Company: LGN
Filing Date: 2025-11-03
Form Type: DRS
Source: 0001193125-25-262782
Chunk: 312

Company: Legence Corp.
Filing Date: 2025-11-03
Form: DRS
Chunk 312
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 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.

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

F-66

Confidential Treatment Requested by Legence Corp. Pursuant to 17 C.F.R. Section 200.83 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-CostInput 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