Legence Corp.LGN

Legence Corp. Segments Disclosure

10-KFiled Mar 30, 20262 min read
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.
The following table presents relevant segment information (in thousands):
Year Ended December 31,
202520242023
Revenue:
Engineering & Consulting$726,293 $601,602 $426,246 
Installation & Maintenance1,824,198 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 & Maintenance297,056 225,682 167,254 
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,
202520242023
Gross profit$535,925 $430,767 $315,146 
Selling, general and administrative342,627 242,888 186,058 
Depreciation and amortization100,365 97,153 80,241 
Acquisition-related costs5,739 5,634 3,794 
Changes in the fair value of contingent consideration liabilities— — 31,071 
Gain on sale of property and equipment(326)— — 
Goodwill impairment24,966 17,804 5,051 
Long-lived asset impairment2,415 — — 
Equity in earnings of joint venture(1,443)(3,063)(1,329)
Interest expense, net of capitalized interest101,778 91,609 68,196 
Interest income(4,488)(5,464)(4,249)
Loss on debt extinguishment6,651 — — 
Credit agreement amendment fees6,302 7,801 — 
Other (income) expense, net6,481 (473)257 
Loss before income tax$(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.

About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

Other Available Disclosures

Income TaxesRevenueEarnings Per ShareFair ValuePP&EGoodwill & IntangiblesLeasesDebtCommitmentsNew Standards