Legence Reports First Quarter 2026 Financial Results
Rhea-AI Summary
Legence (Nasdaq: LGN) reported first quarter 2026 revenue of $1.04 billion, up 105% year over year, with non-GAAP revenue excluding Bowers up 57%. Net income attributable to Legence was $16.1 million versus a prior-year loss, and non-GAAP adjusted EBITDA rose 132% to $118.1 million.
Backlog and awarded contracts reached a record $5.38 billion with a 1.2x book-to-bill ratio. Legence guided Q2 2026 revenue to $1.05–$1.1 billion and raised full-year 2026 revenue guidance to $4.1–$4.3 billion and non-GAAP adjusted EBITDA to $470–$490 million.
AI-generated analysis. Not financial advice.
Positive
- Q1 2026 revenue $1.04B, up 105.1% year over year
- Non-GAAP adjusted EBITDA $118.1M, up 132.4% year over year
- Net income attributable to Legence $16.1M vs. prior-year loss of $21.2M
- Installation & Maintenance revenue up 141.9% to $872.1M
- Record backlog and awarded contracts of $5.38B, up 103.9%
- Net leverage of 2.1x, adjusted net leverage of 1.8x
- Raised full-year 2026 revenue guidance to $4.1–$4.3B
- Raised full-year 2026 non-GAAP adjusted EBITDA guidance to $470–$490M
Negative
- Consolidated gross margin fell to 17.9% from 22.1% year over year
- Engineering & Consulting gross profit down 15.5% to $50.4M
- Engineering & Consulting non-GAAP adjusted gross margin decreased to 33.2% from 40.7%
- Total debt of approximately $1.02B as of March 31, 2026
- Book-to-bill ratio declined to 1.2x from 1.4x year over year
News Market Reaction – LGN
On the day this news was published, LGN declined 11.00%, reflecting a significant negative market reaction. Argus tracked a peak move of +4.7% during that session. Argus tracked a trough of -19.0% from its starting point during tracking. Our momentum scanner triggered 80 alerts that day, indicating high trading interest and price volatility. This price movement removed approximately $1.34B from the company's valuation, bringing the market cap to $10.80B at that time.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Market Reality Check
Peers on Argus
LGN was up 2.4% pre-news, while peers showed mixed moves (e.g., FGL +4.26%, MAGH +9.03%, OFAL -2.82%, ZDAI -5.67%). Momentum scanner also flagged one peer up and one down, pointing to stock-specific strength rather than a broad sector rotation.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Mar 27 | Earnings results | Positive | +3.3% | Record Q4 and FY 2025 revenue, EBITDA growth and higher backlog. |
| Nov 14 | Earnings results | Positive | +20.9% | Record Q3 2025 revenue, strong EBITDA, backlog growth and Bowers deal. |
Recent earnings reports have coincided with positive single- to double-digit percentage moves, suggesting the stock has tended to react favorably to strong financial updates.
Over the last two reported periods, Legence has consistently delivered record results. Q3 2025 revenue reached $708.0M with non-GAAP Adjusted EBITDA of $88.8M, while backlog climbed to $3.07B. By Q4 2025, quarterly revenue rose to $737.6M and full-year 2025 revenue hit $2.55B with Adjusted EBITDA of $298.8M, alongside a $3.7B backlog. Both earnings releases prompted positive price reactions, framing today’s record Q1 2026 results and raised 2026 guidance as a continuation of this growth trajectory.
Historical Comparison
Past earnings releases (Q3 and Q4 2025) drove average moves of about 12.1%, showing investors have reacted strongly to financial updates.
Earnings releases show a progression from Q3 2025 revenue of $708.0M and backlog of $3.07B to Q4 2025 revenue of $737.6M and a $3.7B backlog, followed by Q1 2026 revenue of $1.04B and backlog of $5.38B, highlighting rapid scaling and integration of acquisitions like Bowers.
Market Pulse Summary
The stock dropped -11.0% in the session following this news. A negative reaction despite robust headline growth would contrast with prior earnings, which produced average moves near 12.1% to the upside. Investors could be focusing on margin compression in certain segments, a total debt balance of $1.02B, or concerns around acquisition-driven growth. Recent sizable secondary sales by Blackstone-affiliated holders may also influence sentiment, even though the company itself did not issue new shares in those transactions.
Key Terms
adjusted EBITDA financial
non-gaap financial
book-to-bill ratio financial
net leverage financial
term loan financial
AI-generated analysis. Not financial advice.
