HRB - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Fiscal Year 2020 H&R Block Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program maybe recorded. I would now like to introduce your host for today's program, Colby Brown, Vice President of Finance and Investor Relations. sir. ahead, go Please

Colby Brown

Good discuss and our Jonathan. joining you us to fiscal afternoon, you, thank everyone, for Thank XXXX results.

today Bowen, webcast presentation, posted posted you will call CEO; containing at hrblock.com. the today's the are a the our website this Jones, after On website, on President Investor and Relations Tony be press link our which today's We find will Also CFO. call. release on Jeff and for the

on we'll in that basis. discuss to figures a the presented GAAP figures non-GAAP reconciled are non-GAAP our of the comparable the Some We've today attached press and release. schedules

current Before will and of as date remarks, include prepared the management's I'll and call as this guarantees of are statements that on defined under this statements we future information begin forward-looking Such performance. securities expectations remind our laws. not everyone based are

involve Forward-looking predict. certain and difficult are uncertainties, to statements assumptions risks, that

and our materially. results As differ actual a outcomes result, could

for our turn Q&A more learn call no publicly can You factors a over H&R update our Block At conclusion Instructions] prepared these have SEC that, or obligation With of XX-K about Jeff. and we'll remarks, undertakes to the risk [Operator risks now in our other statements. filings. forward-looking session. Form I'll fiscal these to XXXX the

Jeff Jones

also are our you, Good lives. safe country We're healthy the staying by tragically families that and taken and plague times. afternoon and thanks everyone you for these senseless Thank which and your Colby. racial continue saddened injustice hope joining us. acts We in to of have unprecedented

our change. and H&R culture a bring about We doing needed continue of are building help to our in part to at Block communities belonging committed

a cover several the months, today's past we the call. Given lot of to have on events

how discuss including owners provide discuss how to on new the last perspective week. an I'll followed next product on that tax remainder our in then small the out the I'll I'll began Wave, by our of business are thoughts of we've the we executing season. rolling results, industry First, pandemic. the start since responded exciting more

future our we've will pandemic on review Finally, share business XXXX anything beyond fiscal perspectives capital on our and I'll results, and thoughts challenges XXXX. experienced. The has allocation, Tony created fiscal

have assist was XX% retail way people prevented served demonstrated closed locations, results credit, pursued to from been be committed Never clients. inspiring they times as both quickly our our incredibly so, by And communities At public. we for situation. I nearly and more clients enough consumers leaving making full spread and navigate dramatic to to innovation, owners work impacted, as to during our to virtually crisis serve to and doing challenging business the access resilient confidence which purpose line efforts been franchisees model our our an state affected of operate playbook, of have the virus want refunds they to these office financial impact to providing our extremely help us H&R and financial to policies In help the ability unique important turned and efficiently everywhere. business, In lockdown and uncertainty the of we've Block. accelerated and our Our effectively have peak, the as it. remained our to home that to every as we the to drawn we've our to they enabled and mid-March, began pros, and in react transform network agility been changes much our associates, cannot our operating we've small gain continue hard caused in tax has quickly needed thank their their pandemic. the

and providing top network, scrutiny our priorities use requiring and including local these The that and protocols far been our dramatic keep virtual became for safety of followed more access local their limiting ever. social offices our capabilities. by half diligently changes digital to we helping is drop-off state while open, we greater clients offices worked than franchisees bringing service solutions associates, those guidelines. the follow and subject teams one the obligation in-person important of our ever-changing orders clients than In short, the with of Regardless has clean, our Because health to refunds. complied made increasing independents. in our remained operated, how and to to distancing clients, For of nearly city of changes,

objective to to consumers into this past. didn't of deliver needs our instrumental the and in efforts clients, to meet in been have have aspect every our we our coming enable year, business of These was to allowing using exciting the new recall, methods may digitally you expertise us primary As our in ways.

