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Good day, everyone, and welcome to today's BrightView Earnings Call. [Operator Instructions] Please note, this call may be recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Chris Stoczko, Vice President of Finance and Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining BrightView's Third Quarter Earnings Call. Dale Asplund, BrightView's President and Chief Executive Officer; and Brett Urban, Chief Financial Officer, are on call. I'll now refer you to Slide 2 of the presentation, which can also be found on our website and contains our safe harbor disclaimer. Our presentation includes forward-looking statements subject to risks and uncertainties. In addition, during the call, we will refer to certain non-GAAP financial measures. Please see our press release and 8-K issued yesterday for a reconciliation of these measures. With that, I will now turn the call over to Dale.

Thank you, Chris, and good morning, everyone. Starting with Slide 4. As our results show, we continue to make great progress executing against our One BrightView strategy as we focus on transforming this business. We delivered our highest-ever adjusted EBITDA and margin and our trailing 12-month EBITDA is now $344 million, which is a $45 million or 15% improvement in just 7 quarters. This progress is not possible without the commitment of our 19,000 team members who deliver world-class customer service on a daily basis. Our continued momentum in key metrics, including employee turnover, customer retention and development to maintenance conversions has us on track not only to deliver another record year of adjusted EBITDA, but also positions us to drive profitable top line growth in both the near and long term. Our objectives remain clear: prioritizing our frontline employees drives to lower employee turnover and leads to improved customer retention, which are key fundamentals to drive top line growth and ultimately leads to larger, more profitable branches. This, coupled with leveraging our size and scale as the #1 player in our industry, and strategically allocating our capital will position us as the investment of choice. As I approach my 2-year anniversary, my primary focus is achieving consistent top line profitable growth. I remain encouraged in the progress we have made in such a short period of time. By continuing to prioritize our employees and customers, we have solidified the foundation for growth, which has positioned us to make investments back into our sales force by adding additional resources to achieve top line growth, all while realizing historic EBITDA margins. While we are still early in our transformation, I am confident that our winning formula is in motion and is the key to driving meaningful shareholder value. Moving on to Slide 5. We continue to see sequential improvements in frontline turnover and hiring needs. Taking care of our most valuable asset, our people, has been front and center. Our frontline employees are the ones that touch our customers every single day, and we know that lower employee turnover drives higher customer retention. We've created a workplace where employees can thrive both personally and professionally. We have a highly tenured frontline workforce of greater than 4 years. However, when I joined, frontline employee turnover was nearly 100%. The bottom quarter of our workforce would turn 4 to 5x in 1 year, creating inconsistent service for our customers, which ultimately led to lower customer retention rates and higher cost to rehire and retrain our workforce. We have reduced our hiring needs by over 40% in just 21 months, a true testament to the investments we are making in our frontline workforce. This has led to savings in hiring, onboarding and training new employees, which we have in turn invested back into more consistent service levels, newer fleet and more robust benefits for our frontline. We continue to put our employees first and know that our success as a company depends upon our unified One BrightView culture. Turning to Slide 6. Again, this quarter, we have seen improvements in customer retention, which is now approximately 82%. This is an increase of 190 basis points on a trailing 12-month basis and 300 basis points since fiscal 2023, a testament to the world-class service provided by our employees. As we know, improved employee satisfaction leads to higher quality service. which in turn leads to improved customer satisfaction and ultimately, higher retention rates. What's even more encouraging is that we continue to see meaningful improvements in customer retention across our branch network. Since we outlined our branch segmentation during Investor Day, we have seen growth of 5 points in both the bottom and top quartile as we continue to prioritize our employees and customers. It's clear that our strategy is gaining traction, and our employees are more focused than ever on delivering high-quality service to our customers. As I have said from day 1, prioritizing our employees and customers continue to be the key foundation to drive sustainable top line growth. Now let's turn to Slide 7. Our maintenance and development teams continue to collaborate to drive conversions of development work into reoccurring maintenance contracts, made possible by breaking down legacy silos and operating together. The previous fragmentation of our business resulted in single-digit conversions. Since operating as a unified One BrightView, where development and maintenance work together, we've experienced continued success in cross-selling and believe we can achieve conversions of approximately 70% as we progress in our journey, a $50 million-plus annual reoccurring maintenance opportunity. To further amplify this, we plan to continue leveraging the collaborative efforts by organically growing our development business in markets where maintenance already operates. In locations where we offer a full suite of services, we are able to better serve our customers, leading to higher cross-selling opportunities and a better customer retention. More on that in a minute. Turning to Slide 8. While we experienced development schedule delays during the quarter, I want to be clear that the headwinds were timing related. As you can see on the left, we saw our development backlog grew during the quarter by $14 million, offsetting the revenue timing impact we saw within Q3. Our backlog remains robust, and we continue to sell into the back half of fiscal 2026 and beyond. Development remains the tip of the spear, and we remain highly focused on our ability to enhance our market position by leveraging our existing footprint through development cold starts. We have an industry-leading construction business and plan to open 10 new development branches over the next 24 months, which will increase market share and provide a runway for future growth and development. As you can see on the right, development currently operates in 20 of the 36 states where we have a maintenance presence, leaving us a considerable opportunity to organically expand in markets where we already service. This expansion will not only fuel the $1.2 billion development backlog that we expect to realize by 2030, but it will also be the foundation for future conversions that will provide reoccurring maintenance revenue. Moving on to Slide 9. We have made great progress in solidifying the foundation for future growth in such a short period of time. But let me remind you, my focus is to achieve consistent top line profitable growth. It all starts with our employees and customers, and coupled with investments in sellers and our focus on capturing more of our customers' share of wallet gives me confidence that the foundation we've laid down will provide a runway for growth and meaningful shareholder value in both the near and long term. With that, I will now turn the call over to Brett. Brett?

