Company: LGN
Filing Date: 2025-05-14
Form Type: DRS/A
Source: 0000950123-25-005247
Chunk: 147

Company: Legence Corp.
Filing Date: 2025-05-14
Form: DRS/A
Chunk 147
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 units are estimated based on a market approach and an income
approach. The income approach utilizes discounted future cash flows and assumptions critical to the fair value estimate of the discounted cash flow model include the revenue growth rate, forecasted EBITDA margin and discount rate. The market
approach utilizes market multiples of invested capital from comparable publicly traded companies. The market multiples from invested capital include revenue; book equity plus debt; and earnings before interest, provision for income taxes,
depreciation and amortization. Three reporting units with total goodwill balance of $247.2 million had estimated fair values that exceeded values ranging from 11.3% to 13.3%. As of December 31, 2024, except for these three reporting units and
the reporting unit discussed below, all other reporting units had estimated fair values that exceeded their carrying values by at least 24%.

During the year ended December 31, 2024, it was determined the carrying amount of goodwill for one reporting unit in the Engineering
& Consulting segment exceeded fair value, resulting in goodwill impairment charges of $17.8 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue projections. During the year ended
December 31, 2023, it was determined the carrying amount of goodwill for one reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in goodwill impairment charges of $5.1 million. The impairment was
primarily driven by a decline in projected cash flows due to lower revenue projections and investments in support functions. During the year ended December 31, 2022, it was determined the carrying amount of goodwill for two reporting units in
the Installation & Maintenance segment exceeded fair value, resulting in goodwill impairment charges of $23.4 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue projections,
investments in support functions and increased cost of capital due to rising interest rates.

There are inherent uncertainties related to
these factors and management’s judgment in applying them to the analysis of goodwill impairment. It is possible that changes in facts, judgments and assumptions made in estimating the fair value of reporting units could occur, resulting in
possible impairment in the future.

Income Taxes

We utilize the asset and liability approach in reporting for income taxes. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in