Document
false0000012659 0000012659 2019-12-04 2019-12-04


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): December 4, 2019

H&R BLOCK, INC.
(Exact name of registrant as specified in charter)
Missouri
1-06089
44-0607856
(State or other jurisdiction of
(Commission File Number)
(I.R.S. Employer
incorporation or organization)
 
Identification No.)

One H&R Block Way, Kansas City, MO 64105
(Address of Principal Executive Offices) (Zip Code)

(816) 854-3000
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, without par value
HRB
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 












Item 2.02.    Results of Operations and Financial Condition.
On December 4, 2019, the Company issued a press release regarding the Company’s results of operations for the fiscal quarter ended October 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number    Description
99.1    Press Release Issued December 4, 2019
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
H&R BLOCK, INC.
 
 
 
 
Date:
December 4, 2019
By:
/s/ Scott W. Andreasen
 
 
 
Scott W. Andreasen
 
 
 
Vice President and Secretary



Exhibit

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Exhibit 99.1
News Release
For Immediate Release: December 4, 2019
H&R Block Announces Fiscal 2020 Second Quarter Results and Reiterates Fiscal Year Outlook
KANSAS CITY, Mo. - H&R Block, Inc. (NYSE: HRB) today released its financial results for the fiscal 2020 second quarter ended October 31, 2019. The company normally reports a fiscal second quarter loss due to the seasonality of its tax business. The fiscal second quarter typically represents less than 5% of annual revenues and less than 15% of annual expenses.
Fiscal Second Quarter Highlights1 
Fiscal second quarter financial results were in line with expectations, and the company reiterated its revenue growth and margin outlook for the full fiscal year.
Revenues increased 8%, to $161 million due to Wave and improved tax return volumes.
Loss per share from continuing operations2 increased $0.10 to $0.93; adjusted loss per share from continuing operations2,3 increased $0.07 to $0.85.
The company repurchased and retired 5.7 million shares at an aggregate price of $137 million, or $23.94 per share.
"We've made significant progress to digitally enable all facets of our business to deliver expertise and care in new and compelling ways," said Jeff Jones, H&R Block's president and chief executive officer. "These efforts, along with Wave and our momentum from last year, position us well to deliver for this fiscal year and for the long term."


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 loss per share from continuing operations is a non-GAAP financial measure. See "About Non-GAAP Financial Information" below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).










Fiscal 2020 Second Quarter Results From Continuing Operations
(in millions, except EPS)
 
Q2 FY2020
 
Q2 FY2019
Revenue
 
$
161

 
$
149

Pretax Loss
 
$
(261
)
 
$
(232
)
Net Loss
 
$
(184
)
 
$
(171
)
Weighted-Avg. Shares - Diluted
 
198.1

 
205.5

EPS2
 
$
(0.93
)
 
$
(0.83
)
Adjusted EPS2,3
 
$
(0.85
)
 
$
(0.78
)
EBITDA4
 
$
(197
)
 
$
(169
)
 
 
 
 
 
"We were pleased with our strong revenue growth in the fiscal second quarter," said Tony Bowen, H&R Block's chief financial officer. "We’re well-positioned for success in the upcoming tax season and have reiterated our revenue growth and margin outlook for the fiscal year."
Key Financial Metrics
Fiscal second quarter results were in line with expectations.
Total revenues increased $11.9 million, or 8.0%, to $160.8 million due to Wave and improved tax return volumes.
Total operating expenses increased $39.4 million, or 10.8%, to $403.5 million due to Wave, planned investments in our technology roadmap, and legal expenses, which were partially offset by lower occupancy costs.
Pretax loss increased $29.3 million, or 12.6%, to $261.3 million.
Loss per share from continuing operations increased $0.10 to $0.93; adjusted loss per share from continuing operations increased $0.07 to $0.85. The change in pretax loss, along with lower shares outstanding, impacted loss per share. While beneficial on a full-year basis, the lower share count negatively impacts EPS in quarters in which the company reports a loss. These impacts were partially offset by an increased tax benefit.

Share Repurchases and Dividends
During the second quarter of fiscal 2020, the company repurchased and retired approximately 5.7 million shares at an aggregate price of $136.9 million, or $23.94 per share. Fiscal year-to-date repurchases total 7.3 million shares at an aggregate price of $181.0 million, or $24.75 per share.
As previously announced, a quarterly cash dividend of $0.26 per share is payable on January 2, 2020 to shareholders of record as of December 9, 2019. H&R Block has paid quarterly dividends consecutively since the company went public in 1962 and has increased its dividend in each of the past four fiscal years.
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.


4 Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations is a non-GAAP financial measure. See "About Non-GAAP Financial Information" below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).



Conference Call
Discussion of the fiscal 2020 second quarter results, outlook, and a general business update will occur during the company’s previously announced fiscal second quarter earnings conference call for analysts, institutional investors, and shareholders. The call is scheduled for 4:30 p.m. Eastern time on December 4, 2019. To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:
U.S./Canada (866) 987-6821 or International (630) 652-5951
Conference ID: 9677027
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 http://investors.hrblock.com. The presentation will be posted on the Quarterly Results page at http://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 December 4, 2019 and continuing for seven days by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International). The conference ID is 9677027. The webcast will be available for replay beginning on December 5, 2019 and continuing for 90 days at http://investors.hrblock.com.
About H&R Block
H&R Block, Inc. (NYSE: HRB) is a global consumer tax and small business services provider. Tax return preparation services are provided by professional tax preparers in approximately 11,000 company-owned and franchise retail tax offices worldwide, as well as through virtual channels and H&R Block tax software products for the DIY consumer. H&R Block offers small business financial solutions through its retail locations and online through Wave. In fiscal 2019, H&R Block had revenues of $3.1 billion with over 23 million tax returns prepared worldwide. For more information, visit the H&R Block Newsroom.
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" or "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. 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 fiscal year ended April 30, 2019 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. In addition, factors that may cause the company’s actual estimated effective tax rate to differ from estimates include the company’s actual results from operations compared to current estimates, future discrete items, changes in interpretations and assumptions the company has made, and future actions of the company. 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.
For Further Information
Investor Relations:    Colby Brown, (816) 854-4559, colby.brown@hrblock.com
Media Relations:    Susan Waldron, (816) 854-5522, susan.waldron@hrblock.com


TABLES FOLLOW





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CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
(unaudited, in 000s - except per share amounts)
 
 
 
Three months ended October 31,
 
Six months ended October 31,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
REVENUES:
 
 
 
 
 
 
 
 
Service revenues
 
$
139,648

 
$
127,267

 
$
271,807

 
$
254,127

Royalty, product and other revenues
 
21,153

 
21,604

 
39,356

 
39,927

 
 
160,801

 
148,871

 
311,163

 
294,054

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
Costs of revenues
 
253,206

 
250,815

 
482,598

 
472,375

Selling, general and administrative
 
150,334

 
113,319

 
266,470

 
219,059

Total operating expenses
 
403,540

 
364,134

 
749,068

 
691,434

 
 
 
 
 
 
 
 
 
Other income (expense), net
 
2,739

 
4,464

 
11,862

 
9,006

Interest expense on borrowings
 
(21,306
)
 
(21,191
)
 
(42,377
)
 
(42,381
)
Loss from continuing operations before income tax benefit
 
(261,306
)
 
(231,990
)
 
(468,420
)
 
(430,755
)
Income tax benefit
 
(77,752
)
 
(61,053
)
 
(139,142
)
 
(111,021
)
Net loss from continuing operations
 
(183,554
)
 
(170,937
)
 
(329,278
)
 
(319,734
)
Net loss from discontinued operations
 
(4,445
)
 
(5,339
)
 
(8,968
)
 
(9,212
)
NET LOSS
 
$
(187,999
)
 
$
(176,276
)
 
$
(338,246
)
 
$
(328,946
)
 
 
 
 
 
 
 
 
 
BASIC AND DILUTED LOSS PER SHARE:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.93
)
 
$
(0.83
)
 
$
(1.65
)
 
$
(1.55
)
Discontinued operations
 
(0.02
)
 
(0.03
)
 
(0.04
)
 
(0.04
)
Consolidated
 
$
(0.95
)
 
$
(0.86
)
 
$
(1.69
)
 
$
(1.59
)
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE BASIC AND DILUTED SHARES
 
198,079

 
205,520

 
200,058

 
206,596

 
 
 
 
 
 
 
 
 






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CONSOLIDATED BALANCE SHEETS
 
(unaudited, in 000s - except per share data)
 
As of
 
October 31, 2019
 
October 31, 2018
 
April 30, 2019
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
245,312

 
$
600,799

 
$
1,572,150

Cash and cash equivalents - restricted
 
176,332

 
122,507

 
135,577

Receivables, net
 
74,710

 
61,286

 
138,965

Prepaid expenses and other current assets
 
105,058

 
106,410

 
146,667

Total current assets
 
601,412

 
891,002

 
1,993,359

Property and equipment, net
 
206,216

 
241,772

 
212,092

Operating lease right of use asset
 
475,969

 