their Online, it approve digital allows their these mobile returns, We their off review Online their once clients filers our to capability of Review more uncertain fees a Go, historically leveraging device. have times. Pro to a significant this than returns, provides With returns, seen complete offices including and convenience, increase tremendous capabilities, and portion Approve visiting dramatic in our Tax from Approve Tax especially, feature. pay Pro during

offices. will pros thousands our also model, clients up capability stood serve for them two moving many to We from This without allowing to the prepare we be digital of pros because our invaluable tax tax enhanced Within office. forward. come capabilities into returns work-from-home weeks, having of a our couldn't

with in to needs this both scores on and in areas DIY efforts business, to increases significant strong they in the crisis serve building however points service XXXX. improving clients, and digitally fiscal continue during points Our quality in X has Assisted our clients our meet enable X feedback to of want led

of taking our our take to care significant measures associates. Beyond also we clients, of took care

volume package. we're on filing to extension result in of continuing American our reported our and benefit We we've context volume for IRS they Express, to Our proud made a to seasonal like leading June for also how X, believe the the joined of And IRS's results. by of were a did on proud DIY as them what in their give Pro feedback. positive a I'm so spend impacted. inflating finally, offered as the The for as our stimulus returned tax Go of instant the I'm operations, Small payouts returns we pros our to our returns businesses. total as And X%. well preparation vast instant which of industry were in to Stand asset we our the through coalition these to investment receive returns associates overwhelmingly and of the as the support of in unusual I'd communities. are greatest payments workers of May well create in Tax to our pandemic, At free free received the IRS's down which payments. due frontline number filings program We Industry this market. responded With June, small They don't through is those file. includes access stimulus the minute all to provided fillable we Wave, been has site, majority seeing the year millions if to Through completed completed the tax directly who customers commitment form typically money. this

through Excluding down are compared June we DIY estimate e-files these down X% X. approximately to returns, XX% Assisted e-files,

filing tax our the this toward more gap to in shares provide during call. happened this end are has In extended volumes thoughts history. we'll through that our season April, never maintained With the of Assisted, season. It's an expect gains that QX U.S. respect DIY, this recognize in but relatively through and share of early June. moderate seeing extension we We had in we've the important flat to end moderate to like

reopen, is precedent states no business beginning for behavior. to So is there as consumer there no Despite forecasting usual.

offices either a locations a we expanded first operation and end the We tax drop-off. hours our open not have of more more with to in is typical pros of through normal clients these clients in time while compared less of office. substantial interact have this Instead, number working serving the but than continue than at portion it the season typical tax would a quarter, are year, we far have virtually we April. our to of or have And

volumes be For these may reasons, impacted. client

for marketing make and As have those of we're make available. doing We're understand quarter through the who the to to such, target sure options updated to open help variety sure we've this consumers channels haven't know them plans multiple drop-off we our and filed. appropriately we digital

business Center assistance on In addition we're Small programs. time. our we're help on to we a during doing updates regular consumers, small owners website help difficult this We've everything to free Resource the provide government Business to added can also providing

is This human navigate in tax including another plan Additionally, leveraging service, action of loan programs example the which we entrepreneurs advantage. May, Act, and credits. our launched helps great CARES our recovery

at near to to during and business and operating XX% posting were Turning similar strong the of growth be businesses to as term we pandemic. performance valuation we've this flat without revenue in the impacted losses through these in sacrificing pandemic. limiting over to mid-March, Wave, actions, expect April the key are small business. seen ensure Despite impacted May Wave many measures the by We've taken after we businesses of investments resulting negatively results revenues other

we a have reported such, which goodwill talk of As later. will Tony impairment about non-cash

including aspects first does software-powered giving manage time confidence and viability growth which via in and for pipeline the market, this readiness is products their access integration has all bank of future. for One instant customers remain to short future This great Money, are on benefits platform provide automatically, accounting example been a for Wave payments. fees no more confident expense this to last A and that or was several customers business. others categorization we and more Wave account, is of impact Wave. business the on what week. is focus Wave's to innovation the account is term While valuable to the funds business minimums, Wave on Money bookkeeping to reason unique Wave there can't, business, term we of long bank Wave's and small monthly entrepreneurs services a expanded working the to seamless which of tax

objectives We excited have haven't of we we strategic this new ways lost as to toward this we about simplify couldn't anticipated. normal, product sight significant the owners. what lives innovate to are accomplished navigate progress in we've business making of we summary, our year In continue this as small

