HRB H and R Block Inc

H&R Block, Inc. (NYSE: HRB) (the "Company") today released financial results1 for its fiscal 2025 second quarter ended December 31, 2024.

"I am pleased with our performance in the first half of the year," said Jeff Jones, president and chief executive officer. "We are reaffirming our fiscal 2025 outlook, and are well prepared to deliver this tax season and in the second half of the fiscal year."

Fiscal 2025 Second Quarter Results and Key Financial Metrics"We are on track for the year and we are well positioned to deliver strong results," said Tiffany Mason, chief financial officer. "During the second quarter, we repurchased 3.2 million shares for $190 million, reflecting our confidence in the long-term value of our stock and our commitment to delivering shareholder returns."

For the second quarter, the Company delivered total revenue of $179.1 million, which was flat to the prior year. Increases in revenue from Wave and international tax preparation were offset by lower interest and fee income on Emerald Advance® due to a decrease in loan originations.

Total operating expenses of $472.4 million increased by $25.8 million as expected, primarily due to higher tax professional and corporate wages, increased healthcare costs, an increase in occupancy costs and the timing of marketing expenses versus the prior year.

Pretax loss increased by $29.4 million to $312.3 million.

Loss per share from continuing operations2 increased to $(1.79) from $(1.33) and adjusted loss per share from continuing operations2 increased to $(1.73) from $(1.27), due to a higher net loss and fewer shares outstanding as a result of share repurchases, which are accretive to earnings per share on a full-year basis.

Capital Allocation

The Company reported the following related to its capital structure:

• Repurchased and retired 3.2 million shares at an aggregate price of $190.5 million, or $58.65 per share in the second quarter.
• The Company has approximately $1.1 billion remaining on its $1.5 billion share repurchase program.

Since 2016, the Company has returned more than $4.4 billion to shareholders in the form of dividends and share repurchases, buying back over 43% of its shares outstanding3.

Fiscal Year 2025 Outlook Reaffirmed

The Company continues to expect:

• Revenue to be in the range of $3.69 to $3.75 billion.
• EBITDA4 to be in the range of $975 million to $1.02 billion.
• Effective tax rate to be approximately 13%, resulting in a one-time benefit to EPS of approximately 50 cents.
• Adjusted Diluted Earnings Per Share4 to be in the range of $5.15 to $5.35.

Conference Call

The Company will host a conference call for analysts and investors to discuss second quarter 2025 results at 4:30 p.m. ET on Tuesday, February 4, 2025. To join live, participants must register at https://register.vevent.com/register/BI06a7e8ddc07544a6853995c1fe75ea2c. 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 general public. The webcast can be accessed directly at https://edge.media-server.com/mmc/p/qdeqpgfd 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 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 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 Shares outstanding calculated as of April 30, 2016.4 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:		Colby Brown, (816) 854-4559, colby.brown@hrblock.com
		Jordyn Eskijian, (816) 854-5674, jordyn.eskijian@hrblock.com
Media Relations:		Teri Daley, (816) 854-3787, teri.daley@hrblock.com
		Media Desk, mediadesk@hrblock.com

