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H&R Block Reports Strong Fiscal 2021 Results; Increases Dividend

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  • The Company achieved robust growth across total filing volumes, total market share, Assisted filings and market share, and Do-It-Yourself (DIY) revenue in the 2021 tax season. When including total tax season performance through the May 17, 2021 filing deadline, the Company substantially exceeded its original fiscal 2021 revenue and earnings outlook.

  • The Company announced a 4% increase in its quarterly dividend to $0.27 per share. This is the fifth increase in six years, resulting in a 35% total increase in that time frame.

  • The Company repurchased 2.11 million shares in its fiscal fourth quarter, resulting in total share repurchases of 11.6 million shares and $188 million, or $16.29 per share, for fiscal 2021.

  • The Company announced its fiscal year-end will change to June 30, effective immediately.

KANSAS CITY, Mo., June 15, 2021 (GLOBE NEWSWIRE) -- H&R Block, Inc. (NYSE: HRB) (the “Company”) today released its financial results for the fiscal year ended April 30, 2021. The extension of the U.S. federal tax filing deadline from April 15 to May 17 resulted in the tax season concluding beyond fiscal 2021. Including performance through May 18, 2021, in fiscal 2021, would result in the Company substantially exceeding its original revenue and earnings outlook for 2021.

“I am proud of the outstanding growth across our business," said Jeff Jones, H&R Block's president and chief executive officer. "Our team provided help and inspired financial confidence for millions of consumers and small business owners this year. We made tremendous progress in our first year of Block Horizons, blending technology and digital tools with human expertise in tax, improving our offerings in small business, driving significant growth in Wave, and making progress on our new mobile banking platform.”

Fiscal 2021 Results From Continuing Operations

"Growth in total filings, strong performance from Wave, and proactive fiscal management resulted in a strong 2021 that exceeded our expectations," said Tony Bowen, H&R Block's chief financial officer. "We are confident in our future, as evidenced by increasing our quarterly dividend by 4% and repurchasing 6% of our shares outstanding this fiscal year."

(in millions, except EPS)

Fiscal Year 2021

Fiscal Year 2020

Revenue

$

3,414

$

2,640

Pretax Income (Loss)

$

669

$

(3

)

Net Income

$

590

$

6

Weighted-Avg. Shares - Diluted

188.8

198.1

EPS2

$

3.11

$

0.03

Adjusted EPS2,3

$

3.39

$

0.84

Adjusted EBITDA3

$

932

$

368

Key Financial Metrics

  • Total revenue of $3.4 billion increased by $774 million, or 29.3%, due to an increase in U.S. tax return volumes due to the extension of the 2020 tax season into our fiscal 2021, stronger mix in DIY, Emerald Card revenues related to federal stimulus payments, and strong growth from Wave.

  • Total operating expenses of $2.6 billion increased by $82 million, or 3.2%, due to an increase in variable labor, partially offset by impairment charges related to the pandemic in fiscal 2020, and lower bank partner fees and travel-related costs.

  • Pretax income of $669 million compared favorably to a pretax loss of $3 million in the prior year.

  • Earnings per share from continuing operations increased $3.08 to $3.11; adjusted earnings per share from continuing operations increased from $0.84 to $3.39.

Dividends and Share Repurchases

The company announced today that its Board of Directors increased the quarterly dividend by 4%, representing the fifth increase in the dividend in six years and a 35% total increase over that time frame. The quarterly cash dividend is now $0.27 per share, payable on July 1, 2021 to shareholders of record as of June 25, 2021. The Company has paid consecutive quarterly dividends since it became publicly traded in 1962. Future actions regarding dividends will be dependent upon the Board's approval following consideration of operating results, market conditions, and capital needs, among other factors.

In fiscal 2021, the company repurchased 11.6 million shares for $188 million, at an average price of $16.29. Share repurchases made in the fourth quarter of fiscal 2021 totaled $38 million. Approximately $564 million remains under the company's current share repurchase authorization, which expires in June of 2022.