Record Quarterly Revenues of
Excluding Bowers Acquisition, Revenues (non-GAAP) Grew by
Quarterly Adjusted EBITDA (non-GAAP) Increased
Record Total Backlog and Awards of
Establish Second Quarter 2026 Guidance for Revenue of
Raise Full Year 2026 Guidance for Revenue to
SAN JOSE, Calif., May 14, 2026 (GLOBE NEWSWIRE) -- Legence Corp. (Nasdaq: LGN) (“Legence” or the “Company”) today reported financial results for the first quarter ended March 31, 2026.
“Legence delivered a strong start to the year, as our first quarter 2026 results reflect robust demand and exceptional project execution across the platform,” said Jeff Sprau, Chief Executive Officer of Legence. “Revenues more than doubled year over year, from a combination of healthy organic growth in both Installation & Maintenance and Engineering & Consulting segments, alongside significant contributions from recent acquisitions, particularly The Bowers Group (“Bowers”). Our dedicated and skilled craftspeople and engineering professionals continue to deliver complex projects safely, efficiently, and at the highest standards for our customers. We maintain strong visibility into our business, with record quarter-ending backlog and awarded contracts, supported by solid demand and tailwinds across the diverse end markets that we serve.”
____________________
1 Excludes impact of approximately
2 Adjusted EBITDA is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure are included in the section titled “Non-GAAP Financial Measures.”
First Quarter 2026 Consolidated Results:
Revenues for the first quarter 2026 totaled
| Legence Corp. Consolidated Results | |||||||||||||||||||
| ($ in thousands) | Three Months Ended March 31, | ||||||||||||||||||
| 2026 | 2025 | Year over Year Change | |||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||
| Revenues: | |||||||||||||||||||
| Engineering & Consulting | $ | 165,801 | 16.0 | % | $ | 145,447 | 28.7 | % | $ | 20,354 | 14.0 | % | |||||||
| Installation & Maintenance | 872,092 | 84.0 | % | 360,506 | 71.3 | % | 511,586 | 141.9 | % | ||||||||||
| Consolidated Revenues | $ | 1,037,893 | 100.0 | % | $ | 505,953 | 100.0 | % | $ | 531,940 | 105.1 | % | |||||||
| Three Months Ended March 31, | |||||||||||||||||||
| 2026 | 2025 | Year over Year Change | |||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | ||||||||||||||
| Gross Profit: | |||||||||||||||||||
| Engineering & Consulting | $ | 50,413 | 30.4 | % | $ | 59,653 | 41.0 | % | $ | (9,240 | ) | (15.5)% | |||||||
| Installation & Maintenance | 135,741 | 15.6 | % | 52,051 | 14.4 | % | 83,690 | 160.8 | % | ||||||||||
| Consolidated Gross Profit | $ | 186,154 | 17.9 | % | $ | 111,704 | 22.1 | % | $ | 74,450 | 66.6 | % | |||||||
| Non-GAAP Adjusted Gross Profit | $ | 193,846 | 18.7 | % | $ | 110,871 | 21.9 | % | $ | 82,975 | 74.8 | % | |||||||
| Non-GAAP Adjusted EBITDA | $ | 118,101 | 11.4 | % | $ | 50,819 | 10.0 | % | $ | 67,282 | 132.4 | % | |||||||
Engineering & Consulting Segment Results:
Engineering & Consulting segment revenue for the first quarter 2026 totaled
Engineering & Consulting segment gross profit for the first quarter 2026 totaled
| Engineering & Consulting Segment Results | |||||||||||||||||||
| ($ in thousands) | Three Months Ended March 31, | ||||||||||||||||||
| 2026 | 2025 | Year over Year Change | |||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||
| Segment Revenues: | |||||||||||||||||||
| Engineering & Design | $ | 97,571 | 58.8 | % | $ | 106,542 | 73.3 | % | $ | (8,971 | ) | (8.4)% | |||||||
| Program & Project Management | 68,230 | 41.2 | % | 38,905 | 26.7 | % | 29,325 | 75.4 | % | ||||||||||