Thank you, Dale, and good morning, everyone. Before I start with my prepared remarks, I share Dale's conviction, energy and enthusiasm in our transformation. We remain disciplined in executing our strategy and managing our business for the long term. Moving to Slide 11. We are positioned to deliver yet another year of record adjusted EBITDA and margin, which has been made possible for the continued streamlining of our operating structure and efficiencies gained through our One BrightView strategy. Our trailing 12-month EBITDA is now $344 million or 210 basis points better than fiscal 2023, all while reinvesting at record levels back into the business. Our concentration remains clear, and we continue to drive operational efficiencies with a focus on centralization and unlocking our size and scale, which I will go into more detail on Slide 14. Let's move to Slide 12 to discuss our results in the quarter. Total revenue for the third quarter was $708 million, which is a decrease of 4% due to macro-related dynamics that have been driven delays in maintenance discretionary spending and development projects. As Dale outlined earlier, we continue to be highly encouraged by the underlying trends in our business. We remain confident that the early success we're seeing around our employees and customers will result in sustainable, profitable top line growth. Turning now to profitability on Slide 13. We delivered record total adjusted EBITDA for the third quarter of $113 million, an increase of $5 million or 5% higher versus the prior year period. Adjusted EBITDA margins of 16% were also a Q3 record and expanded by 140 basis points, marking another consecutive quarter of year-over-year margin expansion on a company-wide basis as we continue to transform this business for the long term. Operating efficiencies more than offset revenue flow-through, and we are now seeing the benefits from the record level of investments we have made into refreshing our fleet, centralization efforts of our procurement group and continued efficiencies in G&A. Important to note as well, we continue to make investments back into expanding our sales organization, which will be a key catalyst to achieving consistent top line growth. I will provide more details on each of these strategies on the next slide. Turning to Slide 14. As previously mentioned, we are executing against 3 key strategies: fleet management, leveraging our scale and driving efficiencies. To start, we've invested over $250 million of capital over the past 2 years, and we'll continue to invest going forward to refresh our fleet of trucks, mowers, trailers and other equipment, bringing down the average age of these assets considerably. We have seen the age of our core mowers go from over 3 years old to just 15 months. Our core production vehicles went from over 9 years old to less than 6. This has not only driven sequential improvements on our cost of repairs, maintenance and equipment rental expense but also higher employee satisfaction, improved customer service and enhanced brand reputation. As we focus on continuing to unlock our size and scale, we've set into motion a strategy to centralize our procurement function and partner with preferred vendors and ultimately drive cost efficiencies through favorable terms and fixed pricing. A small example of a recent success story relates to our safety gloves category. Previously, we had over 100 vendors for safety gloves, where individual branches were procuring gloves through various suppliers at different prices, leading to significant cost inefficiencies. Now we have streamlined all purchases through 2 vendors at fixed and preferred pricing. Additionally, the added benefit, we are now getting higher quality gloves, which are safer for our employees, all at a significantly lower cost. While this one small example has resulted in approximate 50% reduction in spend in this category, opportunities like this exist across our entire business. And as it relates to our cost structure, we have seen sequential improvements in our SG&A as a percentage of revenue by reducing redundancies through centralization and leveraging technology. The savings we've realized through this strategy are being reinvested back into our sales force with the goal of rebalancing G&A from approximately 80% to 65% of total SG&A. This reinvestment is part of the engine that will drive future top line growth. Now let's turn to Slide 15 to review our adjusted free cash flow and leverage. 2025 will be another year of sequential free cash flow and conversion improvement, all while investing at record levels back into our business. For reference, our free cash flow reconciliation appears in the appendix on Slide 25. These investments are a testament to prioritizing both our employees and customers. Adjusted free cash flow is expected to grow approximately 27% year-over-year and adjusted free cash flow conversion is expected to be approximately 34% at the midpoint of this guidance, a 500-point increase. While we have ample cash on hand that can be used for opportunistic acquisitions, our priority is on achieving organic top line profitable growth. And net leverage at the end of the third quarter came in at 2.3x, which compares to 2.4x in the prior year period. This was driven by lower debt levels, improved profitability and improved liquidity. Now let's turn to Slide 16 to review our outlook for fiscal '25. We are reaffirming the full year guidance we issued in July. As mentioned earlier, we expect another year of record EBITDA and margins, the highest in company history since going public. These results are a testament to the hard work and dedication of all 19,000 team members working together to provide best-in-class service to all of our customers. We expect a continuation of healthy cash flow generation driven by improved operating performance. Our outlook reflects our momentum on broad-based initiatives to reinvest in the business. With the recent passage of the tax bill, we expect to invest these cash savings into continued acceleration of our fleet strategy, all while managing our free cash flow range of $60 million to $75 million. Finally, we are holding our revenue range of $2.68 billion to $2.73 billion. This reflects snow assumptions of $210 million for the year, while both land and development ranges remain unchanged. For reference, our revenue guidance reconciliation appears in the appendix on Slide 24. Before turning the call back over to Dale, I want to again express my appreciation to our BrightView team members. Without their support and commitment, along with our ability to adapt, our ongoing success would not be possible. With that, let me turn the call back to Dale to wrap up on Slide 17.

