Company: LGN
Filing Date: 2025-09-02
Form Type: S-1/A
Source: 0001193125-25-193346
Chunk: 159

Company: Legence Corp.
Filing Date: 2025-09-02
Form: S-1/A
Chunk 159
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. The interest expense associated with our long-term debt will vary with market rates. We seek to mitigate this risk with an appropriate amount of fixed rate debt
obligations through interest rate derivative contracts that fix the interest rate on the respective floating rate debt obligations. Without taking into consideration the effect of our interest rate swap agreements, based upon our outstanding
principal amount of floating rate debt of $1,590.4 million as of December 31, 2024 and $1,582.1 million as of June 30, 2025, an increase in the current interest rate levels of 1% would result in an increase in our annual interest expense
of $15.9 million and $15.8 million, respectively.

Inflation Risk

While inflation pressures have recently and relatively subsided, rising or consistently high rates of inflation, including as a result of
geopolitical tensions and trade wars, have the potential to increase costs of labor and other inputs for our services. We have experienced, and may experience in the future, higher than expected inflation, including escalating transportation,
commodity and other supply chain costs and disruptions. If our costs are subject to significant inflationary pressures, we may not be able to offset such higher costs through price increases, which could adversely affect our business, results of
operations or financial condition.

Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of contract assets and accounts
receivable. Exposure to losses on receivables is principally dependent on each customer’s financial condition. We monitor the exposure for credit losses and maintain allowances for anticipated losses. We may also require prepayments for
certain of our services. Concentrations of credit risk with respect to our receivables are limited due to the large number of customers comprising our customer base and their dispersion among many different geographies.

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INDUSTRY OVERVIEW We participate in the market for engineering, consulting, installation and maintenance services used in the construction of new industrial, commercial and institutional buildings and upgrades and retrofits to existing buildings in the United States. We focus on buildings’ MEP systems. MEP systems are responsible for a building’s temperature, air quality, power supply, lighting, water supply and sewage. According to 2024 RSMeans Data, MEP engineering and installation costs represent an average of 26% of the total construction budget for new industrial and commercial buildings, and as much as 35% and 39% for laboratories and hospitals, respectively. MEP systems also account for more than