Line of Credit
The Company amended its line of credit to a new five-year term, resulting in favorable rates, reduced capacity to better align with business needs, and lower costs. Additional details regarding this line of credit can be found in a related Form 8-K filing today.

Change in Fiscal Year

The Company announced a change to its fiscal year-end from April 30 to June 30, effective immediately. The change allows for better alignment of complete tax seasons in comparable fiscal periods and other related benefits. The Company plans to file a transition report on form 10-QT for the transition period of May 1, 2021, through June 30, 2021, later this summer. The Company’s fiscal 2022 will begin on July 1, 2021, and end on June 30, 2022.

Discontinued Operations

For 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 fiscal 2021 results, outlook, and a general business update will occur during the company’s previously announced fiscal 2021 conference call for analysts and investors that will be held at 4:30 p.m. Eastern Time on Tuesday, June 15, 2021. To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:

U.S./Canada (855) 859-2056 or International (404) 537-3406

Conference ID: 2575807

The call, along with a presentation for viewing, will also be webcast in a listen-only format for the media and public. The link to the webcast can be accessed directly at https://investors.hrblock.com. The presentation will be posted on the Quarterly Results page at https://investors.hrblock.com following the conclusion of the call.

A replay of the call will be available beginning at 7:30 p.m. Eastern time on June 15, 2021 and continuing for seven days by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International). The conference ID is 5554906. The webcast will be available for replay beginning on June 17, 2021 and continuing for 90 days at https://investors.hrblock.com.

About H&R Block
H&R Block, Inc. (NYSE: HRB) provides help and inspires confidence in its clients and communities everywhere through global tax preparation, financial services and small business solutions. The company blends digital innovation with the human expertise of its associates and franchisees as it helps people get the best outcome at tax time, and better manage and access their money year-round. Through Block Advisors and Wave, the company helps small business owners thrive with innovative products like Wave Money, a small business banking and bookkeeping solution, and the only business bank account to manage bookkeeping automatically. For more information visit hrblock.com/news and follow @HRBlockNews.

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," "commits," "seeks," "estimates," "projects," "forecasts," "targets," "would," "will," "should," "goal," "could," "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, market share, industry volumes, 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. They also include the expected impact of the coronavirus (COVID-19) pandemic, including, without limitation, the impact on economic and financial markets, the Company’s capital resources and financial condition, the expected use of proceeds under the Company’s revolving credit facility, future expenditures, potential regulatory actions, such as extensions of tax filing deadlines or other related relief, changes in consumer behaviors and modifications to the Company’s operations related thereto. 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 most recently completed fiscal year 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. 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.
__________________

1 All amounts in this release are unaudited. Unless otherwise noted, all comparisons refer to the current period compared to the corresponding prior year period.
2 All per share amounts are based on weighted average fully diluted shares over the corresponding period.
3 Adjusted earnings per share from continuing operations and adjusted EBITDA from continuing operations are non-GAAP financial measures. 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, colby.brown@hrblock.com

Michaella Gallina, (816) 854-3022, michaella.gallina@hrblock.com

Media Relations:

Angela Davied, (816) 854-5798, angela.davied@hrblock.com


CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in 000s - except per share amounts)

Three months ended April 30,

Year ended April 30,

2021

2020

2021

2020

REVENUES:

Service revenues

$

2,110,618

$

1,635,561

$

3,067,223

$

2,327,323

Royalty, product and other revenues

217,562

173,791

346,764

312,397

2,328,180

1,809,352

3,413,987

2,639,720

OPERATING EXPENSES:

Costs of revenues

901,728

767,157

1,842,092

1,712,276

Impairment of goodwill

106,000

106,000

Selling, general and administrative

340,900

268,603

802,268

744,361

Total operating expenses

1,242,628

1,141,760

2,644,360

2,562,637

Other income (expense), net

1,220

1,896

5,979

15,637

Interest expense on borrowings

(21,551

)

(27,412

)

(106,870

)

(96,094

)

Income (loss) from continuing operations before income taxes (benefit)

