H&R Block, Inc. (NYSE:HRB) today released U.S. tax return
volume through February 28 and its financial results for the fiscal
2018 third quarter ended January 31, 2018. The company
normally reports a fiscal third quarter loss due to the seasonality
of its tax business.
Tax Season and Fiscal Third Quarter
Highlights1
- H&R Block grows total U.S. returns through February
28.
- Company reiterates financial outlook for full year.
- Fiscal third quarter revenues increased $37 million, or 8%, to
$488 million primarily due to increased return volumes in both
Assisted and DIY tax preparation businesses.
- Loss per share from continuing operations increased $0.67, from
$0.49 to $1.16, solely due to changes in the company's effective
tax rate resulting from the recently enacted federal corporate tax
legislation. The negative impact from these corporate tax
rate changes is unique to the company's fiscal third quarter, as
the impact will be favorable on a full fiscal year basis.
Tax Season Results2
H&R Block total U.S. return volume increased 3.4% through
February 28, with Assisted returns increasing 0.7% and DIY returns
increasing 8.2%. Positive results in the Assisted business
were due to the success of early-season promotions including the
company's Refund Advance no-interest loan and Free Federal 1040EZ
offer. In DIY, continued product improvements, enhanced
partnerships, and the H&R Block More Zero® promotion led to the
strong performance.
CEO Perspective
"I'm proud of what we have accomplished so far this tax season,
with strong results in both the Assisted and DIY tax preparation
categories," said Jeff Jones, H&R Block's president and chief
executive officer. "As we look to the second half of the tax
season, we'll continue to focus on execution as we leverage our
products, partnerships and marketing to deliver on our financial
outlook."
Fiscal 2018 Third Quarter Results From Continuing
Operations
(in
millions, except EPS) |
|
Fiscal Year 2018 |
|
Fiscal Year 2017 |
Revenue |
|
$ |
488 |
|
|
$ |
452 |
|
Pretax Loss |
|
$ |
(121 |
) |
|
$ |
(151 |
) |
Net Loss |
|
$ |
(243 |
) |
|
$ |
(101 |
) |
Weighted-Avg. Shares - Diluted |
|
209.1 |
|
|
207.9 |
|
EPS3 |
|
$ |
(1.16 |
) |
|
$ |
(0.49 |
) |
EBITDA4 |
|
$ |
(48 |
) |
|
$ |
(79 |
) |
|
|
|
|
|
Key Financial Metrics
- Total revenues increased $37 million, or 8%, to $488 million
primarily due to increased return volumes.
- Total operating expenses increased $9 million, or 2%, to $586
million primarily due to increases in compensation costs, partially
offset by lower marketing and advertising expenses.
- Pretax loss decreased $30 million to $121 million.
- Loss per share from continuing operations increased $0.67, from
$0.49 to $1.16, solely due to changes in the company's effective
tax rate resulting from the recently enacted federal corporate tax
legislation. The negative impact from these corporate tax
rate changes is unique to the company's fiscal third quarter, as
the impact will be favorable on a full fiscal year basis. The
company expects its fiscal year effective tax rate to be 6%-9%,
which is an update to the anticipated annual effective tax rate for
fiscal 2018 disclosed in the company's Form 8-K filed with the
Securities and Exchange Commission (SEC) on January 22, 2018.
CFO Perspective
"We are pleased with our performance during the first half of
the tax season, which was in line with our expectations," said Tony
Bowen, H&R Block's chief financial officer. "Our
expectations for revenue growth and margin are unchanged from the
outlook we provided in December."
Dividends
As previously announced, a quarterly cash dividend of $0.24 per
share is payable on April 2, 2018 to shareholders of record as of
March 13, 2018. H&R Block has paid quarterly dividends
consecutively since the company went public in 1962.
Discontinued Operations
During the fiscal quarter, Sand Canyon Corporation made payments
of $4.5 million pursuant to a settlement agreement entered into in
fiscal 2016. The full amount of the payments had been
previously accrued by the company. For additional information
on Sand Canyon, please refer to disclosures in the company’s
reports on Forms 10-K, 10-Q, and other filings with the SEC.
