Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 6, 2024

H&R BLOCK, INC.

(Exact name of registrant as specified in charter)


Missouri	1-06089	44-0607856
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification No.)

One H&R Block Way, Kansas City, MO 64105

(Address of Principal Executive Offices) (Zip Code)

(816) 854-3000

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	HRB	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On February 6, 2024, H&R Block, Inc. (the "Company") issued a press release regarding the Company’s results of operations for the fiscal quarter ended December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number Description

99.1 Press Release Issued February 6, 2024.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


			H&R BLOCK, INC.

Date:	February 6, 2024	By:	/s/ Katharine M. Haynes
			Katharine M. Haynes
			Vice President and Corporate Secretary

Exhibit 99.1

News Release

For Immediate Release: February 6, 2024

H&R Block Reports Fiscal 2024 Second Quarter Results; Full Year Outlook Reaffirmed

KANSAS CITY, Mo. - H&R Block, Inc. (NYSE: HRB) (the "Company") today released its financial results1 for the fiscal 2024 second quarter ended December 31, 2023.

•Revenue grew 8% as the Company saw a strong end to the extended filing season

•The Company reaffirmed its previously announced outlook for fiscal year 2024

•Repurchased $218.1 million of shares during the quarter, retiring another 3% of shares outstanding

"I’m pleased with our Q2 performance, and our results reflect the progress we continue to make," said Jeff Jones, H&R Block's president and chief executive officer. "In the quarter, our refreshed Emerald Advance product performed well, we launched AI Tax Assist in our DIY Online product, and we continued to allocate capital by paying our quarterly dividend and repurchasing shares. We are well positioned for the tax season, and I’m looking forward to the rest of the year.”

Fiscal 2024 Second Quarter Results and Key Financial Metrics

"Our performance continues to meet expectations, and our capital allocation practice remains strong," said Tony Bowen, H&R Block's chief financial officer. "We feel good about our balance sheet and how we are positioned in the current environment, and I am confident in our ability to drive ongoing value for shareholders."

•Total revenue of $179.1 million increased by $12.7 million, or 8%, to the prior year. The increase was primarily due to higher volumes and net average charge in the Assisted category combined with higher interest and fee income on Emerald AdvanceSM due to an increase in Emerald AdvanceSM Loans and an earlier start to the offering period in the current year.

•Total operating expenses of $446.5 million decreased by $3.1 million, as a result of lower consulting and marketing and advertising expenses, partially offset by higher corporate wages resulting from higher headcount in the current year.

•Pretax loss decreased by $15.1 million to $282.9 million.

•Loss per share from continuing operations2 improved from $(1.43) to $(1.33) and adjusted loss per share from continuing operations2 improved from $(1.37) to $(1.27), due to a lower loss, partially offset by fewer shares outstanding.

Capital Allocation

The Company reported the following related to its capital structure:

•As previously announced, a quarterly cash dividend of $0.32 per share is payable on April 3, 2024 to shareholders of record as of March 5, 2024. H&R Block has paid quarterly dividends consecutively since the Company became public in 1962.

1All amounts in this release are unaudited. Unless otherwise noted, all comparisons refer to the current period compared to the corresponding prior year period.

2All per share amounts are based on fully diluted shares at the end of the corresponding period. The Company reports non-GAAP financial measures of performance, including adjusted earnings per share (EPS), earnings before interest, tax, depreciation, and amortization (EBITDA) from continuing operations, free cash flow, and free cash flow yield, 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).

•Repurchased and retired 4.8 million shares at an aggregate price of $218.1 million, or $45.88 per share in the second quarter.

•The Company has approximately $350.0 million remaining on its $1.25 billion share repurchase authorization available through fiscal year 2025.

Since 2016, the Company has returned more than $3.8 billion to shareholders in the form of share repurchases and dividends, buying back over 40% of its shares outstanding3.

Fiscal Year 2024 Outlook

The Company continues to expect:

•Revenue to be in the range of $3.530 to $3.585 billion.

•EBITDA4 to be in the range of $930 to $965 million.

•Effective tax rate to be approximately 23%.

•Adjusted Diluted Earnings Per Share4 to be in the range of $4.10 to $4.30.