We do and reprioritizing evaluate what to in urgency detail of the are sense thoroughly strategic this process to objectively our in committed our evaluating and remain We imperatives, continuing efforts. and transformation We're of our of progress, these reinforce we more determine where to business. taking current With our opportunity to while save better over can we the and work be is This future. expense to later the the will I'll operating year. can examining fund given this structure simultaneously, environment. Tony. hand call identify We'll help our providing our ongoing fluid areas to remain that,

Tony Bowen

on we Jeff. Thanks, Good were on The the for everyone. in the time outlook spoke, afternoon, fiscal deliver our track to tax year. last season we

Because pandemic XXXX financial aligned pandemic However, the of our the outlook. we like we impacted most which with the year the our and has revenue, our withdrew of fiscal companies, our majority in the timing business recognize in of year financial negatively performance. time fiscal

recognized our we tax in I such, results, financial XXXX of future for representing a our taking of see tax by detailing XXXX be investment contribution normally the the we return regarding how our $X.X the year, as in driven as provide performance and of deadline, against the revenues fiscal prior I by actions As enable offset growth. Wave. filing result to however, will, impact extension lower XX.X% remainder In those from we're performance a volumes fiscal of would. the fiscal XXXX, expectations year federal partially decline tax insights I continued billion, the season won't financial of

impairment operating increased Wave's of entirely total driven expenses and goodwill expenses, operating X.X%, expenses. the by Regarding Wave

and $XXX investments our to total though technology. have benefits, at decline would recorded in small goodwill impact lower the expenses its and than revenue operating a Wave non-cash We due million pandemic legal in Wave, fees, businesses. on the planned Excluding at to impairment declined, related due percentage COVID-XX

Wave's As been performance mentioned, since acquisition the pleased growth Jeff with mid-March. solid through we've with

businesses. during to tremendous However, in innovative the business We in small revenue Wave's continue future of value has Wave's and growth platform. to which payments the ability has remain to invoicing pandemic, our slowed small owners confident impacted deliver through and volume

increase Turning was statement, income interest Approximately normal higher $X draws of expense this through credit the half third by increased to during course the rest to the the of our line our of of million. fiscal due business quarter. on

earnings and The discrete with favorable tax during in at positive related pre-tax intangibles GAAP related $X.XX per operations $X the additional of no late discontinued $X.XX. of half other share, items. in changes associated was was due interest were contingent the and March. the due of which excludes In $X liabilities there from a the While resulted Adjusted million. billion in impairment was office impact revenue share, draw Wave amortization the expenses year. per to earnings changes accrued loss to tax continuing and acquisitions, to Sand Canyon to operations, to

for the on information in needs. disclosures additional operational on Despite the COVID-XX, circumstances and At allocation our now top of Canyon, unique sheet. and liquidity the Company's For our is Sand priorities refer the to remain XX-Q allocation maintaining to capital filings. list turn and XX-K balance please reports SEC Forms to adequate other same. the capital I'll the related

we in with ended which credit. includes year strong, full $X line Our the cash, on of as current our the position billion billion liquidity $X.X remains drawn

