Company: LGN
Filing Date: 2025-02-14
Form Type: DRS
Source: 0000950123-25-002471
Chunk: 49

Company: Legence Corp.
Filing Date: 2025-02-14
Form: DRS
Chunk 49
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 limitations that may not cover our potential liabilities. Generally, our insurance program covers
workers’ compensation and employer’s liability, general liability, automobile liability, professional errors and omissions liability, property and contractor’s pollution liability (in addition to other policies for specific projects).
Our insurance program includes deductibles or self-insured retentions for each covered claim that may increase over time. In addition, our insurance policies contain exclusions that insurance providers may use to deny or restrict coverage.
Employment practices liability and professional and pollution liability insurance policies provide for coverage on a “claims-made” basis, covering only claims actually made and reported during the policy period currently in effect. If we
sustain legal liabilities that exceed or that are excluded from our insurance coverage, or for which we are not insured, it could have a material adverse impact on our business, financial condition and results of operations.

If our goodwill or other intangible assets become impaired, then our profits may be significantly reduced.

Because we have historically acquired a significant number of companies, goodwill and other intangible assets represent a substantial portion
of our assets. As of December 31, 2024, our goodwill was approximately $ million and other intangible assets were $ million. We are required to perform a goodwill impairment test for
potential impairment at least on an annual basis. We also assess the recoverability of the unamortized balance of our intangible assets when indications of impairment are present based on expected future profitability and undiscounted expected cash
flows and their contribution to our overall operations. The goodwill impairment test requires us to determine the fair value of our brands, which are the components one level below our reportable segments. In determining fair value, we make
significant judgments and estimates, including assumptions about our strategic plans with regard to our operations. We also analyze current economic indicators and market valuations to help determine fair value. In the fiscal year 2023, we
recognized a goodwill impairment charge of $5.1 million relating to our determination that the carrying amount of one of our brands exceeded its fair value. In the fiscal year 2022, we recognized a goodwill impairment of $23.4 million
relating to our determination that the carrying amount of one of our brands exceeded its fair value. To the extent economic conditions that would impact the future operations of our brands change, our goodwill may be deemed to be impaired, and we
would be required to record a noncash charge that could have a material adverse impact on our business, financial condition and results of operations.