H and R Block issued the following announcement on June 16
H&R Block, Inc. (NYSE: HRB) today released its financial results for the fiscal year ended April 30, 2020, and provided an update on its response to the COVID-19 pandemic. The pandemic, along with the related extension of the U.S. federal tax filing deadline from April 15th to July 15th, resulted in lower revenue and earnings compared to the prior year.
The company will provide an update on its complete tax season 2020 results during its fiscal 2021 first quarter earnings call.
“This has obviously been a challenging time for everyone, and I’m so proud of how our associates, tax pros, and franchisees responded in the face of the pandemic,” said Jeff Jones, H&R Block’s president and chief executive officer. “This has impacted our business and challenged us to be agile and innovative as we made broad changes to our operating model in order to continue to help our clients. We remain committed to transforming our business and will use this opportunity to reimagine our future.”
Fiscal 2020 Results From Continuing Operations
“Prior to the disruption to the tax industry caused by the pandemic, we were on track to deliver on our financial outlook for fiscal 2020. Our focus now is on executing during the first quarter as we navigate this difficult time,” said Tony Bowen, H&R Block’s chief financial officer. “We have adequate liquidity to meet anticipated operating cash needs through the start of tax season 2021 and are taking measures to reduce expenses to continue to fund future growth.”
Key Financial Metrics
- Total revenues of $2.6 billion decreased $455 million, or 14.7 percent, due to lower U.S. tax return volumes, partially offset by the addition of Wave.
- The COVID-19 pandemic and its effect on small businesses has impacted Wave’s client volumes and revenues. As a result, we evaluated Wave’s goodwill during our fiscal fourth quarter, which resulted in an impairment of $106.0 million. We remain confident in Wave’s future, and in our ability to continue to deliver value to small business owners through Wave’s innovative platform.
- Total operating expenses of $2.6 billion increased $84 million, or 3.4 percent, primarily due to the impairment of Wave’s goodwill, Wave’s operating expenses, legal fees, and planned investments in technology, partially offset by compensation savings on lower tax return volume.
- Pretax loss of $3 million compared to pretax income of $545 million in the prior year.
- Earnings per share from continuing operations decreased $2.12 to $0.03; adjusted earnings per share from continuing operations decreased $1.55 to $0.84.
The company announced that its Board of Directors has declared a quarterly cash dividend of $0.26 per share, payable on July 1, 2020 to shareholders of record as of June 26, 2020. H&R Block has paid quarterly dividends consecutively since the company went public in 1962. Future actions regarding dividends will be dependent upon the Board’s approval following consideration of operating results, market conditions, and capital needs, among other factors.
In fiscal 2020, the company repurchased 10.1 million shares for $247 million, at an average price of $24.36. No share repurchases were made in the fourth quarter of fiscal 2020. Approximately $750 million remains under the company’s current share repurchase authorization, which expires in June 2022.
The company ended the fiscal year with $2.7 billion in cash, including $2.0 billion from its line of credit, which remains fully drawn. The line of credit is subject to various conditions, including a covenant which requires us to maintain a debt-to-EBITDA ratio of 3.5 on April 30 of each year. The company did not meet this covenant based on fiscal 2020 financial results but has obtained a waiver from its lenders for the period ended April 30, 2020, with no changes to any of the terms of the line of credit.
Discontinued Operations
For information on Sand Canyon, please refer to disclosures in the company’s reports on Forms 10-K, 10-Q, and other filings with the SEC.
Conference Call
Discussion of the fiscal 2020 results, outlook, and a general business update will occur during the company’s previously announced fiscal 2020 earnings conference call for analysts, institutional investors, and shareholders. The call is scheduled for 4:30 p.m. Eastern time on June 16, 2020. To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:
U.S./Canada (866) 987-6821 or International (630) 652-5951
Conference ID: 5554906
The call, along with a presentation for viewing, will also be webcast in a listen-only format for the media and public. The link to the webcast can be accessed directly at https://investors.hrblock.com. The presentation will be posted on the Quarterly Results page at https://investors.hrblock.com following the conclusion of the call.
A replay of the call will be available beginning at 7:30 p.m. Eastern time on June 16, 2020, and continuing for seven days by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International). The conference ID is 5554906. The webcast will be available for replay beginning on June 17, 2020, and continuing for 90 days at https://investors.hrblock.com.
Original source can be found here.
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