Legence Corp. 提交截至 2026 年 3 月 31 日止季度之 10-Q 季度報告

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
_________________________
(Mark One)

☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended March 31, 2026
OR

☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________ 
Commission File Number 001-42838
_________________________
Legence Corp.
(Exact name of registrant as specified in its charter)
_________________________

Delaware
33-2905250

(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

1601 Las Plumas Avenue
San Jose, CA

95133
(Address of Principal Executive Offices)
(Zip Code)

(833) 534-3623
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered

Class A common stock, par value $0.01 per share
LGN 
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”and "emerging growth company" in Rule 12b-2 of the Exchange Act.
1

Large accelerated filer
☐
Accelerated filer
☐

Non-accelerated filer
x
Smaller reporting company
☐

Emerging growth company
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No x
As of May 11, 2026, there were 108,037,932 shares of total common stock of the Registrant outstanding, including 76,866,798 shares of Class A common stock, par value $0.01 per share, and 31,171,134 shares of Class B common stock, par value $0.01 per share.

2

Table of Contents

Cautionary Statement Regarding Forward-Looking Statements
4

Part I. Financial Information

Item 1.
Financial Statements
6

Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2026 and December 31, 2025
6

Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2026 and 2025
7

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2026 and 2025
8

Condensed Consolidated Statements of Changes in Equity (Unaudited) for the Three Months Ended March 31, 2026 and 2025
9

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2026 and 2025
10

Notes to the Condensed Consolidated Financial Statements (Unaudited)
11

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
35

Item 3. 
Quantitative and Qualitative Disclosures About Market Risk
49

Item 4.
Controls and Procedures
49

Part II. Other Information

Item 1.
Legal Proceedings
51

Item 1A.
Risk Factors
51

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
51

Item 5.
Other Information
52

Item 6.
Exhibits
53

Signatures
54

3

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the information in this Quarterly Report on Form 10-Q (this “Quarterly Report”) may contain “forward-looking statements.” All statements, other than statements of historical fact included in this Quarterly Report regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, words such as “may,” “assume,” “forecast,” “could,” “should,” “will,” “plan,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events at the time such statement was made. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in this Quarterly Report. Examples of forward-looking statements include, among others, statements we make regarding:
•our business strategy, including with respect to our supply chain, expanded or new service offerings and potential expansion into new domestic or international markets;
•expectations regarding our business or financial outlook;
•expectations regarding opportunities, technological developments, competitive positioning, future economic and regulatory conditions and other trends in particular markets or industries;
•the business plans or financial condition of our customers;
•our ability to achieve or maintain certain financial and operational metrics;
•our ability to comply with and liabilities related to environmental, health and safety laws, regulations and obligations;
•our ability to obtain, maintain and comply with permits and governmental approvals;
•our ability to remain competitive and adapt to developments in the industries in which we operate;
•our ability to secure contracts and maintain relationships with our existing customers;
•our ability to comply with increasing scrutiny, regulatory requirements and changing stakeholder expectations with respect to sustainability and environmental, social and governance matters;
•potential benefits from, and future financial and operational performance of, acquired businesses and our investments;
•expected value of contracts or intended contracts with customers, as well as the expected timing, scope, services, term or results of any awarded or expected projects;
•the expected future value of our intangible assets;
•expectations regarding the future availability and price of materials and equipment necessary for the performance of our business;
•the expected impact of global and domestic economic or political conditions on our business, financial condition, results of operations, cash flows, liquidity, and demand for our services, including inflation, interest rates, tariffs, recessionary economic conditions and commodity prices;
•the expected impact of changes and potential changes in climate and the physical and transition risks associated with climate change;
•the expected impact of existing or potential legislation or regulation;
•the future demand for, availability of and costs related to labor resources in the industries we serve;
•the expected recognition and realization of our remaining performance obligations or backlog; 
•credit markets;
4

•our pending legal matters; and
•our plans, objectives, expectations and intentions contained in this Quarterly Report that are not historical.
We caution you that these forward-looking statements are subject to all of the risks and uncertainties incident to the business in which we operate, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, the risks described under “Part I, Item 1A. Risk Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”) and “Part II, Item 1A. Risk Factors” of this Quarterly Report.
Should one or more of the risks or uncertainties referred to in the 2025 Annual Report or this Quarterly Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.
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 Quarterly Report.
5

PART I. FINANCIAL INFORMATION 

Item 1. Financial Statements

Legence Corp.
Condensed Consolidated Balance Sheets
(In thousands, except par value and share amounts)
(Unaudited)