| Engineering & Consulting Revenues | $ | 165,801 | 100.0 | % | $ | 145,447 | 100.0 | % | $ | 20,354 | 14.0 | % | |||||||
| Three Months Ended March 31, | |||||||||||||||||||
| 2026 | 2025 | Year over Year Change | |||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | ||||||||||||||
| Engineering & Consulting Gross Profit | $ | 50,413 | 30.4 | % | $ | 59,653 | 41.0 | % | $ | (9,240 | ) | (15.5)% | |||||||
| Engineering & Consulting Non-GAAP Adjusted Gross Profit | $ | 55,022 | 33.2 | % | $ | 59,218 | 40.7 | % | $ | (4,196 | ) | (7.1)% | |||||||
Installation & Maintenance Segment Results:
Installation & Maintenance segment revenue for the first quarter 2026 totaled
Installation & Maintenance segment gross profit for the first quarter 2026 totaled
____________________
3 Excludes impact of approximately
| Installation & Maintenance Segment Results | ||||||||||||||||||
| ($ in thousands) | Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Year over Year Change | ||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||
| Segment Revenues: | ||||||||||||||||||
| Installation & Fabrication | $ | 758,592 | 87.0 | % | $ | 289,682 | 80.4 | % | $ | 468,910 | 161.9 | % | ||||||
| Maintenance & Service | 113,500 | 13.0 | % | 70,824 | 19.6 | % | 42,676 | 60.3 | % | |||||||||
| Installation & Maintenance Revenues | $ | 872,092 | 100.0 | % | $ | 360,506 | 100.0 | % | $ | 511,586 | 141.9 | % | ||||||
| Three Months Ended March 31, | ||||||||||||||||||
| 2026 | 2025 | Year over Year Change | ||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | |||||||||||||
| Installation & Maintenance Gross Profit | $ | 135,741 | 15.6 | % | $ | 52,051 | 14.4 | % | $ | 83,690 | 160.8 | % | ||||||
| Installation & Maintenance Non-GAAP Adjusted Gross Profit | $ | 138,824 | 15.9 | % | $ | 51,653 | 14.3 | % | $ | 87,171 | 168.8 | % | ||||||
Backlog and Awarded Contracts and Book-to-Bill Ratio
Backlog and awarded contracts totaled
| Backlog and Awarded Contracts | ||||||||||||
| ($ in thousands) | ||||||||||||
| As of March 31, | Year over Year Change | |||||||||||
| 2026 | 2025 | $ | % | |||||||||
| Engineering & Consulting | $ | 1,011,678 | $ | 896,295 | $ | 115,383 | 12.9 | % | ||||
| Installation & Maintenance | 4,371,172 | 1,743,580 | 2,627,592 | 150.7 | % | |||||||
| Total Backlog and Awarded Contracts | $ | 5,382,850 | $ | 2,639,875 | $ | 2,742,975 | 103.9 | % | ||||
| Book-to-bill ratio for the three months ended | ||||||||||||
| March 31 | 1.2x | 1.4x | ||||||||||
Balance Sheet
At March 31, 2026, the Company had cash and equivalents of approximately
____________________
4 Total debt defined as Term Loan balance of
Guidance
Legence announces the following guidance for the second quarter of 2026:
- Total revenues of
$1.05 billion to$1.1 billion ; and - Non-GAAP Adjusted EBITDA of
$115 million to$125 million .
Legence revises guidance for full year 2026 as follows:
- Total revenues of
$4.1 billion to$4.3 billion , up from$3.7 billion to$3.9 billion ; and - Non-GAAP Adjusted EBITDA of
$470 million to$490 million , up from$400 million to$430 million .
Conference Call
Legence will host a webcast and conference call to discuss its financial results on May 14, 2026 at 10:00 a.m. (Eastern Time). The webcast link to the call and the slide presentation to accompany the call remarks can be accessed on the Company’s website at https://investors.wearelegence.com/. A replay of the webcast can be accessed through the same webcast link on the Company’s website shortly after the call and will be available through June 14, 2026.
