Company: LGN
Filing Date: 2025-08-25
Form Type: S-1/A
Source: 0001193125-25-186788
Chunk: 135

Company: Legence Corp.
Filing Date: 2025-08-25
Form: S-1/A
Chunk 135
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     |                       | 35,716 |     |   | 27.2 | % |     |          | (0.2 | )% |
| Consolidated gross profit          |     | $                       | 233,706 |     |          | 18.7 | % |     | $ | 315,146 |     |          | 19.5 | % |     | $                     | 81,440 |     |   | 34.8 | % |     |          |  0.8 | %  |

Engineering & Consulting: The increase in gross profit was primarily attributable to higher revenue as well as the full year impact of acquisitions completed in late 2022, which contributed approximately $28.4 million to our Engineering & Consulting segment gross profit in 2023. The increase in gross profit margin was primarily attributable to a higher mix of Engineering & Design revenue, which earns a higher margin than our Program & Project Management service line. 97

Installation& Maintenance: The increase in gross profit was
primarily attributable to higher revenue. Gross profit margin was relatively flat year over year.

Selling, General & Administrative

The increase in selling, general and administrative is primarily attributable to a $21.4 million increase in compensation
costs during the period resulting from more headcount. Additionally, there was an increase in professional fees of $10.4 million as compared to the prior year related primarily to IT costs and acquisition- related fees.

Changes in the Fair Value of Contingent Consideration Liabilities

The increase in changes in the fair value of contingent consideration liabilities is primarily attributable to the contingent earnout
obligation associated with the Black Bear acquisition, which we closed in 2022. The Black Bear acquisition included a maximum potential earnout of $50.0 million based upon the business’s results for the year ended December 31, 2023.
As of December 31, 2022, the estimated fair value of the contingent earnout obligation was $23.0 million. Based upon actual fiscal year 2023 results, the maximum earnout was achieved, resulting in a $27.0 million increase to the
contingent earnout obligation. We paid the earnout amount in 2024 and have no further obligations to Black Bear shareholders under the earnout agreement.

Goodwill Impairment

During the
year ended December 31, 2023, it was determined the carrying amount of goodwill for one reporting unit in the Engineering &