 

Intangible assets, net
 
425,377

 
364,524

 
342,493

Goodwill
 
815,331

 
507,191

 
519,937

Deferred tax assets and income taxes receivable
 
145,807

 
130,987

 
141,979

Other noncurrent assets
 
86,629

 
97,820

 
90,085

Total assets
 
$
2,756,741

 
$
2,233,296

 
$
3,299,945

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
LIABILITIES:
 
 
 
 
 
 
Accounts payable and accrued expenses
 
$
111,439

 
$
114,393

 
$
249,525

Accrued salaries, wages and payroll taxes
 
57,602

 
43,396

 
196,527

Accrued income taxes and reserves for uncertain tax positions
 
106,125

 
94,257

 
271,973

Current portion of long-term debt
 
648,651

 

 

Operating lease liabilities
 
162,897

 

 

Deferred revenue and other current liabilities
 
177,243

 
183,675

 
204,976

Total current liabilities
 
1,263,957

 
435,721

 
923,001

Long-term debt and line of credit borrowings
 
980,299

 
1,491,328

 
1,492,629

Deferred tax liabilities and reserves for uncertain tax positions
 
180,362

 
235,799

 
197,906

Operating lease liabilities
 
326,691

 

 

Deferred revenue and other noncurrent liabilities
 
81,179

 
101,773

 
144,882

Total liabilities
 
2,832,488

 
2,264,621

 
2,758,418

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
Common stock, no par, stated value $.01 per share
 
2,310

 
2,420

 
2,383

Additional paid-in capital
 
765,220

 
759,235

 
767,636

Accumulated other comprehensive loss
 
(21,817
)
 
(18,880
)
 
(20,416
)
Retained earnings (deficit)
 
(122,535
)
 
(64,291
)
 
499,386

Less treasury shares, at cost
 
(698,925
)
 
(709,809
)
 
(707,462
)
Total stockholders' equity (deficiency)
 
(75,747
)
 
(31,325
)
 
541,527

Total liabilities and stockholders' equity
 
$
2,756,741

 
$
2,233,296

 
$
3,299,945

 
 
 
 
 
 
 






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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(unaudited, in 000s)
 
Six months ended October 31,
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net loss
 
$
(338,246
)
 
$
(328,946
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
81,262

 
81,925

Provision for bad debt
 
1,890

 
2,350

Deferred taxes
 
12,595

 
17,913

Stock-based compensation
 
16,094

 
11,839

Changes in assets and liabilities, net of acquisitions:
 
 
 
 
Receivables
 
71,859

 
74,672

Prepaid expenses, other current and noncurrent assets
 
13,889

 
(9,134
)
Accounts payable, accrued expenses, salaries, wages and payroll taxes
 
(267,257
)
 
(218,692
)
Deferred revenue, other current and noncurrent liabilities
 
(74,996
)
 
(81,014
)
Income tax receivables, accrued income taxes and income tax reserves
 
(206,278
)
 
(179,660
)
Other, net
 
(4,128
)
 
1,056

Net cash used in operating activities
 
(693,316
)
 
(627,691
)
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Capital expenditures
 
(42,854
)
 
(66,422
)
Payments made for business acquisitions, net of cash acquired
 
(416,925
)
 
(24,549
)
Franchise loans funded
 
(16,021
)
 
(8,915
)
Payments from franchisees
 
7,902

 
11,689

Other, net
 
50,839

 
4,993

Net cash used in investing activities
 
(417,059
)
 
(83,204
)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Proceeds from line of credit borrowings
 
135,000

 

Dividends paid
 
(104,063
)
 
(103,484
)
Repurchase of common stock, including shares surrendered
 
(190,369
)
 
(102,096
)
Proceeds from exercise of stock options
 
1,215

 
1,746

Other, net
 
(18,544
)
 
(22,434
)
Net cash used in financing activities
 
(176,761
)
 
(226,268
)
 
 
 
 
 
Effects of exchange rate changes on cash
 
1,053

 
(3,209
)
 
 
 
 
 
Net decrease in cash and cash equivalents, including restricted balances
 
(1,286,083
)
 
(940,372
)
Cash, cash equivalents and restricted cash, beginning of period
 
1,707,727

 
1,663,678

Cash, cash equivalents and restricted cash, end of period
 
$
421,644

 
$
723,306

 
 
 
 
 
SUPPLEMENTARY CASH FLOW DATA:
 
 
 
 
Income taxes paid, net of refunds received
 
$
54,109

 
$
50,197

Interest paid on borrowings
 
39,952

 
39,902

Accrued additions to property and equipment
 
3,409

 
4,765

 
 
