Company: LGN
Filing Date: 2025-08-15
Form Type: S-1
Source: 0001193125-25-181698
Chunk: 324

Company: Legence Corp.
Filing Date: 2025-08-15
Form: S-1
Chunk 324
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 ended June 30, 2025 and 2024, revenue recognized under the output method represented 0.8% and 2.4% of revenues, respectively. For the six months ended June 30, 2025 and 2024, revenue recognized under the
output method represented 1.1% and 2.9% of revenues, respectively.

The consideration promised in a contract with customers may include fixed amounts,
variable amounts, or both. The Company estimates variable consideration and includes it in the transaction price to the extent it is probable that a significant future reversal in the amount of cumulative revenue recognized under the contract will
not occur when the uncertainty associated with the variable consideration is resolved. Management reassesses the amount of variable consideration each reporting period, and changes to estimated variable consideration are accounted for as a
cumulative adjustment to revenue recognized in the current period. Recognizing changes in the transaction price requires significant judgments of various factors, including, but not limited to, dispute resolution developments and outcomes and
anticipated negotiation results.

F-70

Legence Holdings LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements—(Continued)

(Unaudited)

In satisfying the Company’s performance obligations to its customers, the Company routinely procures
goods and services from third parties that are inputs into an integrated single performance obligation typically under fixed-price contracts. Procurement from third parties often consists of goods and services provided by subcontractors that the
Company engages to perform specified tasks on its behalf and/or under its direction. The Company earns a margin related to these costs under either fixed-margin or fixed-price arrangements with its customers. The Company determined that it is the
principal in these arrangements as the Company controls the goods and services procured from third parties.

For some transactions, customers may withhold
a portion of the contract price as a contract retention until the project is substantially complete or completed to ensure performance; however, these arrangements typically do not constitute a significant financing component.

Contract Estimates and Changes in Estimates

After
contract inception, the transaction price may change for various reasons, including executed or unresolved change orders, executed or unresolved contract modifications, claims to or from the customer or owner, and back-charge recoveries. The
customers may partially or fully agree with such modifications or affirmative claims. Most changes are considered variable consideration until approved by both parties.

Contracts with customers are often modified through change orders. Many change orders are for goods or services that are not distinct within the context of
the original contract, and