Conference Call
Discussion of the fiscal 2018 third quarter results, future
outlook, and a general business update will occur during the
company’s previously announced fiscal third quarter earnings
conference call for analysts, institutional investors, and
shareholders. The call is scheduled for 4:30 p.m. Eastern time on
March 6, 2018. To access the call, please dial the number below
approximately 10 minutes prior to the scheduled starting time:
U.S./Canada (855) 702-5257 or International (213)
358-0868Conference ID: 3876229
The call will also be webcast in a listen-only format for the
media and public. The link to the webcast can be accessed directly
at http://investors.hrblock.com.
A replay of the call will be available beginning at 7:30 p.m.
Eastern time on March 6, 2018, and continuing until April 6, 2018,
by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406
(International). The conference ID is 3876229. The webcast will be
available for replay beginning on March 7, 2018 at
http://investors.hrblock.com.
About H&R Block
H&R Block, Inc. (NYSE:HRB) is a global consumer tax services
provider. Tax return preparation services are provided by
professional tax preparers in approximately 12,000 company-owned
and franchise retail tax offices worldwide, and through H&R
Block tax software products for the DIY consumer. H&R
Block also offers adjacent Tax Plus products and services. In
fiscal 2017, H&R Block had annual revenues of over $3 billion
with 23 million tax returns prepared worldwide. For more
information, visit the H&R Block Newsroom.
About Non-GAAP Financial Information
This press release and the accompanying tables include non-GAAP
financial information. For a description of these non-GAAP
financial measures, including the reasons management uses each
measure, and reconciliations of these non-GAAP financial measures
to the most directly comparable financial measures prepared in
accordance with generally accepted accounting principles, please
see the section of the accompanying tables titled "Non-GAAP
Financial Information."
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the securities laws. Forward-looking statements can
be identified by the fact that they do not relate strictly to
historical or current facts. They often include words or variation
of words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," "projects," "forecasts,"
"targets," "would," "will," "should," "goal," "could" or "may" or
other similar expressions. Forward-looking statements provide
management's current expectations or predictions of future
conditions, events or results. All statements that address
operating performance, events or developments that we expect or
anticipate will occur in the future are forward-looking statements.
They may include estimates of revenues, client trajectory, income,
effective tax rate, earnings per share, cost savings, capital
expenditures, dividends, share repurchases, liquidity, capital
structure or other financial items, descriptions of management’s
plans or objectives for future operations, products or services, or
descriptions of assumptions underlying any of the above. All
forward-looking statements speak only as of the date they are made
and reflect the company's good faith beliefs, assumptions and
expectations, but they are not guarantees of future performance or
events. Furthermore, the company disclaims any obligation to
publicly update or revise any forward-looking statement to reflect
changes in underlying assumptions, factors, or expectations, new
information, data or methods, future events or other changes,
except as required by law. By their nature, forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those suggested by the
forward-looking statements. Factors that might cause such
differences include, but are not limited to a variety of economic,
competitive and regulatory factors, many of which are beyond the
company's control, that are described in our Annual Report on Form
10-K for the fiscal year ended April 30, 2017 in the section
entitled "Risk Factors" and additional factors we may describe from
time to time in other filings with the Securities and Exchange
Commission. You may get such filings for free at our website at
http://investors.hrblock.com. In addition, factors that may cause
the company’s actual estimated effective tax rate to differ from
estimates include the company’s actual results from operations
compared to current estimates, future discrete items, changes in
interpretations and assumptions the company has made, guidance from
the Internal Revenue Service, SEC, or the Financial Accounting
Standards Board about the Tax Legislation, and future actions of
the company. You should understand that it is not possible to
predict or identify all such factors and, consequently, you should
not consider any such list to be a complete set of all potential
risks or uncertainties.
