What is the threshold for severe weather-related damages, net of insurance proceeds, included in Budget's Adjusted EBITDA calculation?
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, the company's Adjusted EBITDA calculation excludes severe weather-related damages exceeding $5 million, net of any insurance proceeds. This means that if Budget experiences weather-related damages, the amount exceeding $5 million (after subtracting what the insurance covers) will not be factored into their Adjusted EBITDA.
For a prospective franchisee, this is relevant because Adjusted EBITDA is a metric used to evaluate the financial performance of Budget's operating segments. By excluding significant weather-related damages, Budget aims to provide a clearer picture of its core operational profitability, without the distortion of potentially large, one-time weather events.
Budget revised its definition of Adjusted EBITDA to exclude these damages, and the company did not revise prior years' Adjusted EBITDA amounts because there were no other charges similar in nature to these. This change provides investors and franchisees with a more consistent and comparable measure of Budget's financial health across different periods, focusing on ongoing business operations rather than extraordinary events.