Company: LGN
Filing Date: 2025-07-15
Form Type: DRS/A
Source: 0000950123-25-006399
Chunk: 324

Company: Legence Corp.
Filing Date: 2025-07-15
Form: DRS/A
Chunk 324
---
 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

F-70

Confidential Treatment Requested by Legence Corp.

Pursuant to 17 C.F.R. Section 200.83

Legence Holdings LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements—(Continued)

(Unaudited)

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, therefore, are not treated as separate performance obligations.

For contracts where the
Company applies the Cost-to-Cost Input Method, the accuracy of the Company’s revenue and profit recognition in each year depends on the accuracy of
management’s estimates of the cost to complete each project. Contract costs include labor, material, subcontractors and various overhead costs such as maintenance, depreciation, consumables, or equipment rentals, which are either directly
related to the fulfillment of specific contract performance obligations or indirectly contribute to the overall customer service delivery fulfillment of multiple contracts and obligations. Costs associated with change orders, unresolved contract
modifications, claims to or from owners and back-charge recoveries are recorded as incurred. Revisions to estimated total costs are reflected in the Company’s measure of progress.

These revisions, as well as the stage of completion of contracts in process and the mix of contracts at different margins, may cause fluctuations in gross
profit from period to period, which may have a significant impact on the Condensed