Company: LGN
Filing Date: 2025-09-02
Form Type: S-1/A
Source: 0001193125-25-193346
Chunk: 135

Company: Legence Corp.
Filing Date: 2025-09-02
Form: S-1/A
Chunk 135
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 have no further obligations to Black Bear shareholders under the earnout agreement and as such did not recognize any changes in the fair value of the contingent earnout obligation during the year ended
December 31, 2024.

Goodwill Impairment

During the year ended December 31, 2024, it was determined the carrying amount of goodwill for one reporting unit in the
Engineering & Consulting segment exceeded its fair value, resulting in goodwill impairment charges of $17.8 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue projections. During the
year ended December 31, 2023, it was determined the carrying amount of goodwill for one reporting unit in the Engineering & Consulting segment exceeded 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.

Interest Expense, Net of Capitalized Interest

The increase in interest expense, net of capitalized interest is primarily attributable to additional borrowings. This includes
$565.0 million of borrowings under the Term Loan Credit Facility during 2024, as well as the full year impact of $155.0 million of incremental borrowings under the Term Loan Credit Facility during 2023.

Income Tax (Benefit) Expense

Income tax expense was $4.5 million in the year ended December 31, 2024, and resulted in an effective tax rate of negative 19.6%, as
compared to an income tax benefit of $7.9 million in the year ended December 31, 2023 and an effective tax rate of 14.5%. These rates are lower than the federal statutory rate of 21%. The effective tax rate in the year ended
December 31, 2024 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 unfavorable
permanent adjustments including goodwill impairment, and was partially offset by a reduction in the Company’s deferred state tax rate. 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 and to taxable income in the tax paying C corporations.

96

For the Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 A summary of