1,065,221

642,076

668,736

(3,374

)

Income taxes (benefit)

114,254

178,616

78,524

(9,530

)

Net income from continuing operations

950,967

463,460

590,212

6,156

Net loss from discontinued operations

(1,715

)

(3,057

)

(6,421

)

(13,682

)

NET INCOME (LOSS)

$

949,252

$

460,403

$

583,791

$

(7,526

)

BASIC EARNINGS (LOSS) PER SHARE:

Continuing operations

$

5.22

$

2.40

$

3.15

$

0.03

Discontinued operations

(0.01

)

(0.01

)

(0.04

)

(0.07

)

Consolidated

$

5.21

$

2.39

$

3.11

$

(0.04

)

WEIGHTED AVERAGE BASIC SHARES

181,512

192,475

186,832

196,701

DILUTED EARNINGS (LOSS) PER SHARE:

Continuing operations

$

5.14

$

2.39

$

3.11

$

0.03

Discontinued operations

(0.01

)

(0.02

)

(0.03

)

(0.07

)

Consolidated

$

5.13

$

2.37

$

3.08

$

(0.04

)

WEIGHTED AVERAGE DILUTED SHARES

184,354

193,726

188,777

198,108


CONSOLIDATED BALANCE SHEETS

(unaudited, in 000s - except per share data)

As of April 30,

2021

2020

ASSETS

Cash and cash equivalents

$

934,251

$

2,661,914

Cash and cash equivalents - restricted

128,669

211,106

Receivables, net

197,876

133,197

Income taxes receivable

333,366

28,477

Prepaid expenses and other current assets

105,562

52,042

Total current assets

1,699,724

3,086,736

Property and equipment, net

148,490

184,367

Operating lease right of use asset

437,246

494,788

Intangible assets, net

360,148

414,976

Goodwill

757,659

712,138

Deferred tax assets and income taxes receivable

182,848

151,195

Other noncurrent assets

67,531

67,847

Total assets

$

3,653,646

$

5,112,047

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES:

Accounts payable and accrued expenses

$

198,084

$

203,103

Accrued salaries, wages and payroll taxes

270,982

116,375

Accrued income taxes and reserves for uncertain tax positions

287,404

209,816

Current portion of long-term debt

649,384

Operating lease liabilities

206,393

195,537

Deferred revenue and other current liabilities

200,216

201,401

Total current liabilities

1,163,079

1,575,616

Long-term debt and line of credit borrowings

1,490,039

2,845,873

Deferred tax liabilities and reserves for uncertain tax positions

279,351

182,441

Operating lease liabilities

242,626

312,566

Deferred revenue and other noncurrent liabilities

126,150

124,510

Total liabilities

3,301,245

5,041,006

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:

Common stock, no par, stated value $.01 per share

2,167

2,282

Additional paid-in capital

783,292

775,387

Accumulated other comprehensive income (loss)

4,786

(51,576

)

Retained earnings

248,506

42,965

Less treasury shares, at cost

(686,350

)

(698,017

)

Total stockholders' equity

352,401

71,041

Total liabilities and stockholders' equity

$

3,653,646

$

5,112,047


CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in 000s)

Year ended April 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

583,791

$

(7,526

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

156,852

169,536

Provision for bad debt

73,451

76,621

Deferred taxes

(22,583

)

(8,300

)

Stock-based compensation

28,271

28,045

Impairment of goodwill

106,000

Changes in assets and liabilities, net of acquisitions:

Receivables

(150,933

)

(66,896

)

Prepaid expenses and other current and noncurrent assets

(49,498

)

39,377

Accounts payable, accrued expenses, salaries, wages and payroll taxes

150,635

(124,019

)

Deferred revenue, other current and noncurrent liabilities

(1,160

)

(9,096

)

Income tax receivables, accrued income taxes and income tax reserves

(138,152

)

(87,423

)

Other, net

(4,746

)

(7,358

)

Net cash provided by operating activities

625,928

108,961

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(52,792

)

