liberty tax inc. reports results for the third quarter ended jan. 31
by 卡塔尔世界杯常规比赛时间 research
liberty tax, the chain of almost 4,000 tax prep offices, is suffering from a variety of problems, both internal and external, according to founder and ceo john hewitt.
“the 2017 tax season marks another period of change for the industry as filing patterns continue to shift later into the season,” says hewitt in a statement. “the whole industry has been slow, but we are clearly not satisfied with how we have performed in comparison to the market. there is still a lot of season in front of us and we are focused on delivering a strong second half and on implementing the appropriate changes to be successful in an evolving landscape.”
through feb. 28, the company said it had prepared 915,000 u.s. tax returns, as compared to 1,094,000 u.s. tax returns prepared in the comparable prior year period, representing a decline of 16.4%. the company operated 3,823 offices in the u.s. in fiscal 2017, down from 4,225 offices in 2016. the decrease represents a decline of 250 permanent office locations, as well as a reduction of 152 seasonal and processing center locations, some stemming from compliance problems.
hewitt surprised listeners on the company’s quarterly earnings conference call by saying he’s looking to turn over the reins. “it’s time i have a backup in the company,” he said.
one analyst, lee jagoda with cjs securities, told a reporter that the successor announcement was “something i would have never expected to hear on a conference call.”
but hewitt has a history of sharp turns. liberty is the second tax-prep franchise hewitt has created. his first, jackson hewitt began in 1982 in hampton roads, va., after hewitt and other investors acquired the six offices of a local tax-preparation company, mel jackson tax service and launched the “hewtax” interview program the first of its kind in the industry.
hewitt developed the software with his father daniel. in 1988, the company changed its name to jackson hewitt. by 1986, irs personnel also began seeing the advantages of computerized filings. that year the irs tested the electronic filing process, allowing taxpayers to directly file their taxes and bypass the mailing of returns entirely. as a leader in using technology to facilitate tax filings, jackson hewitt benefited considerably. also in 1986, jackson hewitt began offering franchises in the united states.
by 1992 jackson hewitt was one of the fastest growing private companies in the united states, according to inc. magazine, attaining a secure second-place ranking in its industry. the company became public in 1994, and was sold for $483 million in 1997, by which time it was operating 1,345 offices.
earlier this tax season hewitt predicted that the crackdown on undocumented immigrants and an irs move to delay refunds would hurt the industry. beginning this tax season, the irs by law cannot release refunds to taxpayers who receive the earned income tax credit (eitc) or the additional child tax credit (actc) before feb. 15. the irs has said that taxpayers should not expect funds in their bank accounts or debit cards before the week of feb. 27.
“liberty tax service is concerned,” the company said in a statement, “that the federally mandated refund delay has negatively affected the nation’s economy by helping to create a $45.5 billion year-over-year decline in income tax refund payments in the first two weeks of the tax season. liberty tax service estimates that about 2 million of the nearly 9 million individuals who filed federal income taxes in the first week of tax season were affected by the refund delay, stalling approximately $10 billion in refund spending in the nation’s economy. the reason for the refund delay – to decrease tax fraud – is positive, but liberty tax service urges congress and the irs to work with partners in the tax industry, including liberty tax service, to seek other solutions that do not penalize families and disrupt the economy.
“the timing of the refunds is crucial,” said hewitt. “families anticipate that money to pay bills, buy groceries, and catch up on late payments. this delay likely will disrupt many households and have a dramatic effect on the economy.”
income statement
for the three months ended january 31, 2017, revenue declined 9.7% to $48.4 million reflecting a slow start to the filing season. operating expenses were down 3%, or $1.3 million, as a result of the slower start to the tax season, as well as cost saving measures implemented in fiscal 2017. diluted net income per share of $0.18 was $0.16 lower than the prior-year period as a result of the decline in revenues.
| ($ in millions except per share data) | gaap | non – gaap* | ||||||||||||||||
| q3 2017 | q3 2016 | change | q3 2017 | q3 2016 | change | |||||||||||||
| revenue | $48.4 | $53.6 | -9.7 | % | $48.4 | $53.6 | -9.7 | % | ||||||||||
| operating expenses | 43.3 | 44.7 | -3.0 | % | 43.1 | 44.7 | -3.5 | % | ||||||||||
| income before taxes | 4.1 | 8.2 | -49.8 | % | 4.4 | 8.2 | -46.8 | % | ||||||||||
| net income | 2.5 | 4.7 | -48.2 | % | 2.6 | 4.7 | -45.1 | % | ||||||||||
| diluted eps | 0.18 | 0.34 | -47.1 | % | 0.19 | 0.34 | -44.1 | % | ||||||||||
as of january 31, 2017, the company had drawn $131.2 million on its revolving credit facility, compared to $150.7 million at january 31, 2016. the decrease in the usage of credit facility is primarily due to a shift in seasonal borrowings of our franchisees from the third quarter to the fourth quarter.
on march 7, 2017, the board of directors approved their ninth consecutive quarterly dividend to stockholders of $0.16 per share. the dividend will be paid on april 24, 2017 to holders of record of common stock and common stock equivalents on the close of business on april 12, 2017.