H&R Block, Inc. (NYSE: HRB) (the "Company") today released
financial results1 for its fiscal 2025 first quarter ended
September 30, 2024.
"We had a good start to the year and I am pleased with our
performance in the quarter," said Jeff Jones, president and chief
executive officer. "We are reaffirming our fiscal 2025 outlook and
our team is focused on operational and technical enhancements to
improve the client experience in office and online."
Fiscal 2025 First Quarter Results and
Key Financial Metrics
"We delivered revenue growth of 5% and continued our share
repurchase program, buying approximately $210 million in the
quarter," said Tiffany Mason, chief financial officer. "We are on
track for the year and believe we are well positioned to deliver
results."
For the first quarter, the Company delivered total revenue of
$193.8 million, an increase of $10.0 million, or 5%, versus the
prior year. The increase was primarily due to higher company office
volumes and a higher net average charge in the Assisted category
combined with higher international tax preparation revenues.
Total operating expenses of $422.1 million increased by $32.0
million, primarily due to higher tax professional wages in the U.S.
and international as a result of higher tax return volume, higher
corporate wages, and an increase in legal expenses in the current
year.
Pretax loss increased by $19.9 million to $232.3 million.
Loss per share from continuing operations2 increased to $(1.23)
from $(1.11) and adjusted loss per share from continuing
operations2 increased to $(1.17) from $(1.05), due to a higher
pretax loss and fewer shares outstanding as a result of share
repurchases.
Capital Allocation
The Company reported the following related to its capital
structure:
- As previously announced, a quarterly cash dividend of $0.375
per share is payable on January 6, 2025 to shareholders of record
as of December 5, 2024. H&R Block has paid quarterly dividends
consecutively since the Company became public in 1962.
- Repurchased and retired 3.3 million shares at an aggregate
price of $209.6 million, or $63.51 per share in the first
quarter.
- The Company has approximately $1.3 billion remaining on its
$1.5 billion share repurchase program. The repurchase program does
not have an expiration date.
Since 2016, the Company has returned more than $4.1 billion to
shareholders in the form of dividends and share repurchases, buying
back over 41% of its shares outstanding3.
Fiscal Year 2025 Outlook Reaffirmed
The Company continues to expect:
- Revenue to be in the range of $3.69 to $3.75 billion.
- EBITDA4 to be in the range of $975 million to $1.02
billion.
- Effective tax rate to be approximately 13%, resulting in a
one-time benefit to EPS of approximately 50 cents.
- Adjusted Diluted Earnings Per Share4 to be in the range of
$5.15 to $5.35.
Conference Call
The Company will host a conference call for analysts and
investors to discuss first quarter 2025 results at 4:30 p.m. ET on
Thursday, November 7, 2024. To join live, participants must
register at
https://register.vevent.com/register/BI46d8067507a543a1803367b08bae03f8.
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 general public.
The webcast can be accessed directly at
https://edge.media-server.com/mmc/p/qdeqpgfd 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 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.
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. They may also include the expected
impact of external events beyond the Company’s control, such as
outbreaks of infectious disease, 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.
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).3Shares outstanding calculated as of
April 30, 2016.4Adjusted Diluted 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.
