VIRGINIA BEACH, VA - (Marketwired) - March 05, 2015 - Liberty Tax, Inc. (NASDAQ: TAX) (the "Company"), the parent company of Liberty Tax Service, today reported its results for the third fiscal quarter ended January 31, 2015.
"This has been a challenging season for us and the industry as a whole," said John Hewitt, CEO. "Despite the fact that we have continued to outperform the paid preparer category, our office and return count growth failed to meet the standards that we have come to expect. Going forward, we are focused on driving new sales, working with existing franchisees to expand, and capitalizing on the opportunities presented by the Affordable Care Act and immigration reform."
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Revenues for the three months ended January 31, 2015 increased 17% to $47.7 million compared to $40.7 million in the prior year period. The increase in revenue was primarily driven by the earlier start to the tax season, along with our franchisees' ability to generate higher net fees and higher financial product revenue. We processed a higher portion of our financial product volume through our in-house subsidiary, JTH Financial, which increased our revenue and profitability.
Reported operating expenses increased 22% to $43.4 million. Adjusted operating expenses, as reported on Table E, increased 11% to $39.3 million driven primarily by increased variable costs associated with the higher revenue. During the three months ended January 31, 2015, the Company also incurred $4.1 million in costs, including costs related to a potential loss on one of our class action lawsuits, net of recovery from a vendor involved in one of our cases.
The tax rate for the three months ended January 31, 2015 was 46.3% and is significantly higher than our year-to-date rate of 38.9%. We anticipate the full year tax rate to be slightly less than last year.
The Company had a balance of $110.8 million on its revolving credit facility as of January 31, 2015, compared to $104.6 million as of January 31, 2014.
During the calendar year through February 28, 2015, the Company has processed 1,140,000 U.S. returns in its offices, a decrease of 0.7%, when compared to the same period last year. Despite the decline in return count, systemwide revenue has increased 5.7% to $311.9 million.
As announced separately, our Board has approved the initiation of a quarterly dividend to shareholders. The first quarterly dividend of $0.16 per share will be paid on April 22, 2015 to holders of record of common stock and common stock equivalents on the close of business April 15, 2015.
At 8:30 a.m. Eastern time on Thursday, March 5, 2015, the Company will host a conference call for analysts, institutional investors and stockholders. To access the call, please dial the number below approximately 5 to 10 minutes prior to the scheduled starting time:
U.S. 855-611-0856
International 518-444-5569
Conference ID Code: 91108801
The call will also be webcast in a listen-only format. The link to the webcast can 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 and continue until Thursday, March 12, 2015, by dialing 855-859-2056 (domestic) or 404-537-3406 (international). The conference ID code is 91108801. 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, Liberty Tax, Inc., is the parent company of Liberty Tax Service. Liberty Tax is the fastest-growing tax preparation franchise and has prepared almost 18 million individual income tax returns in more than 4,300 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 approximately 35,000 seasonal 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.
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 E&F titled "Non-GAAP Financial Information."
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 future growth. 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; uncertainties regarding the Company's ability to attract and retain clients; the ability to continue to pay a quarterly dividend; the effect of health care reform on tax preparation-related revenue; the impact of the launch of a new franchise brand; uncertainties regarding the Company's ability to 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 U.S. 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.
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The Company will provide an update of operational results through season end shortly after the tax season ends.
SOURCE Liberty Tax, Inc.
Kathy Donovan
Investor Relations
Liberty Tax, Inc.
Vice President, Chief Financial Officer
(757) 493-8855
investorrelations@libtax.com
Martha O'Gorman
Media Relations
Liberty Tax, Inc.
Chief Marketing Officer
(757) 301-8022
martha@libtax.com