Is Budget's Adjusted EBITDA a GAAP or non-GAAP measure?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
ing segments into our reportable segments. In identifying our reportable segments, we also consider the management structure of the organization, the nature of services provided by our operating segments, the geographical areas and economic characteristics in which the segments operate, and other relevant factors.
Our CODM evaluates the operating results of each of our reportable segments based upon revenues and Adjusted EBITDA, which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; long-lived asset impairment and other related charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, net, which includes amounts recorded in excess of $5 million, related primarily to unprecedented self-insurance reserves for allocated loss adjustment expense, class action lawsuits and personal injury matters; non-operational charges related to shareholder activits activity, which includes third-party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; severe weather-related damages in excess of $5 million, net of insurance proceeds; and income taxes.
We have revised our definition of Adjusted EBITDA to exclude severe weather-related damages in excess of $5 million, net of insurance proceeds. We did not revise prior years' Adjusted EBITDA amounts because there were no other charges similar in nature to these. We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to a
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Adjusted EBITDA is a non-GAAP measure. The document specifies that Budget defines Adjusted EBITDA as income (loss) from continuing operations before several items, including non-vehicle related depreciation and amortization, long-lived asset impairment, restructuring charges, debt costs, non-vehicle related interest, transaction-related costs, legal matters exceeding $5 million, non-operational charges related to shareholder activity, COVID-19 charges, cloud computing costs, other income/expense, severe weather-related damages exceeding $5 million (net of insurance), and income taxes.
The 2025 FDD states that Budget believes Adjusted EBITDA is a useful supplemental measure for evaluating the performance of its operating businesses and comparing results from period to period. Budget also believes it is useful to investors because it allows them to assess the company's results of operations and financial condition on the same basis that management uses internally.
However, the 2025 Budget FDD explicitly states that Adjusted EBITDA is a non-GAAP measure. As such, it should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. This means that while Budget's management finds this metric helpful for their internal analysis, prospective franchisees should also review the standard GAAP figures to get a complete financial picture. Franchisees should be aware that non-GAAP measures can be adjusted and defined by the company, so understanding the specific definition is crucial.