H&R Block Reports Interim Tax Season Data; Company Reaffirms Full Year Earnings Guidance
KANSAS CITY, Mo.--(BUSINESS WIRE)--April 1, 2004--H&R Block Inc. (NYSE:HRB) said tax preparation and related fees increased 5.6 percent to $1.6 billion in the current tax season through March 15. The total number of clients served increased 0.4 percent, including a 2.4 percent decline in retail office clients and a 15.2 percent increase in digital tax solutions clients.
Based on projected results through the end of the tax season, the company reaffirmed that it expects full year earnings per share to be in the range of $3.65 to $3.85.
The average fee per retail office client was $136.08, an increase of 8.2 percent.
"We continue to see weakness in the number of clients in our retail offices and now expect that retail office clients served will likely decline for the year. However, we remain on plan for revenue growth per retail client, which we expect will increase in the range of 6 to 8 percent. In addition, we continue to be pleased with the performance of our digital tax services business," said Chairman and Chief Executive Officer Mark A. Ernst.
H&R Block plans to release more business results for its U.S. tax operations before market opening on April 16 and April 30.
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 uncertainty that the company will achieve or exceed its revenue, earnings, and earnings per share growth goals or expectations for fiscal year 2004 and that actual financial results for fiscal year 2004 will fall within the guidance provided by the company; the uncertainty of the company's ability to purchase shares of its common stock; the uncertainty of the effect of any share repurchases upon the company and its shareholders; the uncertainty as to the effect on financial results of the adoption of accounting pronouncements; changes in interest rates; changes in economic, political or regulatory environments; the uncertainty of assumptions utilized to estimate cash flows from residual interests in mortgage securitizations and mortgage servicing rights; risks associated with sources of liquidity for each of the lines of business of the company; changes in competition; litigation involving the company and its subsidiaries; 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) is a diversified company with subsidiaries that deliver tax, financial, mortgage and business products and services. It is the only major company with subsidiaries offering a full range of software, online and in-office tax solutions, combined with personalized financial advice about retirement savings, home ownership, and other opportunities to help clients build a better financial future. As the world's largest tax services company, H&R Block served nearly 21 million clients in the U.S. and 11 countries in 2003. H&R Block Financial Advisors Inc. offers investment services and securities products. With more than 1,000 financial advisors serving clients at more than 400 offices, H&R Block Financial Advisors Inc. is a member NYSE, SIPC, a registered broker-dealer and a registered investment advisor. H&R Block Inc. is not a registered broker-dealer and is not a registered investment advisor. H&R Block Mortgage Corp. offers a full range of retail mortgage products. Option One Mortgage Corp. provides mortgage services and offers wholesale mortgage products through large financial institutions and a network of 24,000 independent mortgage brokers. RSM McGladrey Business Services Inc. and its subsidiaries serve mid-sized businesses and their owners with tax, accounting and business consulting services, as well as personal wealth management services.
H&R Block, Inc.
