Legence Corp. 10-K

Item 8. Financial Statements and Supplementary Data 70 Table of Conten t s REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Legence Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Legence Corp. (the "Company") as of December 31, 2025 and December 31, 2024, the related consolidated statements of operations, comprehensive loss, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and December 31, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Legence Corp. Initial Public Offering— Refer to Notes 1 and 2 to the financial statements Critical Audit Matter Description In September 2025, the Company completed an initial public offering ("IPO") utilizing a structure that allows the Company and certain investors to continue to realize tax benefits associated with the entity following the IPO (commonly known as an Up-C structure). In connection with the IPO, the Company completed a series of organizational transactions, including: (1) certain entities were formed and reorganized, including the formation of Legence Corp.; (2) the Limited Liability Company Agreement of Legence Holdings was amended and restated to, among other things, make the Company the managing member of Legence Holdings LLC and converted its existing equity interests into LGN A Units and LGN B Units, with LGN A Units corresponding one-for-one to shares of Class A common stock and LGN B Units corresponding one-for-one to shares of Class B common stock; (3) the Company entered into an Exchange Agreement pursuant to which holders of LGN B units may exchange their interests for shares of Class A common stock; and 4) the Company entered into a Tax Receivable Agreement ("TRA") with certain investors (collectively the "Transactions"). As a result of the 71 Table of Conten t s Transactions, the Company (1) determined that Legence Holdings LLC is a variable interest entity and the Company is the primary beneficiary of Legence Holdings LLC, and therefore consolidates Legence Holdings LLC, (2) will measure and classify LGN B units as noncontrolling interest within equity, and (3) will recognize a TRA liability and related deferred tax asset, net of any valuation allowance, with an offsetting entry to additional paid-in capital. We identified the Company’s conclusions related to the Transactions as a critical audit matter because of the complex judgments involved in applying the accounting guidance in the recording of such transactions. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve professionals having expertise in consolidation, financial instruments, and tax accounting, when performing audit procedures to evaluate management’s judgments and conclusions. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s conclusions related to the Transactions included the following, among others: • We read the executed agreements and other supporting documents relevant to the Transactions and evaluated key terms. • With the assistance of professionals having expertise in consolidation, financial instruments, and tax accounting, we evaluated management’s conclusions regarding the accounting for the Transactions under accounting principles generally accepted in the United States of America. • We evaluated the Company’s financial statement disclosures related to the impacts of the Transactions. Revenue — Refer to Notes 2 and 3 to the financial statements Critical Audit Matter Description The majority of the Company’s contracts are fixed price and have over time performance obligations. The Company primarily measures the progress toward complete satisfaction of the performance obligation(s) of these contracts using an input method (i.e., “cost-to-cost”). 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 for each project. There are several factors that can contribute to changes in estimates of contract cost and profitability, which may cause fluctuations in gross profit and gross profit margin from period to period. Given the significant judgment necessary to estimate the cost to complete for contracts where the Company applies the cost-to-cost input method, auditing these estimates required extensive audit effort due to the complexity of the estimates and a high degree of auditor judgment when evaluating the results of audit procedures. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to costs to complete for fixed price contracts included the following, among others: • We evaluated the reasonableness and consistency of the methods and assumptions used by management to estimate cost to complete on fixed price contracts. • We evaluated management’s ability to accurately estimate cost to complete by comparing current gross profit margin to historical and prospective gross profit margin for fixed price contracts. • We selected a sample of fixed price contracts and performed the following: ◦ Evaluated management's ability to estimate costs at completion for each selected contract by performing inquiries with the Company's project managers and personnel involved with the selected contracts, including inquiries related to the timeline to completion and estimates of future costs to complete the contract. ◦ Selected a sample of estimates of costs to complete and evaluated management’s estimates by comparing to supporting documents for those estimates. 72 Table of Conten t s Goodwill — Refer to Notes 2 and 5 to the financial statements Critical Audit Matter Description Goodwill is evaluated for impairment at the reporting unit level, at least, on an annual basis. The fair value of a reporting unit is estimated based on a market approach and an income approach. The income approach utilizes discounted future cash flows. Assumptions critical to the fair value estimate utilizing the discounted cash flow model include the revenue growth rate, EBITDA margin, and discount rate. We identified goodwill for two reporting units with a combined total of $88.3 million of goodwill as a critical audit matter because of the significant judgments made by management to estimate the fair value of these reporting units. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management's estimates and assumptions related to the revenue growth rate, EBITDA margin, and discount rate. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the revenue growth rate, EBITDA margin, and discount rate used by management to estimate the fair value of the reporting units included the following, among others: • We performed a sensitivity analysis on the projected future cash flows related to revenue growth rate, EBITDA margin, and discount rate. • We evaluated management’s ability to accurately forecast the revenue growth rate and EBITDA margin by comparing actual results to management’s historical forecasts. • We evaluated the reasonableness of management's revenue growth rate and forecasted EBITDA margin by comparing the forecasts to historical results, information included in industry reports and analyst reports of comparable companies. • With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology and discount rate. /s/ Deloitte & Touche LLP San Francisco, California March 30, 2026 We have served as the Company’s auditor since 2021. 73 Table of Contents Legence Corp. Consolidated Balance Sheets (In thousands, except par value and share amounts) December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 230,166 $ 81,167 Accounts receivable, net 584,060 448,610 Contract assets, net 259,941 188,132 Prepaid expenses and other current assets 36,179 38,506 Total current assets 1,110,346 756,415 Property and equipment, net 92,333 73,381 Operating lease right-of-use assets (including $ 20,025 and $ 23,375 as of December 31, 2025 and 2024, respectively, from related parties) 117,139 90,922 Goodwill 764,336 781,194 Intangible assets, net 551,420 624,250 Other assets 43,822 26,338 Total assets (a) $ 2,679,396 $ 2,352,500 Liabilities and Equity Current liabilities: Accounts payable $ 246,161 $ 126,502 Accrued compensation and benefits 68,064 54,601 Accrued and other current liabilities 16,475 28,490 Contract liabilities 339,462 164,130 Current portion of operating lease liabilities (including $ 3,920 and $ 3,654 as of December 31, 2025 and 2024, respectively, from related parties) 21,300 14,402 Current portion of long-term debt 16,694 22,984 Total current liabilities 708,156 411,109 Long-term debt, net of current portion (including $ 84,735 and $ 211,039 as of December 31, 2025 and 2024, respectively, from related parties) 812,398 1,585,846 Operating lease liabilities, net of current portion (including $ 17,282 and $ 20,960 as of December 31, 2025 and 2024, respectively, from related parties) 103,762 80,669 Tax receivable agreement liability - related party 207,448 — Deferred tax liabilities, net 46,714 35,428 Other long-term liabilities 12,123 35,856 Total liabilities (a) 1,890,601 2,148,908 Commitments and contingencies (Note 21) Stockholders' equity / Member's equity Member's equity — 443,738 Preferred stock, $ 0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding as of December 31, 2025 — — Class A common stock, $ 0.01 par value, 1,000,000,000 shares authorized, 63,856,975 shares issued and outstanding as of December 31, 2025 638 — Class B common stock, $ 0.01 par value, 200,000,000 shares authorized, 41,479,954 shares issued and outstanding as of December 31, 2025 415 — Additional paid-in capital 701,791 — Accumulated deficit ( 309,949 ) ( 250,169 ) Accumulated other comprehensive (loss) income ( 698 ) 9,111 Total Legence stockholders' equity / Member's equity 392,197 202,680 Noncontrolling interests 396,598 912 Total stockholders' equity / Member's equity 788,795 203,592 Total liabilities and stockholders' equity / Member's equity $ 2,679,396 $ 2,352,500 (a) As of December 31, 2025, total assets include $ 21.8 million and total liabilities include $ 9.4 million for consolidated variable interest entities. Substantially all of the remaining total assets and total liabilities, excluding the TRA liability and the related deferred tax assets included in Other assets, are attributable to the consolidated Legence Holdings variable interest entity. As of December 31, 2024, total assets include $ 40.1 million and total liabilities include $ 5.9 million for consolidated variable interest entities. Assets of the variable interest entities can only be used to settle the liabilities of those entities. Refer to “ Note 6—Variable Interest Entities and Equity Method Investments ” for additional information. See Notes to Consolidated Financial Statements. 74 Table of Contents Legence Corp. Consolidated Statements of Operations (In thousands, except per share data) Year Ended December 31, 2025 2024 2023 Revenue $ 2,550,491 $ 2,098,602 $ 1,615,062 Cost of revenue 2,014,566 1,667,835 1,299,916 Gross profit 535,925 430,767 315,146 Selling, general and administrative 342,627 242,888 186,058 Depreciation and amortization 100,365 97,153 80,241 Acquisition-related costs 5,739 5,634 3,794 Changes in fair value of contingent consideration liabilities (including $ 13,424 for the year ended December 31, 2023 from related parties) — — 31,071 Gain on sale of property and equipment ( 326 ) — — Goodwill impairment 24,966 17,804 5,051 Long-lived asset impairment 2,415 — — Equity in earnings of joint venture ( 1,443 ) ( 3,063 ) ( 1,329 ) Income from operations 61,582 70,351 10,260 Other expense (income): Interest expense, net of capitalized interest (including $ 13,340 , $ 13,316 , and $ 12,396 for years ended December 31, 2025, 2024, and 2023, respectively, from related parties) 101,778 91,609 68,196 Interest income ( 4,488 ) ( 5,464 ) ( 4,249 ) Loss on debt extinguishment 6,651 — — Credit agreement amendment fees 6,302 7,801 — Other expense (income) , net 6,481 ( 473 ) 257 Total other expense, net 116,724 93,473 64,204 Loss before income tax ( 55,142 ) ( 23,122 ) ( 53,944 ) Income tax expense (benefit) 22,161 4,521 ( 7,918 ) Net loss ( 77,303 ) ( 27,643 ) ( 46,026 ) Net (loss) income attributable to noncontrolling interests ( 17,523 ) 912 — Net loss attributable to Legence $ ( 59,780 ) $ ( 28,555 ) $ ( 46,026 ) Period from September 12, 2025 to December 31, 2025 Net loss per Class A Common Stock—basic and diluted $ ( 0.57 ) Weighted-average Class A Common Stock outstanding—basic and diluted 59,381 See Notes to Consolidated Financial Statements. 75 Table of Contents Legence Corp. Consolidated Statements of Comprehensive Loss (In thousands) Year Ended December 31, 2025 2024 2023 Net loss $ ( 77,303 ) $ ( 27,643 ) $ ( 46,026 ) Other comprehensive loss, net: Loss related to interest rate swaps, net of tax ( 10,263 ) ( 13,055 ) ( 17,390 ) Other comprehensive loss ( 10,263 ) ( 13,055 ) ( 17,390 ) Comprehensive loss ( 87,566 ) ( 40,698 ) ( 63,416 ) Comprehensive (loss) income attributable to noncontrolling interests ( 17,160 ) 912 — Comprehensive loss attributable to Legence $ ( 70,406 ) $ ( 41,610 ) $ ( 63,416 ) See Notes to Consolidated Financial Statements. 76 Table of Contents Legence Corp. Consolidated Statements of Changes in Equity (In thousands, except share amounts) Class A Common Stock Class B Common Stock Member's Equity Shares Amount Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Legence Stockholders' Equity / Member's Equity Non- controlling Interests Total Equity Balance, December 31, 2022 $ 676,679 — $ — $ — $ — $ — $ ( 175,588 ) $ 39,556 $ 540,647 $ — $ 540,647 Parent issuance of Parent interests for acquisitions 37,351 — — — — — — — 37,351 — 37,351 Parent issuance of Parent interests for contingent consideration - related parties 9,325 — — — — — — — 9,325 — 9,325 Cash contributions from Parent 550 — — — — — — — 550 — 550 Cash distributions to Parent ( 1,527 ) — — — — — — — ( 1,527 ) — ( 1,527 ) Other comprehensive loss — — — — — — — ( 17,390 ) ( 17,390 ) — ( 17,390 ) Net loss — — — — — — ( 46,026 ) — ( 46,026 ) — ( 46,026 ) Balance, December 31, 2023 722,378 — — — — — ( 221,614 ) 22,166 522,930 — 522,930 Parent issuance of Parent interests for acquisitions 22,100 — — — — — — — 22,100 — 22,100 Cash contributions from Parent 400 — — — — — — — 400 — 400 Cash distributions to Parent ( 301,228 ) — — — — — — — ( 301,228 ) — ( 301,228 ) Reclassification of vested Parent Series A Profits Interests from liabilities 88 — — — — — — — 88 — 88 Other comprehensive loss — — — — — — — ( 13,055 ) ( 13,055 ) — ( 13,055 ) Net (loss) income — — — — — — ( 28,555 ) — ( 28,555 ) 912 ( 27,643 ) Balance, December 31, 2024 443,738 — — — — — ( 250,169 ) 9,111 202,680 912 203,592 Reclassification of vested Parent interests from liabilities 310 — — — — — — — 310 — 310 Effect of Reorganization Transactions ( 444,048 ) 29,022,940 290 46,680,762 467 443,291 — — — — — Tax receivable agreement net liability — — — — — ( 171,285 ) — — ( 171,285 ) — ( 171,285 ) Reclassification of Series A Profits Interests and Restricted Series C Common Interests from liability to equity — — — — — 36,358 — — 36,358 — 36,358 Issuance of Class A common stock sold in IPO, net of underwriting discounts, commissions, and offering costs — 29,487,627 295 — — 751,547 — — 751,842 — 751,842 Allocation of equity to non-controlling interests — — — — — ( 431,262 ) — 876 ( 430,386 ) 430,386 — Stock-based compensation for RSUs and stock options — — — — — 3,192 — — 3,192 — 3,192 Issuance of Class A common stock for acquisitions — 145,600 1 — — 4,036 — — 4,037 — 4,037 Noncontrolling interest adjustment for changes in proportionate ownership in Legence Holdings LLC — — — — — 48,109 — ( 59 ) 48,050 ( 48,050 ) — Exchange of Class B Common Stock to Class A Common Stock — 5,200,808 52 ( 5,200,808 ) ( 52 ) — — — — — — Contribution from Legence Parent for Series A Profits Interests and Restricted Series C Common Interests — — — — — — — — — 30,510 30,510 Contribution from Legence Parent II for Series A Profits Interests — — — — — 17,805 — — 17,805 — 17,805 Other comprehensive (loss) income — — — — — — — ( 10,626 ) ( 10,626 ) 363 ( 10,263 ) Net loss — — — — — — ( 59,780 ) — ( 59,780 ) ( 17,523 ) ( 77,303 ) Balance, December 31, 2025 $ — 63,856,975 $ 638 41,479,954 $ 415 $ 701,791 $ ( 309,949 ) $ ( 698 ) $ 392,197 $ 396,598 $ 788,795 See Notes to Consolidated Financial Statements. 77 Table of Contents Legence Corp. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net loss $ ( 77,303 ) $ ( 27,643 ) $ ( 46,026 ) Adjustments to reconcile net loss to cash provided by operating activities: Amortization of intangible assets 82,342 80,967 70,068 Depreciation of property and equipment 31,946 29,882 22,733 Goodwill impairment 24,966 17,804 5,051 Long-lived asset impairment 2,415 — — Amortization of debt issuance costs and discounts 3,480 5,052 5,035 Loss on debt extinguishment 6,651 — — Stock-based compensation 67,550 5,411 10,051 Changes in fair value of contingent consideration liabilities (including $ 13,424 for the year ended December 31, 2023 from related parties) — — 31,071 Deferred taxes 15,287 ( 13,704 ) ( 13,336 ) Tax receivable agreement liability remeasurement 2,914 — — Equity in earnings of joint venture ( 1,443 ) ( 3,063 ) ( 1,329 ) Return on investment in joint venture 1,700 1,000 1,329 Operating lease right-of-use asset lease expense 18,279 13,091 9,060 Other 1,158 3,749 1,156 Changes in operating assets and liabilities: Accounts receivable, net ( 130,070 ) 17,955 ( 80,976 ) Contract assets ( 71,185 ) ( 50,995 ) ( 23,687 ) Prepaid expenses and other current assets 2,929 4,498 3,264 Accounts payable 117,910 10,699 ( 5,020 ) Accrued compensation and benefits 12,298 ( 2,778 ) 6,645 Accrued and other current liabilities ( 13,967 ) ( 36,638 ) 1,230 Contract liabilities 172,194 ( 14,507 ) 46,153 Operating lease liabilities, current and long-term ( 15,280 ) ( 10,603 ) ( 8,633 ) Other long-term assets and liabilities 2,102 ( 909 ) 78 Cash provided by operating activities 256,873 29,268 33,917 Cash flows from investing activities: Purchases of property and equipment ( 37,940 ) ( 19,008 ) ( 17,073 ) Consideration paid for acquisitions, net of cash acquired ( 16,497 ) ( 225,246 ) ( 119,882 ) Proceeds from sale of property and equipment 390 269 353 Return of investment in joint venture — — 2,700 Cash used in investing activities ( 54,047 ) ( 243,985 ) ( 133,902 ) Cash flows from financing activities: Term loan borrowings (including $ 2,968 , $ 103,500 , and $ 15,000 for the years ended December 31, 2025, 2024, and 2023, respectively, from related parties) 59,636 565,000 155,000 Term loan payments (including $ 74,797 in 2025 to related parties) ( 852,214 ) ( 13,682 ) ( 9,841 ) Notes payable payments ( 7,878 ) ( 6,485 ) ( 4,755 ) Finance lease payments ( 3,843 ) ( 2,460 ) ( 1,937 ) Cash distributions to Legence Parent — ( 301,614 ) ( 1,527 ) Cash contributions from Legence Parent — 400 550 Proceeds from IPO, net of underwriting discounts and commissions 780,243 — — Debt issuance costs ( 1,626 ) ( 1,495 ) ( 3,499 ) Payments for deferred offering costs ( 28,145 ) ( 196 ) — Payments of contingent consideration (including ($ 20,663 ) and $( 5,520 ) for the years ended December 31, 2024 and 2023, respectively, from related parties) — ( 32,504 ) ( 5,520 ) Cash (used in) provided by financing activities ( 53,827 ) 206,964 128,471 Increase (decrease) in cash and cash equivalents 148,999 ( 7,753 ) 28,486 Cash and cash equivalents and restricted cash, beginning of period 81,167 88,920 $ 60,434 Cash and cash equivalents, end of period $ 230,166 $ 81,167 $ 88,920 The supplemental disclosures to the Consolidated Statements of Cash Flows are included in " Note 22—Other Financial Information ." See Notes to Consolidated Financial Statements. 78 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Note 1 - Nature of Operations Organization Legence Corp. was incorporated as a Delaware corporation on January 9, 2025 as a holding company for the purpose of facilitating an initial public offering ("IPO") and other related transactions in order to carry on the business of Legence Holdings LLC ("Legence Holdings"). Legence Holdings and its subsidiaries are a leading provider of engineering, installation and maintenance services for mission-critical systems in buildings. The Company focuses on high-growth sectors that have technically demanding buildings, including technology, life sciences, healthcare and education. The Company specializes in designing, fabricating and installing complex heating, ventilation and air conditioning (“HVAC”), process piping and other mechanical, electrical and plumbing (“MEP”) systems for new facilities and upgrading HVAC, lighting and building controls in existing facilities to enhance building performance, improve reliability and drive efficiency. Services are primarily provided on a fixed price basis. All references to the “Company” or “Legence” in this report are to Legence Corp. and its consolidated subsidiaries. Initial Public Offering On September 11, 2025, our registration statement on Form S-1 related to our IPO was declared effective by the Securities and Exchange Commission, and our Class A common stock ("Class A Common Stock") began trading on the Nasdaq Global Select Market, or the Nasdaq, under the ticker symbol “LGN” on September 12, 2025. Our IPO was completed on September 15, 2025. The Company sold 29,487,627 shares, including the partial exercise of the underwriters’ option to purchase additional shares, of its Class A Common Stock at a public offering price of $ 28.00 per share. Legence Corp. received net proceeds from the IPO of $ 780.2 million, net of underwriting discounts and commissions. Legence Corp. contributed the proceeds from the IPO in exchange for newly issued limited liability company interests in Legence Holdings, and Legence Holdings used the net proceeds to pay outstanding offering costs and repay outstanding debt. Refer to “ Note 12—Stockholders' Equity / Member's Equity .” In connection with the IPO, the Company completed a series of organizational transactions (the “Corporate Reorganization”). Prior to the IPO and Corporate Reorganization, Legence Holdings was a single-member limited liability company that was a wholly owned subsidiary of Legence Intermediate, which was a wholly owned subsidiary of Legence Parent. Member’s equity was adjusted as a result of transactions between Legence Holdings and Legence Parent. Such transactions consisted of contributions to Legence Holdings from Legence Parent and distributions from Legence Holdings to Legence Parent. Legence Parent has different classes of equity interests: Series A Profits Interests (“Series A Profits Interests”), Series B Common Interests (“Series B Common Interests”) and Series C Common Interests (“Series C Common Interests”), which includes Restricted Series C Common Interests (“Restricted Series C Common Interests”), (together with Series B Common Interests, “Legence Parent Common Interests”), each with specific terms and conditions. Series A Profits Interests were granted to employees of Legence Holdings and its subsidiaries and are comprised of Time Interests, Performance Interests, and Exit Interests. Series B Common Interests are held by BX Refficiency Aggregator LP. Series C Common Interests are held by certain members of Legence Holdings’ management and former owners of acquired companies who received Series C Common Interests as part of the consideration transferred. Restricted Series C Common Interests were issued in connection with an acquisition as compensation for future services to certain of the acquiree’s former shareholders and employees who became Legence Holdings’ employees in connection with the acquisition. Corporate Reorganization The Corporate Reorganization included the following: 79 Table of Contents Legence Corp. Notes to Consolidated Financial Statements a. The Limited Liability Company Agreement of Legence Holdings was amended and restated to, among other things, (i) make Legence Corp. the managing member of Legence Holdings and (ii) recapitalize the ownership interests in Legence Holdings into two classes of limited liability company interests with the same economic rights (“LGN A Units” and “LGN B Units”, collectively “LGN Units”). b. Certain entities were formed and reorganized as follows: 1. Legence Parent LLC (“Legence Parent”) formed Legence Corp. 2. Legence Intermediate LLC (“Legence Intermediate”) distributed a portion of its interests in Legence Holdings to Legence Parent, which then distributed a portion of such interests to certain Blackstone Inc. ("Blackstone") entities and management holders that held equity in Legence Parent (“Legacy Owners”). 