Company: LGN
Filing Date: 2025-02-14
Form Type: DRS
Source: 0000950123-25-002471
Chunk: 251

Company: Legence Corp.
Filing Date: 2025-02-14
Form: DRS
Chunk 251
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 overall increase in the Company’s volume of project activity as well as the timing of scheduled billings exceeding revenue
recognition from service delivered to customers.

During the years ended December 31, 2023 and 2022, the Company recognized revenue of
$82.9 million and $34.6 million, respectively, related to contract liabilities outstanding as of the end of the prior year.

Contracts Receivable

Included in the contracts receivable balance is retention for which the Company has an unconditional right to payment and is only
subject to the passage of time. Retentions included in Contracts Receivable as of December 31, 2023 and 2022 are $13.2 million, and $10.1 million, respectively.

Remaining Performance Obligations

The Company had
approximately $1,308.3 million in remaining performance obligations as of December 31, 2023, which represent the total dollar value of work to be performed on contracts awarded and in progress. The Company expects to recognize 75% of the
remaining performance obligations within the next twelve months and the remaining 25% thereafter.

Although remaining performance obligations reflect
business that is considered to be firm, cancellations, scope adjustments or project deferrals may occur that impact their volume or the expected timing of their recognition. Remaining performance obligations are adjusted to reflect these impacts as
appropriate.

Note 4—Acquisitions

Acquisitions
are recorded under the acquisition method of accounting, and the total consideration transferred is allocated to the acquired net tangible and identifiable intangible assets based primarily on their fair values as of the acquisition dates. The
estimated fair value of identified intangible assets are Level 3 fair value measurements and are determined using discounted cash flow techniques. Fair value is estimated using a multi-period excess earnings method for customer relationships
and backlog and a relief from royalty method for trade names. The significant assumptions used in estimating fair value of customer relationships and backlog include i) the estimated life the asset will contribute to cash flows, such as remaining
contractual terms, (ii) revenue growth rates and EBITDA margins, (iii) attrition rate of customers, and (iv) the estimated discount rates that reflect the level of risk associated with receiving future cash flows. The significant
assumptions used in estimating fair value of trade names include discount rates and estimated royalties that would be paid to license a comparable asset. The royalty rates used in this method are based on published comparable market royalty
transactions.

F-22

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