H&R Block, Inc. (NYSE: HRB) today released its U.S. tax return
volume through February 28, 2019 and financial results for the
fiscal 2019 third quarter ended January 31, 2019. The
company normally reports a fiscal third quarter loss due to the
seasonality of its tax business.
Tax Season and Fiscal Third Quarter
Highlights1
- Delay in tax returns filed industry wide impacted fiscal third
quarter results; company reiterates its financial outlook for the
full fiscal year.
- H&R Block total U.S. returns declined through February 28,
as growth in DIY returns was offset by a decline in Assisted
returns; the decline in Assisted returns was anticipated due to the
discontinuation of the Free Federal 1040EZ promotion.
- Revenues for the fiscal third quarter ended January 31, 2019
decreased $20 million, or 4 percent, to $468 million primarily due
to a delay in overall industry filings.
- Pretax loss from continuing operations increased 31 percent to
$159 million; however, loss per share from continuing operations2
improved from $1.16 to $0.58 due to the impact of corporate tax
rate changes in the prior year.
Tax Season Results3
H&R Block total U.S. return volume decreased 1.2% through
February 28, as an increase in DIY returns of 6.4% was offset by a
6.5% decrease in Assisted returns. On a comparable basis with
the most recent IRS data for this tax season, the company grew
market share in DIY due to product enhancements and improved
conversion. In Assisted, when comparing to the most recent
IRS data for this tax season, the business was down modestly in
market share, which was expected due to the discontinuation of its
Free Federal 1040EZ promotion.
"The significant improvements we've made across our business
have resulted in increased client satisfaction scores related to
our new upfront and transparent pricing, third party accolades for
our DIY products, and growth in our virtual offerings so far this
tax season," said Jeff Jones, H&R Block's president and chief
executive officer. "H&R Block is leading the way in the
tax industry with offerings that span the full spectrum of tax
preparation, whether clients want little to no help, complete
in-person assistance, or anything in between."
Fiscal 2019 Third Quarter Results From Continuing
Operations
"The slow start to the tax season for the industry impacted the
timing of our business, lowering financial results for our fiscal
third quarter," said Tony Bowen, H&R Block's chief financial
officer. "We remain on track with our strategic and
operational plans and expect to achieve our financial outlook for
the fiscal year."
(in
millions, except EPS) |
Q3 FY2019 |
Q3 FY2018 |
Revenue |
$ |
468 |
|
$ |
488 |
|
Pretax Loss |
$ |
(159 |
) |
$ |
(121 |
) |
Net Loss |
$ |
(120 |
) |
$ |
(243 |
) |
Weighted-Avg. Shares - Diluted |
205.5 |
|
209.1 |
|
EPS2 |
$ |
(0.58 |
) |
$ |
(1.16 |
) |
EBITDA4 |
$ |
(92 |
) |
$ |
(48 |
) |
Key Financial Metrics
- Total revenues decreased $20.0 million, or 4.1 percent, to
$468.4 million primarily due to lower Assisted tax preparation
revenues and royalties as a result of the delay in overall filings
with the IRS.
- Total operating expenses increased $20.8 million, or 3.5
percent, to $606.5 million primarily due to technology spend
related to long-term initiatives and marketing, bad debt, and
supplies expense.
- Pretax loss increased $37.9 million, or 31.3 percent, to $158.7
million.
- Loss per share from continuing operations improved from $1.16
to $0.58, due to the impact of corporate tax rate changes in the
prior year. These changes resulted in an income tax expense
in the third quarter of fiscal 2018, as opposed to an income tax
benefit, which is customary in fiscal quarters in which the company
has a seasonal pretax loss.
Dividends
As previously announced, a quarterly cash dividend of $0.25 per
share is payable on April 1, 2019 to shareholders of record as of
March 18, 2019. H&R Block has paid quarterly dividends
consecutively since the company went public in 1962.
Discontinued Operations
For 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 2019 third quarter results, 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 8:30 a.m. Eastern time on March 7, 2019. 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: 5364734
The call, along with a presentation for viewing, 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. The presentation will be posted
on the Webcasts and Presentations page at
http://investors.hrblock.com following the conclusion of the
call.
