Record Quarterly Revenues of
Quarterly Adjusted EBITDA (non-GAAP) Increased 53% from Prior Year1
Record Total Backlog and Awards of
Tuck-In Acquisition of Seattle Area-Based Engineering Firm
Establish First Quarter 2026 Guidance for Revenue of
Raise Full Year 2026 Guidance for Revenue to
“Our fourth quarter 2025 performance punctuates a milestone year for Legence,” said
Our latest results speak to the demand momentum for mission-critical building systems, which we anticipate will continue throughout 2026 and beyond. The combination of robust industry tailwinds, our record backlog, and the strategic addition of
Fourth Quarter and Full Year 2025 Consolidated Results:
Revenues for the fourth quarter 2025 totaled
| ($ in thousands) | Three Months Ended | ||||||||||||||||||
| 2025 | 2024 | Year over Year Change | |||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||
| Revenues: | |||||||||||||||||||
| Engineering & Consulting | $ | 172,580 | 23.4 | % | $ | 156,872 | 28.6 | % | $ | 15,708 | 10.0 | % | |||||||
| Installation & Maintenance | 565,062 | 76.6 | % | 391,343 | 71.4 | % | 173,719 | 44.4 | % | ||||||||||
| Consolidated Revenues | $ | 737,642 | 100.0 | % | $ | 548,215 | 100.0 | % | $ | 189,427 | 34.6 | % | |||||||
| Three Months Ended | |||||||||||||||||||
| 2025 | 2024 | Year over Year Change | |||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | ||||||||||||||
| Gross Profit: | |||||||||||||||||||
| Engineering & Consulting | $ | 47,779 | 27.7 | % | $ | 51,518 | 32.8 | % | $ | (3,739 | ) | (7.3)% | |||||||
| Installation & Maintenance | 99,709 | 17.6 | % | 61,423 | 15.7 | % | 38,286 | 62.3 | % | ||||||||||
| Consolidated Gross Profit | $ | 147,488 | 20.0 | % | $ | 112,941 | 20.6 | % | $ | 34,547 | 30.6 | % | |||||||
| Non-GAAP Adjusted Gross Profit | $ | 156,560 | 21.2 | % | $ | 112,315 | 20.5 | % | $ | 44,245 | 39.4 | % | |||||||
| Non-GAAP Adjusted EBITDA | $ | 86,981 | 11.8 | % | $ | 56,788 | 10.4 | % | $ | 30,193 | 53.2 | % | |||||||
Revenues for the full year 2025 totaled
| ($ in thousands) | Twelve Months Ended | |||||||||||||||||
| 2025 | 2024 | Year over Year Change | ||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||
| Revenues: | ||||||||||||||||||
| Engineering & Consulting | $ | 726,293 | 28.5 | % | $ | 601,602 | 28.7 | % | $ | 124,691 | 20.7 | % | ||||||
| Installation & Maintenance | 1,824,198 | 71.5 | % | 1,497,000 | 71.3 | % | 327,198 | 21.9 | % | |||||||||
| Consolidated Revenues | $ | 2,550,491 | 100.0 | % | $ | 2,098,602 | 100.0 | % | $ | 451,889 | 21.5 | % | ||||||
| Twelve Months Ended | ||||||||||||||||||
| 2025 | 2024 | Year over Year Change | ||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | |||||||||||||
| Gross Profit: | ||||||||||||||||||
| Engineering & Consulting | $ | 238,869 | 32.9 | % | $ | 205,085 | 34.1 | % | $ | 33,784 | 16.5 | % | ||||||
| Installation & Maintenance | 297,056 | 16.3 | % | 225,682 | 15.1 | % | 71,374 | 31.6 | % | |||||||||
| Consolidated Gross Profit | $ | 535,925 | 21.0 | % | $ | 430,767 | 20.5 | % | $ | 105,158 | 24.4 | % | ||||||
| Non-GAAP Adjusted Gross Profit | $ | 549,665 | 21.6 | % | $ | 432,083 | 20.6 | % | $ | 117,582 | 27.2 | % | ||||||
