H&R Block (HRB 29.55, +2.56) has spiked 9.5% in pre-market after beating bottom line estimates and raising its dividend.
The tax preparer reported above-consensus fourth quarter earnings of $3.76 per share on a 1.3% year-over-year increase in revenue to $2.33 billion, which was just ahead of market expectations. In addition to reporting better than expected results, the company announced that its Board of Directors authorized a 9.0% increase to its quarterly dividend, which is now at $0.24 per share.
H&R Block's President and CEO Bill Cobb noted that the company reported solid quarterly results despite engaging in competitive promotions during a year that saw declining returns across the industry. On a side note, Bill Cobb is set to retire on July 31, 2017. H&R Block's Board of Directors has appointed Tom Gerke, who is the current General Counsel and Chief Administrative Officer, as interim president and CEO.
Higher net average charges in the U.S. Assisted business were largely offset by a decline in Assisted returns. Revenue from ‘do-it-yourself' tax preparation declined due to promotional efforts, which led to a higher volume of returns.
For the year ended April 30, 2017, assisted tax returns prepared at company-owned locations fell 3.5% to 8.00 million while tax returns prepared at franchise locations declined 0.6% to 3.91 million. Returns prepared using the company's DIY software increased 3.5% to 6.99 million. A 6.8% increase in returns prepared online was partially offset by a 3.9% decline in returns prepared offline. In sum, total H&R Block U.S. returns declined 0.8% year-over-year to 19.49 million.
Tax returns prepared worldwide declined 0.6% year-over-year to 22.99 million.
Cost reduction measures and lower bad debt expense during the fiscal year helped the company lower its total operating expenses by $85 million or 3.5%.
H&R Block ended the fiscal year with unrestricted cash of $1.00 billion, up from $900 million at the end of the previous fiscal year.