H&R Block Posts Wider Loss

(RTTNews) - H&R Block Inc. (HRB), the largest US tax preparer, said Tuesday after the markets closed that its first quarter loss widened from last year, hurt by higher expenses even as revenue increased 32%.

The company's quarterly adjusted loss per share was also bigger than what analysts expected.

The company has cut jobs and closed underperforming offices while trying to recapture market share from TurboTax software maker Intuit Inc. (INTU). The company has also increased spending on marketing and offered free services to woo clients.

For the first quarter ended July 31, 2013, the Kansas City, Missouri-based company reported a net loss of $115.2 million or $0.42 per share, compared to a net loss of $107.4 million or $0.39 per share for the year-ago quarter.

Loss from continuing operations for the first quarter was $113.3 million or $0.42 per share, compared to loss from continuing operations of $105.7 million or $0.38 per share in the prior year quarter.

Excluding items, adjusted loss from continuing operations for the first quarter was $107.9 million or $0.40 per share, compared to an adjusted loss from continuing operations of $104.5 million or $0.38 per share in the first quarter of last year.

On average, 4 analysts polled by Thomson Reuters expected the company to report a loss of $0.37 per share for the first quarter. Analysts' estimates typically exclude special items.

The company typically reports a first quarter operating loss due to the seasonality of its core U.S. tax business.

Total revenue for the first quarter rose 32% to $127.20 million from $96.49 million in the same quarter last year. Four analysts had a consensus revenue estimate of $98.40 million for the first quarter.

Tax services revenue for the quarter increased $31 million to $122 million, mainly due to timing differences in the company's Australian operations. Additionally, increased fees from financial services contributed to the increase.

Total costs and expenses for the quarter rose 15% to $306.8 million from $268.9 million last year.

In July, H&R Block reached a deal to sell its banking business, H&R Block Bank, to Republic Bank & Trust Co. The company said Tuesday that it may not be able to complete the deal this year because of delay in obtaining all regulatory approvals. As a result, the company expects to continue offering its financial services products to its clients through H&R Block Bank for the upcoming tax season.

"While we're disappointed that it is not likely that we'll be able to complete the bank transaction in time for this tax season, we remain focused on exiting our bank and continue to believe it is in the best interests of our shareholders," said Bill Cobb, H&R Block's President and CEO.

H&R Block shares, which have traded in a range of $15.90 to $32.09 over the past year, closed Tuesday's regular trading session at $27.88, down 3 cents. The shares are currently losing $1.13 or 4.05% in after hours trading.