(81,685

)

Payments made for business acquisitions, net of cash acquired

(15,576

)

(450,242

)

Franchise loans funded

(26,917

)

(35,264

)

Payments from franchisees

41,215

39,919

Other, net

8,547

57,041

Net cash used in investing activities

(45,523

)

(470,231

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments of line of credit borrowings

(3,275,000

)

(1,335,000

)

Proceeds from line of credit borrowings

1,275,000

3,335,000

Repayments of long-term debt

(650,000

)

Proceeds from issuance of long-term debt

647,965

Dividends paid

(195,068

)

(204,870

)

Repurchase of common stock, including shares surrendered

(191,294

)

(256,214

)

Proceeds from exercise of stock options

2,140

2,075

Other, net

(22,566

)

(9,143

)

Net cash provided by (used in) financing activities

(2,408,823

)

1,531,848

Effects of exchange rate changes on cash

18,318

(5,285

)

Net increase (decrease) in cash and cash equivalents, including restricted balances

(1,810,100

)

1,165,293

Cash, cash equivalents and restricted cash, beginning of the year

2,873,020

1,707,727

Cash, cash equivalents and restricted cash, end of the year

$

1,062,920

$

2,873,020

SUPPLEMENTARY CASH FLOW DATA:

Income taxes paid, net of refunds received

$

236,459

$

89,204

Interest paid on borrowings

103,855

87,426

Accrued additions to property and equipment

1,643

1,185


FINANCIAL RESULTS

(unaudited, in 000s - except per share amounts)

Three months ended April 30,

Year ended April 30,

2021

2020

2021

2020

REVENUES:

U.S. assisted tax preparation

$

1,493,968

$

1,175,129

$

2,035,107

$

1,533,303

U.S. royalties

158,826

133,767

226,253

193,411

U.S. DIY tax preparation

218,724

166,861

313,055

208,901

International

117,521

82,754

249,868

180,065

Refund Transfers

151,577

101,893

163,329

154,687

Emerald Card®

87,916

53,609

136,717

92,737

Peace of Mind® Extended Service Plan

26,011

29,734

98,882

105,185

Tax Identity Shield®

21,495

14,489

40,624

31,797

Interest and fee income on Emerald AdvanceSM

24,676

27,087

53,430

60,867

Wave

17,080

10,971

58,277

36,711

Other

10,386

13,058

38,445

42,056

Total revenues

2,328,180

1,809,352

3,413,987

2,639,720

Compensation and benefits:

Field wages

490,711

398,582

797,262

678,813

Other wages

90,654

40,159

272,664

218,548

Benefits and other compensation

102,566

74,956

208,147

175,535

683,931

513,697

1,278,073

1,072,896

Occupancy

116,508

117,932

414,389

410,402

Marketing and advertising

167,007

153,904

261,960

255,094

Depreciation and amortization

39,689

44,127

156,852

169,536

Bad debt

50,004

39,876

78,763

77,470

Impairment of goodwill

106,000

106,000

Other

185,489

166,224

454,323

471,239

Total operating expenses

1,242,628

1,141,760

2,644,360

2,562,637

Other income (expense), net

1,220

1,896

5,979

15,637

Interest expense on borrowings

(21,551

)

(27,412

)

(106,870

)

(96,094

)

Income (loss) from continuing operations before income taxes (benefit)

1,065,221

642,076

668,736

(3,374

)

Income taxes (benefit)

114,254

178,616

78,524

(9,530

)

Net income from continuing operations

950,967

463,460

590,212

6,156

Net loss from discontinued operations

(1,715

)

(3,057

)

(6,421

)

(13,682

)

NET INCOME (LOSS)

$

949,252

$

460,403

$

583,791

$

(7,526

)

BASIC EARNINGS (LOSS) PER SHARE:

Continuing operations

$

5.22

$

2.40

$

3.15

$

0.03

Discontinued operations

(0.01

)

(0.01

)

(0.04

)

(0.07

)