Thanks, Brett. As I approach my 2-year mark, I'd like to thank our employees for embracing our culture and driving meaningful transformation within our business. Our long-term commitments remain unchanged. As I have said from day 1, this all begins with our people, and I am incredibly proud of our dedicated team members who provide world-class service to our customers on a daily basis. Our One BrightView culture is resonating and we have made great progress in solidifying the foundation. But now my focus is achieving consistent top line profitable growth, combined with unlocking our size and scale and allocating our capital strategically will position our company as the investment of choice. With that, operator, you can open the call for questions.

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

So it looks like that our organic decline in your land maintenance business was a combination of lower contract services and ancillary services. I think that's what it said in the press release, but we were thinking that the decline was related more to the discretionary side of the business rather than that contract business. Can you talk about that contract business in a little more detail because I know that's a bigger piece of maintenance land and I think largely regarded as less discretionary.

Yes. Great question, Tim. Yes. First, I want to start by saying we're going to do this call today from our branch in Dallas. So we're joined by our team members in Dallas, and it's hot down here. So they're making sure our employees are safe. But in your question, like I closed out the last statement, we are 100% focused on growth. If you look at what we said for our Q3 results, they are primarily driven by the reduction of what we call discretionary spend. That comes in 2 buckets. It's people that have made the decision to perhaps push off some of their ancillary work, which is 100% discretionary. But then it also has a bucket that in some of our southern markets, where customers have a little more per occurrence contract work, where they can make the decision that they want to try to stretch out between service levels and avoid some cost. So Tim, we did see a little bit of that per occurrence revenue is why we have to call it contract revenue. But primarily, it was discretionary. It was based on our customers' decision to try to avoid, but it wasn't as a result of us feeling like we are making backwards headway, let's call it, on the key metrics. You saw in the deck, we continue to see retention improve for our customers, which is the long-term lever that's going to drive continued growth in contract. Brett, do you want to add anything?

