“I thought EBITDA was a Swedish rock band.”
— Stephanie Stuckey, in her book Unstuck: Rebirth of an American Icon
When Stephanie Stuckey stepped back into leadership at her family’s iconic roadside brand, Stuckey’s Corporation, she openly shared just how steep the financial learning curve was. That now-famous line wasn’t just a joke — it was a moment of vulnerability from a leader learning the financial language of business while rebuilding an American institution.
Whether you realize it or not, EBITDA is one of the primary ways banks, buyers, and boards decide how healthy your business is — and what it’s worth. It influences lending decisions. It shapes valuations. It drives investment conversations. And in many cases, it determines whether a deal moves forward… or stops cold.
Yet for many operators and leaders, EBITDA still feels like financial alphabet soup.
When I first encountered it, my reaction was simple:
“EBIT-what?”
I already understood profit and loss statements, cost of goods sold, variable and fixed expenses, and operating income. But EBITDA was unfamiliar territory. That’s why Stephanie’s comment resonated so deeply with me.
That same learning curve became very real for me in 2007 when I stepped into my first VP & General Manager role with Coach America. I knew how to lead operations and teams — but I quickly realized there was another language being spoken in boardrooms and banking conversations.
That language was EBITDA.
So, What Is EBITDA? (Plain-English Version)
EBITDA stands for:
Earnings
Before
Interest,
Taxes,
Depreciation, and
Amortization
The concept has been around since the 1970s. As Investopedia explains, EBITDA reflects what a business earns strictly from its day-to-day operations, before financing decisions, tax strategy, and non-cash accounting charges are taken into account.
Unlike net income, EBITDA intentionally excludes:
- Interest (how the business is financed)
- Taxes (how the business is structured)
- Depreciation and amortization (non-cash expenses tied to asset values)
This makes EBITDA a helpful way to view core operating performance, free of financial noise.
Why EBITDA Isn’t a GAAP Metric (And Why That Matters)
EBITDA is not recognized under GAAP (Generally Accepted Accounting Principles). Because it can present a more favorable view of profitability, the Securities and Exchange Commission requires companies to clearly reconcile EBITDA to net income.
That distinction is critical.
Net income reflects what remains after all expenses are paid:
- Operating costs
- Interest
- Taxes
- Everything
EBITDA, on the other hand, intentionally excludes certain items to isolate operational performance. That makes it worthwhile — but also potentially misleading if misunderstood or viewed in isolation.
Why EBITDA Is So Widely Used in Transportation
EBITDA is especially common in asset-intensive industries, where large capital investments and heavy depreciation can distort traditional profit metrics. Ground transportation fits this model perfectly:
- High-cost fleet assets
- Long replacement cycles
- Rising vehicle acquisition costs
- Significant investments in systems and technology
Depreciation can make profitable, growing companies look weaker on paper than they actually are. EBITDA helps normalize those effects, allowing leaders and investors to understand better how the operation is truly performing.
How EBITDA Is Calculated
There are two common approaches:
Method 1:
Start with Net Income, then add back:
- Interest
- Taxes
- Depreciation
- Amortization
Method 2:
Start with Operating Income, then add:
- Depreciation
- Amortization
Different starting points — same destination.
What EBITDA Actually Tells You
At its best, EBITDA helps answer a fundamental question:
“How strong is this business at its core — before debt, taxes, and accounting treatments enter the picture?”
It allows lenders, investors, and buyers to:
- Compare companies with different financing structures
- Evaluate performance across varying tax environments
- Assess operational strength independent of asset age
This matters more than ever today.
Vehicle acquisition costs are rising. Technology investments continue to accelerate. And financing those investments is far more expensive than it was just a few years ago. Rising interest rates alone can dramatically reshape how a company’s bottom line looks — even when operations remain strong.
EBITDA helps separate operating truth from financial distortion.
A Key Perspective for Leaders
Here’s a helpful way to think about EBITDA:
While you run the day-to-day business, EBITDA is often one of the main ways the outside world understands how your business is performing.
Strong EBITDA can:
- Improve borrowing flexibility
- Support higher valuations
- Strengthen your position in negotiations
- Attract investors and buyers
On the flip side, weaker EBITDA — even in a busy operation — can create challenges in those conversations.
That’s why understanding EBITDA isn’t just about accounting.
It’s part of leading with clarity and confidence.
Brian Dickson is the owner of Bus Business Consultants and author of Ground Transportation Insights on Substack. Drawing on leadership roles in motorcoach operations and Disney’s Guest Transportation, he helps operators improve performance, culture, and growth—Bus Business Consultants: Driving Performance, Culture, & Growth in Ground Transportation.
This article was originally published on December 4, 2025 at Ground Transportation Insights.
The views expressed are those of the author alone and do not necessarily reflect the position of the American Bus Association.