About Legence
Legence is a leading provider of engineering, consulting, installation, and maintenance services for mission-critical systems in buildings. The Company specializes in designing, fabricating, and installing complex HVAC, process piping, and other mechanical, electrical and plumbing (MEP) systems—enhancing energy efficiency, reliability, and sustainability in new and existing facilities. Legence also delivers long-term performance through strategic upgrades and holistic solutions. Serving some of the world’s most technically demanding sectors, Legence counts over
Forward-Looking Statements
Some of the information in this press release may contain “forward-looking statements.” All statements, other than statements of historical fact, included in this press release including, without limitation, those relating to our strategy, future operations, financial position and guidance, estimated revenues and losses, projected costs, prospects, plans and objectives of management, are forward-looking statements. When used in this press release, words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “plan,” “potential,” “predict,” “forecast,” “budget,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative versions of these words and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are not historical facts but rather are based on management’s current belief, based on currently available information, as to the outcome and timing of future events, and it is possible that the results described in this press release will not be achieved. Such statements are subject to a number of assumptions, risks, uncertainties and other factors, many of which are outside of the Company’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: changes to economic and regulatory conditions and other trends in the markets in which we operate; our ability to compete effectively in our target markets; the business plans or financial condition of our customers; the impact of acquired companies, including Bowers, on our organization and the ability to recognize the anticipated benefits of such acquisitions; the regulations related to environmental, health and safety matters; the ability to receive necessary government permits and approvals; the future availability and price of materials and equipment necessary for the performance of our business; the risks associated with inflation, interest rates, recessionary economic conditions and commodity prices; the fact that we outsource various elements of the services we sell and use materials and equipment produced by third parties; our clients’ reliance on third party financing; the recognition of all revenues from our backlog and awarded contracts; our receipt of all payments anticipated under awarded projects and customer contracts; the maintenance of safe work sites and equipment; restrictions imposed by our existing and any future indebtedness; our exposure to costs and liabilities under environmental, health and safety laws; misconduct and errors by employees, subcontractors, partners or third party service providers; and the other risks described under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2026 (the “Annual Report”), and in other documents subsequently filed by the Company from time to time with the SEC. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified in their entirety by the statements in this section, to reflect events or circumstances after the date of this press release. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the Annual Report and in the Company’s subsequent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements.
Contact
Media: media@wearelegence.com
Investor Relations: ir@wearelegence.com
| Legence Corp. Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | $ | 1,037,893 | $ | 505,953 | |||||||
| Cost of revenue | 851,739 | 394,249 | |||||||||
| Gross profit | 186,154 | 111,704 | |||||||||
| Selling, general and administrative | 116,095 | 69,459 | |||||||||
| Depreciation and amortization | 36,828 | 26,092 | |||||||||
| Acquisition-related costs | 11,432 | 157 | |||||||||
| Gain on sale of property and equipment | (64 | ) | (98 | ) | |||||||
| Equity in earnings of joint venture | (504 | ) | (460 | ) | |||||||
| Income from operations | 22,367 | 16,554 | |||||||||
| Other expense (income): | |||||||||||
| Interest expense (including | 17,000 | 29,641 | |||||||||
| Interest income | (1,320 | ) | (755 | ) | |||||||
| Credit agreement amendment fees | 3,243 | 2,877 | |||||||||
| Other income, net | (569 | ) | (108 | ) | |||||||
| Total other expense, net | 18,354 | 31,655 | |||||||||
| Income (loss) before income tax | 4,013 | (15,101 | ) | ||||||||
| Income tax (benefit) expense | (13,381 | ) | 4,038 | ||||||||
| Net income (loss) | 17,394 | (19,139 | ) | ||||||||
| Net income attributable to noncontrolling interests | 1,300 | 2,074 | |||||||||
| Net income (loss) attributable to Legence | $ | 16,094 | $ | (21,213 | ) | ||||||
| Earnings per share: | |||||||||||
| Basic | $ | 0.24 | |||||||||
| Diluted | $ | 0.13 | |||||||||
| Weighted-average Class A Common Stock outstanding | |||||||||||