A replay of the call will be available beginning at 11:30 a.m.
Eastern time on March 7, 2019, and continuing until April 7,
2019, by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406
(International). The conference ID is 5364734. The webcast will be
available for replay beginning on March 8, 2019 and continuing for
90 days 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
2018, H&R Block had annual revenues of over $3.1 billion with
over 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," "commits," "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, market share, industry volumes 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, 2018 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, 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 |
All per
share amounts are based on fully diluted shares at the end of the
corresponding period. |
3 |
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.
Comparisons to IRS data are on a day-to-day basis as of February
22, 2019. |
4 |
The company
reports non-GAAP financial measures of performance, including
earnings before interest, tax, depreciation, and amortization
(EBITDA) from continuing operations, EBITDA margin from continuing
operations, and free cash flow 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, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
REVENUES: |
|
|
|
|
|
|
|
Service revenues |
$ |
373,659 |
|
|
$ |
388,771 |
|
|
$ |
627,786 |
|
|
$ |
641,389 |
|
Royalty,
product and other revenues |
94,725 |
|
|
99,655 |
|
|
134,652 |
|
|
125,693 |
|
|
468,384 |
|
|
488,426 |
|
|
762,438 |
|
|
767,082 |
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
Costs of
revenues |
421,026 |
|
|
416,601 |
|
|
893,401 |
|
|
884,335 |
|
Selling,
general and administrative |
185,458 |
|
|
169,098 |
|
|
404,517 |
|
|
381,193 |
|
Total operating
expenses |
606,484 |
|
|
585,699 |
|
|
1,297,918 |
|
|
1,265,528 |
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
2,269 |
|
|
1,028 |
|
|
11,275 |
|
|
3,259 |
|
Interest expense on
borrowings |
(22,833 |
) |
|
(24,560 |
) |
|
(65,214 |
) |
|
(67,102 |
) |
Loss from continuing
operations before income taxes (benefit) |
(158,664 |
) |
|
(120,805 |
) |
|
(589,419 |
) |
|
(562,289 |
) |
Income taxes
(benefit) |
(38,885 |
) |
|
122,120 |
|
|
(149,906 |
) |
|
(43,234 |
) |
Net loss from
continuing operations |
(119,779 |
) |
|
(242,925 |
) |
|
(439,513 |
) |
|
(519,055 |
) |
Net loss from
discontinued operations |
(6,675 |
) |
|
(2,720 |
) |
|
(15,887 |
) |
|
(10,723 |
) |
NET
LOSS |
$ |
(126,454 |
) |
|
$ |
(245,645 |
) |
|
$ |
(455,400 |
) |
|
$ |
(529,778 |
) |
|
|
|
|
|
|
|
|
BASIC AND
DILUTED LOSS PER SHARE: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.58 |
) |
|
$ |
(1.16 |
) |
|
$ |
(2.13 |
) |
|
$ |
(2.49 |
) |
Discontinued operations |
(0.04 |
) |
|
(0.02 |
) |
|
(0.08 |
) |
|
(0.05 |
) |
Consolidated |
$ |
(0.62 |
) |
|
$ |
(1.18 |
) |
|
$ |
(2.21 |
) |
|
$ |
(2.54 |
) |
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE BASIC AND DILUTED SHARES |
205,532 |
|
|
209,080 |
|
|
206,242 |
|
|
208,693 |
