H&R Block Profit Misses Estimates Amid U.S. Tax-Filing Delays

H&R Block Inc. (HRB), the biggest U.S. tax preparer, posted a fiscal fourth-quarter profit that fell short of analysts’ estimates amid tax-law changes and filing delays.

Net income from continuing operations for the three months ended April 30 rose 16 percent to $688.9 million, or $2.51 a share, from $591.7 million, or $2.01, a year earlier, the Kansas City, Missouri-based company said today in a statement. Adjusted earnings per share, which excludes some items, was $2.54, missing the $2.61 average estimate of eight analysts surveyed by Bloomberg.

H&R Block, led by Chief Executive Officer Bill Cobb, said last year that it would cut about 350 jobs and close offices as the firm sought to recapture market share lost to TurboTax maker Intuit Inc. (INTU) Internal Revenue Service changes and new U.S. tax laws led to the filing of fewer returns during the quarter, the firm said.

“Considering the challenges the industry faced this tax season, we’re pleased to have executed well and delivered improved profits,” Cobb, 56, said in the statement. “We also gained share for the third consecutive year in the important digital online category.”

H&R Block fell 1.9 percent to $28.83 at 4:01 p.m. in New York. The shares have climbed 55 percent this year, outpacing the 13 percent advance for the Standard & Poor’s 500 Index. (SPX)

Fewer Returns

The shares slid in late April after the company said it handled fewer returns than expected during the 2013 tax season. The stock has since recovered as investors expect the U.S. health care overhaul and potential changes in immigration policy to increase the number of people who file tax returns, Mark Palmer, a New York-based analyst at BTIG LLC, wrote yesterday in a report.

Fourth-quarter revenue rose 10 percent to $2.2 billion, according to the statement. Total U.S. returns prepared by H&R Block fell 0.7 percent to 22.2 million in the fiscal year ended April 30, the company said. Returns filed online and with the company’s desktop software climbed 3.1 percent to 7.67 million.

H&R Block said last year that it hired New York-based Goldman Sachs Group Inc. to help the tax preparer explore “strategic alternatives” for its bank. Selling the unit may free up as much as $400 million of capital that may be used to buy back stock, Palmer said.

The tax preparer repurchased 21.3 million shares for $315 million, or $14.82 per share, during the fiscal year, according to the statement.

To contact the reporter on this story: Zeke Faux in New York at zfaux@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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