H&R Block Q4 Profit Rises, Results Top Estimates

(RTTNews) - Tax preparer H&R Block, Inc. (HRB) reported Wednesday reported a profit for the fourth quarter that increased 37 percent from last year, reflecting improved revenues as the delayed opening of the Internal Revenue Service's e-file system shifted revenues into the fourth quarter. Both earnings per share from continuing operations and quarterly revenues topped analysts' expectations.

The Kansas City, Missouri-based world's largest consumer tax services provider, posted net income of $910.0 million or $3.29 per share for the fourth quarter, higher than $664.34 million or $2.42 per share in the prior-year quarter.

Net income from continuing operations for the quarter increased to $929.13 million or $3.36 per share from $688.92 million or $2.51 per share in the year-ago quarter.

On average, eight analysts polled by Thomson Reuters expected the company to report a earnings of $3.23 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total revenues for the quarter grew to $2.56 billion from $2.20 billion in the same quarter last year, and topped five Wall Street analysts' consensus estimate of $2.49 billion.

The incremental revenue was attributed to the delayed opening of the Internal Revenue Service's e-file system that shifted revenues into the fourth quarter. The company's decision to discontinue its free federal 1040EZ promotion in virtually all markets, exiting unprofitable retail partnerships, pricing changes, and improved return mix also aided revenues.

Service revenues for the quarter increased to $2.21 billion from $1.88 billion as well as royalty, product and other revenues grew to $312.66 million from $274.94 million from last year. Meanwhile, interest income declined to $38.90 million from $40.80 million a year ago.

The company also recently announced a quarterly cash dividend of $0.20 per share, payable on July 1 to shareholders of record as of June 16, 2014.

H&R Block in early April agreed to sell certain assets and transfer certain liabilities of H&R Block Bank to BofI Federal Bank, the banking unit of BofI Holding Inc (BOFI). The financial terms of the deal, which is expected to close in time for next tax season, were not disclosed. The company will also sell certain available for sale securities held by H&R Block Bank.

The decision to sell the bank was prompted by new rules that will impose higher capital requirements on savings and loan holding companies such as H&R Block. The Federal Reserve promulgated the rules in order to implement changes required by the Dodd-Frank Act.

In Wednesday's regular trading session, HRB is currently trading at $32.00, up $1.26 or 4.10% on a volume of 1.07 million shares after hitting a past 52-week high of $32.50.