RE:Question for the board - Provision for Income TaxesMatlock wrote: On the Q1 press release, they made no comments in the highlights about adjusted net earnings per share, only adjusted EBITDA. This caught my attention because in all recent quarterly reports, they would highlight adjusted net earnings per share.
Going down to where it is buried in the MD&A (page 34 of 38), adjusted net earnings was 0.20/share, down from 0.43/share in Q1-2015. The main culprit appears to be a provision for income taxes of $10,959,000. Going through the past four years of financials, this amount appears to be exceptional as an annual expense, let alone a quarterly one. 2014 had an annual income tax expense of $6 million, any other year it's been barely a fraction of even that.
Any insight from the board? Is such provisions for income taxes the new normal?
I don’t have a Financial background not to mention much in the way of understanding Corporate Accounting.
Nevertheless, with a bit of help from 5i I have attempted to get my head around the Q1 “Adjusted EPS” and the “Provision for tax”. I think that I am making some progress but there is no guarantee.
If you have a look at the Comprehensive Income statement page 04 of the Q1 Financials you will see;
- Earnings Before Income Tax = $37.965m (including the unrealized FX)
- Income Tax Expense = $10.959
**In Q1/15 the Earnings Before Income Tax were negligible.
If you think about it based on what AGT has told us re their Tax rates an $11m tax liability on $38m of income would not be out of line.
To my untrained eye it appears that to calculate the “Adjusted EPS” although they don’t recognize the unrealized FX they do recognize the potential tax on it.
If my understanding of this correct it would appear that the Q1 “Adjusted EPS” made Q1 look much worse than it actually was.
Conversely this “Adjusted EPS” method has the potential to make a quarters result look a bit better than it actually was.
Personally I don’t like all these “Adjusted” numbers. They (for me a least) makes it a bit harder to understand what is actually going on.
It’s almost like saying “If it hadn’t Rained Yesterday it would have been Sunny”
As Always; Do Your Own Due Diligence; It’s Your Money !! PS; If there is anybody on this board that actually has a good understanding of Corporate Accounting please let me know if I am on the right track. If I am “out to lunch” please explain why.