1 All amounts in this release are unaudited. Unless
otherwise noted, all comparisons refer to the current period
compared to the corresponding prior year period.2 Volume
changes to prior year noted in this paragraph and in the table
attached to this release are based on a date-to-date basis.3
All per share amounts are based on fully diluted shares at the end
of the corresponding period.4 The company reports non-GAAP
financial measures of performance, including earnings before
interest, tax, depreciation, and amortization (EBITDA), which it
considers to be useful metrics for management and investors to
evaluate and compare the ongoing operating performance of the
company. See "About Non-GAAP Financial Information" below for more
information regarding financial measures not prepared in accordance
with generally accepted accounting principles (GAAP).
For Further Information
Investor Relations: Colby Brown, (816) 854-4559,
colby.brown@hrblock.comMedia Relations: Susan Waldron,
(816) 854-5522, susan.waldron@hrblock.com
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
(unaudited, in 000s
-except per share amounts) |
|
|
Three months ended January 31, |
|
Nine months ended January 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
REVENUES: |
|
|
|
|
|
|
|
|
Service
revenues |
|
$ |
388,771 |
|
|
$ |
361,397 |
|
|
$ |
641,389 |
|
|
$ |
592,721 |
|
Royalty,
product and other revenues |
|
99,655 |
|
|
90,485 |
|
|
125,693 |
|
|
115,678 |
|
|
|
488,426 |
|
|
451,882 |
|
|
767,082 |
|
|
708,399 |
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Cost of
revenues: |
|
|
|
|
|
|
|
|
Compensation and benefits |
|
181,958 |
|
|
165,015 |
|
|
303,434 |
|
|
275,098 |
|
Occupancy
and equipment |
|
107,981 |
|
|
104,094 |
|
|
311,752 |
|
|
297,586 |
|
Provision
for bad debt |
|
29,191 |
|
|
28,348 |
|
|
33,429 |
|
|
29,634 |
|
Depreciation and amortization |
|
32,046 |
|
|
29,828 |
|
|
90,391 |
|
|
87,206 |
|
Other |
|
65,425 |
|
|
61,492 |
|
|
145,329 |
|
|
136,041 |
|
|
|
416,601 |
|
|
388,777 |
|
|
884,335 |
|
|
825,565 |
|
Selling,
general and administrative: |
|
|
|
|
|
|
|
|
Marketing
and advertising |
|
64,209 |
|
|
84,101 |
|
|
82,875 |
|
|
103,663 |
|
Compensation and benefits |
|
66,942 |
|
|
58,408 |
|
|
185,453 |
|
|
174,223 |
|
Depreciation and amortization |
|
16,442 |
|
|
15,332 |
|
|
46,487 |
|
|
44,986 |
|
Other
selling, general and administrative |
|
21,505 |
|
|
30,056 |
|
|
66,378 |
|
|
77,500 |
|
|
|
169,098 |
|
|
187,897 |
|
|
381,193 |
|
|
400,372 |
|
Total
operating expenses |
|
585,699 |
|
|
576,674 |
|
|
1,265,528 |
|
|
1,225,937 |
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
|
1,028 |
|
|
134 |
|
|
3,259 |
|
|
4,948 |
|
Interest expense on
borrowings |
|
(24,560 |
) |
|
(25,940 |
) |
|
(67,102 |
) |
|
(70,026 |
) |
Loss from continuing
operations before income taxes (benefit) |
|
(120,805 |
) |
|
(150,598 |
) |
|
(562,289 |
) |
|
(582,616 |
) |
Income taxes
(benefit) |
|
122,120 |
|
|
(49,386 |
) |
|
(43,234 |
) |
|
(216,963 |
) |
Net loss from
continuing operations |
|
(242,925 |
) |
|
(101,212 |
) |
|
(519,055 |
) |
|
(365,653 |
) |
Net loss from
discontinued operations |
|
(2,720 |
) |
|
(3,302 |
) |
|
(10,723 |
) |
|
(8,754 |
) |
NET
LOSS |
|
$ |
(245,645 |
) |
|
$ |
(104,514 |
) |
|
$ |
(529,778 |
