions, except per share and share data)

1.Business and Basis of Presentation

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

Basis of Presentation

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

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

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

Use of Estimates

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

2.Recent Accounting Pronouncements

Leases

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

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

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

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

Measurement of Credit Losses

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments, which was amended in May 2019 by ASU No. 2019-04, Codification Improvements to Topic 326, Financial Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief. These ASUs require entities to account for expected credit losses on financial instruments including trade receivables. The guidance is effective for the Company in the first quarter of fiscal 2021 and early adoption is permitted. The Company is currently evaluating the impact of the updated guidance on its consolidated financial statements.

Fair Value Measurement

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reason for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The guidance is effective for the Company in the first quarter of fiscal 2021. Early adoption is permitted for any removed or modified disclosures and adoption of the additional disclosures can be delayed until the effective date. The Company does not currently expect the adoption of ASU 2018-13 to have a material impact on its consolidated financial statements and disclosures.

Simplifying the Accounting for Income Taxes

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

3.Revenue

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

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Maintenance Services

The Company’s Maintenance Services revenues are generated primarily through landscape maintenance services and snow removal services. Landscape maintenance services that are primarily viewed as non-discretionary, such as lawn care, mowing, gardening, mulching, leaf removal, irrigation and tree care, are provided under recurring annual contracts, which typically range from one to three years in duration and are generally cancellable by the customer with 30 days’ notice. Snow removal services are provided on either fixed fee based contracts or per occurrence contracts. Both landscape maintenance services and snow removal services can also include enhancement services that represent supplemental maintenance or improvement services generally provided under contracts of short duration related to specific services. Revenue for landscape maintenance and snow removal services under fixed fee models is recognized over time using an output based method. Additionally, a portion of the Company’s recurring fixed fee landscape maintenance and snow removal services are recorded under the series guidance. The right to invoice practical expedient, defined below, is generally applied to revenue related to landscape maintenance and snow removal services performed in relation to per occurrence contracts as well as enhancement services. When use of the practical expedient is not appropriate for these contracts, revenue is recognized using a cost-to-cost input method. Fees for contracted landscape maintenance services are typically billed on an equal monthly basis. Fees for fixed fee snow removal services are typically billed on an equal monthly basis during snow season, while fees for time and material or other activity-based snow removal services are typically billed as the services are performed. Fees for enhancement services are typically billed as the services are performed.

Development Services

For Development Services, revenue is primarily recognized over time using the cost-to-cost input method, measured by the percentage of cost incurred to date to the estimated total cost for each contract, which we believe to be the best measure of progress. The full amount of anticipated losses on contracts is recorded as soon as such losses can be estimated. These losses have been immaterial in prior periods. Changes in job performance, job conditions, and estimated profitability, including final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.

Disaggregation of revenue

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

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

Remaining Performance Obligations

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

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

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

Contract Assets and Liabilities

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

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

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

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

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

Practical Expedients and Exemptions

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

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

4.Accounts Receivable

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

5.Inventories

Inventories consist of the following:

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

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6.Property and Equipment, net

Property and equipment, net consists of the following:

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

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

7.Intangible Assets, Goodwill and Acquisitions

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

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

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

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

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

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8.Long-term Debt

Long-term debt consists of the following:

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

First Lien credit facility term loans due 2020 and Series B Term Loan due 2025

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

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

Revolving credit facility

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

Receivables financing agreement

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

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

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

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

9.Fair Value Measurements and Derivatives Instruments

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

Fair Value Hierarchy

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

Level 1

Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement dates.

Level 2

Significant observable inputs that are used by market participants in pricing the asset or liability based on market data obtained from independent sources.

Level 3

Significant unobservable inputs the Company believes market participants would use in pricing the asset or liability based on the best information available.

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

Investments held in Rabbi Trust

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

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Derivatives

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

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

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

	September 30, 2019
	Carrying Value		Level 1		Level 2		Level 3
Other assets:
Investments held by Rabbi Trust	$	11.1	$	11.1	$	—	$	—
Total assets	$	11.1	$	11.1	$	—	$	—
Accrued expenses and other current liabilities:
Interest rate swap contracts	$	6.3	$	—	$	6.3	$	—
Other liabilities:
Interest rate swap contracts		10.9		—		10.9		—
Obligation to Rabbi Trust		11.1		11.1		—		—
Total liabilities	$	28.3	$	11.1	$	17.2	$	—

Hedging Activities

As of December 31, 2019 and September 30, 2019, the Company’s outstanding derivatives qualify as cash flow hedges. The Company assesses whether derivatives used in hedging transactions are “highly effective” in offsetting changes in the cash flow of the hedged forecasted transactions. Regression analysis is used for the hedge relationships and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. The entire change in the fair value of the derivative included in the assessment of hedge effectiveness is initially reported in Other comprehensive income (loss) and subsequently reclassified to Interest expense in the Consolidated Statements of Operations when the hedged item affects earnings. If it is determined that a derivative is not highly effective as a hedge, or if the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in Accumulated other comprehensive loss is released to earnings. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction.

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Interest Rate Swap Contracts

The Company has exposures to variability in interest rates associated with its variable interest rate debt. As such, the Company has entered into interest rate swaps to help manage interest rate exposure by economically converting a portion of its variable-rate debt to fixed-rate debt effective for the periods March 18, 2016 through December 31, 2020. The notional amount of interest rate contracts was $1,000.0 and $1,000.0, respectively, at December 31, 2019 and September 30, 2019. The net deferred losses on the interest rate swaps as of December 31, 2019 of $9.5, net of taxes, are expected to be recognized in interest expense over the next 12 months.

The effects on the consolidated financial statements of the interest rate swaps which were designated as cash flow hedges were as follows:

	Three Months Ended December 31,
	2019			2018
Income (loss) recognized in Other comprehensive income (loss)	$	0.2		$	(4.2	)
Net (loss) reclassified from Accumulated other comprehensive loss into Interest expense		(3.0	)		(0.8	)

10.Income Taxes

The following table summarizes the Company’s income tax benefit and effective income tax rate for the three months ended December 31, 2019 and 2018.

	Three Months Ended December 31,
	2019			2018
(Loss) before income taxes	$	(17.5	)	$	(12.0	)
Income tax (benefit)		(4.9	)		(3.2	)
Effective income tax rate		28.0	%		26.7	%

The increase in the effective tax rate for the three months ended December 31, 2019 when compared to the three months ended December 31, 2018, is primarily related to the benefit for state tax law changes that were recorded discretely during the period.

11.Leases0-3, 842-20-50-9]

The Company determines if an arrangement is a lease at the inception of the agreement. The Company determines an arrangement is a lease if it conveys the right to control the use of the asset for a period of time in exchange for consideration.

The Company has operating and finance leases for branch and administrative offices, vehicles, certain machinery and equipment, furniture, and information technology assets. The Company’s leases have remaining lease terms of month to month up to 13 years with one or more exercisable renewal periods and specified increases in lease payments upon exercise of the renewal options. For purposes of calculating lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that the Company will exercise those options. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance, common area maintenance, and tax payments. The variable lease payments are not presented as part of the initial right-of-use asset or lease liability. The Company's lease agreements do not contain any material restrictive covenants or residual value guarantees.

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The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheet at December 31, 2019:

Operating leases:
Right-of-use asset	$	65.0
Current portion of lease liabilities		23.3
Lease liabilities		48.0
Total operating lease liabilities	$	71.3

Finance leases:
Right-of-use asset⁽¹⁾	$	36.9
Current portion of lease liabilities⁽²⁾		4.8
Lease liabilities⁽³⁾		1.4
Total finance lease liabilities	$	6.2

(1)	Included in “Property and equipment, net” in the consolidated balance sheet.

(2)	Included in “Accrued expenses and other liabilities” in the consolidated balance sheet.

(3)	Included in “Other liabilities” in the consolidated balance sheet.

As most of the Company’s leases do not specifically state an implicit rate, the Company uses an incremental borrowing rate consistent with the lease term as of the lease commencement date when calculating the present value of remaining lease payments. The incremental borrowing rate reflects the cost to borrow on a securitized basis. The remaining lease term does not reflect all renewal options available to the Company, only those renewal options that the Company has assessed as reasonably certain taking into consideration the economic factors noted above.

The weighted-average remaining lease terms and incremental borrowing rates as of December 31, 2019 are as follows:

Operating leases:
Weighted-average remaining lease term (years)	5.6
Weighted-average incremental borrowing rate	3.2	%

Finance leases:
Weighted-average remaining lease term (years)	1.8
Weighted-average incremental borrowing rate	4.2	%

The components of lease cost for operating and finance leases for the three months ended December 31, 2019 were as follows:

Operating lease cost	$	7.3
Finance lease cost:
Amortization of right-of-use asset		1.1
Interest on lease liabilities		—
Total finance lease cost		1.1
Short-term lease cost		6.4
Variable lease costs not included in lease liability		0.1
Sublease income		(0.1	)
Total lease cost	$	14.8

Supplemental cash flow information for the three months ended December 31, 2019 is as follows:

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(6.6	)
Operating cash flows from finance leases		—
Financing cash flows from finance leases		(1.5	)

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As of December 31, 2019, the Company does not have material operating or financing leases that have not yet commenced.

Maturities of operating and finance lease liabilities as of December 31, 2019 were as follows:

Fiscal Year	Operating Lease			Finance Lease
2020	$	17.7		$	5.0
2021		18.0			2.2
2022		13.0			0.5
2023		9.8			0.1
2024		6.5			—
Thereafter		16.3			—
Total		81.3			7.8
Less: Executory Costs		—			(0.1	)
Total net lease payments		81.3			7.7
Less: Amounts representing interest		10.0			1.5
Total lease liabilities		71.3			6.2
Less: Current portion of lease liabilities		(23.3	)		(4.8	)
Non-current lease liabilities	$	48.0		$	1.4

Future minimum lease payments for operating leases accounted for under ASC 840, Leases, with remaining non-cancelable terms in excess of one year at September 30, 2019 were as follows:

Fiscal Year Ended September 30,
2020	$	21.7
2021		17.0
2022		13.2
2023		10.3
2024 and thereafter		22.8
Total	$	85.0

Future minimum lease payments under capital lease obligations as of September 30, 2019 are as follows:

Future minimum lease payments:
Fiscal Year Ended September 30:
2020	$	5.6
2021		3.2
2022		0.7
2023		0.2
2024 and thereafter	—
Total		9.7
Less: Executory costs		(0.1	)
Net minimum lease payments		9.6
Less: Amount representing interest		(1.1	)
Present value of net minimum lease payments		8.5
Less: Current portion		(5.4	)
Long-term portion of finance lease obligations	$	3.1

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12.Equity-based Compensation

Restricted Stock Units

On November 22, 2019, the Company issued 194,000 nonforfeitable restricted stock units (“RSUs”) at a weighted average grant date fair value of $16.89, all of which are subject to vesting. The majority of these shares will vest ratably over a two-year period commencing on the first anniversary of the grant date. Non-cash equity-based compensation expense associated with the grant is approximately $3.3 all of which was recognized during the three months ended December 31, 2019.

