• H&R Block Reports FY23 Results; Announces a 10% Dividend Increase

    Источник: Nasdaq GlobeNewswire / 15 авг 2023 16:05:01   America/New_York

    KANSAS CITY, Mo., Aug. 15, 2023 (GLOBE NEWSWIRE) -- H&R Block, Inc. (NYSE: HRB) (the "Company") today released its financial results1 for the fiscal year ended June 30, 2023.

    • H&R Block reported full year revenue of $3.5 billion (+0.3% growth), earnings per share from continuing operations2 of $3.56 (+9% growth), and adjusted earnings per share from continuing operations2 of $3.82 (+9% growth)
    • In the fourth quarter the Company repurchased $200 million of shares at an average price of $30.94; In FY23, the Company repurchased 9% of shares outstanding
    • The Company today announced a 10% increase in its quarterly dividend to $0.32 per share
    • The FY24 outlook guides to growth in revenue, EBITDA, and adjusted earnings per share

    “We had a good finish to the year and I am pleased that we were able to grow revenue, deliver material EBITDA growth, and adjusted EPS that grew 9% despite the many headwinds we faced,” said Jeff Jones, president and CEO. “Our DIY strategy delivered, we demonstrated pricing power in the Assisted channel and saw positive customer satisfaction metrics, Small Business continued to be a growth driver, and we are executing on our Block Horizons strategy. We feel well positioned and look forward to FY24."

    Fiscal 2023 Results from Continuing Operations and Key Financial Metrics

    "We produced another year of robust free cash flow and repurchased a meaningful amount of shares outstanding. In addition, we announced a 10% dividend increase today, reflecting the Board's confidence in our business," said Tony Bowen, H&R Block's chief financial officer. "Since 2016, we have repurchased 37%3 of the Company and increased the dividend by 60%3."

      Year Ended June 30,
    (in millions, except EPS)  2023  2022
    Revenue $3,472 $3,463
    Pretax Income $711 $659
    Net Income $562 $561
    Weighted-Avg. Shares - Diluted  157.2  171.4
    EPS2 $3.56 $3.26
    Adjusted EPS2 $3.82 $3.51
    EBITDA2 $915 $890
    • Total revenue of $3.5 billion increased by $9 million, or 0.3%, primarily driven by higher U.S. Assisted tax preparation revenues, partially offset by a decrease in Emerald Card® revenues.
    • Total operating expenses of $2.7 billion increased by $5 million, or 0.2%, primarily due to higher field wages, partially offset by lower consulting and outsourced services.
    • Pretax income of $711 million increased by $52 million, or 7.9%, primarily due to higher interest income in the current year and lower interest expense on borrowings due to the repayment of our $500 million 5.5% Senior Notes in May 2022.
    • Earnings per share from continuing operations4 of $3.56 increased by $0.30, or 9.2%; adjusted earnings per share from continuing operations4 of $3.82 increased by $0.31, or 8.8%.

    Capital Structure

    The Company reported the following related to its capital structure:

    • In fiscal year 2023, the Company repurchased and retired approximately 15 million shares, or 9% of shares outstanding, at an aggregate price of $550 million, or $37.59 per share.
    • The Company has approximately $700 million remaining on its $1.25 billion share repurchase authorization available through fiscal year 2025.
    • The Company announced today that the Board of Directors increased the quarterly dividend by 10%, representing the seventh increase in seven years. The quarterly cash dividend is now $0.32 per share, payable on October 4, 2023, to shareholders of record as of September 7, 2023.

    H&R Block has paid quarterly dividends consecutively since the Company became public in 1962. Since 2016, the Company has returned nearly $3.4 billion to shareholders in the form of share repurchases and dividends.

    FY24 Outlook

    For fiscal year 2024 the Company expects:

    • Revenue to be in the range of $3.530 to $3.585 billion.
    • EBITDA5 to be in the range of $930 to $965 million.
    • Effective tax rate to be approximately 23%.
    • Adjusted Diluted Earnings Per Share5 to be in the range of $4.10 to $4.30.

    Conference Call & Webcast

    A conference call for analysts, institutional investors, and shareholders will be held at 4:30 p.m. Eastern time on Tuesday, August 15, 2023. During the conference call the Company will discuss fiscal 2023 results, outlook, and give a general business update. To join live, participants must register at https://register.vevent.com/register/BIc2731c264adc4c6887316fef4f02c795. Once registered, the participant will receive a dial-in number and unique PIN to access the call. Please join approximately 5 minutes prior to the scheduled start time.

    The call, along with a presentation for viewing, will also be webcast in a listen-only format for the media and public. The webcast can be accessed directly at https://edge.media-server.com/mmc/p/qmmca8vv and will be available for replay 2 hours after the call is concluded and continuing for 90 days.