Yes. No, I think Dale hit it spot on. I think it's discretionary spend in nature, which is really what we talked about at the end of last quarter and in our release in early July. So as you think about the good news and what we're excited about here in the business is all the underlying fundamentals of the business and KPIs, we see moving in the right direction, especially as you think about employee retention improving, which we know directly leads to customer retention improvement, which over the last 21 months has now gone up by over 300 basis points. So we feel great about the underlying fundamentals of the business, Tim, and really improvement that we're seeing in those key KPIs.

Okay. That's really helpful. I was trying to square all that math because I saw retention rates going up, but then you mentioned lower contract revenue, but it was the per occurrence work, which I assume can -- if you're reducing the scope quickly, you can -- that the customer can increase the scope pretty quickly as well, like that can bounce back quickly as well, correct?

Yes, yes. Tim. Look, we feel -- and we're going to do what's best for our customers. We've worked so hard over the last 21 months to show our customers, we're a great partner to them. So when our customers ask us to work with them, we're going to do it. Even if the contract requests us to do something different. I've told all of our branch leaders and market leaders put the customer first on everything we do. I would say, Tim, and this is, I think, an important statement to make. We definitely feel the headwinds we felt as we worked our way through Q3 and the worst of it is behind us. We feel like some of that unknown that was created in early April and lingered through April, May and June. Based on what we're seeing and we're hearing from our operators, customers are becoming more receptive to some of these. These changes, Tim, even on the contract they are short-term decisions. They're not adjusting our contracts. They're just saying, can you guys only service us 3 times this month instead of 4, to try to save themselves a little money while we work through these uncertain times. But by no means are our customers saying, we want to readjust the long-term contract relationship we have. They know what world- class service needs to look like to keep their facilities looking good. But I do believe, we made significant progress as we work through Q3. And as we start Q4, we have great optimism that the worst is behind us, and we're starting to make progress returning this business, as I've said, to long-term profitable top line growth. Brett, do you want to add anything?

No. I think Dale said it. We're still early in Q4 here. We're through basically 1 month of our quarter July. And I think we're starting to see some of those trends, especially around discretionary spend rebound. Keep in mind, Tim, and I know you know this, but the last time we kind of went through a big macro change here was back in COVID era, which is 5 years ago or so. But we saw contract -- some of this per occurrence work in contract take a very small 2% dip a par -- we went to basically 98% a par in the first quarter. And then pretty quickly after that, we returned right back to 100% a par 90 days later. So we're starting to see some of those trends, as Dale mentioned, start to come back to more normal levels here in early Q4.

We'll go next now to Bob Labick of CJS Securities.

So I wanted to start, so you obviously have been hitting on your key metrics and focusing on profitable growth. And 1 of the keys to getting this growth is winning new business, not just retaining the business you have, but you also have to win stuff as well. And you've talked about in the past, the need to grow the sales force to increase the S in SG&A. I think you may have alluded to it a little on Slide 13, but the question is kind of where do you stand in the sales force, I guess, development and growth? And how should we see that process unfold? And how long does that take to see new accounts and sales grow from there?

Yes. Yes. Great question because it's an important lever for us to drive profitable top line growth. So what we said at our Investor Day in late February, we gave some details that we said we had roughly 1,000 sellers in our business that interact with our customers on a daily basis. And that breaks into 2 buckets. It's our new sales group that sells into new accounts to get new customers, and then the team of account managers we have that partner with our customers to work on that ancillary business. Where we sit today is since that time when we announced that, we've grown that group by roughly 6%, so we've already added roughly 60 of those frontline people interacting with our customers on a daily basis. Now, the ancillary work. We know we have headwinds there, but our account managers are getting up to speed with our customers to talk about what they can do, and we continue to put quotes out on the street. Our new salespeople, this is much longer to take hold, Bob. And traditionally, what we've seen is new sales reps in the first year are about 1/3 as productive as what they'll be by year 3. So while we've had some get up to speed a little quicker, traditionally, it takes anywhere from 90 days to the full 12 months to really create some new revenue production by these sales reps. So we feel great. Our branches are working with these new reps. We're talking to new potential accounts. And all the investments we're making, as we noted, $2 million in the quarter, and we're lucky that we can pay for that through the improvements we've made in other parts of the business has given us the ability to get these people on board, get them working with our teams, talk to new customers, and that's just going to fuel that growth well into '26 and beyond for us. Brett, do you want to add anything?

