Company: LGN
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0002052568-25-000018
Chunk: 107

Company: Legence Corp.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 107
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 Members under the TRA will not be available for reinvestment in Legence Holdings (or indirectly, its business) and generally will reduce the amount of overall cash flow that might have otherwise been available to us. We expect to fund the required payments under the TRA with our actual cash tax savings generated by the exchanges of LGN B Units in the UP-C structure. Our ability to satisfy our long-term liquidity requirements depends on our future operating performance, which is affected by and subject to prevailing economic conditions, market conditions in our industry and financial, business and other factors that we will not be able to predict or control.

The term of the TRA commenced upon the IPO and will continue until all such tax benefits have been utilized or expired and all required payments are made, unless we exercise our right to terminate the TRA (or the TRA is terminated due to other circumstances, including our breach of a material obligation thereunder or certain mergers or other changes of control) by making the termination payment specified in the agreement.

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Our Tax receivable agreement liability was $146.5 million as of September 30, 2025. Please refer to “Item 1. Financial Statements, Note 14—Tax Receivable Agreement” in Notes to Condensed Consolidated Financial Statements for further information. 

Material Cash Requirements 

As of September 30, 2025, our material cash requirements primarily consist of obligations under our financing arrangements and lease arrangements. As discussed above, the Company prepaid $780.3 million of the term loan debt on September 15, 2025. In connection with the prepayment and other amendments executed during the nine months ended September 30, 2025, our material cash requirements related to the term loan and related term loan interest payments were significantly reduced. As of September 30, 2025, the outstanding term loan balance is $797.8 million and the estimated future interest payments are $357.6 million. Future interest payments are estimated using the interest rate applicable as of September 30, 2025 applied to the outstanding balance, which decreases each quarter by principal payments of $2.0 million until the debt matures on December 16, 2031.

Additionally, we have various contingent obligations that we anticipate could require the use of cash based on contractual obligations as of September 30, 2025; however, the final amount payable or the timing may not be fixed and determinable. Such contingent obligations include the following: 

•Some of our customers require us to secure surety