On November 22, 2019, the Company issued 454,000 restricted stock units (“RSUs”) at a weighted average grant date fair value of $16.89, all of which are subject to vesting. The majority of these units will vest ratably over a four-year period commencing on the first anniversary of the grant date. Non-cash equity-based compensation expense associated with the grant will be approximately $6.8 over the requisite service period.

Stock Option Awards

On November 22, 2019, the Company issued 953,000 stock options at a weighted average exercise price of $16.89 and a weighted average grant date fair value of $8.06, the majority of which will vest and become exercisable ratably over a four-year period commencing on the first anniversary of the grant date. Non-cash equity-based compensation expense associated with the grant will be approximately $6.6 over the requisite service period.

Information regarding the total equity-based compensation expense, for the periods indicated is as follows:

Three Months Ended

December 31,

2019

2018

Total equity-based compensation expense recognized

8.2

5.9

At December 31, 2019 the aggregate unamortized value of outstanding stock-based compensation awards was approximately $49.5, with a weighted average remaining life of 2.5 years.

2018 Employee Stock Purchase Plan

The Company’s stockholders approved in 2018 the Company’s 2018 Employee Stock Purchase Plan (the “ESPP”). A total of 1,100,000 shares of the Company’s common stock were made available for sale on October 22, 2018 and 172,000 were issued on November 14, 2019, and an additional portion thereof will be issued on November 14, 2020.

13.Commitments and Contingencies

Risk Management

The Company carries general liability, auto liability, workers’ compensation, professional liability, directors’ and officers’ liability and employee health care insurance policies. In addition, the Company carries umbrella liability insurance policies to cover claims over the liability limits contained in the primary policies. The Company’s insurance programs for workers’ compensation, general liability, auto liability and employee health care for certain employees contain self-insured retention amounts, deductibles and other coverage limits (“self-insured liability”). Claims that are not self-insured as well as claims in excess of the self-insured liability amounts are insured. The Company uses estimates in the determination of the required reserves. These estimates are based upon calculations performed by third-party actuaries, as well as examination of historical trends and industry claims experience. The Company’s reserve for unpaid and incurred but not reported claims under these programs at December 31, 2019 was $126.4, of which $41.7 was classified in current liabilities and $84.7 was classified in non-current liabilities in the accompanying unaudited consolidated balance sheet. The Company’s reserve for unpaid and incurred but not reported claims under these programs at September 30, 2019 was $124.5, of which $37.4 was classified in current liabilities and $87.1 was classified in non-current liabilities in the accompanying consolidated balance sheet. While the ultimate amount of these claims is dependent on future developments, in management’s opinion, recorded reserves are adequate to cover these claims. The Company’s reserve for unpaid and incurred but not reported claims at December 31, 2019 includes $34.1 related to claims recoverable from third party insurance carriers. Corresponding assets of $6.6 and $27.5 are recorded at December 31, 2019, as Other current assets and Other assets, respectively. The Company’s reserve for unpaid and incurred but not reported claims at September 30, 2019 includes $32.1 related to claims recoverable from third party insurance carriers. Corresponding assets of $6.1 and $26.0 were recorded at September 30, 2019, as Other current assets and Other assets, respectively.

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Litigation Contingency

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of its business, principally claims made alleging injuries (including vehicle and general liability matters as well as workers’ compensation and property casualty claims). Such claims, even if lacking merit, can result in expenditures of significant financial and managerial resources. In the ordinary course of its business, the Company is also subject to claims involving current and/or former employees and disputes involving commercial and regulatory matters. Regulatory matters include, among other things, audits and reviews of local and federal tax compliance, safety and employment practices. Although the process of resolving regulatory matters and claims through litigation and other means is inherently uncertain, the Company is not aware of any such matter, legal proceeding or claim that it believes will have, individually or in the aggregate, a material effect on the Company, its financial condition, results of operations or cash flows. For all legal matters, an estimated liability is established in accordance with the loss contingencies accounting guidance. This estimated liability is included in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets.

Stockholder Litigation

In April 2019, two purported class action complaints, one captioned McComas v. BrightView Holdings, Inc., and the other captioned Speiser v. BrightView Holdings, Inc., were filed against the Company, certain current and former officers and directors of the Company, the underwriters in the Company’s IPO, and the Company’s alleged controlling stockholders. The complaints were consolidated in July 2019 in the Montgomery County Court of Common Pleas under the caption In re BrightView Holdings, Inc. Securities Litigation, with the McComas complaint, as subsequently amended, as the operative pleading. Both complaints allege violations of Section 11 of the Securities Act of 1933 against all defendants and controlling person claims under Section 15 of the Act against certain defendants. The plaintiffs purport to represent similar classes of persons who purchased BrightView stock in its IPO in July 2018 or purchased BrightView stock in the market that was traceable to the shares issued in the IPO. The complaints allege that the IPO prospectus was misleading because it allegedly failed to disclose that a portion of BrightView’s contracts were underperforming and/or represented undesirable costs to the Company and that, as a result, BrightView would implement a managed exit strategy from low margin or non-profitable contracts that would negatively impact its future revenues; and that BrightView failed to disclose an alleged labor shortage caused by the Company’s inability to hire sufficient workers through the H-2B visa program would adversely affect earnings. On August 12, 2019, BrightView and the other defendants filed preliminary objections seeking dismissal of the complaint as legally insufficient. Defendants also filed a petition for dismissal based on the provision in BrightView’s certificate of incorporation that designates the federal district courts of the United States of America as the exclusive forum for resolving any claim arising under the United States federal securities laws, or to stay the action pending the decision of the Delaware Supreme Court in Sciabacucchi v. Salzberg. In that case, the Delaware Supreme Court is expected to decide whether federal forum selection provisions such as the one in BrightView’s certificate of incorporation are enforceable under Delaware law. On November 4, 2019, plaintiffs filed a motion for class certification. On November 6, 2019, the Court overruled defendants’ preliminary objections and denied defendants’ petition for dismissal or for a stay. On January 10, 2020, the defendants filed answers to the complaint, and discovery in the case is now ongoing. The Company intends to continue to defend itself vigorously against the actions. The Company is unable at this time to determine the amount of the possible loss or range of loss, if any, that it may incur as a result of these matters.

14.Segments

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

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

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

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

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

	Three Months Ended December 31,
	2019			2018
Maintenance Services	$	418.9		$	392.5
Development Services		152.8			134.4
Eliminations		(1.0	)		(0.9	)
Net service revenues	$	570.7		$	526.0
Maintenance Services	$	47.7		$	48.7
Development Services		19.1			17.0
Corporate		(15.1	)		(15.6	)
Adjusted EBITDA⁽¹⁾	$	51.7		$	50.1
Maintenance Services	$	11.7		$	11.1
Development Services		2.0			3.2
Corporate		0.8			3.0
Capital expenditures	$	14.5		$	17.3

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

	Three Months Ended December 31,
	2019			2018
Net (loss)	$	(12.6	)	$	(8.8	)
Interest expense		17.4			17.1
Income tax (benefit)		(4.9	)		(3.2	)
Depreciation expense		20.2			19.3
Amortization expense		13.5			15.1
Establish public company financial reporting compliance (a)		0.9			0.4
Business transformation and integration costs (b)		8.3			4.3
Offering-related expenses (c)		0.4			—
Equity-based compensation (d)		8.5			5.9
Adjusted EBITDA	$	51.7		$	50.1

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

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

(c)	Represents expenses incurred for IPO related litigation and subsequent registration statements. No related expenses were incurred during the three months ended December 31, 2018.

(d)	Represents equity-based compensation expense and related taxes recognized for equity incentive plans outstanding, including $2.0 of equity based compensation expense related to the IPO during the three months ended December 31, 2019.

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15.Earnings (Loss) Per Share of Common Stock

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. Set forth below is a reconciliation of the numerator and denominator for basic and diluted earnings (loss) per share calculation for the periods indicated:

	Three Months Ended December 31,
	2019			2018
Numerator:
Net (loss) available to common stockholders	$	(12.6	)	$	(8.8	)
Denominator:
Weighted average number of common shares outstanding – basic and diluted		103,307,000			102,502,000
Basic and diluted (loss) per share	$	(0.12	)	$	(0.09	)
Other Information:
Weighted average number of anti-dilutive options and restricted stock		7,607,000			5,891,000

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis supplements our management’s discussion and analysis for the year ended September 30, 2019 as contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 21, 2019, and presumes that readers have read or have access to such discussion and analysis. The following discussion and analysis should also be read together with the unaudited consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that reflect our plans and strategy for our business, and involve risks and uncertainties. You should review the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

Overview

Our Company

We are the largest provider of commercial landscaping services in the United States, with revenues more than 10 times those of our next largest commercial landscaping competitor. We provide commercial landscaping services ranging from landscape maintenance and enhancements to tree care and landscape development. We operate through a differentiated and integrated national service model which systematically delivers services at the local level by combining our network of over 220 branches with a qualified service partner network. Our branch delivery model underpins our position as a single-source end-to-end landscaping solution provider to our diverse customer base at the national, regional and local levels, which we believe represents a significant competitive advantage. We believe our commercial customer base understands the financial and reputational risk associated with inadequate landscape maintenance and considers our services to be essential and non-discretionary.

Our Segments

We report our results of operations through two reportable segments: Maintenance Services and Development Services. We serve a geographically diverse set of customers through our strategically located network of branches in 32 U.S. states, and, through our qualified service partner network, we are able to efficiently provide nationwide coverage in all 50 U.S. states and Puerto Rico.

Maintenance Services

Our Maintenance Services segment delivers a full suite of recurring commercial landscaping services in both evergreen and seasonal markets, ranging from mowing, gardening, mulching and snow removal, to more horticulturally advanced services, such as water management, irrigation maintenance, tree care, golf course maintenance and specialty turf maintenance. In addition to contracted maintenance services, we also have a strong track record of providing value-added landscape enhancements. We primarily self-perform our maintenance services through our national branch network, which are route-based in nature. Our maintenance services customers include Fortune 500 corporate campuses and commercial properties, HOAs, public parks, leading international hotels and resorts, airport authorities, municipalities, hospitals and other healthcare facilities, educational institutions, restaurants and retail, and golf courses, among others.

Development Services

Through our Development Services segment, we provide landscape architecture and development services for new facilities and significant redesign projects. Specific services include project design and management services, landscape architecture, landscape installation, irrigation installation, tree nursery and installation, pool and water features and sports field services, among others. Our development services are comprised of sophisticated design, coordination and installation of landscapes at some of the most recognizable corporate, athletic and university complexes and showcase highly visible work that is paramount to our customers’ perception of our brand as a market leader.

In our Development Services business, we are typically hired by general contractors, with whom we maintain strong relationships as a result of our superior technical and project management capabilities. We believe the quality of our work is also well-regarded by our end-customers, some of whom directly request that their general contractors utilize our services when outsourcing their landscape development projects.