 
 
 






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FINANCIAL RESULTS
 
(unaudited, in 000s - except per share amounts)
 
 
 
Three months ended October 31,
 
Six months ended October 31,
 
 
2019
 
2018
 
2019
 
2018
REVENUES:
 
 
 
 
 
 
 
 
U.S. assisted tax preparation
 
$
41,226

 
$
41,652

 
$
74,218

 
$
72,756

U.S. royalties
 
7,820

 
8,062

 
14,679

 
15,633

U.S. DIY tax preparation
 
4,541

 
2,994

 
7,951

 
5,775

International
 
44,926

 
45,497

 
85,507

 
84,676

Refund Transfers
 
791

 
560

 
2,300

 
1,984

Emerald Card®
 
8,616

 
9,478

 
22,471

 
23,724

Peace of Mind® Extended Service Plan
 
25,660

 
24,318

 
58,497

 
60,895

Tax Identity Shield®
 
4,648

 
5,243

 
9,170

 
9,984

Interest and fee income on Emerald AdvanceTM
 
485

 
397

 
1,039

 
844

Wave
 
10,902

 

 
14,527

 

Other
 
11,186

 
10,670

 
20,804

 
17,783

 
 
160,801

 
148,871

 
311,163

 
294,054

Compensation and benefits:
 
 
 
 
 
 
 
 
Field wages
 
60,993

 
59,096

 
114,796

 
109,028

Other wages
 
60,744

 
50,046

 
114,581

 
97,868

Benefits and other compensation
 
28,708

 
24,178

 
55,182

 
47,109

 
 
150,445

 
133,320

 
284,559

 
254,005

Occupancy
 
97,530

 
104,880

 
189,682

 
195,606

Marketing and advertising
 
9,651

 
8,586

 
16,430

 
15,480

Depreciation and amortization
 
42,657

 
41,493

 
81,262

 
81,925

Bad debt
 
2,035

 
188

 
1,067

 
(670
)
Other (1)
 
101,222

 
75,667

 
176,068

 
145,088

Total operating expenses
 
403,540

 
364,134

 
749,068

 
691,434

 
 
 
 
 
 
 
 
 
Other income (expense), net
 
2,739

 
4,464

 
11,862

 
9,006

Interest expense on borrowings
 
(21,306
)
 
(21,191
)
 
(42,377
)
 
(42,381
)
Pretax loss
 
(261,306
)
 
(231,990
)
 
(468,420
)
 
(430,755
)
Income tax benefit
 
(77,752
)
 
(61,053
)
 
(139,142
)
 
(111,021
)
Net loss from continuing operations
 
(183,554
)
 
(170,937
)
 
(329,278
)
 
(319,734
)
Net loss from discontinued operations
 
(4,445
)
 
(5,339
)
 
(8,968
)
 
(9,212
)
NET LOSS
 
$
(187,999
)
 
$
(176,276
)
 
$
(338,246
)
 
$
(328,946
)
 
 
 
 
 
 
 
 
 
BASIC AND DILUTED LOSS PER SHARE:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.93
)
 
$
(0.83
)
 
$
(1.65
)
 
$
(1.55
)
Discontinued operations
 
(0.02
)
 
(0.03
)
 
(0.04
)
 
(0.04
)
Consolidated
 
$
(0.95
)
 
$
(0.86
)
 
$
(1.69
)
 
$
(1.59
)
 
 
 
 
 
 
 
 
 
Weighted average basic and diluted shares
 
198,079

 
205,520

 
200,058

 
206,596

 
 
 
 
 
 
 
 
 
EBITDA from continuing operations (2)
 
$
(197,343
)
 
$
(169,306
)
 
$
(344,781
)
 
$
(306,449
)
 
 
 
 
 
 
 
 
 
(1) 
We reclassified $3.2 million and $5.4 million of supplies expense from its own financial statement line to other expenses for the three and six months ended October 31, 2018, respectively, to conform to the current year presentation.
(2) See "Non-GAAP Financial Information" for a reconciliation of non-GAAP measures.






