KANSAS CITY, Mo., March 07, 2019 (GLOBE NEWSWIRE) -- 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) 358-0868
Conference 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.com
Media 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.
