H&R Block Reports Interim Tax Season Data Through March 31
KANSAS CITY, Mo., Apr 15, 2003 /PRNewswire-FirstCall via COMTEX/ -- H&R Block Inc. (NYSE: HRB) said interim results for the current tax season through March 31 indicate the continuation of a later-in-season filing trend, offset by strength in the mix of clients and growth in online and software users. Based upon strength in the company's multi-channel tax performance, client mix and non-tax businesses, full year earnings results are expected to be at the higher end of the company's guidance range.
H&R Block reported $1.7 billion in fees from retail office tax preparation and related services from Jan. 1 through March 31, up 4.2 percent from the same period last year. Total clients served increased 0.5 percent to 15 million. The average fee per client served rose 7.5 percent to $127.32. The average fee per tax return rose 8.8 percent to $114.70.
"The trends that we observed two weeks ago remain basically unchanged. We see indications of a much later filing trend in all of our tax filing channels," said Mark A. Ernst, chairman and chief executive officer. "While we will not reach our tax office client growth target, we have seen very strong growth in our online and software clients, as well as continued growth in clients with more complex tax returns, resulting in revenues per client that are above our previous expectations."
Through March 31, tax professionals in H&R Block offices prepared 13.2 million returns, a decrease of 2.7 percent compared to the same period last year. Growth in online and software clients increased 45.6 percent. During this period, H&R Block electronically filed 91.4 percent of the tax returns it prepared.
H&R Block left its fiscal year earnings guidance unchanged, in the range of $3.10 to $3.25 per diluted share, up 34 to 41 percent from fiscal 2002, when H&R Block earned $2.31 per diluted share. The company expects that growth in revenues per client, growth in online and software clients and cost controls, combined with performance in non-tax businesses will offset weakness in tax office client growth. Consolidated company-wide revenues will likely exceed the target growth range of 10-to-15 percent for the year, the company said.
The company's guidance range of $3.10 to $3.25 per diluted share includes a total of 27 cents in charges for both a litigation settlement and goodwill impairment charges recorded earlier in the company's fiscal year. The analysts' earnings estimates on First Call exclude the charges, which are included in the company's expected GAAP results. Excluding these charges, the guidance range would be $3.37 to $3.52 per diluted share, compared to First Call consensus estimates of $3.46 per diluted share.
Except for historical information contained herein, the matters set forth in this press release are forward-looking statements based upon current information and expectations. Such statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that could cause actual results to differ materially from what is expressed, implied or forecast in such forward-looking statements. Such differences could be caused by a number of factors, including, but not limited to, the uncertainties that the company will achieve its revenue, earnings and earnings per share goals for fiscal year 2003, that the level of growth in fees, average fee, clients served and online and software clients, and level of decline in tax returns prepared at tax offices experienced in U.S. tax operations through March 31, 2003 will continue throughout the remainder of the tax season and fiscal year, and that actual financial results for fiscal year 2003 will fall within the guidance provided by the company; litigation involving the company and its subsidiaries; changes in economic, political or regulatory environments; and risks described from time to time in reports and registration statements filed by H&R Block Inc. and its subsidiaries with the Securities and Exchange Commission. Readers should take these factors into account in evaluating such forward-looking statements.
About H&R Block
H&R Block Inc. ( www.hrblock.com, http://hrblock.com ) is a diversified company with subsidiaries that deliver tax services and financial advice, investment and mortgage products and services, and business accounting and consulting services. As the world's largest tax services company, H&R Block served nearly 23 million clients during fiscal year 2002. Clients were served at the approximately 10,400 H&R Block retail offices worldwide and through the company's award-winning software, TaxCut(R), and its online tax services. H&R Block is the only major tax and financial services company that focuses primarily on helping middle-income taxpayers achieve their financial goals. Investment services and securities products are offered through H&R Block Financial Advisors Inc., member NYSE, SIPC. H&R Block Inc. is not a registered broker-dealer. H&R Block Mortgage Corp. offers retail mortgage products. Option One Mortgage Corp. offers wholesale mortgage products and a wide range of mortgage services. RSM McGladrey Inc. serves mid-sized businesses with accounting, tax and consulting services.
H&R Block, Inc.
