Legence beats estimates as management issues 2027 guidance

By Amara Osei

Legence Corp. reported third-quarter revenue of $1.31 billion and adjusted earnings of $1.15 per share on Thursday, beating the $0.50 consensus by $0.65, while management introduced 2027 revenue guidance of $5.3 billion to $5.6 billion.

Record revenue, a $5.9 billion backlog and strong demand in data centers and semiconductors supported management's outlook, while the company posted a negative net margin of 1.20% and a positive 4.33% return on equity. Revenue also topped expectations, although the report supplied no consensus revenue figure.

What did Legence deliver in the third quarter?

Legence called $1.31 billion record third-quarter revenue, up 85% year over year. Revenue excluding Bowers rose 40%. Adjusted EBITDA nearly doubled to $177 million, while margin increased about 100 basis points to 13.5%.

Backlog and awards also reached a record $5.9 billion, up 92% year over year, and the quarterly book-to-bill ratio stood at 1.2x.

Read plainly, the quarter delivered an earnings beat and a larger order book.

How did shares and analysts respond?

NASDAQ-listed LGN traded down $1.34 to $34.93 during Friday midday trading, a 3.7% decline, despite the earnings beat and stronger outlook. The decline suggested investors may have expected more or taken profits.

• Trading volume reached 1,006,219 shares, below the average of 1,442,192.
• Market capitalization stood at $3.77 billion; the price-to-earnings ratio was 87.38 and beta was 3.42.
• The 12-month low was $23.90; the high was $107.24.
• Debt-to-equity was 1.03; quick and current ratios both stood at 1.35.
• The 50-day moving average was $46.46, and the 200-day moving average was $62.30.

Research firms issued divergent assessments after the results:

• Guggenheim restated a “buy” rating and set a $90 price target on Monday, October 26.
• Stifel Nicolaus cut its target from $101 to $82 and set a “buy” rating on Thursday, October 8.
• Weiss Ratings moved the stock from “sell (d-)” to “sell (e+)” on Friday, October 30.
• Royal Bank of Canada cut its target from $101 to $90 and set an “outperform” rating on Thursday, October 15.
• Sanford C. Bernstein reiterated an “outperform” rating on Friday.
• BTIG cut its target from $100 to $60 while maintaining a “Buy” rating.

MarketBeat listed one Strong Buy, 11 Buy, two Hold and one Sell rating. It calculated an average rating of “Moderate Buy” and a consensus price target of $93.33.

Published targets varied, but every stated numerical target sat above Friday's $34.93 midday price.

What does the 2027 guidance require?

Management guided to 2027 revenue of $5.3 billion–$5.6 billion and adjusted EBITDA of $690 million–$730 million. Some larger projects extend into 2028 and 2029.

On the earnings call, executives said data-center customers had not changed plans or schedules despite regulatory concerns, describing demand in data centers and semiconductors as strong.

About 40% of Legence's data-center work sits in Northern Virginia. Executives said no local projects had been delayed and said the company could shift work to nearby markets.

Engineering and Consulting revenue fell 6%, partly because large projects ended and education demand softened. Management expects improvement in 2027, citing 19% growth in backlog and awards since the start of the year.

Legence also acquired Austin-based CTI for about $100 million to expand its Texas presence. The board authorized a $150 million share-repurchase program that could return capital to shareholders, while management kept acquisitions and business investment among other capital-allocation options.

Management's 2027 plan relies on a larger backlog, resilient data-center schedules and a rebound in Engineering and Consulting.

What changed in insider and institutional holdings?

CAO Bris Philippe Le sold 1,058 shares on Friday, September 18, at an average price of $55.01, generating $58,200.58. After the sale, the chief accounting officer directly owned 4,749 shares valued at $261,242.49, an 18.22% reduction. The transaction appeared in an SEC filing available through the SEC website; corporate insiders owned 0.01% of the stock.

• Value Aligned Research Advisors increased its stake by 22.4% in the first quarter, buying 56,460 additional shares and ending with 308,141 shares worth $17,398,000.
• Winton Group raised its holding by 174.0% in the second quarter, adding 52,904 shares to reach 83,300 shares worth $7.1 million.
• Allianz Asset Management opened a second-quarter position valued at approximately $1.568 million.
• Renaissance Technologies increased its stake by 87.6% in the first quarter, buying 270,615 shares to reach 579,700 shares worth $32.73 million.
• Mirae Asset Global Investments opened a third-quarter position valued at approximately $3.95 million.

Recent filings show several sizable institutional positions alongside one disclosed insider sale.

What business sits behind the numbers?

Legence provides engineering, installation and maintenance services for building systems. Its work includes heating, ventilation and air conditioning, plumbing, electrical systems, process piping, building automation and energy solutions.

The company serves customers with complex building needs in data centers, healthcare, life sciences, commercial buildings and industrial facilities. Services run from design and construction through ongoing operations and maintenance across the building lifecycle.

That mix makes project timing and data-center demand central to management's 2027 plan.