H&R Posts Smaller Loss; To Buyback $3.5 Bln. Stock

(RTTNews) - H&R Block Inc (HRB), the world's largest consumer tax services provider, on Tuesday reported a smaller loss for the first quarter, driven by a four percent increase in revenues, partly offset by foreign currency fluctuations. The loss was narrower compared with Wall Street estimates and revenues surpassed expectations.

H&R Block said it will buyback $3.5 billion of its shares, effective through June 2019, spurred by the earlier-than-expected sale of its bank business to BofI Federal Bank.

The buyback includes the purchase of up to $1.5 billion shares in a "modified Dutch auction" tender offer at a price of $32.25 to $37.00 per share, and will represent about 16 percent of its market capitalization, H&R Block said.

H&R Block is going ahead with a new capital structure which, apart from buybacks, will encompass dividends and taking on incremental debt.

H&R Block shares gained more than 7 percent in after-hours trade on the New York Stock Exchange.

For the first quarter, the company reported a net loss of $99.7 million or $0.36 per share, compared with a loss of $116.2 million or $0.42 per share last year.

Excluding items, adjusted loss for the quarter was $0.35 per share, compared with a loss of $0.40 per share last year. On average, eight analysts polled by Thomson Reuters estimated a loss of $0.40 per share for the quarter. Analysts' estimates typically exclude special items.

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

Revenues for the first quarter were up at $137.7 million, compared with $133.6 million in the prior year. Six analysts had a consensus revenue estimate of $136 million for the quarter.

Related to the sale of its bank business, H&R Block reaffirms the ongoing annual net financial impact to be dilutive by $0.08 to $0.10 per share beginning fiscal 2016.

The company also expects to incur one-time charges for transaction and related costs of about $0.02 to $0.03 per share in fiscal year 2016.

HRB closed Tuesday at $32.95, down $1.07 or 3.15%, on a volume of 4 million shares. In after hours, the stock gained $2.45 or 7.44% at $35.40.