H&R Block Inc.
) loss from continuing operations was 38 cents per share in the
first quarter of fiscal 2013, ending July 31, wider than the Zacks
Consensus Estimate loss of 37 cents and loss of 37 cents incurred
in the year-ago quarter.
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Net loss from continuing operations for the quarter was $105
million, improving 6% from $119 million incurred in the year-ago
Revenue in the quarter under review was $96.8 million, down 4.1%
year over year. Also, reported revenue fell short of the Zacks
Consensus Estimate of $101 million.
Total expense in the quarter reached $268.9 million, waning 12%
over the prior-year quarter, primarily aided by lower selling,
general and administrative expenses, lower compensation and
benefits and lower occupancy and equipment costs.
Operating loss in the quarter narrowed to $172.4 million from
$204.6 million in the first quarter of fiscal 2012.
Tax Services revenue was $90 million in the reported quarter,
reflecting a decline of 1.3%, primarily due to an extension of the
Canadian tax filing season in the first quarter of fiscal 2012.
Pre-tax loss for the segment was $140.9 million, narrowing from the
loss of $169.5 million incurred in the year-ago quarter.
Corporate and Eliminations posted revenue of $6.2 million, down
32.2% from the prior-year quarter. The decline was attributable to
lower interest income from H&R Block Bank's shrinking mortgage
The segment's pre-tax loss in the quarter was $28.3 million,
narrowing from the loss of $31.1 million in the year-ago quarter.
H&R Block ended fiscal first quarter 2013 with cash and cash
equivalents of $0.98 billion, falling 7% from $1.06 billion
reported at the end of fiscal first quarter 2012. Total outstanding
long-term debt at the reported quarter end was $0.409 billion, a
59% drop from $1.00 billion at the end of the first quarter of
Net cash used in operating activities in the quarter was $373
million, compared with $394 million used in the year-ago quarter.
Share repurchase and Dividend
In the reported quarter, H&R Block spent $315 million to buy
back 21.3 million shares at a cost of $14.82 per share.
On October 2, the company will pay a dividend of 20 cents per share
to the shareholders of record as of September 14, 2012.
H&R Block expects cost reduction initiatives to help it deliver
$85 to $100 million of pretax earnings in fiscal 2013.
) reported fourth quarter 2012 adjusted loss per share of 8 cents,
wider than the Zacks Consensus Estimate loss of 4 cents.
Revenues of $651.0 million in the fourth quarter increased 13.6%
from $573.0 million in the prior-year quarter. Reported revenue was
within management's guidance of $647.0 million - $662.0 million.
H&R Block's leading position in the tax preparer market, its
strategic initiatives to grow its business by gaining and retaining
customers augur well for long-term growth. The company's efforts to
return more value to its shareholders will also help retain
investor confidence in the stock. H&R Block is also increasing
its share in the digital and assisted space.
With cost reduction initiatives bearing fruit and a successful
first tax season in Brazil and India, we believe H&R Block
remains well positioned.
We retain our Neutral recommendation on H&R Block. The
quantitative Zacks #3 Rank (short-term Hold rating) for the company
indicates no clear directional pressure on the shares over the near