) |
|
$ |
(374,407 |
) |
|
|
|
|
|
|
|
|
|
BASIC AND
DILUTED LOSS PER SHARE: |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(1.16 |
) |
|
$ |
(0.49 |
) |
|
$ |
(2.49 |
) |
|
$ |
(1.71 |
) |
Discontinued operations |
|
(0.02 |
) |
|
(0.01 |
) |
|
(0.05 |
) |
|
(0.04 |
) |
Consolidated |
|
$ |
(1.18 |
) |
|
$ |
(0.50 |
) |
|
$ |
(2.54 |
) |
|
$ |
(1.75 |
) |
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE BASIC AND DILUTED SHARES |
|
209,080 |
|
|
207,862 |
|
|
208,693 |
|
|
214,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS |
|
(unaudited, in 000s - except per share data) |
As of |
|
January 31, 2018 |
|
January 31, 2017 |
|
April 30, 2017 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
187,366 |
|
|
$ |
221,172 |
|
|
$ |
1,011,331 |
|
Cash and
cash equivalents - restricted |
|
83,033 |
|
|
70,166 |
|
|
106,208 |
|
Receivables, net |
|
791,618 |
|
|
787,865 |
|
|
162,775 |
|
Income
taxes receivable |
|
72,775 |
|
|
38,032 |
|
|
— |
|
Prepaid
expenses and other current assets |
|
149,349 |
|
|
85,599 |
|
|
65,725 |
|
Total
current assets |
|
1,284,141 |
|
|
1,202,834 |
|
|
1,346,039 |
|
Property
and equipment, net |
|
249,911 |
|
|
282,358 |
|
|
263,827 |
|
Intangible assets, net |
|
390,993 |
|
|
434,720 |
|
|
409,364 |
|
Goodwill |
|
504,789 |
|
|
483,320 |
|
|
491,207 |
|
Deferred
tax assets and income taxes receivable |
|
25,305 |
|
|
71,639 |
|
|
83,728 |
|
Other
noncurrent assets |
|
106,161 |
|
|
102,760 |
|
|
99,943 |
|
Total
assets |
|
$ |
2,561,300 |
|
|
$ |
2,577,631 |
|
|
$ |
2,694,108 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
163,653 |
|
|
$ |
239,085 |
|
|
$ |
217,028 |
|
Accrued
salaries, wages and payroll taxes |
|
135,626 |
|
|
123,457 |
|
|
183,856 |
|
Accrued
income taxes and reserves for uncertain tax positions |
|
164,246 |
|
|
7,537 |
|
|
348,199 |
|
Current
portion of long-term debt |
|
1,015 |
|
|
942 |
|
|
981 |
|
Deferred
revenue and other current liabilities |
|
201,988 |
|
|
183,616 |
|
|
189,216 |
|
Total
current liabilities |
|
666,528 |
|
|
554,637 |
|
|
939,280 |
|
Long-term
debt and line of credit borrowings |
|
2,284,231 |
|
|
2,592,622 |
|
|
1,493,017 |
|
Deferred
tax liabilities and reserves for uncertain tax positions |
|
201,384 |
|
|
109,557 |
|
|
159,085 |
|
Deferred
revenue and other noncurrent liabilities |
|
107,226 |
|
|
121,631 |
|
|
163,609 |
|
Total
liabilities |
|
3,259,369 |
|
|
3,378,447 |
|
|
2,754,991 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
|
|
Common
stock, no par, stated value $.01 per share |
|
2,462 |
|
|
2,462 |
|
|
2,462 |
|
Additional paid-in capital |
|
758,361 |
|
|
752,748 |
|
|
754,912 |
|
Accumulated other comprehensive loss |
|
(9,374 |
) |
|
(15,363 |
) |
|
(15,299 |
) |
Retained
deficit |
|
(729,578 |
) |
|
(785,823 |
) |
|
(48,206 |
) |
Less
treasury shares, at cost |
|
(719,940 |
) |
|
(754,840 |
) |
|
(754,752 |
) |
Total
stockholders' equity (deficiency) |
|
(698,069 |
) |
|
(800,816 |
) |
|
(60,883 |
) |
Total
liabilities and stockholders' equity |
|
$ |
2,561,300 |
|
|
$ |
2,577,631 |
|
|
$ |
2,694,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(unaudited, in 000s) |
Nine months ended January 31, |
|
2018 |
|
2017 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net
loss |
|
$ |
(529,778 |
) |
|
