Company: LGN
Filing Date: 2025-07-15
Form Type: DRS/A
Source: 0000950123-25-006399
Chunk: 154

Company: Legence Corp.
Filing Date: 2025-07-15
Form: DRS/A
Chunk 154
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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.

108

Confidential Treatment Requested by Legence Corp.

Pursuant to 17 C.F.R. Section 200.83

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 which the differences are expected
to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized.