H&R Block Reports FY24 Results; Announces 17% Dividend Increase, & $1.5B Share Repurchase Authorization

KANSAS CITY, Mo., Aug. 15, 2024 (GLOBE NEWSWIRE) — H&R Block, Inc. (NYSE: HRB) (the “Company”) today released its financial results1  for the fiscal year ended June 30, 2024.

  • H&R Block reported full year revenue of $3.6 billion (4% increase) and earnings per share from continuing operations2 of $4.14 (16% increase)
  • In FY24, the Company repurchased $350 million, or another 5.5%, of shares outstanding at an average price of $43.66
  • The Company announced a 17% increase in its quarterly dividend to $0.375 per share
  • The Company announced a new share repurchase authorization of $1.5 billion, which replaces the prior authorization
  • The FY25 outlook guides to another year of revenue growth, EBITDA that outpaces revenue, and earnings per share that grows even faster

“In fiscal 2024 we made strides across our different products and services that provide value to our clients and help enable their financial confidence,” said Jeff Jones H&R Block’s president and chief executive officer. “We continue to make progress, gain new insight, and translate this client success into value for shareholders, and are well positioned to build on this momentum in fiscal 2025 and beyond.”

Fiscal 2024 Results from Continuing Operations and Key Financial Metrics

“I am pleased with our financial performance in 2024 resulting in another year of strong free cash flow and capital allocation,” said Tony Bowen, H&R Block’s chief financial officer. “In addition, today’s announcement of a 17% dividend increase and new $1.5B share repurchase authorization reflects the Board’s support of our strategy and confidence in our future.”

    Year Ended June 30,
(in millions, except EPS)   2024
  2023
Revenue   $ 3,610     $ 3,472  
Pretax Income   $ 762     $ 711  
Net Income   $ 598     $ 562  
Weighted-Avg. Shares – Diluted     143.9       157.2  
EPS2   $ 4.14     $ 3.56  
Adjusted EPS2   $ 4.41     $ 3.82  
EBITDA2   $ 963     $ 915  
                 
  • Total revenue of $3.6 billion increased by $138.2 million, or 4.0%, primarily due to a higher net average charge and company-owned volumes in the Assisted category combined with greater online paid returns at a higher net average charge in DIY, partially offset by lower Emerald Card® activity in the current year.
  • Total operating expenses of $2.8 billion increased by $81.6 million, or 3.0%, primarily due to higher labor costs and bad debt expense, partially offset by lower consulting and outsourced services.
  • Pretax income of $762.3 million increased by $51.1 million, or 7.2%, primarily due to higher revenues in the current year.
  • Earnings per share from continuing operations2 of $4.14 increased by $0.58, or 16.3%; adjusted earnings per share from continuing operations2 of $4.41 increased by $0.59, or 15.4%.

Capital Structure

The Company reported the following related to its capital structure:

  • In fiscal year 2024, the Company repurchased and retired approximately 8.0 million shares, or 5.5% of shares outstanding, at an aggregate price of $350 million, or $43.66 per share.
  • The Company announced today that the Board of Directors approved a new share repurchase authorization of $1.5 billion, which replaces the prior authorization.
  • The Company also announced today that the Board of Directors increased the quarterly dividend by 17%, representing the seventh increase in seven years. The quarterly cash dividend is now $0.375 per share, payable on October 3, 2024 to shareholders of record as of September 5, 2024.

H&R Block has paid quarterly dividends consecutively since the Company became public in 1962. Since 2016, the Company has returned more than $3.9 billion to shareholders in the form of share repurchases and dividends.

FY25 Outlook

For fiscal year 2025, the Company expects:

  • Revenue to be in the range of $3.69 to $3.75 billion.
  • EBITDA3 to be in the range of $975 million to $1.02 billion.
  • Effective tax rate to be approximately 13%. The tax rate is positively impacted due to the anticipated closure of various matters under examination and the expiration of statute of limitations. We expect this to contribute approximately 50 cents to EPS.
  • Adjusted Diluted Earnings Per Share3 to be in the range of $5.15 to $5.35.

