v3.26.1
Debt
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Debt Debt
Debt obligations consist of the following (in thousands):
June 30, 2026December 31, 2025
Term loan$992,790 $797,772
Notes payable33,58927,345
Finance lease liabilities14,97210,642
Total debt1,041,351 835,759 
Less: Current portion(26,201)(16,694)
Less: Unamortized debt issuance costs and discounts(6,814)(6,667)
Long-term debt, net of current portion$1,008,336 $812,398 
Term loan
Legence Holdings has entered into a credit agreement (as amended from time to time) with Jefferies Finance LLC as the administrative agent for a group of lenders, which provides for a term loan credit facility and a revolving credit facility. The term loan matures on December 2031, and is secured by a lien on substantially all assets of Legence Holdings and its wholly-owned subsidiaries, subject to customary exclusions. A portion of the term loan is held by lenders associated with the Company and BX Aggregators. They are subject to the same terms described below, including interest payments, principal payments and maturity. The credit agreement has been amended from time to time, including as described below:
•On January 2, 2026, Legence Holdings obtained a $200.0 million incremental term loan, and used the proceeds to fund acquisition-related payments. In connection with the amendment, Legence Holdings incurred $4.1 million of fees, of which $3.2 million relate to third parties and are recognized in Credit agreement amendment fees on the Condensed Consolidated Statements of Operations.
•On January 15, 2026, Legence Holdings amended its credit agreement to modify and clarify the terms governing letters of credit, while confirming that all existing letters of credit remain in effect and all other provisions of the agreement remain unchanged.
•On May 27, 2026, Legence Holdings amended its credit agreement to reduce the interest rate applicable to the term loan by 0.25%. The amendment provides for an additional 0.25% reduction of the interest rate applicable to the term loan if the Company maintains certain credit ratings.
Prior to the May 27, 2026 amendment, Secured Overnight Financing Rate (“SOFR”) rate term loans bore interest at SOFR plus 2.25% with a SOFR floor of 0.75%. Base rate loans bear interest at 1.25% plus the base rate, which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate and (c) the SOFR rate for one month plus 1.00% ("Base Rate").
After the May 27, 2026 amendment, SOFR rate term loans bear interest at SOFR plus 2.00% with a SOFR floor of 0.75%. Base rate term loans bear interest at 1.00% plus the Base Rate.
Interest on SOFR rate term loans is payable based on the selected interest period if less than three months or quarterly if the selected interest period is three months or longer. Interest on base rate loans is payable quarterly.
As of June 30, 2026, principal payments on the term loans of $2.5 million are payable quarterly, with any remaining principal balance due on December 16, 2031. Subject to the requirements of the agreement, Legence Holdings may also be required, as applicable, to make additional principal payments based on its excess cash flow, as defined in the credit agreement. The credit agreement contains customary representations and warranties and customary events of default, as well as certain affirmative and negative covenants. Legence Holdings is in compliance with the financial covenants as of June 30, 2026.
Revolving Credit Facility
The credit agreement provides Legence Holdings with a revolving credit facility in an aggregate principal amount of $200.0 million. Borrowings under the revolving credit facility are secured by a lien on substantially all the assets of Legence Holdings and its wholly-owned subsidiaries on a pari passu basis with the term loan facility.
Advances, including standby letters of credit, under the revolving credit facility may be elected to be treated as either SOFR rate loans or base rate loans.
SOFR rate revolving loans bear interest at SOFR plus 2.25% and base rate revolving loans bear interest at 1.25% plus the base rate which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate and (c) the SOFR rate for one month plus 1.00%. Interest on SOFR rate revolving loans is payable based on the selected interest period if less than three months or quarterly if the selected interest period is three months or longer. Interest on base rate revolving loans is payable quarterly.
In January 2026, Legence Holdings borrowed and repaid $25.0 million under the revolving credit facility. The weighted-average interest rate was 5.95%.
In addition, a revolver commitment fee is payable quarterly for the unused portion of the revolving credit facility at a rate of 0.38% to 0.50% based on Legence Holdings’ Net Leverage Ratio. As of June 30, 2026, the rate for the unused portion of the revolving credit facility is 0.38%. The revolving credit facility may be used to issue standby letters of credit, which reduce the amount available for borrowings. As of June 30, 2026, there are $30.7 million letters of credit outstanding under the revolving credit facility, with an interest rate of 2.38%, leaving $169.3 million remaining available to be borrowed under the facility. There were no outstanding borrowings under the revolving credit facility as of June 30, 2026 and December 31, 2025.
The credit agreement, in addition to customary affirmative covenants, contains a springing financial maintenance covenant that requires the Consolidated First Lien Net Leverage Ratio to be less than 8.50 to 1.00 if certain testing conditions are
satisfied. The springing financial maintenance covenant is only tested if as of the last day of a Test Period (generally quarterly) the amount of loans and/or letters of credit outstanding under the revolving credit facility is greater than 35% of the facility size. The springing financial maintenance covenant was not required to be tested during the periods presented in the Condensed Consolidated Financial Statements, and the Company is in compliance with the financial covenant as of June 30, 2026.
Notes payable
As part of the consideration transferred to acquire certain companies in prior years, the Company issued notes payable to former owners of acquired companies. The former owners are considered related parties when they are employees or Parent interests holders. The Company can prepay these notes without penalty.
The Company issued a promissory note payable in connection with a 2022 acquisition. As of June 30, 2026 and December 31, 2025, the outstanding balance is $10.9 million and $10.6 million, respectively, and the carrying value is $10.5 million and $10.1 million, respectively, recorded in Long-term debt, net of current portion on the Condensed Consolidated Balance Sheets. The stated interest rate is 5.5%. All principal and interest are due at the earlier of the end of the 5-year term in 2027 or upon a sale event as defined in the note agreement.
The Company issued promissory notes payable in connection with a 2023 acquisition and a 2022 acquisition, and the holders of the promissory notes were related parties as of June 30, 2026 and December 31, 2025. As of both June 30, 2026 and December 31, 2025, the outstanding balance is $13.7 million. As of June 30, 2026 and December 31, 2025, the carrying value is $13.0 million and $12.8 million, respectively. As of June 30, 2026 and December 31, 2025, $11.0 million and $10.8 million, respectively, are recorded in Long-term debt, net of current portion on the Condensed Consolidated Balance Sheets. As of both June 30, 2026 and December 31, 2025, $2.0 million is recorded in Current portion of long-term debt on the Condensed Consolidated Balance Sheets. The promissory notes have a range of stated interest rates from 5.5% to 6.0% and maturities ranging from 2026 to 2028, at which time all principal and interest are due. The promissory note related to the 2022 acquisition requires the Company to repay all principal and interest earlier if the Company undergoes a change of control as defined in the note agreement.