S&P Global Ratings raised Legence Holdings LLC's corporate credit rating to 'BB-' from 'B+' on Friday, attaching a positive outlook to the engineering, consulting, installation and maintenance services provider. The ratings action reflects what S&P described as both a material reduction in sponsor ownership and better-than-anticipated operational performance in the first quarter of 2026.
S&P noted that Blackstone cut its stake in Legence to roughly 47% from 72% at the time of the company's initial public offering in September 2025. The ratings agency said it expects governance and financial policy to improve following this meaningful decrease in sponsor ownership.
Legence used proceeds from its IPO during 2025 to pare down debt, a move that S&P said reduced its adjusted leverage to 4x at fiscal year-end 2025, down from 7.8x in fiscal 2024 under S&P Global Ratings adjustments. That decline in leverage was a central factor in the upgrade.
Operationally, Legence reported accelerating demand in high-technology end markets during the first quarter, particularly from data centers, alongside broad strength in mission-critical infrastructure. After reporting pro-forma revenue growth of more than 100% for the quarter and 57% growth excluding the contribution from The Bowers Group acquisition in January 2026, the company raised its full-year guidance.
S&P Global Ratings outlined its expectations for 2026 as well, forecasting approximately 63% revenue growth on a pro-forma basis for the full year and adjusted EBITDA growth of about 49%, to roughly $450 million.
The January acquisition of The Bowers Group added about 1.3 million square feet of fabrication capacity and contributed an estimated $5.4 billion backlog. S&P emphasized that roughly 62% of Legence's revenues come from data center and technology customers, and that the company is positioned to serve complex heating, ventilation and air conditioning needs for large technology firms including Open AI, Amazon Web Services, Oracle, Meta, Microsoft and Alphabet.
The positive outlook from S&P indicates the ratings firm could consider a further upgrade for Legence within the next 12 months if the company continues to exceed expectations or meaningfully reduces sponsor ownership while bringing leverage below 3x and keeping free operating cash flow to debt above 15%.
Conversely, S&P said it would likely revise the outlook to stable if Legence's leverage remains above 3x or if free operating cash flow to debt falls below 15%.
Contextual note - The rating change and outlook reflect S&P Global Ratings' assessment of ownership structure, leverage metrics and recent operating trends as described above.