Preliminary U.S. Tax Operating Data
Amounts in thousands, except average fee and number of offices
Period
1/1- 2/1- 2/16- 3/1- 3/16- YTD
1/31 2/15 2/28 3/15 3/31 3/31
Tax preparation &
related fees
Fiscal year 2003
Company owned
offices $287,698 $366,075 $151,434 $142,736 $138,700 $1,086,643
Franchised
offices 173,731 209,522 89,938 73,474 67,842 614,507
$461,429 $575,597 $241,372 $216,210 $206,542 $1,701,150
Fiscal year
2002 (A)
Company owned
offices $260,155 $356,120 $157,205 $146,190 $136,474 $1,056,144
Franchised
offices 148,706 199,176 91,062 72,841 65,222 577,007
$408,861 $555,296 $248,267 $219,031 $201,696 $1,633,151
Percent change
Company owned
offices 10.6% 2.8% -3.7% -2.4% 1.6% 2.9%
Franchised
offices 16.8% 5.2% -1.2% 0.9% 4.0% 6.5%
Total 12.9% 3.7% -2.8% -1.3% 2.4% 4.2%
Tax returns prepared
Fiscal year 2003
Company owned
offices 2,202 2,702 1,129 1,033 962 8,028
Franchised
offices 1,460 1,764 762 619 553 5,158
3,662 4,466 1,891 1,652 1,515 13,186
Fiscal year
2002 (A)
Company owned
offices 2,133 2,877 1,255 1,097 979 8,341
Franchised
offices 1,350 1,811 835 658 559 5,213
3,483 4,688 2,090 1,755 1,538 13,554
Percent change
Company owned
offices 3.2% -6.1% -10.0% -5.8% -1.7% -3.8%
Franchised
offices 8.2% -2.6% -8.7% -5.9% -1.1% -1.1%
Total 5.1% -4.7% -9.5% -5.9% -1.5% -2.7%
Total clients served
Fiscal year 2003
Company owned
offices 2,218 2,725 1,137 1,039 967 8,086
Franchised
offices 1,497 1,808 777 632 561 5,275
E-commerce (B) 239 596 315 228 223 1,601
3,954 5,129 2,229 1,899 1,751 14,962
Fiscal year
2002 (A)
Company owned
offices 2,152 2,907 1,267 1,105 983 8,414
Franchised
offices 1,403 1,872 857 669 567 5,368
E-commerce (B) 143 414 219 173 151 1,100
3,698 5,193 2,343 1,947 1,701 14,882
Percent change
Company owned
offices 3.1% -6.3% -10.3% -6.0% -1.6% -3.9%
Franchised
offices 6.7% -3.4% -9.3% -5.5% -1.1% -1.7%
E-commerce (B) 67.1% 44.0% 43.8% 31.8% 47.7% 45.6%
Total 6.9% -1.2% -4.9% -2.5% 2.9% 0.5%
Tax returns filed
electronically (C)
Fiscal year 2003
Company owned
offices 2,159 2,599 1,027 895 800 7,480
Franchised
offices 1,441 1,671 656 490 407 4,665
E-commerce (B) 167 610 290 237 228 1,532
3,767 4,880 1,973 1,622 1,435 13,677
Fiscal year
2002 (A)
Company owned
offices 2,084 2,730 1,111 913 775 7,613
Franchised
offices 1,330 1,671 691 478 375 4,545
E-commerce (B) 119 382 214 165 140 1,020
3,533 4,783 2,016 1,556 1,290 13,178
Percent change
Company owned
offices 3.6% -4.8% -7.6% -2.0% 3.2% -1.8%
Franchised
offices 8.4% 0.0% -5.1% 2.5% 8.5% 2.6%
E-commerce (B) 40.3% 59.7% 35.5% 43.6% 62.9% 50.2%
Total 6.6% 2.0% -2.1% 4.2% 11.2% 3.8%
H&R Block, Inc.
