Non-GAAP measures in MD&A: disclosure examples
Verbatim excerpt (380 words), formatting simplified. View full filing on EDGAR →Distributable Earnings is derived from Blackstone’s segment reported results. Distributable Earnings is used to assess performance and amounts available for dividends to Blackstone stockholders, including Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships. Distributable Earnings is the sum of Segment Distributable Earnings plus Net Interest and Dividend Income (Loss) less Taxes and Related Payables. Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “—Non-GAAP Financial Measures” for our reconciliation of Distributable Earnings.
Net Interest and Dividend Income (Loss) is presented on a segment basis and is equal to Interest and Dividend Revenue less Interest Expense, adjusted for the impact of consolidation of Blackstone Funds, and interest expense associated with the Tax Receivable Agreement.
Taxes and Related Payables represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes and including the payable under the Tax Receivable Agreement. Further, the current tax provision utilized when calculating Taxes and Related Payables and Distributable Earnings reflects the benefit of deductions available to the company on certain expense items that are excluded from the underlying calculation of Segment Distributable Earnings and Total Segment Distributable Earnings, such as equity-based compensation charges and certain Transaction-Related and Non-Recurring Items where there is a current tax provision or benefit. The economic assumptions and methodologies that impact the implied income tax provision are the same as those methodologies and assumptions used in calculating the current income tax provision for Blackstone’s Condensed Consolidated Statements of Operations under GAAP, excluding the impact of divestitures and accrued tax contingency-related liabilities or refunds which are reflected when paid or received. The Payable under the Tax Receivable Agreement reflects the expected amount of tax savings generated in the period that parties to the Tax Receivable Agreement are entitled to receive in future periods. Management believes that including the amount payable under the Tax Receivable Agreement and utilizing the current income tax provision adjusted as described above when calculating Distributable Earnings is meaningful as it increases comparability between periods and more accurately reflects earnings that are available for distribution to stockholders.
Segment Distributable Earnings
Verbatim excerpt (289 words), formatting simplified. View full filing on EDGAR →Economic Profit should be considered in addition to, rather than a substitute for, operating income, which is the most directly comparable GAAP measure. Economic Profit is defined by the Company as Gross Cash Earnings (“GCE”) minus the Capital Charge on Gross Operating Assets (“GOA”). Increases in Economic Profit indicate that the Company is effectively allocating capital and rewarding shareholders by generating returns in excess of the incremental cost of capital associated with reinvestment in the business.
GCE is calculated as operating income plus depreciation, amortization and operating lease expense, less unusual items and taxes. The Capital Charge uses a minimum required return multiplied by the GOA. CSX's GOAs include gross properties and other non-cash assets, net of non-interest bearing liabilities. The Company used a 15% tax rate and an 8% required return, for both periods presented, which is consistent with rates used for investment decisions and performance evaluation within those same periods. The tax rate is the approximate equivalent of the Company’s actual income tax expense as a percentage of pre-tax GCE. The required return rate represents management’s desired minimum return on any investment. CSX annually re-evaluates these rates to ensure they accurately represent taxes and a required return in light of internal and external factors and would adjust the rate if the annual review resulted in a preset deviation from the current rates. This focuses the Economic Profit measure on value generated by management instead of external factors, such as legislative tax policy or interest rate volatility.
CSX Q3 2025 Form 10-Q p.38
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table reconciles operating income (the most directly comparable GAAP measure) to Economic Profit (non-GAAP measure).
Verbatim excerpt (278 words), formatting simplified. View full filing on EDGAR →In this MD&A, our consolidated measures "adjusted income from operations," earnings per share on that same basis and "adjusted revenues" are not determined in accordance with GAAP and should not be viewed as substitutes for the most directly comparable GAAP measures of "shareholders' net income," "earnings per share" and "total revenues." We also use pre-tax adjusted income (loss) from operations and adjusted revenues to measure the results of our segments.
The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes these metrics reflect the underlying results of business operations and facilitate analysis of trends in underlying revenue, expenses and profitability. We define adjusted income (loss) from operations as shareholders' net income (or income (loss) before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net investment gains/losses, amortization of acquired intangible assets and special items. The Cigna Group's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of normal, recurring operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results. Consolidated adjusted income (loss) from operations is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders' net income. See the below Financial Highlights section for a reconciliation of consolidated adjusted income from operations to shareholders' net income.
