Liberty Tax Incurs Narrower Loss in Q2, Beats on Revenues

Liberty Tax Service’s parent company, Liberty Tax, Inc. TAX reported second-quarter fiscal 2016 (ending Oct 31) net loss of 71 cents per share, narrower than the Zacks Consensus Estimate of a loss of 80 cents and year-ago loss of 74 cents.

A lower level of expenses likely helped in narrowing the loss in the fiscal second quarter.

Behind the Headlines

Liberty Tax reported total revenue of $7.9 million, up 1.8% year over year. Results also outperformed the Zacks Consensus Estimate of $7 million. The improvement was prompted by higher royalties and advertising fees, interest income, financial products fees and other income.

Total operating expenses of $21.9 million decreased 3.4% year over year primarily on lower commission along with lesser area developer expenses, lower and depreciation, amortization, and impairment charges.

The company estimates depreciation and amortization to increase in the fiscal third quarter as it places the next generation LibPro software into service in all the offices.

Loss from operations narrowed to $14.0 million from loss of $18.2 million incurred in the year-ago quarter.

Financial Update

Liberty Tax exited the fiscal second quarter with cash and cash equivalents of approximately $4.0 million, down 13.9% year over year.

Total assets increased 3.1% year over year to $192.3 million at the end of the reported quarter.

Total long-term debt amounted to $18.1 million as of Oct 31, reflecting an improvement of about 18.1% year over year.

Cash used in operations was $37.3 million in the quarter under review, less than $40.4 million used in the year-ago quarter.

Dividend

The board of directors approved a quarterly dividend of 16 cents per share payable on Jan 22 to shareholders of record on Jan 15.

Zacks Rank

Liberty Tax presently carries a Zacks Rank #3 (Hold).

Performances of Other Business Service Providers

Cardtronics Inc. CATM and WNS (Holdings) Ltd. WNS surpassed earnings estimates in the recently reported quarterly results. However, Avis Budget Group, Inc. CAR missed the same.

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