| Basic | 67,151 | ||||||||||
| Diluted | 108,431 | ||||||||||
| Legence Corp. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) | |||||||
| March 31, 2026 | December 31, 2025 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 244,620 | $ | 230,166 | |||
| Accounts receivable, net | 827,255 | 584,060 | |||||
| Contract assets, net | 355,750 | 259,941 | |||||
| Prepaid expenses and other current assets | 42,974 | 36,179 | |||||
| Total current assets | 1,470,599 | 1,110,346 | |||||
| Property and equipment, net of accumulated depreciation of | 115,361 | 92,333 | |||||
| Operating lease right-of-use assets (including | 143,794 | 117,139 | |||||
| Goodwill | 841,958 | 764,336 | |||||
| Intangible assets, net | 843,266 | 551,420 | |||||
| Other assets | 68,130 | 43,822 | |||||
| Total assets | $ | 3,483,108 | $ | 2,679,396 | |||
| Liabilities and Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 350,316 | $ | 246,161 | |||
| Accrued compensation and benefits | 120,264 | 68,064 | |||||
| Accrued and other current liabilities | 73,849 | 16,475 | |||||
| Contract liabilities | 543,280 | 339,462 | |||||
| Current portion of operating lease liabilities (including | 27,402 | 21,300 | |||||
| Current portion of long-term debt | 18,297 | 16,694 | |||||
| Total current liabilities | 1,133,408 | 708,156 | |||||
| Long-term debt, net of current portion (including | 1,008,769 | 812,398 | |||||
| Operating lease liabilities, net of current portion (including | 123,250 | 103,762 | |||||
| Tax receivable agreement liability - related party | 208,838 | 207,448 | |||||
| Deferred tax liabilities, net | 45,149 | 46,714 | |||||
| Other long-term liabilities | 12,655 | 12,123 | |||||
| Total liabilities | 2,532,069 | 1,890,601 | |||||
| Commitments and contingencies | |||||||
| Stockholders' equity | |||||||
| Preferred stock, | — | — | |||||
| Class A common stock | 673 | 638 | |||||
| Class B common stock | 407 | 415 | |||||
| Additional paid-in capital | 796,998 | 701,791 | |||||
| Accumulated deficit | (293,855 | ) | (309,949 | ) | |||
| Accumulated other comprehensive (loss) income | 1,221 | (698 | ) | ||||
| Total Legence stockholders' equity | 505,444 | 392,197 | |||||
| Noncontrolling interests | 445,595 | 396,598 | |||||
| Total stockholders' equity | 951,039 | 788,795 | |||||
| Total liabilities and stockholders' equity | $ | 3,483,108 | $ | 2,679,396 | |||
| Legence Corp. Condensed Statements of Cash Flows (In thousands) (Unaudited) | |||||||
| Three Months Ended March 31, | |||||||
| 2026 | 2025 | ||||||
| Cash flows from operating activities: | |||||||
| Net income (loss) | $ | 17,394 | $ | (19,139 | ) | ||
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||||||
| Amortization of intangible assets | 32,554 | 21,462 | |||||
| Depreciation of property and equipment | 9,722 | 7,889 | |||||
| Amortization of debt issuance costs and discounts | 425 | 1,084 | |||||
| Stock-based compensation | 36,652 | (4,458 | ) | ||||
| Compensation expense - Performance Interests | 3,763 | — | |||||
| Deferred taxes | (19,321 | ) | (1,452 | ) | |||
| Equity in earnings of joint venture | (504 | ) | (460 | ) | |||
| Operating lease right-of-use asset lease expense | 6,877 | 4,001 | |||||
| Other | 31 | (200 | ) | ||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable, net | (59,199 | ) | 32,451 | ||||
| Contract assets | (25,711 | ) | (9,991 | ) | |||
| Prepaid expenses and other current assets | (1,549 | ) | (664 | ) | |||
| Accounts payable | 26,144 | (5,733 | ) | ||||
| Accrued compensation and benefits | 24,044 | 11,009 | |||||
| Accrued and other current liabilities | (5,856 | ) | 1,919 | ||||
| Contract liabilities | 79,141 | (4,932 | ) | ||||
| Operating lease liabilities, current and long-term | (5,153 | ) | (3,272 | ) | |||
| Other long-term assets and liabilities | 658 | (53 | ) | ||||
| Cash provided by operating activities | 120,112 | 29,461 | |||||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment | (17,822 | ) | (5,364 | ) | |||
| Consideration paid for acquisitions, net of cash acquired | (281,330 | ) | (453 | ) | |||
| Proceeds from sale of property and equipment | 133 | 67 | |||||
| Cash used in investing activities | (299,019 | ) | (5,750 | ) | |||
| Cash flows from financing activities: | |||||||
| Term loan borrowings (including | 200,000 | 2,495 | |||||
| Term loan payments | (2,494 | ) | (6,604 | ) | |||
| Revolver borrowings | 25,000 | — | |||||
| Revolver payments | (25,000 | ) | — | ||||
| Notes payable payments | (1,905 | ) | (3,379 | ) | |||
| Finance lease payments | (1,288 | ) | (849 | ) | |||
| Debt issuance costs | (892 | ) | — | ||||
| Payments for deferred offering costs | (60 | ) | (7,416 | ) | |||
| Cash provided by (used in) financing activities | 193,361 | (15,753 | ) | ||||
| Increase in cash and cash equivalents | 14,454 | 7,958 | |||||
| Cash and cash equivalents, beginning of period | 230,166 | 81,167 | |||||
| Cash and cash equivalents, end of period | $ | 244,620 | $ | 89,125 | |||
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), our earnings release contains non-GAAP financial measures as described below.
Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies, have limitations as analytical tools and should not be considered in isolation, or substitutes for analysis of our operating results as reported under GAAP. Additionally, we do not consider our non-GAAP financial measures superior to, or a substitute for, the equivalent measures calculated and presented in accordance with GAAP.
In addition, this press release includes certain projections of the non-GAAP financial measure Adjusted EBITDA. Due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from these projected measures, together with some of the excluded information not being ascertainable or accessible, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measures without unreasonable effort. Consequently, no disclosure of estimated comparable GAAP measures is included and no reconciliation of the forward-looking non-GAAP financial measures is included.
Revenue Growth (excluding Bowers)
This press release discloses consolidated revenue growth of Legence of
Adjusted EBITDA and Adjusted EBITDA Margin; Net Leverage and Adjusted Net Leverage
Adjusted EBITDA and Adjusted EBITDA Margin are financial measures not presented in accordance with GAAP but are intended to provide useful and supplemental information to investors and analysts as they evaluate our performance. Adjusted EBITDA is defined as net income (loss) adjusted to exclude, or otherwise reflect, interest expense, interest income, income tax (benefit) expense, depreciation and amortization, credit agreement amendment fees, goodwill impairment, long-lived asset impairment, net gain on sale and disposition of property and equipment, loss on debt extinguishment, acquisition and integration costs, system deployment costs, strategic initiative costs, indemnification asset adjustments, Tax Receivable Agreement liability remeasurements and stock-based and other non-cash compensation expense (benefit). Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin should not be considered alternatives to net income (loss) or net income (loss) margin, respectively, as determined in accordance with GAAP. Management believes that the exclusion of the above-described items from net income (loss) in the presentation of the non-GAAP measures identified above enables us and our investors to more effectively evaluate our operations period over period and to identify operating trends that might not be apparent due to, among other reasons, the variable nature of these items, both in value and frequency, period over period. In addition, management believes these measures may be useful for investors in comparing our operating results with those of other companies.
Net leverage is defined as net debt of Legence divided by Adjusted EBITDA of Legence, and adjusted net leverage is defined as net debt of Legence divided by LTM combined adjusted EBITDA. Net debt includes total balance sheet debt, excluding finance lease liabilities, less cash and cash equivalents. LTM combined adjusted EBITDA is the sum of (1) adjusted EBITDA of Legence for the 12-month period ended March 31, 2026 (or “Legence LTM adjusted EBITDA”) and (2) EBITDA of Bowers for the nine month period ended December 31, 2025 (“Bowers EBITDA”), which is based on certain unaudited financial information of Bowers for the three months ended December 31, 2025 and audited financial information of Bowers for the year ended September 30, 2025. Bowers EBITDA is defined as net income, plus depreciation and amortization, interest income and income tax expense. The Company believes these non-GAAP measures are useful to investors as they provides alternative information that management believes to be useful in assessing (including, in the case of adjusted net leverage, on a combined basis giving effect to the Bowers acquisition) our ability to meet our payment obligations in addition to considering the absolute amount of our debt.