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS |
|
(unaudited, in 000s - except per share data) |
As of |
|
January 31, 2019 |
|
January 31, 2018 |
|
April 30, 2018 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
203,226 |
|
|
$ |
187,366 |
|
|
$ |
1,544,944 |
|
Cash and
cash equivalents - restricted |
|
101,903 |
|
|
83,033 |
|
|
118,734 |
|
Receivables, net |
|
758,217 |
|
|
791,618 |
|
|
146,774 |
|
Income
taxes receivable |
|
36,486 |
|
|
72,775 |
|
|
12,310 |
|
Prepaid
expenses and other current assets |
|
134,820 |
|
|
149,349 |
|
|
68,951 |
|
Total
current assets |
|
1,234,652 |
|
|
1,284,141 |
|
|
1,891,713 |
|
Property
and equipment, net |
|
220,505 |
|
|
249,911 |
|
|
231,888 |
|
Intangible assets, net |
|
356,952 |
|
|
390,993 |
|
|
373,981 |
|
Goodwill |
|
520,005 |
|
|
504,789 |
|
|
507,871 |
|
Deferred
tax assets and income taxes receivable |
|
141,366 |
|
|
25,305 |
|
|
34,095 |
|
Other
noncurrent assets |
|
95,326 |
|
|
106,161 |
|
|
101,401 |
|
Total
assets |
|
$ |
2,568,806 |
|
|
$ |
2,561,300 |
|
|
$ |
3,140,949 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
202,101 |
|
|
$ |
163,653 |
|
|
$ |
251,975 |
|
Accrued
salaries, wages and payroll taxes |
|
140,902 |
|
|
135,626 |
|
|
141,499 |
|
Accrued
income taxes and reserves for uncertain tax positions |
|
49,009 |
|
|
164,246 |
|
|
263,050 |
|
Current
portion of long-term debt |
|
— |
|
|
1,015 |
|
|
1,026 |
|
Deferred
revenue and other current liabilities |
|
195,634 |
|
|
201,988 |
|
|
186,101 |
|
Total
current liabilities |
|
587,646 |
|
|
666,528 |
|
|
843,651 |
|
Long-term
debt and line of credit borrowings |
|
1,876,989 |
|
|
2,284,231 |
|
|
1,494,609 |
|
Deferred
tax liabilities and reserves for uncertain tax positions |
|
214,217 |
|
|
201,384 |
|
|
229,430 |
|
Deferred
revenue and other noncurrent liabilities |
|
103,545 |
|
|
107,226 |
|
|
179,548 |
|
Total
liabilities |
|
2,782,397 |
|
|
3,259,369 |
|
|
2,747,238 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
|
|
Common
stock, no par, stated value $.01 per share |
|
2,415 |
|
|
2,462 |
|
|
2,462 |
|
Additional paid-in capital |
|
764,982 |
|
|
758,361 |
|
|
760,250 |
|
Accumulated other comprehensive loss |
|
(17,642 |
) |
|
(9,374 |
) |
|
(14,303 |
) |
Retained
earnings (deficit) |
|
(254,277 |
) |
|
(729,578 |
) |
|
362,980 |
|
Less
treasury shares, at cost |
|
(709,069 |
) |
|
(719,940 |
) |
|
(717,678 |
) |
Total
stockholders' equity (deficiency) |
|
(213,591 |
) |
|
(698,069 |
) |
|
393,711 |
|
Total
liabilities and stockholders' equity |
|
$ |
2,568,806 |
|
|
$ |
2,561,300 |
|
|
$ |
3,140,949 |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(unaudited, in 000s) |
Nine months ended January 31, |
|
2019 |
|
2018 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net loss |
|
$ |
(455,400 |
) |
|
$ |
(529,778 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
Depreciation and amortization |
|
126,013 |
|
|
136,878 |
|
Provision
for bad debt |
|
35,009 |
|
|
33,429 |
|
Deferred
taxes |
|
20,557 |
|
|
113,345 |
|
Stock-based compensation |
|
18,009 |
|
|
17,065 |
|
Changes