| Non-GAAP Adjusted EBITDA | $ | 298,825 | 11.7 | % | $ | 229,625 | 10.9 | % | $ | 69,200 | 30.1 | % | ||||||
Engineering & Consulting Segment Results:
Engineering & Consulting segment revenue for the fourth quarter 2025 totaled
Engineering & Consulting segment gross profit for the fourth quarter 2025 totaled
| Engineering & Consulting Segment Results | |||||||||||||||||||
| ($ in thousands) | Three Months Ended | ||||||||||||||||||
| 2025 | 2024 | Year over Year Change | |||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||
| Segment Revenues: | |||||||||||||||||||
| Engineering & Design | $ | 100,848 | 58.4 | % | $ | 101,583 | 64.8 | % | $ | (735 | ) | (0.7)% | |||||||
| Program & Project Management | 71,732 | 41.6 | % | 55,289 | 35.2 | % | 16,443 | 29.7 | % | ||||||||||
| Engineering & Consulting Revenues | $ | 172,580 | 100.0 | % | $ | 156,872 | 100.0 | % | $ | 15,708 | 10.0 | % | |||||||
| Three Months Ended | |||||||||||||||||||
| 2025 | 2024 | Year over Year Change | |||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | ||||||||||||||
| Engineering & Consulting Gross Profit | $ | 47,779 | 27.7 | % | $ | 51,518 | 32.8 | % | $ | (3,739 | ) | (7.3)% | |||||||
| Engineering & Consulting Non-GAAP Adjusted Gross Profit | 53,405 | 30.9 | % | 51,185 | 32.6 | % | 2,220 | 4.3 | % | ||||||||||
Engineering & Consulting segment revenue for the full year 2025 totaled
Engineering & Consulting segment gross profit for the full year 2025 totaled
| Engineering & Consulting Segment Results | ||||||||||||||||||
| ($ in thousands) | Twelve Months Ended | |||||||||||||||||
| 2025 | 2024 | Year over Year Change | ||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||
| Segment Revenues: | ||||||||||||||||||
| Engineering & Design | $ | 425,014 | 58.5 | % | $ | 345,977 | 57.5 | % | $ | 79,037 | 22.8 | % | ||||||
| Program & Project Management | 301,279 | 41.5 | % | 255,625 | 42.5 | % | 45,654 | 17.9 | % | |||||||||
| Engineering & Consulting Revenues | $ | 726,293 | 100.0 | % | $ | 601,602 | 100.0 | % | $ | 124,691 | 20.7 | % | ||||||
| Twelve Months Ended | ||||||||||||||||||
| 2025 | 2024 | Year over Year Change | ||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | |||||||||||||
| Engineering & Consulting Gross Profit | $ | 238,869 | 32.9 | % | $ | 205,085 | 34.1 | % | $ | 33,784 | 16.5 | % | ||||||
| Engineering & Consulting Non-GAAP Adjusted Gross Profit | 247,282 | 34.0 | % | 205,922 | 34.2 | % | 41,360 | 20.1 | % | |||||||||
Installation & Maintenance Segment Results:
Installation & Maintenance segment revenue for the fourth quarter 2025 totaled
Installation & Maintenance segment gross profit for the fourth quarter 2025 totaled
| Installation & Maintenance Segment Results | ||||||||||||||||||
| ($ in thousands) | Three Months Ended | |||||||||||||||||
| 2025 | 2024 | Year over Year Change | ||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||
| Segment Revenues: | ||||||||||||||||||
| Installation & Fabrication | $ | 475,406 | 84.1 | % | $ | 310,269 | 79.3 | % | $ | 165,137 | 53.2 | % | ||||||
| Maintenance & Service | 89,656 | 15.9 | % | 81,074 | 20.7 | % | 8,582 | 10.6 | % | |||||||||
