Company: LGN
Filing Date: 2025-02-14
Form Type: DRS
Source: 0000950123-25-002471
Chunk: 111

Company: Legence Corp.
Filing Date: 2025-02-14
Form: DRS
Chunk 111
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 rates are stable or falling because these conditions encourage businesses to invest in their facilities. We typically see less demand for our services when the economy is
contracting and interest rates are rising. To mitigate the impact of downturns in the economy on our business, we have focused on sectors with strong secular growth that we believe are less sensitive to macroeconomic conditions, including
technology, life sciences and education, and on services that help customers reduce their energy costs because we believe cost reduction is attractive to clients in all economic environments.

Investment in Technology and Related Infrastructure

We derive a significant portion of our revenues from technology companies, and demand for our services depends, in part, on technology
companies making continued investments in their facilities. Investment in technology is subject to a number of factors, including the frequency and nature of innovations, whether or not developing or implementing those innovations requires new
physical infrastructure and the availability of capital to fund investments in that infrastructure.

Service Mix

The margin we earn can vary significantly based on the type of service we perform, the size of the job as well as other factors. We typically
earn higher margins on engineering, consulting and maintenance services than we earn on installation and fabrication services and higher margins on smaller jobs than we earn on larger jobs. Our overall margins can vary between quarters based on
service mix in the period.

Labor Costs and Productivity

Our largest expense is the wages and salaries of our employees. Our margins depend on our ability to accurately estimate the amount of labor
that each job will require because our customer contracts are typically fixed-price. We have a long track record of accurately estimating our job costs.

Subcontractor Expense

We
subcontract certain scopes of work to third parties, particularly in our Program & Project Management service line. The level of subcontracting that we do, the price that subcontractors charge us and whether we are able to earn a margin on
the work that we subcontract can impact our margins.

75

Confidential Treatment Requested by Legence Corp.

Pursuant to 17 C.F.R. Section 200.83

Strategic Acquisitions

We have a pipeline of strategic acquisition opportunities and intend to continue to pursue acquisitions as part of our strategy to increase our
scale, expand existing or acquire new capabilities, access new customers, or broaden our geographic reach. While we target acquisitions that will enhance our growth and profitability, they may add redundant operating expenses in the short-term. Our
ability to successfully execute strategic acquisitions depends upon a number of factors, including sustained execution of a disciplined