XML 71 R52.htm IDEA: XBRL DOCUMENT
v3.26.1

Income Taxes (Tables) | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Schedule of Income Tax Expense | The income tax expense (benefit) consists of the following (in thousands):
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Current tax expense (benefit): |  |  |  |  |
Federal | $ | (499) |  |  | $ | 11,842 |  |  | $ | 1,939 |
State | 7,373 |  |  | 6,383 |  |  | 3,479 |
Total current tax expense | 6,874 |  |  | 18,225 |  |  | 5,418 |
Deferred tax expense (benefit): |  |  |  |  |
Federal | 10,955 |  |  | (5,608) |  |  | (7,299) |
State | 4,332 |  |  | (8,096) |  |  | (6,037) |
Total deferred tax expense (benefit) | 15,287 |  |  | (13,704) |  |  | (13,336) |
Income tax expense (benefit) | $ | 22,161 |  |  | $ | 4,521 |  |  | $ | (7,918) |
Schedule of Cash Paid for Income Taxes, Net of Refunds | During the tax year 2025, cash paid for income taxes, net of refunds consisted of the following:
| Year Ended December 31, 2025
Federal | $ | 9,605 |
California | 1,228 |
Pennsylvania | 942 |
Other States | 4,667 |
Foreign | — |
Total | $ | 16,442 |
Additional cash flow information was as follows (in thousands):
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Cash paid for interest and taxes |  |  |  |  |
Interest paid, net of interest rate swaps(a) | $ | 96,884 |  |  | $ | 85,662 |  |  | $ | 61,794 |
Income taxes paid, net of refunds | $ | 16,442 |  |  | $ | 17,496 |  |  | $ | 10,160 |
Non-cash investing activities |  |  |  |  |
Property and equipment additions included in Accounts payable | $ | 4,906 |  |  | $ | 429 |  |  | $ | 579 |
Non-cash financing activities |  |  |  |  |
Parent issuance of Parent interests for contingent consideration - related parties | $ | — |  |  | $ | — |  |  | $ | 9,325 |
Deferred offering costs included in Accounts payable | $ | 60 |  |  | $ | 3,488 |  |  | $ | — |
Contribution from Legence Parent for Series A Interests and Restricted Series C Interests | $ | 30,510 |  |  | $ | — |  |  | $ | — |
Contribution from Legence Parent II for Series A Interests | $ | 17,805 |  |  | $ | — |  |  | $ | — |
TRA liability - secondary offering exchanges | $ | 58,060 |  |  | $ | — |  |  | $ | — |
Deferred tax asset, net of valuation allowance, recognized in connection with TRA liability - secondary offering exchanges | $ | 4,552 |  |  | $ | — |  |  | $ | — |
Non-cash financing activities related to IPO and Corporate Reorganization |  |  |  |  |
Reclassification of Series A Interests and Restricted Series C Interests from liability to equity | $ | 36,358 |  |  | $ | — |  |  | $ | — |
TRA liability recognized | $ | 146,474 |  |  | $ | — |  |  | $ | — |
Deferred tax asset, net of valuation allowance, recognized in connection with TRA liability | $ | 28,697 |  |  | $ | — |  |  | $ | — |
(a)The Company classifies the cash flows resulting from its interest rate swaps in Cash provided by operating activities on the Consolidated Statements of Cash Flows consistent with the interest that is hedged. Refer to “Note 11—Derivatives” for additional information on the Company's interest rate swaps.
