Despite consistent net losses, the core business generates positive operating cash flow, with Q2 2026 operating cash flow of $74.4 million, though free cash flow margins have been volatile, ranging from 4.0% to 12.6% over the past six quarters.
Legence Corp. Class A Common stock (LGN) cash flow statement — 3-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 |
|---|
| Cash from Operations | 388.82M | 256.87M | 29.27M | 33.92M |
| Operating CF Margin % | - | 10.07% | 1.39% | 2.1% |
| Operating CF Growth % | 432.55% | 777.66% | -13.71% | - |
| Net Income | -45.04M | -59.78M | -27.64M | -46.03M |
| Depreciation & Amortization | 118.91M | 82.34M | 110.85M | 92.8M |
| Stock-Based Compensation | 160.79M | 67.55M | 5.41M | 10.05M |
| Deferred Taxes | -4.52M | 15.29M | -13.7M | -13.34M |
| Other Non-Cash Items | 192.46M | 74.54M | 37.63M | 51.37M |
| Working Capital Changes | -7.34M | 76.93M | -83.28M | -60.95M |
| Change in Receivables | -266.25M | -201.25M | -33.04M | -104.66M |
| Change in Inventory | 0 | 0 | 0 | 0 |
| Change in Payables | 176.69M | 117.91M | 10.7M | -5.02M |
| Cash from Investing | -362.54M | -54.05M | -243.99M | -133.9M |
| Capital Expenditures | -65.64M | -37.94M | -19.01M | -17.07M |
| CapEx % of Revenue | 1.75% | 1.49% | 0.91% | 1.06% |
| Acquisitions | -297.34M | -16.5M | -225.25M | -117.18M |
| Investments | - | - | - | - |
| Other Investing | 444K | 390K | 269K | 353K |
| Cash from Financing | 167.79M | -53.83M | 206.96M | 128.47M |
| Debt Issued (Net) | -600.61M | -805.92M | 542.37M | 138.47M |
| Equity Issued (Net) | 773.2M | 780.24M | 400K | 550K |
| Dividends Paid | 0 | 0 | -301.61M | -1.53M |
| Share Repurchases | 0 | 0 | 0 | 0 |
| Other Financing | -4.8M | -28.14M | -34.2M | -9.02M |
| Net Change in Cash | 194.08M | 149M | -7.75M | 28.49M |
| Free Cash Flow | 323.18M | 218.93M | 10.26M | 16.84M |
| FCF Margin % | 8.63% | 8.58% | 0.49% | 1.04% |
| FCF Growth % | - | 2033.85% | -39.09% | - |
| FCF per Share | 5.43 | 3.69 | 0.18 | 0.29 |
| FCF Conversion (FCF/Net Income) | -7.17x | -4.30x | 3.01x | -0.74x |
| Interest Paid | 0 | 0 | 85.66M | 61.79M |
| Taxes Paid | 0 | 0 | 17.5M | 10.16M |
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.
Key Metrics
Top Statement Risk
Profitability lagging rapid revenue growth
Metrics are mathematically derived from official filings.
Strong Cash Conversion Despite Net Losses
Legence's operating cash flow consistently exceeds its net income, with a Q2 2026 OCF of $74.4M against a net loss of $27.8M, suggesting the core business generates solid cash despite accounting losses.
The persistent negative OCF/NI ratio, which reached -2.67 in Q2 2026, indicates that non-cash charges, likely acquisition-related amortization and stock-based compensation, are the primary drivers of the reported net losses. This pattern suggests the underlying engineering and installation services are cash-generative, but the company's capital structure and accounting for past deals obscure this operational strength.
FCF Margin Volatility Amidst Hyper-Growth
Free cash flow margins have been volatile, ranging from 4.0% to 12.6% over the past six quarters, indicating that cash generation is not scaling linearly with the company's explosive revenue growth.
The FCF margin compression to 4.0% in Q2 2026, despite record revenue, appears to be driven by a significant working capital outflow of $49.2M. This suggests that the rapid project ramp-up is consuming cash for inventory and receivables before collections catch up, a common challenge in high-growth construction cycles that investors should monitor for sustainability.
Working Capital Swings Dictate Cash Flow
Working capital changes have swung dramatically, from a $32.5M inflow in Q1 2026 to a $49.2M outflow in Q2 2026, highlighting the lumpy and project-dependent nature of cash conversion.
The large Q2 2026 working capital outflow, which consumed nearly all operating cash flow, appears to be funding the working capital needs of new project starts. This pattern implies that Legence's cash flow is highly sensitive to the timing of project milestones and client payments, creating potential for significant quarter-to-quarter volatility.
Low Capital Intensity Supports Cash Generation
Capital expenditures have remained consistently low at 1.5% to 1.9% of revenue, indicating a business model that is not heavily reliant on fixed asset investment to drive growth.
The minimal CapEx requirement, which peaked at just $24.0M in Q2 2026, suggests Legence's competitive advantage is rooted in human capital and project management rather than physical infrastructure. This low capital intensity is a structural positive for free cash flow generation, provided the company can manage its working capital cycle effectively.
Acquisition-Fueled Growth Consumes Cash
Significant cash outflows for acquisitions, including $281.3M in Q1 2026, indicate management is prioritizing inorganic expansion over shareholder returns or debt reduction.
The absence of dividends or share repurchases, combined with large acquisition outflows, confirms a growth-at-all-costs capital allocation strategy. This approach appears to be funding the revenue acceleration but also contributes to the net losses through integration costs and amortization, creating a tension between top-line growth and near-term profitability.
Cash Flow Obscured by Acquisition Accounting
The cash flow statement may understate true economic earnings due to significant non-cash charges like stock-based compensation, which reached $59.8M in Q2 2026, and acquisition-related amortization.
The large and growing stock-based compensation expense, which is added back to calculate operating cash flow, represents a real economic cost to shareholders through dilution. Furthermore, the net losses are likely inflated by non-cash amortization of intangible assets from past acquisitions, meaning the company's underlying cash earnings power is stronger than the GAAP net income suggests.