Other Announcements

•Today the Company separately announced that chief financial officer Tony Bowen has decided to retire. He is committed to a smooth transition and will remain at the Company into September of 2024. The press release can be found on the investor relations website at https://investors.hrblock.com/.

Conference Call

A conference call for analysts, institutional investors, and shareholders will be held at 4:30 p.m. Eastern time on Tuesday, February 6, 2024. During the conference call the Company will discuss fiscal 2024 second quarter results, outlook, and give a general business update. To join live, participants must register at https://register.vevent.com/register/BI161a9ef1a2c8484cb4c9c10131ac69ee. Once registered, the participant will receive a dial-in number and unique PIN to access the call. Please join approximately 5 minutes prior to the scheduled start time.

The call, along with a presentation for viewing, will also be webcast in a listen-only format for the media and public. The webcast can be accessed directly at https://edge.media-server.com/mmc/p/4u8imwtm and will be available for replay 2 hours after the call is concluded and continuing for 90 days.

About H&R Block

H&R Block, Inc. (NYSE: HRB) provides help and inspires confidence in its clients and communities everywhere through global tax preparation services, financial products, and small-business solutions. The Company blends digital innovation with human expertise and care as it helps people get the best outcome at tax time and also be better with money using its mobile banking app, Spruce. Through Block Advisors and Wave, the Company helps small-business owners thrive with year-round bookkeeping, payroll, advisory, and payment processing solutions. For more information, visit H&R Block News or follow @HRBlockNews.

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."

3Shares outstanding calculated as of April 30, 2016.

4Adjusted EPS and EBITDA from continuing operations are non-GAAP financial measures. Future period non-GAAP outlook includes adjustments for items not indicative of our core operations, which may include, without limitation, items described in the below section titled “Non-GAAP Financial Information” and in the accompanying tables. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual, or unanticipated charges, expenses or gains, or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this non-GAAP outlook to the most comparable GAAP measures.

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. They may also include the expected impact of external events beyond the Company’s control, such as outbreaks of infectious disease (including the COVID-19 pandemic), severe weather events, natural or manmade disasters, or changes in the regulatory environment in which we operate. 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 most recently completed fiscal year 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 https://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, future actions of the Company, or increases in applicable tax rates in jurisdictions where the Company operates. 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.


For Further Information

Investor Relations:						Michaella Gallina, (816) 854-3022, michaella.gallina@hrblock.com
						Jordyn Eskijian, (816) 854-5674, jordyn.eskijian@hrblock.com
Media Relations:						Teri Daley, (816) 854-3787, teri.daley@hrblock.com

TABLES FOLLOW


FINANCIAL RESULTS	(unaudited, in 000s - except per share amounts)
	Three months ended December 31,				Six months ended December 31,
	2023		2022		2023		2022
REVENUES:
U.S. tax preparation and related services:
Assisted tax preparation	$	48,342	$	41,216	$	87,605	$	77,528
Royalties	5,454		4,946		11,155		11,174
DIY tax preparation	13,111		12,150		16,959		15,308
Refund Transfers	813		1,542		1,955		2,826
Peace of Mind® Extended Service Plan	17,440		17,320		42,287		42,090
Tax Identity Shield®	4,694		5,350		9,274		10,517
Other	9,592		8,513		20,572		17,873
Total U.S. tax preparation and related services	99,446		91,037		189,807		177,316
Financial services:
Emerald Card® and SpruceSM	11,700		12,478		20,333		24,090
Interest and fee income on Emerald AdvanceSM	15,235		12,903		15,533		13,517
Total financial services	26,935		25,381		35,866		37,607
International	29,569		28,046		90,134		86,880
Wave	23,133		21,941		47,076		44,587
Total revenues	$	179,083	$	166,405	$	362,883	$	346,390
Compensation and benefits:
Field wages	77,795		76,204		140,230		137,877
Other wages	74,671		70,530		146,769		134,283
Benefits and other compensation	36,063		34,277		71,311		69,109
	188,529		181,011		358,310		341,269
Occupancy	101,194		101,173		200,479		198,763
Marketing and advertising	11,305		15,142		16,786		25,791
Depreciation and amortization	30,107		32,723		60,332		66,347
Bad debt	21,754		22,416		26,552		22,745
Other	93,626		97,143		174,182		183,789
Total operating expenses	446,515		449,608		836,641		838,704
Other income (expense), net	5,922		4,185		15,758		7,796
Interest expense on borrowings	(21,364)		(18,985)		(37,234)		(34,809)
Pretax loss	(282,874)		(298,003)		(495,234)		(519,327)
Income tax benefit	(93,758)		(77,140)		(143,245)		(131,097)
Net loss from continuing operations	(189,116)		(220,863)		(351,989)		(388,230)
Net loss from discontinued operations	(639)		(2,716)		(1,248)		(3,770)
Net loss	$	(189,755)	$	(223,579)	$	(353,237)	$	(392,000)
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations	$	(1.33)	$	(1.43)	$	(2.44)	$	(2.48)
Discontinued operations	—		(0.02)		(0.01)		(0.02)
Consolidated	$	(1.33)	$	(1.45)	$	(2.45)	$	(2.50)
WEIGHTED AVERAGE DILUTED SHARES	142,340		154,119		144,307		156,701
Adjusted diluted EPS (1)	$	(1.27)	$	(1.37)	$	(2.31)	$	(2.36)
EBITDA (1)	$	(231,403)	$	(246,295)	$	(397,668)	$	(418,171)