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 |
|
Media Desk,
mediadesk@hrblock.com |
FINANCIAL RESULTS |
(unaudited, in 000s - except per share amounts) |
|
|
Three months ended September 30, |
|
|
2024 |
|
2023 |
REVENUES: |
|
|
|
|
U.S. tax preparation and related services: |
|
|
|
|
Assisted tax preparation |
|
$ |
42,963 |
|
|
$ |
39,263 |
|
Royalties |
|
|
5,852 |
|
|
|
5,701 |
|
DIY tax preparation |
|
|
3,236 |
|
|
|
3,848 |
|
Refund Transfers |
|
|
860 |
|
|
|
1,142 |
|
Peace of Mind® Extended Service Plan |
|
|
23,097 |
|
|
|
24,847 |
|
Tax Identity Shield® |
|
|
3,909 |
|
|
|
4,580 |
|
Other |
|
|
13,809 |
|
|
|
10,980 |
|
Total U.S. tax preparation and related services |
|
|
93,726 |
|
|
|
90,361 |
|
Financial services: |
|
|
|
|
Emerald Card® and SpruceSM |
|
|
8,826 |
|
|
|
8,633 |
|
Interest and fee income on Emerald Advance® |
|
|
— |
|
|
|
298 |
|
Total financial services |
|
|
8,826 |
|
|
|
8,931 |
|
International |
|
|
64,855 |
|
|
|
60,565 |
|
Wave |
|
|
26,403 |
|
|
|
23,943 |
|
Total revenues |
|
$ |
193,810 |
|
|
$ |
183,800 |
|
Compensation and
benefits: |
|
|
|
|
Field wages |
|
|
68,094 |
|
|
|
62,435 |
|
Other wages |
|
|
77,335 |
|
|
|
72,098 |
|
Benefits and other compensation |
|
|
38,754 |
|
|
|
35,248 |
|
|
|
|
184,183 |
|
|
|
169,781 |
|
Occupancy |
|
|
101,318 |
|
|
|
99,285 |
|
Marketing and advertising |
|
|
9,972 |
|
|
|
5,481 |
|
Depreciation and
amortization |
|
|
28,831 |
|
|
|
30,225 |
|
Bad debt |
|
|
2,730 |
|
|
|
4,798 |
|
Other |
|
|
95,107 |
|
|
|
80,556 |
|
Total operating expenses |
|
|
422,141 |
|
|
|
390,126 |
|
Other income (expense),
net |
|
|
11,917 |
|
|
|
9,836 |
|
Interest expense on
borrowings |
|
|
(15,847 |
) |
|
|
(15,870 |
) |
Pretax loss |
|
|
(232,261 |
) |
|
|
(212,360 |
) |
Income tax benefit |
|
|
(60,840 |
) |
|
|
(49,487 |
) |
Net loss from continuing
operations |
|
|
(171,421 |
) |
|
|
(162,873 |
) |
Net loss from discontinued
operations |
|
|
(1,155 |
) |
|
|
(609 |
) |
Net loss |
|
$ |
(172,576 |
) |
|
$ |
(163,482 |
) |
BASIC AND DILUTED LOSS
PER SHARE: |
|
|
|
|
Continuing operations |
|
$ |
(1.23 |
) |
|
$ |
(1.11 |
) |
Discontinued operations |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Consolidated |
|
$ |
(1.24 |
) |
|
$ |
(1.12 |
) |
WEIGHTED AVERAGE
DILUTED SHARES |
|
|
139,154 |
|
|
|
146,273 |
|
Adjusted diluted EPS (1) |
|
$ |
(1.17 |
) |
|
$ |
(1.05 |
) |
EBITDA (1) |
|
$ |
(187,583 |
) |
|
$ |
(166,265 |
) |
|
|
|
|
|
(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 |
|
September 30, 2024 |
|
June 30, 2024 |
|
|
|
|
|
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
415,860 |
|
|
$ |
1,053,326 |
|
Cash and cash equivalents - restricted |
|
|
23,157 |
|
|
|
21,867 |
|
Receivables, net |
|
|
69,929 |
|
|
|
69,075 |
|
Prepaid expenses and other current assets |
|
|
102,657 |
|
|
|
95,208 |
|
Total current assets |
|
|
611,603 |
|
|
|
1,239,476 |
|
Property and equipment, net |
|
|
135,533 |
|
|
|
131,319 |
|
Operating lease right of use assets |
|
|
426,990 |
|
|
|
461,986 |
|
Intangible assets, net |
|
