Steady utility demand cushioned the quarter, but a missing storm-cleanup project and a colder winter dragged earnings lower.

June 4, 2026

The Davey Tree Expert Company reported nearly flat revenue for the first quarter of 2026, as rising costs and seasonal headwinds pushed the company to a wider operating loss. Revenue reached $435.8 million, up just $1.0 million, or 0.2 percent, from the record set in the same period a year earlier.

Utility Strength Offset by Residential/Commercial Decline

The quarter’s modest top-line growth came from the Utility segment, where revenue rose $8.4 million, or 3.3 percent, driven largely by the company’s Utility Resource Group. Those gains were nearly erased by a $7.3 million, or 4.1 percent, decline in the Residential/Commercial segment.

The drop was entirely attributable to the absence of a storm-cleanup project that had lifted the Commercial Landscape Services business a year earlier, in the aftermath of the 2024 hurricane season. More encouragingly, residential and commercial tree care revenue grew 7.6 percent year over year, underscoring the resilience of Davey’s diversified service mix.

Costs and Cold Weather Weigh on Earnings

Profitability eroded sharply during the quarter. Key results included:

• Loss from operations of about $10.9 million, compared with a $1.6 million loss a year earlier.
• Net loss of roughly $10.7 million, or 27 cents per share, versus a smaller prior-year loss.
• Interest expense up 4.8 percent to $4.6 million.

Management linked the weaker performance to stagnant sales, persistent inflation across labor, parts, fuel and subcontracting, and higher marketing and selling expenses. Those marketing costs are now distributed evenly across the year rather than concentrated in peak revenue periods, weighing disproportionately on the first quarter. The company expects them to normalize over the full year. An unusually cold winter further dampened early-season residential tree care productivity.

Investments Lift Debt as Credit Terms Ease

Debt levels climbed compared with a year earlier, reflecting the company’s long-term investment strategy. The increase stemmed from the acquisition of Cal Engineering Solutions, targeted property purchases, and the continued phased rollout of SAP S/4HANA and Motive Telematics systems. To strengthen flexibility, Davey amended its credit facility, relaxing certain covenant requirements and preserving access to liquidity for operations, strategic investments and future obligations.

Risk Environment and Outlook

Leadership cited an ongoing challenging risk landscape shaped by rising insurance costs and litigation trends, particularly in workers’ compensation and auto liability. The company is addressing these pressures through strong insurer relationships, safety and technology investments, tighter contract terms, and selectivity in the projects and regions it takes on. Management also continues to watch fuel and fertilizer volatility tied to Middle East conflicts.

Chairman, President and Chief Executive Officer Patrick M. Covey thanked field, operating and administrative teams for their work, describing 2026 as off to a modest start while expressing confidence in the company’s ability to deliver another strong year.