| Installation & Maintenance Revenues | $ | 565,062 | 100.0 | % | $ | 391,343 | 100.0 | % | $ | 173,719 | 44.4 | % | ||||||
| Three Months Ended | ||||||||||||||||||
| 2025 | 2024 | Year over Year Change | ||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | |||||||||||||
| Installation & Maintenance Gross Profit | $ | 99,709 | 17.6 | % | $ | 61,423 | 15.7 | % | $ | 38,286 | 62.3 | % | ||||||
| Installation & Maintenance Non-GAAP Adjusted Gross Profit | 103,155 | 18.3 | % | 61,130 | 15.6 | % | 42,025 | 68.7 | % | |||||||||
Installation & Maintenance segment revenue for the full year 2025 totaled
Installation & Maintenance segment gross profit for the full year 2025 totaled
| Installation & Maintenance Segment Results | ||||||||||||||||||
| ($ in thousands) | Twelve Months Ended | |||||||||||||||||
| 2025 | 2024 | Year over Year Change | ||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||
| Segment Revenues: | ||||||||||||||||||
| Installation & Fabrication | $ | 1,493,830 | 81.9 | % | $ | 1,183,750 | 79.1 | % | $ | 310,080 | 26.2 | % | ||||||
| Maintenance & Service | 330,368 | 18.1 | % | 313,250 | 20.9 | % | 17,118 | 5.5 | % | |||||||||
| Installation & Maintenance Revenues | $ | 1,824,198 | 100.0 | % | $ | 1,497,000 | 100.0 | % | $ | 327,198 | 21.9 | % | ||||||
| Twelve Months Ended | ||||||||||||||||||
| 2025 | 2024 | Year over Year Change | ||||||||||||||||
| $ | % Margin | $ | % Margin | $ | % | |||||||||||||
| Installation & Maintenance Gross Profit | $ | 297,056 | 16.3 | % | $ | 225,682 | 15.1 | % | $ | 71,374 | 31.6 | % | ||||||
| Installation & Maintenance Non-GAAP Adjusted Gross Profit | 302,383 | 16.6 | % | 226,161 | 15.1 | % | 76,222 | 33.7 | % | |||||||||
Backlog and Awarded Contracts
Backlog and awarded contracts totaled
| Backlog and Awarded Contracts | ||||||||||||
| ($ in thousands) | ||||||||||||
| As of | Year over Year Change | |||||||||||
| 2025 | 2024 | $ | % | |||||||||
| Engineering & Consulting | $ | 994,073 | $ | 855,784 | $ | 138,289 | 16.2 | % | ||||
| Installation & Maintenance | 2,680,276 | 1,616,310 | 1,063,966 | 65.8 | % | |||||||
| Total Backlog and Awarded Contracts | $ | 3,674,349 | $ | 2,472,094 | $ | 1,202,255 | 48.6 | % | ||||
| Book-to-bill ratio for the three months ended | ||||||||||||
| 1.9x | 1.2x | |||||||||||
| Book-to-bill ratio for the twelve months ended | ||||||||||||
| 1.6x | 1.3x | |||||||||||
Acquisitions
On
“The Metrix team is a great addition to our organization, within the Engineering & Consulting segment, and aligns well with our collaborative culture,” said
Balance Sheet
At
Guidance
Legence announces the following guidance for the first quarter of 2026:
- Total revenues of
$925 million to$950 million ; and - Non-GAAP adjusted EBITDA of
$90 million to$100 million .
Legence revises guidance for full year 2026 as follows (which in both cases, reflects the expected results following the acquisition of Metrix and incorporates the previously-disclosed separate guidance for Bowers for full year 2026):
- Total revenues of
$3.7 billion to$3.9 billion , up from$3.5 billion to$3.7 billion ; and - Non-GAAP Adjusted EBITDA of
$400 million to$430 million , up from$370 million to$400 million .
