Legence Corp

Legence, a provider of energy infrastructure and commercial HVAC services, climbed 55% on accelerating demand for building electrification and energy-efficiency projects. This growth reflects the increasing market need for sustainable energy solutions, positioning Legence favorably within the sector. The company's focus on energy efficiency aligns with broader trends in infrastructure development, making it a compelling investment opportunity as demand continues to rise.

Legence Corp. (LGN) provides energy efficiency, sustainability, and specialty engineering services for commercial buildings, with a large presence in the data center space. Strong execution and robust project demand drove another solid quarter, with investors encouraged by record awarded contracts of $5.4 billion. The results reinforced confidence that healthy demand across healthcare, education, and data center markets should continue supporting growth.

Legence produced very strong results and guidance, helping the sector overcome the meaningful headwind of not owning Bloom Energy. The Fund's positive performance in industrials, which included Legence, indicates confidence in its future prospects. The manager believes that a balanced portfolio, which includes strong performers like Legence, is best suited to outperform over the long term.

We initiated a position in Legence Corp. when the company went public in September. Legence is a leading provider of engineering, installation, and maintenance services for mission-critical systems in buildings. We think Legence is positioned to grow rapidly as data centers, manufacturers, pharmaceutical companies, and hospitals make investments in new and existing facilities to support growing demand. Additionally, with a strong balance sheet and an active pipeline for M&A, we believe the company can double its $1 billion in revenue over the coming five years, with earnings growing faster driven by a continuous improvement culture.