in assets and liabilities, net of acquisitions: |
|
|
|
|
Receivables |
|
(640,482 |
) |
|
(651,200 |
) |
Prepaid
expenses and other current assets |
|
(66,497 |
) |
|
(83,201 |
) |
Other
noncurrent assets |
|
9,662 |
|
|
8,310 |
|
Accounts
payable and accrued expenses |
|
(47,510 |
) |
|
(36,608 |
) |
Accrued
salaries, wages and payroll taxes |
|
(465 |
) |
|
(49,255 |
) |
Deferred
revenue and other current liabilities |
|
3,990 |
|
|
10,113 |
|
Deferred
revenue and other noncurrent liabilities |
|
(70,794 |
) |
|
(58,695 |
) |
Income
tax receivables, accrued income taxes and income tax reserves |
|
(277,240 |
) |
|
(255,650 |
) |
Other,
net |
|
(2,308 |
) |
|
(12,454 |
) |
Net cash
used in operating activities |
|
(1,347,456 |
) |
|
(1,357,701 |
) |
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Capital
expenditures |
|
(79,982 |
) |
|
(77,865 |
) |
Payments
made for business acquisitions, net of cash acquired |
|
(42,428 |
) |
|
(39,397 |
) |
Franchise
loans funded |
|
(16,875 |
) |
|
(20,226 |
) |
Payments
received on franchise loans |
|
15,149 |
|
|
13,391 |
|
Other,
net |
|
4,877 |
|
|
1,524 |
|
Net cash
used in investing activities |
|
(119,259 |
) |
|
(122,573 |
) |
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Repayments of line of credit borrowings |
|
(230,000 |
) |
|
(40,000 |
) |
Proceeds
from line of credit borrowings |
|
615,000 |
|
|
830,000 |
|
Dividends
paid |
|
(154,866 |
) |
|
(150,258 |
) |
Repurchase of common stock, including shares surrendered |
|
(102,152 |
) |
|
(7,746 |
) |
Proceeds
from exercise of stock options |
|
2,527 |
|
|
28,268 |
|
Other,
net |
|
(20,126 |
) |
|
(28,922 |
) |
Net cash
provided by financing activities |
|
110,383 |
|
|
631,342 |
|
|
|
|
|
|
Effects of exchange
rate changes on cash |
|
(2,217 |
) |
|
1,792 |
|
|
|
|
|
|
Net decrease in cash,
cash equivalents and restricted cash |
|
(1,358,549 |
) |
|
(847,140 |
) |
Cash, cash equivalents
and restricted cash, beginning of period |
|
1,663,678 |
|
|
1,117,539 |
|
Cash, cash equivalents
and restricted cash, end of period |
|
$ |
305,129 |
|
|
$ |
270,399 |
|
|
|
|
|
|
SUPPLEMENTARY
CASH FLOW DATA: |
|
|
|
|
Income
taxes paid, net of refunds received |
|
$ |
103,789 |
|
|
$ |
102,755 |
|
Interest
paid on borrowings |
|
55,581 |
|
|
57,834 |
|
Accrued
additions to property and equipment |
|
2,241 |
|
|
1,078 |
|
Accrued
purchase of common stock |
|
12,301 |
|
|
— |
|
|
|
|
|
|
FINANCIAL RESULTS |
(unaudited, in 000s - except per share amounts) |
|
Three months ended January 31, |
|
Nine months ended January 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
REVENUES: |
|
|
|
|
|
|
|
U.S. assisted tax
preparation |
$ |
256,813 |
|
|
$ |
267,328 |
|
|
$ |
329,569 |
|
|
$ |
333,956 |
|
U.S.
royalties |
42,265 |
|
|
45,420 |
|
|
57,898 |
|
|
59,395 |
|
U.S. DIY
tax preparation |
31,885 |
|
|
31,322 |
|
|
37,660 |
|
|
38,811 |
|
International revenues |
12,304 |
|
|
12,308 |
|
|
96,980 |
|
|
100,659 |
|
Revenues
from Refund Transfers |
47,482 |
|
|
50,770 |
|
|
49,466 |
|
|
54,721 |
|
Revenues
from Emerald Card® |
14,980 |
|
|
16,125 |
|
|
38,704 |
|
|
40,292 |
|