    About H&R Block

    H&R Block, Inc. (NYSE: HRB) provides help and inspires confidence in its clients and communities everywhere through global tax preparation services, financial products, and small-business solutions. The company blends digital innovation with human expertise and care as it helps people get the best outcome at tax time and also be better with money using its mobile banking app, Spruce. Through Block Advisors and Wave, the company helps small-business owners thrive with year-round bookkeeping, payroll, advisory, and payment processing solutions. For more information, visit H&R Block News or follow @HRBlockNews on X.

    About Non-GAAP Financial Information

    This press release and the accompanying tables include non-GAAP financial information. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with generally accepted accounting principles, please see the section of the accompanying tables titled "Non-GAAP Financial Information."

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as "expects," "anticipates," "intends," "plans," "believes," "commits," "seeks," "estimates," "projects," "forecasts," "targets," "would," "will," "should," "goal," "could" or "may" or other similar expressions. Forward-looking statements provide management's current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. They may include estimates of revenues, client trajectory, income, effective tax rate, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volumes or other financial items, descriptions of management’s plans or objectives for future operations, products or services, or descriptions of assumptions underlying any of the above. They may also include the expected impact of external events beyond the Company’s control, such as outbreaks of infectious disease (including the COVID-19 pandemic), severe weather events, natural or manmade disasters, or changes in the regulatory environment in which we operate. All forward-looking statements speak only as of the date they are made and reflect the Company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, factors, or expectations, new information, data or methods, future events or other changes, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to a variety of economic, competitive and regulatory factors, many of which are beyond the Company's control, that are described in our Annual Report on Form 10-K for the most recently completed fiscal year in the section entitled "Risk Factors" and additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. You may get such filings for free at our website at https://investors.hrblock.com. In addition, factors that may cause the Company’s actual estimated effective tax rate to differ from estimates include the Company’s actual results from operations compared to current estimates, future discrete items, changes in interpretations and assumptions the Company has made, future actions of the Company, or increases in applicable tax rates in jurisdictions where the Company operates. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

    1 All amounts in this release are unaudited. Unless otherwise noted, all comparisons refer to the current period compared to the corresponding prior year period.
    2 All per share amounts are based on continuing operations and fully diluted shares at the end of the corresponding period. The company reports non-GAAP financial measures of performance, including adjusted earnings per share (EPS), earnings before interest, tax, depreciation, and amortization (EBITDA) from continuing operations, free cash flow, and free cash flow yield, which it considers to be useful metrics for management and investors to evaluate and compare the ongoing operating performance of the company. See "About Non-GAAP Financial Information" below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).
    3Shares outstanding calculated as of April 30, 2016; dividend growth is calculated as percentage growth from our April 2016 dividend to our October 2023 dividend.
    4 All per share amounts are based on continuing operations and fully diluted shares at the end of the corresponding period. The company reports non-GAAP financial measures of performance, including adjusted EPS, EBITDA from continuing operations, free cash flow, and free cash flow yield, which it considers to be useful metrics for management and investors to evaluate and compare the ongoing operating performance of the company. See "About Non-GAAP Financial Information" below for more information regarding financial measures not prepared in accordance with GAAP.
    5 Adjusted Diluted EPS and EBITDA from continuing operations are non-GAAP financial measures. Future period non-GAAP outlook includes adjustments for items not indicative of our core operations, which may include, without limitation, items described in the below section titled “Non-GAAP Financial Information” and in the accompanying tables. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual, or unanticipated charges, expenses or gains, or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this non-GAAP outlook to the most comparable GAAP measures.

    For Further Information

    Investor Relations: Michaella Gallina, (816) 854-3022, michaella.gallina@hrblock.com
      Jordyn Eskijian, (816) 854-5674, jordyn.eskijian@hrblock.com
    Media Relations: Heather Woodard, (660) 864-3836, heather.woodard@hrblock.com

     

     