Verbatim excerpt (390 words), formatting simplified. View full filing on EDGAR →We reconcile each non‑GAAP performance measure to its most directly comparable GAAP measure in the table below, followed by descriptions of each non-GAAP adjustment. Margins are calculated by dividing the applicable line item by consolidated sales for the relevant period. In addition to our non-GAAP performance measures, we also present components used in calculating adjusted EPS to illustrate the per share effect of our non‑GAAP adjustments. All per share amounts are calculated on a diluted basis from continuing operations attributable to Air Products. Because margins and per share amounts are calculated independently, the individual components may not sum to the related totals due to rounding.
Three Months Ended 31 December Q1 2026 vs. Q1 2025 Operating Income Operating Margin Other Non- Operating Inc/Exp, Net Income Tax Expense Net Income Attributable to Air Products EPS Q1 2026 GAAP Measures $734.5 23.7% ($1.4) $159.4 $678.2 $3.04 Q1 2025 GAAP Measures 643.6 22.0% 38.9 140.7 617.4 2.77 $ GAAP Change $90.9 $0.27 %/bp GAAP Change 14% 170 bp 10% Q1 2026 GAAP Measures $734.5 23.7% ($1.4) $159.4 $678.2 $3.04 Business and asset actions (A) 22.0 0.7% 6.3 3.1 24.6 0.11 Non-service pension cost, net — —% 3.4 0.9 2.5 0.01 Q1 2026 Adjusted Measures $756.5 24.4% $8.3 $163.4 $705.3 $3.16 Q1 2025 GAAP Measures $643.6 22.0% $38.9 $140.7 $617.4 $2.77 Shareholder activism-related costs 29.9 1.0% — 8.0 21.9 0.10 Gain on de-designation of cash flow hedges (B) — —% (38.8) (3.3) (10.3) (0.05) Non-service pension cost, net — —% 10.5 2.6 7.9 0.04 Q1 2025 Adjusted Measures $673.5 23.0% $10.6 $148.0 $636.9 $2.86 $ Adjusted Change $83.0 $0.30 %/bp Adjusted Change 12% 140 bp 10% (A) Charge attributable to noncontrolling interests was $0.6. (B) Gain attributable to noncontrolling interests was $25.2. Business and Asset Actions
During the first quarter of fiscal year 2026, we recorded charges for business and asset actions totaling $28.3 ($24.6 after tax, or $0.11 per share) related to project exits announced in fiscal year 2025. Of these charges, $22.0 were recorded within operating income to reflect updated cost estimates as we settle project‑related commitments and sell associated assets. The remaining $6.3 was recorded to "Other non‑operating income (expense), net" and reflects losses on cross‑currency interest rate swaps terminated in connection with the early repayment of related intercompany loans for one of the affected gasification projects.
Verbatim excerpt (303 words), formatting simplified. View full filing on EDGAR →In this section, Grainger utilizes non-GAAP measures where it believes it will assist users of its financial statements in understanding its business. As discussed in the "Non-GAAP Measures" section, we have adjusted the current year results to exclude one-time losses recorded in SG&A expenses of $186 million within Other and $10 million within Endless Assortment, related to the intention to exit the U.K. market. For further information regarding the Company's non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see below "Non-GAAP Measures."
The following table is included as an aid to understanding the changes in Grainger’s Condensed Consolidated Statements of Earnings for the three months ended September 30, 2025 and 2024 (in millions of dollars except per share amounts):
Three Months Ended September 30, % Change % of Net Sales 2025 2024 2025 2024 Net sales (1) 4,657 4,388 6.1 100.0 100.0 Cost of goods sold 2,859 2,668 7.2 61.4 60.8 Gross profit 1,798 1,720 4.5 38.6 39.2 Selling, general and administrative expenses 1,287 1,034 24.5 27.6 23.6 Operating earnings 511 686 (25.5) 11.0 15.6 Other expense – net 19 15 26.7 0.4 0.3 Income tax provision 171 166 3.0 3.7 3.8 Net earnings 321 505 (36.4) 6.9 11.5 Noncontrolling interest 27 19 42.1 0.6 0.4 Net earnings attributable to W.W. Grainger, Inc. 294 486 (39.5) 6.3 11.1 Diluted earnings per share 6.12 9.87 (38.0) (1) For further information regarding the Company's disaggregated revenue, see Note 3 of the Notes to Condensed Consolidated Financial Statements in Part 1, Item 1: Financial Statements of this Form 10-Q. The following table is included as an aid to understanding the changes of Grainger's total net sales, daily net sales and daily, constant currency net sales from the prior period for the three months ended September 30, 2025 and 2024 (in millions of dollars):
Verbatim excerpt (162 words), formatting simplified. View full filing on EDGAR →Certain information presented is derived from amounts calculated in accordance with U.S. GAAP but is not itself an expressly permitted GAAP measure. The non-GAAP financial measures as summarized below should not be viewed in isolation or as an alternative to the most directly comparable GAAP measure.
Adjusted EBITDA: Adjusted EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, depletion, amortiz ation, Lo ss on impairment s, gain/loss on divestitures and investments, I ncome/loss from equity method investments, substantial acquisition-related costs, and pension expense/income excluding current service cost component. It is quoted by management in conjunction with other GAAP and non-GAAP financial measures to aid investors in their analysis of the performance of the Company. Adjusted EBITDA by segment is monitored by management in order to allocate resources between segments and to assess performance.
Adjusted EBITDA margin is calculated by expressing Adjusted EBITDA as a percentage of Total revenues.
Reconciliation to its most directly comparable GAAP measure is presented below:
Verbatim excerpt (374 words), formatting simplified. View full filing on EDGAR →The Company uses certain “non-GAAP” financial measures as defined by the SEC. These are measures of performance not defined by accounting principles generally accepted in the United States, and should be considered in addition to, not in lieu of, GAAP reported measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this section.
The Company uses adjusted net earnings, adjusted diluted EPS, EBITDA, adjusted EBITDA, and total segment operating profit, non-GAAP financial measures as defined by the SEC, to evaluate the Company’s financial performance.
Adjusted net earnings is defined as net earnings adjusted for the effects on net earnings of specified items as more fully described in the reconciliation tables. Adjusted diluted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items as more fully described in the reconciliation tables.
EBITDA is defined as earnings before interest on borrowings, taxes, and depreciation and amortization. Adjusted EBITDA is defined as earnings before interest on borrowings, taxes, depreciation, and amortization, adjusted to exclude the impact of specified items as more fully described in the reconciliation tables.
Total segment operating profit is defined as ADM’s consolidated earnings before income taxes, adjusted for Other Business, Corporate, and specified items as more fully described in the reconciliation tables.
Management believes that adjusted net earnings, adjusted diluted EPS, EBITDA, adjusted EBITDA, and total segment operating profit are useful measures of the Company’s performance because they provide investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. Adjusted net earnings, adjusted diluted EPS, EBITDA, adjusted EBITDA, and total segment operating profit are not intended to replace or be an alternative to net earnings, diluted EPS, earnings before income taxes and cash flows from operating activities, the most directly comparable amounts reported under GAAP.
The table below provides a reconciliation of net earnings (the most directly comparable GAAP measure) to adjusted net earnings (a non-GAAP measure) and diluted EPS (the most directly comparable GAAP measure) to adjusted diluted EPS (a non-GAAP measure) for the three months ended June 30, 2026 and 2025.
