SEC Presses Non-GAAP Segment and EBITDA Fixes
Staff letters to Rockwell, Maximus, and Albany International pressed Regulation G and Item 10(e) reconciliation and adjustment-rationale issues.
SEC staff pressed three companies on non-GAAP presentation, asking Rockwell Automation (ROK) to justify total segment operating earnings and telling Maximus (MMS) and Albany International (AIN) to fix reconciliation starting points and an adjustment tied to a CH-53K contract.
Staff said Rockwell’s total segment operating earnings sit outside ASC 280 disclosures, exclude corporate and other costs, and therefore appear to exclude normal, recurring, cash operating expenses in violation of Rule 100(b) of Regulation G and Item 10(e) of Regulation S-K. The comment also said the measure excludes purchase accounting depreciation and amortization, producing a figure that reflects only part of an accounting concept and substitutes individually tailored recognition and measurement methods, citing C&DI Question 100.04.
Maximus received a different but related Item 10(e) ask: begin its Adjusted EBITDA reconciliation with net income as the most directly comparable GAAP measure under Item 10(e)(1)(i)(B) and C&DI Questions 102.10(b) and 103.02, and present a GAAP-comparable measure for Adjusted EBITDA margin under Item 10(e)(1)(i)(A) and C&DI Question 102.10(a). The company told staff that in future filings, beginning with its Form 10-Q for the quarter ended March 31, 2026, it would update the Adjusted EBITDA reconciliation to start with net income and include net income margin as the comparable GAAP measure for Adjusted EBITDA margin.
Albany International’s issue was an adjustment rather than a starting point. Staff said the company presents several non-GAAP measures that exclude the CH-53K loss contract reserve and program adjustments, and asked it to remove the adjustment or explain why excluding that item is appropriate, specifically addressing C&DI Question 100.01. Albany told staff it excluded those items after considering SEC non-GAAP rules and C&DI Question 100.01, citing the staff’s view that normal operating expenses depend on the nature and effect of the adjustment and the company’s operations, strategy, and industry.
The company also said the exclusion was tied to its October 28, 2025 strategic evaluation of the structure assembly business limited to the CH-53K contract, which it concluded is not aligned with long-term strategy and for which it is exploring options that could result in a sale before the end of 2026. Rockwell’s segment-earnings comment remains a staff question on Regulation G and Item 10(e), not a company concession that the measure is wrong.