Company: LGN
Filing Date: 2025-04-30
Form Type: DRS/A
Source: 0000950123-25-003868
Chunk: 150

Company: Legence Corp.
Filing Date: 2025-04-30
Form: DRS/A
Chunk 150
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 estimates are disclosed accordingly.

Goodwill

Goodwill represents the
excess of the purchase price over the fair value of identifiable assets and liabilities of the acquired business. Goodwill is not subject to amortization but is tested for impairment at the reporting unit level, which represents the operating
segment level or one level below the operating segment level for which discrete information is available. Goodwill is evaluated for impairment on an annual basis in the fourth quarter of the fiscal year and on an interim basis if events or
circumstances arise which indicate that the carrying value of goodwill may not be recoverable from future cash flows.

Fair values of
reporting units are estimated based on a market approach and an income approach. The income approach utilizes discounted future cash flows and assumptions critical to the fair value estimate of the discounted cash flow model include the revenue
growth rate, forecasted EBITDA margin and discount rate. The market approach utilizes market multiples of invested capital from comparable publicly traded companies. The

99

Confidential Treatment Requested by Legence Corp.

Pursuant to 17 C.F.R. Section 200.83

market multiples from invested capital include revenue; book equity plus debt; and earnings before interest, provision for income taxes, depreciation and amortization. Three reporting units with
total goodwill balance of $247.2 million had estimated fair values that exceeded values ranging from 11.3% to 13.3%. As of December 31, 2024, except for these three reporting units and the reporting unit discussed below, all other reporting
units had estimated fair values that exceeded their carrying values by at least 24%.

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 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. During the year ended December 31,
2022, it was determined the carrying amount of goodwill for two reporting units in the Installation & Maintenance segment exceeded fair value, resulting in goodwill impairment charges of $23.4