Company: LGN
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0002052568-25-000018
Chunk: 150

Company: Legence Corp.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 150
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, 2025 and December 31, 2024 was calculated using a discounted cash flow methodology under the income approach, using interest rate indices, risk premiums, and adjustments for the size and subordination of the instrument (Level 3 measurement).

28

Legence Corp.Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)

The carrying value of the remaining notes payable and finance lease liabilities approximates fair value as of September 30, 2025 and December 31, 2024.

Note 9 - Derivatives

Interest Rate Swaps: The Company has multiple interest rate swap agreements designated as cash flow hedges. The Company utilizes these interest rate swap agreements to reduce exposure to fluctuations in variable interest rates for future interest payments on its term loan. The total notional amount is $785.0 million and $815.0 million as of September 30, 2025 and December 31, 2024, respectively. Failure of the interest rate swap counterparties to make payments may result in the loss of any potential benefit to the Company under the interest rate swap agreements. The Company mitigates risk of non-performance by counterparties by dealing with highly rated counterparties. The Company does not use financial instruments for trading or speculative purposes. Additional information regarding the fair value of the Company’s interest rate swaps can be found in “Note 8—Fair Value Measurements”.The fair value of derivative instruments is presented on the Condensed Consolidated Balance Sheets, as follows (in thousands):Balance Sheet LocationSeptember 30, 2025December 31, 2024Derivatives designated as hedging instrumentsInterest rate swap asset (short-term)Prepaid expenses and other current assets$1,172 $5,861 Interest rate swap asset (long-term)Other assets$— $3,387 Interest rate swap liability (short-term)Accrued and other current liabilities$500 $— Interest rate swap liability (long-term)Other long-term liabilities$1,117 $137 The following table presents the gross changes in Accumulated Other Comprehensive Income ("AOCI") from the Company’s cash flow hedges (in thousands). Prior to the Corporate Reorganization, there was no tax impact associated with the interest rate swaps.Three Months Ended September 30,Nine Months Ended September 30,2025202420252024Beginning balance$840 $24,673 $9,111 $22,166 Unrealized gain (loss