Company: LGN
Filing Date: 2025-08-25
Form Type: S-1/A
Source: 0001193125-25-186788
Chunk: 136

Company: Legence Corp.
Filing Date: 2025-08-25
Form: S-1/A
Chunk 136
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 Consulting segment exceeded its 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.

Interest Expense, Net of Capitalized Interest

The increase in interest expense, net of capitalized interest is primarily attributable to additional borrowings. This
includes $155.0 million of borrowings under the Term Loan Credit Facility during 2023, as well as the full year impact of $146.7 million of borrowings under the Term Loan Credit Facility during 2022.

Income Tax Expense (Benefit)

Income tax benefit was $7.9 million in the year ended December 31, 2023, and the effective tax rate was 14.5%, as compared to income tax
expense of $7.6 million in the year ended December 31, 2022 and an effective tax rate of negative 10.3%. These rates are lower than the federal statutory rate of 21%. The effective tax rate in the year ended December 31, 2023 was primarily due
to a significant portion of the pre-tax loss being generated by pass-through entities that are not subject to income taxes at the Company level, partially offset by favorable return-to-provision adjustments in the tax paying C corporations. The effective tax rate in the year ended December 31, 2022 was primarily due to a significant portion of the pre-tax loss being generated by pass-through entities that are not subject to income taxes at the Company level and to taxable income in the tax paying C corporations.

Selected Quarterly Financial Data (unaudited)

The following table sets forth a summary of selected quarterly financial data. The information for each quarter has been prepared on a basis
consistent with our audited Consolidated Financial Statements included in this prospectus and reflects, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for a fair depiction of the financial information
contained in those statements. Our historical results are not necessarily indicative

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of the results that may be expected for the full year