H&R Block Inc. HRB reported loss from continuing operations of 51 cents per share for fiscal second-quarter 2016, ended Oct 31, wider than the Zacks Consensus Estimate of a loss of 49 cents. The loss was also wider than 45 cents incurred in the year-ago quarter on higher expenses.
Shares lost 3.85% in after-market trading hours, reflecting the underperformance.
Operational Performance
H&R Block’s revenues came in at $128 million, down 4.6% year over year due to adverse foreign exchanges impact. Revenues were in line with the Zacks Consensus Estimate. Tax preparation fees declined 3.1% year over year in the quarter.
Total expense at H&R Block was $362.2 million, 13.5% higher than the prior-year period. The increase stemmed from transaction costs related to bank divestiture and capital structure actions undertaken by the company. Also, occupancy costs and amortization expense increased due to the annualization of expenses related to acquisitions of independent tax preparation and franchise businesses.
Earnings before interest, tax, depreciation and amortization (EBITDA) were ($181) million. In the year-ago quarter, EBITDA came in at ($148) million.
Financial Position
H&R Block exited the quarter with cash and cash equivalents of $403.5 million, down 41% year over year. Total outstanding long-term debt at quarter end was $1.5 billion, higher than $0.5 million from year-ago end level due to the issuance of $650 million of 4.125% Senior Notes and $350 million of 5.250% Senior Notes.
Net cash provided by operating activities was $365.1 million, which compared favorably with $807 million cash used in the year-ago quarter.
Dividend and Share Repurchase Update
On Jan 4, 2016, H&R Block will pay a dividend of 20 cents per share to investors of record as of Dec 7. The dividend will mark the 213th consecutive quarterly payment to shareholders since the company went public in 1962.
The company also bought back 40.5 million shares for $1.5 billion.
Peer Comparison
Intuit Inc. INTU reported adjusted loss per share of 9 cents per share, narrower than the Zacks Consensus Estimate of a loss of 21 cents.
Zacks Rank
H&R Block presently carries a Zacks Rank #3 (Hold). A couple of better-ranked consumer service providers are Outerwall Inc. OUTR and Weight Watchers International, Inc. WTW, both with a Zacks Rank #2 (Buy).
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