VIRGINIA BEACH, VA - (Marketwired - Mar 13, 2014) - JTH Holding, Inc. (NASDAQ: TAX) (the "Company"), the parent company of Liberty Tax Service, today reported net income for the third fiscal quarter ended January 31, 2014 of $4.1 million, or $0.28 per diluted share, compared to $1.7 million, or $0.12 per share, in the prior year period. The Company also reported that U.S. customers served during the calendar year through February 28, 2014 increased 7.7% and systemwide revenue increased 13.3% from the same period in the prior year.
"We are pleased with the increases we are seeing this year and they are in-line with our expectations. We have continued to take market share even though we had fewer offices," said John Hewitt, CEO. "As we said in February, we were fortunate to be able to focus on our high performers, and the results so far this season speak for themselves. Our best performing franchisees embody our mission statement of 'Set the standard, improve each day and have some fun!' We are glad to be partners with them and look forward to helping them continue to expand their business and ours."
Revenues for the three months ended January 31, 2014 increased 8.3% to $40.7 million compared to $37.6 million in the prior year period. Revenues for the nine months ended January 31, 2014 increased 3.5% to $56.1 million compared to $54.2 million in the prior year period. The increase in revenue during both periods was primarily due to an increase in royalties and advertising fees, financial products and tax preparation fees. These revenue increases were mostly driven by higher volumes of returns and an increase in average net fees. In addition, much of the increase in tax preparation fees resulted from an increase in the number of online returns processed by the Company in part due to an acquisition of certain assets of an online tax preparation provider in early January 2014. These increases were partially offset by a decrease in franchise fees because the Company was unable to sell franchises during a portion of the second quarter of fiscal 2014 and a decrease in area developer fees due to the repurchase of several areas from area developers during fiscal 2014.
Operating expenses for the three months ended January 31, 2014 increased 4.1% to $35.5 million compared to $34.1 million in the prior year period. Operating expenses for the nine months ended January 31, 2014 increased 5.1% to $73.8 million compared to $70.2 million in the prior year period. The increase in both periods was primarily due to an increase in general and administrative expenses, area developer expense and depreciation, amortization and impairment charges.
The increase in general and administrative expense was related to one-time restatement costs and an increase in bad debt expense related to the higher number of office closures. The increase in area developer expense was directly related to the increase in royalties. The increase in depreciation, amortization and impairment charges was primarily due to additional amortization expense related to acquired customer lists and area developer rights, along with placing the Company's NextGen software into service in fiscal 2014 and thus beginning to depreciate it. These increases were partially offset by a decrease in advertising expense in anticipation of the later start to the tax season and shifting more of those costs into the fourth quarter of fiscal 2014.
The Company had a cash balance of $3.7 million at January 31, 2014. The Company has drawn $104.6 million on its revolving credit facility as of January 31, 2014 compared to $108.1 million as of January 31, 2013, to provide cash used in operating activities and operating loans to franchisees. As of February 28, 2014, the Company had a balance of $9.7 million on its revolving credit facility compared to $61.0 million as of February 28, 2013.
During the calendar year through February 28, 2014, the Company has processed 1,250,000 returns in offices and online, an increase of 7.7% when compared to the same period last year. The number of returns processed in offices increased 6.1% to 1,148,000 and the number of returns processed online increased 29.1% to 102,000 compared to the same period last year partly due to the acquisition of certain assets of an online tax preparation provider.
At 8:30 a.m. ET on Thursday, March 13, 2014, the Company will host a conference call to discuss its results from the third quarter of fiscal 2014. To listen to the call, dial 855-611-0856 (domestic) or 518-444-5569 (international), conference ID code 41557018, approximately 10 minutes prior to the start time of the call. The call will also be webcast in a listen-only format. The link to the webcast may be accessed on the Company's investor relations website at www.libertytax.com.
A telephonic replay of the call will be available beginning shortly after the call on Thursday, March 13, 2014 and continuing until Thursday, March 20, 2014, by dialing 855-859-2056 (domestic) or 404-537-3406 (international). The conference ID code is 41557018. A replay of the webcast will also be available at the site listed above beginning shortly after its conclusion.
Founded in 1997 by CEO John T. Hewitt, JTH Holding, Inc., is the parent company of Liberty Tax Service. Liberty Tax is the fastest-growing tax preparation franchise and has prepared almost 16 million individual income tax returns in more than 4,400 offices and online. Liberty Tax's online services are available through eSmart Tax, Liberty Online and DIY Tax, and are all backed by the tax professionals at Liberty Tax locations and its nationwide network of over 30,000 tax preparers. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor for many charitable causes. For a more in-depth look, visit Liberty Tax Service and interact with Liberty Tax on Twitter and Facebook.
In addition to historical information, this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including implied and express statements regarding the restatement of the Company's historical financial statements, the costs associated with the restatement, the filing of the Company's periodic reports with the SEC, the Company's anticipated growth and expansion of its business, and the completion of the Company's franchise disclosure documents and related filings. These forward-looking statements, as well as Company guidance, are based upon the Company's current expectations and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties and speak only as of the date on which they are made, the Company's actual results could differ materially from these statements. These risks and uncertainties relate to, among other things, the impact of changes in our accounting practices on historical and future financial results; the consequences of any restatements of our financial statements; the timing for and results of the pending restatements, including our filings with the SEC; uncertainties regarding the Company's ability to attract and retain clients; meet its prepared returns targets; competitive factors; the Company's effective income tax rate; litigation defense expenses and costs of judgments or settlements; and changes in market, economic, political or regulatory conditions. Information concerning these risks and uncertainties is contained in the Company's annual report on Form 10-K and in other filings by the Company with the Securities and Exchange Commission. The Company does not undertake any duty to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Darby Schoenfeld
JTH Holding, Inc.
Director of Investor Relations
(757) 453-6047
Martha O'Gorman
JTH Holding, Inc.
Chief Marketing Officer
(757) 301-8022