$ |
(374,407 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
Depreciation and amortization |
|
136,878 |
|
|
132,192 |
|
Provision
for bad debt |
|
33,429 |
|
|
29,634 |
|
Deferred
taxes |
|
113,345 |
|
|
6,128 |
|
Stock-based compensation |
|
17,065 |
|
|
16,945 |
|
Changes
in assets and liabilities, net of acquisitions: |
|
|
|
|
Receivables |
|
(651,200 |
) |
|
(646,290 |
) |
Prepaid
expenses and other current assets |
|
(83,201 |
) |
|
(23,208 |
) |
Other
noncurrent assets |
|
8,310 |
|
|
7,575 |
|
Accounts
payable and accrued expenses |
|
(36,608 |
) |
|
(33,560 |
) |
Accrued
salaries, wages and payroll taxes |
|
(49,255 |
) |
|
(37,978 |
) |
Deferred
revenue and other current liabilities |
|
10,113 |
|
|
(44,243 |
) |
Deferred
revenue and other noncurrent liabilities |
|
(58,695 |
) |
|
(57,216 |
) |
Income
tax receivables, accrued income taxes and income tax reserves |
|
(255,650 |
) |
|
(378,987 |
) |
Other,
net |
|
(12,454 |
) |
|
(6,444 |
) |
Net cash
used in operating activities |
|
(1,357,701 |
) |
|
(1,409,859 |
) |
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Principal
payments and sales of mortgage loans and real estate owned,
net |
|
— |
|
|
207,174 |
|
Capital
expenditures |
|
(77,865 |
) |
|
(73,924 |
) |
Payments
made for business acquisitions, net of cash acquired |
|
(39,397 |
) |
|
(52,825 |
) |
Franchise
loans funded |
|
(20,226 |
) |
|
(31,788 |
) |
Payments
received on franchise loans |
|
13,391 |
|
|
20,816 |
|
Other,
net |
|
1,524 |
|
|
(4,711 |
) |
Net cash
provided by (used in) investing activities |
|
(122,573 |
) |
|
64,742 |
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Repayments of line of credit borrowings |
|
(40,000 |
) |
|
(445,000 |
) |
Proceeds
from line of credit borrowings |
|
830,000 |
|
|
1,545,000 |
|
Dividends
paid |
|
(150,258 |
) |
|
(141,537 |
) |
Repurchase of common stock, including shares surrendered |
|
(7,746 |
) |
|
(322,782 |
) |
Proceeds
from exercise of stock options |
|
28,268 |
|
|
2,403 |
|
Other,
net |
|
(28,922 |
) |
|
373 |
|
Net cash
provided by financing activities |
|
631,342 |
|
|
638,457 |
|
|
|
|
|
|
Effects of exchange
rate changes on cash |
|
1,792 |
|
|
(2,913 |
) |
|
|
|
|
|
Net decrease in cash,
cash equivalents and restricted cash |
|
(847,140 |
) |
|
(709,573 |
) |
Cash, cash equivalents
and restricted cash, beginning of period |
|
1,117,539 |
|
|
1,000,911 |
|
Cash, cash equivalents
and restricted cash, end of period |
|
$ |
270,399 |
|
|
$ |
291,338 |
|
|
|
|
|
|
SUPPLEMENTARY
CASH FLOW DATA: |
|
|
|
|
Income
taxes paid, net of refunds received |
|
$ |
102,755 |
|
|
$ |
158,656 |
|
Interest
paid on borrowings |
|
57,834 |
|
|
59,809 |
|
Accrued
additions to property and equipment |
|
1,078 |
|
|
5,959 |
|
|
|
|
|
|
|
|
|
|
|
Note: Effective May 1, 2017, we adopted the
provisions of Accounting Standards Update No. 2016-18, "Restricted
Cash (a consensus of the FASB Emerging Issues Task Force)," (ASU
2016-18) on a retrospective basis. Accordingly, the statements of
cash flows explain the change in the total of cash, cash
equivalents and amounts generally described as restricted cash and
restricted cash equivalents per ASU 2016-18. Amounts for prior
periods have been retrospectively adjusted to conform to the
current period presentation.