3. Certain Legacy Owners contributed a portion of their interests in Legence Holdings (either directly or indirectly through certain Blackstone entities) to Legence Corp. and Legence Intermediate contributed a portion of its interests in Legence Holdings to Legence Corp, all in exchange for 29,022,940 shares of newly issued Class A Common Stock. 4. Certain Legacy Owners contributed the 28,844,369 shares of Class A Common Stock received pursuant to item 3 above to newly created Legence Parent II LLC (“Legence Parent II”) in exchange for Legence Parent II Common Interests (together with Legence Parent Common Interests, the “Common Interests") and Legence Parent II Series A Capital Interests (the "Series A Capital Interests") and Legence Intermediate was liquidated and distributed its remaining interests in Legence Holdings and its 178,571 shares of Class A Common Stock to Legence Parent. 5. Management holders contributed their interests in Legence Parent and Legence Parent II to newly created entities above Legence Parent and Legence Parent II called Legence Parent Management Aggregator LLC (“Management Aggregator I”) and Legence Parent II Management Aggregator LLC (“Management Aggregator II”, collectively the “Management Aggregators”), respectively, in exchange for interests of the Management Aggregators with similar terms and economics. 6. Legence Parent subscribed for Class B common stock ("Class B Common Stock") of Legence Corp. for nominal consideration, reflecting its historic indirect ownership of Legence Holdings. Legence Holdings recapitalized its ownership interests into newly issued LGN Units, and Legence Parent retained a portion of their pre-IPO ownership in Legence Holdings through LGN B Units. Refer to “ Note 14 — Nonc ontrolling Interests ”. 7. Legence Corp., through its subsidiary, contributed the net proceeds of the offering to Legence Holdings in exchange for newly issued LGN A Units. c. Legence Corp. entered into an exchange agreement (the "Exchange Agreement") in which the holders of LGN B Units, may exchange their LGN B Units, together with an equal number of corresponding shares of Class B Common Stock, for shares of Class A Common Stock of Legence Corp. on a one -for-one basis or the cash equivalent thereof (based on the 10-day volume weighted average price of the shares of Class A Common Stock at the time of exchange) as determined by Legence (the “Exchange Right”). d. The Company entered into a tax receivable agreement (the “TRA”) pursuant to which the Company will pay to certain Legacy Owners 85 % of the net cash tax savings, if any, that the Company realizes from certain tax attributes and benefits arising in connection with the IPO and future exchanges of LGN B Units, and the Company will retain the remaining 15 % of such benefits. Refer to “ Note 1 6 — Tax Receivable Ag reement ”. e. Legence Parent historically issued Series A profits interests (“Series A Profits Interests”) awards and Restricted Series C common interests (“Restricted Series C Common Interests”) awards as compensation to the Company’s employees. The Series A Profits Interests were exchanged for equivalent interests in newly created entities above 80 Table of Contents Legence Corp. Notes to Consolidated Financial Statements the consolidated structure of the Company as follows: (i) a portion of Series A Profits Interests from Legence Parent were exchanged for Series A Capital Interests of newly created Legence Parent II, (ii) Series A Capital Interests of Legence Parent II were exchanged for Class A Management Holdings Interests of Management Aggregator II (“Aggregator II Mirror A Units”), and (iii) the remaining Series A Profits Interests of Legence Parent were exchanged for Class A Management Holdings Interests of Management Aggregator I (“Aggregator I Mirror A Units” and, together with Aggregator II Mirror A Units, the “Rollover Series A Profits Interests”). The Rollover Series A Profits Interests, together with historical Series A Profits Interests, are collectively referred to as “Series A Interests”. The Restricted Series C Common Interests of Legence Parent were exchanged for Class C Management Holdings Interests of Management Aggregator I (“Rollover Restricted Series C Interests”, and together with Restricted Series C Common Interests, the “Restricted Series C Interests”). Refer to “ Note 2 — Summary of Significant Accounting Policies ” and “ Note 13—Stock-Based Compensation and Long-term Incentive Awards ”. Effective September 11, 2025, following approval by the Company’s stockholders, the Board of Directors of Legence Corp. (the "Board") adopted the Legence Corp. 2025 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). In connection with the IPO, certain employees, including our named executive officers, and non-employee directors were granted stock options and/or restricted stock units (“RSUs”) under the Omnibus Incentive Plan. Refer to “ Note 2—Summary of Significant Accounting Policies ” and “ Note 13—Stock-Based Compensation and Long-term Incentive Awards ”. The corporate structure following the completion of the IPO, as described above, is commonly referred to as an “UP-C” structure, which is often used by partnerships and limited liability companies undertaking an initial public offering. The Company consolidates Legence Holdings as part of the consolidated financial statements and reports a noncontrolling interest related to the LGN B Units held by Legence Parent. Immediately following the closing of the IPO, the Company is a holding company, and its sole material asset is a controlling equity interest in Legence Holdings. As the managing member of Legence Holdings, the Company operates and controls all of the business and affairs of Legence Holdings, has the obligation to absorb losses and receive benefits from Legence Holdings and, through Legence Holdings and its subsidiaries, conducts its business. The Corporate Reorganization was accounted for in a manner consistent with a reorganization of entities under common control. The Consolidated Financial Statements for periods prior to the IPO and Corporate Reorganization relate to Legence Holdings. Prior to the Corporate Reorganization, Legence Corp. had no operations. Subsequent Organizational Transactions In the fourth quarter of 2025, Legence Parent and Legence Parent II each formed wholly owned subsidiaries, Legence Parent ML LLC (“Legence Parent ML”) and Legence Parent II ML LLC (“Legence Parent II ML” and together with Legence Parent ML, the “ML Entities”). Legence Parent and Legence Parent II subsequently transferred their respective interests in Legence Holdings and Legence Corp. to the ML Entities. The ML Entities now hold the interests in Legence Holdings and Legence Corp. previously held by Legence Parent and Legence Parent II and, together with those entities, are included in references to the “Parent Entities” in these consolidated financial statements. Additionally, on December 16, 2025, the Company completed a secondary offering of 8,402,178 shares of Class A Common Stock on behalf of the Parent Entities at a price of $ 45.00 per share. Refer to “ Note 12—Stockholders' Equity / Member's Equity .” Note 2 - Summary of Significant Accounting Policies The Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Principles of Consolidation The Consolidated Financial Statements include the accounts of Legence Corp., its wholly owned subsidiaries and certain Variable Interest Entities ("VIE") of which the Company is the primary beneficiary. The Company assesses whether it is 81 Table of Contents Legence Corp. Notes to Consolidated Financial Statements the primary beneficiary of a VIE, which is the case if the Company, in combination with its related parties, has both (1) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. When the Company is deemed to be the primary beneficiary, the VIE is consolidated and the interest in the VIE held by a third-party is accounted for as a noncontrolling interest. For VIEs that are not consolidated, the Company accounts for its investments using the equity method. All intercompany accounts and transactions have been eliminated. Please refer to “ Note 6 — Variable Interest Entities and Equity Method Investments ” for additional information. Business Combinations Business combinations are recorded in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805"). Under the acquisition method of accounting, the consideration transferred by the acquirer is assigned to the identifiable assets acquired and liabilities assumed as of their acquisition date fair values. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. ASC 805 provides certain recognition and measurement exceptions such as leases, contract assets and contract liabilities, and income taxes, which are accounted for under ASC 842, ASC 606 and ASC 740, respectively. Goodwill represents the excess of the consideration transferred over the fair value of identifiable assets acquired and liabilities assumed. Bargain purchase gains represent the excess of the fair value of identifiable assets acquired and liabilities assumed over the consideration transferred. The results of operations of acquired companies are included in the Consolidated Statements of Operations from their acquisition dates. Use of Estimates The preparation of Consolidated Financial Statements in conformity with U.S. GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the related revenues and expenses and related disclosures as of the date of the Consolidated Financial Statements. Actual results could differ from those estimates. The Company’s Consolidated Financial Statements include estimates and assumptions related primarily to Revenue, Goodwill, Income taxes, Business combinations and the TRA. Revenue Recognition The Company’s revenue is primarily derived from contracts that can span from one day to several years, though most contracts are completed in less than one year. Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Refer to “ Note 3 — Revenue Recognition and Related Balance Sheet Accounts ” for additional information. Cash and Cash Equivalents Cash and cash equivalents includes cash in banks and highly liquid investments with maturities of three months or less at the date of purchase. The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Restricted Cash At various points in time, the Company may have restricted cash. Restricted cash represents legally restricted funds that are not available for general business use and are set aside for specific purposes. The Company classifies restricted cash separately from cash and cash equivalents on the Consolidated Balance Sheets. As of December 31, 2022, the Company had restricted cash of $ 46.5 million. 82 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Refer to “ Note 22—Other Financial Information ” for additional information. Accounts Receivable, Contract Assets and Allowance for Credit Losses Accounts receivable primarily consists of contracts receivable, which include billed and billable amounts for goods and services provided to customers for which the Company has an unconditional right to payment. Amounts contingent on anything other than the passage of time are contract assets. Accounts receivable also include other receivables which primarily consists of income tax receivables and amounts due from government and insurance entities. Refer to “ Note 22—Other Financial Information ” for additional information. The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers maintaining allowances for estimated credit losses that, when realized, have been within management's expectations. The Company estimates and records expected credit losses over the contractual life of its financial assets measured at amortized cost, including accounts receivable and contract assets. The estimate uses a loss-rate method based on historical loss activity adjusted for current market conditions and reasonable and supportable forecasts, as applicable. Accounts receivable are generally written off when they are determined to be uncollectible after reasonable collection efforts have been made and collection appears unlikely. Refer to “ Note 3 — Revenue Recognition and Related Balance Sheet Accounts ” for additional information. Deferred Offering Costs Offering costs include legal, accounting, printing, and other third-party fees that were incremental and directly related to the Company's IPO. Prior to the completion of the IPO, the Company deferred $ 28.4 million of offering costs within Other assets on the Consolidated Balance Sheets. Upon completion of the IPO, these costs were reclassified into Additional paid-in capital as a reduction against the proceeds received from the IPO. Deferred offering costs as of December 31, 2024 totaled $ 3.7 million. Property and Equipment, Net Property and equipment is stated at cost, net of accumulated depreciation. Interest costs are capitalized on qualified capital projects as part of the net asset cost until the asset is ready for its intended use. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. Software obtained for internal use and internal and external software development costs incurred during the application development stage of projects are generally capitalized at cost, unless relating to training or data conversion, which are expensed as incurred. Betterments, additions, and renewals that significantly extend the life of the asset are capitalized and depreciated over their useful lives. Expenditures for repairs and maintenance are charged to expense as incurred. Upon retirement or disposition of property or equipment, the cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is recognized in the Consolidated Statements of Operations. The estimated useful lives for new property and equipment acquired are generally as follows: Autos and trucks 2 - 5 years Computer equipment and software 3 - 5 years Leasehold improvements Various (1) Equipment and tools 5 years Office furniture and other 4 - 7 years (1) Leasehold Improvements are amortized over the shorter of their useful life and the remaining lease term, unless the lease transfers ownership of the underlying asset to the Company or the Company is reasonably certain to exercise the option to purchase the underlying asset, in which case the leasehold improvements will be amortized over their useful lives. 83 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Goodwill Goodwill represents the excess of the consideration transferred over the fair value of identifiable assets and liabilities of the acquired business. Goodwill is not subject to amortization but is evaluated 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 as of October 1 st 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. The Company has determined its reporting units are its operating companies, which constitute businesses. The Company has an option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. If the Company determines, based on qualitative factors, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment is performed to compare the fair value of the reporting unit to its carrying value. Further, the Company may choose to bypass the qualitative assessment and proceed directly to the quantitative assessment. An impairment loss is recognized for a reporting unit to the extent fair value is less than the carrying value, limited to the amount of goodwill allocated to that reporting unit. 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 including the revenue growth rate, forecasted margins, and discount rate. The market approach utilizes earnings before interest, provision for income taxes, depreciation and amortization (“EBITDA”) market multiples on invested capital from comparable publicly traded companies. If an impairment loss is determined, the loss is recognized in the Consolidated Statements of Operations. The Company completed its annual goodwill impairment test as of October 1, 2025. Refer to “ Note 5 — Goodwill and Intangible Assets ” for additional information regarding Goodwill. Intangible Assets, Net The Company’s identifiable intangible assets include customer relationships, trade names, and contract backlog. All finite-lived identifiable intangible assets are subject to amortization on a straight-line basis over their estimated lives. Refer to “ Note 5 — Goodwill and Intangible Assets ” for additional information regarding intangible assets. Long-Lived Assets Impairment Long-lived assets, which include property and equipment, operating lease right-of-use assets, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability generally is determined by comparing the carrying value of an asset group to the expected undiscounted future cash flows of the asset group. If the carrying value of an asset group exceeds its expected undiscounted future cash flows (i.e., not recoverable), the amount of impairment loss is measured as the difference between the carrying value of the asset group and its estimated fair value generally using the expected discounted future cash flows. During the fourth quarter of 2025, the Company determined that a triggering event had occurred for long-lived assets related to two reporting units in the Engineering & Consulting segment. The triggering event occurred as a result of declining revenue, margins and cash flow projections in these two reporting units. The triggering event resulted in the performance of a recoverability test for the long-lived assets in the related asset groups prior to assessing goodwill for impairment. The Company determined that the carrying amount of long-lived assets for one of the asset groups exceeded fair value, resulting in a long-lived asset impairment of $ 2.4 million recognized in Long-lived asset impairment on the Consolidated Statement of Operations for the year ended December 31, 2025. During the fourth quarter of 2024, the Company determined that a triggering event had occurred for long-lived assets related to a reporting unit in the Engineering & Consulting segment. The triggering event occurred as a result of a decline in projected cash flows due to lower revenue projections, among other factors. Lower revenue projections primarily reflected the impact of delayed contract awards and the uncertainty that revenue will be realized for these contracts which 84 Table of Contents Legence Corp. Notes to Consolidated Financial Statements are point-in-time revenue recognition contracts. The triggering event resulted in the performance of a recoverability test for the long-lived assets in the related asset group prior to assessing goodwill for impairment. The Company determined that the estimated undiscounted cash flows were sufficient to cover the carrying values and concluded that no impairments were necessary. No impairment charge was recorded against long-lived assets for the years ended December 31, 2024 or 2023. Equity Method Investments The Company has investments in a number of joint ventures, some of which are VIEs. For VIEs where the Company is not the primary beneficiary, the Company accounts for its investments using the equity method of accounting. Any investment in a joint venture that is not a VIE and for which the Company has investments between 20% and 50% is accounted for using the equity method of accounting when the Company has the ability to exercise significant influence, but not control. The joint venture investments are included in Other assets on the Consolidated Balance Sheets and are adjusted for contributions made, distributions received, impairments and the Company's share of income or loss. Equity in earnings of joint venture, presented in the Company’s Consolidated Statements of Operations, reflects the Company’s share of joint venture income or loss, as well as any impairment loss. Distributions received from the joint venture investment are accounted for under the cumulative earnings approach, which compares the Company’s cumulative distributions received from the joint venture against its cumulative equity in earnings of joint venture. The Company assesses its equity method investments for impairment if there are changes in facts and circumstances that indicate a loss in value may have occurred. If a loss is deemed to have occurred and the loss is determined to be other than temporary, the carrying value of the equity method investment is written down to fair value and an impairment recorded. An immaterial impairment charge was recorded for the year ended December 31, 2024. No impairment charge was recorded for the years ended December 31, 2025 and 2023. Insurance Legence maintains insurance for cyber, general liability, workers' compensation, automobile liability and professional liability, subject to policy limits. Most of the Company's insurance policies also include deductibles. The Company has umbrella and excess coverage attached to these policies that insure the Company for certain amounts in excess of the related insurance policy limits. The Company is self-insured for its medical coverage and is covered by stop-loss insurance for claims in excess of a contractual limit. Insurance liabilities are estimated based on (i) reported claims and (ii) amounts incurred but not reported. The liability for reported claims is estimated by evaluating the facts and circumstances of each claim and are adjusted from time to time based upon the status of each claim and the Company's historical experience with similar claims. The liability for amounts incurred but not reported is estimated each reporting period by a third-party and includes provisions for expected claims to be reported in the future but which have occurred prior to the accounting date. Insurance liabilities are reflected in the Consolidated Balance Sheets in Accrued and other current liabilities. Any adjustments to these liabilities are recorded in the Consolidated Statements of Operations. Debt Issuance Costs The Company has obtained debt financing using term loans, delayed draw term loan (“DDTL”) commitments, and a revolving line of credit. Debt issuance costs incurred to obtain financing are amortized over the expected term of the underlying debt. Unamortized debt issuance costs related to term loans are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of Long-term debt, net of current portion, consistent with debt discounts, and amortized using the effective interest method. When financing arrangements are amended, the existing unamortized costs are either written off, for lenders that no longer provide financing, or amortized using an updated effective interest rate when there is no substantial change to the related debt. Unamortized debt issuance costs related to the revolving line of credit are included in Other assets on the Consolidated Balance Sheets and are amortized using the straight-line method. 