Liberty Tax Service Announces Fiscal 2016 First Quarter Results
VIRGINIA BEACH, VA - (Marketwired) - August 28, 2015 - Liberty Tax, Inc. (NASDAQ: TAX) (the "Company"), the parent company of Liberty Tax Service, today reported results for the first quarter ended July 31, 2015.
"I am pleased with our sales efforts thus far, the progress we are making to expand our office count, and our ability to engage closely with our franchisees and area developers to improve return counts in existing offices," said John Hewitt, CEO. "We have developed several new pilot programs and continue to see progress and expansion with our SiempreTax brand."
As a seasonal business, the Company typically reports a loss in the first quarter when revenues are low and costs are ramping up to drive growth in the following tax season. The Company reported a net loss for the fiscal first quarter ended July 31, 2015, of $8.5 million, or $0.67 per share, which was unchanged from prior year. The Company reported an adjusted non-GAAP net loss of $0.65 per share, also in line with the prior year.
|($ in millions except per share data)||GAAP||Non - GAAP*|
|Q1 2016||Q1 2015||Change||Q1 2016||Q1 2015||Change|
|Loss before taxes||(14.3||)||(14.3||)||-0.2||%||(13.9||)||(13.8||)||0.3||%|
|Basic and Diluted EPS||(0.67||)||(0.67||)||0.0||%||(0.65||)||(0.65||)||0.0||%|
|*See reconciliation of non-GAAP to GAAP measures in Table D|
Revenues for the three months ended July 31, 2015 decreased to $7.5 million from $7.8 million in the prior year period. Revenue from Area Developer ("AD") fees declined $0.2 million because revenue from some prior year sales has now been fully recognized over the ten year life of the related agreements.
The Company had a cash balance of $4.4 million at July 31, 2015. The Company has drawn $16.6 million on its revolving credit facility as of July 31, 2015 compared to $13.8 million at the prior year's quarter end. During the first quarter we typically draw on this facility to provide for cash used in operations and for operating loans to franchisees.
During the first quarter of fiscal 2016, the Company sold 37 new U.S. and Canadian territories, compared to 30 new territories during the prior year period. In order to project total office count, other factors, including the opening of previously sold territories and terminations, must be considered as well. The Company expects the total office count to increase over last year.
On August 27, 2015, the Board of Directors approved a quarterly dividend to shareholders of $0.16 per share. The dividend will be paid on October 22, 2015 to holders of record of common stock and common stock equivalents on the close of business on October 15, 2015.
At 8:30 a.m. Eastern time on August 28, 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:
|Conference ID Code:||4280497|
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 Friday, September 4, 2015, by dialing 855-859-2056 (domestic) or 404-537-3406 (international). The conference ID code is 4280497. 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 U.S. generally accepted accounting principles, please see the section of the accompanying Table D 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.
|Liberty Tax, Inc.|
|Condensed Consolidated Balance Sheets|
|Amounts in thousands|
|July 31,||April 30,||July 31,|
|Cash and cash equivalents||$||4,418||$||21,387||$||8,649|
|Current receivables, net||64,400||65,927||59,308|
|Assets held for sale||6,357||5,160||5,425|
|Income taxes receivable||7,901||-||10,946|
|Deferred income tax asset||6,773||6,921||3,636|
|Other current assets||2,552||6,470||3,058|
|Total current assets||92,401||105,865||91,022|
|Property, equipment, and software, net||37,937||36,232||38,866|
|Notes receivable, non-current, net||21,146||20,753||15,575|
|Other intangible assets, net||13,339||14,672||12,786|
|Current installments of long-term debt||$||1,958||$||3,934||$||3,042|
|Accounts payable and accrued expenses||16,819||17,321||8,963|
|Due to ADs||9,403||24,340||9,207|
|Income taxes payable||187||2,147||-|
|Deferred revenue - current||5,585||6,076||6,796|
|Total current liabilities||33,952||53,818||28,008|
|Long-term debt, excluding current installments||20,858||21,463||21,103|
|Revolving credit facility||16,556||-||13,822|
|Deferred revenue - non-current||8,964||7,640||8,097|
|Deferred income tax liability||3,673||2,363||4,657|
|Special voting preferred stock, $0.01 par value per share||-||-||-|
|Class A common stock, $0.01 par value per share||119||119||118|
|Class B common stock, $0.01 par value per share||9||9||9|
|Exchangeable shares, $0.01 par value per share||10||10||10|
|Additional paid-in capital||4,049||4,082||6,590|
|Accumulated other comprehensive income (loss), net of taxes||(1,455||)||(697||)||184|