As the the funds of season March, we believe tax sufficient to at have XXXX. business late in we we announced start support

of with have drive made believe shareholders. we into secured our business subject results, no After is credit. line Based fiscal including Our financial not on ultimately XXXX benefiting this to to did growth, then covenant, a we of April we credit strategic maintain we meet which will the a back ratio on line lenders that our covenant, us but our debt-to-EBITDA requires waiver times of investments terms adequate XX. a X.X to conditions, ensuring the of liquidity, year sustainable our various with changes

fiscal expense in mentioned, the given spend to and these a financial COVID-XX undertaken capital moment. to pandemic's the deploy I'll process in talk dividends to of expense Jeff any I'm pleased to announce payable after share extended our tax committed in growth. year. a we made dividend season, unnecessary will the at our of future despite through an never about going XXXX, of our fiscal a initiatives annual $XXX each step impact quarterly continue our respect is have to has fourth repurchases. fuel July a With declared for public Directors payment last average business, allocation $XX.XX. impact We structure XXXX. quarter. excess measures to of We in the Xst. share in dividend remain no repurchased share share million, review and The of we shares million eliminate the that a We've to dividend an review Board As per order performing since funding repurchases, repurchases of of the XX.X that total price $X.XX capital missed

For the offset minimum, to from thereafter. repurchases at repurchasing equity have past to, shares two opportunistic years, grants share a committed we and dilution

thoughts I'll yet uncertainty regarding not for created the we our repurchase XXXX. Given determined our have XXXX. fiscal by share approach now discuss on COVID-XX, -- fiscal

QX we on As a our provided call. outlook year reminder, year, last financial fiscal our

will plan financial for on call not outlook tax at a financial quarter and full fiscal haven't pandemic, we time. in due on current we uncertainty the our we second to providing and call Given, September recap season be provide Instead, quarter remains completed this yet our our first there tax the XXXX to December. in season outlook a

a me some cost the as our expect on thoughts provide mitigate efforts increases and extension. how Let season the high-level out of to we result close tax to

fiscal QX in of fiscal case. all necessarily shift First, quarter loss while that into the volume not to natural be XXXX expect to the first it's of may XXXX

quarter, under As mentioned, modified a Jeff are still this during we model. operating

clients attract operating usual, we brand. ability with face-to-face. network serve unable substantial we and a to to clients portion just total retain our may clients open are of to the than new impact have While our This offices half still and more

season, of anticipate the quarter. to due the tax expenses, additional Regarding cost extension during the we first

interest million We expense expect and in an expense. $XX increase approximately in marketing of approximately $XX million

Additionally, approximately compensation, assisted to to variable revenues be bad related we of benefits debt expect expenses XX% and generated. incremental

renegotiating a a additional in but and our by reducing our fiscal merit spend is with footprint, landlords a freeze, business. We're XXXX, focus, detailed prudent the for implementing finalizing cost across mitigate to We few are existing to spend contracts, ways can reductions any rents capital expenditures to areas including plans, taking eliminating examining across at all offer of increases and actively process look what necessary. only hiring vendor I making these of evaluating renegotiate retail still categories,

to and including have preparation and leader addition In letter to partner excited we and these We're Advance with to the in Refund model, Advance, efforts. experience valuable providing MetaBank us prudent in Emerald non-binding call clients. of operate which credit measures while Emerald of them line over adjust cost to savings. products continued future. With savings, to including effectively, the the to financial of operating Card steps MetaBank we've have taken is financial into our tax I now the Refund reduction a entered continue solutions products, pandemic, intent to that, will will a will investments modified our to Jeff. consumers significant our industry. result providing in In our back in to enabling with to turn summary, draw, These be provider Transfer, allow

Jeff Jones

I history. are we'll business. Jonathan? most. again now Thanks, time unlike than of Tony. to our model transform am we any our with our come the our our September. stronger tremendous continue as challenged The delivering speaking months questions. when us adjust to forward strong pros, the to time has a open during and to confident value to financial With you we'll live foundation, associates work look that, line other out the our ability our I'd clients in tax purpose. last like ever us continuing dedication few crisis of enabled who operating at to been We've to franchisees, for this resilience continue team, in they and thank our and I our need

Operator

first from Goldstein Jeff of question Certainly. [Operator from line Morgan the And Stanley. Instructions] our comes

Your question, please.

Jeff Goldstein

Hey, guys.

You extended in mentioned tax seeing Assisted share the moderating season. gains

So, in place the final to? are in I'm just strategies month the that you there curious, And season then that any what to mitigate of attribute here?

