Company: LGN
Filing Date: 2025-04-30
Form Type: DRS/A
Source: 0000950123-25-003868
Chunk: 120

Company: Legence Corp.
Filing Date: 2025-04-30
Form: DRS/A
Chunk 120
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 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 and Equipment Expenses

We subcontract certain scopes of work to third parties, particularly in our Program & Project Management service line within our
Engineering & Consulting segment. We record the amounts we pay to subcontractors as subcontractor expense in our cost of revenue. The amount of subcontracting that we do and the price that subcontractors charge us can impact our margins.

We also purchase certain types of equipment that we install in our clients’ facilities, including chillers, heat pumps, packaged HVAC
systems, pumps, valves and switchgear, primarily in our Installation & Fabrication service line within our Installation & Maintenance segment. We record the amounts we pay for equipment in our cost of revenue. The amount of equipment we
purchase, which varies significantly based on the type of job, and our markup on the equipment, can impact our margins.

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 clients, 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 acquisition strategy and our ability to effectively integrate acquired companies or assets
into our business.

Effects of Seasonality

Our revenues are subject to seasonal fluctuations, particularly in regions with colder winter climates and areas prone to extreme weather
events, such as wildfires, storms, flooding, and hurricanes. We generally see greater levels of activity in the spring and summer months than we do in the winter months due to reduced construction activity during inc