Conference Call
Legence will host a webcast and conference call to discuss its financial results on
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 60% of the Nasdaq-100 Index among its clients.
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 regarding 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 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 and Metrix, 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 final prospectus, dated
Contact
Media: media@wearelegence.com
Investor Relations: ir@wearelegence.com
Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Revenue | $ | 737,642 | $ | 548,215 | $ | 2,550,491 | $ | 2,098,602 | |||||||
| Cost of revenue | 590,154 | 435,274 | 2,014,566 | 1,667,835 | |||||||||||
| Gross profit | 147,488 | 112,941 | 535,925 | 430,767 | |||||||||||
| Selling, general and administrative | 114,813 | 63,040 | 342,627 | 242,888 | |||||||||||
| Depreciation and amortization | 24,746 | 26,415 | 100,365 | 97,153 | |||||||||||
| Acquisition-related costs | 4,768 | 41 | 5,739 | 5,634 | |||||||||||
| Gain on sale of property and equipment | (127 | ) | — | (326 | ) | — | |||||||||
| 24,966 | 17,804 | 24,966 | 17,804 | ||||||||||||
| Long-lived asset impairment | 2,415 | — | 2,415 | — | |||||||||||
| Equity in earnings of joint venture | (595 | ) | 68 | (1,443 | ) | (3,063 | ) | ||||||||
| (Loss) income from operations | (23,498 | ) | 5,573 | 61,582 | 70,351 | ||||||||||
| Other expense (income): | |||||||||||||||
| Interest expense (including | 13,550 | 26,217 | 101,778 | 91,609 | |||||||||||
| Interest income | (1,900 | ) | (1,108 | ) | (4,488 | ) | (5,464 | ) | |||||||
| Loss on debt extinguishment | 966 | — | 6,651 | — | |||||||||||
| Credit agreement amendment fees | 3,312 | 3,682 | 6,302 | 7,801 | |||||||||||
| Other expense (income) , net | 6,749 | (39 | ) | 6,481 | (473 | ) | |||||||||
| Total other expense, net | 22,677 | 28,752 | 116,724 | 93,473 | |||||||||||
| Loss before income tax | (46,175 | ) | (23,179 | ) | (55,142 | ) | (23,122 | ) | |||||||
| Income tax expense (benefit) | 8,499 | (4,979 | ) | 22,161 | 4,521 | ||||||||||
| Net loss | (54,674 | ) | (18,200 | ) | (77,303 | ) | (27,643 | ) | |||||||
| Net (loss) income attributable to noncontrolling interests | (21,953 | ) | 505 | (17,523 | ) | 912 | |||||||||
| Net loss attributable to Legence | $ | (32,721 | ) | $ | (18,705 | ) | $ | (59,780 | ) | $ | (28,555 | ) | |||
| Period from 2025 to December 31, 2025 | |||||||||||||||
| Net loss per Class A Common Stock—basic and diluted | $ | (0.55 | ) | $ | (0.57 | ) | |||||||||
| Weighted-average Class A Common Stock outstanding—basic and diluted | 59,561 | 59,381 | |||||||||||||
Condensed Consolidated Balance Sheets (In thousands) (Unaudited) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | 230,166 | 81,167 | |||||
| Accounts receivable, net | 584,060 | 448,610 | |||||
| Contract assets, net | 259,941 | 188,132 | |||||
| Prepaid expenses and other current assets | 36,179 | 38,506 | |||||
| Total current assets | 1,110,346 | 756,415 | |||||
| Property and equipment, net | 92,333 | 73,381 | |||||
| Operating lease right-of-use assets (including | 117,139 | 90,922 | |||||
| 764,336 | 781,194 | ||||||
| Intangible assets, net | 551,420 | 624,250 | |||||
| Other assets | 43,822 | 26,338 | |||||
| Total assets | $ | 2,679,396 | $ | 2,352,500 | |||
| Liabilities and Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | 246,161 | 126,502 | |||||
| Accrued compensation and benefits | 68,064 | 54,601 | |||||
| Accrued and other current liabilities | 16,475 | 28,490 | |||||
| Contract liabilities | 339,462 | 164,130 | |||||
| Current portion of operating lease liabilities (including | 21,300 | 14,402 | |||||
| Current portion of long-term debt | 16,694 | 22,984 | |||||
| Total current liabilities | 708,156 | 411,109 | |||||
| Long-term debt, net of current portion (including | 812,398 | 1,585,846 | |||||
| Operating lease liabilities, net of current portion (including | 103,762 | 80,669 | |||||
| Tax receivable agreement liability - related party | 207,448 | — | |||||
