Tuesday, June 28, 2022

Non-GAAP accounting disclosures are one of the most popular topics of conversation we have with Calcbench users, and we’ve devoted a fair bit of this blog lately to non-GAAP issues. So today we just want to offer a quick recap of recent non-GAAP items we’ve published, and pointers on where Calcbench users can find non-GAAP data yourselves.

First is our latest piece of research about what non-GAAP adjustments companies claim when they report non-GAAP net income. A crack team of interns reviewed the 2021 earnings reports of 123 S&P 500 companies.

They found that in total, those firms reported adjusted, non-GAAP net income that was $86 billion greater than traditional GAAP net income; largest adjustment by dollar amount was amortization of intangibles, which accounted for $45.5 billion, or more than half of all non-GAAP adjustments. You can find our complete report and accompanying slide deck on the Calcbench research page.

Second is a look at the comparability of non-GAAP disclosures among multiple companies — or rather, the difficulty in doing so, since the details of non-GAAP disclosures often mean incomparability between firms. We use Pfizer ($PFE) as a prime example of the challenge here, plus a few other pharma firms as well.

Third, we stick with the pharma industry to see how non-GAAP disclosures might change over time. Specifically, numerous pharma companies changed how they report adjustments for in-process research and development (IPR&D) costs, once the SEC sent comment letters to the industry inquiring about the wisdom of previous disclosures.

All those non-GAAP posts are only within the last month, by the way. You can always search the Calcbench blog archive for previous non-GAAP content. Rest assured, you’ll find a lot.

Studying Non-GAAP Data on Your Own

Calcbench also offers several ways to find and analyze non-GAAP disclosures yourself.

Perhaps the best place to start is our Multi-Company page, where you can compare disclosures across large groups of companies — non-GAAP disclosures included! Simply use the standardized metrics search field on the left side of your screen, where you can choose from a host of non-GAAP metrics we’ve already pre-programmed. See Figure 1, below.

Again, you can’t automatically assume that one firm’s non-GAAP net income is the same as any other firm’s non-GAAP disclosure; each one is unique, and you’ll need to research those details. But the Multi-Company page is a great place to collect lots of raw material so you can begin that journey.

You can also search our Interactive Disclosures page to pull up a company’s earnings releases, where non-GAAP metrics typically get their most exposure. For every non-GAAP disclosure a company makes, it must include a reconciliation back to the nearest comparable GAAP metric. Those reconciliations can typically be found at the bottom of the earnings release.

Figure 2, below, shows the reconciliation statement for Carnival Corp., which filed its most recent earnings release on June 24. (Notice how Carnival had to report a non-GAAP loss larger than GAAP loss. That’s rare, but you see it sometimes since firms typically must report non-GAAP metrics consistently over time.)

Those are just a few ways Calcbench tries to stay on top of non-GAAP issues. We know it’s important for users, and we’re here to help.

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