    FINANCIAL RESULTS (unaudited, in 000s - except per share amounts)
      Three months ended June 30, Year ended June 30,
       2023   2022   2023   2022 
    REVENUES:        
    U.S. tax preparation and related services:        
    Assisted tax preparation $636,561  $638,018  $2,167,138  $2,094,612 
    Royalties  49,294   55,694   210,631   225,242 
    DIY tax preparation  132,428   130,631   314,758   319,086 
    Refund Transfers  23,100   28,228   143,310   162,893 
    Peace of Mind® Extended Service Plan  36,341   35,264   95,181   94,637 
    Tax Identity Shield®  19,028   19,683   38,265   39,114 
    Other  16,407   18,225   45,252   45,961 
    Total U.S. tax preparation and related services  913,159   925,743   3,014,535   2,981,545 
    Financial services:        
    Emerald Card® and SpruceSM  16,203   21,696   84,651   125,444 
    Interest and fee income on Emerald AdvanceSM  287   543   47,554   43,981 
    Total financial services  16,490   22,239   132,205   169,425 
    International  78,834   79,871   235,131   231,335 
    Wave  23,663   22,220   90,314   80,965 
    Total revenues $1,032,146  $1,050,073  $3,472,185  $3,463,270 
    Compensation and benefits:        
    Field wages  223,086   247,421   841,742   808,903 
    Other wages  66,064   83,974   273,850   284,689 
    Benefits and other compensation  51,053   60,194   220,530   206,902 
       340,203   391,589   1,336,122   1,300,494 
    Occupancy  111,293   106,639   428,167   413,162 
    Marketing and advertising  49,956   60,448   286,255   284,244 
    Depreciation and amortization  31,841   34,716   130,501   142,178 
    Bad debt  3,383   12,018   60,401   71,778 
    Other  118,960   133,059   482,041   506,517 
    Total operating expenses  655,636   738,469   2,723,487   2,718,373 
             
    Other income (expense), net  14,472   465   35,492   2,454 
    Interest expense on borrowings  (15,871)  (18,621)  (72,978)  (88,282)
    Income from continuing operations before income taxes  375,111   293,448   711,212   659,069 
    Income taxes  71,158   68,757   149,412   98,423 
    Net income from continuing operations  303,953   224,691   561,800   560,646 
    Net loss from discontinued operations  (1,682)  (1,988)  (8,100)  (6,972)
    Net income $302,271  $222,703  $553,700  $553,674 
             
    DILUTED EARNINGS PER SHARE:        
    Continuing operations $1.97  $1.37  $3.56  $3.26 
    Discontinued operations  (0.01)  (0.01)  (0.05)  (0.04)
    Consolidated $1.96  $1.36  $3.51  $3.22 
             
    WEIGHTED AVERAGE DILUTED SHARES  153,512   163,283   157,248   171,435 
             
    Adjusted diluted EPS(1) $2.05  $1.43  $3.82  $3.51 
    EBITDA(1) $422,823  $346,785  $914,691  $889,529 
             

    (1)   All non-GAAP measures are results from continuing operations. See "Non-GAAP Financial Information" for a reconciliation of non-GAAP measures.

     

    CONSOLIDATED BALANCE SHEETS (unaudited, in 000s - except per share data)
    As of June 30,  2023   2022 
         
    ASSETS    
    Cash and cash equivalents $986,975  $885,015 
    Cash and cash equivalents - restricted  28,341   165,698 
    Receivables, net  59,987   58,447 
    Income taxes receivable  35,910   202,838 
    Prepaid expenses and other current assets  76,273   72,460 
    Total current assets  1,187,486   1,384,458 
    Property and equipment, net  130,015   123,912 
    Operating lease right of use asset  438,299   427,783 
    Intangible assets, net  277,043   309,644 
    Goodwill  775,453   760,401 
    Deferred tax assets and income taxes receivable  211,391   208,948 
    Other noncurrent assets  52,571   54,012 
    Total assets $3,072,258  $3,269,158 
    LIABILITIES AND STOCKHOLDERS’ EQUITY    
    LIABILITIES:    
    Accounts payable and accrued expenses $159,901  $160,929 
    Accrued salaries, wages and payroll taxes  95,154   154,764 
       Accrued income taxes and reserves for uncertain tax positions  271,800   280,115 
    Operating lease liabilities  205,391   206,898 
    Deferred revenue and other current liabilities  206,536   196,107 
    Total current liabilities  938,782   998,813 
    Long-term debt  1,488,974   1,486,876 
       Deferred tax liabilities and reserves for uncertain tax positions  264,567   226,362 
    Operating lease liabilities  240,543   228,820 
    Deferred revenue and other noncurrent liabilities  107,328   116,656 
    Total liabilities  3,040,194   3,057,527 
    COMMITMENTS AND CONTINGENCIES    
    STOCKHOLDERS’ EQUITY:    
    Common stock, no par, stated value $.01 per share  1,789   1,936 
    Additional paid-in capital  770,376   772,182 
    Accumulated other comprehensive loss  (37,099)  (21,645)
    Retained earnings (deficit)  (48,677)  120,405 
    Less treasury shares, at cost  (654,325)  (661,247)
    Total stockholders' equity  32,064   211,631 
      Total liabilities and stockholders' equity $3,072,258  $3,269,158 
         

     

    CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in 000s)
    Year ended June 30,  2023   2022 
    CASH FLOWS FROM OPERATING ACTIVITIES:    
    Net income $553,700  $553,674 
    Adjustments to reconcile net income to net cash provided by operating activities:    
    Depreciation and amortization  130,501   142,178 
    Provision for credit losses  52,290   66,807 
    Deferred taxes  49,579   (53,352)
    Stock-based compensation  31,326   34,252 
    Changes in assets and liabilities, net of acquisitions:    
    Receivables  (57,244)  (37,889)
    Prepaid expenses and other current and noncurrent assets  (7,011)  (1,944)
    Accounts payable, accrued expenses, salaries, wages and payroll taxes  (67,627)  (19,645)
    Deferred revenue, other current and noncurrent liabilities  (4,773)  7,342 
    Income tax receivables, accrued income taxes and income tax reserves  144,164   118,713 
    Other, net  (3,064)  (1,599)
       Net cash provided by operating activities  821,841   808,537 
         
    CASH FLOWS FROM INVESTING ACTIVITIES:    
    Capital expenditures  (69,698)  (61,955)
    Payments made for business acquisitions, net of cash acquired  (48,246)  (35,920)
    Franchise loans funded  (21,633)  (18,467)
    Payments from franchisees  27,350   30,899 
    Other, net  10,838   8,902 
    Net cash used in investing activities  (101,389)  (76,541)
         
    CASH FLOWS FROM FINANCING ACTIVITIES:    
    Repayments of line of credit borrowings  (970,000)  (705,000)
    Proceeds from line of credit borrowings  970,000   705,000 
    Repayments of long-term debt  —   (500,000)
    Dividends paid  (177,925)  (186,476)
    Repurchase of common stock, including shares surrendered  (568,952)  (563,174)
    Proceeds from exercise of stock options  3,383   6,334 
    Other, net  (7,498)  (14,030)
    Net cash used in financing activities  (750,992)  (1,257,346)
         
    Effects of exchange rate changes on cash  (4,857)  (8,101)
         
    Net decrease in cash and cash equivalents, including restricted balances  (35,397)  (533,451)
    Cash, cash equivalents and restricted cash, beginning of the year  1,050,713   1,584,164 
    Cash, cash equivalents and restricted cash, end of the year $1,015,316  $1,050,713 
         
    SUPPLEMENTARY CASH FLOW DATA:    
    Income taxes paid (received), net $(45,539) $31,689 
    Interest paid on borrowings  69,554   81,960 
    Accrued additions to property and equipment  2,238   4,315 
    Accrued dividends payable to common shareholders  42,953   43,093 
         

     

            (in 000s)
      Three months ended June 30, Year ended June 30,
    NON-GAAP FINANCIAL MEASURE - EBITDA  2023  2022  2023  2022
             
    Net income - as reported $302,271 $222,703 $553,700 $553,674
    Discontinued operations, net  1,682  1,988  8,100  6,972
    Net income from continuing operations - as reported  303,953  224,691  561,800  560,646
    Add back:        
    Income taxes  71,158  68,757  149,412  98,423
    Interest expense  15,871  18,621  72,978  88,282
       Depreciation and amortization  31,841  34,716  130,501  142,178
       118,870  122,094  352,891  328,883
    EBITDA from continuing operations $422,823 $346,785 $914,691 $889,529
             


          (in 000s, except per share amounts)
      Three months ended June 30, Year ended June 30,
    NON-GAAP FINANCIAL MEASURE - ADJUSTED EPS  2023   2022   2023   2022 
             
    Net income from continuing operations - as reported $303,953  $224,691  $561,800  $560,646 
    Adjustments:        
        Amortization of intangibles related to acquisitions (pretax)  12,865   13,151   51,411   56,292 
    Tax effect of adjustments(1)  (1,599)  (3,256)  (10,797)  (13,358)
    Adjusted net income from continuing operations $315,219  $234,586  $602,414  $603,580 
    Diluted earnings per share from continuing operations - as reported $1.97  $1.37  $3.56  $3.26 
    Adjustments, net of tax  0.08   0.06   0.26   0.25 
    Adjusted diluted earnings per share from continuing operations $2.05  $1.43  $3.82  $3.51 
             

    (1) The tax effect of adjustments is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis.

    NON-GAAP FINANCIAL INFORMATION

    Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Because these measures are not measures of financial performance under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures for other companies.

    We consider our non-GAAP financial measures to be performance measures and a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business. We make adjustments for certain non-GAAP financial measures related to amortization of intangibles from acquisitions and goodwill impairments. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

    We measure the performance of our business using a variety of metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations, adjusted diluted earnings per share from continuing operations, free cash flow, and free cash flow yield. We also use EBITDA from continuing operations and pretax income from continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.


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