Company Starts Implementation of Cost Savings Initiatives
Total Revenues Increased 0.5% to $174.9 Million and Cash Flows Remain Strong
VIRGINIA BEACH, Va. - Sept. 07, 2018 // GLOBE NEWSWIRE // - Liberty Tax, Inc. (OTC PINK: TAXA) (the “Company”), the parent company of Liberty Tax Service, today reported its unaudited results for fiscal year 2018. The Company reported total revenue of $174.9 million and GAAP earnings per share of $0.01. Non-GAAP earnings per share were $0.64. The Company delivered adjusted EBITDA of $35.2 million and net cash from operating activities of $27.6 million.
The average returns processed per U.S. office increased 2.8% to 445 returns compared to 433 in the prior year. Total U.S. returns of 1.49 million were lower than the 1.66 million U.S. returns in the prior year, primarily due to reductions in locations and store closings. Total returns processed in Canada increased to 0.38 million from 0.36 million.
“The Company delivered strong free cash flows and EBITDA, despite significant one-time expenses, an anticipated reduction in U.S. franchised locations, and lower performing company-owned stores,” said Chief Executive Officer, Nicole Ossenfort. “We now begin a new future direction after completion of management changes and installing new Board members. We are evaluating and implementing additional cost savings designed to drive further profitability and working with our Board to power new strategic initiatives directed towards bottom line performance. Our initiatives are focused around attracting and retaining customers as well as improving overall performance of our company-owned locations.”
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Financial Highlights
Effective Tax Rate
For the fiscal year ended April 30, 2018, the Company’s effective tax rate was materially impacted by the following items:
While there may be some future impact of stock-based compensation on the Company’s effective tax rate, the Company expects the annual effective tax rate going forward to normalize between 26% and 29%.
Other Items
Founded in 1997, Liberty Tax, Inc. (OTC PINK: TAXA) is the parent company of Liberty Tax Service. In the U.S. and Canada, last year, Liberty Tax prepared approximately two million individual income tax returns in more than 3,600 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 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 Table D titled “Reconciliation of Non-GAAP Financial Information to the Most Directly Comparable GAAP Financial Measures.”
Forward Looking Statements
In addition to historical information, this press 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 Company’s strategic initiatives and the Company’s anticipated timing with respect to the filing of its delinquent periodic reports. These forward-looking statements 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 risk that the Company’s appeal to Nasdaq will not be successful; uncertainties relating to the ability of the Company to file its delinquent periodic filings with the SEC; uncertainties regarding the Company's ability to attract and retain clients; uncertainties regarding the Company’s strategic plans related to company-owned stores; uncertainties regarding the Company’s ability to meet its prepared returns targets; competitive factors; regulatory 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. Additional information concerning these risks and uncertainties is contained in the Company’s filings 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 except as may be required by law.
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Non-GAAP Financial Information
The Company believes that EBITDA and non-GAAP net income should be evaluated, in addition to, and not as an alternative for, net income 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 results and which management excludes when evaluating the performance of the Company. Descriptions of the items which are excluded are as follows:
Executive severance and related costs, including stock-based compensation: We exclude from our non-GAAP financial measures cash and non-cash stock-based compensation, related third-party expenses and perquisites associated with the separation of employment with executives of the Company.
Executive recruitment costs: We exclude from our non-GAAP financial measures one-time costs incurred to recruit and hire new executives.
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. These expenses include professional and legal
fees.
Shareholder litigation costs: We exclude from our non-GAAP financial measures one-time costs incurred related to shareholder litigation.
Tax Cuts and Jobs Act adjustments: We exclude from our non-GAAP financial measures one-time tax adjustments for Transition Taxes related to our Canadian subsidiary and the re-measurement of deferred taxes.
Restructuring: We exclude from our non-GAAP financial measures cash and non-cash expenses of restructuring activities. These expenses include contract termination costs related to licensing, support and impairment, property and intangible impairments and exit costs as well as employee termination costs.
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.
Accrued judgment: We exclude from our non-GAAP financial measures an accrued judgment recorded in the period ended April 30, 2017.
Michael S. Piper
Liberty Tax, Inc.
Vice President and Chief Financial Officer
(757) 493-8855
investorrelations@libtax.com
SOURCE Liberty Tax, Inc.