| Deferred tax liabilities, net | 46,714 | 35,428 | |||||
| Other long-term liabilities | 12,123 | 35,856 | |||||
| Total liabilities | 1,890,601 | 2,148,908 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity / Member’s equity | |||||||
| Member’s equity | — | 443,738 | |||||
| Preferred stock, | — | — | |||||
| Class A common stock, | 638 | — | |||||
| Class B common stock, | 415 | — | |||||
| Additional paid-in capital | 701,791 | — | |||||
| Accumulated deficit | (309,949 | ) | (250,169 | ) | |||
| Accumulated other comprehensive (loss) income | (698 | ) | 9,111 | ||||
| Total Legence stockholders’ equity / Member’s equity | 392,197 | 202,680 | |||||
| Noncontrolling interests | 396,598 | 912 | |||||
| Total stockholders’ equity / Member’s equity | 788,795 | 203,592 | |||||
| Total liabilities and stockholders’ equity / Member’s equity | $ | 2,679,396 | $ | 2,352,500 | |||
Condensed Statements of Cash Flows (In thousands) (Unaudited) | |||||||
| Year Ended | |||||||
| 2025 | 2024 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (77,303 | ) | $ | (27,643 | ) | |
| Adjustments to reconcile net loss to cash provided by operating activities: | |||||||
| Amortization of intangible assets | 82,342 | 80,967 | |||||
| Depreciation of property and equipment | 31,946 | 29,882 | |||||
| 24,966 | 17,804 | ||||||
| Long-lived asset impairment | 2,415 | — | |||||
| Amortization of debt issuance costs and discounts | 3,480 | 5,052 | |||||
| Loss on debt extinguishment | 6,651 | — | |||||
| Stock-based compensation | 67,550 | 5,411 | |||||
| Deferred taxes | 15,287 | (13,704 | ) | ||||
| Tax receivable agreement liability remeasurement | 2,914 | — | |||||
| Equity in earnings of joint venture | (1,443 | ) | (3,063 | ) | |||
| Return on investment in joint venture | 1,700 | 1,000 | |||||
| Operating lease right-of-use asset lease expense | 18,279 | 13,091 | |||||
| Other | 1,158 | 3,749 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable, net | (130,070 | ) | 17,955 | ||||
| Contract assets | (71,185 | ) | (50,995 | ) | |||
| Prepaid expenses and other current assets | 2,929 | 4,498 | |||||
| Accounts payable | 117,910 | 10,699 | |||||
| Accrued compensation and benefits | 12,298 | (2,778 | ) | ||||
| Accrued and other current liabilities | (13,967 | ) | (36,638 | ) | |||
| Contract liabilities | 172,194 | (14,507 | ) | ||||
| Operating lease liabilities, current and long-term | (15,280 | ) | (10,603 | ) | |||
| Other long-term assets and liabilities | 2,102 | (909 | ) | ||||
| Cash provided by operating activities | 256,873 | 29,268 | |||||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment | (37,940 | ) | (19,008 | ) | |||
| Consideration paid for acquisitions, net of cash acquired | (16,497 | ) | (225,246 | ) | |||
| Proceeds from sale of property and equipment | 390 | 269 | |||||
| Cash used in investing activities | (54,047 | ) | (243,985 | ) | |||
| Cash flows from financing activities: | |||||||
| Term loan borrowings (including | 59,636 | 565,000 | |||||
| Term loan payments (including | (852,214 | ) | (13,682 | ) | |||
| Notes payable payments | (7,878 | ) | (6,485 | ) | |||
| Finance lease payments | (3,843 | ) | (2,460 | ) | |||
| Cash distributions to Legence Parent | — | (301,614 | ) | ||||
| Cash contributions from Legence Parent | — | 400 | |||||
| Proceeds from IPO, net of underwriting discounts and commissions | 780,243 | — | |||||
| Debt issuance costs | (1,626 | ) | (1,495 | ) | |||
| Payments for deferred offering costs | (28,145 | ) | (196 | ) | |||
| Payments of contingent consideration (including ( | — | (32,504 | ) | ||||
| Cash (used in) provided by financing activities | (53,827 | ) | 206,964 | ||||
| Increase (decrease) in cash and cash equivalents | 148,999 | (7,753 | ) | ||||
| Cash and cash equivalents and restricted cash, beginning of period | 81,167 | 88,920 | |||||
| Cash and cash equivalents, end of period | $ | 230,166 | $ | 81,167 | |||
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with
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.