Preliminary U.S. Tax Operating Data
Amounts in thousands, except average fee and number of offices
Period
---------------------------------------------------
1/1-1/31 2/1-2/15 2/16-2/29 3/1-3/15 YTD 3/15
-------- -------- --------- --------- ---------
Tax preparation &
related fees (1)
------------------
Fiscal year 2004
Company-owned
offices (2) $309,034 $364,345 $180,131 $142,323 $995,833
Former major
franchise
territories (3) 21,889 27,146 11,846 12,661 73,542
--------- --------- --------- --------- -----------
Total company-
owned offices 330,923 391,491 191,977 154,984 1,069,375
Franchise
offices (4) 169,338 182,173 86,199 64,612 502,322
--------- --------- --------- --------- -----------
$500,261 $573,664 $278,176 $219,596 $1,571,697
========= ========= ========= ========= ===========
Fiscal year 2003
(5)
Company-owned
offices (2) $288,175 $365,196 $151,759 $141,083 $946,213
Former major
franchise
territories (3) 18,714 28,246 11,742 11,206 69,908
--------- --------- --------- --------- -----------
Total company-
owned offices 306,889 393,442 163,501 152,289 1,016,121
Franchise
offices (4) 153,725 180,043 76,308 62,102 472,178
--------- --------- --------- --------- -----------
$460,614 $573,485 $239,809 $214,391 $1,488,299
========= ========= ========= ========= ===========
Percent change
Company-owned
offices 7.2% -0.2% 18.7% 0.9% 5.2%
Former major
franchise
territories 17.0% -3.9% 0.9% 13.0% 5.2%
--------------------------------------------------------------------
Total company-
owned offices 7.8% -0.5% 17.4% 1.8% 5.2%
--------------------------------------------------------------------
Franchise
offices 10.2% 1.2% 13.0% 4.0% 6.4%
--------------------------------------------------------------------
Total retail
offices 8.6% 0.0% 16.0% 2.4% 5.6%
--------------------------------------------------------------------
Total clients
served
------------------
Fiscal year 2004
Company-owned
offices (2) 2,191 2,553 1,263 976 6,983
Former major
franchise
territories (3) 168 208 89 94 559
--------- --------- --------- --------- -----------
Total company-
owned offices 2,359 2,761 1,352 1,070 7,542
Franchise
offices (4) 1,347 1,460 692 509 4,008
Digital tax
solutions (6) 1,268 737 337 234 2,576
--------- --------- --------- --------- -----------
4,974 4,958 2,381 1,813 14,126
========= ========= ========= ========= ===========
Fiscal year 2003(5)
Company-owned
offices (2) 2,228 2,734 1,153 1,038 7,153
Former major
franchise
territories (3) 157 233 98 93 581
--------- --------- --------- --------- -----------
Total company-
owned offices 2,385 2,967 1,251 1,131 7,734
Franchise
offices (4) 1,330 1,565 663 541 4,099
Digital tax
solutions (6) 1,042 634 333 227 2,236
--------- --------- --------- --------- -----------
4,757 5,166 2,247 1,899 14,069
========= ========= ========= ========= ===========
Percent change
Company-owned
offices -1.7% -6.6% 9.5% -6.0% -2.4%
Former major
franchise
territories 7.0% -10.7% -9.2% 1.1% -3.8%
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Total company-
owned offices -1.1% -6.9% 8.1% -5.4% -2.5%
--------------------------------------------------------------------
Franchise
offices 1.3% -6.7% 4.4% -5.9% -2.2%
--------------------------------------------------------------------
Total retail
offices -0.2% -6.9% 6.8% -5.6% -2.4%
--------------------------------------------------------------------
Digital tax
solutions 21.7% 16.3% 1.2% 3.1% 15.2%
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Total 4.6% -4.0% 6.0% -4.5% 0.4%
--------------------------------------------------------------------
Average fee per
client served (7)
------------------
Fiscal year 2004
Company-owned
offices (2) $141.05 $142.71 $142.62 $145.82 $142.61
Former major
franchise
territories (3) 130.29 130.51 133.10 134.69 131.56
--------- --------- --------- --------- -----------
Total company-
owned offices 140.28 141.79 141.99 144.84 141.79
Franchise
offices (4) 125.71 124.78 124.57 126.94 125.33
--------- --------- --------- --------- -----------
$134.99 $135.91 $136.09 $139.07 $136.08
========= ========= ========= ========= ===========
Fiscal year 2003(5)
Company-owned
offices (2) $129.34 $133.58 $131.62 $135.92 $132.28