|
|
|
FINANCIAL RESULTS |
|
(unaudited, in 000s - except per share amounts) |
|
|
Three months ended January 31, |
|
Nine months ended January 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
REVENUES: |
|
|
|
|
|
|
|
|
U.S.
assisted tax preparation fees |
|
$ |
267,328 |
|
|
$ |
245,262 |
|
|
$ |
333,956 |
|
|
$ |
306,030 |
|
U.S.
royalties |
|
45,420 |
|
|
43,254 |
|
|
59,395 |
|
|
56,607 |
|
U.S. DIY
tax preparation fees |
|
31,322 |
|
|
30,745 |
|
|
38,811 |
|
|
36,748 |
|
International revenues |
|
12,308 |
|
|
10,914 |
|
|
100,659 |
|
|
93,328 |
|
Revenues
from Refund Transfers |
|
50,770 |
|
|
47,323 |
|
|
54,721 |
|
|
51,314 |
|
Revenues
from Emerald Card® |
|
16,125 |
|
|
14,100 |
|
|
40,292 |
|
|
35,809 |
|
Revenues
from Peace of Mind® Extended Service Plan |
|
19,967 |
|
|
18,135 |
|
|
76,495 |
|
|
67,855 |
|
Interest
and fee income on Emerald Advance |
|
31,075 |
|
|
30,060 |
|
|
32,333 |
|
|
31,519 |
|
Other |
|
14,111 |
|
|
12,089 |
|
|
30,420 |
|
|
29,189 |
|
|
|
488,426 |
|
|
451,882 |
|
|
767,082 |
|
|
708,399 |
|
Compensation and
benefits: |
|
|
|
|
|
|
|
|
Field
wages |
|
156,027 |
|
|
142,084 |
|
|
261,866 |
|
|
237,223 |
|
Other
wages |
|
50,717 |
|
|
45,172 |
|
|
140,637 |
|
|
129,479 |
|
Benefits
and other compensation |
|
42,156 |
|
|
36,167 |
|
|
86,384 |
|
|
82,619 |
|
|
|
248,900 |
|
|
223,423 |
|
|
488,887 |
|
|
449,321 |
|
Occupancy and
equipment |
|
107,731 |
|
|
103,867 |
|
|
311,335 |
|
|
297,275 |
|
Marketing and
advertising |
|
64,209 |
|
|
84,101 |
|
|
82,875 |
|
|
103,663 |
|
Depreciation and
amortization |
|
48,488 |
|
|
45,160 |
|
|
136,878 |
|
|
132,192 |
|
Provision for bad
debt |
|
29,191 |
|
|
28,348 |
|
|
33,429 |
|
|
29,634 |
|
Supplies |
|
4,950 |
|
|
4,453 |
|
|
12,052 |
|
|
11,467 |
|
Other |
|
82,230 |
|
|
87,322 |
|
|
200,072 |
|
|
202,385 |
|
Total
operating expenses |
|
585,699 |
|
|
576,674 |
|
|
1,265,528 |
|
|
1,225,937 |
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
|
1,028 |
|
|
134 |
|
|
3,259 |
|
|
4,948 |
|
Interest expense on
borrowings |
|
(24,560 |
) |
|
(25,940 |
) |
|
(67,102 |
) |
|
(70,026 |
) |
Pretax loss |
|
(120,805 |
) |
|
(150,598 |
) |
|
(562,289 |
) |
|
(582,616 |
) |
Income taxes
(benefit) |
|
122,120 |
|
|
(49,386 |
) |
|
(43,234 |
) |
|
(216,963 |
) |
Net loss from
continuing operations |
|
(242,925 |
) |
|
(101,212 |
) |
|
(519,055 |
) |
|
(365,653 |
) |
Net loss from
discontinued operations |
|
(2,720 |
) |
|
(3,302 |
) |
|
(10,723 |
) |
|
(8,754 |
) |
NET
LOSS |
|
$ |
(245,645 |
) |
|
$ |
(104,514 |
) |
|
$ |
(529,778 |
) |
|
$ |
(374,407 |
) |
|
|
|
|
|
|
|
|
|
BASIC AND
DILUTED LOSS PER SHARE: |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(1.16 |
) |
|
$ |
(0.49 |
) |
|
$ |
(2.49 |
) |
|
$ |
(1.71 |
) |
Discontinued operations |
|
(0.02 |
) |
|
(0.01 |
) |
|
(0.05 |
) |
|
(0.04 |
) |
Consolidated |
|
$ |
(1.18 |
) |
|
$ |
(0.50 |
) |
|
$ |
(2.54 |
) |
|
$ |
(1.75 |
) |
|
|
|
|
|
|
|
|
|
Weighted average basic