85 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Shipping and Handling Costs The Company includes all shipping and handling charges incurred in Cost of revenue. Shipping and handling costs charged to customers are included as a component of Revenue. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurement , clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value, as follows: Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2: Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3: Inputs are unobservable inputs that reflect the reporting entity's own assumptions on which assumptions the market participants would use in pricing the asset or liability based on the best available information. Interest Rate Swaps The Company has interest rate swap agreements to reduce its exposure to fluctuations in variable interest rates for future interest payments on debt. The Company has designated these interest rate swaps as cash flow hedges and records the changes in the estimated fair value of the interest rate swaps to Accumulated other comprehensive income ("AOCI") on its Consolidated Balance Sheets in accordance with ASC Topic 815, Derivatives and Hedging . Differences between the variable interest rate payments and the fixed interest rate settlements with the swap counterparties are recognized as an adjustment to Interest expense, net of capitalized interest, on the Consolidated Statements of Operations. Amounts reported in AOCI related to cash flow hedges are reclassified to Interest expense, net of capitalized interest, as interest payments are made on the Company’s variable-rate debt. Cash flows from derivatives designated as cash flow hedges are classified in the same category as the item being hedged in the Consolidated Statements of Cash Flows. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. The Company assesses, both at inception and at each reporting period thereafter, whether the designated derivative instrument is highly effective in offsetting changes in cash flows of the hedged item. To the extent the interest rate swaps are determined to be ineffective, the Company recognizes the changes in the estimated fair value of the interest rate swaps in earnings. The Company has elected not to offset the assets and liabilities from derivative agreements and instead presents the related balances on a gross basis. If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated, and amounts in AOCI will be reclassified to Interest expense, net of capitalized interest, in the current period. Leases The Company leases real estate, vehicles and equipment. The Company determines whether the arrangement is or contains a lease at the inception of the contract and classifies leases as either operating or finance at the lease commencement date. The Company records right-of-use assets and corresponding lease liabilities for its leases, which are initially recognized based on the present value of lease payments over the lease term. Right-of-use assets also include initial direct costs incurred, lease payments made at or before the commencement date, less any lease incentives received. When measuring the right-of-use asset and lease liability, fixed payments and variable payments that depend on an index or a rate are included. Other variable payments are excluded from such measurement and expensed as incurred. As the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate for initial measurement. The incremental borrowing rate represents the rate of interest the Company would pay to borrow on a collateralized basis, over a similar term, an amount equal to the lease payments as of the commencement date. 86 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The lease term is the non-cancellable period of the lease, including the period covered by options to renew the lease when it is reasonably certain that the Company will exercise the option. Many real estate leases contain options to renew or terminate the lease, generally at the Company's discretion; however, options are often not included in the lease term as the Company is not reasonably certain to exercise the options to renew or is reasonably certain not to exercise the option to terminate. Short-term leases, which are leases with an initial term of 12 months or less or leases that are cancellable by the lessee and lessor without significant penalties, are not recorded on the Consolidated Balance Sheets and are expensed on a straight-line basis over the lease term. For leases of real estate, the Company elected not to separate the accounting for lease and non-lease components. For all other lease asset classes, the Company separates the accounting for lease and non-lease components. Please refer to “ Note 8 — Leases ” for additional lease information and disclosures. Stockholders' Equity / Member's Equity Please refer to “ Note 12—Stockholders' Equity / Member’s Equity ” for additional information related to Stockholders' equity. Refer to “ Note 1—Nature of Operations ” for a summary of Member's Equity and structure prior to the IPO and Corporate Reorganization. Stock-Based Compensation and Long-term Incentive Awards Series A Interests and Restricted Series C Interests Management Aggregator I and Management Aggregator II issue Series A Interests and Restricted Series C Interests to the Company’s employees. Series A Interests awards are comprised of time vesting interests ( 60 %) (“Time Interests”), performance vesting interests ( 20 %) (“Performance Interests”), and exit vesting interests ( 20 %) (“Exit Interests”). The Time Interests and Restricted Series C Interests are indexed to the value of the Company's Class A Common Stock and settled in Management Aggregator I and Management Aggregator II interests or assets. The Company accounts for these awards as stock-based payment awards under ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). The Time Interests and Restricted Series C Interests are service-based awards. While the Time Interests and Restricted Series C Interests include a below fair value repurchase feature, and were historically accounted for as liability-classified awards by the Company due to this feature, upon the Corporate Reorganization, the Management Aggregators have the obligation to settle these awards, and they do not have the ability to direct Legence Holdings to directly settle or declare distributions to settle these awards. Thus, these awards are remeasured to fair value at the end of each period, and the offset is recorded as a capital contribution from the Management Aggregators through Legence Parent and Legence Parent II, as they have the sole obligation for settlement. The Company recognizes compensation expense on a straight-line basis over the five-year vesting period with accelerated vesting and recognition of compensation expense when or if a change of control event occurs. Distributions to Time Interest and Restricted Series C Interest holders are recognized as compensation expense when declared with a corresponding capital contribution through the Parent Entities. The Series A Interests are subject to certain forfeiture and repurchase provisions in the event of interest holder employment termination. Restricted Series C Interests participate in distributions as they are Common Interests; however, are subject to the same forfeiture and repurchase provisions as the Time Interests. Holders of Restricted Series C Interests must repay any distributions received on unvested Restricted Series C Interests within 15 days of employment termination. The Time Interests and Restricted Series C Interests are units of Management Aggregator I and Management Aggregator II and act as options that receive value after certain Common Interests receive a return matching the specified thresholds. Subsequent to the IPO, the Company utilizes the option-pricing method (“OPM”) to estimate the fair value of these awards. The expected life assumption represents the period of time the interests are expected to be outstanding and the risk-free rate is based on the U.S. Treasury yield for a term consistent with the expected life. The total equity value is calculated based on the full market capitalization of the Company. The expected volatility assumption is based on the volatility of guideline 87 Table of Contents Legence Corp. Notes to Consolidated Financial Statements public companies, adjusted for the Company’s size and leverage. Since Legence Parent and Legence Parent II do not have a history or expectation of future recurring dividends and there are no contractual dividends associated with the equity interests, the expected dividend yield assumption is nil. Prior to the IPO, the Company utilized the OPM and the hybrid method to determine the fair value of these awards using certain assumptions. The expected life assumption represented the period of time the interests were expected to be outstanding while the risk-free rate was based on the U.S. Treasury yield for a term consistent with the expected life. The expected volatility assumption was based on the volatility of guideline public companies, adjusted for the Company’s size and leverage. Since the interests did not have a provision for recurring distributions and the issuing entities did not have a history or expectation of future recurring distributions, the expected dividend yield assumption was nil. The hybrid method incorporated various future outcomes and allocated the value in each scenario using the OPM, which included IPO scenarios and delayed exit scenarios. The Company accounts for the Performance Interests and Exit Interests under ASC Topic 710, Compensation—General (“ASC 710”). Compensation cost is recognized when the obligation to make a cash payment to employees becomes probable and reasonably estimable under ASC Topic 450—Contingencies (“ASC 450”), which generally occurs upon the consummation of certain liquidity events that triggers payment. Because such liquidity events are not considered probable until they occur, no compensation expense is recognized prior to that date. Award forfeitures are accounted for as they occur. Once vested, the holders of the Series A Interests may participate in distributions made by or on behalf of the Management Aggregators upon liquidation or a distribution as directed by Blackstone affiliated entities (the "BX Aggregators"). The distributions are first made to the holders of Common Interests until their unreturned contributions are reduced to zero, and thereafter to the holders of Series A Interests and Common Interests pro rata based on their aggregate percentage interests (taking into account any applicable participation thresholds). For purposes of distributions, Time Interests are treated as fully vested while the holder remains employed by the Company or an affiliate of the Company or upon legal vesting. Refer to “ Note 1—Nature of Operations ” for additional information regarding Common Interests. RSUs and Stock Options The Company accounts for RSUs and stock options based on their grant date fair value. RSUs and stock options are subject to service-based vesting conditions, and the corresponding stock-based compensation expense is recognized on a straight-line basis. The Company has elected to account for forfeitures as they occur for both the RSUs and the stock options. The Company uses the price of its Class A Common Stock on the date of grant as the fair value for RSUs. The Company estimates the fair value of stock options granted under the Omnibus Incentive Plan on the grant date using a Black-Scholes option-pricing model. The assumptions and estimates used as part of the Black-Scholes option-pricing model are as follows: • Stock price: The price of the Company's Class A Common Stock generally at the grant date. • Exercise price: The exercise price as stated per the terms of the option agreements. • Expected Term: The Company uses the simplified method for determining the expected term of stock options, as there is insufficient historical exercise data to provide a reasonable basis on which to estimate expected term. Under the simplified method, the expected term is calculated as the midpoint between the vesting period and the contractual term. • Expected Volatility: The expected volatility is based on the historical equity volatility of a group of publicly traded guideline companies with similar size and industry characteristics, and is adjusted for differences in leverage, size, and stage of development, as well as volatility studies considering recent IPOs. • Risk-free rate: The risk-free interest rate is based on the United States Treasury yield curve in effect at the grant date, corresponding to the expected term of the stock options. 88 Table of Contents Legence Corp. Notes to Consolidated Financial Statements • Dividend yield: The estimated dividend yield is zero as the Company does not currently intend to declare dividends in the foreseeable future. Refer to “ Note 1—Nature of Operations ” and “ Note 13—Stock-Based Compensation and Long-term Incentive Awards ” for additional information and further disclosures regarding stock-based compensation. Earnings Per Share The Company calculates basic and diluted earnings per share ("EPS") in accordance with ASC Topic 260, Earnings Per Share, for the periods following the IPO and Corporate Reorganization. Basic EPS is calculated using Net income (loss) attributable to Legence divided by the weighted-average number of shares of Class A Common Stock outstanding during the period. Diluted EPS is calculated using Net income (loss) attributable to Legence divided by the weighted-average number of shares of Class A Common Stock outstanding during the period, 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 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 RSUs and unexercised 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 15—Earnings Per Share ” for additional information. Tax Receivable Agreement In connection with the IPO, the Company entered into the 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 450. 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 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 in the Consolidated Balance Sheets. Subsequent changes to the TRA liability and deferred tax assets, net of valuation allowance, that are not related to an exchange or a payment pursuant to the TRA are recorded in Other expense (income), net and Income tax expense (benefit), respectively, in the Consolidated Statements of Operations. Refer to “ Note 16—Tax Receivable Agreement ” and “ Note 18—Income Taxes ” for additional information. Income Taxes The Company is subject to U.S. federal and state income taxes with respect to our allocable share of any taxable income or loss of Legence Holdings, as well as any stand-alone income or loss we generate. Legence Holdings is treated as a partnership for federal and state income tax purposes. Generally, entities characterized as a partnership for federal and state income tax purposes are not subject to entity-level income taxes. Legence Holdings’ taxable income or loss is passed through to its members, including Legence Corp, which is responsible for its own U.S. federal and state income taxes. Certain other subsidiaries of Legence Corp are treated as corporations and will file as a consolidated group in various jurisdictions within the United States, including both federal and state and local jurisdictions. 89 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Income taxes for the corporations are provided for under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the Consolidated Balance Sheets and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized. Under the provisions of ASC 740-10, Income Taxes - Overall ("ASC 740-10"), the Company evaluates uncertain tax positions by reviewing against applicable tax law all positions taken by the Company with respect to tax years for which the statute of limitations is still open. ASC 740-10 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. For those tax positions where it is not “more likely than not” that a tax benefit will be sustained, no tax benefit is recognized. The Company classifies interest expense and penalties relating to income tax in the Consolidated Statements of Operations as Income tax expense (benefit). Recent Accounting Pronouncements Hedge Accounting Improvements - In December 2025, the FASB issued Accounting Standards Update ASU 2025-09, "Derivatives and Hedging (Topic 815): Hedge Accounting Improvements" ("Update 2025-09"). The guidance introduces targeted refinements intended to align hedge accounting with risk management activities, including greater flexibility in hedge designation and clarifications for certain instruments. Update 2025-09 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact that the adoption of Update 2025-09 will have on the Consolidated Financial Statements. Targeted Improvements to the Accounting for Internal-Use Software - In September 2025, the FASB issued ASU 2025-06, "Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" ("Update 2025-06"), which removes references to the project stages and requires entities to begin capitalizing software costs when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. Update 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption and a prospective, retrospective or modified transition approach are permitted. The Company is currently evaluating the impact that the adoption of Update 2025-06 will have on the Consolidated Financial Statements. Measurement of Credit Losses for Accounts Receivable and Contract Assets - In July 2025, the FASB issued ASU 2025-05, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets" ("Update 2025-05"), which allows entities to elect a practical expedient for current accounts receivables and contract assets to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The Company adopted Update 2025-05 as of January 1, 2026, on a prospective basis, and it did not have a material impact on the Consolidated Financial Statements. Business Combinations and Consolidation - In May 2025, the FASB issued ASU 2025-03, "Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity" ("Update 2025-03"). This update revises current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a VIE that meets the definition of a business. It requires that an entity consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. Update 2025-03 is effective for fiscal years beginning after December 15, 2026 and interim reporting periods within those annual reporting periods, with early adoption permitted. Update 2025-03 requires that an entity apply the new guidance prospectively to any acquisition that occurs after the initial application date. The Company is currently evaluating the impact that the adoption of Update 2025-03 will have on the Consolidated Financial Statements. Income Statement - Expense Disaggregation - In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, " Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures " ("Update 2024-03"). This update requires disclosure, in the notes to the financial statements, of disaggregated information about certain income statement costs and expenses on an interim and annual basis. Update 90 Table of Contents Legence Corp. Notes to Consolidated Financial Statements 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact that the adoption of Update 2024-03 will have on the Consolidated Financial Statements. Compensation - Stock Compensation - In March 2024, the FASB issued ASU 2024-01, " Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards " ("Update 2024-01"). This update adds an illustrative example to demonstrate how an entity should apply the scope guidance to determine whether profits interest awards should be accounted for in accordance with ASC 718. The Company adopted Update 2024-01 as of January 1, 2025 on a prospective basis, and the adoption did not have an impact on the accounting for the Time Interests of Series A Interests as the Company will continue to account for the Time Interests awards in accordance with ASC 718. Income Taxes - In December 2023, the FASB issued ASU 2023-09, " Income Taxes (Topic 740): Improvements to Income Tax Disclosures " ("Update 2023-09"). The amendments in this update provide more transparency about income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The Company adopted Update 2023-09 as of January 1, 2025 on a prospective basis. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. Refer to “ Note 18—Income Taxes .” The adoption of Update 2023-09 expanded the Company’s disclosures but had no impact on the Consolidated Financial Statements. Note 3 - Revenue Recognition and Related Balance Sheet Accounts Revenue is recognized when control of the promised goods or services is transferred to the customer, either at a point-in-time or over-time, as the performance obligation is satisfied. The amount of revenue recognized reflects the transaction price, which is the consideration that the Company expects to receive in exchange for those goods or services provided. The Company transacts with customers that management believes are credit worthy, and management considers historical customer practices and payment history when determining whether collection is probable. The five-step model is applied as follows: 1) Identify the contract Management determines if a contract exists using the following factors: (a) the parties have approved the contract and are committed to perform their respective obligations, (b) the rights of the parties can be identified, (c) payment terms can be identified, (d) the arrangement has commercial substance, and (e) collectability of consideration is probable. 2) Identify performance obligations in the contract A performance obligation is a contractual promise to transfer a distinct good or service. The Company applies judgment in determining whether each promise or groups of promises are both (a) capable of being distinct and (b) distinct within the context of the contract. Most of the Company's contracts are considered to have a single performance obligation because (a) the Company provides a significant service of integrating complex tasks and components into a single project under the purview of the Company's project management, and (b) the risks associated with the Company's performance, including customer acceptance clauses, warranty provisions, and liquidated damages, are tied to the overall project. Contracts with customers are often modified through change orders that may impact the scope or price of the goods or services the Company is providing. The Company evaluates change orders to determine whether they create separate performance obligations. Many change orders are for goods or services that are not distinct within the context of the original contract, and, therefore, are not treated as separate performance obligations. 