On August 13, Legence Corp. (NASDAQ:LGN) reported second-quarter results that more than doubled the company's revenue from a year earlier, a jump big enough to make even seasoned investors do a double take. Strip out the contribution from the company's Bowers acquisition and the underlying business still grew 60%. But dig one line deeper into the same report and a less flattering picture shows up: profitability per dollar of revenue actually shrank, and the bottom line posted a wider loss than it did last year. That contrast, blistering growth paired with thinning margins, is the story investors now have to sort out.
The headline number was revenue of $1.26 billion for the quarter, up 110.7% from $598.9 million a year ago. Adjusted EBITDA climbed even faster in percentage terms, rising 114.1% to $154.6 million, which tells you the company managed to grow its cash-generating profit measure roughly in step with the top line even during a period of heavy acquisition-driven expansion. Backlog and awarded contracts, effectively the pipeline of future work already on the books, reached $5.67 billion, more than double the $2.77 billion Legence held a year earlier.
That backlog is not concentrated in one place either. While data centers and technology remained the biggest driver, management pointed to healthy activity across life sciences and healthcare, state and local government, and education as well, spreading the growth across several end markets rather than resting it on a single customer type. The Installation & Maintenance segment did the heavy lifting, with revenue up 162% to $1.06 billion, and even after removing the Bowers acquisition's impact, that segment still grew 86.6% on its own.
Management also used the quarter to raise its full-year guidance, now targeting $4.7 billion to $4.8 billion in revenue, up from a prior range of $4.1 billion to $4.3 billion, alongside adjusted EBITDA guidance lifted to $565 million to $585 million from $470 million to $490 million.
The same report shows profitability moving in the opposite direction of revenue. Gross margin fell to 17.4% from 21.5% a year ago, and the non-GAAP adjusted version slipped to 18.5% from 21.8%, a shift the company attributed to a revenue mix leaning more heavily toward lower-margin installation and maintenance work. The Engineering & Consulting segment felt this directly, with gross profit down 12.4% to $56.1 million even as its revenue grew, a sign that pricing and cost pressure in that business outpaced its sales growth. Net loss attributable to Legence widened to $27.8 million from $5.3 million a year earlier, and the company's total net loss grew to $34.6 million from $3.9 million.
#year #grew #adjusted
The headline number was revenue of $1.26 billion for the quarter, up 110.7% from $598.9 million a year ago. Adjusted EBITDA climbed even faster in percentage terms, rising 114.1% to $154.6 million, which tells you the company managed to grow its cash-generating profit measure roughly in step with the top line even during a period of heavy acquisition-driven expansion. Backlog and awarded contracts, effectively the pipeline of future work already on the books, reached $5.67 billion, more than double the $2.77 billion Legence held a year earlier.
That backlog is not concentrated in one place either. While data centers and technology remained the biggest driver, management pointed to healthy activity across life sciences and healthcare, state and local government, and education as well, spreading the growth across several end markets rather than resting it on a single customer type. The Installation & Maintenance segment did the heavy lifting, with revenue up 162% to $1.06 billion, and even after removing the Bowers acquisition's impact, that segment still grew 86.6% on its own.
Management also used the quarter to raise its full-year guidance, now targeting $4.7 billion to $4.8 billion in revenue, up from a prior range of $4.1 billion to $4.3 billion, alongside adjusted EBITDA guidance lifted to $565 million to $585 million from $470 million to $490 million.
The same report shows profitability moving in the opposite direction of revenue. Gross margin fell to 17.4% from 21.5% a year ago, and the non-GAAP adjusted version slipped to 18.5% from 21.8%, a shift the company attributed to a revenue mix leaning more heavily toward lower-margin installation and maintenance work. The Engineering & Consulting segment felt this directly, with gross profit down 12.4% to $56.1 million even as its revenue grew, a sign that pricing and cost pressure in that business outpaced its sales growth. Net loss attributable to Legence widened to $27.8 million from $5.3 million a year earlier, and the company's total net loss grew to $34.6 million from $3.9 million.
#year #grew #adjusted
2 months ago
