Thursday, Jackson Hewitt Tax Services, Inc. (JTX), a provider of income tax preparation services, posted a wider net loss for the first quarter.
The company that owns 6,800 franchised and company-owned units in the US, reported net loss of $20.5 million or $0.72 per share, compared with net loss of $19.6 million or $0.65 per share in the first quarter of 2008.
The increase in losses reflects an increased number of company-owned stores resulting from acquisitions made in 2008 and higher interest expense for past common share repurchases.
During the quarter, the company reduced its consolidated workforce by approximately 10% to achieve a lower cost structure. In relation to the work force reduction and certain employee terminations, the company recorded a pre-tax severance charge of $1.4 million. Further, the first-quarter results included a $1.5 million favorable credit from an insurance recovery, related to the settlement of a prior litigation.
On an adjusted basis, net loss widened to $19.7 million or $0.69 per share from $17.1 million or $0.57 per share in the previous year.
On average, six analysts polled by First Call/Thomson Financial expected the company to report loss of $0.69 per share.
Total revenues declined to $4.3 million from $5.9 million in the year-ago period. Analysts had a consensus estimate of $4.47 million for the quarter.
The company attributed the decline in revenues to lower territory sales coupled with a marginal decrease in financial product fees.
Revenue from franchise operations declined to $3.8 million from $5.4 million, while service revenue from company-owned operations fell to $412 thousands from $508 thousands in the previous year.
In the first quarter, the company recorded an expense of $3.4 million, associated with Jackson Hewitt's internal review for a Department of Justice case involving a former franchisee. The company also said that reported expenses from the company-owned operations were higher.
Jackson Hewitt's president and chief executive officer, Michael Yerington, said, "We have made, and continue to make, progress on all of the initiatives we detailed on June 5, 2008, including new product development, new marketing programs, a more efficient cost structure, and other initiatives to selectively broaden our distribution and improve same store sales."
JTX closed Wednesday's regular trading at $17.18. For the past 52 weeks, the stock has been trading in the range of $10.90 to $34.48.
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