3) Determine the transaction price The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods and services to the customer. The consideration promised in a contract with customers may include fixed amounts, variable amounts, or both. After contract inception, the transaction price may change for various reasons, including executed or unresolved change orders, executed or unresolved contract modifications, claims to or from the 91 Table of Contents Legence Corp. Notes to Consolidated Financial Statements customer or owner, and back-charge recoveries. The customers may partially or fully agree with such modifications or affirmative claims. Most changes are considered variable consideration until approved by both parties. The Company estimates variable consideration and includes it in the transaction price to the extent it is probable that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is resolved. This threshold is referred to as the variable consideration constraint. In assessing whether to apply a variable consideration constraint, the Company considers if factors exist that could increase the likelihood or magnitude of a potential reversal of revenue, including, but not limited to, whether: (a) the amount of consideration is highly susceptible to factors outside of the Company’s influence, such as the actions of third parties, (b) the uncertainty surrounding the amount of consideration is not expected to be resolved for a long period of time, and (c) the Company’s experience with similar types of contracts is limited or that experience has limited predictive value. Management reassesses the amount of variable consideration each reporting period, and changes to estimated variable consideration are accounted for as a cumulative adjustment to revenue recognized in the current period. Recognizing changes in the transaction price requires significant judgments of various factors, including, but not limited to, dispute resolution developments and outcomes and anticipated negotiation results. For some transactions, customers may withhold a portion of the contract price as a contract retention until the project is substantially complete or completed to ensure performance; however, these arrangements typically do not constitute a significant financing component. 4) Allocate the transaction price to the performance obligations For contracts that contain multiple performance obligations, the transaction price is allocated to each performance obligation based on their estimated relative standalone selling prices. The Company generally estimates standalone selling price using the expected costs plus a margin. 5) Recognize revenue as performance obligations are satisfied The Company recognizes revenue when or as a performance obligation is satisfied, which occurs when the customer obtains control of the good or service. This can occur over time or at a point in time. 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, 2025, 2024, and 2023, revenue recognized under the output method represented 0.8 %, 2.3 %, and 7.8 % 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 single 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 procured from 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. 92 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Performance obligations related to certain standalone 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 presented. 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 make 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 issuance. Changes in Estimates For contracts where the Company applies the Cost-to-Cost Input 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 rentals, 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 and schedule changes as well as 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 impact on the Consolidated Financial Statements. At the time a loss on a contract becomes probable, the entire amount of the estimated loss is accrued. Management monitors for circumstances that may affect the accuracy of its estimates. Disaggregation of Revenue The Company’s revenue was derived from contracts to provide goods or services in the Engineering & Consulting and Installation & Maintenance segments. Refer to “ Note 19—Segment Information ” for additional information on reportable segments. 93 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The Company disaggregates revenue by service line as management believes this category best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See details in the following table (in thousands): Year Ended December 31, Revenue by Service Line and Segment 2025 2024 2023 Engineering & Consulting: Engineering & Design $ 425,014 $ 345,977 $ 222,198 Program & Project Management 301,279 255,625 204,048 Total Engineering & Consulting segment 726,293 601,602 426,246 Installation & Maintenance: Installation & Fabrication 1,493,830 1,183,750 942,841 Maintenance & Service 330,368 313,250 245,975 Total Installation & Maintenance segment 1,824,198 1,497,000 1,188,816 Revenue $ 2,550,491 $ 2,098,602 $ 1,615,062 No single customer accounted for more than 10% of revenue in the years ended December 31, 2025, 2024 or 2023. Contract Assets and Liabilities Due to the nature of the Company’s performance obligations and the timing of contractual payment terms, the Company has material contract asset and liability balances. Contract assets represent revenue recognized in excess of amounts paid or payable to the Company on uncompleted contracts for which the right to bill is conditional on something other than the passage of time (e.g., the Company’s future performance on uncompleted contracts or performance obligations). Contract liabilities represent the Company’s obligation to perform on uncomplete d contracts for which the Company has invoiced the customer or received payment. Contract assets and contract liabilities in the Consolidated Balance Sheets consist of the following amounts (in thousands): December 31, 2025 2024 2023 Contract assets: Contract assets, net $ 259,941 $ 188,132 $ 125,373 Other assets $ — $ 2,040 $ 1,772 Contract liabilities $ 339,462 $ 164,130 $ 164,598 Contract assets include $ 98.5 million, $ 78.3 million and $ 83.1 million of contract retentions as of December 31, 2025, 2024 and 2023, respectively. Contract retentions included in contract assets are generally subject to substantial project completion and acceptance by the customer. Contract assets and contract liabilities fluctuate based on factors that occur in the normal course of business, including the volume of projects in progress at period end, the timing of negotiated payment terms, billing frequency and other differences in payment terms relative to revenue recognition. The Company recognized $ 0.6 million of contract assets and $ 1.4 million of contract liabilities related to acquisitions completed during the year ended December 31, 2025. The remaining increase in contract assets from December 31, 2024 to December 31, 2025 is primarily due to the increase in the Company’s volume of project activity from both Installation & Maintenance and Engineering & Consulting segments, as reflected in increased revenue from these segments for the year ended December 31, 2025. The remaining change in contract liabilities from December 31, 2024 to December 31, 2025 is primarily due to the timing and amount of revenue recognized. 94 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The Company recognized $ 11.8 million of contract assets and $ 14.0 million of contract liabilities related to acquisitions completed during the year ended December 31, 2024. The remaining increase in contract assets from December 31, 2023 to December 31, 2024 is primarily due to the increase in the Company’s volume of project activity from both Installation & Maintenance and Engineering & Consulting segments, as reflected in increased revenue for the year ended December 31, 2024. The remaining change in contract liabilities from December 31, 2023 to December 31, 2024 is primarily due to the timing and amount of revenue recognized. During the years ended December 31, 2025, 2024 and 2023, the Company recognized revenue of $ 132.2 million, $ 151.3 million and $ 82.9 million, respectively, related to contract liabilities outstanding as of the end of the prior year. Contracts Receivable Included in the contracts receivable balance is retention for which the Company has an unconditional right to payment and is only subject to the passage of time. Retentions included in Contracts Receivable as of December 31, 2025, 2024 and 2023 are $ 9.6 million, $ 9.8 million and $ 13.2 million, respectively. Remaining Performance Obligations The Company had approximately $ 2,785.1 million in remaining performance obligations as of December 31, 2025 , which represent the expected revenue values under the Company's contracted or otherwise secured fixed-price project commitments. The Company expects to recognize approximately 75 % of the remaining performance obligations within the next 12 months and the remaining amount thereafter. The majority of the remaining performance obligations after the first 12 months is expected to be recognized by the end of 2027 . Although remaining performance obligations reflect expected revenue values that are considered to be firm, cancellations, scope adjustments or project deferrals ma y occur that impact their volume or the expected timing of their recognition. Note 4 - Acquisitions Acquisitions are recorded under the acquisition method of accounting, and the total consideration transferred is allocated to the acquired net tangible and identifiable intangible assets based primarily on their fair values as of the acquisition dates. The estimated fair value of identified intangible assets are Level 3 fair value measurements and are determined using discounted cash flow techniques. Such fair value is estimated using a multi-period excess earnings method for customer relationships and backlog and a relief from royalty method for trade names. The significant assumptions used in estimating fair value of customer relationships and backlog include i) the estimated life the asset will contribute to cash flows, such as remaining contractual terms, (ii) revenue growth rates and EBITDA margins, (iii) attrition rate of customers, and (iv) the estimated discount rates that reflect the level of risk associated with receiving future cash flows. The significant assumptions used in estimating fair value of trade names include estimated discount rates and estimated royalties that would be paid to license a comparable asset. The royalty rates used in this method are based on published comparable market royalty transactions. 95 Table of Contents Legence Corp. Notes to Consolidated Financial Statements 2025 Acquisitions : On October 1, 2025, the Company acquired Innovative Mechanical & Design, LLC ("IMD"). IMD is a mechanical contracting business based in Colorado. This acquisition expands the Company's geographic footprint in mechanical services. The IMD operations and associated goodwill are included in the Installation & Maintenance segment. During the year ended December 31, 2025, the Company completed one other immaterial acquisition (“Other 2025 Acquisition”). The business is a part of the Engineering & Consulting segment and is an MEP engineering business based in Arizona. This acquisition expands the Company’s customer base and provides additional opportunities for cross-selling. Total consideration transferred of $ 21.5 million for the 2025 acquisitions consists of the following (in thousands): IMD Other 2025 Acquisition Total Cash $ 9,302 $ 6,818 $ 16,120 Issuance of Legence Corp. Class A Common Stock 3,589 449 4,038 Holdback 1,000 341 1,341 Purchase price receivable ( 37 ) — ( 37 ) Total consideration transferred $ 13,854 $ 7,608 $ 21,462 The Company issued 145,600 shares of Class A Common Stock as part of the 2025 acquisitions. Holdback amounts reflect consideration transferred to be paid in cash after the acquisition date assuming conditions for release of the holdback are met. As of December 31, 2025, there was $ 1.3 million in holdback included in Accrued and other current liabilities on the Consolidated Balance Sheets related to 2025 acquisitions. A summary of the purchased assets and liabilities for the 2025 acquisitions acquired at their fair value was as follows (in thousands): IMD Other 2025 Acquisition Total Cash $ — $ 76 $ 76 Accounts receivable 3,293 989 4,282 Contract assets 419 225 644 Prepaid expenses and other current assets — 3 3 Property and equipment 1,318 23 1,341 Operating lease right-of-use assets 634 121 755 Goodwill 3,232 3,139 6,371 Intangible assets 7,690 4,070 11,760 Other assets — 8 8 16,586 8,654 25,240 Accounts payable ( 1,100 ) ( 64 ) ( 1,164 ) Accrued compensation and benefits ( 215 ) ( 74 ) ( 289 ) Accrued and other current liabilities ( 152 ) ( 18 ) ( 170 ) Contract liabilities ( 631 ) ( 769 ) ( 1,400 ) Current portion of operating lease liabilities ( 238 ) ( 104 ) ( 342 ) Operating lease liabilities, net of current portion ( 396 ) ( 17 ) ( 413 ) ( 2,732 ) ( 1,046 ) ( 3,778 ) Net acquired assets $ 13,854 $ 7,608 $ 21,462 96 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Finite-lived intangible assets that are being amortized using the straight-line method over their estimated lives at the applicable acquisition dates in 2025 consist of the following (in thousands, except weighted-average useful lives): IMD Other 2025 Acquisition Total Weighted- average Useful Life (in years) Customer relationships $ 5,040 $ 3,250 $ 8,290 8.3 Trade names 1,900 — 1,900 9.3 Contract backlog 750 820 1,570 1.7 $ 7,690 $ 4,070 $ 11,760 Goodwill arising from acquisitions is derived largely from expected synergies and growth as well as the acquired assembled workforces. Goodwill is deductible for tax purposes for the 2025 acquisitions. Total acquisition-related costs of $ 0.6 million were incurred during the year ended December 31, 2025 related to 2025 acquisitions. These costs are included within Acquisition-related costs in the Consolidated Statements of Operations for the year ended December 31, 2025. Subsequent acquisitions On November 13, 2025, the Company entered into an equity purchase agreement to acquire all of the outstanding equity of The Bowers Group, Inc. (“Bowers”). The acquisition was completed on January 2, 2026. Bowers is a mechanical contracting company based in Maryland. This acquisition adds mechanical contracting capabilities to the Company's existing electrical contracting capabilities in the mid-Atlantic region. The operations will be included in the Installation & Maintenance segment. On March 1, 2026, the Company acquired Metrix Engineers, LLC ("Metrix"). Metrix is an MEP engineering business based in Washington. This acquisition expands the Company's geographic footprint in engineering services. The operations will be included in the Engineering & Consulting segment. Total consideration transferred of $ 459.9 million for the 2026 acquisitions consists of the following, subject to customary post‑closing purchase price adjustments (in thousands): Bowers Metrix Total Cash $ 283,104 $ 25,181 $ 308,285 Issuance of Legence Corp Class A Common Stock 98,635 7,802 106,437 Deferred consideration 44,941 — 44,941 Holdback — 250 250 Total consideration transferred $ 426,680 $ 33,233 $ 459,913 For the Bowers acquisition, the Company issued 2,551,672 shares of Class A Common Stock. The deferred consideration is payable on December 31, 2026, in cash, Class A Common Stock, or a combination, at the Company’s discretion. The Company incurred incremental term loan borrowings of $ 200.0 million to partially finance the Bowers acquisition. Refer to " Note 9—Deb t ." For the Metrix acquisition, the Company issued 149,331 shares of Class A Common Stock. The 2026 acquisitions are business combinations and will be accounted for under the acquisition method. The initial accounting for the 2026 acquisitions is incomplete, and therefore the Company is unable to disclose the information required by ASC 805. The Company will include relevant disclosures as required in the first quarter of 2026. Included in Acquisition-related costs in the Consolidated Statements of Operations for the year ended December 31, 2025 is $ 4.5 million for the Bowers acquisition. 97 Table of Contents Legence Corp. Notes to Consolidated Financial Statements 2024 Acquisitions: On March 1, 2024, the Company acquired all of the outstanding equity of P2S LP (“P2S”). P2S is a consulting engineering, commissioning and construction management services firm based in California. This acquisition expands the Company’s services to new geographic markets and priority end markets throughout the Western United States. The P2S operations and associated goodwill are included in the Engineering & Consulting segment. On July 1, 2024, the Company acquired all of the outstanding equity of AMA Consulting Engineers Holdings LLC (“AMA”). AMA is a consulting engineering, commissioning and construction management firm based in New York. This acquisition expands the Company’s geographic footprint, technical offerings and end markets. The AMA operations and associated goodwill are included in the Engineering & Consulting segment. During the year ended December 31, 2024, the Company completed one other immaterial acquisition (“Other 2024 Acquisition”). The business is a part of the Engineering & Consulting segment and is an energy and sustainability advisory firm based in California. This acquisition expands the Company’s service offerings with a focus on providing sustainability services, strategy, benchmarking and reporting services to commercial real estate clients. Total consideration transferred of $ 243.7 million for the 2024 acquisitions consists of the following (in thousands): P2S AMA Other 2024 Acquisition Total Cash $ 62,520 $ 154,916 $ 3,203 $ 220,639 Parent issuance of Parent interests 20,719 — 1,381 22,100 Holdback — 983 — 983 Total consideration transferred $ 83,239 $ 155,899 $ 4,584 $ 243,722 Parent issued 9,189 and 613 Series C Common Interests in the Company's purchase of P2S and Other 2024 Acquisition, respectively. The fair value of Parent interests was estimated utilizing the OPM. Holdback amounts reflect consideration transferred to be paid in cash after the acquisition date assuming conditions for release of the holdback are met. As of December 31, 2025, there was $ 1.0 million in holdback included in Accrued and other current liabilities on the Consolidated Balance Sheets related to 2024 acquisitions. 98 Table of Contents Legence Corp. Notes to Consolidated Financial Statements A summary of the purchased assets and liabilities for the 2024 acquisitions acquired at their fair value was as follows (in thousands): P2S AMA Other 2024 Acquisition Total Cash $ 1,330 $ 2,578 $ — $ 3,908 Accounts receivable 16,843 27,123 — 43,966 Contract assets 6,254 5,521 11 11,786 Prepaid expenses and other current assets 1,532 506 — 2,038 Property and equipment 5,074 2,605 — 7,679 Operating lease right-of-use assets 19,746 3,537 — 23,283 Goodwill 28,193 96,643 1,685 126,521 Intangible assets 37,800 46,250 3,020 87,070 Other assets 340 12,377 — 12,717 117,112 197,140 4,716 318,968 Accounts payable ( 53 ) ( 8,891 ) ( 33 ) ( 8,977 ) Accrued compensation and benefits ( 3,963 ) ( 4,129 ) — ( 8,092 ) Accrued and other current liabilities ( 3,966 ) ( 2,831 ) — ( 6,797 ) Contract liabilities ( 6,238 ) ( 9,443 ) ( 96 ) ( 15,777 ) Current portion of operating lease liabilities ( 1,313 ) ( 850 ) — ( 2,163 ) Current portion of long-term debt — ( 316 ) — ( 316 ) Operating lease liabilities, net of current portion ( 18,288 ) ( 2,947 ) — ( 21,235 ) Long-term debt, net of current portion — ( 65 ) — ( 65 ) Other long-term liabilities — ( 11,769 ) — ( 11,769 ) Deferred tax liabilities, net ( 52 ) — ( 3 ) ( 55 ) ( 33,873 ) ( 41,241 ) ( 132 ) ( 75,246 ) Net acquired assets $ 83,239 $ 155,899 $ 4,584 $ 243,722 In the AMA acquisition, the Company assumed unrecognized tax benefits associated with consolidated VIEs, including interest and penalties, of $ 11.8 million, which was recorded in Other long-term liabilities on the Consolidated Balance Sheet. The seller agreed to indemnify the Company for the outcome of these unrecognized tax benefits. Accordingly, the Company recognized a corresponding indemnification asset in Other assets. As of December 31, 2025, the asset and liability were $ 8.0 million and $ 8.0 million, respectively. During the year ended December 31, 2025, the Company recognized a reduction in the liability for unrecognized tax benefits and related interest and penalties. Refer to “ Note 1 8— Income Taxes ” for further information. As a result, the Company recognized a $ 3.8 million reduction in the related indemnification asset as Other expense in the Consolidated Statement of Operations during the year ended December 31, 2025. 99 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Finite-lived intangible assets that are being amortized using the straight-line method over their estimated lives at the applicable acquisition dates in 2024 consist of the following (in thousands, except weighted-average useful lives): P2S AMA Other 2024 Acquisition Total Weighted- average Useful Life (in years) Customer relationships $ 27,600 $ 42,000 $ 2,850 $ 72,450 10.4 Trade names 4,900 — — 4,900 11.8 Contract backlog 5,300 4,250 170 9,720 1.4 $ 37,800 $ 46,250 $ 3,020 $ 87,070 During the year ended December 31, 2025, the purchase accounting was completed for all 2024 acquisitions without any material measurement period adjustments. Goodwill arising from acquisitions is derived largely from expected synergies and growth as well as the acquired assembled workforces. Goodwill is deductible for tax purposes for the P2S, AMA and the Other 2024 Acquisition. Total acquisition-related costs of $ 5.6 million were incurred during the year ended December 31, 2024, including $ 2.3 million for P2S and $ 2.6 million for AMA. These costs are included within Acquisition-related costs in the Consolidated Statements of Operations for the year ended December 31, 2024. 2023 Acquisitions: On August 1, 2023, the Company acquired all the outstanding equity of San Jose Boiler Works, Inc. ("San Jose Boiler"). San Jose Boiler is a full spectrum boiler sales, installation, maintenance and repair service company operating in California. The acquisition expands the Company's technical offerings and capabilities in Northern California while growing the service and maintenance base. The consideration transferred primarily includes cash and promissory notes issued to the sellers with face amounts totaling $ 3.3 million, consisting of 3-year promissory notes totaling $ 1.8 million and 1.5 -year promissory notes totaling $ 1.5 million. The promissory notes accrue interest at a 6.0 % annual rate, which may be added to the principal amount of the notes on an annual basis at the option of the Company. The acquisition-date fair value of the promissory notes was $ 3.2 million. The San Jose Boiler operations and associated goodwill are included in the Installation & Maintenance segment. On September 1, 2023, the Company acquired all the outstanding equity of A.O. Reed & Co. ("A.O. Reed"). A.O. Reed is a mechanical contracting company based in California. The acquisition expands the Company's fabrication, installation and maintenance services to new geographic markets and priority end markets. The consideration transferred includes an earnout provision for attainment of targeted EBITDA, as defined in the purchase agreement, for the year ended December 31, 2023, up to $ 12.0 million. The acquisition-date fair value of the contingent consideration was $ 11.5 million. The A.O. Reed operations and associated goodwill are included in the Installation & Maintenance segment. On November 1, 2023, the Company acquired all the outstanding equity of OCI Associates, LLC ("OCI"). OCI is a consulting engineering and commissioning services firm based in Florida. The acquisition expands the Company's technical offerings to new geographic markets and priority end markets. The consideration transferred includes an earnout provision for attainment of targeted EBITDA, as defined in the purchase agreement, for the year ended December 31, 2023, up to $ 3.0 million. The acquisition-date fair value of the contingent consideration was $ 2.4 million. The OCI operations and associated goodwill are included in the Engineering & Consulting segment. During the year ended December 31, 2023, the Company completed one other immaterial acquisition (“Other 2023 Acquisition”) and recognized a bargain purchase gain of $ 0.3 million, included in Other (income) expense, net on the Consolidated Statements of Operations, which was derived primarily from negotiating directly with sellers without a competitive bidding process. 