Adjusted EBITDA
Adjusted EBITDA 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. EBITDA is defined as earnings before interest and other financing expenses, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude, or otherwise reflect, interest expense, interest income, income tax expense, depreciation and amortization, credit agreement amendment fees, goodwill impairment, long-lived asset impairment, net (gain) loss 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 compensation expense. Adjusted EBITDA should not be considered an alternative to net loss that is derived in accordance with GAAP. Management believes that the exclusion of the above-described items from net loss in the presentation of the non-GAAP measure 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 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 net loss, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA for the periods presented herein (in thousands):
| Three Months Ended | Year Ended | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net loss | $ | (54,674 | ) | $ | (18,200 | ) | $ | (77,303 | ) | $ | (27,643 | ) | |||
| Interest expense | 13,550 | 26,217 | 101,778 | 91,609 | |||||||||||
| Interest income | (1,900 | ) | (1,108 | ) | (4,488 | ) | (5,464 | ) | |||||||
| Income tax expense | 8,499 | (4,979 | ) | 22,161 | 4,521 | ||||||||||
| Depreciation and amortization | 28,677 | 29,862 | 114,288 | 110,849 | |||||||||||
| Credit agreement amendment fees(1) | 3,312 | 3,682 | 6,302 | 7,801 | |||||||||||
| 24,966 | 17,804 | 24,966 | 17,804 | ||||||||||||
| Long-lived asset impairment(3) | 2,415 | — | 2,415 | — | |||||||||||
| Net (gain) loss on sale and disposition of property and equipment | (127 | ) | 29 | (326 | ) | (270 | ) | ||||||||
| Loss on debt extinguishment | 966 | — | 6,651 | — | |||||||||||
| Acquisition and integration costs(4) | 5,501 | 2,112 | 8,436 | 9,181 | |||||||||||
| System deployment costs(5) | — | 1,139 | 2,140 | 5,048 | |||||||||||
| Strategic initiative costs(6) | 2,964 | 3,545 | 17,092 | 10,778 | |||||||||||
| Indemnification asset adjustments(7) | 3,796 | — | 3,796 | — | |||||||||||
| Tax Receivable Agreement liability remeasurements(8) | 2,914 | — | 2,914 | — | |||||||||||
| Stock-based compensation expense | 46,122 | (3,315 | ) | 68,003 | 5,411 | ||||||||||
| Adjusted EBITDA | $ | 86,981 | $ | 56,788 | $ | 298,825 | $ | 229,625 | |||||||
| Net loss margin | (7.4)% | (3.3)% | (3.0)% | (1.3)% | |||||||||||
| Adjusted EBITDA margin | 11.8 | % | 10.4 | % | 11.7 | % | 10.9 | % | |||||||
(1) Represents costs incurred in connection with our debt refinancings in each of the periods presented.
