Core Thesis - Legence Corp. (LGN) presents a compelling investment opportunity driven by its rapidly growing data center business and strong organic growth metrics [2][3][5] Company Overview - Legence Corp. provides engineering, installation, and maintenance services for mission-critical systems in buildings across the United States, with a focus on energy efficiency and consulting [2] - Approximately 50% of its pro-forma business is concentrated in data centers, which experienced over 60% year-over-year growth in Q3 2025 [3] Financial Performance - Total order intake exceeded $1 billion in Q3, reflecting a more than 40% year-over-year increase, while quarterly revenue growth accelerated from 8% in Q1 to 26% in Q3 [3] - The engineering and consulting segment generates high margins (~30%), complementing mid-teens margins in installation and maintenance, which together constitute 70% of the business [3] Valuation and Market Position - LGN trades at approximately 12x 2026 pro-forma EBITDA, significantly below peer multiples ranging from 14x to 20x, despite its strong growth trajectory [4] - The company benefits from Blackstone ownership, providing preferred access to major data center investments and supporting nationwide infrastructure expansion [4] Growth Outlook - Management projects ~15% organic top- and bottom-line growth in 2026, which appears conservative given recent performance [4] - Upside scenarios include a potential re-rating to peer multiples, which could result in a ~50% stock price increase over the next few years [5] Investment Case - The investment case is supported by modest downside risk, attractive free cash flow, and the potential for quick upside as the market recognizes LGN post-IPO [5] - Even under slower growth conditions, EBITDA expansion and recurring maintenance services provide a resilient floor for the company [5]

Financial Data and Key Metrics Changes - The consolidated net sales reached 552 million lei, representing a 29% increase compared to the first half of 2024 [13][15] - EBITDA increased by 74%, amounting to 47 million lei, with an EBITDA margin improvement of 2.2% compared to the same period last year [15][16] - The net result showed a profit of 3.4 million lei, a significant turnaround from a loss of 6.6 million lei in 2024 [15][17] Business Line Data and Key Metrics Changes - The installation and recycling segment contributed significantly to turnover, with a turnover of 402 million lei, up from 307 million lei in the same period of 2024, resulting in an operational profit of 25 million lei [18] - The compounds segment saw a modest turnover increase of 4%, but a substantial 244% increase in EBITDA, indicating stabilization [19] - The flexible packaging segment experienced a 51% turnover increase to 75 million lei, although it still reported a negative EBITDA of 1.5 million lei [20] Market Data and Key Metrics Changes - External sales nearly doubled from 100 million lei to close to 200 million lei, accounting for 35% of total turnover, driven by an 18% increase in volumes and new business contributions [7] - The infrastructure segment in Romania showed a growth of close to 40% in engineering works, while other construction segments did not perform as well [4][5] Company Strategy and Development Direction - The company aims to reduce dependency on the Romanian market and increase market share in Germany and Austria through dedicated sales structures and investments in personnel [5][7] - There is a strategic shift towards biodegradable packaging to meet market demands and improve profitability in the packaging segment [11][12] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the contributions from recent acquisitions, particularly Aquatica Experience, expected to enhance financial performance by year-end [3][5] - The packaging segment remains challenging, with management actively working on operational improvements and staffing to achieve profitability [6][12] Other Important Information - The company faced a forex impact costing approximately 5 million lei but still managed to maintain a positive net result [9][17] - Working capital increased significantly due to higher inventory and receivables, leading to an increase in bank loans to 383 million lei [21][22] Q&A Session Summary - No questions were raised during the Q&A session, indicating a lack of immediate inquiries from participants [25]