100 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Total consideration transferred of $ 188.5 million for the 2023 acquisitions consists of the following (in thousands): San Jose Boiler A.O. Reed OCI Other 2023 Acquisition Total Cash $ 9,888 $ 99,691 $ 24,453 $ — $ 134,032 Parent issuance of Parent interests — 33,333 4,018 — 37,351 Contingent consideration (earnout) — 11,529 2,400 — 13,929 Promissory notes due to seller 3,150 — — — 3,150 Total consideration transferred $ 13,038 $ 144,553 $ 30,871 $ — $ 188,462 Parent issued 22,053 and 2,557 Series C Common Interests in the Company's purchase of A.O. Reed and OCI, respectively. The fair value of Parent interests was estimated utilizing the OPM. Contingent consideration is valued using a Monte Carlo Analysis. For the A.O. Reed and OCI acquisitions, the contingent consideration relates to sellers who became employees of the Company and therefore are related parties. Holdback amounts reflect consideration transferred to be paid in cash after the acquisition date assuming conditions for release of the holdback are met. Goodwill arising from acquisitions is derived largely from expected synergies and growth as well as the acquired assembled workforces. Goodwill is deductible for tax purposes for the A.O. Reed and OCI acquisitions. Goodwill is not deductible for tax purposes for the San Jose Boiler acquisition. Total Acquisition-related costs of $ 3.8 million were incurred during the year ended December 31, 2023, including $ 2.0 million for A.O. Reed, $ 1.0 million for OCI and $ 0.5 million for San Jose Boiler. These costs are included within Acquisition-related costs in the Consolidated Statements of Operations for the year ended December 31, 2023. Supplemental Pro Forma Information (Unaudited) Pro forma results for the 2025 acquisitions are not presented as they are not material to the Company's Consolidated Financial Statements. The following unaudited supplemental pro forma results of operations for Legence are presented as if 2024 acquisitions had been consummated on January 1, 2023 and 2023 acquisitions had been consummated on January 1, 2022. These unaudited supplemental pro forma results are provided for illustrative purposes only and may not be indicative of the actual results that would have been achieved by the combined companies or the future results of the combined companies (in thousands). Year Ended December 31, 2024 2023 Revenue $ 2,151,196 $ 1,985,764 Net loss attributable to Legence $ ( 18,156 ) $ ( 69,498 ) These pro forma combined historical results were adjusted for: an increase in interest expense for debt incurred by the Company to finance the transactions, increased depreciation and amortization expense due to the fair value of fixed assets and intangible assets, adjustments for operating lease right-of-use asset lease expense, and the reclassification of transaction expenses to the beginning of the respective pro forma period for each acquisition. The pro forma combined historical results do not eliminate the impact of Acquisition-related costs nor any cost savings or other synergies that may result from the acquisitions. Results of Operations The results of the businesses acquired in 2025 are not presented as they are immaterial to the Company's Consolidated Financial Statements. For the year ended December 31, 2024, Revenue of $ 105.9 million and Net loss attributable to Legence of $( 2.8 ) million are included in the Consolidated Statements of Operations for the businesses acquired in 2024. 101 Table of Contents Legence Corp. Notes to Consolidated Financial Statements For the year ended December 31, 2023, Revenue of $ 101.4 million and Net income attributable to Legence of $ 4.4 million are included in the Consolidated Statements of Operations for the businesses acquired in 2023. Note 5 - Goodwill and Intangible Assets The following is a summary of changes in the carrying value of Goodwill by segment (in thousands): Carrying value of Goodwill Engineering & Consulting Installation & Maintenance Total Balance, December 31, 2023 $ 327,950 $ 348,084 $ 676,034 Acquisitions 124,784 — 124,784 Measurement period adjustments ( 1,853 ) 33 ( 1,820 ) Impairment ( 17,804 ) — ( 17,804 ) Balance, December 31, 2024 433,077 348,117 781,194 Acquisitions 3,139 3,232 6,371 Measurement period adjustments 1,737 — 1,737 Impairment ( 24,966 ) — ( 24,966 ) Balance, December 31, 2025 $ 412,987 $ 351,349 $ 764,336 Accumulated goodwill impairment Balance, December 31, 2023 $ 5,051 $ 47,407 $ 52,458 Balance, December 31, 2024 $ 22,855 $ 47,407 $ 70,262 Balance, December 31, 2025 $ 47,821 $ 47,407 $ 95,228 During the annual impairment testing conducted on October 1, 2025, 2024 and 2023, the Company bypassed the qualitative assessment and proceeded directly to the quantitative assessment. The Company performed its annual goodwill impairment assessment for all reporting units and determined that the estimated fair value of each reporting unit exceeded its carrying amount. Subsequent to the annual goodwill impairment assessment, it was determined the carrying amount of Goodwill for one reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in Goodwill impairment of $ 25.0 million. The impairment was primarily driven by a decline in projected cash flows due to lower customer demand, extending sales cycles and project funding uncertainty in the alternative energy industry. During the year ended December 31, 2024, it was determined the carrying amount of Goodwill for the same reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in Goodwill impairment of $ 17.8 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue projections. Lower revenue projections primarily reflected the impact of delayed contract awards and the uncertainty that revenue will be realized for these contracts which are point-in-time revenue recognition contracts. During the year ended December 31, 2023, it was determined the carrying amount of Goodwill for a different reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in Goodwill impairment 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. Impairment charges are presented in Goodwill impairment on the Consolidated Statements of Operations. 102 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The Company’s identifiable intangible assets consist of the following (in thousands, except weighted-average remaining lives): December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-average Remaining Life (in years) Customer relationships $ 658,798 $ ( 209,054 ) $ 449,744 8.3 Trade names 180,428 ( 80,068 ) 100,360 5.4 Contract backlog 1,570 ( 254 ) 1,316 1.4 $ 840,796 $ ( 289,376 ) $ 551,420 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-average Remaining Life (in years) Customer relationships $ 652,315 $ ( 153,262 ) $ 499,053 9.3 Trade names 178,970 ( 61,137 ) 117,833 6.4 Contract backlog 18,745 ( 11,381 ) 7,364 0.6 $ 850,030 $ ( 225,780 ) $ 624,250 The value of acquired identifiable intangibles at the applicable acquisition dates in 2025 and 2024 are $ 11.8 million and $ 87.1 million, respectively. Refer to “ Note 4—Acquisitions ” for further information. Future amortization of intangible assets as of December 31, 2025 was as follows (in thousands): Year ending December 31: 2026 $ 78,407 2027 74,063 2028 73,763 2029 73,737 2030 72,475 Thereafter 178,975 $ 551,420 Note 6 - Variable Interest Entities and Equity Method Investments The Company holds interests in a number of joint ventures and other entities, some of which are VIEs. The Company consolidates a VIE when it is the primary beneficiary. For unconsolidated joint ventures, the Company accounts for its investment using the equity method. Consolidated Variable Interest Entities In connection with the Corporate Reorganization, Legence Corp. became the sole managing member of Legence Holdings, in which Legence Corp. operates and controls all of the business and affairs of Legence Holdings, and has the obligation to 103 Table of Contents Legence Corp. Notes to Consolidated Financial Statements absorb losses and receive benefits from Legence Holdings. Accordingly, Legence Holdings is evaluated under the guidance for limited partnerships and similar entities in ASC 810, Consolidation, and is considered a variable interest entity. Legence Corp. has both (i) the power to direct the activities that most significantly impact Legence Holdings’ economic performance and (ii) the right to receive benefits or the obligation to absorb losses that could be significant to Legence Holdings. Accordingly, Legence Corp. is the primary beneficiary and consolidates Legence Holdings in its consolidated financial statements. The assets of Legence Holdings can only be used to settle its own obligations. Refer to “ Note 14—Noncontrolling Interests .” The Company has various contractual relationships with two professional corporations ("PCs") that provide engineering and design services in New York and California. The Company does not own any equity interest in the PCs but provides most of the administrative functions, personnel and other resources required for the PCs to fulfill contracts with their customers. The Company receives fees from the PCs for these services. The Company is the primary beneficiary of the PCs. As such, the Company consolidates the PCs within the Consolidated Financial Statements. The table below shows the carrying amounts and classification of the PCs' assets and liabilities included on the Company's Consolidated Balance Sheets, excluding intercompany balances (in thousands): December 31, 2025 2024 Cash $ 5,019 $ 11,391 Accounts receivable, net 12,868 25,744 Contract assets, net 3,699 2,475 Total current assets 21,586 39,610 Other assets 224 467 Total assets $ 21,810 $ 40,077 Accrued and other current liabilities $ 2,359 $ 1,448 Contract liabilities 7,012 4,471 Total liabilities $ 9,371 $ 5,919 The assets of the PCs can only be used to settle their own obligations. The Company and the PCs have a promissory note agreement that allows each PC to borrow up to $ 1.0 million from the Company; however, no amounts have been borrowed. The Company's Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows, net of intercompany eliminations, are impacted by the performance of the PCs. The Company's Consolidated Financial Statements show noncontrolling interests, which represent the equity owned by the PCs' owner. Equity Method Investments The Company has investments in, and transactions with, a number of unconsolidated joint ventures. The investments and earnings are immaterial. In addition, the Company recognized related party revenue from subcontracts with these joint ventures of $ 2.6 million and $ 5.7 million for the years ended December 31, 2025 and 2024, respectively. These amounts are included in Revenue on the Consolidated Statements of Operations. 104 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Note 7 - Property and Equipment, net Property and equipment are summarized by major classifications as follows (in thousands): December 31, Property and equipment classification 2025 2024 Autos and trucks $ 43,473 $ 38,622 Computer equipment and software 42,582 37,450 Leasehold improvements 28,228 22,489 Equipment and tools 42,558 27,530 Office furniture and other 5,320 5,164 Finance lease assets (1) 18,231 12,242 Work-in-progress 10,591 560 Property and equipment, gross 190,983 144,057 Less: Accumulated depreciation ( 98,650 ) ( 70,676 ) Property and equipment, net $ 92,333 $ 73,381 (1) Refer to “ Note 8—Leases ” for further information. The depreciation expense on property and equipment amounted to $ 31.9 million, $ 29.9 million and $ 22.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. A portion of depreciation expense is included in Cost of revenue on the Consolidated Statements of Operations, which totaled $ 13.9 million, $ 13.7 million and $ 12.6 million for the same respective years. The remaining amount for each respective year is included in Depreciation and amortization on the Consolidated Statements of Operations. Note 8 - Leases The Company leases real estate, vehicles, and equipment under various arrangements. Certain real estate operating leases are under non-cancelable agreements with entities owned by members of its management team and/or Parent interests holders. The Company's operating leases primarily consist of real estate and equipment leases while finance leases primarily consist of vehicle leases. Many of the real estate operating leases contain options to renew or terminate the lease, generally at the Company's discretion. Lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. The Company does not have any leases that have not yet commenced that create significant rights and obligations for the lessee. The Company has short-term leases ranging in terms of 12 months or less. The majority of the Company's short-term leases relate to facilities and equipment used on construction projects. Construction equipment leases are generally entered into at agreed upon hourly, daily, weekly, or monthly rental rates for an unspecified duration and typically have a termination for convenience provision. Such leases are considered short-term in nature unless it is reasonably certain that they will be leased for a period greater than 12 months. The below tables present information for lease positions, lease expense, cash flow and other information, and maturity of lease liabilities. 105 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Lease position: Supplemental balance sheet information related to operating and finance leases was as follows (in thousands): December 31, Balance Sheet Classification 2025 2024 Finance leases Assets Finance lease assets Property and equipment, net $ 10,965 $ 7,444 Liabilities Current finance lease liabilities Current portion of long-term debt $ 3,747 $ 2,548 Long-term finance lease liabilities Long-term debt, net of current portion 6,895 4,668 Total finance lease liabilities $ 10,642 $ 7,216 Weighted-average remaining lease term in years: Operating leases - related parties 5.5 6.3 Operating leases 5.6 6.5 Finance leases 3.1 3.1 Weighted-average discount rate: Operating leases - related parties 7.8 % 7.8 % Operating leases 7.2 % 7.5 % Finance leases 7.2 % 8.1 % Lease expense: The components of lease expense recognized in the Consolidated Statements of Operations are as follows (in thousands): Consolidated Statements of Operations Classification Year Ended December 31, 2025 2024 2023 Finance lease expense: Amortization expense Depreciation and amortization $ 3,752 $ 2,460 $ 2,397 Interest expense Interest expense, net of capitalized interest 670 474 381 Operating lease expense - related parties Cost of revenue 960 882 510 Operating lease expense - related parties Selling, general and administrative 4,365 4,024 2,408 Operating lease expense Cost of revenue 1,637 2,921 2,511 Operating lease expense Selling, general and administrative 19,431 11,533 7,456 Short-term lease expense Cost of revenue 24,541 19,096 13,867 Short-term lease expense Selling, general and administrative 773 1,153 1,508 Variable lease expense Selling, general and administrative 2,874 1,642 2,338 Total lease expense $ 59,003 $ 44,185 $ 33,376 106 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Cash flow and other information: Supplemental cash flow and other information related to operating and finance leases was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases - related parties $ 5,387 $ 4,763 $ 2,866 Operating cash flows from operating leases $ 17,846 $ 11,986 $ 9,601 Operating cash flows from finance leases $ 666 $ 468 $ 380 Financing cash flows from finance leases $ 3,843 $ 2,460 $ 1,937 Supplemental noncash information: Right-of-use assets obtained in exchange for new operating lease liabilities - related parties (1) $ — $ 3,429 $ 13,317 Right-of-use assets obtained in exchange for new operating lease liabilities (1) $ 40,530 $ 31,452 $ 795 Right-of-use assets obtained in exchange for new finance lease liabilities $ 7,589 $ 4,732 $ 2,752 Right-of-use asset modifications for operating leases $ 4,012 $ 2,844 $ 3,846 (1) Includes right-of-use assets acquired. Refer to “ Note 4 — Acquisitions ”. Maturities of lease liabilities: The following table presents maturities of lease liabilities and reconciles future lease payments on an undiscounted cash flow basis to the lease liabilities in the Consolidated Balance Sheet as of December 31, 2025 (in thousands): Year ending December 31, Operating Leases Finance Leases 2026 $ 29,518 $ 4,357 2027 30,082 3,572 2028 27,155 2,616 2029 23,564 1,199 2030 18,789 43 Thereafter 25,175 — Total minimum lease payments 154,283 11,787 Less: Amount of lease payments representing interest ( 29,221 ) ( 1,145 ) Lease liabilities $ 125,062 $ 10,642 107 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Note 9 - Debt Debt obligations consist of the following (in thousands): Debt obligations December 31, 2025 2024 Term loan $ 797,772 $ 1,590,350 Notes payable 27,345 27,083 Finance lease liabilities 10,642 7,216 Total debt 835,759 1,624,649 Less: Current portion ( 16,694 ) ( 22,984 ) Less: Unamortized debt issuance costs and discounts ( 6,667 ) ( 15,819 ) Long-term debt, net of current portion $ 812,398 $ 1,585,846 Future payments on debt as of December 31, 2025 are presented in the table below (in thousands): Year ending December 31, 2026 $ 12,963 2027 18,592 2028 19,722 2029 7,978 2030 7,978 Thereafter 757,884 Total $ 825,117 Finance lease liabilities (see maturity analysis in " Note 8 — L eases ") 10,642 Total debt $ 835,759 Term loan On December 16, 2020, Legence Holdings entered into a credit agreement with Jefferies Finance LLC as the administrative agent for a group of lenders, which provided for (a) a term loan credit facility, (b) a delayed draw term loan credit facility and (c) a $ 200.0 million revolving credit facility. The term loan matures on December 16, 2031, and is secured by substantially all assets of the Company, subject to customary exclusions. A portion of the term loan is held by entities associated with the Company and BX Aggregators. They are subject to the same terms described below, including interest payments, principal payments and maturity. The credit agreement has been amended from time to time, including as described below: • On February 27, 2023, Legence Holdings amended the credit agreement to transition its benchmark interest from London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”) for an additional credit spread adjustment of 0.10 %. • On July 31, 2023, Legence Holdings obtained a $ 155.0 million incremental term loan, and the proceeds were used to fund acquisition-related payments. Legence Holdings paid debt issuance costs of $ 3.5 million related to this incremental term loan. • On January 19, 2024, Legence Holdings obtained a $ 125.0 million incremental term loan, and the proceeds were used to fund acquisition-related payments. Legence Holdings paid debt issuance costs of $ 0.9 million related to this incremental term loan. 108 Table of Contents Legence Corp. Notes to Consolidated Financial Statements • On June 18, 2024, Legence Holdings obtained a $ 125.0 million incremental term loan, and the proceeds were used to fund acquisition-related payments. Legence Holdings paid debt issuance costs of $ 0.2 million related to this incremental term loan. • On November 21, 2024, Legence Holdings obtained a $ 315.0 million incremental term loan, and the proceeds were used for general corporate purposes, including to fund a shareholder distribution, as discussed in " Note 12—Stockholders' Equity / Member's Equity ,” and to fund acquisition-related payments. Legence Holdings paid debt issuance costs of $ 0.4 million related to this incremental term loan. • On February 6, 2025, the credit agreement was amended to reduce the interest rate and extend the maturity date of the term loan from December 16, 2027, to December 16, 2028. In connection with the amendment, Legence Holdings incurred $ 2.9 million of fees with third parties that are recognized in Credit agreement amendment fees on the Consolidated Statements of Operations. • On September 8, 2025, Legence Holdings and certain of its subsidiaries amended the credit agreement to, among other things, facilitate the Corporate Reorganization. • On September 15, 2025, the Company used IPO proceeds and cash on hand to prepay $ 780.3 million of the term loan debt. In connection with the prepayment, Legence Holdings recognized a loss on debt extinguishment of $ 5.7 million related to previously deferred discounts and debt issuance costs. These costs are recognized in Loss on debt extinguishment in the Consolidated Statements of Operations for the year ended December 31, 2025. • On October 30, 2025, the credit agreement was amended to reduce the interest rate and extend the maturity date of the term loan from December 16, 2028, to December 16, 2031. In connection with the amendment, Legence Holdings incurred $ 3.7 million of fees, of which $ 3.0 million relate to third parties that are recognized in Credit agreement amendment fees on the Consolidated Statements of Operations. Prior to the February 6, 2025 amendment, SOFR rate loans bore interest at SOFR plus 3.25 % to 3.75 % based on Legence Holdings's Consolidated First Lien Net Leverage Ratio (the "Net Leverage Ratio"), (generally defined as the ratio of indebtedness net of cash to consolidated pro forma adjusted EBITDA for the preceding four fiscal quarters), with a SOFR floor of 0.75 %, plus a 0.10 % credit spread adjustment. Base rate loans bore interest at 2.25 % to 2.75 % plus the base rate, which is the highest of (a) the federal funds rate plus 0.50 %, (b) the prime rate and (c) the SOFR rate for one month plus 1.00 % ("Base Rate"), plus a 0.10 % credit spread adjustment. After the February 6, 2025 amendment and until October 30, 2025, SOFR rate loans bore interest at SOFR plus 2.75 % to 3.25 % with a SOFR floor of 0.75 %. Base rate loans bore interest at 1.75 % to 2.25 % plus the Base Rate. As a result of the IPO, the interest rate for term loans was reduced by 0.25 %. After the October 30, 2025 amendment, SOFR rate loans bear interest at SOFR plus 2.25 % with a SOFR floor of 0.75 %. Base rate loans bear interest at 1.25 % plus the base rate. Interest on SOFR rate loans is payable based on the selected interest period if less than three months or quarterly if the selected interest period is three months or longer. Interest on base rate loans is payable quarterly. As of December 31, 2025, principal payments on the term loans of $ 2.0 million are payable quarterly, with any remaining principal balance due on December 16, 2031. Subject to the requirements of the agreement, Legence Holdings may also be required, as applicable, to make additional principal payments based on its excess cash flow, as defined in the agreement. The credit agreement contains customary representations and warranties and customary events of default, as well as certain affirmative and negative covenants. Legence Holdings is in compliance with the financial covenants as of December 31, 2025. 