KANSAS CITY, Mo. - March 07, 2017 // GLOBE NEWSWIRE // - H&R Block, Inc. (NYSE:HRB) today released U.S. tax return volume through February 28 and its financial results for the fiscal 2017 third quarter ended January 31, 2017. The company typically reports a fiscal third quarter operating loss due to the seasonality of its tax business.
H&R Block return volume outperformed industry results when compared to IRS data reported through February 24. In total, the IRS reported a decline in e-files of 10% compared to the company's decline of 7%. Market share gains were realized in both the Assisted and DIY categories. In the Assisted category, H&R Block outperformed the industry with a decline of 8% compared to the IRS reported decline of 13%. In the DIY category, H&R Block outperformed the industry with a decline of 5% compared to the IRS reported decline of 8%. While overall industry and company volume is expected to improve during the second half of the tax season, company performance relative to the industry is expected to moderate given the conclusion of its Free Federal 1040EZ and Refund Advance promotions on February 28.
"We are delivering what we promised in December. Through aggressive Assisted and DIY offers, we are achieving our goal of new client growth and I'm pleased that we gained market share in both the Assisted and DIY tax preparation categories in the first half of the tax season," said Bill Cobb, H&R Block's president and chief executive officer. "I'm proud of what we have accomplished so far. These results are in line with our expectations for the first half of the season. And with our new partner, IBM Watson, we are focused on continued execution of our reinvented client experience over the remainder of the tax season."
The growth in market share is attributable to solid execution of an aggressive plan designed to change the trajectory of prior year client losses. In the Assisted tax preparation business, this included the launch of the no-interest, no-fee Refund Advance loan product and the Free Federal 1040EZ promotion. The company also introduced a new, exclusive client experience that incorporates IBM Watson, bringing the power of cognitive computing technology and the expertise of over 60 years of tax preparation experience together for the first time in the industry. In the company's DIY business, it expanded its free filing option with the launch of H&R Block More ZeroSM and introduced significant product enhancements.
For the fiscal year, H&R Block expects to deliver results in line with its annual financial outlook previously provided in December 2016.
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"We are starting to fully realize the benefits of last year's cost reduction efforts," said Tony Bowen, H&R Block's chief financial officer. "These savings have enabled us to invest in other areas of the business, including our early season promotions and our new DIY pricing structure, which have been instrumental in achieving new client growth and taking market share in the first half of this season."
Discussion of the fiscal 2017 third quarter results, future 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 4:30 p.m. Eastern time on March 7, 2017. To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:
U.S./Canada (888) 895-5260 or International (443) 842-7595
Conference ID: 46102763
The call 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.
A replay of the call will be available beginning at 7:30 p.m. Eastern time on March 7, 2017, and continuing until April 7, 2017, by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International). The conference ID is 46102763. The webcast will be available for replay March 8, 2017 at http://investors.hrblock.com.
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 2016, H&R Block had annual revenues of over $3 billion with 23.2 million tax returns prepared worldwide. For more information, visit the H&R Block Newsroom.
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."
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," "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, income, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure 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, 2016 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. 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.
2Volume changes to prior year noted in this paragraph are based on accepted e-files on a day-to-day basis, which is consistent with IRS reported results. Volume changes noted in the table attached to this release are based on a date-to-date basis.
3All per share amounts are based on fully diluted shares at the end of the corresponding period.
4The company reports non-GAAP financial measures, including earnings before interest, tax, depreciation, and amortization (EBITDA) and adjusted financial performance, which it believes are a better indication of the company's core operations. See "About Non-GAAP Financial Information" below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).
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Note: Effective May 1, 2016, we adopted the provisions of Accounting Standards Update No. 2015-3, "Interest - Imputation of Interest," (ASU 2015-3) on a retrospective basis. Accordingly, debt issuance costs related to our Senior Notes are included in long-term debt in the consolidated balance sheets. Amounts for prior periods have been retrospectively adjusted to conform to the current period presentation.
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(1) See "Non-GAAP Financial Information" for a reconciliation of non-GAAP measures.
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(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 through February 28. The count methodology has been adjusted in the current and prior year periods to exclude extensions and to recognize the corresponding individual tax returns when filed. A software return is defined as a return that has been electronically filed and accepted by the IRS. Also included are online returns purchased with a credit card and printed for mailing.
(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 total revenue divided by total returns. For DIY Tax Software, net average charge excludes Free File Alliance.
(4) Net average charge related to H&R Block Franchise Operations represents tax preparation fee revenues collected by H&R Block franchisees divided by returns filed in franchise offices. H&R Block will recognize a portion of franchise revenues as franchise royalties based on the terms of franchise agreements.
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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 on a consistent basis across reporting periods, as it eliminates the effect of items that are not indicative of our core operating performance.
The following are descriptions of adjustments we make for our non-GAAP financial measures:
We may consider whether other significant items that arise in the future should also 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 and adjusted EBITDA from continuing operations, adjusted pretax and net income of continuing operations, and adjusted diluted earnings per share from continuing operations. Adjusted EBITDA from continuing operations, adjusted pretax and net income from continuing operations, and adjusted diluted earnings per share from continuing operations eliminate the impact of items that we do not consider indicative of our core operating performance and, we believe, provide meaningful information to assist in understanding our financial results, analyzing trends in our underlying business, and assessing our prospects for future performance. We also use EBITDA from continuing operations and pretax income of continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.
Colby Brown
Investor Relations
(816) 854-4559
colby.brown@hrblock.com
Gene King
Media Relations
(816) 854-4672
gene.king@hrblock.com
SOURCE HRB Tax Group, Inc.