Former major
franchise
territories (3) 119.20 121.23 119.82 120.49 120.32
--------- --------- --------- --------- -----------
Total company-
owned offices 128.67 132.61 130.70 134.65 131.38
Franchise
offices (4) 115.58 115.04 115.10 114.79 115.19
--------- --------- --------- --------- -----------
$123.99 $126.54 $125.29 $128.22 $125.78
========= ========= ========= ========= ===========
Percent change
Company-owned
offices 9.1% 6.8% 8.4% 7.3% 7.8%
Former major
franchise
territories 9.3% 7.7% 11.1% 11.8% 9.3%
--------------------------------------------------------------------
Total company-
owned offices 9.0% 6.9% 8.6% 7.6% 7.9%
--------------------------------------------------------------------
Franchise
offices 8.8% 8.5% 8.2% 10.6% 8.8%
--------------------------------------------------------------------
Total retail
offices 8.9% 7.4% 8.6% 8.5% 8.2%
--------------------------------------------------------------------
Refund
anticipation
loans
------------------
Fiscal year 2004
Company-owned
offices (2) 1,112 1,042 206 93 2,453
Former major
franchise
territories (3) 81 77 16 7 181
--------- --------- --------- --------- -----------
Total company-
owned offices 1,193 1,119 222 100 2,634
Franchise
offices (4) 713 610 109 46 1,478
Digital tax
solutions (6) 20 25 7 4 56
--------- --------- --------- --------- -----------
1,926 1,754 338 150 4,168
========= ========= ========= ========= ===========
Fiscal year 2003(5)
Company-owned
offices (2) 1,146 1,148 211 121 2,626
Former major
franchise
territories (3) 81 74 16 8 179
--------- --------- --------- --------- -----------
Total company-
owned offices 1,227 1,222 227 129 2,805
Franchise
offices (4) 703 653 122 58 1,536
Digital tax
solutions (6) 19 29 9 6 63
--------- --------- --------- --------- -----------
1,949 1,904 358 193 4,404
========= ========= ========= ========= ===========
Percent change
Company-owned
offices -3.0% -9.2% -2.4% -23.1% -6.6%
Former major
franchise
territories 0.0% 4.1% 0.0% -12.5% 1.1%
--------------------------------------------------------------------
Total company-
owned offices -2.8% -8.4% -2.2% -22.5% -6.1%
--------------------------------------------------------------------
Franchise
offices 1.4% -6.6% -10.7% -20.7% -3.8%
--------------------------------------------------------------------
Total retail
offices -1.2% -7.8% -5.2% -21.9% -5.3%
--------------------------------------------------------------------
Digital tax
solutions 5.3% -13.8% -22.2% -33.3% -11.1%
--------------------------------------------------------------------
Total -1.2% -7.9% -5.6% -22.3% -5.4%
--------------------------------------------------------------------
Offices FY 2004 FY 2003
------------------ ------- -------
Company-owned
offices (2) 4,746 4,672
Former major
franchise
territories (3) 459 --
Company-owned
shared office
locations (8) 947 607
--------- ---------
Total company-
owned offices 6,152 5,279
--------- ---------
Franchise
offices (4) 3,374 3,398
Former major
franchise
territories (3) -- 529
Franchise shared
office locations
(8) 325 95
--------- ---------
Total
franchise
offices 3,699 4,022
--------- ---------
9,851 9,301
========= =========
(1) Includes fees received for tax return preparation services and
system administration fees.
(2) Excludes company-owned offices in former major franchise
territories which commenced operations during fiscal year 2004.
(3) Impact of company-owned offices in former major franchise
territories which commenced operations during fiscal year 2004.
(4) Represents remaining major franchise territories and other
franchises.
(5) Prior year numbers have been reclassified between company-owned
and franchise offices for offices in former franchise territories
which commenced company-owned operations during fiscal year 2004.
(6) Includes on-line completed and paid returns and federal software
units sold.
(7) Calculated as tax preparation and related fees divided by clients
served.
(8) Shared locations include offices located within Wal-Mart, Sears
and other third-party businesses.
CONTACT:
H&R Block Inc.
Media Relations:
Bob Schneider, 816-932-4835
bschneider@hrblock.com
or
Investor Relations:
Mark Barnett, 816-701-4443
marbarnett@hrblock.com