Liberty Tax Service Announces Fiscal Year 2015 Results

Liberty Tax Service
Published: June 18th, 2015

VIRGINIA BEACH, VA - (Marketwired) - June 18, 2015 - Liberty Tax, Inc. (NASDAQ: TAX) (the "Company"), the parent company of Liberty Tax Service, today reported its results for fiscal year 2015. The Company reported that the total number of customers served in the U.S. and Canada grew by 2.1% to 2.2 million. Tax returns prepared in offices in the U.S. grew 0.9%, exceeding the national paid preparer category growth rate, while total returns in Canada grew 9.3%.

"Despite one of the most challenging tax seasons in recent memory, we continued our track record of increasing the number of taxpayers we served faster than the overall market," said John Hewitt, CEO. "Unfortunately, the revenue growth we expected from the Affordable Care Act (ACA) did not materialize and delays in implementation of immigration reform also impacted our revenue this year. However, we made significant investments related to the ACA and the launch of the SiempreTax+ brand, and we are uniquely prepared to capitalize on future industry growth."

In response to the growing issue of identity theft fraud in the tax system, Liberty recently joined forces with the IRS, state tax authorities and other companies in the industry to develop a plan to combat identity theft tax fraud beginning in the 2016 tax season. The Company remains committed to protecting its customers and addressing this growing threat, and to further efforts to address other types of tax fraud, as well.

Fiscal 2015 Results

View Original for Full Data Table

Operational Highlights

U.S. systemwide revenue grew 4%.
SiempreTax+ was successfully launched with 57 stores in operation for the tax season, a record for a first year tax franchise.
Canadian systemwide revenue grew 10.5% (on a local currency basis) and returns processed grew 9.3%.
Licensed insurance agents were present in over 1,000 offices, ready to help the 23% of Liberty customers impacted by the ACA.

Revenues

Reported revenue increased 1.6% to $162.2 million.
Financial product revenue increased due to the Company's strategy to originate a larger portion of its financial products in house.
Growth in assisted tax preparation volume of 0.9% coupled with an increase in average net fee of 3.1% drove higher royalty and advertising revenue.
Franchise fee and other revenue were down as a result of lower cash payments received from franchisees.
Foreign exchange rates negatively impacted revenue by $0.8 million.

Operating Expenses

Reported operating expenses increased 17.5% to $146.8 million, compared to $124.9 million in the prior year. Adjusted operating expenses, as reported on Table F, increased 4.1% to $129.3 million. Investments in ACA initiatives and in launching the SiempreTax+ brand along with incremental advertising expense caused most of the increase.
Due to changes in the competitive landscape in the DIY market, the Company recorded an impairment of its online assets of $8.4 million. Additionally, the Company recorded $7.6 million in costs related to potential losses on two class action lawsuits, net of recovery from a vendor. These cases are now awaiting final approval from the courts. These items are excluded from the Company's adjusted results.

Balance Sheet and Cash Flow Highlights

During the year the Company repurchased $24.3 million in stock, net of options exercised, and initiated a quarterly dividend of 16 cents per share in the fourth quarter.
Cash and cash equivalents at April 30, 2015 were $21.4 million, down $24.7 million versus prior year, due to the share repurchases and dividend payment.

Dividend

On June 17, 2015, the Board of Directors has approved a quarterly dividend to shareholders of $0.16 per share. The dividend will be paid on July 22, 2015 to holders of record of common stock and common stock equivalents on the close of business on July 15, 2015.

Conference Call

At 8:30 a.m. Eastern time on June 18, 2015, the Company will host a conference call for analysts, institutional investors and stockholders. To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:

U.S. 855-611-0856
International 518-444-5569
Conference ID code: 48303673

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, under the "About" tab.

A telephonic replay of the call will be available beginning shortly after the call continuing until Thursday, June 25, 2015, by dialing 855-859-2056 (domestic) or 404-537-3406 (international). The conference ID code is 48303673. A replay of the webcast will also be available at the site listed above beginning shortly after its conclusion.

About Liberty Tax, Inc.

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 20 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.

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 E&F titled "Non-GAAP Financial Information."

Forward Looking Statements

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 and immigration 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.

View Original for Full Data Table

Source: Liberty Tax, Inc.

Contacts:

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

About Liberty Tax Service

Liberty Tax is a tax preparation franchise.

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