Conference Call & Webcast

A conference call for analysts, institutional investors, and shareholders will be held at 4:30 p.m. Eastern time on Thursday, August 15, 2024. During the conference call the Company will discuss fiscal 2024 results, outlook, and give a general business update. To join live, participants must register at https://register.vevent.com/register/BIde20112dcb6f48afb47e1f4828d62d83. Once registered, the participant will receive a dial-in number and unique PIN to access the call. Please join approximately 5 minutes prior to the scheduled start time.

The call, along with a presentation for viewing, will also be webcast in a listen-only format for the media and public. The webcast can be accessed directly at https://edge.media-server.com/mmc/p/yzzds4pa and will be available for replay 2 hours after the call is concluded and continuing for 90 days.

About H&R Block

H&R Block, Inc. (NYSE: HRB) provides help and inspires confidence in its clients and communities everywhere through global tax preparation services, financial products, and small-business solutions. The company blends digital innovation with human expertise and care as it helps people get the best outcome at tax time and also be better with money using its mobile banking app, Spruce. Through Block Advisors and Wave, the company helps small-business owners thrive with year-round bookkeeping, payroll, advisory, and payment processing solutions. For more information, visit H&R Block News.

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. They may also include the expected impact of external events beyond the Company’s control, such as outbreaks of infectious disease, severe weather events, natural or manmade disasters, or changes in the regulatory environment in which we operate. 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 most recently completed fiscal year 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 https://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, future actions of the Company, or increases in applicable tax rates in jurisdictions where the Company operates. 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.

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 continuing operations and fully diluted shares at the end of the corresponding period. The company reports non-GAAP financial measures of performance, including adjusted earnings per share (EPS), earnings before interest, tax, depreciation, and amortization (EBITDA) from continuing operations, free cash flow, and free cash flow yield, which it considers to be useful metrics for management and investors to evaluate and compare the ongoing operating performance of the company. See “About Non-GAAP Financial Information” below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).
3 Adjusted Diluted EPS and EBITDA from continuing operations are non-GAAP financial measures. Future period non-GAAP outlook includes adjustments for items not indicative of our core operations, which may include, without limitation, items described in the below section titled “Non-GAAP Financial Information” and in the accompanying tables. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual, or unanticipated charges, expenses or gains, or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this non-GAAP outlook to the most comparable GAAP measures.

For Further Information

Investor Relations:   Michaella Gallina, (816) 854-3022, [email protected]
    Jordyn Eskijian, (816) 854-5674, [email protected]
Media Relations:   Teri Daley, (816) 854-3787, [email protected]
     
FINANCIAL RESULTS   (unaudited, in 000s – except per share amounts)
    Three months ended June 30,   Year ended June 30,
    2024   2023   2024   2023
REVENUES:                
U.S. tax preparation and related services:                
Assisted tax preparation   $ 652,405     $ 636,561     $ 2,274,835     $ 2,167,138  
Royalties     51,732       49,294       204,802       210,631  
DIY tax preparation     134,283       132,428       349,812       314,758  
Refund Transfers     21,357       23,100       142,249       143,310  
Peace of Mind® Extended Service Plan     33,987       36,341       93,087       95,181  
Tax Identity Shield®     16,576       19,028       33,386       38,265  
Other     18,918       16,407       51,555       45,252  
Total U.S. tax preparation and related services     929,258       913,159       3,149,726       3,014,535  
Financial services:                
Emerald Card® and SpruceSM     14,600       16,203       76,093       84,651  
Interest and fee income on Emerald Advance®     4,231       287       40,933       47,554  
Total financial services     18,831       16,490       117,026       132,205  
International     88,725       78,834       247,123       235,131  
Wave     25,816       23,663       96,472       90,314  
Total revenues   $ 1,062,630     $ 1,032,146     $ 3,610,347     $ 3,472,185  
Compensation and benefits:                
Field wages     218,473       223,086       869,002       841,742  
Other wages     76,694       66,064       298,819       273,850  
Benefits and other compensation     57,759       51,053       228,723       220,530  
      352,926       340,203       1,396,544       1,336,122  
Occupancy     112,618       111,293       432,461       428,167  
Marketing and advertising     66,612       49,956       277,747       286,255  
Depreciation and amortization     30,780       31,841       121,784       130,501  
Bad debt     23,963       3,383       91,523       60,401  
Other     124,900       118,960       485,011       482,041  
Total operating expenses     711,799       655,636       2,805,070       2,723,487  
                 
