Company: LGN
Filing Date: 2025-02-14
Form Type: DRS
Source: 0000950123-25-002471
Chunk: 249

Company: Legence Corp.
Filing Date: 2025-02-14
Form: DRS
Chunk 249
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. For some contracts, the Company uses an output method (i.e., “milestone achievement”), where the transfer of services reasonably depicts the fulfillment of performance obligations. This determination requires judgment based on the nature of the services to be provided. Performance obligations related to sales of custom-fabricated, construction-related materials are satisfied at a point in time and revenue is recognized upon delivery of the products to the customer. Performance obligations related to energy procurement 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. The Company invoices its customers in accordance with contractual payment terms. It is common for construction contracts to specify that an architect or a general contractor is not required to submit payments to a subcontractor until it has received those funds from the owner or funding source. In most instances, the Company receives payment of its invoices between 30 to 90 days of the invoice. Changes in Estimates For contracts where the Company applies the cost-to-costinput method, the accuracy of the Company’s revenue and profit recognition in each year depends on the accuracy of management’s estimates of the cost to complete each project. Contract costs include labor, material, subcontractors and various overhead costs such as maintenance, depreciation, consumables, or equipment rental, which are either directly related to the fulfillment of specific contract performance obligations or indirectly contribute to the overall customer service delivery fulfillment of multiple contracts and obligations. Costs associated with change orders, unresolved contract modifications, claims to or from owners and back-charge recoveries are recorded as incurred. Revisions to estimated total costs are reflected in the Company’s measure of progress. There are several factors that can contribute to changes in estimates of contract cost and profitability. Potential factors include:

| • |     | The completeness and accuracy of the original bid; |

| • |     | Costs associated with scope changes and changes from the original design; |

| • |     | Changes in costs of labor and/or materials, owner changes, weather, site conditions and other delays; |

| • |     | Subcontractor performance; |

| • |     | Changes in productivity expectations; |

| • |     | The Company’s ability to fully and promptly recover on contract scope changes; and |

| • |     | The customer’s ability to properly administer the contract. |

The foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins, may cause fluctuations in gross profit from period to period, which may have a significant F-20