Revenues
from Peace of Mind® Extended Service Plan |
16,596 |
|
|
19,967 |
|
|
77,491 |
|
|
76,495 |
|
Revenues
from Tax Identity Shield® |
7,655 |
|
|
6,818 |
|
|
17,639 |
|
|
7,329 |
|
Interest
and fee income on Emerald AdvanceTM |
30,924 |
|
|
31,075 |
|
|
31,768 |
|
|
32,333 |
|
Other |
7,480 |
|
|
7,293 |
|
|
25,263 |
|
|
23,091 |
|
|
468,384 |
|
|
488,426 |
|
|
762,438 |
|
|
767,082 |
|
Compensation and
benefits: |
|
|
|
|
|
|
|
Field
wages |
153,764 |
|
|
156,027 |
|
|
262,792 |
|
|
261,866 |
|
Other
wages |
54,243 |
|
|
50,717 |
|
|
152,111 |
|
|
140,637 |
|
Benefits
and other compensation |
42,778 |
|
|
42,156 |
|
|
89,887 |
|
|
86,384 |
|
|
250,785 |
|
|
248,900 |
|
|
504,790 |
|
|
488,887 |
|
Occupancy (1) |
94,407 |
|
|
97,557 |
|
|
290,013 |
|
|
282,755 |
|
Marketing and
advertising |
72,876 |
|
|
64,209 |
|
|
88,356 |
|
|
82,875 |
|
Depreciation and
amortization |
44,088 |
|
|
48,488 |
|
|
126,013 |
|
|
136,878 |
|
Bad debt |
33,861 |
|
|
29,191 |
|
|
33,191 |
|
|
33,429 |
|
Supplies |
9,950 |
|
|
4,950 |
|
|
15,343 |
|
|
12,052 |
|
Other (1) |
100,517 |
|
|
92,404 |
|
|
240,212 |
|
|
228,652 |
|
Total
operating expenses |
606,484 |
|
|
585,699 |
|
|
1,297,918 |
|
|
1,265,528 |
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
2,269 |
|
|
1,028 |
|
|
11,275 |
|
|
3,259 |
|
Interest expense on
borrowings |
(22,833 |
) |
|
(24,560 |
) |
|
(65,214 |
) |
|
(67,102 |
) |
Pretax loss |
(158,664 |
) |
|
(120,805 |
) |
|
(589,419 |
) |
|
(562,289 |
) |
Income taxes
(benefit) |
(38,885 |
) |
|
122,120 |
|
|
(149,906 |
) |
|
(43,234 |
) |
Net loss from
continuing operations |
(119,779 |
) |
|
(242,925 |
) |
|
(439,513 |
) |
|
(519,055 |
) |
Net loss from
discontinued operations |
(6,675 |
) |
|
(2,720 |
) |
|
(15,887 |
) |
|
(10,723 |
) |
NET
LOSS |
$ |
(126,454 |
) |
|
$ |
(245,645 |
) |
|
$ |
(455,400 |
) |
|
$ |
(529,778 |
) |
|
|
|
|
|
|
|
|
BASIC AND
DILUTED LOSS PER SHARE: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.58 |
) |
|
$ |
(1.16 |
) |
|
$ |
(2.13 |
) |
|
$ |
(2.49 |
) |
Discontinued operations |
(0.04 |
) |
|
(0.02 |
) |
|
(0.08 |
) |
|
(0.05 |
) |
Consolidated |
$ |
(0.62 |
) |
|
$ |
(1.18 |
) |
|
$ |
(2.21 |
) |
|
$ |
(2.54 |
) |
|
|
|
|
|
|
|
|
Weighted average basic
and diluted shares |
205,532 |
|
|
209,080 |
|
|
206,242 |
|
|
208,693 |
|
|
|
|
|
|
|
|
|
EBITDA from continuing
operations (2) |
$ |
(91,743 |
) |
|
$ |
(47,757 |
) |
|
$ |
(398,192 |
) |
|
$ |
(358,309 |
) |
|
|
|
|
|
|
|
|
(1) |
We reclassified $10.2
million and $28.6 million of software and information technology
(IT) maintenance expense from occupancy to other expenses for the
three and nine months ended January 31, 2018, respectively, to
conform to the current period presentation. |
(2) |
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, |
|
|
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
Tax Returns Prepared:
(in 000s) (1) (2) |
|
|
|
|
|
|
|
|
|
|
|
Company-Owned Operations |
1,310 |
|
|
1,453 |
|
|
(9.8 |
) |
% |
|
4,101 |
|
|
4,429 |
|
|
(7.4 |
) |
% |
Franchise
Operations |
657 |
|
|
707 |
|
|
(7.1 |
) |
% |
|
1,938 |
|
|
2,028 |
|