109 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Subsequent to the year ended December 31, 2025, on January 2, 2026, Legence Holdings obtained a $ 200.0 million incremental term loan, and used the proceeds to fund acquisition-related payments. The incremental term loan increased the quarterly principal payments to $ 2.5 million. Revolving line of credit Legence Holdings has a revolving line of credit agreement with Jefferies Finance LLC as the administrative agent for a group of lenders, up to $ 200.0 million. Borrowings under the revolving line of credit agreement are secured by substantially all the assets of the Company. On November 21, 2024, the maturity date of the revolving line of credit agreement was extended from December 16, 2025 to December 16, 2026. On October 30, 2025, the revolving line of credit agreement was amended to increase the revolving line of credit capacity from $ 90.0 million to $ 200.0 million and extended the maturity date from December 16, 2026, to September 22, 2030. Advances, including standby letters of credit, under the revolving line of credit agreement may be elected to be treated as either SOFR rate loans or base rate loans. Prior to the October 30, 2025 amendment, SOFR rate loans bore interest at SOFR plus 3.50 % to 4.00 % based on Legence Holdings's Net Leverage Ratio, with a SOFR floor of 0 %, and base rate loans bore interest at 2.50 % to 3.00 % plus the base rate, which is the highest of (a) the federal funds rate plus 0.50 %, (b) the prime rate and (c) the SOFR rate for one month plus 1.00 %. As a result of the IPO, the interest rate for revolving credit loans and the fee rate on letters of credit was reduced by 0.25 %. As a result of the October 30, 2025 amendment, SOFR rate loans bear interest at SOFR plus 2.25 % and base rate loans bear interest at 1.25 % plus the base rate. Interest on SOFR rate loans is payable based on the selected interest period if less than three months or quarterly if the selected interest period is three months or longer. Interest on base rate loans is payable quarterly. In addition, a revolver commitment fee is payable quarterly for the unused portion of the revolving line of credit at a rate of 0.38 % to 0.50 % based on Legence Holdings's Net Leverage Ratio. As of December 31, 2025, the rate for the unused portion of the revolving line of credit is 0.38 %. The revolving line of credit may be used to issue standby letters of credit, which reduce the available borrowings. As of December 31, 2025, there are $ 5.7 million letters of credit outstanding under the revolving line of credit, with an interest rate of 2.38 %. As of December 31, 2025, $ 194.3 million was available to be borrowed under the revolving line of credit. There were no borrowings under the revolving line of credit as of December 31, 2025 or 2024. Subsequent to the year ended December 31, 2025, on January 2, 2026, Legence Holdings borrowed $ 25.0 million under the revolving line of credit to fund working capital needs. The borrowing was repaid in January 2026. The Company's revolving line of credit agreement, in addition to customary affirmative covenants, contains a springing financial maintenance covenant that requires the Consolidated First Lien Net Leverage Ratio to be less than 8.50 to 1.00 if certain testing conditions are satisfied. The springing financial maintenance covenant is only tested if as of the last day of a Test Period (generally quarterly) the amount of loans and/or letters of credit outstanding under the revolving line of credit is greater than 35 % of the facility size. The springing financial maintenance covenant was not required to be tested during the periods presented in the Consolidated Financial Statements, and the Company is in compliance with the financial covenant as of December 31, 2025. Notes payable As part of the consideration transferred to acquire certain companies in prior years, the Company issued notes payable to former owners of the acquired companies. The former owners are considered related parties when they are employees or Parent interests holders. The Company can prepay these notes without penalty. 110 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The Company issued a promissory note payable in connection with a 2022 acquisition. As of December 31, 2025 and 2024, the outstanding balance is $ 10.6 million and $ 10.0 million, respectively, and the carrying value is $ 10.1 million and $ 9.3 million, respectively, recorded in Long-term debt, net of current portion on the Consolidated Balance Sheets. The stated interest rate is 5.5 %. All principal and interest are due at the earlier of the end of the 5-year term in 2027 or upon a sale event as defined in the note agreement. The Company issued promissory notes payable in connection with the 2023 acquisition of San Jose Boiler and a 2022 acquisition, and the holders of the promissory notes were related parties as of December 31, 2025 and 2024. As of December 31, 2025 and 2024, the outstanding balance is $ 13.7 million and $ 14.6 million, respectively, and the carrying value is $ 12.8 million and $ 13.4 million, respectively. As of December 31, 2025 and 2024, $ 10.8 million and $ 11.8 million, respectively, are recorded in Long-term debt, net of current portion on the Consolidated Balance Sheets. As of December 31, 2025 and 2024, $ 2.0 million and $ 1.6 million, respectively, is recorded in Current portion of long-term debt on the Consolidated Balance Sheets. The promissory notes have a range of stated interest rates from 5.5 % to 6.0 % and maturities ranging from 2026 to 2028, at which time all principal and interest are due. The promissory note related to the 2022 acquisition requires the Company to repay all principal and interest earlier if the Company undergoes a change of control as defined in the note agreement. The Company also financed certain insurance-related payments. As of December 31, 2025 and 2024, the outstanding balance is $ 3.0 million with an interest rate of 7.4 % and $ 2.1 million with an interest rate of 8.5 %, respectively. The outstanding balance is included in Current portion of long-term debt. Finance leases Refer to “ Note 8—Leases ” for information on finance leases. Note 10 - Fair Value Measurements The Company recognizes certain financial assets and liabilities at fair value on a recurring basis following the fair value hierarchy detailed in “ Note 2—Summary of Significant Accounting Policies .” The following table presents the input level used to determine the fair value of the financial instruments measured at fair value on a recurring basis (in thousands): December 31, 2025 Level 1 Level 2 Level 3 Assets: Cash equivalents - money market $ 572 $ — $ — Interest rate swap instruments $ — $ 42 $ — Liabilities: Interest rate swap instruments $ — $ 1,194 $ — December 31, 2024 Level 1 Level 2 Level 3 Assets: Cash equivalents - money market $ 49,217 $ — $ — Interest rate swap instruments $ — $ 9,248 $ — Liabilities: Interest rate swap instruments $ — $ 137 $ — The carrying value of Cash approximates fair value due to its short-term nature. 111 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Interest Rate Swap Instruments: Additional information regarding the accounting policies and relevant derivative instrument disclosure information for the Company’s interest rate swaps can be found in “ Note 2—Summary of Significant Accounting Policies ” and “ Note 11—Derivatives .” For determining the fair value of the interest rate swap contracts, the Company uses significant observable market data or assumptions (Level 2 inputs) that market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. The fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data, including interest rate curves. Contingent Consideration Liabilities: Contingent consideration liabilities are related to business acquisitions with earnout provisions included in the respective purchase agreement, as further described in “ Note 4—Acquisitions ,” pursuant to which a payment may be made at a specified future date based on the performance of the acquired business subsequent to the acquisition. The Company's contingent consideration liabilities are measured at fair value using Level 3 unobservable inputs. The Level 3 inputs include internally developed assumptions of the probabilities of achieving the specified earnout target. A probability weighted discounted cash flow method is used to convert the projected earnings to a present fair value, including inputs such as projected earnings from the acquired business, the likelihood of such outcomes, and specific contractual terms governing the individual earnout. Changes in the fair value of contingent consideration liabilities are recorded to Changes in the fair value of contingent consideration liabilities on the Company's Consolidated Statements of Operations. During the years ended December 31, 2024, there were no significant changes in the valuation techniques or inputs related to the Company's contingent consideration liabilities. The following is a Level 3 summary of changes in contingent consideration liabilities (in thousands): 2024 Balance, beginning of period $ 65,700 Payment of contingent consideration - cash ( 65,700 ) Balance, end of period $ — During the year ended December 31, 2024, all contingent consideration liabilities were paid in cash, primarily relating to A.O. Reed, OCI and a 2022 acquisition; $ 33.2 million of these payments were made to related parties. During the year ended December 31, 2023, the Company recognized $ 31.1 million in Changes in fair value of contingent consideration liabilities in the Consolidated Statements of Operations, paid $ 10.7 million of contingent consideration in cash, and paid $ 9.3 million of contingent consideration in Parent interests. Included in these amounts are $ 13.4 million, $ 10.7 million, and $ 9.3 million, respectively, of amounts related to related parties. Included in the $ 31.1 million of Change in fair value of contingent consideration liabilities is a $ 27.0 million increase related to a 2022 acquisition due to the achievement of the targeted EBITDA, as defined in the purchase agreement. Cash payments made for the settlement of contingent consideration liabilities are included within the financing section on the Consolidated Statements of Cash Flows for amounts up to the acquisition-date fair value of the liability. Noncash payments, related to a 2021 acquisition, made for the settlement of a contingent consideration liability during the year ended December 31, 2023 include 6,800 Parent interests to a related party. Financial Instruments Not Carried at Fair Value: The table below shows the fair value and carrying value of the term loan and promissory notes (a component of notes payable) included in Total debt as shown in " Note 9—Debt " (in thousands): 112 Table of Contents Legence Corp. Notes to Consolidated Financial Statements December 31, 2025 December 31, 2024 Fair Value Carrying Value Fair Value Carrying Value Term loan $ 803,995 $ 792,515 $ 1,597,825 $ 1,576,502 Promissory notes $ 21,490 $ 22,906 $ 19,475 $ 22,646 The fair value of the term loan as of December 31, 2025 and 2024 was derived by taking the mid-point of the trading prices from observable market inputs in the secondary bond market for the term loan (Level 2 measurement) and multiplying it by the outstanding face value of the term loan. The fair value of the promissory notes as of December 31, 2025 and 2024 was calculated using a discounted cash flow methodology under the income approach, using interest rate indices, risk premiums, and adjustments for the size and subordination of the instrument (Level 3 measurement). The carrying value of the remaining notes payable and finance lease liabilities approximates fair value as of December 31, 2025 and 2024. Note 11 - Derivatives Interest Rate Swaps: The Company has multiple interest rate swap agreements designated as cash flow hedges. The Company utilizes these interest rate swap agreements to reduce exposure to fluctuations in variable interest rates for future interest payments on its term loan. The total notional amount is $ 785.0 million and $ 815.0 million as of December 31, 2025 and 2024, respectively. During the first quarter of 2023, the Company amended the swap agreements to transition its benchmark interest from LIBOR to SOFR. Failure of the interest rate swap counterparties to make payments may result in the loss of any potential benefit to the Company under the interest rate swap agreements. The Company mitigates risk of non-performance by counterparties by dealing with highly rated counterparties. The Company does not use financial instruments for trading or speculative purposes. Additional information regarding the accounting policies and relevant fair value information for the Company’s interest rate swaps can be found in “ Note 2—Summary of Significant Accounting Policies ” and “ Note 10—Fair Value Measurements .” The fair value of derivative instruments is presented in the Consolidated Balance Sheets, as follows (in thousands): December 31, Balance Sheet Location 2025 2024 Derivatives designated as hedging instruments Interest rate swap asset (short-term) Prepaid expenses and other current assets $ 42 $ 5,861 Interest rate swap asset (long-term) Other assets $ — $ 3,387 Interest rate swap liability (short-term) Accrued and other current liabilities $ 886 $ — Interest rate swap liability (long-term) Other long-term liabilities $ 308 $ 137 113 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The following table presents the gross changes in AOCI from the Company’s cash flow hedges (in thousands). 2025 2024 2023 Beginning balance $ 9,111 $ 22,166 $ 39,556 Unrealized (loss) gain recognized in AOCI ( 3,296 ) 14,789 7,512 Gain reclassified from AOCI to Interest expense ( 6,967 ) ( 27,844 ) ( 24,902 ) Other comprehensive loss ( 10,263 ) ( 13,055 ) ( 17,390 ) Ending balance ( 1,152 ) 9,111 22,166 Noncontrolling interests ( 454 ) — — Accumulated (loss) gain in AOCI $ ( 698 ) $ 9,111 $ 22,166 For the years ended December 31, 2025, 2024 and 2023, there was no ineffectiveness recognized in earnings. The following table provides additional details related to the interest rate swap agreements, as amended, that are in effect as of December 31, 2025 (notional in thousands): Effective Date (1) Maturity Date Notional Amount (2) Fixed Interest Rate (3) February 28, 2023 December 31, 2026 $ 337,500 3.4396 % February 28, 2023 December 31, 2026 $ 337,500 3.3750 % January 31, 2024 December 31, 2026 $ 110,000 — $ 140,000 4.0433 % December 31, 2026 December 31, 2027 $ 200,000 3.2480 % December 31, 2026 December 31, 2027 $ 200,000 3.2480 % (1) The interest rate swaps with effective dates of December 31, 2026 were added during July 2025 and are not included in the notional amount as of December 31, 2025. (2) For interest rate swaps with ranges, the notional amount is $ 140,000 from January 31, 2024 to September 14, 2025 and $ 110,000 from September 15, 2025 to December 31, 2026, due to a $ 30.0 million reduction in notional amount in connection with the debt prepayment on September 15, 2025. (3) Payments will be made to the Company if the one-month SOFR exceeds the fixed interest rates for the respective interest rate swaps. The following table provides additional details related to the interest rate swap agreements, as amended, that are in effect as of December 31, 2024 (notional in thousands): Effective Date Maturity Date Notional Amount (1) Fixed Interest Rate (2) February 28, 2023 January 31, 2025 $ 350,000 0.8325 % February 28, 2023 January 31, 2025 $ 109,000 1.1740 % February 28, 2023 January 31, 2025 $ 109,000 1.1732 % February 28, 2023 December 31, 2026 $ 53,500 — $ 337,500 3.4396 % February 28, 2023 December 31, 2026 $ 53,500 — $ 337,500 3.3750 % January 31, 2024 December 31, 2026 $ 140,000 4.0433 % (1) For interest rate swaps with ranges, the notional amount is $ 53,500 from January 31, 2023 to January 31, 2025 and $ 337,500 from February 1, 2025 to December 31, 2026. (2) Payments will be made to the Company if the one-month SOFR exceeds the fixed interest rates for the respective interest rate swaps. 114 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The following table provides additional details related to the interest rate swap agreements in effect as of December 31, 2023 (notional in thousands): Effective Date Maturity Date Notional Amount (1) Fixed Interest Rate (2) February 28, 2023 January 31, 2025 $ 350,000 0.8325 % February 28, 2023 January 31, 2025 $ 109,000 1.1740 % February 28, 2023 January 31, 2025 $ 109,000 1.1732 % February 28, 2023 December 31, 2026 $ 53,500 — $ 337,500 3.4396 % February 28, 2023 December 31, 2026 $ 53,500 — $ 337,500 3.3750 % (1) For interest rate swaps with ranges, the notional amount is $ 53,500 from January 31, 2023 to January 31, 2025 and $ 337,500 from February 1, 2025 to December 31, 2026. (2) Payments will be made to the Company if the one-month SOFR exceeds the fixed interest rates for the respective interest rate swaps. The following interest rate swap agreements were added in March 2026 (notional in thousands): Effective Date Maturity Date Notional Amount Fixed Interest Rate (1) December 31, 2026 December 31, 2028 $ 100,000 3.4581 % December 31, 2026 December 31, 2028 $ 100,000 3.6995 % (1) Payments will be made to the Company if the one-month SOFR exceeds the fixed interest rates for the respective interest rate swaps. Note 12 - Stockholders' Equity / Member's Equity Stockholders' Equity Prior to the IPO, Legence Holdings was reorganized to establish the Company’s current UP-C structure, under which Legence Corp., the publicly traded entity, became the sole managing member and consolidates Legence Holdings’ financial results. In connection with the Corporate Reorganization: • Legence Corp. became the sole managing member of Legence Holdings, providing Legence Corp. with 100 % of the voting power of Legence Holdings. • All outstanding equity interests of Legence Holdings were recapitalized into LGN A Units and LGN B Units. The number of LGN A Units corresponds on a one -for-one basis with shares of the Company’s Class A Common Stock, while the number of LGN B Units corresponds on a one -for-one basis with shares of the Company’s Class B Common Stock. As of December 31, 2025, Legence Corp. and its subsidiaries held 63,856,975 LGN A Units and Legence Parent held 41,479,954 LGN B Units. • A noncontrolling interest was recognized to reflect the ownership of LGN B Units held by Legence Parent. Secondary Offering On December 16, 2025, the Company completed a secondary offering of 8,402,178 shares of Class A Common Stock on behalf of the Parent Entities at a price of $ 45.00 per share. In connection with the transaction, Legence Parent ML exchanged 5,200,808 issued and outstanding LGN B Units, together with an equal number of corresponding shares of Class B Common Stock, for an equal number of shares of Class A common stock. Additionally, the Parent Entities granted the underwriters a 30-day option to purchase up to 1,260,326 additional shares of Class A Common Stock. Subsequent to the year ended December 31, 2025, on January 8, 2026, the underwriters fully exercised the option to purchase 1,260,326 additional shares of Class A Common Stock, of which 780,121 were issued in exchange for LGN B Units, together with an equal number of corresponding shares of Class B Common Stock, held by Legence Parent ML. As a result of the exchanges, the LGN B Units that were previously classified as noncontrolling interests were converted into LGN A Units held by Legence Corp. and its subsidiaries, thereby increasing the Company’s ownership interest in 115 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Legence Holdings. The Company did not issue or sell any shares of Class A Common Stock in the offering and did not receive any proceeds from the sale of shares by the Parent Entities. Acquisitions In connection with the 2025 acquisitions, the Company issued 145,600 shares of Class A Common Stock. Subsequent to the year ended December 31, 2025, the Company issued 2,551,672 shares of Class A Common Stock as noncash consideration for the acquisition of Bowers and issued 149,331 shares of Class A Common Stock as noncash consideration for the acquisition of Metrix. Refer to “ Note 4—Acquisitions ” for additional information. Amendment and Restatement of Certificate of Incorporation In connection with the IPO and Corporate Reorganization, the certificate of incorporation of Legence Corp. was amended and restated to provide for the authorization of (i) 1,000,000,000 shares of Class A Common Stock, (ii) 200,000,000 shares of Class B Common Stock, and (iii) 50,000,000 shares of preferred stock, each with a par value of $ 0.01 per share. Class A Common Stock Shares of Class A common stock have both voting and economic rights. Each share of Class A Common Stock entitles the holder to one vote per share. Shares of Class A Common Stock are entitled to dividends and pro rata distribution of remaining available assets upon liquidation. Shares of Class A Common Stock do not have preemptive, subscription, redemption or conversion rights. Class B Common Stock Shares of Class B Common Stock have voting but no economic rights. Holders of Class B Common Stock are entitled to one vote per share. Each share is issued for nominal consideration solely to maintain voting alignment with LGN B Units, and will be surrendered and cancelled upon the exchange of LGN B Units for shares of Class A Common Stock. Preferred Stock As of December 31, 2025, no shares of preferred stock were issued or outstanding. Under the Company’s Amended and Restated Certificate of Incorporation, the Board may issue shares of preferred stock in one or more series without further approval from holders of common stock. For each series, the Board has the authority to determine the number of shares and to establish the designations, powers, preferences, and rights of such shares, as well as any qualifications, limitations, or restrictions, including dividend rights, conversion or exchange features, voting rights, redemption provisions, and liquidation preferences. Refer to “ Note 1—Nature of Operations ” for a summary of Member's Equity and structure prior to the IPO and Corporate Reorganization. Tax distributions of $ 1.4 million were made during the year ended 2024. During the year ended December 31, 2023, there were no tax distributions. During the years ended December 31, 2024 and 2023, the Company made capital distributions of $ 300.2 million and $ 1.5 million, respectively, including $ 0.4 million for the return to holders of Restricted Series C Common Interests for the year ended December 31, 2024. Please refer to “ Note 13—Stock-Based Compensation and Long-term Incentive Awards ” for additional information related to Series A Interests and Restricted Series C Interests. Subsequent to the year ended December 31, 2025, on February 25, 2026, the Board adopted the 2026 Employee Stock Purchase Plan ("2026 ESPP"), including the reservation of 1,580,053 shares of Class A Common Stock for issuance under the 2026 ESPP. The 2026 ESPP is subject to the approval of our stockholders. Pursuant to the 2026 ESPP, eligible employees may contribute up to 15 % of their cash compensation during quarterly purchase periods for the purchase of Class A Common Stock up to an annual maximum of $ 25,000 per employee. On each purchase date, participants are entitled to acquire shares of Class A Common Stock at 90 % of the Company's closing price on such date. 116 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Note 13 - Stock-Based Compensation and Long-term Incentive Awards Series A Interests and Restricted Series C Interests Modifications of Series A Time Interests and Restricted Series C Common Interests In connection with the IPO, the Company underwent a Corporate Reorganization in which the Series A Time Interests originally issued by Legence Parent were exchanged for equivalent interests in newly created entities above the consolidated structure of the Company (refer to “ Note 1—Nature of Operations ”). The Company determined the exchanges were contemporaneous and effectuated as part of the UP-C structure. The key terms and vesting conditions of the Rollover Series A Profits Interests and Rollover Restricted Series C Interests remain consistent with those of the original Series A Profits Interests and Restricted Series C Common Interests, respectively. The Corporate Reorganization resulted in a modification of the Series A Time Interests and Restricted Series C Common Interests, the impact of which is described as follows: • Series A Time Interests: The Time Interests will continue to be remeasured at fair value at each reporting date with an offset to equity based on capital contributions from the issuers (refer to “ Note 2—Summary of Significant Accounting Policies ”). As the modification did not result in a change to the fair-value based measurement approach, no incremental compensation cost was recognized during the period. • Restricted Series C Common Interests: The Rollover Restricted Series C Interests will continue to be remeasured at fair value at each reporting date. As the modification did not result in a change to the fair-value based measurement approach, no incremental compensation cost was recognized during the period. Additionally, on September 16, 2025, the Series A Interests were modified such that for purposes of distributions, Time Interests are treated as fully vested while the holder remains employed by the Company. The Time Interests will continue to be remeasured at fair value at each reporting date. As the modification did not result in a change to the fair-value based measurement approach, no incremental compensation cost was recognized during the period. Series A Interests Time Interests were liability classified as of December 31, 2024 and equity classified as of December 31, 2025 (refer to “ Note 2—Summary of Significant Accounting Policies ”). The stock-based compensation liability for Time Interests as of December 31, 2024 is $ 19.9 million and is included in Other long-term liabilities on the Consolidated Balance Sheets. The activity of the Time Interests issued to employees of the Company was as follows: Time Interests Weighted- average Grant Date or Modification Date Fair Value Per Interest (1) Outstanding as of December 31, 2023 39,498 $ 346 Granted 3,682 580 Forfeited ( 394 ) 441 Vested ( 121 ) 344 Outstanding as of December 31, 2024 42,665 365 Granted 6,178 897 Forfeited ( 857 ) 977 Vested ( 577 ) 395 Outstanding at December 31, 2025 47,409 $ 1,176 (1) As discussed above, grants were modified during the year ended December 31, 2025. 