Schedule of Effective Income Tax Rate Reconciliation | The following table represents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:
| Year Ended December 31, 2025
Income tax at the statutory federal rate | $ | (11,580) |  |  | 21.0 | %
State and local income taxes |  |  |
Current and Deferred State Tax Provision | 6,910 |  |  | (12.5) | %
State Tax Rate & Apportionment Changes | 3,079 |  |  | (5.6) | %
Tax Credits | (969) |  |  | 1.8 | %
Changes in Valuation Allowances | 1,725 |  |  | (3.1) | %
Nontaxable or nondeductible items |  |  |
Section 179D deduction | (1,596) |  |  | 2.9 | %
Series A Profits Interests | 6,432 |  |  | (11.7) | %
Indemnification Expense | 2,117 |  |  | (3.8) | %
TRA Expense Adjustment | 612 |  |  | (1.1) | %
Non-Controlling Interest | 14,381 |  |  | (26.1) | %
Goodwill Impairment | 5,243 |  |  | (9.5) | %
Other nontaxable or nondeductible items | 646 |  |  | (1.2) | %
Changes in unrecognized tax benefits | (3,589) |  |  | 6.5 | %
Other | (1,250) |  |  | 2.2 | %
Effective tax rate | $ | 22,161 |  |  | (40.2) | %
The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective tax rate for the years ended December 31, 2024 and 2023:
| Year Ended December 31,
| 2024 |  | 2023
Income tax at the statutory federal income tax rate | 21.0% |  | 21.0%
Pass-through income not subject to income tax | (48.7)% |  | (15.5)%
State and local income taxes | (7.7)% |  | 4.9%
Non-corporate pass-through earnings | (6.2)% |  | (1.1)%
Nondeductible transaction costs | —% |  | (3.7)%
Nondeductible earnout expenses | —% |  | (17.3)%
Section 179D deduction | 4.1% |  | 9.4%
Intercompany interest transfer | 6.8% |  | 3.0%
Stock compensation | (1.9)% |  | —%
R&D credit | 3.8% |  | 1.6%
Rate change | 30.1% |  | (1.6)%
Return to provision adjustments | (1.8)% |  | 8.2%
Goodwill impairment | (16.2)% |  | —%
Deferred tax adjustments | (0.3)% |  | 7.1%
Other | (2.6)% |  | (1.5)%
Effective tax rate | (19.6)% |  | 14.5%
Schedule of Components of Deferred Tax Assets and Liabilities | Significant components of the Company's net deferred tax liability as reflected in the Consolidated Balance Sheets are as follows (in thousands):
| December 31,
| 2025 |  | 2024 |  | 2023 |  |
Deferred tax assets: |  |  |  |  |  |  |
Net operating loss carryforwards | $ | 11,161 |  |  | $ | 1,417 |  |  | $ | 2,314 |  |  |
Research and development credit carryforwards | — |  |  | — |  |  | 316 |  |  |
Amortization | 1,084 |  |  | 12,917 |  |  | 11,430 |  |  |
Accrued expenses | 1,363 |  |  | 951 |  |  | 737 |  |  |
Outside basis difference in partnerships | 169,244 |  |  | — |  |  | — |  |  |
Tax receivable agreement liability | 25,431 |  |  | — |  |  | — |  |  |
Interest carryforwards | 5,669 |  |  | — |  |  | — |  |  |
Operating lease liabilities | 5,410 |  |  | 5,667 |  |  | 6,368 |  |  |
Other | 1,035 |  |  | 924 |  |  | 1,889 |  |  |
Total deferred tax assets | 220,397 |  |  | 21,876 |  |  | 23,054 |  |  |
Less: Valuation allowance | (181,533) |  |  | (129) |  |  | — |  |  |
Net deferred tax assets | $ | 38,864 |  |  | $ | 21,747 |  |  | $ | 23,054 |  |  |
Deferred tax liabilities: |  |  |  |  |  |  |
Outside basis difference in partnerships | (22,799) |  |  | (20,875) |  |  | (26,485) |  |  |
Intangible assets | (26,187) |  |  | (28,734) |  |  | (36,974) |  |  |
Operating lease right-of-use-assets | (4,759) |  |  | (5,133) |  |  | (5,818) |  |  |
Property and equipment depreciation | (2,064) |  |  | (1,967) |  |  | (2,423) |  |  |
Other | (55) |  |  | — |  |  | (26) |  |  |
Total deferred tax liabilities | (55,864) |  |  | (56,709) |  |  | (71,726) |  |  |
Net deferred tax liabilities | $ | (17,000) |  |  | $ | (34,962) |  |  | $ | (48,672) |  |  |
Schedule of Unrecognized Tax Benefits Roll Forward |
| December 31,
| 2025 |  | 2024 |  | 2023
Unrecognized tax benefits at the beginning of period | $ | 10,358 |  |  | $ | 2,677 |  |  | $ | 2,677 |
Increases based on tax positions related to the current period | — |  |  | — |  |  | — |
Increases based on tax positions related to prior periods | — |  |  | 7,681 |  |  | — |
Decreases based on tax positions related to prior periods | (2,453) |  |  | — |  |  | — |
Decreases related to cash settlements with taxing authorities | — |  |  | — |  |  | — |
Unrecognized tax benefits at the end of period | $ | 7,905 |  |  | $ | 10,358 |  |  | $ | 2,677 |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of supplemental cash flow information for the periods presented. + References No definition available. + Details
Name: | us-gaap_ScheduleOfCashFlowSupplementalDisclosuresTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-9 + Details
Name: | us-gaap_ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-2 + Details
Name: | us-gaap_ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12A -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12A Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 + Details
Name: | us-gaap_ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Tabular disclosure of the change in unrecognized tax benefits. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 217 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-217 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-15A + Details
Name: | us-gaap_ScheduleOfUnrecognizedTaxBenefitsRollForwardTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration