Company: LGN
Filing Date: 2025-09-02
Form Type: S-1/A
Source: 0001193125-25-193346
Chunk: 291

Company: Legence Corp.
Filing Date: 2025-09-02
Form: S-1/A
Chunk 291
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 point in time.

F-26

Legence Holdings LLC and Subsidiaries

Notes to Consolidated Financial Statements

The Company satisfies most performance obligations over time because the Company’s performance
typically either creates or enhances an asset the customer controls or because the customer simultaneously receives and consumes the benefit from the Company’s performance under the contract.

For most contracts, the Company measures progress using the input method (i.e.,
“Cost-to-Cost Input Method”). Under the Cost-to-Cost Input Method, costs
incurred to date are generally the best depiction of transfer of control. For some contracts, the Company has historically used an output method (i.e., milestone achievement), where an output method provides the most reliable information available
and the transfer of services at predetermined project milestones reasonably depicts the fulfillment of performance obligations. This determination requires judgment based on the nature of the services to be provided. For the years ended
December 31, 2024, 2023, and 2022, revenue recognized under the output method represented 2.3%, 7.8%, and 9.8% of revenues, respectively.

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 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 customers. The Company determined that it is the principal in these arrangements as the Company controls the goods and services provided by third parties, as the Company is primarily
responsible for fulfillment and acceptability by the customer, has inventory risk with respect to goods and services completed by third parties, and has discretion in establishing pricing for the integrated performance obligation. Accordingly, the
Company recognizes revenue from customers in Revenue with the associated third party costs included in Cost of revenue on the Consolidated Statements of Operations.

Performance obligations related to sales of custom-fabricated, construction-related products are satisfied at a point in time and revenue is recognized upon
delivery of the products to the customer and are not material to the financial statement periods presented.

Performance obligations related to energy
procurement and infrastructure services are satisfied at a point in time, and revenue is recognized upon the Company securing energy supply or infrastructure service contracts on behalf of customers and are not material to the financial statement
periods