Yes. I would just add, Bob, and it's a great question on ramping up the sales force. I would just add that as you think through the business 2 years ago, we had much higher employee turnover much lower customer retention. And as you think about adding to the sales force at that point in time, it really wasn't the right time. Anything we were putting in the top of the funnel was walking out the back end of the funnel. So now that the last really 21 months has been focused on the long-term foundation of the business around our employees and customers, now is the time where we're really starting to add to that sales force. And I think you could see on Slide 13 in the deck, it's a rebalancing of our SG&A spend, right? It's the savings we're getting from the size and scale unlock through centralization, through our procurement initiatives, through centralizing functions, back-of-the-house functions to really support our branches. And those efficiencies are allowing us to start that investment in sales as we speak. And I think as you go forward, you're going to see that number tick up. You're going to see us really start to put the gas pedal down on sales investments. And like you said, it's going to be a combination of customer retention improvement and now new sales coming in the top of the funnel.

Okay. Great. That's exciting. And then just one real quick clarification, I guess. You mentioned, I think, obviously, free cash flow guidance was maintained, but I think you're getting a benefit from accelerated depreciation. I think you said you're reinvesting that. But anyway, if you could just clarify your free cash flow, your CapEx spending and the reconciliation bill benefit to you?

Look, I'll let Brett add some color, Bob. But as I travel our branches and like I said, I'm in Dallas this week, you would not believe the cultural impact, the $250 million of new fleet that we've given these people has created. Seeing new trucks leaving our yards so we can provide quality service to our customers is critical. And when we had the opportunity, and we're fortunate enough today to have it to be able to take some of these tax savings that I'll let Brett do the math for you, and reinvest that even to more fleet that we can service our customers at the quality levels that we need, we're going to take that. But Brett, why don't you give Bob the math?

No, it's -- yes, Bob, great question. Look, as Dale mentioned, I think the new fleet and what that does for our employee satisfaction, customer satisfaction, brand reputation, that kind of speaking for itself from the underlying KPIs. But from a specific cash flow guidance standpoint, one, we feel great where the ability of this business to generate cash is, especially in the last couple of years. We feel great where our leverage is at this point at 2.3x as a company. And that tax bill will help us. Our previous cash tax guidance was us a taxpayer of about $25 million to $30 million. Now we're saying that guidance is $5 million to $10 million. So we're going to save about $20 million in really federal taxes. But what we're doing is we're increasing our capital guide. We're seeing those benefits from fleet and the quicker and faster we can accelerate the fleet strategy, not only the better -- the more satisfied our employees and customers will be. But as you see on Slide 13, we're getting EBITDA and margin benefits from that early days. So the quicker we can get the fleet refreshed, the better off will be for both employees, customers and margin standpoint. So we're basically taking that money, Bob, and reinvesting it right back in the fleet. And important to note, just as you're thinking about what the impact of that is next year, we expect with our continued investment in our fleet and that bonus depreciation, that's now 100%. We don't expect to pay federal taxes next year either. So that's going to be another $20 or so million of benefit that we put back into accelerating our fleet strategy.

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

What really kind of stood out to us was the operating leverage here and just the absolute SG&A spend in the quarter coming down as much as it did. Just in terms of the cost structure, where are you seeing the most benefit? I mean kind of the greatest amount of cost savings? Anyway to bucket out the various impacts on a year-over-year basis because it's pretty remarkable, just given the lower level of revenue.

Yes. Great question, Greg. I think, you can see that we've been able to reduce G&A. And as we laid out back at Investor Day, we believe there's a significant opportunity. Breaking down those legacy silos that had redundancy happening across our markets, across our regions, even across our business units has given us the ability to reinvest some of that money back into the business. Centralization is something the business never took advantage of in the past that today, we're trying to leverage our size and scale and get more nonvalue-added work away from our branches. And yes, we are investing a portion of that in our sales force, but we're also investing some of that G&A benefit back into the hours to service our customers on the front line. Over the last year, we've continued to make sure our employees have adequate time to service our customers, and we're going to continue to do that. And that's created a little offset to some of those G&A savings, and we will continue to invest. But look, fleet, less fleet issues, more procurement benefit and just trying to leverage our G&A better has been the biggest driver across those 3 buckets. Brett, do you want to add?

