After multiple wrist slaps from the SEC Kaiser Aluminum Corporation (KALU), a manufacturer of semi-fabricated specialty aluminum mill products, is changing how it reports non-GAAP financial measures. When calculating Adjusted EBITDA, Kaiser will no longer adjust results for the impact of last-in, first-out (LIFO) calculated on an annual basis to LIFO calculated on a monthly basis.

In its latest annual report, Kaiser said it made the change:

“...based on discussions with the SEC pertaining to comment letters received during 2022.”

The change reveals Kaiser overstated 2021 Adjusted EBITDA by $7.8 million, or 4.2%.

Importantly, Kaiser’s short term executive bonuses are based on Adjusted EBITDA.

Separately, the company is also renaming its key metric “value-added-revenue” (VAR) to “conversion revenue”, explaining the change:

“...is based on discussions with staff of the SEC pertaining to comment letters received during 2022 and is intended to more clearly characterize the metric as a subcomponent of revenue.”