ARCHER-DANIELS-MIDLAND COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Verbatim excerpt (330 words), formatting simplified. View full filing on EDGAR →Set forth below is a reconciliation of pro forma and macro adjusted revenue and key performance metric by segment, used to calculate organic revenue growth, to the most directly comparable GAAP measure, revenues, net and key performance metric (in millions):*
Revenues, net Key Performance Metric Three Months Ended March 31, 2026 Three Months Ended March 31, 2026 (Unaudited) 2026 2025 2026 2025 CORPORATE PAYMENTS - SPEND Pro forma and macro adjusted 481.8 416.8 81,850 57,371 Impact of acquisitions/dispositions — (71.7) — (9,525) Impact of fuel prices/spread 0.5 — — — Impact of foreign exchange rates 21.5 — — — As reported 503.9 345.1 81,850 47,846 VEHICLE PAYMENTS - TRANSACTIONS Pro forma and macro adjusted 523.6 477.6 208.4 199.8 Impact of acquisitions/dispositions 1.0 (3.4) 0.6 0.9 Impact of fuel prices/spread 1.3 — — — Impact of foreign exchange rates 38.0 — — — As reported 563.9 474.3 209.0 200.7 LODGING PAYMENTS - ROOM NIGHTS Pro forma and macro adjusted 109.7 110.2 7.4 9.8 Impact of acquisitions/dispositions — — — — Impact of fuel prices/spread — — — — Impact of foreign exchange rates 1.3 — — — As reported 111.0 110.2 7.4 9.8 OTHER 1 - TRANSACTIONS Pro forma and macro adjusted 81.1 76.0 465.0 429.0 Impact of acquisitions/dispositions — — — — Impact of fuel prices/spread — — — —
Verbatim excerpt (333 words), formatting simplified. View full filing on EDGAR →The following table: (i) reconciles adjusted net income to net income, the most directly comparable GAAP measure, (ii) reconciles adjusted EPS to diluted earnings per share, the most directly comparable GAAP measure, and (iii) presents the computations of adjusted net income margin and incremental adjusted net income margin:
Three Months Ended March 31, 2026 vs 2025 ($ and shares in thousands, except per share amounts) (1) 2026 2025 $ Change Net income (GAAP) 166,731 71,116 95,615 Adjusted net income (non-GAAP) 166,731 71,116 95,615 Numerator: Net income attributable to common stockholders – diluted (GAAP) (2) 167,075 71,455 Adjusted net income attributable to common stockholders – diluted (non-GAAP) 167,075 71,455 Denominator: Weighted average common stock outstanding – diluted (GAAP) 1,378,011 1,185,466 Non-GAAP adjustments: Dilutive impact of convertible notes (3) (22,032) (31,412) Adjusted weighted average common stock outstanding – diluted (non-GAAP) 1,355,979 1,154,054 Earnings per share – diluted (GAAP) (2) 0.12 0.06 Impact of adjustments per share — — Adjusted earnings per share – diluted (non-GAAP) (2) 0.12 0.06 Net income margin (GAAP) 15 9 Adjusted net revenue (non-GAAP) (4) 1,087,232 770,720 Adjusted net income margin (non-GAAP) 15 9 Incremental adjusted net income margin (non-GAAP) 30 (1) Certain amounts may not recalculate exactly using the rounded amounts provided. Earnings per share is calculated based on unrounded numbers.
(2) Diluted earnings per share and diluted net income attributable to common stockholders exclude gain on extinguishment of debt, net of tax, as well as interest expense incurred, net of tax, associated with convertible note activity during the period as evaluated under the if-converted method.
(3) This non-GAAP adjustment excludes the dilutive impact of the 2026 and 2029 convertible notes, to the extent that the 2026 and 2029 capped call transactions, respectively, would deliver cash or shares to offset dilution.
(4) Refer to ' Adjusted Net Revenue ' above for reconciliation of this non-GAAP measure.
The table below presents the key business metrics that management uses to evaluate our business, measure our performance, identify trends and make strategic decisions:
Verbatim excerpt (314 words), formatting simplified. View full filing on EDGAR →Adjusted operating earnings (loss) and adjusted operating earnings (loss) per share are defined as earnings (loss) from continuing operations (a GAAP measure) excluding net special items and non-operating pension expense (income). Earnings (loss) from continuing operations and diluted earnings (loss) from continuing operations per share are the most directly comparable GAAP measures. The Company calculates adjusted operating earnings (loss) by excluding the after-tax effect of non-operating pension expense (income) and net special items, as described in greater detail below, from earnings (loss) from continuing operations reported under GAAP. Adjusted operating earnings (loss) per share is calculated by dividing adjusted operating earnings (loss) by diluted average shares of common stock outstanding. Management uses these non-GAAP financial measures to focus on ongoing operations and believes that such non-GAAP financial measures are useful to investors in assessing the operational performance of the Company and enabling investors to perform meaningful comparisons of past and present consolidated operating results from continuing operations. The Company believes that these non-GAAP financial measures, viewed alongside the most directly comparable GAAP measures, provides for a more complete analysis of the Company's results of operations.
Adjusted EBITDA from continuing operations is defined as earnings (loss) from continuing operations (a GAAP measure) before income taxes and equity earnings (loss), interest expense, net, net special items, non-operating pension expense (income) and depreciation and amortization. Earnings (loss) from continuing operations is the most directly comparable GAAP measure. Management uses this measure to focus on on-going operations and believes this measure is useful to investors. Management uses this non-GAAP financial measure to focus on on-going operations and believes this measure is useful to investors to perform meaningful comparisons of past and present consolidated operating results from continuing operations. The Company believes that adjusted EBITDA from continuing operations, viewed alongside the most directly comparable GAAP measure, provides for a more complete analysis of the Company's results from continuing operations.
