H&R Block Inc
) reported adjusted income from continuing operations of $2.54
per share for the fourth quarter of 2013, ended Apr 30. Though
earnings missed the Zacks Consensus Estimate of $2.59 by 1.9%, it
improved nearly 24% year over year.
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Including severance charges of 1 cent per share, unfavorable
adjustments from discrete tax items of 2 cents and a loss from
discontinued operations of 9 cents, H&R Block reported net
income of $2.42 per share, improving almost 22% year over year.
Quarterly Operational Performance
H&R Block's revenues stood at $2.2 billion, improving
approximately 10% year over year. Revenues lagged the Zacks
Consensus Estimate of $2.3 billion.
Total expense of H&R Block was $1.1 billion, increasing 5.3%
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 income in the reported quarter improved
15% year over year to $1.1 billion.
Total U.S. tax returns prepared by and through H&R Block
declined 6% year over year to 133 million returns through Apr 30,
while international returns increased 1.3% to 3.3 million. Total
tax returns prepared were 25.4 million in fiscal 2013.
revenues in the reported quarter improved approximately 10% to
$2.2 billion. Fiscal revenues climbed 0.5% to $2.9 billion
attributable to an increase in digital online filings and changes
in promotional offerings like the Free Refund Anticipation Check
Pre-tax income for the segment was $1.2 billion in the quarter,
improving nearly 20% year over year, while fiscal 2013 pre-tax
income was $823 million, improving 9% year over year
Corporate and Eliminations
posted revenues of $7 million in the fourth quarter, up 8% year
over year. Fiscal revenues slumped 11% to $28 million.
The segment's pre-tax loss in the quarter was $26 million,
narrower than the loss of $34 million in the year-ago quarter,
while fiscal pre-tax loss narrowed to $119 million from $128
million in fiscal 2012.
Fiscal 2013 Highlights
Fiscal 2013 adjusted income from continuing operations came in at
$1.59 per share, missing the Zacks Consensus Estimate of $1.62 by
1.9%. Results, however, improved 25% year over year.
Including impairment of goodwill and intangible assets of 1 cent,
severance charges of 1 cent, loss on extinguishment of debt of 1
cent, favorable adjustments from discrete tax items of 12 cents,
loss contingencies - litigation of 1 cent and loss from
discontinued operations of 11 cents, H&R Block reported net
income of $1.58 per share, surging 77% year over year.
Successful execution of the previously announced cost containment
measures aided the year-over-year improvement.
Total revenue inched up 0.4% year over year to $2.9 billion,
H&R Block ended fiscal 2013 with cash and cash equivalents of
$1.9 billion, 6.3% lower from fiscal 2012 level. Total
outstanding long-term debt of H&R Block at the end of the
reported quarter was $0.9 billion, surging from the year-ago
level of $0.4 billion, due to the issuance of $0.5 billion senior
Net cash used in operating activities in fiscal 2013 was $111
million, compared with $352 million generated in the year-ago
Dividend and Share Repurchase
On Jul 1, 2013, H&R Block will pay a dividend of 20 cents per
share to the shareholders of record as of Jun 17, 2013. The
dividend will mark 203rd consecutive quarterly dividend paid
since the company went public in 1962.
Additionally, in 2013, H&R Block spent $315 million to buy
back 21.3 million shares.
) reported third-quarter 2013 adjusted earnings per share of
$2.87, surpassing the Zacks Consensus Estimate of $2.85 on
Shares of H&R Block fell 1.94% to close at $28.83 on
Wednesday after the tax preparer missed the expectation for the
second time in a row. Full-year results also failed to meet the
Nevertheless, H&R Block's costs reduction initiatives has
been successful. The company surpassed its expectation to reduce
costs by $85 to $100 million.
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.
According to management, the company has successfully captured
market share in the digital online category from Intuit for the
third consecutive year. Its efforts to return value to its
shareholders will also help retain investor confidence on the
Last year, H&R Block announced an agreement with
Sears Holdings Corporation
), to focus on 112 best performing Sears locations, while
shutting down the rest. Likewise, this year, it is not renewing
its agreement with
) in the United States, as the performance and results from the
channel failed to match its expectations. These initiatives
further reinforce the company's efforts to improve operational
H&R Block presently carries a Zacks Rank #4 (Sell).