I'd only add that we said this last call, we said it in our early July release that this macro headwind that we're facing here in the market and some of our customers are not immune to. Yes, it's things that we have to get on the call and talk about some of that, but that's somewhat out of our control. The things within our control that allow us to expand that quality earnings and allow us to feel confident in what we're guiding to for EBITDA margin in Q4, as you think about 2026 and beyond. This is just the beginning stages of these strategies. We're really starting to see this One BrightView initiative, like Dale said, around our fleet, around procurement centralization, around our centralization size and scale unlock around G&A. I mean we gave one small example of procurement with safety glove category, which is a small amount of our spend. It's a few million dollars, and we're saving 50% in one small category. Opportunities like that exist across the entire business. And now that we have development and maintenance working together, and we centralize that function as an example, we expect to see significant margin improvement as we move forward just by really unlocking the size and scale power of BrightView.

Okay. That's great. And then just more of a clarifying question on what you're seeing quarter-to-date. Just to be clear, are you -- did you actually see an improvement in the results in July? Or just are you feeling better about kind of what you're kind of hearing and seeing out there from customers?

Yes. It's a great question. And I'll try to refrain from giving inter-quarter guidance. But Greg, I would tell you, I think as much as the financials will tell us what's happening, it's the tone that I get from my SVPs and my market leaders. And when I visit branches, just the optimism that they're feeling. So what I can tell you is more quantitatively, I feel like people are more optimistic than what they've been without me giving you specific inter-quarter numbers. I would say we -- if you look at our guidance update on Page 24, there's numbers that are implied in there. And like I said earlier, we believe Q4 will show improvements over the headwinds we saw in Q3 and the worst of it is behind us. So that's probably a high level to try to answer your question without giving inter-quarter numbers.

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

Just wanted to start with the headwinds that you saw in the quarter. Were there any customer end markets that were being hit worse than others or customer types like HOAs or end markets like leisure, hotels or any sort of pattern to the hesitancy in demand?

Yes. So I don't want to broad base everything. Let me give you, Toni, it's a good question. So let me try to provide a little bit of color on where we felt some of maybe more of the headwinds. Obviously, as many people remember, in Q2, we reported that we saw snow in areas that was very untypical. So kind of across the Carolinas, in Virginia, markets that traditionally didn't get as much snow as what they traditionally did. And when you're dealing with an HOA that has a budget or in many cases, businesses that have budgets, those markets can get headwinds when people talk about their discretionary spend, where they try to offset those snow spends that they had over the winter to make sure that their facilities were clean and safe. So there are market drivers to that. The other area that I would note, I don't think we feel like any overall segment. Obviously, as many people's businesses know, there have been impact on the cost of insurance in some markets. And there, again, when you look across areas that have been the hardest hits, let's take the areas that were impacted by the hurricanes and HOAs in those markets that saw insurance go drastically up. Those can kind of create some headwinds where our customers are asking us to be a little more flexible and, of course, the horrific events that occurred out in California with the fires last year and some of the insurance that those people are dealing with. So I don't want to say every HOA or home association is saying that they don't want to spend money. It's really driven by what's occurred over the last 12 months across our portfolio. But that's the best part. The closer we get to our customers and the better we partner with them and the longer they stay, they know they can address it with us. And we're in this for the long run. Everything we're doing is about long-term partnerships and growing this business, not short-term gains. So it's different areas in the part of the country. And I feel good that every time a customer asks us for help, they feel like they have a partner that they can find a way to work with. So that's probably the way I'd describe it, but a great question.

And while this business doesn't totally lend itself to AI, I know you do have a couple of AI tools around predicting customer retention and around vehicle safety. I'd also imagine you could get some back-office efficiencies from AI as well or maybe supply chain efficiencies. So just wanted to understand how you've been thinking about AI and the potential benefits from it? I know it's not going to be as much as the fleet strategy, but just wanted to get some thoughts there.

Great question. I think let's just take AI and talk about technology as the baseline. I think our business drastically underinvested in technology, in general. We recently brought in 2 leaders to help me shore up those functions. We've made significant investments in a new platform with an HRIS system that's going to allow us better manage our #1 resource, our employees. And then our biggest expense labor, we're deploying a new field service management tool as we speak across the country. While they use some AI in both those systems, it's really just the platforms of technology that will allow us to use data better. Yes, today, we do, do some work with our current customers that give us indications, maybe customers that are at risk of potentially leaving us. I even get reports every week of customers of a specific size and above that I want to make sure whatever their issue may be that my market leaders know, I'm sure to support them. So yes, look, I think getting our IT platforms up to speed, we've made the investment in leaders to help us do that. And then long term, using that data better, it's just more of that $100 million of unlock that we talked about in G&A. We have to be better as a public company with the #1 player in our industry to leverage technology to better support our branches. Every day that I can move work away from our branches, it's more time they can spend with our customers. There's going to be a day where our branches can hopefully spend 95% of their time out with clients and not behind computers at the office.

