SEC Questions Costs Left Out of Adjusted Earnings

The Tip Desk · October 5, 2026 · 2 min read

Rockwell agreed to include corporate costs, Maximus promised clearer profit comparisons, and Albany defended excluding contract losses.

SEC correspondence with Rockwell Automation, Maximus, and Albany International highlights two questions about adjusted earnings: which costs companies leave out, and how clearly they compare those figures with results under standard accounting rules. Rockwell agreed to include corporate costs in a revised measure, Maximus promised clearer comparisons with net income, and Albany defended excluding losses on its CH-53K contract.

Rockwell: include corporate costs, explain other exclusions

SEC staff questioned Rockwell's total segment operating earnings because it excluded corporate and other costs that appeared to be normal, recurring cash expenses. Staff said that when the measure appeared outside the segment disclosures in the financial-statement notes, it needed to meet the requirements for adjusted financial measures. They asked Rockwell to stop presenting it there or revise it to include the challenged costs. Staff also objected to excluding purchase-accounting depreciation and amortization, saying the adjustment applied only part of an accounting concept. These were staff challenges, not an established finding of a violation.

Rockwell responded that it would include corporate and other costs and rename the measures enterprise operating profit and enterprise operating margin, beginning with its quarterly report and earnings release for the period ending March 31, 2026. It continued to defend excluding amortization of acquired intangible assets, arguing that the adjustment helps investors compare operating performance across periods and with peers. It proposed clearer labeling and explanation of that exclusion.

Maximus: start with net income and show the comparable margin

Staff asked Maximus to begin the reconciliation of Adjusted EBITDA with net income, the most directly comparable result under standard accounting rules. They also asked it to present the comparable accounting-based margin alongside its adjusted margin. A reconciliation shows how a company moves from its reported accounting result to its adjusted figure.

Maximus agreed to start its reconciliation with net income and include net income margin alongside Adjusted EBITDA margin in future filings, beginning with its quarterly report for the quarter ended March 31, 2026.

Albany: defend excluding contract losses

Staff questioned Albany's exclusion of the CH-53K loss contract reserve and program adjustments from several adjusted performance measures. They asked the company to remove the adjustment in future filings or explain why it was appropriate given the nature of the costs and the company's operations.

Albany argued that the charge was a one-time reset of the contract's expected value, rather than a normal recurring cost of performing the work. It also tied the exclusion to its strategic evaluation announced on October 28, 2025: the structure assembly business, limited to the CH-53K contract, no longer fit its long-term strategy, and the company was exploring options that could result in a sale before the end of 2026. That was the company's justification; the cited response does not establish that SEC staff accepted it.