FINANCIAL RESULTS		(unaudited, in 000s - except per share amounts)
		Three months ended December 31,								Six months ended December 31,
			2024				2023				2024				2023
REVENUES:
U.S. tax preparation and related services:
Assisted tax preparation		$	48,380			$	48,342			$	91,343			$	87,605
Royalties			3,499				5,454				9,351				11,155
DIY tax preparation			13,744				13,111				16,980				16,959
Refund Transfers			637				813				1,497				1,955
Peace of Mind® Extended Service Plan			16,145				17,440				39,242				42,287
Tax Identity Shield®			4,013				4,694				7,922				9,274
Other			11,824				9,592				25,633				20,572
Total U.S. tax preparation and related services			98,242				99,446				191,968				189,807
Financial services:
Emerald Card® and SpruceSM			10,148				11,700				18,974				20,333
Interest and fee income on Emerald Advance®			12,308				15,235				12,308				15,533
Total financial services			22,456				26,935				31,282				35,866
International			31,811				29,569				96,666				90,134
Wave			26,561				23,133				52,964				47,076
Total revenues		$	179,070			$	179,083			$	372,880			$	362,883
Compensation and benefits:
Field wages			81,565				77,795				149,659				140,230
Other wages			78,731				74,671				156,066				146,769
Benefits and other compensation			38,402				36,063				77,156				71,311
			198,698				188,529				382,881				358,310
Occupancy			104,999				101,194				206,317				200,479
Marketing and advertising			14,863				11,305				24,835				16,786
Depreciation and amortization			29,195				30,107				58,026				60,332
Bad debt			19,416				21,754				22,146				26,552
Other			105,190				93,626				200,297				174,182
Total operating expenses			472,361				446,515				894,502				836,641
Other income (expense), net			2,744				5,922				14,661				15,758
Interest expense on borrowings			(21,752	)			(21,364	)			(37,599	)			(37,234	)
Pretax loss			(312,299	)			(282,874	)			(544,560	)			(495,234	)
Income tax benefit			(69,833	)			(93,758	)			(130,673	)			(143,245	)
Net loss from continuing operations			(242,466	)			(189,116	)			(413,887	)			(351,989	)
Net loss from discontinued operations			(954	)			(639	)			(2,109	)			(1,248	)
Net loss		$	(243,420	)		$	(189,755	)		$	(415,996	)		$	(353,237	)
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations		$	(1.79	)		$	(1.33	)		$	(3.02	)		$	(2.44	)
Discontinued operations			(0.01	)			—				(0.01	)			(0.01	)
Consolidated		$	(1.80	)		$	(1.33	)		$	(3.03	)		$	(2.45	)
WEIGHTED AVERAGE DILUTED SHARES			135,563				142,340				137,359				144,307
Adjusted diluted EPS (1)		$	(1.73	)		$	(1.27	)		$	(2.89	)		$	(2.31	)
EBITDA (1)		$	(261,352	)		$	(231,403	)		$	(448,935	)		$	(397,668	)

(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		December 31, 2024				June 30, 2024
ASSETS
Cash and cash equivalents		$	320,051			$	1,053,326
Cash and cash equivalents - restricted			21,473				21,867
Receivables, net			321,171				69,075
Prepaid expenses and other current assets			114,658				95,208
Total current assets			777,353				1,239,476
Property and equipment, net			143,833				131,319
Operating lease right of use assets			389,629				461,986
Intangible assets, net			270,601				264,102
Goodwill			783,286				785,226
Deferred tax assets and income taxes receivable			281,694				271,658
Other noncurrent assets			65,924				65,043
Total assets		$	2,712,320			$	3,218,810
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Accounts payable and accrued expenses		$	136,893			$	155,830
Accrued salaries, wages and payroll taxes			64,993				105,548
Accrued income taxes and reserves for uncertain tax positions			149,255				318,830
Current portion of long-term debt			349,611				—
Operating lease liabilities			170,726				206,070
Deferred revenue and other current liabilities			187,885				191,050
Total current liabilities			1,059,363				977,328
Long-term debt and line of credit borrowings			1,932,545				1,491,095
Deferred tax liabilities and reserves for uncertain tax positions			292,643				291,063
Operating lease liabilities			228,041				265,373
Deferred revenue and other noncurrent liabilities			72,188				103,357
Total liabilities			3,584,780				3,128,216
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock, no par, stated value $.01 per share			1,644				1,709
Additional paid-in capital			752,093				762,583
Accumulated other comprehensive loss			(71,762	)			(48,845	)
Retained earnings (deficit)			(908,785	)			12,654
Less treasury shares, at cost			(645,650	)			(637,507	)
Total stockholders' equity (deficiency)			(872,460	)			90,594
Total liabilities and stockholders' equity		$	2,712,320			$	3,218,810