|
256,053 |
|
|
|
264,102 |
|
Goodwill |
|
|
792,195 |
|
|
|
785,226 |
|
Deferred tax assets and income taxes receivable |
|
|
261,384 |
|
|
|
271,658 |
|
Other noncurrent assets |
|
|
66,209 |
|
|
|
65,043 |
|
Total assets |
|
$ |
2,549,967 |
|
|
$ |
3,218,810 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
LIABILITIES: |
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
161,620 |
|
|
$ |
155,830 |
|
Accrued salaries, wages and payroll taxes |
|
|
58,294 |
|
|
|
105,548 |
|
Accrued income taxes and reserves for uncertain tax positions |
|
|
205,470 |
|
|
|
318,830 |
|
Operating lease liabilities |
|
|
189,432 |
|
|
|
206,070 |
|
Deferred revenue and other current liabilities |
|
|
181,069 |
|
|
|
191,050 |
|
Total current liabilities |
|
|
795,885 |
|
|
|
977,328 |
|
Long-term debt |
|
|
1,491,621 |
|
|
|
1,491,095 |
|
Deferred tax liabilities and reserves for uncertain tax
positions |
|
|
296,370 |
|
|
|
291,063 |
|
Operating lease liabilities |
|
|
247,062 |
|
|
|
265,373 |
|
Deferred revenue and other noncurrent liabilities |
|
|
87,094 |
|
|
|
103,357 |
|
Total liabilities |
|
|
2,918,032 |
|
|
|
3,128,216 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
Common stock, no par, stated value $.01 per share |
|
|
1,676 |
|
|
|
1,709 |
|
Additional paid-in capital |
|
|
744,076 |
|
|
|
762,583 |
|
Accumulated other comprehensive loss |
|
|
(42,728 |
) |
|
|
(48,845 |
) |
Retained earnings (deficit) |
|
|
(424,548 |
) |
|
|
12,654 |
|
Less treasury shares, at cost |
|
|
(646,541 |
) |
|
|
(637,507 |
) |
Total stockholders' equity (deficiency) |
|
|
(368,065 |
) |
|
|
90,594 |
|
Total liabilities and stockholders' equity |
|
$ |
2,549,967 |
|
|
$ |
3,218,810 |
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(unaudited, in 000s) |
Three months ended September 30, |
|
2024 |
|
2023 |
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net loss |
|
$ |
(172,576 |
) |
|
$ |
(163,482 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
Depreciation and amortization |
|
|
28,831 |
|
|
|
30,225 |
|
Provision for credit losses |
|
|
1,024 |
|
|
|
1,098 |
|
Deferred taxes |
|
|
19,006 |
|
|
|
(37,757 |
) |
Stock-based compensation |
|
|
8,727 |
|
|
|
7,550 |
|
Changes in assets and liabilities, net of acquisitions: |
|
|
|
|
Receivables |
|
|
1,029 |
|
|
|
4,981 |
|
Prepaid expenses, other current and noncurrent assets |
|
|
8,836 |
|
|
|
6,396 |
|
Accounts payable, accrued expenses, salaries, wages and payroll
taxes |
|
|
(66,017 |
) |
|
|
(71,202 |
) |
Deferred revenue, other current and noncurrent liabilities |
|
|
(27,025 |
) |
|
|
(42,657 |
) |
Income tax receivables, accrued income taxes and income tax
reserves |
|
|
(129,397 |
) |
|
|
(70,301 |
) |
Other, net |
|
|
(1,019 |
) |
|
|
160 |
|
Net cash used in operating activities |
|
|
(328,581 |
) |
|
|
(334,989 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Capital expenditures |
|
|
(18,735 |
) |
|
|
(12,916 |
) |
Payments made for business acquisitions, net of cash acquired |
|
|
(5,901 |
) |
|
|
(6,919 |
) |
Franchise loans funded |
|
|
