Why does The Standardx believe the revised definition of Adjusted EBITDA presents a more representative measure?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
During the year ended December 31, 2024, we revised our definition of Adjusted EBITDA to exclude transaction and integration costs (see Note 1), and we recast prior-period results to provide comparability. The revised definition excludes integration costs, which were recognized in integration costs during the three months ended March 31, 2024 and transaction costs, which were recognized in general and administrative expenses during the three months ended March 31, 2024. Previously, only transaction costs recognized in gains on sales of real estate and other and other income (loss), net were excluded from Adjusted EBITDA. As transaction and integration costs may vary in frequency or magnitude, we believe the revised definition presents a more representative measure of our core operations, assists in the comparability of results, and provides information consistent with how our management evaluates operating performance.
Source: Item 1 — Financial Statements. (FDD pages 156–187)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the company revised its definition of Adjusted EBITDA during the year ended December 31, 2024, to exclude transaction and integration costs. The company also recast prior-period results to provide comparability. These costs were previously recognized in integration costs during the three months ended March 31, 2024, and transaction costs were recognized in general and administrative expenses during the same period. Before the revision, only transaction costs recognized in gains on sales of real estate and other and other income (loss), net were excluded from Adjusted EBITDA.
The Standardx believes that the revised definition of Adjusted EBITDA offers a more representative measure of its core operations. This is because transaction and integration costs can vary significantly in frequency or magnitude. By excluding these costs, the company aims to improve the comparability of its financial results across different reporting periods.
For a prospective franchisee, this change in definition means that the Adjusted EBITDA figures presented by The Standardx are intended to provide a clearer picture of the company's ongoing operational performance, without the distortion of one-time or irregular transaction and integration expenses. This allows franchisees to better assess the underlying profitability and stability of The Standardx's business model when considering their investment.