117 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The fair value of Time Interests was estimated using the OPM as of December 31, 2025 and 2023 and the hybrid method as of December 31, 2024 with the following assumptions: December 31, 2025 2024 2023 Expected dividend yield — % — % — % Risk-free interest rate 3.5 % 4.3 % 3.8 % Expected volatility 55 % 75 % 55 % Expected life (years) 2.5 2.7 5.0 The hybrid method assumptions above for December 31, 2024 were based on the weighted average assumptions of potential future scenarios as follows: Net Settle at IPO (1) Remain as Profits Interests post IPO (2) Delayed Exit (3) Expected dividend yield — % — % — % Risk-free interest rate 4.2 % 4.3 % 4.3 % Expected volatility 80 % 70 % 70 % Expected life (years) 0.5 3.5 5.0 (1) The Company completes an IPO, and Series A Profits Interests are settled. (2) The Company completes an IPO, and Series A Profits Interests remain outstanding. (3) The Company does not undergo a Change of Control in the foreseeable future. The compensation expense and corresponding income tax benefit for Time Interests was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Selling, general and administrative $ 49,547 $ 3,786 $ 8,095 Cost of revenue 12,286 1,026 1,923 Compensation expense $ 61,833 $ 4,812 $ 10,018 Income tax benefit $ — $ — $ 403 For the year ended December 31, 2025, Parent Entities distributed $ 26.2 million related to Time Interests, which the Company recorded as compensation expense. There were no distributions for Time Interests for the years ended December 31, 2024 or 2023. As of December 31, 2025, the unrecognized compensation expense related to Time Interests is approximately $ 21.1 million to be recognized over a remaining weighted-average term of 1.4 years. 118 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The compensation expense and corresponding income tax benefit for Performance Interests was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Selling, general and administrative $ 370 $ — $ — Cost of revenue 83 — — Compensation expense $ 453 $ — $ — Income tax benefit $ — $ — $ — Payments related to the Performance Interests and Exit Interests are contingent upon the achievement of specified market thresholds and require the recipient’s continued employment through distribution dates. Once the applicable thresholds are achieved, holders are entitled to receive payments upon each qualifying distribution from the Parent Entities. For the year ended December 31, 2025, Parent Entities distributed $ 0.5 million to holders of Performance Interests after the threshold for the Performance Interests was met, which the Company recorded as compensation expense. There were no distributions for Performance Interests and no compensation expense recorded for Performance Interests for the years ended December 31, 2024 or 2023. There were no distributions for Exit Interests and no compensation expense recorded for Exit Interests for the years ended December 31, 2025, 2024 or 2023. Because additional distributions are dependent on future liquidity events that are not considered probable as of the financial statement dates, no compensation was accrued for these awards as of December 31, 2025 or 2024. Restricted Series C Interests Restricted Series C Interests were liability classified as of December 31, 2024 and equity classified as of December 31, 2025 (refer to “ Note 2—Summary of Significant Accounting Policies ”). The stock-based compensation liability for Restricted Series C Interests as of December 31, 2024 is $ 0.5 million and is included in Other long-term liabilities on the Consolidated Balance Sheets. The activity of the Restricted Series C Common Interests issued to employees of the Company was as follows: Restricted Series C Interests Weighted- average Grant Date or Modification Date Fair Value Per Interest (1) Outstanding as of December 31, 2023 1,278 $ 1,571 Granted — — Outstanding as of December 31, 2024 1,278 1,571 Granted — — Outstanding as of December 31, 2025 1,278 $ 2,611 119 Table of Contents Legence Corp. Notes to Consolidated Financial Statements (1) As discussed above, grants were modified during the year ended December 31, 2025. The fair value was estimated using the OPM as of December 31, 2025 and 2023 and the hybrid method as of December 31, 2024 with the following assumptions: December 31, 2025 2024 2023 Expected dividend yield — % — % — % Risk-free interest rate 3.5 % 4.3 % 3.8 % Expected volatility 55 % 75 % 55 % Expected life (years) 2.5 2.7 5.0 The hybrid method assumptions above for December 31, 2024 were based on the weighted average assumptions of potential future scenarios as follows: Net Settle at IPO (1) Remain as Restricted Series C Interests post IPO (2) Delayed Exit (3) Expected dividend yield — % — % — % Risk-free interest rate 4.2 % 4.3 % 4.3 % Expected volatility 80 % 70 % 70 % Expected life (years) 0.5 3.5 5.0 (1) The Company completes an IPO, and Restricted Series C Interests are settled. (2) The Company completes an IPO, and Restricted Series C Interests remain outstanding. (3) The Company does not undergo a Change of Control in the foreseeable future. The compensation expense for Restricted Series C Interests was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Selling, general and administrative $ 1,151 $ 273 $ 15 Cost of revenue 1,375 326 18 Compensation expense $ 2,526 $ 599 $ 33 For the year ended December 31, 2025, Parent Entities distributed $ 1.7 million related to Restricted Series C Interests, which the Company recorded as compensation expense. For the year ended December 31, 2024 the Company made a capital distribution of $ 0.4 million related to Restricted Series C Interests. There were no distributions for Restricted Series C Interests for the year ended December 31, 2023. As of December 31, 2025, the unrecognized compensation expense related to Restricted Series C Interests is approximately $ 1.6 million to be recognized over a remaining weighted-average term of 2.9 years. 2025 Omnibus Incentive Plan The Omnibus Incentive Plan allows the Company to issue stock options, stock appreciation rights, RSUs, performance awards and other stock-based awards or cash awards to eligible employees, non-employee directors and consultants. RSUs 120 Table of Contents Legence Corp. Notes to Consolidated Financial Statements RSUs represent the right to receive shares of the Company's Class A Common Stock upon vesting. RSUs are subject to a graded service-based vesting condition, vesting in three equal installments over three years subject generally to continued employment. RSUs granted to non-employee directors are subject to a service-based vesting condition, vesting at the earlier of one-year or the annual stockholders' meeting following the grant date, subject generally to continued service. The following table summarizes the RSUs activity during the year ended December 31, 2025 (in thousands, except per share data): RSUs Weighted-Average Grant Date Fair Value per Share Outstanding as of December 31, 2024 — $ — Granted 688,880 28.00 Vested — — Forfeited ( 2,678 ) — Outstanding as of December 31, 2025 686,202 $ 28.00 As of December 31, 2025, unrecognized stock-based compensation expense related to the RSUs was $ 17.4 million, which is expected to be recognized over a weighted-average period of 2.7 years. For the year ended December 31, 2025, the Company recognized $ 0.8 million and $ 1.3 million of stock-based compensation expense related to RSUs in Cost of revenue and Selling, general and administrative, respectively, on the Consolidated Statements of Operations. Stock Options Stock options are an option to purchase the Company's Class A Common Stock upon vesting at an exercise price generally equal to the stock price on the date of grant. Unexercised stock options expire ten years after the grant date and, if vested, can be exercised prior to expiration, generally subject to continued employment. Stock options granted to employees are subject to a graded service-based vesting condition, vesting in three equal installments over three years subject generally to continued employment. The following table summarizes stock option activity during the year ended December 31, 2025: Stock Options Weighted-Average Grant Date Fair Value per Share Weighted-Average Exercise Price per Share Outstanding as of December 31, 2024 — $ — $ — Granted 668,570 16.46 28.00 Vested — — — Forfeited — — — Outstanding as of December 31, 2025 668,570 16.46 28.00 Vested and exercisable as of December 31, 2025 — $ — $ — As of December 31, 2025, unrecognized stock-based compensation expense related to stock options was $ 9.9 million, which is expected to be recognized over a weighted-average period of 2.7 years. For the year ended December 31, 2025, the Company recognized $ 1.1 million of stock-based compensation expense related to stock options in Selling, general and administrative on the Consolidated Statements of Operations. Weighted-average inputs used in the Black-Scholes option pricing model for options granted under the 2025 Omnibus Incentive Plan were as follows: 121 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Stock price $ 28.00 Expected term (in years) 6.0 Expected volatility 60.0 % Risk-free interest rate 3.7 % Dividend yield — % Note 14 - Noncontrolling Interests As noted above, Legence Corp. is the sole managing member of Legence Holdings, and the Company consolidates the financial results of Legence Holdings. Therefore, the Company reports a noncontrolling interest on the portion of net assets and income not attributable to Legence. The following table summarizes the change in ownership of Legence Holdings during the year ended December 31, 2025. Please refer to “ Note 12—Stockholders' Equity / Member’s Equity ” for additional information related to activity during the year ended December 31, 2025. Ownership Ownership Percentage Legence Corp. (LGN A Units) Non- controlling interests (LGN B Units) Total Legence Corp. (LGN A Units) Non- controlling interests (LGN B Units) Total Balances at September 12, 2025 58,510,567 46,680,762 105,191,329 55.6 % 44.4 % 100.0 % Class A Common Stock issued as consideration for acquisitions 145,600 — 145,600 0.1 % ( 0.1 ) % — % Effects of Secondary Offering 5,200,808 ( 5,200,808 ) — 4.9 % ( 4.9 ) % — % Balances at December 31, 2025 63,856,975 41,479,954 105,336,929 60.6 % 39.4 % 100.0 % In addition to the LGN B Units noted above, which represents an economic interest in Legence Holdings, Legence Parent ML owns 41,479,954 shares of Class B Common Stock, which together, may be exchanged at the option of Legence Parent on a one -for-one basis for shares of Class A Common Stock or the cash equivalent thereof (based on the 10-day volume weighted average price of the shares of Class A Common Stock at the time of exchange) as determined by the Company. If the Company elects the exchange to be settled in cash, the cash used to settle the redemption must be funded through a private sale or public offering of Class A Common Stock. Net income (loss) attributable to Legence Holdings is attributed to the Company and the noncontrolling interest based on their relative ownership percentages. Changes in ownership that do not result in a loss of control are accounted for as equity transactions in accordance with ASC Topic 810, Consolidation. Noncontrolling interests as presented on the Consolidated Balance Sheets and Consolidated Statements of Operations reflect balances and activity related to the following: a. Legence Parent ML's ownership of Legence Holdings, as discussed above. b. Contributions from Legence Parent for Series A Interests and Restricted Series C Interests based on the percentage that Legence Parent contributes relative to the total contributions of Series A Interests and Restricted Series C Interests from Legence Parent and Legence Parent II. These capital contributions from Legence Parent recorded in noncontrolling interests are reclassified to additional paid-in capital on a proportional basis when a change in ownership occurs related to an exchange of LGN B Units. 122 Table of Contents Legence Corp. Notes to Consolidated Financial Statements c. Noncontrolling interests for the PCs, as discussed in “ Note 6—Variable Interest Entities and Equity Method Investments .” Note 15 - Earnings Per Share The following table sets forth the computation of basic and diluted EPS of Class A Common Stock and represents the period from September 12, 2025 to December 31, 2025, the period where the Company had Class A Common Stock and Class B Common Stock outstanding. Prior to the IPO, Legence Holdings was a single-member limited liability company and did not present earnings per share. Due to the IPO and Corporate Reorganization, the Company’s capital structure before and after the IPO is not comparable and would not be meaningful to the users of these consolidated financial statements. As a result, only earnings per share for periods subsequent to the IPO are presented. (in thousands, except per share data) September 12, 2025 through December 31, 2025 Numerator: Net loss $ ( 55,951 ) Less: Net loss attributable to noncontrolling interests ( 22,155 ) Net loss attributable to Legence $ ( 33,796 ) Denominator: Weighted-average Class A Common Stock outstanding—basic and diluted 59,381 Net loss per share—basic and diluted $ ( 0.57 ) The effect of potentially dilutive securities is not included in the computation of diluted EPS for the period from September 12, 2025 to December 31, 2025, as there is net loss attributable to Legence, and to do so would be anti-dilutive. Anti-dilutive securities which could potentially dilute EPS in the future are set forth below (in thousands): September 12, 2025 through December 31, 2025 Stock options 669 RSUs 686 LGN B Units exchangeable for Class A Common Stock 41,480 Note 16 - Tax Receivable Agreement In connection with the IPO and Corporate Reorganization, the Company entered into the TRA with the TRA Members, which are related parties. The TRA generally provides for the payment by the Company to the TRA Members of 85 % of the net cash tax savings, if any, in U.S. federal, state and local income tax the Company realizes, or is deemed to realize, as a result of the Company’s (i) allocable share of existing tax basis acquired in connection with the IPO and increases to such allocable share of existing tax basis; (ii) the utilization of certain tax attributes of the blocker entities; (iii) increases in tax basis resulting from future redemptions or exchanges (or deemed exchanges in certain circumstances) of Legence Holdings LGN B Units for Class A Common Stock or cash and certain distributions (or deemed distributions) by Legence Holdings pursuant to the Exchange Agreement; and (iv) certain additional tax benefits arising from payments made under the TRA. The Company retains the benefit of the remaining 15 % of these cash savings, if any. Payments under the TRA are not conditioned upon any continued ownership interest in Legence Holdings or the Company. The Company recognizes an undiscounted liability related to TRA obligations that are both probable and reasonably estimable under ASC 450. In connection with the IPO and Corporate Reorganization, the Company recognized a TRA liability of $ 146.5 million. On December 16, 2025, the Company completed a secondary offering that involved an exchange of LGN B Units and shares of Class B Common Stock for an equal number of shares of Class A common stock. As a result of the exchange, the Company recorded an additional TRA liability of $ 58.0 million. The secondary offering 123 Table of Contents Legence Corp. Notes to Consolidated Financial Statements also increased the deferred tax asset and valuation allowance related to the TRA liability by $ 7.2 million and $ 2.7 million, respectively. Refer to “ Note 1—Nature of Operations ” and “ Note 12—Stockholders' Equity / Member's Equity ” for additional information related to the TRA Members and the secondary offering. During the year ended December 31, 2025, the Company recognized a $ 2.9 million increase in the TRA liability as Other expense (income), net on the Consolidated Statements of Operations related to changes in state tax rates. The Company's total undiscounted TRA liability as of December 31, 2025 is $ 207.4 million and is recorded in Tax receivable agreement liability - related party on the Consolidated Balance Sheets. The timing and amount of aggregate payments under the TRA may vary based on a number of factors, including the Company’s future taxable income, future exchanges of LGN B Units for Class A Common Stock, the fair market value of assets at the time of each exchange, and the enacted tax rates applicable in the periods when deductions are realized. The Company estimates its obligation under the TRA utilizing these factors and other assumptions, including expected exchange activity and the fair value of underlying assets. Payments are generally due within a specified period after the filing of the Company’s federal income tax return for the relevant taxable year. Under the TRA, interest accrues on unpaid amounts at a rate equal to the SOFR plus 100 basis points beginning on the original due date of the related tax return and continuing until payment. If the TRA terminates early, the Company could be required to make a substantial, immediate lump-sum payment. The TRA may be terminated early at the Company’s election or will automatically accelerate upon certain events as defined in the TRA, including (i) a change of control, (ii) a material breach of the TRA, or (iii) bankruptcy or insolvency of the Company. Upon early termination or acceleration, the Company is required to make a lump-sum payment equal to the present value of all remaining expected TRA payments. The term of the TRA continues until all related tax benefits have been utilized or expired and all required payments have been made, unless earlier terminated as described above. Because the timing and amount of realized tax savings depend on future taxable income, stock price, and exchange activity, actual TRA payments could differ materially from estimates. As of December 31, 2025, the Company recorded a deferred tax asset of $ 25.4 million arising from future TRA payments. The Company assesses the realizability of deferred tax assets associated with the TRA liability, considering projected taxable income, character of the deductions, temporary differences, tax planning strategies, and recent operating results. As of December 31, 2025, the Company recorded a valuation allowance of $ 12.0 million. The deferred tax asset and related valuation allowance are recorded in Other assets on the Consolidated Balance Sheets. The Company continues to assess and adjust the valuation allowance each reporting period, as necessary. Note 17 - Union-Sponsored Pension Plans and Other Employee Benefit Plans Defined Pension Plans: Certain of the Company’s consolidated subsidiaries participate in various multiemployer defined benefit pension plans under the terms of collective bargaining agreements covering most of its union-represented employees. The risks of participation in these multiemployer plans are different than single-employer plans in the following aspects: a. Assets contributed to the plan by a company may be used to provide benefits to participants of other companies; b. If a participating company discontinues contributions to a plan, other participating employers may have to cover any unfunded liability that may exist; and c. If a company stops participating in some of its multiemployer pension plans, the company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. The following table lists multiemployer pension plans providing pension benefits, including total contributions made for the years ended December 31, 2025, 2024 and 2023 (contributions in thousands). Among other factors, plans in the red zone are less than 65 percent funded, plans in the yellow zone are between 65 percent and 80 percent funded and plans in the green zone are at least 80 percent funded. 