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

I just wanted to ask if you've seen any as we move through July from project delays on the development side of the business, which it sounds were largely concentrated on some larger projects? Or are you expecting the majority of these delays to be pushed back into fiscal '26?

Yes. So good question, Jeff. And I think part of that being in the construction industry for many years, you're right. I think our definition of how it could bleed from '25 to '26, as everybody knows, we're reporting our third quarter today and our fiscal year-end is the end of September. But by no means is that the end of the annual construction cycle. So when we look at it, Jeff, yes, stuff could continue to bleed right up until November when the weather starts changing and some of the projects slow down. So whether it's going to get pushed well into '26, early '26, we'll see how that determines. I think earlier, you made the statement that a lot of that delay, and we showed everybody, our backlog grew by the amount that we saw kind of the delay in revenue of $14 million, which let me add, Jeff, typically in Q3 and Q4, which are largest revenue-producing periods for development, those are typically periods we consume part of our backlog. And then we see the growth again in Q1 and Q2 as we don't do as much work in ground. But when I think about that $14 million of delay, I don't want to share the public names, Jeff, but let me just say this. Almost half of that $14 million was with 3 large customers. We are currently working on over 1,000 projects across our branch network and 3 specific projects were the ones that actually caused half of that development backlog delay. One of the jobs, what I would say, we are now targeting to complete the end of next summer, and the original target date to complete was May of this year. That particular job, we've only recognized 40% of our overall revenue that we expect to recognize over the full life of the project. Nothing on that job has been shut down. Nothing on that job has been removed from our scope of work. It is 100% timing. So we understand there's a lot of subs out there. We understand that we can be at the very end of the tail on most construction jobs being the last thing with landscaping, but we also understand that people have made the commitments to get these jobs done and we're going to work with the customer to do the work when they need us to do it. But Brett, do you want to add anything?

Yes. I would just add, timing -- as Dale mentioned, it's purely timing. You look at our backlog growth in quarter and you look at our revenue shrink in quarter and some of the projects Dale mentioned that could push you out is really -- the question is we get a question a lot, Jeff, are they still going to happen the way you expected them at the same value? And the answer is yes, and sometimes at a higher value, given change orders and rushes at the end of the project. So it is purely timing. I would just say, what we're doing about that as you think about development, I mean, we feel extremely bullish that we have the best development team by far in the industry. And as you think about development moving forward, that is the tip of the spear to growing that recurring maintenance contract as you think about conversions. And we showed on Slide 7, a couple of years ago, that conversion rate development and maintenance was about 5%, now it's getting closer to 20%. So we feel like that's ticking up in the right direction. And you see on Slide 8, we have 16 states currently where we have a maintenance presence, we have real estate. We have a brand reputation but we don't have a development business. We are going to start adding those development businesses into these states. We're planning to open up 10 over the next 24 months in states where we already have a maintenance presence. That's going to create more of the brand reputation. That's going to create more of that pipeline for development conversion into maintenance. So as you think about the long-term health of both segments of the business, opening up those development branches, again, we can do it on our own. We don't need M&A to do this. We do it cold start with the expertise we have in the business already. That's just going to fuel that future long-term growth.

Additional detail, it's super helpful. And then you reported a nice step up in maintenance margins due to One BrightView initiative, such as your fleet management and centralized procurement beginning to show up maybe earlier than even anticipated in results. And should we expect these benefits to continue to contribute meaningfully to margins as we move into fiscal '26?

Look, I think -- as we had outlined in the past, there is so much opportunity for us to leverage the size and scale of this business. And I've seen what happens when people work together, and we leverage the valuable capital we deploy and the spend we have every year. So yes, Jeff, I think the luxury we have is the fleet improvements we've made, the procurement improvements we've made and the centralization work we've done have allowed us to pay for additional resources in sales. And I expect us to continue to invest in sales. We said we added 6% or 60 resources. We're going to keep on that path knowing those investments take time to pay off to drive top line growth. But those numbers that we shared that we were able to generate, we expect those to continue and eventually continue to grow. So this is the first quarter. We've been getting smaller benefits as we've worked through the first 2 quarters of the year, but in Q3, we wanted to share with you. So you could see. And probably on that EBITDA bridge, Jeff, the biggest thing I would note, when we get this business growing that top line, you can see that, that was the headwind that we had this quarter, costing us $6 million of EBITDA based on revenue. So as we return to growth, then we can even fund more for all those investments. So it's very exciting, but I would definitely expect it to continue to reoccur. And Brett, do you want to add?