|Total stockholders' equity||87,323||98,862||87,778|
|Total liabilities and stockholders' equity||$||171,326||$||184,146||$||163,465|
|Liberty Tax, Inc.|
|Condensed Consolidated Statement of Operations|
|Unaudited, amounts in thousands, except per share and share data|
|Three months ended July 31,|
|2015||2014||$ change||% change|
|Royalties and advertising fees||1,745||1,694||51||3.0||%|
|Tax preparation fees, net of discounts||623||515||108||21.0||%|
|Employee compensation and benefits||8,633||8,415||218||2.6||%|
|Selling, general, and administrative expenses||7,759||7,525||234||3.1||%|
|Depreciation, amortization, and impairment charges||1,670||2,299||(629||)||-27.4||%|
|Total operating expenses||21,397||21,862||(465||)||-2.1||%|
|Loss from operations||(13,874||)||(14,023||)||149||-1.1||%|
|Foreign currency transaction loss||(25||)||(1||)||(24||)||2400.0||%|
|Loss before income taxes||(14,300||)||(14,325||)||25||-0.2||%|
|Income tax benefit||(5,764||)||(5,681||)||(83||)||1.5||%|
|Net loss per share of Class A and Class B common stock|
|Basic and diluted||$||(0.67||)||$||(0.67||)||$||-||0.0||%|
|Weighted-average shares outstanding basic and diluted||12,811,621||12,867,273||(55,652||)||-0.4||%|
|Liberty Tax, Inc.|
|Condensed Consolidated Statements of Cash Flows|
|Unaudited, amounts in thousands|
|Three months ended July 31,|
|Cash flows from operating activities:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Provision for doubtful accounts||1,701||1,456|
|Depreciation, amortization, and impairment charges||1,670||2,299|
|Stock-based compensation expense||465||687|
|Gain on bargain purchases and sales of Company-owned offices||(117||)||(95||)|
|Deferred tax expense||1,458||2,034|
|Changes in accrued income taxes||(9,860||)||(20,622||)|
|Changes in other assets and liabilities||(2,241||)||142|
|Net cash used in operating activities||(15,460||)||(22,743||)|
|Cash flows from investing activities:|
|Issuance of operating loans to franchisees||(12,333||)||(8,505||)|
|Payments received on operating loans to franchisees||654||1,325|
|Purchases of AD rights and Company-owned offices||(336||)||(128||)|
|Proceeds from sale of Company-owned offices and AD rights||2,239||643|
|Purchase of property, equipment, and software||(2,686||)||(2,814||)|
|Net cash used in investing activities||(12,462||)||(9,479||)|
|Cash flows from financing activities:|
|Proceeds from the exercise of stock options||279||4,543|
|Repurchase of common stock||(1,272||)||(22,620||)|
|Repayment of amounts due to former ADs||(2,318||)||(3,840||)|
|Repayment of other long-term debt||(282||)||(641||)|
|Borrowings under revolving credit facility||16,556||13,849|
|Repayments under revolving credit facility||-||(27||)|
|Tax benefit of stock option exercises||495||3,509|
|Net cash provided by (used in) financing activities||11,246||(5,227||)|
|Effect of exchange rate changes on cash, net||(293||)||18|
|Net decrease in cash and cash equivalents||(16,969||)||(37,431||)|
|Cash and cash equivalents at beginning of period||21,387||46,080|
|Cash and cash equivalents at end of period||$||4,418||$||8,649|
|Liberty Tax, Inc.|
|Non-GAAP Financial Information|
|Unaudited, amounts in thousands, except per share data|
|We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, we believe certain non-GAAP performance measure and ratios used in managing the business may provide additional meaningful comparisons between current year results and prior periods. Reconciliations to GAAP financial measures are provided below. These non-GAAP financial measures should be viewed in addition to, not as an alternative for, our reported GAAP results.|
|For the three months ended July 31, 2015|
|Revenues||Expenses||Operations||EBITDA||Pretax Loss||Net Loss (1)||EPS|
|Executive severance including stock-based compensation||-||(413||)||413||413||413||254||0.02|
|Stock-based compensation expense excluding severance related expense||$||-||$||(373||)||$||373||$||373|
|For the three months ended July 31, 2014|
|Revenues||Expenses||Operations||EBITDA||Pretax Loss||Net Loss||EPS|
|Executive severance including stock-based compensation||-||(483||)||483||483||483||291||0.02|
|Stock-based compensation expense excluding severance related expense||$||-||$||(494||)||$||494||$||494|
|Three months ended July 31, 2015 compared to three months ended July 31, 2014|
|As reported year over year:|
|As adjusted year over year:|
|(1) The non-GAAP tax rate of 38.5% used above excludes the income tax effects of the non-GAAP income before tax adjustments described above and is consistent with our average and forecasted rate.|
SOURCE Liberty Tax, Inc.
Liberty Tax, Inc.
Vice President, Chief Financial Officer
Liberty Tax, Inc.
Chief Marketing Officer