(2) Refer to “Note 5—Goodwill and Intangible Assets” in the Notes to Consolidated Financial Statements to be included in the Annual Report for details on the nature of the impairment.
(3) Refer to “Note 2—Summary of Significant Accounting Policies, Long-Lived Assets Impairment” in the Notes to Consolidated Financial Statements to be included in the Annual Report for details on the nature of the impairment.
(4) For the years ended
(5) Represents consulting and initial upfront costs associated with implementing and optimizing certain enterprise resource planning systems, including IFS, Onestream and Ceridian Dayforce.
(6) Represents (i) consulting costs associated with rebranding efforts in connection with our name change to Legence that we do not expect to recur in the future, (ii) upfront consulting and out-of-pocket costs related to developing and launching the cross-selling framework amongst our brands, many of which were more recently acquired and integrated into the Legence brand, (iii) consulting and legal fees associated with education and marketing efforts for our clients with respect to utilizing certain government incentive programs, (iv) 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 (v) consulting, legal, accounting, and other expenses in connection with a secondary offering 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 expense (income), net on the Consolidated Statements of Operations and is fully offset as an income tax benefit netted in Income tax expense on the Consolidated Statements of Operations.
(8) Tax Receivable Agreement liability remeasurements are recorded in Other expense (income), net on the Consolidated Statements of Operations.
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 stock-based compensation expense related to legacy profit interest units, where the payment of this expense is borne by entities outside of
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 | Twelve Months Ended | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Gross Profit | |||||||||||||||
| Engineering & Consulting Segment | $ | 47,779 | $ | 51,518 | $ | 238,869 | $ | 205,085 | |||||||
| Installation & Maintenance Segment | 99,709 | 61,423 | 297,056 | 225,682 | |||||||||||
| Consolidated | $ | 147,488 | $ | 112,941 | $ | 535,925 | $ | 430,767 | |||||||
| Non-GAAP Adjustment: | |||||||||||||||
| Stock-based compensation expense (benefit) from legacy profit interest units(1) | |||||||||||||||
| Engineering & Consulting Segment | $ | 5,626 | $ | (333 | ) | $ | 8,413 | $ | 837 | ||||||
| Installation & Maintenance Segment | 3,446 | (293 | ) | 5,327 | 479 | ||||||||||
| Consolidated | $ | 9,072 | $ | (626 | ) | $ | 13,740 | $ | 1,316 | ||||||
| Non-GAAP Adjusted Gross Profit: | |||||||||||||||
| Engineering & Consulting Segment | $ | 53,405 | $ | 51,185 | $ | 247,282 | $ | 205,922 | |||||||
| Installation & Maintenance Segment | 103,155 | 61,130 | 302,383 | 226,161 | |||||||||||
| Consolidated | $ | 156,560 | $ | 112,315 | $ | 549,665 | $ | 432,083 | |||||||
| Non-GAAP Adjusted Gross Margin: | |||||||||||||||
| Engineering & Consulting Segment | 30.9 | % | 32.6 | % | 34.0 | % | 34.2 | % | |||||||
| Installation & Maintenance Segment | 18.3 | % | 15.6 | % | 16.6 | % | 15.1 | % | |||||||
| Consolidated | 21.2 | % | 20.5 | % | 21.6 | % | 20.6 | % | |||||||
(1) Represents the portion of stock-based compensation expense related to legacy profit interest units paid for by entities outside of
Net Leverage
Net leverage is defined as net debt divided by Adjusted EBITDA. The Company believes this non-GAAP measure is useful to investors as it provides alternative information that management believes to be useful in assessing our ability to meet our payment obligations in addition to considering the absolute amount of our debt. Net debt 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. Net debt includes total balance sheet debt, excluding finance lease liabilities, less cash and cash equivalents.
Backlog and Awarded Contracts and Book-to-
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
1 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.”
2 Total debt defined as Term Loan balance of
