H&R Block(US:HRB)2024-05-09 20:48Revenue Performance - Service revenues for Q3 FY2024 reached $1,993,556, an increase of 5.8% compared to $1,885,035 in Q3 FY2023[9] - Total revenues for the nine months ended March 31, 2024, were $2,547,717, up 4.4% from $2,440,039 in the same period last year[9] - As of March 31, 2024, total revenues reached $2,184.8 million, an increase from $2,093.6 million in the same period of 2023, representing a growth of approximately 4.4%[26] - U.S. assisted tax preparation revenues for the three months ended March 31, 2024, were $1,534.8 million, compared to $1,453.0 million in the prior year, reflecting a year-over-year increase of about 5.6%[26] - U.S. DIY tax preparation revenues increased by $31.5 million, or 18.9%, due to an 8.9% rise in online paid returns and a 10.3% increase in paid net average charge[77] - Total revenues increased by $107.7 million, or 4.4%, to $2,547.7 million for the nine months ended March 31, 2024, compared to the prior year[83] - U.S. assisted tax preparation revenues rose by $91.9 million, or 6.0%, driven by a 4.6% increase in net average charge and higher company-owned tax return volumes[83] - U.S. DIY tax preparation revenues increased by $33.2 million, or 18.2%, primarily due to a 9.1% increase in online paid returns[84] Net Income and Earnings Per Share - Net income for Q3 FY2024 was $690,737, representing a 7.4% increase from $643,429 in Q3 FY2023[9] - Basic earnings per share for continuing operations increased to $4.94 in Q3 FY2024, compared to $4.22 in Q3 FY2023, reflecting a growth of 17.1%[9] - Net income from continuing operations attributable to common shareholders for Q3 FY2024 was $688.8 million, compared to $643.3 million in Q3 FY2023, representing a growth of 7.1%[29] - Diluted earnings per share from continuing operations increased to $4.87, up 17.6% from $4.14 in the prior year[75] - Net income from continuing operations was $339.6 million, a 31.7% increase from $257.8 million in the prior year[82] - Diluted earnings per share from continuing operations increased to $2.34, up 44.4% from $1.62 in the prior year[82] Assets and Liabilities - Total assets as of March 31, 2024, were $3,213,322, up from $3,072,258 as of June 30, 2023, indicating a growth of 4.6%[11] - Total liabilities increased to $3,343,128 as of March 31, 2024, from $3,040,194 as of June 30, 2023, reflecting a rise of 10%[11] - Total receivables as of March 31, 2024, amounted to $346.8 million, a significant increase from $59.99 million as of June 30, 2023[31] - Total long-term debt as of March 31, 2024, was $1,490.57 million, slightly up from $1,488.98 million as of June 30, 2023[43] Cash Flow and Operating Activities - Cash and cash equivalents decreased to $794,617 as of March 31, 2024, from $986,975 as of June 30, 2023, a decline of 19.5%[11] - Net cash provided by operating activities for the nine months ended March 31, 2024, was $420,264, down from $498,386 in the same period last year, a decrease of 15.7%[13] - The company reported a net cash used in financing activities of $520,503 for the nine months ended March 31, 2024, compared to $505,587 in the same period last year[13] - Cash provided by operating activities totaled $420.3 million, down from $498.4 million in the prior year[95] Dividends and Stock Repurchase - Dividends declared per share increased to $0.32 in Q3 FY2024 from $0.29 in Q3 FY2023, a rise of 10.3%[9] - The company repurchased and retired common shares totaling $220.3 million during the quarter ending December 31, 2023[15] - The company repurchased $350.1 million of its common stock at an average price of $43.66 per share during the nine months ended March 31, 2024[100] Operating Expenses and Bad Debt - Total operating expenses increased by $27.5 million, or 2.2%, with field wages rising by $29.5 million, or 6.1%, primarily due to higher company-owned volumes[78] - Bad debt expense increased by $6.7 million, or 19.7%, attributed to an increase in Refund Transfers and higher bad debt rates[78] - Total operating expenses increased by $25.4 million, or 1.2%, with field wages rising by $31.9 million, or 5.2%[85] - Bad debt expense increased by $10.5 million, or 18.5%, attributed to higher Refund Transfers and EA loans[85] Tax and Regulatory Matters - The effective tax rate for continuing operations was 17.6% for the nine months ended March 31, 2024, down from 23.3% for the same period in 2023[48] - The company recorded discrete income tax benefits of $26.0 million for the nine months ended March 31, 2024, compared to $4.2 million for the same period in 2023[49] - The effective tax rate for the three months ended March 31, 2024, was 23.8%, compared to 24.5% in the prior year[80] - The company is involved in litigation matters, including a complaint filed by the FTC regarding its DIY tax preparation services, with a hearing scheduled for October 23, 2024[66] Acquisitions and Goodwill - Goodwill increased to $787.6 million as of March 31, 2024, up from $775.5 million as of July 1, 2023, due to acquisitions totaling $18.9 million[39] - The company made payments to acquire businesses totaling $43.2 million during the nine months ended March 31, 2024, compared to $47.7 million in the same period in 2023[41] - Estimated liabilities related to acquisitions were $27.9 million as of March 31, 2024, up from $18.3 million as of June 30, 2023[51] Other Financial Metrics - The company had gross unrecognized tax benefits of $245.8 million as of March 31, 2024, an increase of $5.7 million from $240.1 million as of June 30, 2023[47] - The company has a CLOC capacity of up to $1.5 billion, with no outstanding balance as of March 31, 2024[103] - The company relies on cash from operations and debt issuances to fund working capital and service debt, especially during off-peak months[91]