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS		(unaudited, in 000s)
Six months ended December 31,			2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(415,996	)		$	(353,237	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			58,026				60,331
Provision for credit losses			20,727				21,536
Deferred taxes			(1,531	)			(35,525	)
Stock-based compensation			17,945				17,525
Changes in assets and liabilities, net of acquisitions:
Receivables			(262,348	)			(348,833	)
Prepaid expenses, other current and noncurrent assets			2,588				(7,395	)
Accounts payable, accrued expenses, salaries, wages and payroll taxes			(76,806	)			(58,543	)
Deferred revenue, other current and noncurrent liabilities			(45,170	)			(58,520	)
Income tax receivables, accrued income taxes and income tax reserves			(192,340	)			(180,706	)
Other, net			(733	)			1,201
Net cash used in operating activities			(895,638	)			(942,166	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(49,115	)			(32,708	)
Payments made for business acquisitions, net of cash acquired			(28,017	)			(27,158	)
Franchise loans funded			(17,442	)			(15,491	)
Payments from franchisees			971				2,747
Other, net			6,110				1,565
Net cash used in investing activities			(87,493	)			(71,045	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of line of credit borrowings			(100,000	)			(25,000	)
Proceeds from line of credit borrowings			890,000				825,000
Dividends paid			(96,960	)			(89,854	)
Repurchase of common stock, including shares surrendered			(436,233	)			(378,709	)
Other, net			1,791				4,011
Net cash provided by financing activities			258,598				335,448
Effects of exchange rate changes on cash			(9,136	)			671
Net decrease in cash and cash equivalents, including restricted balances			(733,669	)			(677,092	)
Cash, cash equivalents and restricted cash, beginning of period			1,075,193				1,015,316
Cash, cash equivalents and restricted cash, end of period		$	341,524			$	338,224
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid, net (includes payments for purchased investment tax credits)		$	62,290			$	72,160
Interest paid on borrowings			33,412				35,496
Accrued additions to property and equipment			3,798				4,036
New operating right of use assets and related lease liabilities			47,135				70,532
Accrued dividends payable to common shareholders			50,176				45,273

(in 000s)
		Three months ended December 31,								Six months ended December 31,
NON-GAAP FINANCIAL MEASURE - EBITDA			2024				2023				2024				2023
Net loss - as reported		$	(243,420	)		$	(189,755	)		$	(415,996	)		$	(353,237	)
Discontinued operations, net			954				639				2,109				1,248
Net loss from continuing operations - as reported			(242,466	)			(189,116	)			(413,887	)			(351,989	)
Add back:
Income tax benefit			(69,833	)			(93,758	)			(130,673	)			(143,245	)
Interest expense			21,752				21,364				37,599				37,234
Depreciation and amortization			29,195				30,107				58,026				60,332
			(18,886	)			(42,287	)			(35,048	)			(45,679	)
EBITDA from continuing operations		$	(261,352	)		$	(231,403	)		$	(448,935	)		$	(397,668	)

(in 000s, except per share amounts)
		Three months ended December 31,								Six months ended December 31,
NON-GAAP FINANCIAL MEASURE - ADJUSTED EPS			2024				2023				2024				2023
Net loss from continuing operations - as reported		$	(242,466	)		$	(189,116	)		$	(413,887	)		$	(351,989	)
Adjustments:
Amortization of intangibles related to acquisitions (pretax)			10,910				12,269				22,038				24,824
Tax effect of adjustments (1)			(2,539	)			(3,087	)			(5,184	)			(6,022	)
Adjusted net loss from continuing operations		$	(234,095	)		$	(179,934	)		$	(397,033	)		$	(333,187	)
Diluted loss per share from continuing operations - as reported		$	(1.79	)		$	(1.33	)		$	(3.02	)		$	(2.44	)
Adjustments, net of tax			0.06				0.06				0.13				0.13
Adjusted diluted loss per share from continuing operations		$	(1.73	)		$	(1.27	)		$	(2.89	)		$	(2.31	)

(1)Tax effect of adjustments is the difference between the tax provision calculated 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.