H&R Block Inc
) income from continuing operations of $2.01 per share in the
fourth quarter of fiscal 2012, ending April 30, modestly surpassed
the Zacks Consensus Estimate by 2 cents. This missed the year-ago
quarter's earnings of $2.09 by almost 4%. Net income from
continuing operations for the quarter was $591.7 million, comparing
unfavorably with $642.8 million reported in the fourth quarter of
Including income from discontinued operations of $5.6 million or 2
cents a share, the company reported a net income of $586.1 million
or $1.99 per share in the quarter under review, compared with
$658.6 million or $2.14 a share earned in the fourth quarter of
For fiscal 2012, H&R Block's adjusted income came in at $1.06
per share, falling short of the Zacks Consensus Estimate by 15
Including after-tax charges of $30.8 million or 10 cents per share,
largely related to a previously announced strategic realignment and
litigation expenses and net loss from discontinued operations of
$80 million or 27 cents a share, the company reported net income of
$265.9 million or 89 cents per share in fiscal 2012. This compares
unfavorably with $406.1 million or $1.31 per share in fiscal 2011.
Revenue in the quarter under review was $2 billion, down 2.2% year
over year. Reported revenue was almost in line with the Zacks
Revenues for fiscal 2012 grossed $2.9 billion, down 1.7% year over
year, though almost in line with the Zacks Consensus Estimate.
Total expense in the quarter totaled $1.02 billion, higher by 1.6%
over the prior-year quarter. Total expense for the year inched down
0.04% over fiscal 2011.
The company reported an operating income of $981 million in the
fourth quarter, a decline of 5.8% year over year. Operating
income for fiscal 2012 declined 8.1% year over year.
revenue was $1.99 billion in the fourth quarter of fiscal 2012,
reflecting a decline of 2.1%.
Fiscal revenue was $2.9 billion, down 1.7% year over year. Lower
financial product revenues more than offset tax preparation and
related revenues that increased 1.2%, leading to the overall
Pre-tax income for the segment was $1.01 billion, declining 7% year
Pre-tax income for the fiscal declined 8.3% year over year to $704
million. The decline was due to lower revenues from financial
products, higher marketing expense, and a decline in gains from the
sale of company-owned offices. However, lower credit losses were a
Corporate and Eliminations
posted revenue of $6.4 million, down 22% from the prior-year
quarter. Fiscal revenue also declined 3.7% over the previous year.
Segment's pre-tax loss in the quarter was $34 million, narrowed
from the loss of $48 million in the year-ago quarter. Pre-tax loss
of the fiscal also improved to $127.9 million from $139.8 million
in fiscal 2011.
H&R Block ended fiscal 2012 with cash and cash equivalents of
$1.99 billion, nearly 15% lower from $1.73 billion at the end of
fiscal 2011. Total outstanding long-term debt at the reported
quarter end was $0.41 billion, a 60% drop from lower than $1.04
billion at the end of fiscal 2011.
Net cash provided by operating activities in fiscal 2012 was $362
million, down 29% from $512 million in fiscal 2011.
Share repurchase and Dividend
In fiscal 2012, H&R Block spent $200.0 million to buyback 14.6
million shares at a cost of $13.74 per share. During fiscal fourth
quarter, the company bought back 1.5 million shares.
Till date, in the first quarter of fiscal 2013, H&R Block spent
$315.0 million to buyback 21.3 million shares at a cost of $14.82
On July 2, the company will pay a dividend of 20 cents per share to
the shareholders of record as of June 11, 2012.
), which competes with H&R Block, reported third quarter fiscal
2012 adjusted earnings $2.43 per share, beating the Zacks Consensus
Estimate of $2.39.
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Revenues of $1.95 billion in the third quarter were up 5.2% from
$1.85 billion in the prior-year quarter. Reported revenue was in
line with the lower end of management's guidance range of $1.95
billion to $1.99 billion and slightly below the Zacks Consensus
Estimate of $1.96 billion.
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 effort 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.
H&R Block scores strongly with the credit rating agencies.
Standard & Poors' affirmed the 'BBB' issuer credit rating based
on its solid liquidity.
We retain our Neutral recommendation on H&R Block. The
quantitative Zacks #4 Rank (short-term Sell rating) for the company
indicates downward pressure on the shares over the near term.