Preliminary U.S. Tax Operating Data
Amounts in thousands, except average fee and number of offices
Period
1/1- 2/1- 2/16- 3/1- 3/16- YTD
1/31 2/15 2/28 3/15 3/31 3/31
Percent filed
electronically (D)
Fiscal year 2003
Company owned
offices 97.3% 95.4% 90.3% 86.1% 82.7% 92.5%
Franchised
offices 96.3% 92.4% 84.4% 77.5% 72.5% 88.4%
E-commerce (B) 69.9% 102.3% 92.1% 103.9% 102.2% 95.7%
95.3% 95.1% 88.5% 85.4% 82.0% 91.4%
Fiscal year
2002 (A)
Company owned
offices 96.8% 93.9% 87.7% 82.6% 78.8% 90.5%
Franchised
offices 94.8% 89.3% 80.6% 71.4% 66.1% 84.7%
E-commerce (B) 83.2% 92.3% 97.7% 95.4% 92.7% 92.7%
95.5% 92.1% 86.0% 79.9% 75.8% 88.5%
Average fee per
client served
Fiscal year 2003
Company owned
offices $129.71 $134.34 $133.19 $137.38 $143.43 $134.39
Franchised
offices 116.05 115.89 115.75 116.26 120.93 116.49
$124.21 $126.98 $126.11 $129.39 $135.17 $127.32
Fiscal year
2002 (A)
Company owned
offices $120.89 $122.50 $124.08 $132.30 $138.83 $125.52
Franchised
offices 105.99 106.40 106.26 108.88 115.03 107.49
$115.01 $116.20 $116.89 $123.47 $130.13 $118.50
Percent change
Company owned
offices 7.3% 9.7% 7.3% 3.8% 3.3% 7.1%
Franchised
offices 9.5% 8.9% 8.9% 6.8% 5.1% 8.4%
Total 8.0% 9.3% 7.9% 4.8% 3.9% 7.5%
Average fee per tax
return (F)
Fiscal year 2003
Company owned
offices $106.94 $118.98 $124.95 $132.38 $140.29 $120.79
Franchised
offices 97.30 103.24 109.25 112.81 118.27 105.21
$103.09 $112.76 $118.63 $125.04 $132.26 $114.70
Fiscal year
2002 (A)
Company owned
offices $97.48 $106.34 $115.12 $126.59 $134.93 $111.41
Franchised
offices 87.03 93.16 98.85 104.29 111.52 95.85
$93.43 $101.24 $108.62 $118.23 $126.42 $105.43
Percent change
Company owned
offices 9.7% 11.9% 8.5% 4.6% 4.0% 8.4%
Franchised
offices 11.8% 10.8% 10.5% 8.2% 6.1% 9.8%
Total 10.4% 11.4% 9.2% 5.8% 4.6% 8.8%
Refund anticipation
loans (E)
Fiscal year 2003
Company owned
offices 1,146 1,148 223 124 64 2,705
Franchised
offices 784 742 133 68 32 1,759
E-commerce (B) 19 29 9 6 4 67
1,949 1,919 365 198 100 4,531
Fiscal year
2002 (A)
Company owned
offices 1,092 1,193 258 138 82 2,763
Franchised
offices 709 753 151 75 42 1,730
E-commerce (B) 8 16 6 5 3 38
1,809 1,962 415 218 127 4,531
Percent change
Company owned
offices 5.0% -3.8% -13.6% -10.1% -22.0% -2.1%
Franchised
offices 10.6% -1.5% -11.9% -9.3% -23.8% 1.7%
E-commerce (B)137.5% 81.3% 50.0% 20.0% 33.3% 76.3%
Total 7.7% -2.2% -12.1% -9.2% -21.3% 0.0%
Offices FY2003 FY2002 %Change
Company owned
offices 5,279 5,017 5.2%
Franchised
offices 4,022 3,998 0.6%
9,301 9,015 3.2%
H&R Block, Inc.
Preliminary U.S. Tax Operating Data
Amounts in thousands, except average fee and number of offices
(A) Prior year numbers have been reclassified between company-owned and
franchise offices for franchise offices acquired during the year.
(B) Includes on-line completed and paid returns and e-filings for software
clients. Excludes returns completed for no fee.
(C) Includes Federal only. State returns also electronically filed are
not included in this total.
(D) Clients served are based on payment date. Returns filed
electronically are based on IRS acceptance date. As such, percent
filed electronically may exceed 100% in an interim period.
(E) Prior year numbers have been restated to include only refund
anticipation loans processed and funded.
(F) Includes tax preparation fees only.
SOURCE H&R Block, Inc.
Media Relations, Bob Schneider, +1-816-932-4835, bschneider@hrblock.com , or Investor Relations, Mark Barnett, +1-816-701-4443, marbarnett@hrblock.com , both of H&R Block, Inc.
http://www.hrblock.com