July 31, 2020
September 22, 2022
Dear Fellow Shareholders,
These are unprecedented times. Our country2022 was another great year for H&R Block. As described in detail in our 2022 Annual Report, virtually all aspects of our business did exceptionally well as we refine and execute upon our Block Horizons 2025 strategy. And, as a result, calendar 2022 is facingalso the most dangerous andyear our share price finally reflects the significant public health crisis in more than a century, one that has afflicted more than 4 million Americans and caused over 150,000 deaths. Essential measures to dealprogress we have made.
For calendar 2022, through the end of August, with the crisis have inevitably led to the most substantial economicbroader stock market down about 17% (the worst market decline since the Great Depression. Meanwhile, we are, individually and asRecession of 2008), your company’s share price has increased 91%. To put this data in a nation, confrontingbroader context, on December 31, 2021, the consequencesmarket value of senseless acts of racial injustice.
It is with both pride and humility that I report that our company was slightly less than $4 billion. As of September 20, 2022, at a share price of $44.94, it is over $7 billion.
This is an extraordinary performance, and your Board couldn’t be prouder of President and CEO Jeff Jones, his Senior Leadership Team, and all of our associates and franchisees. I know all of you join us in recognizing a job exceptionally well done.
Our success has effectively dealt with these severe challengesenabled us to give back to you, our shareholders, more directly through increasing dividends and remains financially strong and fully capablea consistent program of meetingshare repurchases. In August, the demandsBoard authorized the 4th dividend increase in the last 5 years to a quarterly rate of $0.29 per share. We also approved a new $1.25 billion authorization for share repurchases, building upon a program that has resulted in repurchasing nearly a third of outstanding shares since 2016.
The headline for 2022 must of course be the performance of our business, but the Board is equally proud of the future.
During the recently concluded tax season, we faced a number of major and unique issues. First, in mid-March (two-thirds of the way through the traditional tax season) the federal government announced that for the first time since the establishment of the income tax in 1913, the tax filing deadline would be extended beyond April 15 to July 15. Our nationwide Assisted Tax infrastructure, built since its inception in the 1950s around a three month tax season, had to respond quickly to a tax season twice as long.
As the scope of the pandemic was becoming clear by mid-March, state and local jurisdictions throughout the country, heeding medical advice designed to minimize human interaction, began to impose restrictions on businesses and individuals that limited the operations of all but essential businesses. These “lockdown” orders had a double-barreled effect on our business: our clients were strongly advised not to leave their homes and, in many locations, local officials ordered the closure of our offices. We fought to remain open wherever possible, but at the peak nearly 20% of our over 9,400 domestic offices were required to be closed to the public.
Despite these difficulties, it is important to highlight some very real positives. First and foremost, we must recognize our front-line team—our dedicated tax professionals—who came to work determined to help our clients file their taxes and secure the maximum refunds. Their dedication to the job,contributions the company and its associates and franchisees make in the thousands of communities where we do business. Established company-wide programs such as Make Every Block Better are further enhanced by our clients has been particularly importantstrong corporate culture of caring, inclusion, and volunteering. Indeed, the help that is provided daily throughout the H&R Block universe may in helping us through these difficult times.fact be the most prevalent way we make a difference.
Also noteworthy isFinally, a brief word about the important role our digital capabilities—Online Assist, Tax Pro Go, Tax Pro Review, and Approve Online—played in meeting clients’ needs. Having shown its value in times like these,Board members we are even more confident that our unique abilityrecommending for re-election this year. I believe the shareholders are fortunate to offer the full spectrumbe represented by such a distinguished group of tax preparation services will provide an important advantage going forward.
I should also mention how pleased weindividuals. They are with our acquisition of Wave, the small business accountingintelligent, diverse, and financial services business we acquired last summer. Like so much elseare all leaders in the economy, Wave’s rapid growth rate was also significantly impacted by the pandemic in March and April 2020. But, especially with the addition of Wave Money, the first to market combined banking and bookkeeping solution for small businesses, Wave has resumed its positive trajectory in recent months. It is an important part of our plans for the future of H&R Block.
Finally,their respective fields. Along similar lines, I want to recognize allthank Christy Wood, who is not standing for re-election, for her diligence and dedication during her 14 years of service on the Board.
I share with Jeff and his team the conviction that this past year, while exceptional, is only the beginning. We are continuing to deliver strong results in our franchiseescore tax business and associates—are gaining traction in Block Horizons, our long-term strategic transformation, built on the foundation that we can serve more customers in more ways by better leveraging our existing assets to become a trusted partner year-round. H&R Block’s future is very bright. I am proud to be a part of it and especially the senior leadership team headed by CEO Jeff Jones—for the extraordinary way they have dealt with the challenges of the year. Our team has performed above and beyond throughout the crisis and, on behalf of the Board, I wantmost thankful to extend our sincere appreciation.
As always, I will conclude by thanking all of you for your confidence in our company. These are difficult times, but our company is financially strong and strategically well-placed, so we have a great deal of confidence in the future. I look forward to “seeing” you at our first-ever virtual annual meeting in September.support.
Best regards,
Robert A. Gerard
Chairman of the Board