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Components of Our Revenues and Expenses

Net Service Revenues

Maintenance Services

Our Maintenance Services revenues are generated primarily through landscape maintenance services and snow removal services. Landscape maintenance services that are primarily viewed as non-discretionary, such as lawn care, mowing, gardening, mulching, leaf removal, irrigation and tree care, are provided under recurring annual contracts, which typically range from one to three years in duration and are generally cancellable by the customer with 30 days’ notice. Snow removal services are provided on either fixed fee based contracts or per occurrence contracts. Both landscape maintenance services and snow removal services can also include enhancement services that represent supplemental maintenance or improvement services generally provided under contracts of short duration related to specific services. Revenue for landscape maintenance and snow removal services under fixed fee models is recognized over time using an output based method. Additionally, a portion of our recurring fixed fee landscape maintenance and snow removal services are recorded under the series guidance. The right to invoice practical expedient, defined within Note 3 “Revenue” to our unaudited consolidated financial statements, is generally applied to revenue related to landscape maintenance and snow removal services performed in relation to per occurrence contracts as well as enhancement services. When use of the practical expedient is not appropriate for these contracts, revenue is recognized using a cost-to-cost input method. Fees for contracted landscape maintenance services are typically billed on an equal monthly basis. Fees for fixed fee snow removal services are typically billed on an equal monthly basis during snow season, while fees for time and material or other activity-based snow removal services are typically billed as the services are performed. Fees for enhancement services are typically billed as the services are performed.

Development Services

For Development Services, revenue is primarily recognized over time using the cost-to-cost input method, measured by the percentage of cost incurred to date to the estimated total cost for each contract, which we believe to be the best measure of progress. The full amount of anticipated losses on contracts is recorded as soon as such losses can be estimated. These losses have been immaterial in prior periods. Changes in job performance, job conditions and estimated profitability, including final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.

Expenses

Cost of Services Provided

Cost of services provided is comprised of direct costs we incur associated with our operations during a period and includes employee costs, subcontractor costs, purchased materials, operating equipment and vehicle costs. Employee costs consist of wages and other labor-related expenses, including benefits, workers compensation and healthcare costs, for those employees involved in delivering our services. Subcontractor costs consist of costs relating to our qualified service partner network in our Maintenance Services segment and subcontractors we engage from time to time in our Development Services segment. When our use of subcontractors increases, we may experience incrementally higher costs of services provided. Operating equipment and vehicle costs primarily consist of depreciation related to branch operating equipment and vehicles and related fuel expenses. A large component of our costs are variable, such as labor, subcontractor expense and materials.

Selling, General and Administrative Expense

Selling, general and administrative expense consists of costs incurred related to compensation and benefits for management, sales and administrative personnel, equity-based compensation, branch and office rent and facility operating costs, depreciation expense related to branch and office locations, as well as professional fees, software costs and other miscellaneous expenses. Corporate expenses, including corporate executive compensation, finance, legal and information technology, are included in consolidated selling, general and administrative expense and not allocated to the business segments.

Amortization Expense

Amortization expense consists of the periodic amortization of intangible assets, including customer relationships, non-compete agreements and trademarks, recognized when KKR acquired us on December 18, 2013 and in connection with businesses we have acquired since December 18, 2013.

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Interest Expense

Interest expense relates primarily to our long-term debt. See Note 8 “Long-term Debt” in the unaudited consolidated financial statements included under Part I, Item 1, “Financial Statements”.

Income Tax (Expense) Benefit

The benefit for income taxes includes U.S. federal, state and local income taxes. Our effective tax rate differs from the statutory U.S. income tax rate due to the effect of state and local income taxes, tax credits and certain nondeductible expenses. Our effective tax rate may vary from quarter to quarter based on recurring and nonrecurring factors including, but not limited to the geographical distribution of our pre-tax earnings, changes in the tax rates of different jurisdictions, the availability of tax credits and nondeductible items. Changes in judgment due to the evaluation of new information resulting in the recognition, derecognition or remeasurement of a tax position taken in a prior annual period are recognized separately in the period of the change.

Other (Expense) Income

Other (expense) income consists primarily of investment gains and losses related to investments held in Rabbi Trust.

Trends and Other Factors Affecting Our Business

Various trends and other factors affect or have affected our operating results, including:

Seasonality

Our services, particularly in our Maintenance Services segment, have seasonal variability such as increased mulching, flower planting and intensive mowing in the spring, leaf removal and cleanup work in the fall, snow removal services in the winter and potentially minimal mowing during drier summer months. This can drive fluctuations in revenue, costs and cash flows for interim periods.

We have a significant presence in geographies that have a year-round growing season, which we refer to as our evergreen markets. Such markets require landscape maintenance services twelve months per year. In markets that do not have a year-round growing season, which we refer to as our seasonal markets, the demand for our landscape maintenance services decreases during the winter months. Typically, our revenues and net income have been higher in the spring and summer seasons, which correspond with our third and fourth fiscal quarters. The lower level of activity in seasonal markets during our first and second fiscal quarters is partially offset by revenue from our snow removal services. Such seasonality causes our results of operations to vary from quarter to quarter.

Weather Conditions

Weather may impact the timing of performance of landscape maintenance and enhancement services and progress on development projects from quarter to quarter. For example, snow events in the winter, hurricane-related cleanup in the summer and fall, and the effects of abnormally high rainfall or drought in a given market may impact our services. These less predictable weather patterns can impact both our revenues and our costs, especially from quarter to quarter, but also from year to year in some cases. Extreme weather events such as hurricanes and tropical storms can result in a positive impact to our business in the form of increased enhancement services revenues related to cleanup and other services. However, such weather events may also negatively impact our ability to deliver our contracted services or impact the timing of performance.

In our seasonal markets, the performance of our snow removal services is correlated with the amount of snowfall and number of snowfall events in a given season. We benchmark our performance against ten- and thirty-year cumulative annual snowfall averages.

Acquisitions

In addition to our organic growth, we have grown, and expect to continue to grow, our business through acquisitions in an effort to better service our existing customers and to attract new customers. These acquisitions have allowed us to execute our “strong-on-strong” acquisition strategy in which we focus on increasing our density and leadership positions in existing local markets, entering into attractive new geographic markets and expanding our portfolio of landscape enhancement services and improving technical capabilities in specialized services. As we continue to selectively pursue acquisitions that complement our “strong-on-strong” acquisition strategy, we believe we are the acquirer of choice in the highly fragmented commercial landscaping industry because we

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offer the ability to leverage our significant size and scale, as well as provide stable and potentially expanding career opportunities for employees of acquired businesses. In accordance with GAAP, the results of the acquisitions we have completed are reflected in our consolidated financial statements from the date of acquisition. We incur transaction costs in connection with identifying and completing acquisitions and ongoing integration costs as we integrate acquired companies and seek to achieve synergies. We incurred $5.0 million of integration costs during the three months of fiscal 2020 related to acquisitions completed during fiscal 2019 and $0.4 million related to acquisitions completed during fiscal 2020.

Results of Operations

The following tables summarize key components of our results of operations for the periods indicated.

	Three Months Ended December 31,
(In millions)	2019			2018
Net service revenues	$	570.7		$	526.0
Cost of services provided		427.7			394.1
Gross profit		143.0			131.9
Selling, general and administrative expense		130.3			110.2
Amortization expense		13.5			15.1
(Loss) income from operations		(0.8	)		6.6
Other income (expense)		0.7			(1.5	)
Interest expense		17.4			17.1
(Loss) before income taxes		(17.5	)		(12.0	)
Income tax benefit		4.9			3.2
Net (loss)	$	(12.6	)	$	(8.8	)
Adjusted EBITDA⁽¹⁾	$	51.7		$	50.1
Adjusted Net Income⁽¹⁾	$	10.6		$	10.4
Cash flows from operating activities	$	7.3		$	6.4
Free Cash Flow⁽¹⁾	$	(6.2	)	$	(9.1	)

(1)	See the “Non-GAAP Financial Measures” section included in this Quarterly Report for a reconciliation to the most directly comparable GAAP measure.

Three Months Ended December 31, 2019 compared to Three Months Ended December 31, 2018

Net Service Revenues

Net service revenues for the three months ended December 31, 2019 increased $44.7 million, or 8.5%, to $570.7 million, from $526.0 million in the 2018 period. The increase was driven by increases in Maintenance Services revenues of $26.4 million and Development Services revenues of $18.4 million as discussed further below in Segment Results.

Gross Profit

Gross profit for the three months ended December 31, 2019 increased $11.1 million, or 8.4%, to $143.0 million, from $131.9 million in the 2018 period. The increase in gross profit was driven by the increase in revenues, described above. Gross margin remained consistent at 25.1% for the three months ended December 31, 2019 and the 2018 period.

Selling, General and Administrative Expense

Selling, general and administrative expense for the three months ended December 31, 2019 increased $20.1 million, or 18.2%, to $130.3 million, from $110.2 million in the 2018 period. This increase was largely driven by an increase of $8.6 million related to our acquired businesses, consisting of an increase of $4.3 million in business integration costs, to $5.4 million, from $1.1 million in the 2018 period, and $4.3 million of incremental overhead. Additionally, there were increases of $2.7 million due to the timing of expenses related to incentive compensation, $2.6 million in equity based compensation expense due to changes in our long term incentive plans and the employee stock purchase plan, and $3.4 million in salaries and other employee related expenses. As a percentage of revenue, selling, general and administrative expense increased 180 basis points for the three months ended December 31, 2019 to 22.8%, from 21.0% in the 2018 period.

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Amortization Expense

Amortization expense for the three months ended December 31, 2019 decreased $1.6 million, or 10.6%, to $13.5 million, from $15.1 million in the 2018 period. The decrease was principally due to a $2.1 million decrease in the amortization of historical intangible assets recognized in connection with the KKR Acquisition and the ValleyCrest Acquisition, based on the pattern consistent with expected future cash flows calculated at that time, offset by $0.5 million increase in amortization expense for intangible assets recognized in connection with our acquired businesses subsequent to the ValleyCrest Acquisition.

Other Income (Expense)

Other income was $0.7 million for the three months ended December 31, 2019, an increase of $2.2 million from Other expense of $1.5 million in the 2018 period. The increase is driven by an increase in gains on investments held in Rabbi Trust.

Interest Expense

Interest expense for the three months ended December 31, 2019 increased $0.3 million, or 1.8%, to $17.4 million, from $17.1 million in the 2018 period. The increase was driven by the impact of our interest rate swaps for the period, partially offset by a lower weighted average interest rate on our term loans in the 2019 period of 4.36% compared to 4.85% in the 2018 period.

Income Tax Benefit

Income tax benefit for the three months ended December 31, 2019 increased $1.7 million, to $4.9 million, from $3.2 million in the 2018 period. The increase in tax benefit is primarily attributable to the increase in the loss before income taxes due to an increase in Selling, general and administrative expense, as discussed further above.

Net (Loss)

For the three months ended December 31, 2019, net loss was $12.6 million, compared to net loss of $8.8 million in the 2018 period. The change was attributed to lower income from operations, partially offset by an increase in Other income and an increase in the Income tax benefit.

Adjusted EBITDA

Adjusted EBITDA increased $1.6 million for the three months ended December 31, 2019, to $51.7 million, from $50.1 million in the 2018 period. Adjusted EBITDA as a percentage of revenue was 9.1% and 9.5% for the three months ended December 31, 2019 and 2018, respectively. The increase in Adjusted EBITDA was principally driven by an increase in Development Services Segment Adjusted EBITDA of $2.1 million, or 12.4%, as well as a decrease in corporate expenses of $0.5 million, partially offset by a decrease of $1.0 million, or 2.1%, in Maintenance Services Segment Adjusted EBITDA, as discussed further below in Segment Results.