Jeff Jones

question. Absolutely. Thanks for the

serving So, In an if office, normal places, how steps prepared about operating we said operating open drop-off-only, pro in Assisted remarks, protect really model, clients many in our we're to is tax the we we've are even the business. think and in when there we many no both as are you in many, taken client. the there are as and about

For example. cubicles, small the as example, they as orders retail the independents. both sit quite separate fact is, one national in we scrutiny local of just I And are subject a local think differently than following brand, to

For center example, a or we operate counter. operate strip building a may in their independent at in kitchen an honestly

do So really business disrupted with come clients how expect, have that how and operate to and has the that scrutiny, us. they way we have our know to

that, and – serve So have we to that our on clients. see an ability impact could

focused Now, order steps we're QX the winning that are that on said, in that. entire taking to several and organization is offset in there

of sure making haven't yet. I is that can we filed we're to clients doing everything doing that, think the had we've one know we're things biggest the we retain

see to a what mitigate them we end rush the so forward to we the and would normally And of having do to in is out can individually, we pull reach tried of like April. season possibility the at to them honestly,

of to how office know: of all channels sure open. whether marketing, normally the of marketing, those performance it's they time drop sure Obviously, virtual, Block we're making that understand coming in conditions, them, of we et really year; email serve and full A, isn't that, can B, addition making off, television, open cetera. an under breadth ways to clients options this that we're in open H&R marketing, In we're

taking there's question, operating model it. hard it's in to we're the steps But So to how no retail kind of overstate mitigate our is unusual footprint.

Jeff Goldstein

is Understood. COVID term That's opportunities I'm beyond there this helpful. curious, longer then, period. And initial any

changes think of opportunities in services footprint drop-off the world? your digital of maybe that physical some success instance, think future post-COVID else a these and there the is lower For you a do thoughts or of in longer could you the in around curious something Just term? result like,

Jeff Jones

Yeah. Great question.

is light couple confidence, years, the accelerating has our shined very they're question, Over capabilities we've particular, I this a of last and these pandemic really and on virtual in been to those investments no strong. there can with capabilities, build say really

it's assistance, doing of you approving of capabilities DIY their getting filer, perfecting. Our and that a we've ability return to job serve that all various or we been forms online clients, if are know great building whether a

Now this Pro demand, that more us Tax really sure people make said, as work an to that understanding, easy is there option. still ahead safe understand consumer for

it is take to been confident unlocking capabilities If of When season really, time, and big of for a you our we really step retail part footprint. terms think has a to time. business XXXX, their but look shifts, couple shone look more get XXXX like over enabling I digital these help and from flexibility at similar our have will human as today, back that, years to about now through am people footprint certainly, I in on strategy this tax our

Jeff Goldstein

Got Thanks lot. it. a

Jeff Jones

you. Thank

Operator

Thank you.

Our Scott comes line from Schneeberger the question from next Oppenheimer. of

Your question, please.

Scott Schneeberger

for numbers there would Thanks. who it. now would million numbers more I what that stimulus Do that, think you X very some and come? looks Good returns backing point. you at it like about what into as large you much. just IRS on from be mentioned do over occurred I think do were XX We've filed. or think as there going this you is could those seen were have Thanks out that by there that, million. to for that the thoughts remains guess, guys, filing to you thought know it afternoon. But that's have

Jeff Jones

Scott. Yeah,

be what from Washington. we're number learning IRS We We're payments, So, is. of with out it's of reported is those a think kind everything back that to and you based very important second on ultimately, well, as reported hearing think stimulus IRS. We Obviously that yet. them. in hasn't what's be being see publicly do yeah, when working the there what to the that's we round about not going about number clear by

a that that suggest that a over, our in that the at that economy, way the that product and get very of been, forms we zero were stimulus very, was make wave the obviously saw IRS people their it's big So their is with eager dollar payments return, were would to definitely as there changed most people bank very rush as we own fillable to well allow sure people registering accounts. the to --

number on we'll most nets where So we see what out, but behind the say based that's know today, we of would us.