Consolidated

$

5.21

$

2.39

$

3.11

$

(0.04

)

WEIGHTED AVERAGE BASIC SHARES

181,512

192,475

186,832

196,701

DILUTED EARNINGS (LOSS) PER SHARE:

Continuing operations

$

5.14

$

2.39

$

3.11

$

0.03

Discontinued operations

(0.01

)

(0.02

)

(0.03

)

(0.07

)

Consolidated

$

5.13

$

2.37

$

3.08

$

(0.04

)

WEIGHTED AVERAGE DILUTED SHARES

184,354

193,726

188,777

198,108

Adjusted EPS(1)

$

5.16

$

3.01

$

3.39

$

0.84

EBITDA(1)

1,126,461

713,615

932,458

262,256

Adjusted EBITDA (1)

1,126,461

819,615

932,458

368,256

Adjusted EBITDA margin (1)

48.4

%

45.3

%

27.3

%

14.0

%

(1) All non-GAAP measures are results from continuing operations. See "Non-GAAP Financial Information" for a reconciliation of non-GAAP measures.


NON-GAAP FINANCIAL MEASURES

(in 000s)

Three months ended April 30,

Year ended April 30,

NON-GAAP FINANCIAL MEASURE - EBITDA

2021

2020

2021

2020

Net income (loss) - as reported

$

949,252

$

460,403

$

583,791

$

(7,526

)

Discontinued operations, net

1,715

3,057

6,421

13,682

Net income from continuing operations - as reported

950,967

463,460

590,212

6,156

Add back:

Income taxes (benefit)

114,254

178,616

78,524

(9,530

)

Interest expense

21,551

27,412

106,870

96,094

Depreciation and amortization

39,689

44,127

156,852

169,536

175,494

250,155

342,246

256,100

EBITDA from continuing operations

1,126,461

713,615

932,458

262,256

Adjustments:

Impairment of goodwill

106,000

106,000

Adjusted EBITDA from continuing operations

$

1,126,461

$

819,615

$

932,458

$

368,256

EBITDA margin from continuing operations (1)

48.4

%

39.4

%

27.3

%

9.9

%

Adjusted EBITDA margin from continuing operations (2)

48.4

%

45.3

%

27.3

%

14.0

%

(1) EBITDA margin from continuing operations is computed as EBITDA from continuing operations divided by revenues from continuing operations.
(2) Adjusted EBITDA margin from continuing operations is computed as adjusted EBITDA from continuing operations divided by revenues from continuing operations.

(in 000s, except per share amounts)

Three months ended April 30,

Year ended April 30,

NON-GAAP FINANCIAL MEASURE - ADJUSTED EPS

2021

2020

2021

2020

Net income from continuing operations - as reported

$

950,967

$

463,460

$

590,212

$

6,156

Adjustments:

Amortization of intangibles related to acquisitions (pretax)

16,211

19,564

68,387

74,561

Impairment of goodwill (pretax)

106,000

106,000

Tax effect of adjustments(1)

(11,741

)

(5,459

)

(15,884

)

(19,126

)

Adjusted net income from continuing operations

$

955,437

$

583,565

$

642,715

$

167,591

Diluted earnings per share from continuing operations - as reported

$

5.14

$

2.39

$

3.11

$

0.03

Adjustments, net of tax

0.02

0.62

0.28

0.81

Adjusted diluted earnings per share from continuing operations

$

5.16

$

3.01

$

3.39

$

0.84

(1) The tax effect of adjustments is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis.

NON-GAAP FINANCIAL INFORMATION

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Because these measures are not measures of financial performance under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures for other companies.

We consider our non-GAAP financial measures to be performance measures and a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business. We make adjustments for certain non-GAAP financial measures related to amortization of intangibles from acquisitions and goodwill impairments. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

We measure the performance of our business using a variety of metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations, EBITDA margin from continuing operations, adjusted EBITDA margin from continuing operations, adjusted diluted earnings per share from continuing operations and free cash flow. We also use EBITDA from continuing operations and pretax income of continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.