Company: LGN
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0002052568-25-000018
Chunk: 131

Company: Legence Corp.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 131
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, adjusted to give effect to potentially dilutive securities. The effect of potentially dilutive securities is not included in the computation of diluted EPS for periods in which there is a Net loss attributable to Legence, because to do so would be anti-dilutive. Class B Common Stock does not have economic rights in the Company, including no rights to dividends or distributions upon liquidation, and as a result, is 

16

Legence Corp.Notes to Condensed Consolidated Financial Statements - (Continued)(Unaudited)

not considered a participating security for basic and diluted EPS. As such, basic and diluted EPS of Class B Common Stock has not been presented. The Company's potentially dilutive securities consist of (i) unvested and unexercised RSUs and stock options, with the dilutive effect calculated using the treasury stock method, and (ii) exchange of LGN B Units to shares of Class A Common Stock, with the dilutive effect calculated using the if-converted method.Refer to "Note 13—Earnings Per Share" for additional information.Tax Receivable AgreementIn connection with the IPO and Corporate Reorganization, the Company entered into a TRA with Legence Parent and Legence Parent II (the “TRA Members”), which are related parties. The agreement provides that the Company will pay to the TRA Members 85% of the net cash savings that the Company realizes, or is deemed to realize, as a result of favorable tax attributes arising from the IPO and Corporate Reorganization. The annual tax benefits are computed on a with and without basis by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits. The Company will retain the benefit of the remaining 15% of these cash savings, if any.Amounts payable under the TRA are accounted for in accordance with ASC Topic 450, Contingencies. Accordingly, the Company recognizes a liability when payments are probable and reasonably estimable and measures the obligation on an undiscounted basis. The TRA liability is classified as current or non-current based on the expected date of payment and is included in the Condensed Consolidated Balance Sheet as Accrued and other current liabilities and Tax receivable agreement liability, respectively.The TRA liability and related deferred tax assets, net of valuation allowance, initially recognized are recorded against Additional paid-in capital. Subsequent changes to the TRA liability and deferred tax assets, including changes to the related valuation allowance, that are not related to an exchange or a payment pursuant to the