How does Budget define Adjusted EBITDA?
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 key metric used by the company's chief operating decision-maker to assess performance and allocate resources among operating segments. Budget defines Adjusted EBITDA as income (loss) from continuing operations before several financial items. These include non-vehicle related depreciation and amortization, long-lived asset impairment and other related charges, restructuring and other related charges, early extinguishment of debt costs, and non-vehicle related interest.
Additionally, Budget's definition of Adjusted EBITDA also excludes transaction-related costs, net; legal matters, net (which includes amounts recorded in excess of $5 million related primarily to self-insurance reserves, class action lawsuits, and personal injury matters); non-operational charges related to shareholder activity (including 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.
Budget revised its definition of Adjusted EBITDA to exclude severe weather-related damages exceeding $5 million, net of insurance proceeds. However, prior years' Adjusted EBITDA amounts were not revised because there were no other charges similar in nature. Budget believes Adjusted EBITDA is a useful supplemental measure for evaluating the performance of its operating businesses and comparing results from period to period. It is also considered useful for investors, allowing them to assess Budget's results of operations and financial condition on the same basis as management. However, Budget states that Adjusted EBITDA is a non-GAAP measure and should not be considered a substitute for net income or other income statement data prepared in accordance with U.S. GAAP.