Leverage Finance
Adding Up: EBITDA Addbacks Study Shows Moderate Improvement In Earning Projection Accuracy
Published article
Primary contact
Content visualization contacts
spglobal.com
Olen Honeyman
olen.honeyman@spglobal.com
Steve H Wilkinson
steve.wilkinson@spglobal.com
Minesh Patel
minesh.patel@spglobal.com
Deegant Pandya
deegant.pandya@spglobal.com
Bushra Dawawala
bushra.dawawala@spglobal.com
Source: S&P Global Ratings. As of March 27, 2024.
Overview
Detailed view
Key takeaways
Eight-year average company projected vs. net reported EBITDA,
2015-2022 (%)
Overview
S&P Global Ratings' sixth annual analysis of EBITDA addbacks continues to show that
1) Addbacks represent a significant percentage of management adjusted EBITDA at deal inception (30% on a median basis over the life of the study).
Validity and accuracy
2019 data
2) Management projections are aggressive, further substantiating that generally U.S. speculative-grade corporate issuers present earnings, debt, and leverage projections in their marketing materials at deal inception that they cannot realize.
Our study shows median leverage misses of 2.3x and 2.7x in years one and two following deal inception.
Transactions originated, 2015-2020 (%)
Company projected vs. actual reported EBITDA
Eight-year average addback types, 2015-2022 (%)
2019 data
2019 data
2020
2018
2017
2016
2015
2019
Cohort
Source: S&P Global Ratings. As of March 27, 2024.