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(in 000s)
 
 
 
Three months ended October 31,
 
Six months ended October 31,
NON-GAAP FINANCIAL MEASURE - EBITDA
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Net loss - as reported
 
$
(187,999
)
 
$
(176,276
)
 
$
(338,246
)
 
$
(328,946
)
Discontinued operations, net
 
4,445

 
5,339

 
8,968

 
9,212

Net loss from continuing operations - as reported
 
(183,554
)
 
(170,937
)
 
(329,278
)
 
(319,734
)
Add back:
 
 
 
 
 
 
 
 
Income taxes of continuing operations
 
(77,752
)
 
(61,053
)
 
(139,142
)
 
(111,021
)
Interest expense of continuing operations
 
21,306

 
21,191

 
42,377

 
42,381

Depreciation and amortization of continuing operations
 
42,657

 
41,493

 
81,262

 
81,925

 
 
(13,789
)
 
1,631

 
(15,503
)
 
13,285

EBITDA from continuing operations
 
$
(197,343
)
 
$
(169,306
)
 
$
(344,781
)
 
$
(306,449
)
 
 
 
 
 
 
 
 
 
(in 000s, except per share amounts)
 
 
 
Q1
 
Q2
NON-GAAP FINANCIAL MEASURE - ADJUSTED EPS
 
Three months ended July 31, 2019
 
Three months ended October 31, 2019
 
Six months ended October 31, 2019
 
 
 
 
 
 
 
Net loss from continuing operations
 
$
(145,724
)
 
$
(183,554
)
 
$
(329,278
)
 
 
 
 
 
 
 
Adjustments (pretax):
 
 
 
 
 
 
   Amortization of intangibles related to acquisitions
 
16,239

 
19,579

 
35,818

Adjusted pretax loss from continuing operations
 
(129,485
)
 
(163,975
)
 
(293,460
)
Tax effect of adjustments (1)
 
(4,162
)
 
(4,549
)
 
(8,711
)
Adjusted net loss from continuing operations
 
$
(133,647
)
 
$
(168,524
)
 
$
(302,171
)
 
 
 
 
 
 
 
Diluted loss per share (GAAP)
 
$
(0.72
)
 
$
(0.93
)
 
$
(1.65
)
Adjustments, net of tax
 
0.06

 
0.08

 
0.14

Adjusted loss per share (Non-GAAP)
 
$
(0.66
)
 
$
(0.85
)
 
$
(1.51
)
 
 
 
 
 
 
 
(1)    Tax effect of adjustments is computed as the pretax effect of the adjustments multiplied by our effective tax rate before discrete items.






(in 000s, except per share amounts)
 
 
 
Q1
 
Q2
 
Q3
 
Q4
NON-GAAP FINANCIAL MEASURE - PRIOR YEAR ADJUSTED EPS
 
Three months ended July 31, 2018
 
Three months ended October 31, 2018
 
Six months ended October 31, 2018
 
Three months ended January 31, 2019
 
Nine months ended January 31, 2019
 
Three months ended April 30, 2019
 
Twelve months ended April 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
(148,797
)
 
$
(170,937
)
 
$
(319,734
)
 
$
(119,779
)
 
$
(439,513
)
 
$
884,769

 
$
445,256

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments (pretax):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles related to acquisitions
 
15,204

 
15,107

 
30,311

 
16,142

 
46,453

 
16,298

 
62,751

Adjusted pretax income (loss) from continuing operations
 
(133,593
)
 
(155,830
)
 
(289,423
)
 
(103,637
)
 
(393,060
)
 
901,067

 
508,007

Tax effect of adjustments (1)
 
(3,786
)
 
(3,510
)
 
(7,296
)
 
(3,820
)
 
(11,116
)
 
(3,775
)
 
(14,891
)
Adjusted net income (loss) from continuing operations
 
$
(137,379
)
 
$
(159,340
)
 
$
(296,719
)
 
$
(107,457
)
 
$
(404,176
)
 
$
897,292

 
$
493,116

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share (GAAP)
 
$
(0.72
)
 
$
(0.83
)
 
$
(1.55
)
 
$
(0.58
)
 
$
(2.13
)
 
$
4.32

 
$
2.15

Adjustments, net of tax
 
0.06

 
0.05

 
0.11

 
0.06

 
0.17

 
0.07

 
0.24

Adjusted earnings (loss) per share (Non-GAAP)
 
$
(0.66
)
 
$
(0.78
)
 
$
(1.44
)
 
$
(0.52
)
 
$
(1.96
)
 
$
4.39

 
$
2.39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)    Tax effect of adjustments is computed as the pretax effect of the adjustments multiplied by our effective tax rate before discrete items.
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 measure the performance of our business using a variety of metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, 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.
During the quarter we added adjusted diluted earnings per share from continuing operations as a non-GAAP measure, which excludes amortization of intangibles related to our acquisition of Wave and tax franchisee and competitor businesses. Due to the recent acquisition of Wave, we believe removing the impacts of amortization of acquired intangibles provides a more meaningful indicator of performance and will assist in understanding our financial results.
We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.