Adjusted Net Income

Adjusted Net Income for the three months ended December 31, 2019 increased $0.2 million to $10.6 million, from $10.4 million in the 2018 period due to the changes noted above.

Non-GAAP Financial Measures

In addition to our GAAP financial measures, we review various non-GAAP financial measures including Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share (“Adjusted EPS”) and Free Cash Flow.

We believe that Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are helpful supplemental measures to assist us and investors in evaluating our operating results as they exclude certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business. Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net income (loss) including interest and depreciation and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions and the removal of the discrete tax items. Adjusted EPS is defined as Adjusted Net Income divided by the weighted average number of common shares outstanding for the period used in the calculation of basic EPS. We believe that the adjustments applied in presenting Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that we do not expect to continue at the same level in the future.

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We believe Free Cash Flow is a helpful supplemental measure to assist us and investors in evaluating our liquidity. Free Cash Flow represents cash flows from operating activities less capital expenditures, net of proceeds from the sale of property and equipment. We believe Free Cash Flow is useful to provide additional information to assess our ability to pursue business opportunities and investments and to service our debt. Free Cash Flow has limitations as an analytical tool, including that it does not account for our future contractual commitments and exclude investments made to acquire assets under finance leases and required debt service payments.

Set forth below are the reconciliations of net income (loss) to Adjusted EBITDA and Adjusted Net Income, and cash flows from operating activities to Free Cash Flow. Adjusted EPS is defined as Adjusted Net Income (shown below) divided by the weighted average number of common shares outstanding for the period used in the calculation of basic EPS and presented in Note 15 “Earnings (Loss) Per Share of Common Stock” in the Notes to unaudited consolidated financial statements.

	Three Months Ended December 31,
(In millions)	2019			2018
Adjusted EBITDA
Net (loss)	$	(12.6	)	$	(8.8	)
Plus:
Interest expense, net		17.4			17.1
Income tax (benefit)		(4.9	)		(3.2	)
Depreciation expense		20.2			19.3
Amortization expense		13.5			15.1
Establish public company financial reporting compliance (a)		0.9			0.4
Business transformation and integration costs (b)		8.3			4.3
Offering-related expenses (c)		0.4			—
Equity-based compensation (d)		8.5			5.9
Adjusted EBITDA	$	51.7		$	50.1
Adjusted Net Income
Net (loss)	$	(12.6	)	$	(8.8	)
Plus:
Amortization expense		13.5			15.1
Establish public company financial reporting compliance (a)		0.9			0.4
Business transformation and integration costs (b)		8.3			4.3
Offering-related expenses (c)		0.4			—
Equity-based compensation (d)		8.5			5.9
Income tax adjustment (e)		(8.4	)		(6.5	)
Adjusted Net Income	$	10.6		$	10.4
Free Cash Flow
Cash flows from operating activities	$	7.3		$	6.4
Minus:
Capital expenditures		14.5			17.3
Plus:
Proceeds from sale of property and equipment		1.0			1.8
Free Cash Flow	$	(6.2	)	$	(9.1	)

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

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

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	Three Months Ended December 31,
(In millions)	2019		2018
Severance and related costs	$	0.2	$	0.5
Rebranding of vehicle fleet		—		0.3
Business integration		5.4		1.1
IT infrastructure transformation and other		2.7		2.4
Business transformation and integration costs	$	8.3	$	4.3

(c)	Represents expenses incurred for IPO related litigation and subsequent registration statements. No related expenses were incurred during the three months ended December 31, 2018.

(d)	Represents equity-based compensation expense and related taxes recognized for equity incentive plans outstanding, including $2.0 million of equity based compensation expense related to the IPO in the three months ended December 31, 2019.

(e)

Represents the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of the applicable discrete tax items, which collectively result in a reduction of income tax. The tax effect of pre-tax items excluded from Adjusted Net Income is computed using the statutory rate related to the jurisdiction that was impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances. Discrete tax items include changes in laws or rates, changes in uncertain tax positions relating to prior years and changes in valuation allowances.

	Three Months Ended December 31,
(In millions)	2019		2018
Tax impact of pre-tax income adjustments	$	8.1	$	5.9
Discrete tax items		0.3		0.6
Income tax adjustment	$	8.4	$	6.5

Segment Results

We classify our business into two segments: Maintenance Services and Development Services. Our corporate expenses are not allocated to the segments and are not discussed separately as any results that had a significant impact on operating results are included in the consolidated results discussion above.

We evaluate the performance of our segments on Net Service Revenues, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin (Segment Adjusted EBITDA as a percentage of Net Service Revenues). Segment Adjusted EBITDA is indicative of operational performance and ongoing profitability. Our management closely monitors Segment Adjusted EBITDA to evaluate past performance and identify actions required to improve profitability.

Segment Results for the Three Months Ended December 31, 2019 and 2018

The following tables present Net Service Revenues, Segment Adjusted EBITDA, and Segment Adjusted EBITDA Margin for each of our segments. Changes in Segment Adjusted EBITDA Margin are shown in basis points, or bps.

Maintenance Services Segment Results

	Three Months Ended December 31,						Percent Change
(In millions)	2019			2018			2019 vs. 2018
Net Service Revenues	$	418.9		$	392.5			6.7	%
Segment Adjusted EBITDA	$	47.7		$	48.7			(2.1	)%
Segment Adjusted EBITDA Margin		11.4	%		12.4	%		(100	) bps

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Maintenance Services Net Service Revenues

Maintenance Services net service revenues for the three months ended December 31, 2019 increased by $26.4 million, or 6.7%, from the 2018 period. Revenues from landscape maintenance services were $363.3 million, an increase of $18.8 million over the 2018 period and revenues from snow removal services were $55.6 million, an increase of $7.6 million over the 2018 period. The increase in landscape maintenance services was driven by a $21.6 million revenue contribution from acquired businesses offset by a decrease of $2.8 million in underlying commercial landscaping due to the wind down of our strategic managed exit initiative and the timing of new contracts. The increase in snow removal services was primarily attributable to increased snow contracts and the higher relative snowfall in the three months ended December 31, 2019 as compared to the 2018 period (snowfall for the three months ended December 31, 2019 and 2018 was 106.1% and 83.4%, respectively, of the historical 10-year average for that three-month period). Additionally, there was a $1.6 million snow removal services revenue contribution from acquired businesses.

Maintenance Services Segment Adjusted EBITDA

Segment Adjusted EBITDA for the three months ended December 31, 2019 decreased by $1.0 million to $47.7 million from $48.7 million in the 2018 period principally driven by a decrease in Segment Adjusted EBITDA Margin of 100 basis points, to 11.4%, in the three months ended December 31, 2019, from 12.4% in the 2018 period. The decrease in Adjusted EBITDA Margin was principally due to an increase in employee and technology related costs, primarily driven by the timing of expenses related to incentive compensation and the increased investment in our sales and operational leadership teams.

Development Services Segment Results

	Three Months Ended December 31,						Percent Change
(In millions)	2019			2018			2019 vs. 2018
Net Service Revenues	$	152.8		$	134.4			13.7	%
Segment Adjusted EBITDA	$	19.1		$	17.0			12.4	%
Segment Adjusted EBITDA Margin		12.5	%		12.6	%		(10	) bps

Development Services Net Service Revenues

Development Services net service revenues for the three months ended December 31, 2019 increased $18.4 million, or 13.7%, compared to the 2018 period. The increase in development services revenues was driven by higher project volumes and an increase in the work completed compared to the prior fiscal period.

Development Services Segment Adjusted EBITDA

Segment Adjusted EBITDA for the three months ended December 31, 2019 increased $2.1 million, to $19.1 million, compared to the 2018 period. The increase in Segment Adjusted EBITDA was due to the increase in net revenue described above, combined with productivity improvements partially offset by an increase in employee related costs driven by the timing of expenses related to incentive compensation. Segment Adjusted EBITDA Margin decreased 10 basis points, to 12.5%, in the three months ended December 31, 2019, from 12.6% in the 2018 period.

Liquidity and Capital Resources

Liquidity

Since the consummation of the KKR Acquisition and related financing transactions, our principal sources of liquidity have been existing cash and cash equivalents, cash generated from operations and borrowings under the Credit Agreement and the Receivables Financing Agreement. Our principal uses of cash following the consummation of the KKR Acquisition and related financing transactions have been to provide working capital, meet debt service requirements, fund capital expenditures and finance strategic plans, including acquisitions. We may also seek to finance capital expenditures under finance leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. While we have in the past financed certain acquisitions with internally generated cash, in the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings.

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Based on our current level of operations and available cash, we believe our cash flow from operations, together with availability under the Revolving Credit Facility and the Receivables Financing Agreement, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt service requirements and capital spending requirements for the next twelve months.

A substantial portion of our liquidity needs arise from debt service requirements, and from the ongoing cost of operations, working capital and capital expenditures.

(In millions)	December 31, 2019		September 30, 2019
Cash and cash equivalents	$	10.3	$	39.1
Short-term borrowings and current maturities of long-term debt		10.4		10.4
Long-term debt		1,132.5		1,134.2
Total debt, net	$	1,142.9	$	1,144.6

The Company is party to a credit agreement dated December 18, 2013 (as amended, the “Credit Agreement”), a five-year revolving credit facility that matures on August 15, 2023 (the “Revolving Credit Facility”) and, through a wholly-owned subsidiary, a receivables financing agreement dated April 28, 2017 (as amended, the “Receivables Financing Agreement”).

We can increase the borrowing availability under the Credit Agreement or increase the term loans outstanding under the Credit Agreement by up to $303.0 million, in the aggregate, in the form of additional commitments under the Revolving Credit Facility and/or incremental term loans under the Credit Agreement, or in the form of other indebtedness in lieu thereof, plus an additional amount so long as we do not exceed a specified senior secured leverage ratio and, in the case of second lien indebtedness, a specified senior secured leverage ratio. We can incur such additional secured or other unsecured indebtedness under the Credit Agreement if certain specified conditions are met. Our liquidity requirements are significant primarily due to debt service requirements. See Note 8 “Long-term Debt” to our unaudited consolidated financial statements included under Part I, Item 1, “Financial Statements”.

In the event that LIBOR is phased out as is currently expected, the Credit Agreement and the Receivables Financing Agreement each provide that the Company and the applicable administrative agent may amend such Credit Agreement or Receivables Financing Agreement, as applicable, to replace the LIBOR definition with a successor rate based on prevailing market convention, subject to notifying the lending syndicate of such change and not receiving within 5 business days of such notification written objections to such replacement rate from (i) with respect to the Receivables Financing Agreement, lenders holding at least a majority of the aggregate principal amount of commitments then outstanding thereunder or (ii) with respect to any class of loans under the Credit Agreement, lenders holding at least a majority of the aggregate principal amount of loans and commitments then outstanding in such class. The consequences of these developments cannot be entirely predicted, but could include an increase in the interest cost of our variable rate indebtedness.

