Legence Corp.

What they do

Legence designs, fabricates and installs HVAC, process piping and other mechanical, electrical and plumbing systems for new buildings, and retrofits, upgrades and maintains existing ones. It serves high-growth sectors including technology, life sciences, healthcare and education, working directly for clients and as a subcontractor to architects and general contractors. As of March 2026 it had roughly 7,000 full-time employees, 116 locations and operations in 46 states plus the District of Columbia.

Revenue drivers

• Engineering & Consulting — Provides planning, design, engineering and program/project management, including design-build work under Energy Savings Performance Contracts; roughly 59% of 2025 segment revenue came from Engineering & Design and 41% from Program & Project Management. Segment revenue was $206.9M in Q2 2026, about 16% of total company revenue.
• Installation & Maintenance — Fabricates and installs HVAC systems and process piping, and provides retrofit, upgrade and maintenance services for existing buildings; the largest revenue segment and the driver of the Q2 2026 mix shift that lowered gross margin.
• New construction versus retrofit/maintenance — In 2025, approximately 40% of revenue came from new building projects and 60% from retrofits, upgrades and maintenance of existing buildings, giving a recurring base alongside project work.
• High-growth end markets — In 2025 more than half of revenues came from data center and technology and life sciences and healthcare clients; federal government work was less than 2% of 2025 revenue.

Recent performance

Q2 2026 revenue was $1.26 billion, up 110.7% from $598.9 million in Q2 2025, or 60.0% growth excluding approximately $303.8 million of revenue from the Bowers acquisition. Gross margin fell to 17.4% from 21.5% a year earlier; non-GAAP Adjusted Gross Margin was 18.5% versus 21.8%, which management attributed to a revenue mix shift toward Installation & Maintenance and a slight decline in Engineering & Consulting margin. Q2 2026 net loss attributable to Legence was $27.8 million, or $(0.37) per diluted share, compared with a $5.3 million loss a year earlier, while non-GAAP Adjusted EBITDA rose 114.1% to $154.6 million. Backlog and awarded contracts reached a record $5.67 billion, up 105% year over year, and the balance sheet at June 30, 2026 showed $292.0 million of cash against $2.76 billion of total liabilities.

Strategy

Legence is pursuing growth through acquisitions, including The Bowers Group, which added roughly $303.8 million of Q2 2026 revenue and increased goodwill and intangibles on the balance sheet. It emphasizes integrated MEP engineering, installation and maintenance as a way to lower client total cost, reduce change orders and generate incremental margin and recurring revenue. The company targets technically demanding, high-growth sectors, with data centers and technology cited as a significant driver and healthy activity also noted in life sciences and healthcare, state and local government, and education. Management is leveraging what it calls the scalability of its growth platform to drive sequential Adjusted EBITDA margin expansion.

Risks

• Construction cycle exposure — Demand depends on construction and service spending in cyclical markets, and the bulk of project performance often occurs late in a construction project's lifecycle.
• Fixed-price and project execution risk — Cost overruns, inflation, delays or failure to meet performance standards on fixed-price contracts could reduce or eliminate profitability on those projects.
• Internal control weakness — The company has identified material weaknesses in internal control over financial reporting that, if not remediated, could affect the accuracy and timeliness of financial reporting.
• Indebtedness and interest rate risk — Legence carries significant debt, including variable-rate borrowings, with $1.03 billion of long-term debt net of current portion at June 30, 2026, and $97.2 million of that owed to a related party.

Outlook

Management guided Q3 2026 revenue to $1.225–$1.275 billion and non-GAAP Adjusted EBITDA to $150–$160 million. It raised full-year 2026 guidance to revenue of $4.7–$4.8 billion and non-GAAP Adjusted EBITDA of $565–$585 million. The company cites healthy industry conditions and backlog-supported visibility as the basis for the increased outlook.