The following table provides a reconciliation (the “Legence adjusted EBITDA Reconciliation”) of our net income (loss), the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA, and a calculation of Adjusted EBITDA Margin for the periods indicated (in thousands):
| Three Months Ended March 31, | Year Ended December 31, | Twelve Months Ended March 31, | |||||||||||||
| 2026 | 2025 | 2025 | 2026 | ||||||||||||
| Net income (loss) | $ | 17,394 | $ | (19,139 | ) | $ | (77,303 | ) | $ | (40,770 | ) | ||||
| Interest expense | 17,000 | 29,641 | 101,778 | 89,137 | |||||||||||
| Interest income | (1,320 | ) | (755 | ) | (4,488 | ) | (5,053 | ) | |||||||
| Income tax (benefit) expense | (13,381 | ) | 4,038 | 22,161 | 4,742 | ||||||||||
| Depreciation and amortization | 42,276 | 29,351 | 114,288 | 127,213 | |||||||||||
| Credit agreement amendment fees(1) | 3,243 | 2,877 | 6,302 | 6,668 | |||||||||||
| Goodwill impairment(2) | — | — | 24,966 | 24,966 | |||||||||||
| Long-lived asset impairment(3) | — | — | 2,415 | 2,415 | |||||||||||
| Net gain on sale and disposition of property and equipment | (64 | ) | (98 | ) | (326 | ) | (292 | ) | |||||||
| Loss on debt extinguishment | — | — | 6,651 | 6,651 | |||||||||||
| Acquisition and integration costs(4) | 11,693 | 1,468 | 8,436 | 18,661 | |||||||||||
| System deployment costs(5) | — | 1,106 | 2,140 | 1,034 | |||||||||||
| Strategic initiative costs(6) | 1,199 | 6,788 | 17,092 | 11,503 | |||||||||||
| Indemnification asset adjustments(7) | (105 | ) | — | 3,796 | 3,690 | ||||||||||
| Tax Receivable Agreement liability remeasurements(8) | (249 | ) | — | 2,914 | 2,665 | ||||||||||
| Stock-based and other non-cash compensation expense (benefit)(9) | 40,415 | (4,458 | ) | 68,003 | 112,877 | ||||||||||
| Adjusted EBITDA | $ | 118,101 | $ | 50,819 | $ | 298,825 | $ | 366,107 | |||||||
| Net income (loss) margin | 1.7 | % | (3.8)% | (3.0)% | (1.3)% | ||||||||||
| Adjusted EBITDA margin | 11.4 | % | 10.0 | % | 11.7 | % | 11.9 | % | |||||||
| ____________________ | |
| (1) | Represents costs incurred in connection with our debt refinancings in each of the periods presented. |
| (2) | Refer to the “Part II, Item 8. Financial Statements and Supplementary Data, Note 5—Goodwill and Intangible Assets” section of our annual report on Form 10-K for the year ended December 31, 2025. |
| (3) | Refer to the “Part II, Item 8. Financial Statements and Supplementary Data, Note 2—Summary of Significant Accounting Policies, Long-Lived Assets Impairment” section of our annual report on Form 10-K for the year ended December 31, 2025. |
| (4) | For the three months ended March 31, 2026 and 2025, the figures include |
| (5) | Represents consulting and initial upfront costs associated with implementing and optimizing certain enterprise resource planning systems. |
| (6) | Represents (i) consulting, legal, accounting, and other expenses in connection with non-recurring extraordinary company transactions, including fees related to our IPO that did not meet the requirements to be deferred issuance costs and (ii) consulting, legal, accounting, and other expenses in connection with secondary offerings conducted on behalf of our selling shareholders. |
| (7) | Represents adjustments to an indemnification asset related to unrecognized tax benefits acquired in a prior acquisition recorded in Other income, net on the Condensed Consolidated Statements of Operations and is fully offset in Income tax (benefit) expense on the Condensed Consolidated Statements of Operations. |
| (8) | Tax Receivable Agreement liability remeasurements are recorded in Other income, net on the Condensed Consolidated Statements of Operations. |
| (9) | Includes compensation expense for legacy Series A Interests and Restricted Series C Interests, as well as RSUs and stock options. |
The following table provides a reconciliation (the “Bowers EBITDA Reconciliation”) of net income of Bowers, the most directly comparable financial measure presented in accordance with GAAP, to Bowers EBITDA for the nine months ended December 31, 2025:
| The Bowers Group, Inc. Consolidated Results | |||
| ($ in thousands) | Nine Months Ended December 31, 2025 | ||
| Net Income | $ | 69,991 | |
| Interest Income | (1,872 | ) | |
| Income Tax Expense | 3,532 | ||
| Depreciation and Amortization | 1,325 | ||
| EBITDA | $ | 72,976 | |
The following table, taken together with the Legence adjusted EBITDA Reconciliation and the Bowers EBITDA Reconciliation, presents the calculation of LTM combined adjusted EBITDA:
| LTM combined adjusted EBITDA | ||||||||
| ($ in thousands) | Three Months Ended March 31, 2026 | Nine Months Ended December 31, 2025 | Twelve Months Ended March 31, 2026 | |||||
| Legence Adjusted EBITDA | $ | 118,101 | $ | 248,006 | $ | 366,107 | ||
| Bowers EBITDA | 72,976 | 72,976 | ||||||
| LTM combined adjusted EBITDA | $ | 439,083 | ||||||