Our business may not generate sufficient cash flows from operations or future borrowings may not be available to us under our Revolving Credit Facility or the Receivables Financing Agreement in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. Our ability to do so depends on, among other factors, prevailing economic conditions, many of which are beyond our control. In addition, upon the occurrence of certain events, such as a change in control, we could be required to repay or refinance our indebtedness. We may not be able to refinance any of our indebtedness, including the Series B Term Loan under the Credit Agreement, on commercially reasonable terms or at all. Any future acquisitions, joint ventures, or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms or at all.

Cash Flows

Information about our cash flows, by category, is presented in our statements of cash flows and is summarized below:

	Three Months Ended December 31,
(In millions)	2019			2018
Operating activities	$	7.3		$	6.4
Investing activities	$	(31.9	)	$	(17.2	)
Financing activities	$	(4.2	)	$	(6.7	)
Free Cash Flow ⁽¹⁾	$	(6.2	)	$	(9.1	)

(1)	See the “Non-GAAP Financial Measures” section included in this Quarterly Report for a reconciliation to the most directly comparable GAAP measure.

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Cash Flows provided by Operating Activities

Net cash provided by operating activities for the three months ended December 31, 2019 increased $0.9 million, to $7.3 million, from $6.4 million in the 2018 period. This increase was primarily due to an increase in cash provided by unbilled and deferred revenue coupled with a decrease in cash used by accounts payable and other operating liabilities, mostly offset by a decrease in cash provided by accounts receivable and an increase in cash used by other operating assets.

Cash Flows used in Investing Activities

Net cash used in investing activities increased $14.7 million to $31.9 million for the three months ended December 31, 2019 from $17.2 million in the 2018 period. Cash used in investing activities included cash paid for acquisitions which increased $16.5 million to $18.4 million for the three months ended December 31, 2019, compared to $1.9 million in the 2018 period. This increase was slightly offset by a decrease in cash used for capital expenditures of $2.8 million for the three months ended December 31, 2019 compared to the 2018 period.

Cash Flows used in Financing Activities

Net cash flows used in financing activities of $4.2 million for the three months ended December 31, 2019 included scheduled principal payments on long-term borrowings of $12.6 million and repayments of finance lease obligations of $1.5 million offset by net proceeds from our receivables financing agreement of $10.0 million.

Net cash flows used in financing activities of $6.7 million for the three months ended December 31, 2018 included scheduled principal payments on long-term borrowings of $5.2 million and repayments of finance lease obligations of $1.5 million.

Free Cash Flow

Free Cash Flow increased $2.9 million to $(6.2) million for the three months ended December 31, 2019 from $(9.1) million in the 2018 period. The increase in Free Cash Flow was due to an increase in cash flows from operating activities of $0.9 million as well as a decrease in capital expenditures of $2.8 million, each as described above, partially offset by a decrease in proceeds from the sale of property and equipment of $0.8 million.

Working Capital

(In millions)	December 31, 2019		September 30, 2019
Net Working Capital:
Current assets	$	542.6	$	551.4
Less: Current liabilities		362.7		332.7
Net working capital	$	179.9	$	218.7

Net working capital is defined as current assets less current liabilities. Net working capital decreased $38.8 million, to $179.9 million, at December 31, 2019, from $218.7 million at September 30, 2019, primarily driven by a decrease in cash and cash equivalents of $28.8 million, an increase in current portion of operating lease liabilities of $23.3 million, a decrease in unbilled revenue of $22.7 million and an increase in deferred revenue of $17.4 million, partially offset by an increase in accounts receivable, net of $30.2 million due to the timing of collections and a decrease in accrued expenses and other liabilities of $24.5 million.

Description of Indebtedness

As of December 31, 2019, we were in compliance with all of our debt covenants and no event of default has occurred or was ongoing. See Note 8 “Long-term Debt” to our unaudited consolidated financial statements included under Part I, Item 1, “Financial Statements”.

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Contractual Obligations and Commercial Commitments

During the three months ended December 31, 2019, there were no material changes outside the ordinary course of business in our contractual obligations and commercial commitments from those reported as of September 30, 2019 in our Annual Report on Form 10-K.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are materially likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

Management has evaluated the accounting policies used in the preparation of the Company’s consolidated financial statements and related notes and believe those policies to be reasonable and appropriate. Certain of these accounting policies require the application of significant judgment by management in selecting appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on historical experience, trends in the industry, information provided by customers and information available from other outside sources, as appropriate. The most significant areas involving management judgments and estimates may be found in the Annual Report on Form 10-K, in the “Critical Accounting Policies and Estimates” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no material changes to our critical accounting policies as compared to the critical accounting policies described in the Annual Report on Form 10-K for the year ended September 30, 2019, other than those related to revenue as a result of the adoption of ASU 2014-09.

Recently Issued Accounting Policies

The information set forth in Note 2 “Recent Accounting Pronouncements” to our unaudited consolidated financial statements under Part I, Item 1, “Financial Statements” is incorporated herein by reference.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For quantitative and qualitative disclosures about market risk, see “Item 7A. Quantitative and Qualitative Disclosure of Market Risk” in the Annual Report on Form 10-K for the fiscal year ended September 30, 2019.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In accordance with Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision of our CEO and our CFO, the effectiveness of disclosure controls and procedures as of December 31, 2019. Based on this evaluation, our CEO and our CFO concluded that our disclosure controls and procedures were effective as of December 31, 2019 at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has not been any change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information set forth in Note 13 “Commitments and Contingencies” to our Condensed Consolidated Financial Statements under Part I, Item 1, “Financial Statements,” is incorporated herein by reference.

Item 1A. Risk Factors.

As of December 31, 2019, there have been no material changes to the risk factors included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019, as filed with the SEC on November 21, 2019.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Exhibit Index

Exhibit No.		Description
3.1		Third Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 2, 2018)

3.2		Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on July 2, 2018)

10.1*		Form of BrightView Holdings, Inc. Restricted Stock Unit Grant

10.2*		Form of Award Notice and Nonqualified Stock Option Agreement under Brightview Holdings, Inc. 2018 Omnibus Incentive Plan

10.3*		Form of BrightView Holdings, Inc. Restricted Stock Unit Grant

31.1*		Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

31.2*		Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BrightView Holdings, Inc.

Date: February 6, 2020	By:	/s/ Louay H. Khatib

		Louay H. Khatib
		Chief Accounting Officer
		(Principal Accounting Officer)

Exhibit 10.1

Brightview HOLDINGS, INC.

RESTRICTED STOCK UNIT GRANT

THIS RESTRICTED STOCK UNIT GRANT (the “Agreement”), is made effective as of the date set forth on the Company signature page (the “Signature Page”) attached hereto (the “Date of Grant”), by and between BrightView Holdings, Inc., a Delaware corporation (together with its successors and assigns, the “Company”), and the participant identified on the Signature Page attached hereto (“Participant”).

R E C I T A L S:

WHEREAS, the Company has adopted the BrightView Holdings, Inc. 2018 Omnibus Incentive Plan (the “Plan”), the terms of which Plan are incorporated herein by reference and made a part of this Agreement, and capitalized terms not otherwise defined herein shall have the same meaning as in the Plan; and

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1.Restricted Stock Units.

(a)Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement and effective as of the Date of Grant, the Company hereby grants the number of Restricted Stock Units set forth on the Signature Page hereto (the “RSU Award”).

(b)The RSU Award shall vest and become nonforfeitable in accordance with Schedule I attached hereto.

(c)If Participant’s employment or service with the Company and its Subsidiaries is terminated at any time, all unvested Restricted Stock Units shall automatically and immediately be forfeited and canceled (after giving effect to any acceleration of vesting or other terms set forth in Schedule I attached hereto).

2.Settlement of Restricted Stock Units.

(a)Any Restricted Stock Unit which has become vested in accordance with this Agreement shall be settled as soon as reasonably practicable following the vesting of such Restricted Stock Unit (and, in any event, no later than the date which is two and one-half months following the end of the calendar year in which the Restricted Stock Unit vested).

(b)Upon the settlement of a vested Restricted Stock Unit, the Company shall pay to Participant an amount equal to one share of common stock, par value $0.01, of the Company. As determined by the Committee (as defined below), the Company shall pay such amount in (x) cash, (y) shares of common stock of the Company (“Shares”) or (z) any combination thereof. Any fractional shares of common stock may be settled in cash, at the Committee’s election.

001898-0002-17195-Active.31196537.7

Restricted Stock Unit Agreement – Page 2

(c)Notwithstanding anything in this Agreement to the contrary, the Company shall not have any obligation to issue or transfer any Shares as contemplated by this Agreement unless and until such issuance or transfer complies with all relevant provisions of law. As a condition to the settlement of any portion of the RSU Award evidenced by this Agreement, Participant may be required to deliver certain documentation to the Company.

3.Restrictive Covenants.

(a)Restrictive Covenants. Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company Group, that Participant will be allowed access to confidential and proprietary information (including, but not limited to, trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses and the goodwill associated with the Company Group and accordingly agrees, in Participant’s capacity as an investor and equity holder in the Company, to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the Restrictive Covenants would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to forfeit without payment any outstanding Shares subject to this Agreement and otherwise cease making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between Participant and the Company Group. For purposes of this Agreement, “Restrictive Covenant Violation” shall include Participant’s breach of any of the Restrictive Covenants or any similar provision applicable to Participant.

(b)Repayment of Proceeds. If a Restrictive Covenant Violation occurs, Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within 10 business days of the Company’s request to Participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) Participant received either in cash in respect of the settlement of Restricted Stock Units, or upon the sale or other disposition of, or dividends or distributions in respect of, Shares received upon the settlement of Restricted Stock Units.

001898-0002-17195-Active.31196537.7

Restricted Stock Unit Agreement – Page 3

4.Book Entry; Certificates. Upon the settlement of any portion of the RSU Award in Shares pursuant to this Agreement, the Company shall recognize Participant’s ownership of such Shares through uncertificated book entry. If elected by the Company, certificates evidencing the Shares may be issued by the Company and any such certificates shall be registered in Participant’s name on the stock transfer books of the Company promptly after the date hereof, but shall remain in the physical custody of the Company or its designee at all times prior to the later of (a) the settlement of any portion of the RSU Award pursuant to this Agreement and (b) the expiration of any transfer restrictions set forth in this Agreement or otherwise applicable to the Shares. As soon as practicable following such time, any certificates for the Shares shall be delivered to Participant or to Participant’s legal guardian or representative along with the stock powers relating thereto. However, the Company shall not be liable to Participant for damages relating to any delays in issuing the certificates (if any) to Participant, any loss by Participant of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.

5.Legend. To the extent applicable, all book entries (or certificates, if any) representing the Shares delivered to Participant as contemplated by Section 4 above shall be subject to the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and any applicable Federal or state laws, and the Company may cause notations to be made next to the book entries (or a legend or legends put on certificates, if any) to make appropriate reference to such restrictions. Any such book entry notations (or legends on certificates, if any) shall include a description to the effect of the restrictions set forth in Sections 1 and 7 hereof.