124 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Employee ID / Pension Plan Number PPA Zone Status (1) FIP/RP Status (3) Contributions Surcharge Imposed Expiration dates of CBA Pension Fund 2025 (2) 2024 (2) 2025 2024 2023 Sheet Metal Workers Pension Plan of Southern CA, AZ & NV 95-6052257 / 001 Green Green NA $ 4,115 $ 4,828 $ 2,567 No 6/30/2026 to 6/30/2029 Arizona Pipe Trades Trust Fund 86-6025734 / 001 Green Green NA 8,951 10,674 5,667 No 6/30/2027 Electrical Workers Local 26 Pension Trust Fund 52-6117919 / 001 Green Green NA 7,243 6,702 3,411 No 5/31/2027 U.A. Local No. 393 Pension Plan 94-6359772 / 001 Green Green NA 12,079 8,903 9,443 No 6/30/2027 U.A. Local No. 467 Defined Benefit Plan 94-2353807 / 001 Green Green NA 2,021 2,302 2,900 No 6/30/2027 Northern CA Pipe Trades Pension Plan 94-3190386 / 001 Green Green NA 2,895 2,895 2,830 No 6/30/2027 Pipe Trades Services of MN Pension Plan 41-6131800 / 001 Green Green NA 5,434 2,805 2,821 No 4/30/2027 to 4/30/2028 Sheet Metal Workers Pension Plan of Northern CA 51-6115939 / 001 Red Red Implemented 10,694 9,603 10,725 No 6/28/2026 Southern CA Pipe Trades Retirement Fund 51-6108443 / 001 Green Green NA 5,279 4,855 2,203 No 8/31/2026 National Electrical Benefit Fund 53-0181657 / 001 Green Green NA 3,000 2,523 2,173 No 5/23/2026 to 5/31/2027 Sheet Metal Workers National Pension Fund 52-6112463 / 001 Green Green NA 5,072 4,570 3,691 No 6/28/2026 to 6/30/2029 United Association National Pension Fund 52-6152779 / 001 Green Green NA 3,606 2,963 2,297 No 8/31/2026 to 12/31/2030 All Other Plans 5,214 3,616 4,066 $ 75,603 $ 67,239 $ 54,794 (1) Pension Protection Act of 2006 Status ("PPA"). (2) PPA Zone Status represents the most recent available information for the respective Pension Fund, which may be from 2024 or earlier for the 2025 year and from 2023 or earlier for the 2024 year. (3) Funding Improvement Plan ("FIP") or Rehabilitation Plan ("RP") implemented. The Company’s contributions to the following plans were five percent or more of the total contributions for the periods indicated based on the Forms 5500 for these plans for the years ended December 31, 2024 and 2023. Forms 5500 were not yet available for the year ended December 31, 2025. Pension Fund Contributions to the plan exceeded more than 5% of total contributions (as of the plan's year-end) Pipe Trades Services MN Pension Fund 2024 Sheet Metal Workers Pension Plan of Northern CA 2024 and 2023 Electrical Workers Local No. 26 Pension Trust Fund 2024 Arizona Pipe Trades Pension Plan 2024 and 2023 U.A. Local No. 467 Defined Benefit Plan 2024 and 2023 Northern CA Pipe Trades Pension Plan 2024 U.A. Local No. 393 Defined Benefit Pension Plan 2024 and 2023 Pension contributions for the year ended December 31, 2025 include immaterial amounts related to the IMD acquisition. There were no pension contributions for the year ended December 31, 2024 related to the businesses acquired during 2024. 125 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Pension contributions for the year ended December 31, 2023 include $ 4.6 million related to businesses acquired during 2023, primarily A.O. Reed. In the event of the termination of a multiemployer plan or a withdrawal from a multiemployer pension plan, the Company could incur material liabilities under applicable law. Union Benefits: Additionally, the Company is required to make contributions to various unions for health, welfare, retirement and other benefits on behalf of employees covered by collective bargaining agreements. Contributions were $ 139.7 million, $ 103.9 million and $ 110.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. Union benefit contributions for the year ended December 31, 2025 include immaterial amounts related to the IMD acquisition. There were no union benefit contributions for the year ended December 31, 2024 related to businesses acquired during 2024. Union benefit contributions for the year ended December 31, 2023 include $ 7.4 million related to businesses acquired during 2023, primarily A.O. Reed. Total pension and union benefit contributions correspond to the number of union employees employed, and the amount may vary depending on the number and location of ongoing projects at a given time and the need for union resources related to those projects. Defined Contribution Plans: The Company also offers a 401(k) defined contribution plan covering all employees meeting specified eligibility requirements who are not subject to a collective bargaining agreement. While the plan also allows for profit sharing, the Company has not used that feature. Employees can defer certain components of compensation, up to statutory limits, and the Company matches up to 4 % of employees' compensation. The Company may make additional discretionary contributions. Contributions to the plans for non-union employees were $ 11.8 million, $ 9.6 million and $ 7.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. Note 18 - Income Taxes Loss before income tax for the years ended December 31, 2025, 2024, and 2023 consisted entirely of loss from domestic operations of $ 55.1 million, $ 23.1 million and $ 53.9 million, respectively. The income tax expense (benefit) consists of the following (in thousands): Year Ended December 31, 2025 2024 2023 Current tax expense (benefit): Federal $ ( 499 ) $ 11,842 $ 1,939 State 7,373 6,383 3,479 Total current tax expense 6,874 18,225 5,418 Deferred tax expense (benefit): Federal 10,955 ( 5,608 ) ( 7,299 ) State 4,332 ( 8,096 ) ( 6,037 ) Total deferred tax expense (benefit) 15,287 ( 13,704 ) ( 13,336 ) Income tax expense (benefit) $ 22,161 $ 4,521 $ ( 7,918 ) During the tax year 2025, cash paid for income taxes, net of refunds consisted of the following: 126 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Year Ended December 31, 2025 Federal $ 9,605 California 1,228 Pennsylvania 942 Other States 4,667 Foreign — Total $ 16,442 The following table represents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025: Year Ended December 31, 2025 Income tax at the statutory federal rate $ ( 11,580 ) 21.0 % State and local income taxes Current and Deferred State Tax Provision 6,910 ( 12.5 ) % State Tax Rate & Apportionment Changes 3,079 ( 5.6 ) % Tax Credits ( 969 ) 1.8 % Changes in Valuation Allowances 1,725 ( 3.1 ) % Nontaxable or nondeductible items Section 179D deduction ( 1,596 ) 2.9 % Series A Profits Interests 6,432 ( 11.7 ) % Indemnification Expense 2,117 ( 3.8 ) % TRA Expense Adjustment 612 ( 1.1 ) % Non-Controlling Interest 14,381 ( 26.1 ) % Goodwill Impairment 5,243 ( 9.5 ) % Other nontaxable or nondeductible items 646 ( 1.2 ) % Changes in unrecognized tax benefits ( 3,589 ) 6.5 % Other ( 1,250 ) 2.2 % Effective tax rate $ 22,161 ( 40.2 ) % 127 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective tax rate for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Income tax at the statutory federal income tax rate 21.0 % 21.0 % Pass-through income not subject to income tax ( 48.7 )% ( 15.5 )% State and local income taxes ( 7.7 )% 4.9 % Non-corporate pass-through earnings ( 6.2 )% ( 1.1 )% Nondeductible transaction costs — % ( 3.7 )% Nondeductible earnout expenses — % ( 17.3 )% Section 179D deduction 4.1 % 9.4 % Intercompany interest transfer 6.8 % 3.0 % Stock compensation ( 1.9 )% — % R&D credit 3.8 % 1.6 % Rate change 30.1 % ( 1.6 )% Return to provision adjustments ( 1.8 )% 8.2 % Goodwill impairment ( 16.2 )% — % Deferred tax adjustments ( 0.3 )% 7.1 % Other ( 2.6 )% ( 1.5 )% Effective tax rate ( 19.6 )% 14.5 % For the tax year ended December 31, 2025, the state and local jurisdiction that makes up the majority (greater than 50 percent) of the effect of the state and local income tax category is California. 128 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Significant components of the Company's net deferred tax liability as reflected in the Consolidated Balance Sheets are as follows (in thousands): December 31, 2025 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 11,161 $ 1,417 $ 2,314 Research and development credit carryforwards — — 316 Amortization 1,084 12,917 11,430 Accrued expenses 1,363 951 737 Outside basis difference in partnerships 169,244 — — Tax receivable agreement liability 25,431 — — Interest carryforwards 5,669 — — Operating lease liabilities 5,410 5,667 6,368 Other 1,035 924 1,889 Total deferred tax assets 220,397 21,876 23,054 Less: Valuation allowance ( 181,533 ) ( 129 ) — Net deferred tax assets $ 38,864 $ 21,747 $ 23,054 Deferred tax liabilities: Outside basis difference in partnerships ( 22,799 ) ( 20,875 ) ( 26,485 ) Intangible assets ( 26,187 ) ( 28,734 ) ( 36,974 ) Operating lease right-of-use-assets ( 4,759 ) ( 5,133 ) ( 5,818 ) Property and equipment depreciation ( 2,064 ) ( 1,967 ) ( 2,423 ) Other ( 55 ) — ( 26 ) Total deferred tax liabilities ( 55,864 ) ( 56,709 ) ( 71,726 ) Net deferred tax liabilities $ ( 17,000 ) $ ( 34,962 ) $ ( 48,672 ) The Company acquired additional tax attributes from prior acquisitions. As of December 31, 2025, the Company had 163(j) interest carryforward of $ 23.3 million, Federal net operating loss of $ 34.2 million and State net operating loss of $ 62.0 million. The Federal net operating losses can be carried forward indefinitely. Many of the jurisdictions in which the Company has State net operating losses have an indefinite carryforward period; however, $ 2.4 million of State net operating losses could begin to expire as early as 2037 if not utilized. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company regularly evaluates valuation allowances for deferred tax assets for which future realization is uncertain, including in connection with changes in tax laws. As of December 31, 2025, the Company has a valuation allowance of $ 181.5 million. Of the total valuation allowance established, $ 169.2 million was recorded against the deferred tax asset related to the Company’s investment in Legence Holdings based on the difference between the financial statement amount of its investment and the tax basis (outside basis difference). The remainder of the valuation allowance established relates to the deferred tax assets on the tax receivable liability agreement and the state net operating loss carryforwards. Pursuant to Section 382 of the Internal Revenue Code, utilization of Federal net operating loss carryforwards are subject to annual limitations due to the ownership changes of prior acquisitions. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. Based on performing Section 382 studies for prior acquisitions, the Company does not expect any permanent expiration of net operating losses. 129 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The Company recognizes gross unrecognized tax benefits in Other long-term liabilities on the Consolidated Balance Sheets, all of which would affect the effective income tax rate if recognized in future periods. The following table presents changes in the unrecognized tax benefits (in thousands): December 31, 2025 2024 2023 Unrecognized tax benefits at the beginning of period $ 10,358 $ 2,677 $ 2,677 Increases based on tax positions related to the current period — — — Increases based on tax positions related to prior periods — 7,681 — Decreases based on tax positions related to prior periods ( 2,453 ) — — Decreases related to cash settlements with taxing authorities — — — Unrecognized tax benefits at the end of period $ 7,905 $ 10,358 $ 2,677 During the year ended December 31, 2025, the Company's unrecognized tax benefits decreased by $ 2.5 million due to a write off of a prior position as a result of statute of limitation expiration in 2025. During the year ended December 31, 2024, the Company’s unrecognized tax benefits increased by $ 7.7 million due to the AMA acquisition, which included consolidated VIEs. The Company anticipates that the unrecognized tax benefits could decrease by as much as approximately $ 2.2 million over the next 12 months. The Company recognizes a liability for interest and penalties related to the unrecognized tax benefits. As of December 31, 2025 and 2024, the liability for interest and penalties was $ 3.1 million and $ 4.3 million, respectively, and is included in Other long-term liabilities on the Consolidated Balance Sheets. Of these amounts, $ 2.7 million and $ 4.1 million, respectively, relate to consolidated VIEs. The Company's policy is to classify interest and penalties as income tax expense. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company remains subject to income tax examinations for its U.S. federal income taxes for tax years ending December 31, 2022 through 2025. Starting in 2021, the Company has utilized historical pre-acquisition tax losses (2009 through 2021) related to a prior acquisition, which could be subject to review by the IRS upon examination. The open years subject to examination for state tax purposes vary by jurisdiction but generally the Company is no longer subject to examinations for tax years ending on or before December 31, 2021. Note 19 - Segment Information Legence reports its results under two reportable segments: 1) Engineering & Consulting, and 2) Installation & Maintenance. Segments are presented according to the nature of the business activities, and reflect the Company’s consideration of financial information provided to the chief executive officer, who is the Chief Operating Decision Maker ("CODM"). The CODM primarily uses gross profit to assess performance and allocate resources, including decisions such as the annual budget review and approval, allocation of resources to hire additional key personnel, entering new markets and development of new technologies, evaluating executive performance, and determining performance-related bonus plans in each segment. Engineering & Consulting: The Engineering & Consulting segment designs HVAC and other MEP systems for buildings, develops strategies to reduce energy usage and make buildings more sustainable and provides program and project management services for customers’ installation and retrofit projects. Within this segment, there are two primary service offerings – Engineering & Design and Program & Project Management. Installation & Maintenance : The Installation & Maintenance segment fabricates and installs HVAC systems, process piping and other MEP systems in new and existing industrial, commercial and institutional buildings and provides ongoing preventative and corrective maintenance services for those systems. Within this segment, there are two primary service offerings – Installation & Fabrication and Maintenance & Service. All intercompany transactions are eliminated in the Company's Consolidated Statements of Operations. 130 Table of Contents Legence Corp. Notes to Consolidated Financial Statements The following table presents relevant segment information (in thousands): Year Ended December 31, 2025 2024 2023 Revenue: Engineering & Consulting $ 726,293 $ 601,602 $ 426,246 Installation & Maintenance 1,824,198 1,497,000 1,188,816 Revenue $ 2,550,491 $ 2,098,602 $ 1,615,062 Cost of revenue: Engineering & Consulting $ 487,424 $ 396,517 $ 278,354 Installation & Maintenance $ 1,527,142 $ 1,271,318 $ 1,021,562 Gross profit: Engineering & Consulting $ 238,869 $ 205,085 $ 147,892 Installation & Maintenance 297,056 225,682 167,254 Gross profit $ 535,925 $ 430,767 $ 315,146 The following table presents the reconciliation from Gross profit to Loss before income tax (in thousands): Year Ended December 31, 2025 2024 2023 Gross profit $ 535,925 $ 430,767 $ 315,146 Selling, general and administrative 342,627 242,888 186,058 Depreciation and amortization 100,365 97,153 80,241 Acquisition-related costs 5,739 5,634 3,794 Changes in the fair value of contingent consideration liabilities — — 31,071 Gain on sale of property and equipment ( 326 ) — — Goodwill impairment 24,966 17,804 5,051 Long-lived asset impairment 2,415 — — Equity in earnings of joint venture ( 1,443 ) ( 3,063 ) ( 1,329 ) Interest expense, net of capitalized interest 101,778 91,609 68,196 Interest income ( 4,488 ) ( 5,464 ) ( 4,249 ) Loss on debt extinguishment 6,651 — — Credit agreement amendment fees 6,302 7,801 — Other (income) expense, net 6,481 ( 473 ) 257 Loss before income tax $ ( 55,142 ) $ ( 23,122 ) $ ( 53,944 ) Separate measures of Legence's assets, including capital expenditures, are not produced or utilized by management to evaluate segment performance. All operations are located in the United States, the Company’s country of domicile. Note 20 - Related Party Transactions The Company's related party transactions include transactions with certain entities associated with the Company and BX Aggregators. As discussed in “ Note 6 — Variable Interest Entities and Equity Method Investments ”, the Company had related party revenue from certain unconsolidated joint ventures. 131 Table of Contents Legence Corp. Notes to Consolidated Financial Statements As discussed in " Note 4—Acquisitions " and " Note 10—Fair Value Measurements ", in connection with certain business acquisitions, a portion of the contingent consideration was transferred to certain sellers who became members of management of the Company. As discussed in “ Note 8 — Leases ”, the Company has various lease agreements with entities owned by members of its management team and/or Parent interests holders. As discussed in “ Note 9 — Debt ”, a portion of the Company's term loan is held by entities associated with the Company and BX Aggregators. As discussed in “ Note 9 — Debt ”, the Company issued certain related party promissory notes in connection with certain acquisitions. As discussed in “ No te 1 6 — Tax Recei vable Agreement ”, the Company entered into the TRA with TRA Members, which are related parties. Note 21 - Commitments and Contingencies Legal Proceedings The Company is involved in various claims and legal proceedings incidental to its normal business activities. When a potential loss from a proceeding or claim is considered probable and the amount can be reasonably estimated or a range of loss can be determined, a loss contingency is recorded. The Company also provides disclosure when it is reasonably possible that a material loss will be incurred. Although the outcome of such claims and proceedings cannot be predicted with certainty, the Company vigorously defends its position in all such matters. During the year ended December 31, 2023, the Company reached a $ 3.1 million settlement agreement, inclusive of administrative, legal and other fees, for a class action suit related to certain employee matters. Upon court approval and other required administration activities, the settlement payment was made in March 2024. The Company is not aware of any known contingencies, claims or lawsuits that will have a material effect on its financial position, results of operations or cash flows other than those described herein. Insurance The Company carries various insurance policies to address identified risks of loss including cyber, general liability, worker’s compensation, automobile liability and professional liability risks. A liability for known and expected but not yet reported claims of $ 2.6 million, as of both December 31, 2025 and 2024, is reflected in Accrued and other current liabilities in the Consolidated Balance Sheets. The determination of such claims and expenses and the appropriateness of the related liability is continually reviewed and updated by management. The Company is self-insured for its medical coverage. The Company is responsible for the first $ 0.3 million of claims for each participant enrolled in the medical coverage plan. Any claims exceeding $ 0.3 million are covered through a stop-loss insurance plan. A liability for expected but not yet reported claims in the amount of $ 3.2 million and $ 1.3 million is reflected in Accrued compensation and benefits in the Consolidated Balance Sheets as of December 31, 2025 and 2024, respectively. Surety As a requirement under certain contracts, various Legence subsidiaries procure performance and payment bonds through surety underwriters. As a condition for having surety companies write bonds on Legence subsidiary’s behalf, Legence enters into indemnification agreements with the surety companies. Total outstanding bonds were approximately $ 561.5 million and $ 384.2 million as of December 31, 2025 and 2024, respectively. Customer Guarantees As part of its normal course of business, the Company offers guaranteed energy savings to customers under certain contracts. As of December 31, 2025 and 2024, total guarantees were $ 307.4 million and $ 308.2 million, respectively. 132 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Historically, the Company has not incurred material losses in connection with these guarantees. Further, management is not aware of any changes in the ability of the Company to meet these guarantees and does not expect to incur significant losses related to these guarantees in the foreseeable future. Letters of Credit As discussed in “ Note 9—Debt ,” the standby letters of credit are secured through the revolving line of credit. As of December 31, 2025 and 2024, Legence Holdings had $ 5.7 million and $ 5.2 million, respectively, in standby letters of credit primarily related to the deductibles of insurance policies. Note 22 - Other Financial Information Accounts receivable, net consists of the following (in thousands): December 31, 2025 2024 Contracts receivable, net $ 569,812 $ 441,109 Accounts receivable—other 14,248 7,501 Accounts receivable, net $ 584,060 $ 448,610 Prepaid expenses and other current assets consists of the following (in thousands): December 31, 2025 2024 Interest rate swaps $ 42 $ 5,861 Prepaid expenses 22,597 18,909 Inventories 11,303 10,247 Deferred contract costs 2,237 3,489 Prepaid expenses and other current assets $ 36,179 $ 38,506 Consolidated Statements of Cash Flows Information Additional cash flow information was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Cash paid for interest and taxes Interest paid, net of interest rate swaps(a) $ 96,884 $ 85,662 $ 61,794 Income taxes paid, net of refunds $ 16,442 $ 17,496 $ 10,160 Non-cash investing activities Property and equipment additions included in Accounts payable $ 4,906 $ 429 $ 579 Non-cash financing activities Parent issuance of Parent interests for contingent consideration - related parties $ — $ — $ 9,325 Deferred offering costs included in Accounts payable $ 60 $ 3,488 $ — Contribution from Legence Parent for Series A Interests and Restricted Series C Interests $ 30,510 $ — $ — Contribution from Legence Parent II for Series A Interests $ 17,805 $ — $ — TRA liability - secondary offering exchanges $ 58,060 $ — $ — 133 Table of Contents Legence Corp. Notes to Consolidated Financial Statements Deferred tax asset, net of valuation allowance, recognized in connection with TRA liability - secondary offering exchanges $ 4,552 $ — $ — Non-cash financing activities related to IPO and Corporate Reorganization Reclassification of Series A Interests and Restricted Series C Interests from liability to equity $ 36,358 $ — $ — TRA liability recognized $ 146,474 $ — $ — Deferred tax asset, net of valuation allowance, recognized in connection with TRA liability $ 28,697 $ — $ — (a) The Company classifies the cash flows resulting from its interest rate swaps in Cash provided by operating activities on the Consolidated Statements of Cash Flows consistent with the interest that is hedged. Refer to “ Note 11—Derivatives ” for additional information on the Company's interest rate swaps. Refer to “ Note 4—Acquisitions ” for disclosure of non-cash financing of acquisitions through issuance of Parent interests and promissory notes. Refer to “ Note 8—Leases ” for supplemental disclosures of non-cash lease related information. Note 23 - Subsequent Events Refer to “ Note 4—Acquisitions ” for subsequent acquisition. Refer to “ Note 9—Debt ” for subsequent amendment to the credit agreement. Refer to “ Note 11—Derivatives ” for subsequent interest rate swap agreement. Refer to “ Note 12 — Stockholders' Equity / Member's Equity ” for subsequent exercise of underwriters option and subsequent adoption of the 2026 ESPP by the Board. 134 Table of C ontents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.