Company: LGN
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0002052568-25-000018
Chunk: 48

Company: Legence Corp.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 48
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 primary beneficiary of a VIE, which is the case if the Company, in combination with its related parties, has both (1) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. When the Company is deemed to be the primary beneficiary, the VIE is consolidated and the interest in the VIE held by a third-party is accounted for as a noncontrolling interest. For VIEs that are not consolidated, the Company accounts for its investments using the equity method.

14

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

All intercompany accounts and transactions have been eliminated.Refer to “Note 6—Variable Interest Entities and Equity Method Investments” for additional information.Deferred Offering CostsOffering costs include legal, accounting, printing, and other third-party fees that were incremental and directly related to the Company's IPO. Prior to the completion of the IPO, the Company deferred $28.4 million of offering costs within Other assets on the Condensed Consolidated Balance Sheets. Upon completion of the IPO, these costs were reclassified into Additional paid-in capital as a reduction against the proceeds received from the IPO.Stock-Based CompensationSeries A Interests and Restricted Series C InterestsManagement Aggregator I and Management Aggregator II issue Series A Interests and Restricted Series C Interests to the Company’s employees. As their value is indexed to the value of the Company's Class A Common Stock and settled in Management Aggregator I and Management Aggregator II  interests or assets, and the Company does not reimburse these entities for the awards, the Company accounts for these awards as stock-based payment awards under ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). The Company recognizes compensation expense for equity-classified awards at their fair value measured as of the grant date.Series A Interests awards are comprised of time vesting interests (60%) (“Time Interests”), performance vesting interests (20%) (“Performance Interests”), and exit vesting interests (20%) (“Exit Interests”). The Time Interests and Restricted Series C Interests are service-based awards for which the Company recognizes expense based on the fair value of the awards at the end of each reporting period. While the Time Interests continue to include a below fair value repurchase feature, and were historically accounted for as liability-classified awards by the Company due to