6.No Right to Continued Employment or Service. Neither the Plan nor this Agreement nor Participant’s receipt of the Restricted Stock Units hereunder shall impose any obligation on the Company or any Affiliate to continue the employment or engagement of Participant. Further, the Company or any Affiliate (as applicable) may at any time terminate the employment or engagement of Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.

7.Assignment Restrictions; Lock-up.

(a)The Restricted Stock Units may not be Assigned and any such purported Assignment shall be void and unenforceable against the Company or any Affiliate; provided, that the designation of a beneficiary shall not constitute an Assignment.

(b)“Assign” or “Assignment” shall mean (in either the noun or the verb form, including with respect to the verb form, all conjugations thereof within their correlative meanings) with respect to any security, the gift, sale, assignment, transfer, pledge, hypothecation or other disposition (whether for or without consideration, whether directly or indirectly, and whether voluntary, involuntary or by operation of law) of such security or any interest therein.

001898-0002-17195-Active.31196537.7

Restricted Stock Unit Agreement – Page 4

(c)Participant agrees that in the event the Company advises Participant that it plans an underwritten public offering of Shares in compliance with the Securities Act and that the underwriter(s) seek to impose restrictions under which certain shareholders may not sell or contract to sell or grant any option to buy or otherwise dispose of part or all of their stock purchase rights of the underlying Shares, Participant hereby agrees that for a period not to exceed 180 days from the prospectus, Participant will not sell or contract to sell or grant an option to buy or otherwise dispose of any Shares received upon settlement of Restricted Stock Units pursuant to this Agreement without the prior written consent of the underwriter(s) or its representative(s).

8.Withholding. Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Restricted Stock Units, their vesting or settlement or any payment or transfer with respect to the Restricted Stock Units at the minimum applicable statutory rates, and to take such action as may be necessary in the opinion of the Compensation Committee of the Board of Directors of the Company (the “Committee”) to satisfy all obligations for the payment of such withholding taxes. The Committee may, in its sole discretion, permit Participant to satisfy such withholding tax obligations, in whole or in part, by delivering Shares, including Shares received upon settlement of Restricted Stock Units pursuant to this Agreement.

9.Securities Laws; Cooperation. Upon the vesting of any unvested Restricted Stock Units, Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws, the Plan or this Agreement. Participant further agrees to cooperate with the Company in taking any action reasonably necessary or advisable to consummate the transactions contemplated by this Agreement.

10.Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to Participant at the address appearing in the personnel records of the Company for such Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

11.Choice of Law; Jurisdiction; Venue. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of New York or the State of Delaware, and each of Participant, the Company, and any transferees who hold Restricted Stock Units pursuant to a valid Assignment, hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of Participant, the Company, and any transferees who hold Restricted Stock Units pursuant to a valid Assignment hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware or the State of New York, (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum and (c) any right to a jury trial.

001898-0002-17195-Active.31196537.7

Restricted Stock Unit Agreement – Page 5

12.Restricted Stock Units Subject to Plan; Amendment. By entering into this Agreement, Participant agrees and acknowledges that Participant has received and read a copy of the Plan. The Restricted Stock Units granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Agreement, but no such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination shall materially adversely affect the rights of Participant hereunder without the consent of Participant.

13.Section 409A. It is intended that the Restricted Stock Units granted hereunder shall be exempt from Section 409A of the Code pursuant to the “short-term deferral” rule applicable to such section, as set forth in the regulations or other guidance published by the Internal Revenue Service thereunder.

14.Electronic Delivery and Acceptance. This Agreement may be executed electronically and in counterparts. The Company may, in its sole discretion, decide to deliver any documents related to the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

15.Acceptance and Agreement by Participant; Forfeiture upon Failure to Accept. The grant of Restricted Stock Units hereunder will lapse ninety (90) days from the Date of Grant, and the RSU Award granted hereunder will be forfeited on such date if Participant has not accepted this Agreement by such date. For the avoidance of doubt, Participant’s failure to accept this Agreement will not affect Participant’s continuing obligations under any other agreement between the Company and Participant.

16.No Advice Regarding Grant. Notwithstanding anything herein to the contrary, Participant acknowledges and agrees that the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan or Participant’s acquisition or sale of the underlying Shares received upon settlement of the Restricted Stock Units. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

17.Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, and on any Shares received upon settlement of Restricted Stock Units under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

18.Waiver. Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement will not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Participant or any other participant in the Plan.

[Signatures on next page.]

001898-0002-17195-Active.31196537.7

IN WITNESS WHEREOF, Participant acknowledges and accepts the terms of this Agreement which shall be effective as of the date set forth below and countersignature by the Company.

Participant


Name:

Dated:

[Signature Page - RSU Award]

Agreement acknowledged and confirmed:

BrightView Holdings, Inc.

By:
	Name:
	Title:

Equity Schedule

Name:

Date of Grant: , 2019

Number of Restricted Stock Units Granted:

[Signature Page - RSU Award]

Schedule I

Vesting Terms

The RSU Award granted hereunder will vest with respect to that number of such Restricted Stock Units as is set forth on the Appendix: Vesting Schedule attached hereto next to the date set forth on such Appendix on which such Restricted Stock Units vest, subject to Participant’s continuous employment with or provision of services to the Company and its Subsidiaries through each such date; provided, that, if Participant’s employment or service with the Company and its Subsidiaries is terminated due to Participant’s death or Disability, Participant will become vested on the date of such termination in the number of Restricted Stock Units, if any, that would have become vested on the next scheduled vesting date following the date of such termination. Any portion of the RSU Award that is not vested or forfeited will fully vest immediately prior to the consummation of a Change in Control, subject to continued employment with or provisions of services to the Company and its Subsidiaries through such date.

001898-0002-17195-Active.31196537.7

Appendix A

Restrictive Covenants

1.Generally. If Participant’s final place of employment is in the State of California, the covenants contained in Section 2(a)(i) and 2(a)(ii)(A) below will not apply.

2.Non-Competition; Non-Solicitation.

(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Subsidiaries and accordingly agrees as follows:

(i)Non-Compete. For the period of one (1) year after the date on which Participant’s employment or service to the Company Group (as defined below) is terminated for any reason, Participant shall not, within the Geographic Area (as defined below), directly or indirectly own, manage, operate, finance, or be connected as an officer, director, employee, partner, agent or consultant with any business or enterprise which, directly or through an affiliated subsidiary organization, provides services or performs any business activities that are competitive with the business, activities, products or services of the type conducted, authorized, offered, or provided by the Company or any of its direct or indirect Subsidiaries (collectively, the “Company Group”) as of the date of such termination, or with respect to which the Company Group has spent significant time or resources analyzing for the purposes of assessing expansion opportunities by the Company Group, during the twenty-four (24) month period prior to the date of termination (a “Competitive Business”). For purposes of this Agreement, the term “Geographic Area” means any state in which any member of the Company Group is maintaining a business office as of the date on which Participant’s employment or service is terminated.

(ii)Non-Solicit. For the period of one (1) year after the date on which Participant’s employment or service to the Company Group is terminated for any reason, Participant will not, either directly or indirectly:

(A)call on or solicit any person, firm, corporation or other entity who or which at the time of such termination was, or within one year prior thereto had been, a customer or provider of the Company Group within the Geographic Area in connection with any of the business activities referred to above; or

(B)solicit the employment of any person who was employed by the Company Group on a full or part time basis as of the date of such termination unless such person was involuntarily discharged or voluntarily left his or her employment relationship prior to Participant’s termination of employment.

(iii)Remedies. Participant acknowledges that the provisions set forth in this Appendix A are reasonable and necessary to protect the legitimate interests of the Company or its direct or indirect Subsidiaries, and that a violation of any of those provisions will cause irreparable harm to the Company Group. Participant acknowledges that any member of the Company Group may seek injunctive relief for Participant’s violation of such provisions. Participant represents that Participant’s experience and capabilities are such that the provisions contained in this Appendix A will not prevent Participant from obtaining employment or otherwise earning a living at the same general level of economic benefit as earned with the Company Group. In the event that any of the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable law in any jurisdiction, then the affected provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable law.

(iv)Assignment. The rights and protections of the Company hereunder shall extend and may be assigned to any successors of any member of the Company Group.

(v)Similar Provisions. Participant acknowledges that any other agreement between Participant and the Company or its direct or indirect Subsidiaries that contains restrictive covenants shall not be superseded by this Agreement, shall remain in full force and effect in accordance with its terms, and such restrictive covenants shall be in addition to, and not superseded by, the provisions of this Appendix A to the extent the provisions of this Appendix A are applicable to Participant.

Exhibit 10.2

AWARD NOTICE

AND

NONQUALIFIED STOCK OPTION AGREEMENT

BrightView Holdings, Inc. 2018 OMNIBUS INCENTIVE PLAN

Participant has been granted stock options with the terms set forth in this Award Notice, and subject to the terms and conditions of the Plan and the Nonqualified Stock Option Agreement to which this Award Notice is attached. Capitalized terms used and not defined in this Award Notice will have the meanings set forth in the Nonqualified Stock Option Agreement and the Plan.

Participant Name

Number of Shares

Subject to Option

Exercise Price

per Share

Vesting Schedule

Date of Grant

Participant Name

x,xxx

Price @ close 06/03/2019 $16.86

xx% vests on each anniversary of the Date of Grant

June 3, 2019

If Participant’s employment with, or service to, the Company Group is terminated by the Company due to death or Disability prior to the [ ] anniversary of the Date of Grant, the Option shall automatically vest on the date of such termination with respect to an additional [xx]% of the Shares subject thereto.

Vesting of the Option as specified in the chart above is subject to Participant’s continued employment with, or service to, the Company Group through the applicable vesting date. If the number of Shares is not evenly divisible, then no fractional Share will vest and the installments will be as equal as possible with the smaller installment(s) vesting first. Each such right of purchase will be cumulative and will continue, unless sooner exercised or terminated as herein provided, during the remaining period of the Option Period.

001898-0002-13589-Active.26303459.6

NONQUALIFIED STOCK OPTION AGREEMENT

BrightView Holdings, Inc. 2018 OMNIBUS INCENTIVE PLAN

This Nonqualified Stock Option Agreement, effective as of the Date of Grant (as defined below), is between BrightView Holdings Inc., a Delaware corporation (the “Company”), and the individual listed in the Award Notice as the “Participant”. Capitalized terms have the meaning set forth in Section 1, or, if not otherwise defined herein, in the BrightView Holdings, Inc. 2018 Omnibus Incentive Plan (as it may be amended, the “Plan”).

1.Definitions. The following terms have the following meanings for purposes of this Agreement:

(a)“Agreement” means this Nonqualified Stock Option Agreement including (unless the context otherwise requires) the Award Notice.

(b) “Award Notice” means the notice to Participant.

(c)“Exercise Price” means the “Exercise Price” listed in the Award Notice.

(d)“Date of Grant” means the “Date of Grant” listed in the Award Notice.

(e) “Officer” means “officer” as defined under Rule 16a-1(f) of the Exchange Act.

(f)“Participant” means the “Participant” listed in the Award Notice.

(g)“Restrictive Covenant Violation” means Participant’s breach of any covenant regarding confidentiality, competitive activity, solicitation of the Company Group’s vendors, suppliers, customers, or employees, or any similar provision applicable to or agreed to by Participant.

(h) “Shares” means the number of shares of Common Stock listed in the Award Notice as “Number of Shares Subject to Option”, as adjusted in accordance with the Plan.

2.Grant of Options.

(a)Effective as of the Date of Grant but subject to Section 22, the Company hereby irrevocably grants to Participant the right and option (the “Option”) to purchase all or any part of the Shares, subject to, and in accordance with, the terms, conditions and restrictions set forth in the Plan, the Award Notice, and this Agreement. The Option will vest in accordance with the schedule set forth on the Award Notice.

(b)The Option is not intended to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code.

001898-0002-13589-Active.26303459.6

(c)This Agreement will be construed in accordance and consistent with, and subject to, the terms of the Plan (the provisions of which are incorporated hereby by reference). In the event of any conflict between one or more of this Agreement, the Award Notice and the Plan, the Plan will govern this Agreement and the Award Notice, and the Agreement (to the extent not in conflict with the Plan) will govern the Award Notice.

3.Exercise Price. The price at which Participant will be entitled to purchase the Shares upon the exercise of the Option will be the Exercise Price, subject to adjustment as provided in Section 11.

4.Exercisability of Option. The Option will become vested and exercisable in accordance with the schedule set forth on the Award Notice.

5.Duration of Option. The Option will be exercisable to the extent and in the manner provided herein for a period of ten (10) years from the Date of Grant (the “Option Period”); provided, that the Option may be earlier terminated as provided in Section 7 hereof.

6.Manner of Exercise and Payment.

(a)Subject to the terms and conditions of this Agreement and the Plan, the Option may be exercised by delivery of written or electronic notice to the Company in the manner prescribed in Section 7(d) of the Plan and as otherwise set forth by the Committee from time to time. Such notice will set forth the number of Shares in respect of which the Option is being exercised and will be signed by the person or persons exercising the Option. In the event the Company has designated an Award Administrator (as defined below), the Option may also be exercised by giving notice (including through electronic means) in accordance with the procedures established from time to time by the Award Administrator. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part, provided that partial exercise will be for whole shares of Common Stock only.

(b)Upon exercise of the Option pursuant to Section 6(a), unless otherwise determined by the Committee, the Company will withhold a number of Shares otherwise deliverable to Participant to pay (i) the full purchase price for the Shares in respect of which the Option is being exercised and (ii) an amount necessary to satisfy applicable U.S. and non-U.S. Federal, state or local tax or other withholding requirements, if any (“Withholding Taxes”) in accordance with Section 14(d) of the Plan (or, if Participant is subject to Section 16 of the Exchange Act at such time, such amount which would not result in adverse consequences under GAAP), unless otherwise agreed to in writing by Participant and the Company. The number of Shares to be withheld or otherwise used for payment will be calculated using the closing price per Share on the New York Stock Exchange (or other principal exchange on which the Shares then trade) on the date of determination, and will be rounded up to the nearest whole Share.

(c)Upon receipt of the notice of exercise and any payment or other documentation as may be necessary pursuant to Sections 6(a) and 6(b) relating to the Shares in respect of which the Option is being exercised, the Company will, subject to the Plan and this Agreement, take such action as may be necessary to effect the transfer to Participant of the number of Shares as to which such exercise was effective.

001898-0002-13589-Active.26303459.6

(d)Participant will not be deemed to be the holder of, or to have any of the rights and privileges of a stockholder of the Company (including the right to vote or receive dividends) in respect of, Shares purchased upon exercise of the Option until (i) the Option has been exercised pursuant to the terms of this Agreement and Participant has paid the full purchase price for the number of Shares in respect of which the Option was exercised and any applicable Withholding Taxes and (ii) the Company has issued the Shares in connection with such exercise.

7.Termination of Employment or Service.

(a)Subject to Section 7(c) below, in the event that Participant’s employment with, or service to, the Company Group terminates for any reason, any unvested portion of the Option will be forfeited and all of Participant’s rights under this Agreement will terminate as of the effective date of Termination (the “Termination Date”) (unless otherwise provided for by the Committee in accordance with the Plan).

(b)If Participant’s employment or service is terminated by the Company Group for Cause or by Participant when grounds existed for Cause at the time thereof, the vested and unvested portions of the Option will terminate as of the Termination Date.

(c)In the event (i) Participant’s employment with, or service to, the Company Group is terminated by the Company due to death or Disability, the vested portion of the Option will remain exercisable for one year thereafter (but in no event beyond the Option Period) and (ii) Participant’s employment with, or service to, the Company Group is terminated for any other reason (subject to Section 7(b)), the vested portion of the Option will remain exercisable for ninety (90) days thereafter (but in no event beyond the Option Period); provided, that, in each case, the Option Period will expire immediately upon the occurrence of a Restrictive Covenant Violation.

(d)Participant’s rights with respect to the Option will not be affected by any change in the nature of Participant’s employment or service so long as Participant continues to be an employee, consultant or director of the Company Group. Whether (and the circumstances under which) employment or service has terminated and the determination of the Termination Date for the purposes of this Agreement will be determined by the Committee (or, with respect to any Participant who is not a director or Officer, its designee, whose good faith determination will be final, binding and conclusive; provided, that such designee may not make any such determination with respect to the designee’s own employment for purposes of the Option).

8.Restrictions on Transfer.

(a)Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Option or Participant’s right under the Option to receive Shares, other than in accordance with Section 14(b) of the Plan.

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(b)Participant agrees that in the event the Company advises Participant that it plans an underwritten public offering of Shares in compliance with the Securities Act and that the underwriter(s) seek to impose restrictions under which certain shareholders may not sell or contract to sell or grant any option to buy or otherwise dispose of part or all of their stock purchase rights of the underlying Shares, Participant hereby agrees that for a period not to exceed 180 days from the prospectus, Participant will not sell or contract to sell or grant an option to buy or otherwise dispose of any Shares subject to this Agreement without the prior written consent of the underwriter(s) or its representative(s).

9.Repayment of Proceeds; Clawback Policy. The Shares subject to the Option and all proceeds related to such Shares are subject to the clawback and repayment terms set forth in Sections 14(v) and 14(w) of the Plan and the Company’s clawback policy, as in effect from time to time, to the extent Participant is a director or Officer. In addition, if a Restrictive Covenant Violation occurs or the Company discovers after a termination of employment or service that grounds existed for Cause at the time thereof, then Participant will be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within ten (10) business days of the Company’s request to Participant therefor, an amount equal to the excess, if any, of (a) the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) Participant received upon the sale or other disposition of, or distributions in respect of, any Shares acquired upon exercise of the Option (limited, in the case of the Company discovering after a termination of employment or service that grounds existed for Cause at the time thereof, to any such Shares acquired after the date on which grounds for a termination for Cause first existed) over (b) the aggregate Cost (if any) of such Shares. For purposes of this Agreement, “Cost” means, in respect of any Share, the Exercise Price, to the extent paid by Participant for such Share, as proportionately adjusted for all subsequent distributions on the Shares and other recapitalizations and less the amount of any distributions made with respect to the Share pursuant to the Company’s organizational documents; provided, that Cost may not be less than zero. Any reference in this Agreement to grounds existing for a termination of employment with Cause will be determined without regard to any notice period, cure period, or other procedural delay or event required prior to finding of or termination with, Cause.

10.No Right to Continued Employment or Service. Neither the Plan nor this Agreement nor Participant’s receipt of the Option hereunder will impose any obligation on the Company Group to continue the employment or service of Participant. Further, the Company Group may at any time terminate the employment or service of Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.

11.Adjustments. The terms of this Agreement, including, without limitation, (a) the number of Shares subject to the Option and (b) the Exercise Price specified herein, will be subject to adjustment in accordance with Section 12 of the Plan.

001898-0002-13589-Active.26303459.6

12.Award Subject to Plan. The Option granted hereunder is subject to the Plan and the terms of the Plan are hereby incorporated into this Agreement. By accepting the Option, Participant acknowledges that Participant has received and read the Plan and agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Agreement, and the Company’s policies, as in effect from time to time, relating to the Plan. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

13.Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement will not be affected by such holding and will continue in full force in accordance with their terms.

14.Governing Law; Venue; Language. This Agreement will be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, will be brought in any court of competent jurisdiction in the State of New York or the State of Delaware, and each of Participant, the Company, and any transferees who hold a portion of the Option pursuant to a valid assignment, hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of Participant, the Company, and any transferees who hold a portion of the Option pursuant to a valid assignment hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware or the State of New York, (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum and (c) any right to a jury trial. If Participant has received a copy of this Agreement (or the Plan or any other document related hereto or thereto) translated into a language other than English, such translated copy is qualified in its entirety by reference to the English version thereof, and in the event of any conflict the English version will govern. Participant acknowledges that Participant is sufficiently proficient in English to understand the terms and conditions of this Agreement.

15.Successors in Interest. Any successor to the Company will have the benefits of the Company under, and be entitled to enforce, this Agreement. Likewise, Participant’s legal representative will have the benefits of Participant under, and be entitled to enforce, this Agreement. All obligations imposed upon Participant and all rights granted to the Company under this Agreement will be final, binding and conclusive upon Participant’s heirs, executors, administrators and successors.

001898-0002-13589-Active.26303459.6

16.Data Privacy Acknowledgement.

(a)General. Participant hereby explicitly and unambiguously acknowledges and agrees to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other Option grant materials by and among, as applicable, Participant’s employer or contracting party (the “Employer”) and the Company for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan. Participant understands that the Company may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address, email address and telephone number, work location and phone number, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, hire date, any shares of stock or directorships held in the Company, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in Participant’s favor, for the purpose of implementing, administering and managing Participant’s participation in the Plan (“Personal Data”).

(b)Use of Personal Data; Retention. Participant understands that Personal Data may be transferred to Fidelity or any other third parties assisting in the implementation, administration and management of the Plan, now or in the future, that these recipients may be located in Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than Participant’s country. Participant understands that Participant may request a list with the names and addresses of any potential recipients of the Personal Data by contacting Participant’s local human resources representative. Participant authorizes the recipients to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Participant’s participation in the Plan. Participant understands that Personal Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands that Participant may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Participant’s local human resources representative.

(c)Withdrawal of Consent. Participant understands that Participant is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke Participant’s consent, Participant’s employment status or service with the Employer will not be affected; the only consequence of Participant’s refusing or withdrawing Participant’s consent is that the Company would not be able to grant Options or other equity awards to Participant or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing Participant’s consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that Participant may contact Participant’s local human resources representative.

001898-0002-13589-Active.26303459.6

17.Restrictive Covenants. Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company Group, that Participant will be allowed access to confidential and proprietary information (including, but not limited to, trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses, and the goodwill associated with the Company Group and accordingly agrees to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the Restrictive Covenants would be inadequate and the Company Group would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, Parent and the Company, without posting any bond, shall be entitled to cease making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Participant and the Company Group. For purposes of this Agreement, “Restrictive Covenant Violation” shall include Participant’s breach of any of the Restrictive Covenants or any similar provision applicable to Participant.

