Liberty, Block release mixed 2Q results
Tax prep chain giants Liberty Tax and H&R Block separately released their financials from the second quarter of fiscal 2017, which ended on Oct. 31.
Kansas City, Mo.-based H&R Block reported an increase in total revenues of $3 million “as a result of favorable foreign-exchange rates and the recognition of deferred revenues associated with the Peace of Mind service-guarantee.” Total Block operating expenses declined $23 million due to “one-time costs incurred in the prior year related to the divestiture of H&R Block Bank and capital structure transactions,” coupled with savings from cost reduction efforts
Block’s reported net loss from continuing operations was flat compared with prior year; loss per share increased $0.13 due entirely to reduction in share count.
Block added that the fiscal second quarter typically represents less than 5 percent of annual revenues and approximately 15 percent of annual expenses.
Virginia Beach, Va.-based Liberty reported a GAAP net loss of $9.3 million, or $0.72 per share, compared with a loss of $9.1 million, or $0.71 per share in the prior-year period. Non-GAAP net loss was $0.72 per share, compared with a net loss of $0.71 per share in the prior-year period.
Liberty said it typically reports a loss in the first and second quarters when revenues are low and costs are ramping up to drive growth in the following tax season.
Seasonally low revenue for the three months ended Oct. 31 declined 8.1 percent, to $7.2 million. Fewer new territory sales and transfers among franchisees drove most of the decline, the company said, adding that operating expenses were flat, and higher company store costs were offset by expense savings in other areas.
GAAP net loss per share of $0.72 was $0.01 greater than the prior-year period.
Liberty reported a cash balance of $3.7 million. The company has drawn $66.6 million on its revolving credit facility as of Oct. 31, compared with $57.3 million a year before.
Liberty expects office count to decline this season, citing the decision not to extend a relationship with Walmart this year and “actively” cutting “certain underperforming franchise locations.” On a year-to-date basis through November, the number of Liberty territories sold has declined from 142 last year to 50 this year.