Scott Schneeberger

All around tax that. XX, DIY million of they -- was returns category, in The right, million Alliance, File for the thanks, on XX% Similarly, seen versus a season whole Jeff, it last Free million year. increase and X.X that versus April actually. year-over-year, the mid-April IRS X.X X.X that had was updated

elevated. that's So

Alliance Just what's Free occurring some a will slows final File or dynamic more would the see peak? on And like forward in Thanks. down perspective is to that there. get that activity your we think going you

Jeff Jones

Yes.

reported right you're the they results at Block with line at and XX% our right number So in on. were that. that That's H&R

note our IRS many the just more It's Alliance. paid that it's to important forward and and the fact of And participate as conversation think I a for of really a program. the ways file in all we've in would different. File best at growth We positive be I I Free program is the quite The direction out it's to file for we've been communicating the as for there with Absolutely. the that reassessed that reflection The It's shared two October, today a now. commissioner, had an three of of offer them industry to XX is, company, the to years. of decades. to attention week, of are a we to this a of is the important of that free dynamics I in and free are by last priorities company year. in simply benefits different interest the as it mentioned partnership outside believe stepping let move Free remarks, IRS, the the in for know Commissioner ways with almost this File the prepared partnership different fact happy we been season tax with also end program

think of just different it's interest the a to forward we let last week. best know the direction, and company so that in And in them we move

Scott Schneeberger

hop over I'll back the in And Jeff. Thanks, queue. turn and it

interesting Just are moving in? follow-up might development. given those you Alliance, just your File in conversations, ultimately, involved from anything from IRS, do – they you on the That's more different and that. a they In and an a might Free become anticipate decision themselves direction the Thanks.

Jeff Jones

Yeah.

Alliance the of Obviously, question. comprised great H&R Another was than more Block.

footing So something there to participating. each decisions. present this other strong do option That's always three the program not are the years themselves. many different, IRS been companies year. to aware growth having MOU leaving do always else's has a one any We're of the the on we're with that are of think maintained in We in row and

any think companies' And not particular, aware decision, so decisions. we our changes in other we're that. of don't But

Scott Schneeberger

Thanks, Jeff. I appreciate the color.

Jeff Jones

you. Thank Yeah.

Operator

you. Thank

from Mehta comes from the question next of Our Northcoast Research. line Kartik

Your question, please.

Kartik Mehta

this what I'm Jeff, been there's are for growth of thoughts terms channel afternoon. channels tax Assisted for industry the season just your many and wondering good self-prepared in so Hey, since moving just parts. the

Jeff Jones

Absolutely.

here. to try are it a point, me break into Let pieces down with bear different different of to your few lot buckets because me a and there

have first the that. to impact about we is, X% and, would don't we as growth an expect thing into think COVID on I industry, an season the say expecting I in total went

decision. stay-at-home pandemic. we filing the growth of been mid-March. so going thought deadline industry there the since about really requirements, all the things orders, into many local happening have So total and what Obviously, industry The in state the

was extended extended. of – confusion remember may deadline because You balance in was was there before May, the but lot was due deadline extended, a it the announced wasn't

So, then kicked the stimulus in. payments

that really confusion of and lot caused things So a delay.

just remarks, said shift X, Assisted seen June of shy X% down we our up we through payments, those DIY of out e-files for to down XX%, are think prepared and DIY, in We between about Assisted, As DIY basis points. X%. stimulus have you a XXX pull when

So starts balance July expect to as the of and that's we the of the feel We XX,XXX to to this to season, people the why. we because over how was, And see answer end normal, and have kind the to survey dynamic. become get we back have orders them XXth And listed more consumers, through current of April don't yet like who about through a asked recently yet. XX. of filed not did start

answer safety. second The around was

under like IRS it feels peak to of up, definitely July have going of you open complete a be is X of people the all kind be even to the of aren't holiday the though think is to deadline wake this close. So and is ready sense the going way, yet and is though a we season still even and tax sudden