18.Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation. By accepting this Agreement and the grant of the Option evidenced hereby, Participant expressly acknowledges that (a) the Plan is established voluntarily by the Company, it is discretionary in nature and may be suspended or terminated by the Company at any time to the extent permitted by the Plan; (b) the grant of the Option is exceptional, voluntary and occasional and it does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past; (c) all determinations with respect to future option grants, if any, including the grant date, the number of Shares granted, the exercise price and the exercise date or dates, will be at the sole discretion of the Company; (d) Participant’s participation in the Plan is voluntary and not a condition of employment, and Participant may decline to accept the Option without adverse consequences to Participant’s continued employment relationship with the Company Group; (e) the value of the Option is an extraordinary item that is outside the scope of Participant’s employment contract, if any, and nothing can or must automatically be inferred from such employment contract or its consequences; (f) Options and any Shares acquired under the Plan, and the income from and value of same, are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, Participant waives any claim on such basis and, for the avoidance of doubt, the Option will not constitute an “acquired right” under the applicable law of any jurisdiction; (g) if the underlying Shares do not increase in value, the Option will have no value; (h) if Participant exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price; and (i) the future value of the underlying Shares is unknown and cannot be predicted with certainty. In addition, Participant understands, acknowledges and agrees that Participant will have no rights to compensation or damages related to Option proceeds in consequence of the termination of Participant’s employment for any reason whatsoever and whether or not in breach of contract.

001898-0002-13589-Active.26303459.6

19.Award Administrator. The Company may from time to time designate a third party (an “Award Administrator”) to assist the Company in the implementation, administration and management of the Plan and any Options granted thereunder, including by sending award notices on behalf of the Company to Participants, and by facilitating through electronic means acceptance of Agreement by Participants and Option exercises by Participants.

20.Book Entry Delivery of Shares. Whenever reference in this Agreement is made to the issuance or delivery of certificates representing one or more Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.

21.Electronic Delivery and Acceptance. This Agreement may be executed electronically and in counterparts. The Company may, in its sole discretion, decide to deliver any documents related to the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

22.Acceptance and Agreement by Participant; Forfeiture upon Failure to Accept. Participant’s rights under the Option will lapse ninety (90) days from the Date of Grant, and the Option will be forfeited on such date if Participant will not have accepted this Agreement by such date. For the avoidance of doubt, Participant’s failure to accept this Agreement will not affect Participant’s continuing obligations under any other agreement between the Company and Participant.

23.No Advice Regarding Grant. Notwithstanding anything herein to the contrary, Participant acknowledges and agrees that the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

24.Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

25.Waiver. Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement will not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Participant or any other participant in the Plan.

[Signatures follow]

001898-0002-13589-Active.26303459.6

BRIGHTVIEW HOLDINGS, INC.


By:


	Name:	Amanda Orders
	Title:	Senior HR Executive

Acknowledged and Agreed

as of the date first written above:

Participant Name

Name

001898-0002-13589-Active.26303459.6

Appendix A

Restrictive Covenants

1.Generally. If Participant’s final place of employment is in the State of California, the covenants contained in Section 2(a)(i) and 2(a)(ii)(A) below will not apply.

2.Non-Competition; Non-Solicitation.

(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Subsidiaries and accordingly agrees as follows:

(A) call on or solicit any person, firm, corporation or other entity who or which at the time of such termination was, or within one year prior thereto had been, a customer or provider of the Company Group within the Geographic Area in connection with any of the business activities referred to above; or

(B) solicit the employment of any person who was employed by the Company Group on a full or part time basis as of the date of such termination unless such person was involuntarily discharged or voluntarily left his or her employment relationship prior to Participant’s termination of employment.

001898-0002-13589-Active.26303459.6

(iv)Assignment. The rights and protections of the Company hereunder shall extend and may be assigned to any successors of any member of the Company Group.

001898-0002-13589-Active.26303459.6

Exhibit 10.3

Brightview HOLDINGS, INC.

RESTRICTED STOCK UNIT GRANT

(2019 BONUS GRANT)

R E C I T A L S:

WHEREAS, the RSU Award (as defined below) granted pursuant to this Agreement represents the portion of Participant’s annual bonus for the Company’s 2019 fiscal year that is payable in Restricted Stock Units.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1.Restricted Stock Units.

(b)The RSU Award shall vest and become nonforfeitable in accordance with Schedule I attached hereto.

001898-0002-16699-Active.32638666.1

Restricted Stock Unit Agreement – Page 2

2.Settlement of Restricted Stock Units.

(a)Any Restricted Stock Unit which has become vested in accordance with this Agreement shall be settled as soon as reasonably practicable following the applicable vesting date for such Restricted Stock Unit as set forth on Schedule I attached hereto (and, in any event, no later than the date which is two and one-half months following the end of the calendar year in which such vesting date occurs). For the avoidance of doubt, if the vesting of any Restricted Stock Units is accelerated in connection with the termination of Participant’s employment or service with the Company and its Subsidiaries, the settlement of such Restricted Stock Units shall not occur prior to the applicable vesting date for such Restricted Stock Units as is provided in the immediately preceding sentence; provided, that such settlement shall be accelerated upon the consummation of a Change in Control that is also a change in control event” within the meaning of Section 409A of the Code.

3.Restrictive Covenants.

(a)Restrictive Covenants. Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company Group, that Participant will be allowed access to confidential and proprietary information (including, but not limited to, trade secrets) about those businesses, as well as access to the prospective and actual customers, suppliers, investors, clients and partners involved in those businesses and the goodwill associated with the Company Group and accordingly agrees, in Participant’s capacity as an investor and equity holder in the Company, to the provisions of Appendix A to this Agreement (the “Restrictive Covenants”). Participant acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the Restrictive Covenants would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to forfeit without payment any outstanding Restricted Stock Units or Shares subject to this Agreement and otherwise cease making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between Participant and the Company Group. For purposes of this Agreement, “Restrictive Covenant Violation” shall include Participant’s breach of any of the Restrictive Covenants or any similar provision applicable to Participant.

001898-0002-16699-Active.32638666.1

Restricted Stock Unit Agreement – Page 3

6. No Right to Continued Employment or Service. Neither the Plan nor this Agreement nor Participant’s receipt of the Restricted Stock Units hereunder shall impose any obligation on the Company or any Affiliate to continue the employment or engagement of Participant. Further, the Company or any Affiliate (as applicable) may at any time terminate the employment or engagement of Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.

001898-0002-16699-Active.32638666.1

Restricted Stock Unit Agreement – Page 4

7.Assignment Restrictions; Lock-up.

8.Withholding. Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Restricted Stock Units, their grant, vesting or settlement or any payment or transfer with respect to the Restricted Stock Units at the minimum applicable statutory rates, and to take such action as may be necessary in the opinion of the Compensation Committee of the Board of Directors of the Company (the “Committee”) to satisfy all obligations for the payment of such withholding taxes. The Committee may, in its sole discretion, permit Participant to satisfy such withholding tax obligations, in whole or in part, by delivering Shares, including Shares received upon settlement of Restricted Stock Units pursuant to this Agreement.

9.Securities Laws; Cooperation. Upon the settlement of any Restricted Stock Units in Shares, Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws, the Plan or this Agreement. Participant further agrees to cooperate with the Company in taking any action reasonably necessary or advisable to consummate the transactions contemplated by this Agreement.

001898-0002-16699-Active.32638666.1

Restricted Stock Unit Agreement – Page 5

13.Section 409A. The Restricted Stock Units granted hereunder are subject to Section 409A of the Code and the Company and Participant intend that this Agreement and the Restricted Stock Units shall comply with the requirements of Section 409A of the Code and any related regulations or other guidance promulgated with respect to such section by the U.S. Department of the Treasury or the Internal Revenue Service. Therefore, the Company shall not make any changes or adjustments to this Agreement or the Restricted Stock Units that is not in accordance with the requirements of Section 409A of the Code without the express written consent of Participant.

001898-0002-16699-Active.32638666.1

Restricted Stock Unit Agreement – Page 6

[Signatures on next page.]

001898-0002-16699-Active.32638666.1

IN WITNESS WHEREOF, Participant acknowledges and accepts the terms of this Agreement which shall be effective as of the date set forth below and countersignature by the Company.


Participant



Name:

Dated:

[Signature Page - RSU Award]

Agreement acknowledged and confirmed:


BrightView Holdings, Inc.


By:
	Name:
	Title:

Equity Schedule

Name:

Date of Grant: ____________, 2019

Number of Restricted Stock Units Granted:

[Signature Page - RSU Award]

Schedule I

Vesting Terms

The RSU Award granted hereunder will vest with respect to that number of such Restricted Stock Units as is set forth on the Appendix: Vesting Schedule attached hereto next to the date set forth on such Appendix on which such Restricted Stock Units vest, subject to Participant’s continuous employment with or provision of services to the Company and its Subsidiaries through each such date; provided, that, if Participant’s employment or service with the Company and its Subsidiaries is terminated for any reason other than for Cause (including, without limitation, due to Participant’s resignation for any reason), Participant will become vested on the date of such termination in the then remaining number of unvested Restricted Stock Units subject to the RSU Award. Any portion of the RSU Award that is not vested or forfeited will fully vest immediately prior to the consummation of a Change in Control, subject to continued employment with or provisions of services to the Company and its Subsidiaries through such date.

001898-0002-16699-Active.32638666.1

Appendix A

Restrictive Covenants

1.Generally. If Participant’s final place of employment is in the State of California, the covenants contained in Section 2(a)(i) and 2(a)(ii)(A) below will not apply.

2.Non-Competition; Non-Solicitation.

(a)Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Subsidiaries and accordingly agrees as follows:

(A) call on or solicit any person, firm, corporation or other entity who or which at the time of such termination was, or within one year prior thereto had been, a customer or provider of the Company Group within the Geographic Area in connection with any of the business activities referred to above; or

(B) solicit the employment of any person who was employed by the Company Group on a full or part time basis as of the date of such termination unless such person was involuntarily discharged or voluntarily left his or her employment relationship prior to Participant’s termination of employment.

(iv)Assignment. The rights and protections of the Company hereunder shall extend and may be assigned to any successors of any member of the Company Group.

Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Andrew V. Masterman, certify that:

I have reviewed this quarterly report on Form 10-Q for the quarterly period ended December 31, 2019 of BrightView Holdings, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 6, 2020

/s/ Andrew V. Masterman

Andrew V. Masterman

Chief Executive Officer and Director

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, John A. Feenan, certify that:

I have reviewed this quarterly report on Form 10-Q for the quarterly period ended December 31, 2019 of BrightView Holdings, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 6, 2020

/s/ John A. Feenan

John A. Feenan

Executive Vice President, Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BrightView Holdings, Inc. (the “Company”) on Form 10-Q for the quarterly period ended December 31, 2019 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew V. Masterman, Chief Executive Officer and Director of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: February 6, 2020		/s/ Andrew V. Masterman
		Andrew V. Masterman
		Chief Executive Officer and Director
		(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BrightView Holdings, Inc. (the “Company”) on Form 10-Q for the quarterly period ended December 31, 2019 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John A. Feenan, Executive Vice President, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: February 6, 2020		/s/ John A. Feenan
		John A. Feenan
		Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)