|
(4.4 |
) |
% |
Total H&R Block Assisted |
1,967 |
|
|
2,160 |
|
|
(8.9 |
) |
% |
|
6,039 |
|
|
6,457 |
|
|
(6.5 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Desktop |
128 |
|
|
151 |
|
|
(15.2 |
) |
% |
|
706 |
|
|
764 |
|
|
(7.6 |
) |
% |
Online |
1,164 |
|
|
1,126 |
|
|
3.4 |
|
% |
|
3,480 |
|
|
3,170 |
|
|
9.8 |
|
% |
Total
H&R Block DIY |
1,292 |
|
|
1,277 |
|
|
1.2 |
|
% |
|
4,186 |
|
|
3,934 |
|
|
6.4 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
IRS Free
File |
101 |
|
|
94 |
|
|
7.4 |
|
% |
|
340 |
|
|
306 |
|
|
11.1 |
|
% |
Total
H&R Block Returns |
3,360 |
|
|
3,531 |
|
|
(4.8 |
) |
% |
|
10,565 |
|
|
10,697 |
|
|
(1.2 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net Average Charge:
(3) |
|
|
|
|
|
|
|
|
|
|
|
Company-Owned
Operations |
$ |
252.60 |
|
|
$ |
236.38 |
|
|
6.9 |
|
% |
|
$ |
231.64 |
|
|
$ |
223.03 |
|
|
3.9 |
|
% |
Franchise
Operations (4) |
244.08 |
|
|
224.00 |
|
|
9.0 |
|
% |
|
218.78 |
|
|
205.21 |
|
|
6.6 |
|
% |
DIY |
29.15 |
|
|
30.39 |
|
|
(4.1 |
) |
% |
|
27.29 |
|
|
27.71 |
|
|
(1.5 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(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 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, 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 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Net loss - as
reported |
|
$ |
(126,454 |
) |
|
$ |
(245,645 |
) |
|
$ |
(455,400 |
) |
|
$ |
(529,778 |
) |
Discontinued
operations, net |
|
6,675 |
|
|
2,720 |
|
|
15,887 |
|
|
10,723 |
|
Net loss from
continuing operations - as reported |
|
(119,779 |
) |
|
(242,925 |
) |
|
(439,513 |
) |
|
(519,055 |
) |
Add back: |
|
|
|
|
|
|
|
|
Income
taxes of continuing operations |
|
(38,885 |
) |
|
122,120 |
|
|
(149,906 |
) |
|
(43,234 |
) |
Interest
expense of continuing operations |
|
22,833 |
|
|
24,560 |
|
|
65,214 |
|
|
67,102 |
|
Depreciation and amortization of continuing operations |
|
44,088 |
|
|
48,488 |
|
|
126,013 |
|
|
136,878 |
|
|
|
28,036 |
|
|
195,168 |
|
|
41,321 |
|
|
160,746 |
|
|
|
|
|
|
|
|
|
|
EBITDA from continuing
operations |
|
$ |
(91,743 |
) |
|
$ |
(47,757 |
) |
|
$ |
(398,192 |
) |
|
$ |
(358,309 |
) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended January 31, |
|
Nine months ended January 31, |
Supplemental Information |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense: |
|
|
|
|
|
|
|
|
Pretax |
|
$ |
6,170 |
|
|
$ |
5,438 |
|
|
$ |
18,009 |
|
|
$ |
17,065 |
|
After-tax |
|
4,440 |
|
|
8,228 |
|
|
13,429 |
|
|
15,753 |
|
Amortization of
intangible assets: |
|
|
|
|
|
|
|
|
Pretax |
|
$ |
18,737 |
|
|
$ |
20,792 |
|
|
$ |
54,461 |
|
|
$ |
59,465 |
|
After-tax |
|
13,487 |
|
|
29,863 |
|
|
40,612 |
|
|
54,892 |
|
|
|
|
|
|
|
|
|
|
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,
EBITDA margin from continuing operations, and free cash flow. We
also use EBITDA from continuing operations and pretax income from
continuing operations, each subject to permitted adjustments, as
performance metrics in incentive compensation calculations for our
employees.
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