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

June 13 (Bloomberg) -- H&R Block Inc., the largest 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 yesterday in a statement. Adjusted earnings per share, which exclude some items, were $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. 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 yesterday to $28.83 in New York. The stock has climbed 55 percent this year, outpacing the 13 percent advance for the Standard & Poor’s 500 Index.

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 in a June 11 report.

Fourth-quarter revenue rose 10 percent to $2.2 billion, according to the statement. Full-year net income from continuing operations rose 34 percent to $465 million as expenses fell 5 percent to $2.2 billion, H&R Block said.

“We improved overall profitability, while maintaining our overall share of the U.S. market,” Cobb said in 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 firm’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 company said yesterday in a presentation that there’s been “strong interest” in the bank and it’s looking for a partner that will let it keep increasing its financial-services businesses.

H&R Block, which had offices inside Wal-Mart Stores Inc. locations, said yesterday that it ended its partnership with the Bentonville, Arkansas-based retailer. The agreement with Wal-Mart was set to expire last month, according to a regulatory filing.

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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