First it was non-GAAP adjustments, then it was stock buybacks, then it was fudging the effective tax rate; and now, in the most creative way to "boost" one's earnings, Dicks Sporting Goods admitted it blatantly fabricated its Adjusted EBITDA. But it's ok: it was a simple calculation error, and now everything is "fixed", the company reported in an 8K filed this morning.
We do find it odd how such glaring math errors virtually always end up painting a rosier picture of the business than in reality. Almost as if there is an element of more than just chance involved...
This is what the company said:
Dick's Sporting Goods, Inc. (the "Company") is filing this Current Report on Form 8-K/A to correct a computation error in the Company's press release furnished by the Company with its Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 7, 2017 (the "Original Filing").
This Form 8-K/A is being filed solely to correct a computation error in the calculation of Adjusted EBITDA within the "GAAP to non-GAAP Reconciliation - Adjusted EBITDA" tables in the Original Filing. This computation error resulted in a $23.4 million overstatement of Adjusted EBITDA amounts for both the 13 weeks and 52 weeks ended January 28, 2017. The corrected tables are furnished herewith.
Adding insult to stupidity, the company also reminded everyone just how meaningless the concept of Adjusted EBITDA is:
Adjusted EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. Adjusted EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA is a key metric used by the Company that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations, capital investments and certain non-recurring, infrequent or unusual items.
Meanwhile, investors, who apparently don't mind being lied to but are furious when the lie is revealed slammed Dicks after the news was revealed.