Company: LGN
Filing Date: 2025-11-03
Form Type: DRS
Source: 0001193125-25-262782
Chunk: 137

Company: Legence Corp.
Filing Date: 2025-11-03
Form: DRS
Chunk 137
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 impairment on an annual basis in the fourth quarter of the fiscal year and on an interim basis if events or circumstances arise which indicate that the carrying value of goodwill may not be recoverable from future cash flows.

Fair values of reporting units are estimated based on a market approach and an income approach. The income approach utilizes discounted future
cash flows and assumptions critical to the fair value estimate of the discounted cash flow model include the revenue growth rate, forecasted EBITDA margin and discount rate. The market approach utilizes market multiples of invested capital from
comparable publicly traded companies. The market multiples from invested capital include revenue; book equity plus debt; and earnings before interest, provision for income taxes, depreciation and amortization. Three reporting units with total
goodwill balance of $247.2 million had estimated fair values that exceeded values ranging from 11.3% to 13.3%. As of December 31, 2024, except for these three reporting units and the reporting unit discussed below, all other reporting
units had estimated fair values that exceeded their carrying values by at least 24%.

During the year ended December 31, 2024, it was
determined the carrying amount of goodwill for one reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in goodwill impairment charges of $17.8 million. The impairment was primarily driven by a decline
in projected cash flows due to lower

92

Confidential Treatment Requested by Legence Corp.

Pursuant to 17 C.F.R. Section 200.83

revenue projections. During the year ended December 31, 2023, it was determined the carrying amount of goodwill for one reporting unit in the Engineering & Consulting segment
exceeded fair value, resulting in goodwill impairment charges of $5.1 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue projections and investments in support functions. During the year ended
December 31, 2022, it was determined the carrying amount of goodwill for two reporting units in the Installation & Maintenance segment exceeded fair value, resulting in goodwill impairment charges of $23.4 million. The impairment
was primarily driven by a decline in projected cash flows due to lower revenue projections, investments in support functions and increased cost of capital due to rising interest rates.

There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill
impairment. It is possible that changes in facts, judgments and assumptions made in estimating the fair value