(1) All non-GAAP measures are results from continuing operations. See "Non-GAAP Financial Information" for a reconciliation of non-GAAP measures.


CONSOLIDATED BALANCE SHEETS	(unaudited, in 000s - except per share data)
As of	December 31, 2023		June 30, 2023

ASSETS
Cash and cash equivalents	$	321,014	$	986,975
Cash and cash equivalents - restricted	17,210		28,341
Receivables, net	397,453		59,987
Income taxes receivable	74,415		35,910
Prepaid expenses and other current assets	88,793		76,273
Total current assets	898,885		1,187,486
Property and equipment, net	137,153		130,015
Operating lease right of use assets	385,288		438,299
Intangible assets, net	275,230		277,043
Goodwill	789,068		775,453
Deferred tax assets and income taxes receivable	239,300		211,391
Other noncurrent assets	51,371		52,571
Total assets	$	2,776,295	$	3,072,258
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Accounts payable and accrued expenses	$	143,339	$	159,901
Accrued salaries, wages and payroll taxes	65,774		95,154
Accrued income taxes and reserves for uncertain tax positions	151,332		271,800

Operating lease liabilities	185,424		205,391
Deferred revenue and other current liabilities	199,718		206,536
Total current liabilities	745,587		938,782
Long-term debt and line of credit borrowings	2,290,044		1,488,974
Deferred tax liabilities and reserves for uncertain tax positions	235,303		264,567
Operating lease liabilities	208,734		240,543
Deferred revenue and other noncurrent liabilities	69,279		107,328
Total liabilities	3,548,947		3,040,194
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock, no par, stated value $.01 per share	1,709		1,789
Additional paid-in capital	746,734		770,376
Accumulated other comprehensive loss	(36,454)		(37,099)
Retained deficit	(846,162)		(48,677)
Less treasury shares, at cost	(638,479)		(654,325)
Total stockholders' equity (deficiency)	(772,652)		32,064
Total liabilities and stockholders' equity	$	2,776,295	$	3,072,258


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	(unaudited, in 000s)
Six months ended December 31,	2023		2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(353,237)	$	(392,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	60,331		66,347
Provision for credit losses	21,536		16,581
Deferred taxes	(35,525)		41,534
Stock-based compensation	17,525		17,893

Changes in assets and liabilities, net of acquisitions:

Receivables	(348,833)		(262,293)
Prepaid expenses, other current and noncurrent assets	(7,395)		(32,983)

Accounts payable, accrued expenses, salaries, wages and payroll taxes	(58,543)		(121,156)

Deferred revenue, other current and noncurrent liabilities	(58,520)		(52,703)

