VIRGINIA BEACH, VA - (Marketwired) - December 08, 2016 - Liberty Tax, Inc. (NASDAQ: TAX) (the "Company"), the parent company of Liberty Tax Service, today reported results for the second quarter ended October 31, 2016.
The Company typically reports a loss in the first and second quarters when revenues are low and costs are ramping up to drive growth in the following tax season. In the second quarter of fiscal 2017, the Company reported a GAAP net loss of $9.3 million, or $0.72 per share, compared to a loss of $9.1 million, or $0.71 per share in the prior year period. Non-GAAP net loss was also $0.72 per share compared to a net loss of $0.71 per share in the prior year period.
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"Our preparations for the upcoming season are almost complete," said John Hewitt, CEO. "We have the right product offerings in place for our customers and our franchisees. We are managing our expenses, and our Company-store team is prepared to deliver a strong season."
The Company had a cash balance of $3.7 million at October 31, 2016. The Company has drawn $66.6 million on its revolving credit facility as of October 31, 2016 compared to $57.3 million at October 31, 2015. The Company typically draws on this facility through the beginning of each tax season to provide for cash used in operations and for operating loans to franchisees. The increase in the usage of our credit facility is primarily due to entering the year with a lower cash balance.
The Company expects office count to decline this season. There are several factors contributing to this decline, including the previously announced decision not to extend our relationship with Walmart this year. In addition, we have actively pruned back certain underperforming franchise locations as the Company focuses more on developing larger franchisee and Company-owned offices. Lastly, on a year to date basis through November, the number of territories sold has declined from 142 last year to 50 this year.
During the offseason, we acquired many attractive, mature locations from exiting franchisees which will be operated as Company-owned offices this year. As a result, our average Company-owned store will be larger than the Company-owned locations last year, many of which were first year stores. This shift in store population will drive higher tax preparation fees this year.
On December 6, 2016, the Board of Directors approved a quarterly dividend to shareholders of $0.16 per share. The dividend will be paid on January 23, 2017 to holders of record of common stock and common stock equivalents on the close of business on January 12, 2017.
At 8:30 a.m. Eastern time on December 8, 2016, 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: 10692202
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, under the "About" tab.
A telephonic replay of the call will be available beginning shortly after the call continuing until Thursday, December 15, 2016, by dialing 855-859-2056 (domestic) or 404-537-3406 (international). The conference ID code is 10692202. 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. (NASDAQ: TAX) is the parent company of Liberty Tax Service. Liberty Tax is one of the fastest-growing tax preparation franchises. Last year, Liberty Tax prepared over two 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 approximately 22,000 seasonal tax preparers. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor to 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 U.S. generally accepted accounting principles, please see the section of the accompanying Tables E & F titled "Reconciliation of Non-GAAP Financial Information to the Most Directly Comparable GAAP Financial Measures."
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; costs associated with compliance efforts; 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 believes that EBITDA and non-GAAP net income (loss) should be evaluated, in addition to, and not as an alternative for, net income (loss) as determined in accordance with GAAP. Both metrics are used by management when evaluating the performance of the Company. Because not all companies use the same calculations, our definition of EBITDA may not be comparable to similarly titled figures from other companies. In addition, when evaluating non-GAAP financial information, we exclude certain items that are not considered to be part of future operating performance and which management excludes when evaluating the performance of the Company. Descriptions of the items which are excluded are as follows:
Executive severance, including stock-based compensation: We exclude from our non-GAAP financial measures cash and non-cash stock-based compensation and perquisites associated with the separation of employment with executives of the Company.
Compliance Task Force and related costs: We exclude from our non-GAAP financial measures third-party expenses we incur related to our Compliance Task Force, which we established in fiscal 2016 to examine and prevent non-compliance, fraud and other misconduct among our franchisees and employees. These expenses include professional and legal fees.
Gain on available-for-sale securities: We exclude from our non-GAAP financial measures gains and losses we record when we sell equity securities and other investments.
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