March 31, 2026December 31, 2025
Assets
Current assets:
Cash and cash equivalents$244,620 $230,166 
Accounts receivable, net827,255 584,060 
Contract assets, net355,750 259,941 
Prepaid expenses and other current assets42,974 36,179 
Total current assets1,470,599 1,110,346 
Property and equipment, net of accumulated depreciation of $106,729 and $98,650 as of March 31, 2026 and December 31, 2025, respectively
115,361 92,333 
Operating lease right-of-use assets (including $19,082 and $20,025 as of March 31, 2026 and December 31, 2025, respectively, from related parties)
143,794 117,139 
Goodwill841,958 764,336 
Intangible assets, net843,266 551,420 
Other assets68,130 43,822 
Total assets(a)
$3,483,108 $2,679,396 
Liabilities and Equity
Current liabilities:
Accounts payable$350,316 $246,161 
Accrued compensation and benefits120,264 68,064 
Accrued and other current liabilities73,849 16,475 
Contract liabilities543,280 339,462 
Current portion of operating lease liabilities (including $3,946 and $3,920 as of March 31, 2026 and December 31, 2025, respectively, from related parties)
27,402 21,300 
Current portion of long-term debt18,297 16,694 
Total current liabilities1,133,408 708,156 
Long-term debt, net of current portion (including $96,545 and $84,735 as of March 31, 2026 and December 31, 2025, respectively, from related parties)
1,008,769 812,398 
Operating lease liabilities, net of current portion (including $16,290 and $17,282 as of March 31, 2026 and December 31, 2025, respectively, from related parties)
123,250 103,762 
Tax receivable agreement liability - related party208,838 207,448 
Deferred tax liabilities, net45,149 46,714 
Other long-term liabilities12,655 12,123 
Total liabilities(a)
2,532,069 1,890,601 
Commitments and contingencies (Note 18)
Stockholders' equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding as of March 31, 2026 and December 31, 2025
— — 
Class A common stock $0.01 par value, 1,000,000,000 shares authorized, 67,338,099 and 63,856,975 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively
673 638 
Class B common stock $0.01 par value, 200,000,000 shares authorized, 40,699,833 and 41,479,954 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively
407 415 
Additional paid-in capital796,998 701,791 
Accumulated deficit(293,855)(309,949)
Accumulated other comprehensive income (loss)1,221 (698)
Total Legence stockholders' equity505,444 392,197 
Noncontrolling interests445,595 396,598 
Total stockholders' equity951,039 788,795 
Total liabilities and stockholders' equity$3,483,108 $2,679,396 

(a) As of March 31, 2026, total assets include $18.8 million and total liabilities include $8.7 million for consolidated variable interest PCs as defined in “Note 6—Variable Interest Entities and Equity Method Investments”. As of December 31, 2025, total assets include $21.8 million and total liabilities include $9.4 million for consolidated variable interest PCs. Substantially all of the remaining total assets and total liabilities are attributable to the consolidated Legence Holdings variable interest entity, excluding the Tax receivable agreement liability (refer to “Note 14—Tax Receivable Agreement”) and deferred tax assets net of valuation allowance of $51.9 million and $29.5 million included in Other assets as of March 31, 2026 and December 31, 2025, respectively. 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 Condensed Consolidated Financial Statements.
6

Legence Corp.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

Three Months Ended March 31,
20262025
Revenue$1,037,893 $505,953 
Cost of revenue851,739 394,249 
Gross profit186,154 111,704 

Selling, general and administrative116,095 69,459 
Depreciation and amortization36,828 26,092 
Acquisition-related costs11,432 157 
Gain on sale of property and equipment(64)(98)
Equity in earnings of joint venture(504)(460)
Income from operations22,367 16,554 

Other expense (income):
Interest expense (including $1,680 and $4,296 for the three months in 2026 and 2025, respectively, from related parties)
17,000 29,641 
Interest income(1,320)(755)
Credit agreement amendment fees3,243 2,877 
Other income, net(569)(108)
Total other expense, net18,354 31,655 
Income (loss) before income tax4,013 (15,101)

Income tax (benefit) expense(13,381)4,038 
Net income (loss)17,394 (19,139)
Net income attributable to noncontrolling interests1,300 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:
Basic67,151 
Diluted108,431 

See Notes to Condensed Consolidated Financial Statements.
7

Legence Corp.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)