Income tax receivables, accrued income taxes and income tax reserves	(180,706)		(60,163)
Other, net	1,201		(1,515)
Net cash used in operating activities	(942,166)		(780,458)
CASH FLOWS FROM INVESTING ACTIVITIES:



Capital expenditures	(32,708)		(41,495)
Payments made for business acquisitions, net of cash acquired	(27,158)		(39,757)



Franchise loans funded	(15,491)		(17,491)
Payments from franchisees	2,747		3,861

Other, net	1,565		(4,208)
Net cash used in investing activities	(71,045)		(99,090)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of line of credit borrowings	(25,000)		(170,000)
Proceeds from line of credit borrowings	825,000		750,000




Dividends paid	(89,854)		(89,193)
Repurchase of common stock, including shares surrendered	(378,709)		(365,633)

Other, net	4,011		3,639
Net cash provided by financing activities	335,448		128,813
Effects of exchange rate changes on cash	671		(7,790)
Net decrease in cash and cash equivalents, including restricted balances	(677,092)		(758,525)
Cash, cash equivalents and restricted cash, beginning of period	1,015,316		1,050,713
Cash, cash equivalents and restricted cash, end of period	$	338,224	$	292,188
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid (received), net	$	72,160	$	(114,385)
Interest paid on borrowings	35,496		31,812




Accrued additions to property and equipment	4,036		2,499
New operating right of use assets and related lease liabilities	70,532		79,917
Accrued dividends payable to common shareholders	45,273		44,569


(in 000s)
	Three months ended December 31,				Six months ended December 31,
NON-GAAP FINANCIAL MEASURE - EBITDA	2023		2022		2023		2022

Net loss - as reported	$	(189,755)	$	(223,579)	$	(353,237)	$	(392,000)
Discontinued operations, net	639		2,716		1,248		3,770
Net loss from continuing operations - as reported	(189,116)		(220,863)		(351,989)		(388,230)
Add back:
Income tax benefit	(93,758)		(77,140)		(143,245)		(131,097)
Interest expense	21,364		18,985		37,234		34,809
Depreciation and amortization	30,107		32,723		60,332		66,347
	(42,287)		(25,432)		(45,679)		(29,941)
EBITDA from continuing operations	$	(231,403)	$	(246,295)	$	(397,668)	$	(418,171)


(in 000s, except per share amounts)
	Three months ended December 31,				Six months ended December 31,
NON-GAAP FINANCIAL MEASURE - ADJUSTED EPS	2023		2022		2023		2022

Net loss from continuing operations - as reported	$	(189,116)	$	(220,863)	$	(351,989)	$	(388,230)
Adjustments:
Amortization of intangibles related to acquisitions (pretax)	12,269		12,839		24,824		25,535
Tax effect of adjustments (1)	(3,087)		(2,787)		(6,022)		(6,008)
Adjusted net loss from continuing operations	$	(179,934)	$	(210,811)	$	(333,187)	$	(368,703)
Diluted loss per share from continuing operations - as reported	$	(1.33)	$	(1.43)	$	(2.44)	$	(2.48)
Adjustments, net of tax	0.06		0.06		0.13		0.12
Adjusted diluted loss per share from continuing operations	$	(1.27)	$	(1.37)	$	(2.31)	$	(2.36)

(1)Tax effect of adjustments is the difference between the tax provision calculated on a GAAP basis and on an adjusted non-GAAP basis.

Non-GAAP Financial Information

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 make adjustments for certain non-GAAP financial measures related to amortization of intangibles from acquisitions and goodwill impairments. We may consider whether other 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 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations, adjusted diluted earnings per share from continuing operations, free cash flow, and free cash flow yield. 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.

Cover Page	Feb. 06, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Feb. 06, 2024
Entity Registrant Name	H&R BLOCK, INC.
Entity Incorporation, State or Country Code	MO
Entity File Number	1-06089
Entity Tax Identification Number	44-0607856
Entity Address, Address Line One	One H&R Block Way
Entity Address, City or Town	Kansas City
Entity Address, State or Province	MO
Entity Address, Postal Zip Code	64105
City Area Code	816
Local Phone Number	854-3000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, without par value
Trading Symbol	HRB
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0000012659
Amendment Flag	false