H&R Block Inc. (HRB: Quote), the largest US tax preparer, said Tuesday after the markets closed that its fourth quarter profit fell 11% from last year, hurt mainly by charges related to job cuts and tax office closings.
The company has cut jobs and closed underperforming offices while trying to recapture market share from TurboTax software maker Intuit Inc. (INTU). The company has also increased spending on marketing and offered free services to woo clients.
For the fourth quarter ended April 30, 2012, the Kansas City, Missouri-based company reported net income of $586.1 million or $1.99 per share, compared to $658.6 million or $2.14 per share for the year-ago quarter.
Income from continuing operations for the fourth quarter was $591.7 million or $2.01 per share, compared to $642.8 million or $2.09 per share in the prior year quarter.
The company recorded $31.2 million in severance costs and $5.5 million in lease termination costs and impairment charges in the fourth quarter of fiscal year 2012 related to the elimination of about 350 jobs and closure of about 200 underperforming company-owned offices as part of a strategic realignment announced in April.
On average, 6 analysts polled by Thomson Reuters expected the company to earn $2.05 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Total revenue for the fourth quarter declined slightly to $2.00 billion from $2.05 billion in the same quarter last year. Four analysts had a consensus revenue estimate of $2.01 billion for the fourth quarter.
Tax services revenue for the quarter fell 2% to $1.99 billion from $2.04 billion a year earlier.
For the fiscal year 2012, the company reported net income of $265.9 million or $0.89 per share, compared to $406.1 million or $1.31 per share for the fiscal year 2011.
Total revenue for the fiscal year 2012 declined to $2.89 billion from $2.94 billion last year.
Based on preliminary data, the company believes total filings at the IRS during tax season 2012 increased by about 2% to 133.5 million returns. The company estimates it gained 30 basis points of total U.S. market share, including 75 basis points of share in the do-it-yourself category and 10 basis points of share in the assisted category.
The company also announced an organizational realignment, including the formation of U.S. Client Services, in April. In May, the company appointed Gregory Macfarlane as its new Chief Financial Officer.
Bill Cobb, H&R Block's President and Chief Executive Officer, said, "During my first year as CEO, we also rationalized our cost structure and shed non-core assets to drive higher margins and to refocus the business on what we do best -- tax preparation. Today, we believe we're running a better, nimbler, and more client-centric company, which positions us well for long-term client and earnings growth."
During fiscal 2012, the company repurchased and retired 14.6 million shares of its common stock at an aggregate price of $200.0 million, including the repurchase of 1.5 million shares during the fourth quarter. During the first quarter of fiscal 2013 to-date, the company has repurchased and retired an additional 21.3 million shares at an aggregate price of $315.0 million.
H&R Block completed the share repurchases under a $2.0 billion share repurchase program, which was recently extended until June 30, 2015. Under the program, the company has repurchased $1.1 billion of shares.
H&R Block shares, which have traded in a range of $12.54 to $17.46 over the past year, closed Tuesday's regular trading session at $15.09, down 12 cents. The shares are currently losing 16 cents or 1.06% in after hours trading.
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by RTT Staff Writer
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