and diluted shares |
|
209,080 |
|
|
207,862 |
|
|
208,693 |
|
|
214,627 |
|
|
|
|
|
|
|
|
|
|
EBITDA from continuing
operations (1) |
|
$ |
(47,757 |
) |
|
$ |
(79,498 |
) |
|
$ |
(358,309 |
) |
|
$ |
(380,398 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See "Non-GAAP Financial Information" for a
reconciliation of non-GAAP measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. TAX OPERATING DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year-to-Date |
|
|
|
Fiscal Year-to-Date |
|
|
|
|
January 31, |
|
|
|
February 28, |
|
|
|
|
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Returns Prepared:
(in 000s) (1) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Company-Owned Operations |
|
1,424 |
|
|
1,375 |
|
|
3.6 |
% |
|
4,352 |
|
|
4,322 |
|
|
0.7 |
% |
Franchise
Operations |
|
736 |
|
|
705 |
|
|
4.4 |
% |
|
2,105 |
|
|
2,088 |
|
|
0.8 |
% |
Total
H&R Block Assisted |
|
2,160 |
|
|
2,080 |
|
|
3.8 |
% |
|
6,457 |
|
|
6,410 |
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Desktop |
|
151 |
|
|
155 |
|
|
(2.6 |
)% |
|
764 |
|
|
750 |
|
|
1.9 |
% |
Online |
|
1,126 |
|
|
1,056 |
|
|
6.6 |
% |
|
3,170 |
|
|
2,887 |
|
|
9.8 |
% |
Total
H&R Block DIY Tax Software |
|
1,277 |
|
|
1,211 |
|
|
5.5 |
% |
|
3,934 |
|
|
3,637 |
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
IRS Free
File |
|
94 |
|
|
96 |
|
|
(2.1 |
)% |
|
306 |
|
|
298 |
|
|
2.7 |
% |
Total
H&R Block U.S. Returns |
|
3,531 |
|
|
3,387 |
|
|
4.3 |
% |
|
10,697 |
|
|
10,345 |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Average Charge:
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Company-Owned Operations |
|
$ |
235.57 |
|
|
$ |
226.89 |
|
|
3.8 |
% |
|
$ |
222.59 |
|
|
$ |
217.50 |
|
|
2.3 |
% |
Franchise
Operations (4) |
|
226.07 |
|
|
219.06 |
|
|
3.2 |
% |
|
206.77 |
|
|
202.18 |
|
|
2.3 |
% |
DIY Tax
Software |
|
30.39 |
|
|
30.35 |
|
|
0.1 |
% |
|
27.71 |
|
|
26.79 |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) An assisted tax return is defined
as a current or prior year individual tax return that has been
accepted and paid for by the client. Also included are
business returns, which account for less than 1% of assisted tax
returns. A DIY tax software return is defined as a return that has
been electronically filed and accepted by the IRS. Also
included are online returns paid and printed.(2) Amounts
have been reclassified between company-owned and franchise for
offices which were refranchised or repurchased by the company
during the year.(3) Net average charge is calculated as
tax preparation fees divided by tax returns prepared. For DIY Tax
Software, net average charge excludes IRS Free
File.(4) Net average charge related to H&R Block
Franchise Operations represents tax preparation fees collected by
H&R Block franchisees divided by returns prepared in franchise
offices. H&R Block will recognize a portion of franchise
revenues as franchise royalties based on the terms of franchise
agreements.