Three Months Ended March 31,
20262025
Net income (loss)$17,394 $(19,139)
Other comprehensive income (loss), net:
Gain (loss) related to interest rate swaps, net of tax3,110 (6,214)
Other comprehensive income (loss)3,110 (6,214)
Comprehensive income (loss)20,504 (25,353)
Comprehensive income attributable to noncontrolling interests2,472 2,074 
Comprehensive income (loss) attributable to Legence$18,032 $(27,427)

See Notes to Condensed Consolidated Financial Statements.
8

Legence Corp.
Condensed Consolidated Statements of Changes in Equity
(In thousands, except share amounts)
(Unaudited)

Class A 
Common StockClass B 
Common Stock
SharesAmountSharesAmountAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Legence Stockholders' EquityNon-
controlling InterestsTotal Equity 
Balance, December 31, 202563,856,975 $638 41,479,954 $415 $701,791 $(309,949)$(698)$392,197 $396,598 $788,795 
Tax receivable agreement liability and deferred taxes arising from exchanges of Class B Common Stock— — — — (5,112)— — (5,112)— (5,112)
Stock-based compensation for RSUs and stock options— — — — 4,025 — — 4,025 — 4,025 
Issuance of Class A Common Stock for acquisitions2,701,003 27 — — 106,410 — — 106,437 — 106,437 
Noncontrolling interest adjustment for changes in proportionate ownership in Legence Holdings LLC and issuances of Class A Common Stock— — — — (23,681)— (19)(23,700)23,700 — 
Exchange of Class B Common Stock to Class A Common Stock780,121 8 (780,121)(8)— — — — — — 
Contribution from Legence Parent for Series A Interests and Restricted Series C Interests— — — — — — — — 22,825 22,825 
Contribution from Legence Parent II for Series A Interests— — — — 13,565 — — 13,565 — 13,565 
Other comprehensive income— — — — — — 1,938 1,938 1,172 3,110 
Net income— — — — — 16,094 — 16,094 1,300 17,394 
Balance, March 31, 202667,338,099 $673 40,699,833 $407 $796,998 $(293,855)$1,221 $505,444 $445,595 $951,039 

Member's Equity Accumulated DeficitAccumulated Other Comprehensive IncomeTotal Member's EquityNon-
controlling InterestsTotal Equity 
Balance, December 31, 2024$443,738 $(250,169)$9,111 $202,680 $912 $203,592 
Reclassification of vested Legence Parent Series A Interests from liabilities33 — — 33 — 33 
Other comprehensive loss— — (6,214)(6,214)— (6,214)
Net (loss) income— (21,213)— (21,213)2,074 (19,139)
Balance, March 31, 2025$443,771 $(271,382)$2,897 $175,286 $2,986 $178,272 

See Notes to Condensed Consolidated Financial Statements.
9

Legence Corp.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Three Months Ended March 31,
20262025
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 assets32,554 21,462 
Depreciation of property and equipment9,722 7,889 
Amortization of debt issuance costs and discounts425 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 expense6,877 4,001 
Other31 (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 payable26,144 (5,733)
Accrued compensation and benefits24,044 11,009 
Accrued and other current liabilities(5,856)1,919 
Contract liabilities79,141 (4,932)
Operating lease liabilities, current and long-term(5,153)(3,272)
Other long-term assets and liabilities658 (53)
Cash provided by operating activities120,112 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 equipment133 67 
Cash used in investing activities(299,019)(5,750)

Cash flows from financing activities:
Term loan borrowings (including $15,000 and $2,495 in 2026 and 2025, respectively, from related parties)
200,000 2,495 
Term loan payments
(2,494)(6,604)
Revolver borrowings25,000 — 
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 activities193,361 (15,753)
Increase in cash and cash equivalents14,454 7,958 
Cash and cash equivalents, beginning of period230,166 81,167 
Cash and cash equivalents, end of period$244,620 $89,125 

The supplemental disclosures to the Condensed Consolidated Statements of Cash Flows are included in "Note 19 – Other Financial Information.”
See Notes to Condensed Consolidated Financial Statements.
10

Legence Corp.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

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 
11

Legence Corp.
Notes to Condensed Consolidated Financial Statements - (Continued)
(Unaudited)

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 months ended March 31, 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.
12

Legence Corp.
Notes to Condensed Consolidated Financial Statements - (Continued)
(Unaudited)

Note 3 - Revenue Recognition and Related Balance Sheet Accounts
Revenue is recognized when contro