Legence revenue doubles to $1.26bn as AI data-center boom pushes backlog to record $5.7bn

Legence Corp. reported record second-quarter revenue of $1.26 billion as accelerating data-center construction and the acquisition of The Bowers Group Inc. more than doubled the scale of its engineering and building infrastructure business. Revenue increased 110.7% from $598.9 million a year earlier, while adjusted EBITDA surged 114.1% to $154.6 million and backlog and awarded contracts climbed 104.6% to a record $5.67 billion. Management responded by raising full-year revenue guidance to $4.7 billion to $4.8 billion from $4.1 billion to $4.3 billion and increasing adjusted EBITDA guidance to $565 million to $585 million from $470 million to $490 million. The extraordinary growth nevertheless came alongside a $27.8 million net loss attributable to Legence and a decline in gross margin, giving investors reason to look beyond the record headline numbers.

The growth was not simply the result of buying The Bowers Group Inc. Legence said revenue excluding Bowers increased approximately 60% year over year on a non-GAAP basis, indicating that underlying demand was already exceptionally strong as technology companies, healthcare groups, governments and educational institutions invested in technically demanding buildings. Data centers and technology remained the largest growth catalyst, but management also reported healthy activity across life sciences and healthcare, state and local government, and education.

The stock-market response was considerably less enthusiastic than the operating figures. Legence shares were trading around $66.52 during the August 13 session, down approximately 3.1% from the previous close after swinging between $62.65 and $75.03, suggesting investors are balancing extraordinary demand against acquisition dependence, margin compression and a GAAP earnings miss.

Legence’s $5.7 billion backlog shows how AI infrastructure is reshaping the business

Backlog and awarded contracts reached $5.67 billion at June 30, up from $2.77 billion a year earlier, while the quarterly book-to-bill ratio stood at 1.2 times. Installation & Maintenance accounted for approximately $4.55 billion of the total and increased 141.2%, while Engineering & Consulting backlog grew 26.6% to $1.12 billion.

The expansion reflects both acquisitions and unusually strong demand for mission-critical infrastructure. Legence designs, fabricates, installs and maintains heating, ventilation, air conditioning, electrical, process-piping and related systems for technically complex facilities, making the company a direct beneficiary when data-center operators need enormous amounts of cooling, electrical capacity and resilient building infrastructure.

Installation & Maintenance revenue jumped 162% to $1.06 billion from $402.8 million, dwarfing the company’s Engineering & Consulting revenue of $206.9 million. Even after removing Bowers, Installation & Maintenance revenue increased 86.6% on a non-GAAP basis, with Legence attributing much of that expansion to Installation & Fabrication work for data-center and technology customers.

Installation & Fabrication itself generated $924.9 million of quarterly revenue, representing 189% year-over-year growth. Maintenance & Service revenue increased 57.5% to $130.4 million, supported by data centers, education, state and local government, and life sciences and healthcare customers.

The broader demand mix matters because data-center construction can eventually become cyclical even when long-term electricity and computing requirements remain strong. Legence’s exposure to hospitals, laboratories, schools and public infrastructure gives it additional sources of work if artificial intelligence-related capital expenditure eventually cools from current levels.

The company’s customer base also provides significant institutional exposure. Legence says more than 60% of companies in the Nasdaq-100 Index are clients, placing it inside the capital-spending programs of many of the technology and corporate groups driving investment in advanced buildings.

Bowers accelerated Legence’s growth, but organic expansion remains unusually strong

The Bowers acquisition is a major reason reported revenue has increased so dramatically. Before the transaction, Bowers generated approximately $767 million of trailing 12-month revenue, $69 million of net income and $72 million of EBITDA, while carrying an estimated $1.3 billion of backlog and awarded contracts as of September 2025.

Legence acquired Bowers to expand its presence in the Washington, D.C. region, one of the most important data-center markets in the United States. The acquisition added substantial mechanical and electrical construction capacity precisely as hyperscale computing investment has increased demand for cooling, electrical distribution and other mission-critical infrastructure.

Investors should nevertheless avoid assuming that the entire 111% revenue increase came from consolidation. Legence’s 60% non-GAAP revenue growth excluding Bowers indicates that the pre-existing platform was also expanding rapidly, providing a stronger argument that the acquisition amplified an established growth trend rather than manufacturing one through accounting alone.

First-half revenue reached $2.30 billion compared with $1.10 billion during the first six months of 2025. That puts Legence more than halfway toward the lower end of its newly raised full-year revenue forecast before entering the seasonally important second half.

The acquisition strategy still creates integration risk because Bowers brings a large workforce, customer base, backlog and operating structure into a business already growing quickly. Legence must preserve project execution and customer relationships while extracting scale benefits, especially as data-center customers increasingly demand complex projects with tight delivery schedules.

Leverage appears manageable following the company’s public-market capital raising. Legence ended June with approximately $292 million of cash and equivalents and $1.03 billion of total debt, while adjusted net leverage stood at approximately 1.5 times after incorporating Bowers’ relevant earnings contribution.