Other income (expense), net     15,143       14,472       36,125       35,492  
Interest expense on borrowings     (15,776 )     (15,871 )     (79,080 )     (72,978 )
Income from continuing operations before income taxes     350,198       375,111       762,322       711,212  
Income taxes     91,832       71,158       164,359       149,412  
Net income from continuing operations     258,366       303,953       597,963       561,800  
Net loss from discontinued operations     (549 )     (1,682 )     (2,646 )     (8,100 )
Net income   $ 257,817     $ 302,271     $ 595,317     $ 553,700  
                 
DILUTED EARNINGS PER SHARE:                
Continuing operations   $ 1.82     $ 1.97     $ 4.14     $ 3.56  
Discontinued operations     (0.01 )     (0.01 )     (0.02 )     (0.05 )
Consolidated   $ 1.81     $ 1.96     $ 4.12     $ 3.51  
                 
WEIGHTED AVERAGE DILUTED SHARES     141,761       153,512       143,890       157,248  
                 
Adjusted diluted EPS(1)   $ 1.89     $ 2.05     $ 4.41     $ 3.82  
EBITDA(1)   $ 396,754     $ 422,823     $ 963,186     $ 914,691  
                 

(1) All non-GAAP measures are results from continuing operations. See “Non-GAAP Financial Information” for a reconciliation of non-GAAP measures.

     
CONSOLIDATED BALANCE SHEETS   (unaudited, in 000s – except per share data)
As of June 30,   2024   2023
         
ASSETS        
Cash and cash equivalents   $ 1,053,326     $ 986,975  
Cash and cash equivalents – restricted     21,867       28,341  
Receivables, net     69,075       59,987  
Prepaid expenses and other current assets     95,208       112,183  
Total current assets     1,239,476       1,187,486  
Property and equipment, net     131,319       130,015  
Operating lease right of use asset     461,986       438,299  
Intangible assets, net     264,102       277,043  
Goodwill     785,226       775,453  
Deferred tax assets and income taxes receivable     271,658       211,391  
Other noncurrent assets     65,043       52,571  
Total assets   $ 3,218,810     $ 3,072,258  
LIABILITIES AND STOCKHOLDERS’ EQUITY        
LIABILITIES:        
Accounts payable and accrued expenses   $ 155,830     $ 159,901  
Accrued salaries, wages and payroll taxes     105,548       95,154  
Accrued income taxes and reserves for uncertain tax positions     318,830       271,800  
Operating lease liabilities     206,070       205,391  
Deferred revenue and other current liabilities     191,050       206,536  
Total current liabilities     977,328       938,782  
Long-term debt     1,491,095       1,488,974  
Deferred tax liabilities and reserves for uncertain tax positions     291,063       264,567  
Operating lease liabilities     265,373       240,543  
Deferred revenue and other noncurrent liabilities     103,357       107,328  
Total liabilities     3,128,216       3,040,194  
COMMITMENTS AND CONTINGENCIES        
STOCKHOLDERS’ EQUITY:        
Common stock, no par, stated value $.01 per share     1,709       1,789  
Additional paid-in capital     762,583       770,376  
Accumulated other comprehensive loss     (48,845 )     (37,099 )
Retained earnings (deficit)     12,654       (48,677 )
Less treasury shares, at cost     (637,507 )     (654,325 )
Total stockholders’ equity     90,594       32,064  
Total liabilities and stockholders’ equity   $ 3,218,810     $ 3,072,258  
         
         
     
