H&R Block Reports U.S. Tax Volume Through Feb. 28; Fiscal 2013 Third Quarter Earnings Ended Jan. 31
H&R Block, Inc. (NYSE: HRB), the world’s largest consumer tax services provider, today released U.S. tax volume through Feb. 28 and fiscal 2013 third quarter earnings ended Jan. 31. As a result of significant tax legislation being passed shortly before the traditional start of the tax season and the resulting delay in opening the Internal Revenue Service’s (IRS) e-file system, the start of the 2013 U.S. tax season has been subject to an unprecedented delay that has caused changes in the timing of taxpayer filing patterns.
In a typical year, the IRS begins accepting tax returns by mid-January. This year, the IRS opened its e-file system on Jan. 30, just before the end of H&R Block’s fiscal third quarter on Jan. 31. In addition, the IRS and other taxing jurisdictions did not accept certain tax forms until early March. As a result, the company believes industry-wide tax filings through Feb. 28 have been delayed by up to two weeks versus the comparable prior year period.
Total U.S. tax returns prepared by and through H&R Block were lower by 5.8 percent through Feb. 28.(1) The company estimates that industry-wide U.S. tax filings were down approximately 8 percent on a comparable date-to-date basis through Feb. 28. The company believes industry-wide U.S. filings will fully normalize and grow 1 to 2 percent by the end of the tax season.
“We entered this tax season with a very thoughtful plan and while we’ve had to make some adjustments due to the unprecedented delays and competitive factors, I am pleased with our execution to date,” said Bill Cobb, H&R Block’s president and chief executive officer. “Our analysis of industry data gives us confidence that we are on track with our plans for fiscal 2013.”
Third Quarter 2013 Highlights
- Total revenues were lower by 29 percent, primarily driven by timing issues from the IRS opening its e-file system on Jan. 30 and the resulting delays to the start of the U.S. tax season
- GAAP net loss from continuing operations of $17 million, or 6 cents per share, compared to prior year loss of $4 million, or 1 cent per share,(2) driven by the revenue shortfall from the aformentioned delays, partially offset by H&R Block’s previously announced cost reduction initiatives and a $43 million income tax benefit resulting from a settlement with the IRS
- Adjusted net loss of $60 million, or 22 cents per share, compared to break-even in prior year, primarily driven by the aforementioned delays to the start of the U.S. tax season
- H&R Block remains on pace to deliver $85 to $100 million of pretax earnings from cost reduction initiatives in fiscal 2013
Third Quarter Results From Continuing Operations
“The delayed start to this tax season led to a material shift of business from our fiscal third quarter to our fiscal fourth quarter,” said Greg Macfarlane, H&R Block’s chief financial officer. “As a result, our third quarter results are not indicative of the results we expect to achieve this fiscal year. Our cost reduction initiatives remain on track and we continue to believe that we’ll deliver significant earnings and margin expansion in fiscal 2013,” added Macfarlane.
Business Segment Results and Highlights
- Revenues were lower by $191 million, or 29 percent, primarily due to the delayed start of the U.S. tax season
- H&R Block deferred $15 million of revenue to its fiscal fourth quarter, as the IRS did not accept returns that included certain forms prior to January 31
- Pretax loss of $64 million compared to pretax income of $32 million in prior year, primarily due to the delayed start of the U.S. tax season
- Revenues of $7 million were essentially flat to prior year
- Pretax loss improved by $1 million to $32 million
Third Quarter Results from Discontinued Operations
- Net loss of $1 million compared to near break-even net earnings in prior year
- Sand Canyon Corporation (SCC), a separate legal entity from H&R Block, Inc., received new claims during the quarter for alleged breaches of representations and warranties in the principal amount of $16 million
- SCC reviewed claims in the principal amount of $9 million during the quarter, all of which were deemed invalid
- SCC’s accrual for contingent losses related to representations and warranties totaled $119 million at Jan. 31
A previously announced quarterly cash dividend of 20 cents per share is payable on April 1, 2013 to shareholders of record as of March 18, 2013. The April 1 dividend payment will mark H&R Block’s 202nd consecutive quarterly dividend since the company went public in 1962.
About H&R Block
H&R Block, Inc. (NYSE: HRB) is the world’s largest consumer tax services provider. More than 600 million tax returns have been prepared worldwide by and through H&R Block since 1955. In fiscal 2012, H&R Block had annual revenues of $2.9 billion with 25.6 million tax returns prepared worldwide. Tax return preparation services are provided in company-owned and franchise retail tax offices by approximately 90,000 professional tax preparers, and through H&R Block At Home™ digital products. H&R Block Bank provides affordable banking products and services. For more information, visit the H&R Block Online Press Center.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures. 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 “About Non-GAAP Financial Measures.”
This press release may contain 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,” “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, income, earnings per share, capital expenditures, dividends, 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 and which are described in our Annual Report on Form 10-K for the fiscal year ended April 30, 2012 in the section entitled “Risk Factors,” as well as additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. 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) Unless otherwise noted, all comparisons, including those made to the “prior year,” refer to the current period compared to the prior year period.
(2) All per share amounts are based on fully diluted shares.
The complete press release with financial tables can be viewed here: MarketWire
Derek Drysdale 816-854-4513 email@example.com
Gene King 816.854.4287 firstname.lastname@example.org
H&R Block today released its preliminary U.S. tax results, which reflect overall tax return volume growth compared to the prior year.