Verbatim excerpt (396 words), formatting simplified. View full filing on EDGAR →In the accompanying analysis of financial information, we sometimes refer to non-GAAP measures. Refer to the Non-GAAP Measures section of this discussion and analysis for the definitions of, and reasons we use, these non-GAAP measures and the reconciliations to their most directly comparable GAAP measures.
Unless otherwise indicated, all amounts in the following tables are in millions, except per share amounts.
Overview
For a complete overview of our business, refer to Part I, Item 1: Business of our Annual Report on Form 10-K for the year ended December 31, 2025.
The sectors discussed below are organized by asset class and include Automotive, Commercial, Construction and Transportation (“CC&T”), and Other. Automotive includes automobiles, including passenger vehicles and buses. CC&T includes equipment needed for earth moving, lift and material handling, as well as vocational and commercial trucks and trailers. Other primarily includes assets and equipment related to the agricultural, forestry and energy industries, government surplus assets, smaller consumer recreational transportation items and parts sold in our vehicle dismantling business 1 . Each respective sector includes salvage and non-salvage transactions.
Key Operating Metrics
We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, and make operating decisions. We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our operational strategies.
Gross Transaction Value ("GTV") : Represents total proceeds from all items sold on our auctions and online marketplaces, third-party online marketplaces, private brokerage services and other disposition channels. GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in the Company’s condensed consolidated financial statements.
Inventory return: Inventory sales revenue less cost of inventory sold.
Inventory rate: Inventory return divided by inventory sales revenue.
Total lots sold: A single asset to be sold or a group of assets bundled for sale as one unit.
Financial Highlights
For the first quarter of 2026, as compared to the first quarter of 2025:
• Total GTV increased 13% to $4.3 billion
• Total revenue increased 11% to $1.2 billion
◦ Service revenue increased 5% to $897.7 million
◦ Inventory sales revenue increased 32% to $336.9 million
• Net income increased 20% to $135.6 million
• Net income available to common stockholders increased 21% to $124.6 million
Verbatim excerpt (307 words), formatting simplified. View full filing on EDGAR →(2) Amounts are non-GAAP financial measures. See "Non-GAAP Financial Measures" of this Form 10-Q for a discussion of non-GAAP financial metrics including a reconciliation to the most directly comparable GAAP measure.
ROLLINS, INC. AND SUBSIDIARIES
The following table presents financial information, including our significant expense categories, for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30, 2026 2025 % of Revenue % of Revenue Revenue 1,078,576 100.0 999,527 100.0 Less: Cost of services provided (exclusive of depreciation and amortization below): Employee expenses 328,787 30.5 298,354 29.8 Materials and supplies 66,339 6.2 59,500 6.0 Insurance and claims 21,932 2.0 20,734 2.1 Fleet expenses 46,959 4.4 41,834 4.2 Other cost of services provided (1) 44,613 4.1 41,439 4.1 Total cost of services provided (exclusive of depreciation and amortization below) 508,630 47.2 461,861 46.2 Sales, general and administrative: Selling and marketing expenses 151,967 14.1 140,177 14.0 Administrative employee expenses 95,733 8.9 89,303 8.9 Insurance and claims 13,239 1.2 12,939 1.3 Fleet expenses 11,775 1.1 10,443 1.0 Other sales, general and administrative (2) 62,263 5.8 54,734 5.5 Total sales, general and administrative 334,977 31.1 307,596 30.8 Depreciation and amortization 33,610 3.1 31,737 3.2 Interest expense, net 9,391 0.9 7,380 0.7 Other (income) expense, net 2,214 0.2 (292) — Income tax expense 45,844 4.3 49,756 5.0 Net income 143,910 13.3 141,489 14.2 1) Other cost of services provided includes facilities costs, professional services, maintenance & repairs, software license costs, and other expenses directly related to providing services.
2) Other sales, general and administrative includes facilities costs, professional services, maintenance & repairs, software license costs, bad debt expense, and other administrative expenses.
ROLLINS, INC. AND SUBSIDIARIES
Revenues
The following presents a summary of revenues by service offering for the three months ended June 30, 2026 and June 30, 2025, respectively:
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