CONSOLIDATED STATEMENTS OF CASH FLOWS   (unaudited, in 000s)
Year ended June 30,   2024   2023
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income   $ 595,317     $ 553,700  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization     121,784       130,501  
Provision for credit losses     82,567       52,290  
Deferred taxes     (40,940 )     49,579  
Stock-based compensation     34,277       31,326  
Changes in assets and liabilities, net of acquisitions:        
Receivables     (108,394 )     (57,244 )
Prepaid expenses and other current and noncurrent assets     (7,287 )     (7,011 )
Accounts payable, accrued expenses, salaries, wages and payroll taxes     (4,662 )     (67,627 )
Deferred revenue, other current and noncurrent liabilities     (28,507 )     (4,773 )
Income tax receivables, accrued income taxes and income tax reserves     75,444       144,164  
Other, net     1,261       (3,064 )
Net cash provided by operating activities     720,860       821,841  
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Capital expenditures     (63,678 )     (69,698 )
Payments made for business acquisitions, net of cash acquired     (43,358 )     (48,246 )
Franchise loans funded     (18,891 )     (21,633 )
Payments from franchisees     24,926       27,350  
Other, net     7,143       10,838  
Net cash used in investing activities     (93,858 )     (101,389 )
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Repayments of line of credit borrowings     (1,025,000 )     (970,000 )
Proceeds from line of credit borrowings     1,025,000       970,000  
Dividends paid     (179,775 )     (177,925 )
Repurchase of common stock, including shares surrendered     (379,569 )     (568,952 )
Other, net     (4,967 )     (4,115 )
Net cash used in financing activities     (564,311 )     (750,992 )
         
Effects of exchange rate changes on cash     (2,814 )     (4,857 )
         
Net increase (decrease) in cash and cash equivalents, including restricted balances     59,877       (35,397 )
Cash, cash equivalents and restricted cash, beginning of the year     1,015,316       1,050,713  
Cash, cash equivalents and restricted cash, end of the year   $ 1,075,193     $ 1,015,316  
         
SUPPLEMENTARY CASH FLOW DATA:        
Income taxes paid (received), net   $ 131,173     $ (45,539 )
Interest paid on borrowings     75,694       69,554  
Accrued additions to property and equipment     3,052       2,238  
Accrued dividends payable to common shareholders     44,653       42,953  
         
         
                 
                (in 000s)
    Three months ended June 30,   Year ended June 30,
NON-GAAP FINANCIAL MEASURE – EBITDA   2024
  2023   2024
  2023
                 
Net income – as reported   $ 257,817     $ 302,271     $ 595,317     $ 553,700  
Discontinued operations, net     549       1,682       2,646       8,100  
Net income from continuing operations – as reported     258,366       303,953       597,963       561,800  
Add back:                
Income taxes     91,832       71,158       164,359       149,412  
Interest expense     15,776       15,871       79,080       72,978  
Depreciation and amortization     30,780       31,841       121,784       130,501  
      138,388       118,870       365,223       352,891  
EBITDA from continuing operations   $ 396,754     $ 422,823     $ 963,186     $ 914,691  
                 
                 
     
    (in 000s, except per share amounts)
    Three months ended June 30,   Year ended June 30,
NON-GAAP FINANCIAL MEASURE – ADJUSTED EPS   2024   2023   2024   2023
                 
Net income from continuing operations – as reported   $ 258,366     $ 303,953     $ 597,963     $ 561,800  
Adjustments:                
Amortization of intangibles related to acquisitions (pretax)     13,142       12,865       50,835       51,411  
Tax effect of adjustments(1)     (2,936 )     (1,599 )     (11,751 )     (10,797 )
Adjusted net income from continuing operations   $ 268,572     $ 315,219     $ 637,047     $ 602,414  
Diluted earnings per share from continuing operations – as reported   $ 1.82     $ 1.97     $ 4.14     $ 3.56  
Adjustments, net of tax     0.07       0.08       0.27       0.26  
Adjusted diluted earnings per share from continuing operations   $ 1.89     $ 2.05     $ 4.41     $ 3.82  
                 

(1) The tax effect of adjustments is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis.

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 make adjustments for certain non-GAAP financial measures related to amortization of intangibles from acquisitions and goodwill impairments. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

We measure the performance of our business using a variety of metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations, adjusted diluted earnings per share from continuing operations, free cash flow, and free cash flow yield. We also use EBITDA from continuing operations and pretax income from continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.


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