Despite reporting $102.3 million in free cash flow for 2026Q1, the firm's reliance on $281.3 million in acquisition spending and $36.7 million in stock-based compensation warrants caution regarding underlying cash quality.
| Cash from Operations | 347.52M | 256.87M | 29.27M | 33.92M |
| Operating CF Margin % | - | 10.07% | 1.39% | 2.1% |
| Operating CF Growth % | 307.7% | 777.66% | -13.71% | - |
| Net Income | -22.47M | -59.78M | -27.64M | -46.03M |
| Depreciation & Amortization | 103.49M | 82.34M | 110.85M | 92.8M |
| Stock-Based Compensation | 108.66M | 67.55M | 5.41M | 10.05M |
| Deferred Taxes | 332K | 15.29M | -13.7M | -13.34M |
| Other Non-Cash Items | 136.53M | 74.54M | 37.63M | 51.37M |
| Working Capital Changes | 39.28M | 76.93M | -83.28M | -60.95M |
| Change in Receivables | -262.44M | -201.25M | -33.04M | -104.66M |
| Change in Inventory | 0 | 0 | 0 | 0 |
| Change in Payables | 149.79M | 117.91M | 10.7M | -5.02M |
| Cash from Investing | -347.32M | -54.05M | -243.99M | -133.9M |
| Capital Expenditures | -50.4M | -37.94M | -19.01M | -17.07M |
| CapEx % of Revenue | 1.64% | 1.49% | 0.91% | 1.06% |
| Acquisitions | -297.37M | -16.5M | -225.25M | -117.18M |
| Investments | - | - | - | - |
| Other Investing | 456K | 390K | 269K | 353K |
| Cash from Financing | 155.29M | -53.83M | 206.96M | 128.47M |
| Debt Issued (Net) | -602.54M | -805.92M | 542.37M | 138.47M |
| Equity Issued (Net) | 780.18M | 780.24M | 400K | 550K |
| Dividends Paid | 0 | 0 | -301.61M | -1.53M |
| Share Repurchases | 0 | 0 | 0 | 0 |
| Other Financing | -22.36M | -28.14M | -34.2M | -9.02M |
| Net Change in Cash | 155.5M | 149M | -7.75M | 28.49M |
| Free Cash Flow | 297.13M | 218.93M | 10.26M | 16.84M |
| FCF Margin % | 9.64% | 8.58% | 0.49% | 1.04% |
| FCF Growth % | - | 2033.85% | -39.09% | - |
| FCF per Share | 4.99 | 3.69 | 0.18 | 0.29 |
| FCF Conversion (FCF/Net Income) | -13.22x | -4.30x | 3.01x | -0.74x |
| Interest Paid | 28.7M | 0 | 85.66M | 61.79M |
| Taxes Paid | 11.21M | 0 | 17.5M | 10.16M |
Acquisition-Driven Cash Volatility
According to the latest quarterly filings, Legence Corp. reported an OCF/NI ratio of 7.46 in 2026Q1, highlighting a significant divergence between accounting net income and actual cash generation that warrants close scrutiny from investors regarding the sustainability of current earnings quality and operational cash flow conversion.
The massive spread between net income and operating cash flow suggests that non-cash charges, such as stock-based compensation and depreciation, are heavily inflating the reported cash figures. Investors should monitor whether this reliance on non-cash adjustments masks underlying operational inefficiencies in the firm's core project execution.
As reported in recent financial statements, Legence Corp. achieved an FCF margin of 9.9% in 2026Q1, a metric that appears robust on the surface but remains highly sensitive to the company's aggressive acquisition strategy and the timing of large-scale project payments across its installation segments.
While the FCF trajectory shows improvement from the 4.1% margin seen in 2025Q2, the volatility in cash flow generation suggests that the company's ability to self-fund operations is not yet stable. The reliance on external capital to support its growth-at-all-costs model remains a primary concern for long-term solvency.
Based on the provided financial data, Legence Corp. maintained a CapEx/Revenue ratio of 1.7% in 2026Q1, indicating that the firm's business model is not overly capital-intensive despite the significant scale of its engineering and installation projects across mission-critical environments like data centers and semiconductor facilities.
The relatively low capital intensity suggests that the company's primary growth constraint is not physical infrastructure, but rather the availability of specialized technical labor. Investors should investigate whether this low level of investment is sufficient to maintain the competitive edge required for high-precision MEP systems.
As indicated by the company's recent cash flow statements, Legence Corp. deployed $281.3 million toward acquisitions in 2026Q1, a substantial capital outlay that underscores the firm's reliance on inorganic growth to expand its footprint in the specialized engineering and consulting services market.
This aggressive acquisition pace suggests that management is prioritizing market share expansion over immediate cash returns to shareholders. The lack of dividends or share repurchases confirms that all available liquidity is currently being funneled into integration and growth, which may increase the firm's risk profile.
Based on the reported figures, the cash flow statement obscures the true impact of integration costs, as the $36.7 million in stock-based compensation and significant acquisition spending suggest that the company's cash position is heavily influenced by non-operational activities rather than core business performance.
The interplay between acquisition-related cash outflows and stock-based compensation suggests that the company's cash flow profile is heavily engineered. Investors should be wary of whether these adjustments are masking a structural inability to generate cash from organic operations alone.
Quick answers to the most common questions about buying LGN stock.
Legence Corp. Class A Common stock (LGN) generated $256.9M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Legence Corp. Class A Common stock (LGN) generated $218.9M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Legence Corp. Class A Common stock (LGN) spent $37.9M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.