|
|
|
|
|
|
|
Three months ended January 31, |
|
Nine months ended January 31, |
NON-GAAP FINANCIAL MEASURE - EBITDA |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Net loss - as
reported |
|
$ |
(245,645 |
) |
|
$ |
(104,514 |
) |
|
$ |
(529,778 |
) |
|
$ |
(374,407 |
) |
Discontinued
operations, net |
|
2,720 |
|
|
3,302 |
|
|
10,723 |
|
|
8,754 |
|
Net loss from
continuing operations - as reported |
|
(242,925 |
) |
|
(101,212 |
) |
|
(519,055 |
) |
|
(365,653 |
) |
Add back: |
|
|
|
|
|
|
|
|
Income
taxes of continuing operations |
|
122,120 |
|
|
(49,386 |
) |
|
(43,234 |
) |
|
(216,963 |
) |
Interest
expense of continuing operations |
|
24,560 |
|
|
25,940 |
|
|
67,102 |
|
|
70,026 |
|
Depreciation and amortization of continuing operations |
|
48,488 |
|
|
45,160 |
|
|
136,878 |
|
|
132,192 |
|
|
|
195,168 |
|
|
21,714 |
|
|
160,746 |
|
|
(14,745 |
) |
|
|
|
|
|
|
|
|
|
EBITDA from continuing
operations |
|
$ |
(47,757 |
) |
|
$ |
(79,498 |
) |
|
$ |
(358,309 |
) |
|
$ |
(380,398 |
) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended January 31, |
|
Nine months ended January 31, |
Supplemental Information |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense: |
|
|
|
|
|
|
|
|
Pretax |
|
$ |
5,438 |
|
|
$ |
4,473 |
|
|
$ |
17,065 |
|
|
$ |
16,945 |
|
After-tax |
|
8,228 |
|
|
2,948 |
|
|
15,753 |
|
|
10,894 |
|
Amortization of
intangible assets: |
|
|
|
|
|
|
|
|
Pretax |
|
$ |
20,792 |
|
|
$ |
19,287 |
|
|
$ |
59,465 |
|
|
$ |
57,324 |
|
After-tax |
|
29,863 |
|
|
12,621 |
|
|
54,892 |
|
|
36,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL INFORMATION
The accompanying press release contains non-GAAP
financial measures. Non-GAAP financial measures should not be
considered as a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP. Because
these measures are not measures of financial performance under GAAP
and are susceptible to varying calculations, they may not be
comparable to similarly titled measures for other companies.
We consider our non-GAAP financial measures to
be performance measures and a useful metric for management and
investors to evaluate and compare the ongoing operating performance
of our business.
We may consider whether significant items that
arise in the future should be excluded from our non-GAAP financial
measures.
We measure the performance of our business using
a variety of metrics, including EBITDA from continuing operations.
We also use EBITDA from continuing operations and pretax income of
continuing operations, each subject to permitted adjustments, as
performance metrics in incentive compensation calculations for our
employees.
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