Gross margin compression explains why record Legence revenue did not produce GAAP profit

The most important weakness in the quarter was profitability under standardized accounting measures. Gross profit increased 71.2% to $220.2 million, but gross margin fell to 17.4% from 21.5%, while adjusted gross margin declined to 18.5% from 21.8%.

Management attributed the adjusted gross-margin decline primarily to the rapid shift toward Installation & Maintenance, which carries lower percentage margins than Engineering & Consulting. Engineering & Consulting adjusted gross margin also declined to 31.1% from 33.2% as program and project management became a larger portion of the segment and indirect customer fulfillment costs increased.

Installation & Maintenance margins proved considerably more stable. Adjusted gross margin was 16.1% compared with 16.2% a year earlier, suggesting that the consolidated decline largely reflects a changing revenue mix rather than a collapse in the economics of the installation business itself.

That distinction is important because a lower consolidated gross-margin percentage can coexist with substantially higher earnings if the company processes enough additional revenue through the platform. Legence demonstrated that dynamic in Q2 as adjusted EBITDA more than doubled to $154.6 million while adjusted EBITDA margin edged up to 12.2% from 12.1%.

GAAP results tell a less flattering story. Legence reported a $34.6 million consolidated net loss and a $27.8 million net loss attributable to the company, compared with losses of $3.9 million and $5.3 million respectively a year earlier.

The quarter included $21.6 million of goodwill impairment and another $19.5 million of long-lived asset impairment, helping explain the large difference between adjusted EBITDA growth and GAAP profitability. Selling, general and administrative expenses also more than doubled to $147.6 million as the overall business expanded.

For investors, the implication is that adjusted EBITDA currently provides a clearer view of operating momentum, but GAAP losses should not be dismissed. A company generating more than $1 billion of quarterly revenue will eventually be expected to demonstrate that acquisition costs, impairments, financing expenses and other adjustments can normalize enough for strong operating performance to translate consistently into reported net profit.

Raised 2026 guidance puts a much higher valuation test on Legence’s second half

Legence raised its 2026 revenue guidance by an unusually large amount, moving the range to $4.7 billion to $4.8 billion from $4.1 billion to $4.3 billion. The midpoint increased by approximately $550 million, indicating that first-half performance and backlog conversion are running materially ahead of management’s previous expectations.

Adjusted EBITDA guidance increased even more dramatically to $565 million to $585 million from $470 million to $490 million. The midpoint therefore rose by roughly $95 million, giving investors a substantially higher benchmark against which to measure the next two quarters.

Third-quarter guidance calls for revenue of $1.225 billion to $1.275 billion and adjusted EBITDA of $150 million to $160 million. Those numbers imply another quarter close to the record Q2 scale rather than an immediate slowdown after the extraordinary first-half acceleration.

The $5.67 billion backlog adds credibility to that outlook because Legence has contracted and awarded work exceeding its newly projected full-year revenue. Backlog should not be interpreted as guaranteed revenue, however, because project schedules, financing, customer decisions and other execution factors can affect whether and when individual awards are ultimately recognized.

The August 13 stock decline therefore looks less like rejection of the growth story and more like evidence that expectations have become demanding. Legence shares traded as high as $75.03 before retreating into the mid-$60s, showing substantial disagreement over how investors should value a company simultaneously producing triple-digit reported revenue growth, record backlog, compressed gross margins and continued GAAP losses.

The bullish argument remains powerful because artificial intelligence infrastructure requires far more than semiconductors and servers. Data centers also require cooling, electrical systems, plumbing, mechanical infrastructure, construction expertise and long-term maintenance, placing Legence inside a less glamorous but essential part of the AI capital-spending chain.

The next stage of the investment case will depend on whether that demand translates into durable profitability rather than simply spectacular revenue growth. Continued backlog expansion, stable Installation & Maintenance margins and eventual GAAP profitability would strengthen the argument that Legence is becoming a major picks-and-shovels beneficiary of the AI infrastructure boom, while weaker project economics could make today’s enormous growth rates considerably less valuable to shareholders.

Key takeaways from Legence’s record Q2 revenue and $5.7 billion backlog

• Legence Q2 revenue surged 110.7% to a record $1.26 billion, while revenue excluding Bowers grew approximately 60%.
• Adjusted EBITDA jumped 114.1% to $154.6 million as adjusted EBITDA margin edged higher to 12.2%.
• Backlog and awarded contracts reached a record $5.67 billion, representing 104.6% year-over-year growth.
• Installation & Maintenance revenue climbed 162% to $1.06 billion, driven heavily by data-center and technology demand.
• Gross margin fell to 17.4% from 21.5% as lower-margin Installation & Maintenance became a larger portion of revenue.
• Legence reported a $27.8 million attributable net loss despite the sharp increase in adjusted EBITDA.
• Full-year revenue guidance increased to $4.7 billion–$4.8 billion from the previous $4.1 billion–$4.3 billion range.
• Adjusted EBITDA guidance rose to $565 million–$585 million from $470 million–$490 million.
• Net leverage stood near 1.5 times at quarter-end, supported by approximately $292 million of cash and equivalents.
• Legence shares fell about 3% to roughly $66.50 on August 13 as investors weighed record growth against margin and GAAP-profit concerns.