Company: LGN
Filing Date: 2025-09-02
Form Type: S-1/A
Source: 0001193125-25-193346
Chunk: 337

Company: Legence Corp.
Filing Date: 2025-09-02
Form: S-1/A
Chunk 337
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 Accounts

Revenue is recognized when control of the promised goods or services is transferred to the customer, either at a point-in-time or over-time, as the performance obligation is satisfied. The amount of revenue recognized reflects the transaction price, which is the consideration that the Company expects to receive in
exchange for those goods or services provided.

Most of the Company’s contracts are considered to have a single performance obligation satisfied
over time using the input method (i.e., “Cost-to-Cost Input Method”). For some contracts, the Company has historically used an output method (i.e., milestone
achievement). For the three months ended June 30, 2025 and 2024, revenue recognized under the output method represented 0.8% and 2.4% of revenues, respectively. For the six months ended June 30, 2025 and 2024, revenue recognized under the
output method represented 1.1% and 2.9% of revenues, respectively.

The consideration promised in a contract with customers may include fixed amounts,
variable amounts, or both. The Company estimates variable consideration and includes it in the transaction price to the extent it is probable that a significant future reversal in the amount of cumulative revenue recognized under the contract will
not occur when the uncertainty associated with the variable consideration is resolved. Management reassesses the amount of variable consideration each reporting period, and changes to estimated variable consideration are accounted for as a
cumulative adjustment to revenue recognized in the current period. Recognizing changes in the transaction price requires significant judgments of various factors, including, but not limited to, dispute resolution developments and outcomes and
anticipated negotiation results.

F-70

Legence Holdings LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements—(Continued)

(Unaudited)

In satisfying the Company’s performance obligations to its customers, the Company routinely procures
goods and services from third parties that are inputs into an integrated single performance obligation typically under fixed-price contracts. Procurement from third parties often consists of goods and services provided by subcontractors that the
Company engages to perform specified tasks on its behalf and/or under its direction. The Company earns a margin related to these costs under either fixed-margin or fixed-price arrangements with its customers. The Company determined that it is the
principal in these arrangements as the Company controls the goods and services procured from third parties.

For some transactions, customers may withhold
a portion of the contract price as a contract retention until the project is substantially complete or completed to ensure