H&R Block Inc. HRB reported loss from continuing operations of 13 cents per share for the third quarter of fiscal 2015, ended Jan 31, narrower than the Zacks Consensus Estimate loss of 28 cents and year-ago loss of 78 cents.
Loss narrowed mainly on the back of an increase in revenues.
Quarterly Operational Performance
H&R Block’s revenues came in at $509 million, skyrocketing 155% year over year on higher tax service revenues, royalty, product and other revenues as well as interest income.
Total expense of H&R Block was $584 billion, 11.5% higher than the prior-year quarter, primarily due to increased cost of revenues and higher selling, general and administrative expenses.
Earnings before interest, tax, depreciation and amortization (EBITDA) was $(36.5) million, reflecting an improvement from $(300.6) million in the year-ago quarter.
As of Feb 28, 2015, total U.S. tax returns prepared by and through H&R Block lowered 4.2% year over year.
Segment Performances
Tax Services revenues in the reported quarter soared 159.3% year over year to $503 billion on an earlier opening of the IRS's e-file system.
Pre-tax loss narrowed year over year to $74 million from $322 million incurred in the year-ago quarter due to the timing shift in revenues.
Corporate and Eliminations revenues of $6.1 million were down 5.1% year over year.
The segment’s pre-tax loss in the quarter was $15 million, narrower than the loss of $25 million incurred in the year-ago quarter.
Financial Position
H&R Block exited the quarter with cash and cash equivalents of $1.3 billion, up from $0.5 billion in the year-ago quarter. Total outstanding long-term debt of H&R Block at quarter end was $0.5 billion, almost flat year over year.
Net cash used in operating activities was $1.2 billion in the first nine months of fiscal 2015, comparing unfavorably with $1.1 billion used in the year-ago period.
Dividend Update
On Apr 1, 2015, H&R Block will pay a dividend of 20 cents per share to shareholders of record as of Mar 16. The dividend will mark the 210th consecutive quarterly payment to shareholders since the company went public in 1962.
Peer Comparison
Intuit Inc. INTU reported adjusted loss per share from continuing operations of 19 cents in the second quarter of fiscal 2015, widening nearly two-fold from the year-ago loss of 10 cents.
Zacks Rank
H&R Block presently carries a Zacks Rank #3 (Hold). Better-ranked stocks from the same sector include Boyd Gaming Corp. BYD and Universal Technical Institute, Inc. UTI. While Universal Technical Institute stocks sports a Zacks Rank #1 (Strong Buy), Boyd Gaming carries a Zacks Rank #2 (Buy).
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