No, Dale said it great. Look, we -- I'll keep this simple. We are focused like Dale said, on the long-term health of this business. And the early wins from our One BrightView strategy are allowing us, Jeff, to make sure we stay diligent in reinvesting back in the business, right, not just with frontline reinvestment into our workforce, but also now as you see on Slide 13, starting to put the gas pedal down on adding sellers to the business. So we're fortunate that we've put these strategies in place and they're paying early dividends.

And ladies and gentlemen, we do have time for 1 more question this morning. We'll take that now from Stephanie Moore of Jefferies.

I wanted to -- and actually Dale, I can't believe it's been 2 years already. That's crazy to think about. But I wanted to touch a little bit about the availability of labor, maybe the cost of labor. Anything that you can call out in terms of just kind of real-time labor trends, anything that you're dealing with and in this environment would be helpful.

Yes. Good question. It's been I think 21 months, as Brett likes to remind me, going on 2 years. It will be 2 years October 1, but time flies when you're having fun, Stephanie, and it's been an enjoyable experience as we work with our branches. If you talk about labor. Labor is obviously a big expense for us. It's 40% of our cost to service our maintenance customers. But it comes down when I think about our labor costs, and you've seen on Slide 5, the trend that we've been able to produce. And what was once a 100% turnover, we've dropped 40%. That's 6,000 less hires needed to support the service we give our customers. Now the 6,000 less people, it's going to save me anywhere between $10 million and $12 million every year in G&A costs to actually get those people onboarded. What have we done with that money? We put that back into those frontline employees, by making sure that they can work their 40 hours to service their customers. We've added PTO as we've pulled everybody. All those things create better stickiness with your employees and is a benefit for that team of employees that traditionally weren't getting those benefits. Our labor increases have been somewhat nominal. They've been below 3% over the past year, but if you look at all the benefits that they've received, it's probably much greater, but we've been fortunate that we could pay for those benefits for those employees, and it keeps driving down that turnover. So at the end of the day, it's not just the average wage they get that we can quickly measure. It's the overall benefit. But the great part is, if we can keep more of those employees and it costs us less to continue to onboard them, it's money well spent, and they deserve to share in that benefit, the longer we keep people. And as we've said, it is a direct correlation between the longer tenure we have of employees and lower turnover, the more customer retention have at a branch and the more customer retention, the more we can grow those branches. Brett, do you want to add anything?

I think Dale hit the nail on the head, as you think about 6,000 less employee hires at about $2,000 or so a piece, it's significant savings for hiring, onboarding, training of new employees that we can reinvest directly back into the business. And just a reminder for everyone on the call, we are fully e-verified workforce. And the more we take care of our domestic employees and keep those folks staying with us. That has a direct correlation to the cost as well. We've said publicly, typical wage is somewhere between 3% and 5% a year increase at this population of the employee count. But we're kind of seeing wages right towards the lower end of that range here, Stephanie, so more towards the 3% range. But it all comes down to what's on Page 5 of reinvesting back into that front line, not just from a wage standpoint, year-over-year increase, but making sure they get their 40 hours a week, giving them PTO, so when they have personal situations come up, they can take time off and feeling like they're truly valued in the business. That's what we've really been focused on over the last 21 months or so.

And at this time, I'd like to turn things back to you Mr. Asplund for any closing or concluding remarks.

Thank you, operator, and we continue to see great interest and demand in the company, and we apologize for anybody who wanted to get in the queue and not ask a question. And by all means, you can follow up directly with Chris Stoczko with any questions you may have. But I want to close by reiterating the great progress that we've made, but we'll remind everyone that we are still very much early -- in the early days of transforming this business. We've made great strides in solidifying our foundation and driving efficiencies. But let me reiterate, I am 100% focused on achieving long-term profitable top line growth, which will ultimately position us as the investment of choice. With that, operator, you may now end the call. Thank you.