(7,109 |
) |
|
|
(5,380 |
) |
Payments from franchisees |
|
|
211 |
|
|
|
937 |
|
Other, net |
|
|
5,140 |
|
|
|
388 |
|
Net cash used in investing activities |
|
|
(26,394 |
) |
|
|
(23,890 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Dividends paid |
|
|
(44,653 |
) |
|
|
(42,953 |
) |
Repurchase of common stock, including shares surrendered |
|
|
(238,376 |
) |
|
|
(150,442 |
) |
Other, net |
|
|
(1,421 |
) |
|
|
(1,803 |
) |
Net cash used in financing activities |
|
|
(284,450 |
) |
|
|
(195,198 |
) |
Effects of exchange rate
changes on cash |
|
|
3,249 |
|
|
|
(3,679 |
) |
Net decrease in cash and cash
equivalents, including restricted balances |
|
|
(636,176 |
) |
|
|
(557,756 |
) |
Cash, cash equivalents and
restricted cash, beginning of period |
|
|
1,075,193 |
|
|
|
1,015,316 |
|
Cash, cash equivalents and
restricted cash, end of period |
|
$ |
439,017 |
|
|
$ |
457,560 |
|
SUPPLEMENTARY CASH
FLOW DATA: |
|
|
|
|
Income taxes paid, net (includes payments for purchased investment
tax credits) |
|
$ |
48,343 |
|
|
$ |
58,337 |
|
Interest paid on borrowings |
|
|
19,792 |
|
|
|
19,792 |
|
Accrued additions to property and equipment |
|
|
6,341 |
|
|
|
3,316 |
|
New operating right of use assets and related lease
liabilities |
|
|
21,861 |
|
|
|
38,468 |
|
Accrued dividends payable to common shareholders |
|
|
52,307 |
|
|
|
46,901 |
|
Accrued purchase of common stock |
|
|
7,131 |
|
|
|
10,003 |
|
|
|
|
|
|
(in 000s) |
|
|
Three months ended September 30, |
NON-GAAP FINANCIAL MEASURE - EBITDA |
|
2024 |
|
2023 |
|
|
|
|
|
Net loss - as reported |
|
$ |
(172,576 |
) |
|
$ |
(163,482 |
) |
Discontinued operations,
net |
|
|
1,155 |
|
|
|
609 |
|
Net loss from continuing
operations - as reported |
|
|
(171,421 |
) |
|
|
(162,873 |
) |
Add back: |
|
|
|
|
Income tax benefit |
|
|
(60,840 |
) |
|
|
(49,487 |
) |
Interest expense |
|
|
15,847 |
|
|
|
15,870 |
|
Depreciation and amortization |
|
|
28,831 |
|
|
|
30,225 |
|
|
|
|
(16,162 |
) |
|
|
(3,392 |
) |
EBITDA from continuing
operations |
|
$ |
(187,583 |
) |
|
$ |
(166,265 |
) |
|
|
|
|
|
(in 000s, except per share amounts) |
|
|
Three months ended September 30, |
NON-GAAP FINANCIAL MEASURE - ADJUSTED EPS |
|
2024 |
|
2023 |
|
|
|
|
|
Net loss from continuing operations - as reported |
|
$ |
(171,421 |
) |
|
$ |
(162,873 |
) |
Adjustments: |
|
|
|
|
Amortization of intangibles related to acquisitions (pretax) |
|
|
11,128 |
|
|
|
12,555 |
|
Tax effect of adjustments (1) |
|
|
(2,645 |
) |
|
|
(2,936 |
) |
Adjusted net loss from
continuing operations |
|
$ |
(162,938 |
) |
|
$ |
(153,254 |
) |
Diluted loss per share from
continuing operations - as reported |
|
$ |
(1.23 |
) |
|
$ |
(1.11 |
) |
Adjustments, net of tax |
|
|
0.06 |
|
|
|
0.06 |
|
Adjusted diluted loss per
share from continuing operations |
|
$ |
(1.17 |
) |
|
$ |
(1.05 |
) |
|
|
|
|
|
(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.
H and R Block (NYSE:HRB)
Historical Stock Chart
From Nov 2024 to Dec 2024
H and R Block (NYSE:HRB)
Historical Stock Chart
From Dec 2023 to Dec 2024