H&R Block Loss Widens On Deferred Tax Filings

(RTTNews) - H&R Block Inc. (HRB) Thursday reported a wider loss for the third quarter, as the delayed opening of the Internal Revenue Service's e-file system impacted revenue, with results falling well short of Wall Street estimates.

H&R Block said the recent quarter was impacted by the delay in opening of the Internal Revenue Service's e-file system to January 31, leading to deferment in tax filings which hurt revenue by $277 million. The company expects to record the deferred revenue in the current quarter.

H&R Block is the world's largest consumer tax services provider. In an effort to become leaner, the firm earlier cut jobs and closed under-performing offices while trying to compete better with peers such as Intuit Inc. (INTU), the maker of TurboTax software.

The company said it is trying to grow business from an optimal client mix and more product attachments.

H&R Block, based in Kansas City, Missouri, posted a third-quarter net loss of $214.7 million or $0.78 per share, compared with a loss of $17.7 million or $0.07 per share last year.

Excluding one-time items, adjusted loss for the quarter was $209 million or $0.77 per share, compared with a loss of $57 million or $0.21 per share a year ago.

On average, eight analysts polled by Thomson Reuters expected a loss of $0.11 per share for the quarter. Analysts' estimates typically exclude one-time items.

Revenue for the third quarter tumbled 58 percent to $200 million from $472 million in the prior year. Five analysts had a consensus revenue estimate of $519.3 million for the quarter.

H&R Block said it discontinued free federal Form 1040EZ promotion in most markets and exited unprofitable retail partnerships and as a result, U.S. tax returns channeled through the company declined 6 percent through February 28.

The company continued to expend on fixed costs such as personnel and occupancy, resulting in operating expenses of $538 million for the quarter. This compares with $564.6 million last year.

H&R Block stock closed Thursday at $30.96, down $0.17 or 0.55%, on a volume of 5 million shares on the NYSE. In after hours, the stock dropped $0.45 or 1.45% at $30.51.