Maintenance capex

Maintenance capex is what a business has to spend to stand still: replacing machines as they wear out, refitting stores on their cycle, renewing vehicles at the end of their life, keeping systems current. Calling it non discretionary is close enough to true, because deferring it works for a year or two and then stops working.

It matters because EBITDA less maintenance capex is roughly what the business generates if growth stops, and that is the number a buyer with no expansion plans is actually acquiring. It is also the cleanest single explanation of why EBITDA flatters capital intensive businesses: two companies with identical EBITDA can convert very different amounts of it into cash, and most of the difference lives here.

No company discloses it. IFRS requires total capital expenditure in the cash flow statement and additions by class of asset in the property, plant and equipment note, and neither is split by purpose, because purpose is a management judgement rather than an accounting category. Some capital intensive companies volunteer a figure in their own reporting, which is useful and worth reading with the knowledge that the incentive runs toward calling as much as possible growth.

So it is estimated. Depreciation is the usual proxy, on the logic that in a stable asset base what wears out each year is what has to be replaced. The proxy has a known direction of error: depreciation spreads what the assets cost when they were bought, while replacement happens at today's prices, so it tends to understate the cash needed to stand still. Practitioners differ on how much to add, and the honest position in an interview is to name the bias rather than to assert a precise number.