Legence Q3 revenue jumps 85% as data-center backlog reaches $5.9B

By Tom Whitfield

Legence reported record third-quarter 2026 revenue of $1.31 billion on Nov. 12, up 85.1% from $708.0 million. At Sept. 30, backlog and awarded contracts reached a record $5.90 billion, up 92.5% from $3.07 billion a year earlier. The company designs and installs cooling, process piping and other building systems for clients building data centers and technology campuses.

What drove the revenue jump?

The quarter included The Bowers Group, which Legence acquired. Bowers contributed about $322.7 million; excluding that contribution, non-GAAP revenue growth was 39.5%. The board also authorized a $150 million share repurchase program.

Legence’s quarterly revenue sequence shows the scale of the step-up. The company reported:

• 2025: Q1 $506 million; Q2 $599 million; Q3 $708 million; Q4 $738 million.
• 2026: Q1 $1,038 million; Q2 $1,262.1 million; Q3 $1,310.7 million.

Installation and Fabrication revenue rose 142.8% to $992.5 million, driven primarily by data-center and technology clients. Backlog for the Installation and Maintenance segment rose 117.2% to $4.71 billion, reflecting the Bowers deal and growth in data-center, technology and education work.

For AI campuses, Legence supplies the mechanical side of the build rather than the processors: chillers, piping and HVAC systems that remove heat from dense GPU halls. Its revenue therefore depends on facility construction schedules and the pace at which clients move projects into installation.

Takeaway: Acquired scale and data-center construction drove the headline surge, while growth excluding Bowers remained substantial at 39.5%.

What did margins and the balance sheet show?

Adjusted EBITDA rose 99.3% to $177.0 million, lifting the margin to 13.5% from 12.5%. Chief executive Jeff Sprau called the 13.5% result “the highest in company history.”

Gross margin reached 21.0%, but adjusted gross margin declined to 20.3% from 21.5%. Legence attributed the decrease to a revenue mix shifting toward installation work.

Net income reached $133.9 million, compared with $0.4 million a year earlier. After noncontrolling interests, $89.6 million was attributable to Legence, equal to $1.15 per diluted share.

Engineering and Consulting revenue fell 5.8% to $199.9 million, mainly because education clients reduced program-management work. The divergence shows that growth remained concentrated in installation rather than consulting.

At Sept. 30, Legence held $340.8 million in cash and about $1.02 billion in debt, with net leverage of 1.3 times. The company went public in September 2025 and says more than 60% of Nasdaq-100 companies count as clients.

Takeaway: Installation growth raised profit dollars, but a heavier installation mix pushed adjusted gross margin lower.

What must Legence deliver next?

Fourth-quarter revenue guidance calls for $1.26 billion to $1.30 billion, slightly below Q3’s $1.31 billion and roughly level with Q2’s $1.262 billion. Management expects adjusted EBITDA of $160 million to $170 million for the quarter.

For full-year 2026, Legence raised revenue guidance to $4.87 billion to $4.91 billion from $4.70 billion to $4.80 billion. It also raised adjusted EBITDA guidance to $610 million to $620 million from $565 million to $585 million.

The first 2027 outlook calls for $5.3 billion to $5.6 billion of revenue and $690 million to $730 million of adjusted EBITDA. At the midpoints, MLQ.ai calculates about 11% revenue growth from 2026; these figures remain management guidance rather than booked revenue.

On Nov. 1, Legence closed its purchase of Central Texas Industrial Contractors, an Austin mechanical contractor with a strong semiconductor customer base. The company expects the acquisition to add $6 million to $8 million of fourth-quarter revenue, a company estimate rather than a reported result.

Takeaway: Legence’s $5.3 billion to $5.6 billion 2027 outlook depends on converting its $5.90 billion of backlog and awarded contracts, integrating Bowers and Central Texas Industrial Contractors, and preserving installation margins as data-center projects move into execution.