H&R Block (HRB)
Q1 2014 Earnings Call
September 03, 2013 4:30 pm ET
Colby R. Brown - Vice President and Corporate Controller
William C. Cobb - Chief Executive Officer, President, Director and Member of Finance Committee
Gregory J. Macfarlane - Chief Financial Officer
Jason L. Houseworth - President of Global Digital & Product Management
Kartik Mehta - Northcoast Research
Thomas Allen - Morgan Stanley, Research Division
Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division
Gil B. Luria - Wedbush Securities Inc., Research Division
Michael Millman - Millman Research Associates
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Colby R. Brown
Thank you, Adrian. Good afternoon, everyone, and thank you for joining us to discuss our first quarter fiscal 2014 results. Joining me on the call today are Bill Cobb, our President and CEO; and Greg Macfarlane, our CFO. Other members of our senior management team will be available during the Q&A session.
In connection with the call, we have posted today's press release and slide presentation on the Investor Relations website at hrblock.com. Some of the figures that we'll discuss today are presented on a non-GAAP basis. We reconciled the comparable GAAP and non-GAAP figures and the schedules attached to our press release and in the Appendix of today's slide presentation.
Before we begin our prepared remarks, I'd like to remind everyone that this call will include forward-looking statements as defined under the securities laws. Such statements are based on current information and management's expectations as of this date and are not guarantees of future performance.
Forward-looking statements involve certain risks, uncertainties and assumptions that are difficult to predict. As a result, our actual outcomes and results could differ materially. You can learn more about these risks in our Form 10-K for fiscal 2013 and our other SEC filings. H&R Block undertakes no obligation to publicly update these risk factors or forward-looking statements.
With that, I'll now turn the call over to Bill.
William C. Cobb
Thanks, Colby, and good afternoon. I hope everybody had a great Labor Day weekend.
Earlier today, we announced our first quarter results for fiscal year 2014, which ended July 31. As many of you know, our off-season results are not indicative of our financial performance for the full year given the seasonality of our business. Greg will take you through the details of our first quarter earnings later in the call.
We have been hard at work this summer in planning for the upcoming tax season and beyond, and I'm very pleased with the progress we've made. We have a lot of work to do, but I'm confident that we're poised to take advantage of the long-term opportunities that lie ahead. We'll have much more to say about this during our Investor conference in December, but I'll offer a few insights today regarding the upcoming tax season, H&R Block Bank and our efforts regarding health care reform.
First, while we don't have complete information from the IRS on returns filed on 2013, we've already begun to leverage some of the lessons learned from last year. We continue to believe that many of the challenges faced by the industry last season were an exception, and we now expect IRS filings to grow around 1% in 2014. Looking ahead to this season, we have to focus on what we do best, serving our clients the way they want to be served. Our primary objective will be consistent with last year, striking the right balance of profitability and growth.
Next I'd like to talk about H&R Block Bank. Last year, we announced that we're exploring strategic alternatives for our bank due to proposed rules that would impose higher capital requirements on savings and loan holding companies. The regulatory constraints that would result from these proposed rules are inconsistent with our strategic plans. Thus, our aim was to exit the bank with the hope of accomplishing 2 primary objectives. One, to cease being regulated as a savings and loan holding company; and two, to find the right partner to help us continue to grow our financial services business.
We have been diligent in our pursuit of these 2 objectives, and in July, we announced that H&R Block Bank had entered into a definitive agreement with Republic Bank & Trust Company to sell certain assets and liabilities, with the intent of forming a long-term relationship with Republic to offer financial services products to our clients. We're confident that the structure we put in place and the partner we selected accomplished our 2 objectives.
As discussed on our call in July, the transaction was contingent on various closing conditions, including successfully negotiating, executing and fulfilling other agreements with Republic, and receiving the required approvals from each party's respective regulators. Prior to entering into this agreement, Republic, which currently operates under a state bank charter, filed an application with their regular -- regulator to convert to a national bank charter. This application is being processed by Republic's regulators concurrent with the review of the transaction between H&R Block Bank and Republic.
At the time of our announcement, we were hopeful, based on our review of recent bank transactions of the approvals, would take 2 to 3 months. We acknowledge, however, that it was difficult to know with any certainty how long the process may take, and as such, that there was a possibility that regulatory approvals may not be received as soon as we had hoped.