Company: LGN
Filing Date: 2025-04-30
Form Type: DRS/A
Source: 0000950123-25-003868
Chunk: 153

Company: Legence Corp.
Filing Date: 2025-04-30
Form: DRS/A
Chunk 153
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 including escalating transportation, commodity and other supply chain costs and disruptions. If our costs are subject to significant inflationary
pressures, we may not be able to offset such higher costs through price increases, which could adversely affect our business, results of operations or financial condition.

Credit Risk

Financial instruments
that potentially subject us to a concentration of credit risk consist principally of contract assets and accounts receivable. Exposure to losses on receivables is principally dependent on each customer’s financial condition. We monitor the
exposure for credit losses and maintain allowances for anticipated losses. We may also require prepayments for certain of our services. Concentrations of credit risk with respect to our receivables are limited due to the large number of customers
comprising our customer base and their dispersion among many different geographies.

101

Confidential Treatment Requested by Legence Corp. Pursuant to 17 C.F.R. Section 200.83 INDUSTRY OVERVIEW We participate in the market for engineering, consulting, installation and maintenance services used in the construction of new industrial, commercial and institutional buildings and upgrades and retrofits to existing buildings in the United States. We focus on buildings’ MEP systems. MEP systems are responsible for a building’s temperature, air quality, power supply, lighting, water supply and sewage. According to 2024 RSMeans Data, MEP engineering and installation costs represent an average of 26% of the total construction budget for new industrial and commercial buildings, and as much as 35% and 39% for laboratories and hospitals, respectively. MEP systems also account for more than 50% of a building’s energy consumption according to the U.S. Energy Information Administration, and therefore, upgrading and maintaining MEP systems is critical to managing a building’s energy costs over its life. Demand for engineering, consulting, installation and maintenance services for MEP systems is driven primarily by investment in new and existing industrial, commercial and public sector buildings in the United States. Investments in nonresidential buildings in the United States grew from $279 billion in 2021 to $437 billion in 2024, representing a compound annual growth rate of 16%, according to Dodge Construction Network. Investments in buildings in the market segments where we focus— data centers, technology, semiconductors, life sciences, healthcareand education—grew at a 22% compound annual growth rate over the same period, according to Dodge Construction Network, nearly 40% faster than overall investments in nonresidential buildings in the United States. We believe key drivers