Legence Corp.

Notes to Condensed Consolidated Financial Statements

Note 1 -Nature of Operations and Basis of Presentation

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 and Organizational Transactions

On September 15, 2025, the Company completed its IPO. In connection with the IPO, the Company completed a corporate reorganization (the “Corporate Reorganization”) that established an UP-C structure in which Legence Corp. became the managing member of Legence Holdings, Legence Holdings interests were recapitalized into LGN A Units and LGN B Units (collectively, “LGN Units”), Legence Parent II LLC (“Legence Parent II”), Legence Parent Management Aggregator LLC (“Management Aggregator I”) and Legence Parent II Management Aggregator LLC (“Management Aggregator II,” and together with Management Aggregator I, the “Management Aggregators”) were formed, and Legence Parent LLC (“Legence Parent”) subscribed for Class B common stock (“Class B Common Stock”) for nominal consideration and retained a portion of its pre-IPO ownership in Legence Holdings through 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, par value $0.01 (the “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. Class A Common Stock (corresponding to LGN A Units) is held by Legence Parent and Legence Parent II (through their respective wholly-owned subsidiaries, since the fourth quarter of 2025, as described below) and public shareholders.

The Corporate Reorganization was accounted for in a manner consistent with a reorganization of entities under common control. The unaudited Condensed 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.

Additionally, as part of the Corporate Reorganization, 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”). 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.

In the fourth quarter of 2025, Legence Parent and Legence Parent II formed Legence Parent ML LLC and Legence Parent II ML LLC (together, the “ML Entities”), which now hold the interests in Legence Holdings and Legence Corp. previously held by Legence Parent and Legence Parent II (collectively, the “Parent Entities”).

The accompanying unaudited Condensed Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these unaudited Condensed Consolidated Financial Statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the Company’s audited Consolidated Financial Statements and notes thereto from the Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026 (the “2025 Annual Report”). In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements include all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of the Company’s financial position, results of operations, comprehensive income (loss) and cash flows for the interim periods presented. The December 31, 2025 Condensed Consolidated Balance Sheet data was derived from the 2025 audited Consolidated Financial Statements but does not include all disclosures required by GAAP. The preparation of the unaudited Condensed Consolidated Financial Statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the related revenues and expenses and disclosures as of the date of the financial statements. Actual results could differ from those estimates.

Results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results that will be realized for the year ended December 31, 2026, or for any future period. These condensed consolidated financial statements should be read in conjunction with the 2025 Annual Report.

Note 2 -Summary of Significant Accounting Policies

Refer to “Note 2. Summary of Significant Accounting Policies” in the 2025 Annual Report for the discussion of our significant accounting policies.

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 Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 its 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 Condensed 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 its Consolidated Financial Statements.

Income Statement - Expense Disaggregation - In November 2024, the FASB issued 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 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 its 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. Most of the Company's contracts are considered to have a single performance obligation satisfied over time using the input method (i.e., “Cost-to-Cost Input Method”).

The consideration promised in a contract with customers may include fixed amounts, variable amounts, or both. 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.

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.

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.

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.

Contract Estimates and Changes in Estimates

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 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.

Contracts with customers are often modified through change orders. 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.

For contracts where the Company applies the Cost-to-Cost Input Method, the accuracy of the Company’s revenue and profit recognition in each reporting period 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.

These revisions, 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 Condensed 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 16—Segment Information” for additional information on reportable segments.

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):

One customer of the Installation & Maintenance segment represented 17.2% and 17.6% of the Company’s revenue for the three and six months ended June 30, 2026, respectively, and 5.7% and 5.9% of the Company’s revenue for the three and six months ended June 30, 2025, respectively. No other single customer accounted for more than 10% of revenue for the three and six months ended June 30, 2026 and 2025.

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 include $158.0 million and $98.5 million of contract retentions as of June 30, 2026 and December 31, 2025, 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 $68.5 million of contract assets and $127.1 million of contract liabilities as part of purchased assets and liabilities related to acquisitions completed during the six months ended June 30, 2026. Refer to “Note 4—Acquisitions” for further information. The remaining increase in contract assets from December 31, 2025 to June 30, 2026 was 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 six months ended June 30, 2026. The remaining change in contract liabilities from December 31, 2025 to June 30, 2026 is primarily due to the timing and amount of revenue recognized.

During the three and six months ended June 30, 2026, the Company recognized revenue of $74.2 million and $274.9 million, respectively, related to contract liabilities outstanding as of December 31, 2025. During the three and six months ended June 30, 2025, the Company recognized revenue of $24.5 million and $97.3 million, respectively, related to contract liabilities outstanding as of December 31, 2024.

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 June 30, 2026 and December 31, 2025 were $41.8 million and $9.6 million, respectively.

Remaining Performance Obligations

The Company had approximately $4,017.8 million in remaining performance obligations as of June 30, 2026, which represent the expected remaining revenue values under the Company’s contracted or otherwise secured fixed-price project commitments. The Company expects to recognize approximately 65% to 75% of the remaining performance obligations within the next 12 months. The majority of the remaining performance obligations after the first 12 months are expected to be recognized within the following two years.

Although remaining performance obligations reflect expected revenue values that are considered to be firm, cancellations, scope adjustments or project deferrals may 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.

2026 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 Bowers operations and associated goodwill are 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 Metrix operations and associated goodwill are included in the Engineering & Consulting segment.

Total consideration transferred of $460.0 million for the 2026 acquisitions consists of the following, subject to customary post‑closing purchase price adjustments (in thousands):

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 7—Debt.” For the Metrix acquisition, the Company issued 149,331 shares of Class A Common Stock.

A summary of the purchased assets and liabilities for the 2026 acquisitions acquired at their fair value was as follows (in thousands):

Finite-lived intangible assets that are being amortized using the straight-line method over their estimated lives at the applicable acquisition dates in 2026 consist of the following (in thousands, except weighted-average useful lives):

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 2026 acquisitions.

During the three and six months ended June 30, 2026, the Company incurred acquisition-related costs for Bowers of $0.2 million and $10.7 million, respectively, which are included in Acquisition-related costs on the Condensed Consolidated Statements of Operations.

The purchase price allocation presented above reflects preliminary fair value estimates. The Company is in the process of finalizing working capital amounts and valuation amounts for certain intangible assets acquired. The Company has recorded preliminary estimates for these items and will record adjustments, if any, upon finalization of the respective valuations. The Company expects to complete the purchase price allocations of the 2026 acquisitions as soon as practicable but no later than one year from the respective acquisition dates.

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):

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 June 30, 2026, there was $1.3 million in holdback included in Accrued and other current liabilities on the Condensed 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):

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.

Supplemental Pro Forma Information

The following unaudited supplemental pro forma results of operations for Legence are presented as if the Bowers acquisition had been consummated on January 1, 2025. There is no pro forma information included for the three and six months ended June 30, 2026, as the Company’s actual financial results for the period fully reflect the acquisition of Bowers. Pro forma results for the Metrix acquisition are not presented as they are not material to the Company’s Condensed Consolidated Financial Statements. 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).

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, recognition of retention bonuses and other share-based payments as compensation expense, accretion of deferred consideration, reclassification of transaction expenses to the beginning of the pro forma period, and other adjustments including income tax effects and noncontrolling interests. The pro forma combined historical results do not eliminate the impact of acquisition-related costs or any cost savings or other synergies that may result from the acquisitions. The pro forma results include $14.5 million of acquisition-related costs that are not expected to have a continuing impact on the Company’s operations.