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H&R Block announces strong start to the tax season and fiscal 2018 third quarter results

7 min read

7 min read

March 06, 2018

H&R Block, Inc. (NYSE: HRB) today released U.S. tax return volume through February 28 and its financial results for the fiscal 2018 third quarter ended January 31, 2018.  The company normally reports a fiscal third quarter loss due to the seasonality of its tax business.

Tax Season and Fiscal Third Quarter Highlights1

  • H&R Block grows total U.S. returns through February 28.
  • Company reiterates financial outlook for full year.
  • Fiscal third quarter revenues increased $37 million, or 8%, to $488 million primarily due to increased return volumes in both Assisted and DIY tax preparation businesses.
  • Loss per share from continuing operations increased $0.67, from $0.49 to $1.16, solely due to changes in the company’s effective tax rate resulting from the recently enacted federal corporate tax legislation. The negative impact from these corporate tax rate changes is unique to the company’s fiscal third quarter, as the impact will be favorable on a full fiscal year basis.

Tax Season Results2

H&R Block total U.S. return volume increased 3.4% through February 28, with Assisted returns increasing 0.7% and DIY returns increasing 8.2%.  Positive results in the Assisted business were due to the success of early-season promotions including the company’s Refund Advance no-interest loan and Free Federal 1040EZ offer.  In DIY, continued product improvements, enhanced partnerships, and the H&R Block More Zero® promotion led to the strong performance.

CEO Perspective

“I’m proud of what we have accomplished so far this tax season, with strong results in both the Assisted and DIY tax preparation categories,” said Jeff Jones, H&R Block’s president and chief executive officer.  “As we look to the second half of the tax season, we’ll continue to focus on execution as we leverage our products, partnerships and marketing to deliver on our financial outlook.”

Fiscal 2018 Third Quarter Results From Continuing Operations

(in millions, except EPS) Fiscal Year 2018 Fiscal Year 2017
Revenue $ 488 $ 452
Pretax Loss $ (121 ) $ (151 )
Net Loss $ (243 ) $ (101 )
Weighted-Avg. Shares – Diluted 209.1 207.9
EPS3 $ (1.16 ) $ (0.49 )
EBITDA4 $ (48 ) $ (79 )

Key Financial Metrics

  • Total revenues increased $37 million, or 8%, to $488 million primarily due to increased return volumes.
  • Total operating expenses increased $9 million, or 2%, to $586 million primarily due to increases in compensation costs, partially offset by lower marketing and advertising expenses.
  • Pretax loss decreased $30 million to $121 million.
  • Loss per share from continuing operations increased $0.67, from $0.49 to $1.16, solely due to changes in the company’s effective tax rate resulting from the recently enacted federal corporate tax legislation. The negative impact from these corporate tax rate changes is unique to the company’s fiscal third quarter, as the impact will be favorable on a full fiscal year basis.  The company expects its fiscal year effective tax rate to be 6%-9%, which is an update to the anticipated annual effective tax rate for fiscal 2018 disclosed in the company’s Form 8-K filed with the Securities and Exchange Commission (SEC) on January 22, 2018.

CFO Perspective

“We are pleased with our performance during the first half of the tax season, which was in line with our expectations,” said Tony Bowen, H&R Block’s chief financial officer.  “Our expectations for revenue growth and margin are unchanged from the outlook we provided in December.”


As previously announced, a quarterly cash dividend of $0.24 per share is payable on April 2, 2018 to shareholders of record as of March 13, 2018.  H&R Block has paid quarterly dividends consecutively since the company went public in 1962.

Discontinued Operations

During the fiscal quarter, Sand Canyon Corporation made payments of $4.5 million pursuant to a settlement agreement entered into in fiscal 2016.  The full amount of the payments had been previously accrued by the company.  For additional 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 2018 third quarter results, future outlook, and a general business update will occur during the company’s previously announced fiscal third quarter earnings conference call for analysts, institutional investors, and shareholders. The call is scheduled for 4:30 p.m. Eastern time on March 6, 2018. To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:

U.S./Canada (855) 702-5257 or International (213) 358-0868

Conference ID: 3876229

The call will also be webcast in a listen-only format for the media and public. The link to the webcast can be accessed directly at http://investors.hrblock.com.

A replay of the call will be available beginning at 7:30 p.m. Eastern time on March 6, 2018, and continuing until April 6, 2018, by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International). The conference ID is 3876229. The webcast will be available for replay beginning on March 7, 2018 at http://investors.hrblock.com.

About H&R Block

H&R Block, Inc. (NYSE: HRB) is a global consumer tax services provider.  Tax return preparation services are provided by professional tax preparers in approximately 12,000 company-owned and franchise retail tax offices worldwide, and through H&R Block tax software products for the DIY consumer.  H&R Block also offers adjacent Tax Plus products and services.  In fiscal 2017, H&R Block had annual revenues of over $3 billion with 23 million tax returns prepared worldwide.  For more information, visit the H&R Block Newsroom.

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,” “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 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. 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 fiscal year ended April 30, 2017 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 http://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, guidance from the Internal Revenue Service, SEC, or the Financial Accounting Standards Board about the Tax Legislation, and future actions of the company. 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.

All amounts in this release are unaudited.  Unless otherwise noted, all comparisons refer to the current period compared to the corresponding prior year period.

Volume changes to prior year noted in this paragraph and in the table attached to this release are based on a date-to-date basis.

3 All per share amounts are based on fully diluted shares at the end of the corresponding period.

4 The company reports non-GAAP financial measures of performance, including earnings before interest, tax, depreciation, and amortization (EBITDA), 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).

For Further Information

Investor Relations

Colby Brown
(816) 854-4559

Media Relations

Susan Waldron
(816) 854-5522

Download the release with full tables