The following table presents the calculation of net leverage and adjusted net leverage:
| ($ in thousands) | March 31, 2026 | |
| Cash | $ | 244,620 |
| Term Loan | 995,278 | |
| Notes Payable | 26,167 | |
| Total Debt(1) | 1,021,445 | |
| Net Debt(1) | 776,825 | |
| Legence LTM adjusted EBITDA | $ | 366,107 |
| Net Leverage | 2.1 | |
| LTM combined adjusted EBITDA(2) | $ | 439,083 |
| Adjusted Net Leverage | 1.8 | |
| ____________________ | |
| (1) | Excludes |
| (2) | Represents the sum of (a) Adjusted EBITDA of Legence for the 12-month period ended March 31, 2026 and (b) EBITDA of Bowers for the nine month period ended December 31, 2025 |
Adjusted Gross Profit and Adjusted Gross Margin
Adjusted Gross Profit is a financial measure not presented in accordance with GAAP but is intended to provide useful and supplemental information to investors and analysts as they evaluate our performance. Gross profit is defined as revenue less cost of revenue services. Adjusted Gross Profit is defined as gross profit adjusted to exclude compensation related to legacy Series A Interests and Restricted Series C Interests, where the payment of this expense is borne by entities outside of Legence Corp. Adjusted Gross Profit should not be considered an alternative to gross profit that is derived in accordance with GAAP. Adjusted Gross Margin is defined as Adjusted Gross Profit divided by revenue. Management believes that the exclusion of the above-described items from gross profit in the presentation of the non-GAAP measure identified above enables us and our investors to supplement the evaluation of our operations period over period and to identify operating trends that might not otherwise be apparent due to, among other reasons, the variable nature of these items, both in value and frequency, period over period. In addition, management believes this measure may be useful for investors in comparing our operating results with those of other companies.
The following table provides a reconciliation of our gross profit, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted Gross Profit for the periods presented herein (in thousands) and our Adjusted Gross Margin for the same periods:
| Three Months Ended March 31, 2026 | |||||||||||
| 2026 | 2025 | ||||||||||
| Gross Profit | |||||||||||
| Engineering & Consulting Segment | $ | 50,413 | $ | 59,653 | |||||||
| Installation & Maintenance Segment | 135,741 | 52,051 | |||||||||
| Consolidated | $ | 186,154 | $ | 111,704 | |||||||
| Non-GAAP Adjustments: | |||||||||||
| Compensation related to legacy Series A Interests and Restricted Series C Interests(1) | |||||||||||
| Engineering & Consulting Segment | $ | 4,609 | $ | (435 | ) | ||||||
| Installation & Maintenance Segment | 3,083 | (398 | ) | ||||||||
| Consolidated | $ | 7,692 | $ | (833 | ) | ||||||
| Non-GAAP Adjusted Gross Profit: | |||||||||||
| Engineering & Consulting Segment | $ | 55,022 | $ | 59,218 | |||||||
| Installation & Maintenance Segment | 138,824 | 51,653 | |||||||||
| Consolidated | $ | 193,846 | $ | 110,871 | |||||||
| Non-GAAP Adjusted Gross Margin: | |||||||||||
| Engineering & Consulting Segment | 33.2 | % | 40.7 | % | |||||||
| Installation & Maintenance Segment | 15.9 | % | 14.3 | % | |||||||
| Consolidated | 18.7 | % | 21.9 | % | |||||||
| ____________________ | |
| (1) | Represents the portion of compensation related to legacy Series A Interests and Restricted Series C Interests paid for by entities outside of Legence Corp. and recorded in cost of revenue in the Condensed Consolidated Statements of Operations. Figures exclude the portion of stock-based compensation expense related to restricted stock units and other equity awards issued by Legence Corp. |
Backlog and Awarded Contracts and Book-to-Bill Ratio
We believe that backlog and awarded contracts and book-to-bill ratio enable us to more effectively forecast our future results and working capital needs, as well as better identify future operating trends that may not otherwise be apparent. Backlog represents, as of any date of determination, the expected revenue values of the remaining performance obligations under our contracted fixed-price projects. Awarded contracts represents, as of any date of determination, the expected revenue values of projects awarded to us following a request for proposals but for which a formal contract has not yet been signed. We calculate our book-to-bill ratio by taking our additions to backlog and awarded contracts, excluding additions that were attained through acquisition, for the period, and dividing it by revenue from fixed-price contracts for the same period. Given that backlog and awarded contracts and book-to-bill ratio are operational measures and that our methodology for calculating each such measure does not meet the definition of a non-GAAP financial measure, as that term is defined by the SEC, a quantitative reconciliation for each is not required nor provided.
