H&R Block Inc
) reported adjusted loss from continuing operations of 42 cents
per share for the second quarter of fiscal 2014, ended Oct 31,
2013. Loss was wider than the Zacks Consensus Estimate loss as
well as the year-ago loss of 37 cents.
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Adjusting for professional fees related to HRB Bank transaction
of 1 cent and discreet tax item of 3 cents , H&R Block
reported net loss of 38 cents per share, a cent worse than loss
of 37 cents incurred in the year-ago quarter.
Quarterly Operational Performance
H&R Block's revenues stood at $134 million, declining
approximately 2.2% year over year. Revenues missed the Zacks
Consensus Estimate of $135 million.
Total expense of H&R Block was $287.4 million, increasing
10.5% over the prior-year quarter, primarily driven by higher
selling, general and administrative expenses, as well as higher
compensation and benefits.
H&R Block's operating loss in the reported quarter
deteriorated 9.4% year over year to $180 million.
revenues in the reported quarter declined approximately 1.4% to
The decline stemmed from timing differences in Australian
operations. However, higher Emerald Card fee revenues from
increased year-round usage limited the downside.
Pre-tax loss widened 22.4% year over year to $159 million.
Corporate and Eliminations
posted revenues of $6.3 million in the second quarter, down 15.4%
year over year.
The segment's pre-tax loss in the quarter was $20 million,
narrower than the loss of $32.2 million in the year-ago quarter.
H&R Block ended second quarter with cash and cash equivalents
of $838 billion, 35.5% lower on a year-over-year basis. Total
outstanding long-term debt of H&R Block at the end of the
reported quarter was $506.1 million, improving 44.1% year over
Net cash used in operating activities in first half of fiscal
2014 was $492.4 million, lower than $567.0 million used in the
On Jan 2, 2014, H&R Block will pay a dividend of 20 cents per
share to the shareholders of record as of Dec 9, 2013. The
dividend will mark the 205th consecutive quarterly dividend paid
since the company went public in 1962.
) reported adjusted loss per share from continuing operations of
18 cents in the first quarter of fiscal 2014, narrower than the
Zacks Consensus Estimate of a loss of 20 cents per share.
The tax preparer missed the expectation for the fourth time in a
row. The top line declined while expenses increased, inducing
higher year-over-year loss.
As most of the clients file their tax returns from January
through April each year, substantially all of H&R Block's
revenues from income tax return preparation and related services
and products are received during this period. As a result, the
company incurs loss through the first eight months of a fiscal
year. Nonetheless, with plans for the upcoming tax season, the
company is well positioned to deliver strong results going
Additionally, H&R Block's leading position in the tax
preparer market along with its strategic initiatives to grow its
business by gaining and retaining customers augur well for
long-term growth. Its efforts to return value to its shareholders
will also help retain investor confidence in the stock.
H&R Block presently carries a Zacks Rank #4 (Sell).
Better-ranked stocks from the same sector include
Core-Mark Holding Company, Inc.
). Both these stocks carry a Zacks Rank #2 (Buy).