Please ensure Javascript is enabled for purposes of website accessibility

“Adjusted EBITDA (As Adjusted)” Is Our New Favorite Non-GAAP Measure Being Used By a Real-life Company

Today in creative accounting news, Jonathan Weil has the absurd notion that some company would use a profitability metric with a lot of convenient adjustments to achieve a desired earnings outcome. And then try to rationalize it to analysts and investors in a press release. I'm floored.

The company in question is Black Box Corp. "a leading communications system integrator dedicated to designing, sourcing, implementing and maintaining today's complex communications solutions." Yep! That sounds like a business! The metric that caught Weil's attention is "adjusted EBITDA (as adjusted)" and it's a pretty impressive attempt in financial distraction. 

Here's the company's explanation of EBITDA (as adjusted) and adjusted EBITDA (as adjusted):

Management believes that EBITDA (as adjusted), defined as Net income (loss) plus provision (benefit) for income taxes, interest, depreciation, amortization, the goodwill impairment loss and the joint venture investment loss, is a widely-accepted measure of profitability that may be used to measure the Company's ability to service its debt. Adjusted EBITDA (as adjusted), defined as EBITDA plus stock compensation expense, may also be used to measure the Company's ability to service its debt.
Got it? Luckily they provided a table (numbers are in thousands):
 
Whoa, that's a nice goodwill impairment you had last year! Probably glad to get out of the way, huh? 
 
Weil points out the joint venture loss and stock comp expense in the third quarter adds $4.4 million back to EBITDA (aka everything but the bad stuff). Presto! $24 million adjusted EBITDA (as adjusted). 
 
It's no Adjusted Consolidated Segment Operating Income, but this is a solid effort.

 

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Comments are closed.

Related articles

New SOX In the U.K.? It’s (Probably) Coming Soon

The February gloom was broken recently by the news that the British government will be introducing reforms targeting company financial reporting and audit oversight. In truth, none of this should be a surprise. There have been several accounting scandals in recent years where the directors of various companies have been unscrupulous and their external auditors […]

Learn How COVID-19 Is Impacting Q2 Financial Disclosures—For Free!

In yesterday’s Accounting News Roundup e-newsletter, you might have noticed an ad for a free webinar on June 23, “Be Ready: Q2 Disclosures in Light of COVID.” (If you do not subscribe to ANR, you can do so here, thx.) Because the COVID-19 pandemic is affecting pretty much everything in life—yes, even public company financial […]