Company: LGN
Filing Date: 2025-09-02
Form Type: S-1/A
Source: 0001193125-25-193346
Chunk: 52

Company: Legence Corp.
Filing Date: 2025-09-02
Form: S-1/A
Chunk 52
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, our insurance policies contain exclusions that insurance providers may use to deny or restrict
coverage. Employment practices liability and professional and pollution liability insurance policies provide for coverage on a “claims-made” basis, covering only claims actually made and reported during the policy period currently in
effect. If we sustain legal liabilities that exceed or that are excluded from our insurance coverage, or for which we are not insured, it could have a material adverse impact on our business, financial condition and results of operations.

If our goodwill or other intangible assets become impaired, then our profits may be significantly reduced.

Because we have historically acquired a significant number of companies, goodwill and other intangible assets represent a majority of our
assets. As of June 30, 2025, our goodwill was approximately $782.9 million and intangible assets, net was approximately $582.0 million. We are required to perform a goodwill impairment test for potential impairment at least on an annual
basis. We also assess the recoverability of the unamortized balance of our intangible assets when indications of impairment are present based on expected future profitability and undiscounted expected cash flows and their contribution to our overall
operations. The goodwill impairment test requires us to determine the fair value of our reporting units, which are the components one level below our reportable segments. In determining fair value, we make significant judgments and estimates,
including assumptions about our strategic plans with regard to our operations. We also analyze current economic indicators and market valuations to help determine fair value. In the fiscal year 2024, we recognized a goodwill impairment of $17.8
million relating to the determination that the carrying amount of one of our reporting units exceeded its fair value. In the fiscal year 2023, we recognized a goodwill impairment charge of $5.1 million relating to our determination that the
carrying amount of one of our reporting units exceeded its fair value. In the fiscal year 2022, we recognized a goodwill impairment of $23.4 million relating to our determination that the carrying amount of two of our reporting units exceeded
fair value. To the extent economic conditions that would impact the future operations of our brands change, our goodwill may be deemed to be impaired, and we would be required to record a noncash charge that could have a material adverse impact on
our business, financial condition and results of operations.

Our use of the cost-to-costinput method of accounting could result in a reduction or reversal of previously recorded revenue or profits.

We primarily measure the progress toward