One a that things basis it so to, ultimately DIY told have even of again, XXX conditions. been reform, more and shift all Assisted end massive we than to to than expect to comes for close this to There year, to far, of DIY home. this points. XX. with back we were shifted been than present those are And But conditions, basis last the that the stay paying points. just tax less year. the second conditions expect about it's XXX to higher closer step only People moderate is season to kinds but July be migration as And did all couldn't to obviously, attention really it, of year we've take if I moderate the is from

and close but a as consumer paying parts, again, we're said, moving attention behavior. to you of migration that the lot So

Tony Bowen

industry our would Just Jeff, X% filed, the thing is real exclude the quickly, on just obviously. been to that returns expectation the add does have stimulus one I at for clarify

of kind and said, return, we're return because volume backing not the a typical materially of at Jeff that we reason be have but out different believe thought So, the so tax unusual they're beginning we season. as those just, overall no what to would than tax

Jeff Jones

Yes. Thanks for that.

Kartik Mehta

discrepancy the why as than costs, you between significant Tony, of -- there maybe increased for the a you decline, some then, much but wondering was this EBITDA was I and I could walk at revenue year, And there revenue. a understand And so adjusted through EBITDA. look more reported such I'm

Tony Bowen

the bottom also in Yes, talked line. revenue almost us, XX% offsetting Kartik, to expenses definitely of decline labor we've of the I that essentially very a that you're mean, you we declines in to line. DIY as model of runs the about the in a business, business think labor. ratio Assisted little the bit hit for to our saving But know usually we lot with And that put drop when about cost the because big but well. some had example, variable we think have the if some we does I incremental see revenue huge business, some benefits mean, to place. and drops special did a bottom due in drop drop of it XX% year, percentage expenses in didn't this even about COVID-related in a we that you one-time

did So that's the why have we revenue. we on such EBITDA in to impact relative an saw decline

Kartik Mehta

that like public. on just And it then know thought. from to allocation, you sounds be to as mentioned the as originally from going And -- DIY you great DIY since I dividends maybe company Assisted through Jeff, isn't capital the shift that went paid

you're tax file will because season, better, obviously people all get year. next year's that be to going didn't the so And this

it of amount, long-winded like or the in dividend the sounds question pay. Board a to I it past the but absolute the seems statement, is where it's something was as growth EBITDA that or as committed know reasonable? the kind is is So that dollar long

Tony Bowen

take I'll Kartik, Yes. this.

which right typically, this So dividend, we obviously Tony. fiscal end is year, is now. the that, after We've of the the review shared

the that Board of dividend support is rate share. the to per the pleased we're at $X.XX So continuing prior

You we row, that a years prior pleased so over the increase period. four in may with raised really the recall dividend that

over we're up period. four-year XX% over I that think

being which EBITDA that, revenue rate. obviously, a a from shift and with fact current would dividend toward we'll down, year. the fiscal down at given we're really that's pleased happening year time and next QX, this we're favorable QX to the year tax year, being of to with looking given review next able Obviously, after of the dip to maintain season be double So we're that in then each QX, kind continue

Kartik Mehta

Tony I you. it, Thank Jeff. appreciate Yes. and

Jeff Jones

Kartik. Thanks,

Tony Bowen

Thanks, Kartik.

Operator

you. Thank

of next Goldman from Our question comes George Tong from the Sachs. line

please. question, Your

George Tong

H&R into do has many marketing afternoon. through traditionally to have Hi, a your outreach or customers either H&R Block digitally competitor? filed at on thanks. you already, Good returns how Based Assisted their Block customers, insights through

Jeff Jones

Even to to of or I whether So, doing. we that look result back thing some that, intention definitely competitors. different we the it's I for the and circumstances just out, method about to reinforce spoke DIY were it have we the to the growth will us or relationship ripe we mentioned do Online simplicity, pleased for and And, think, year again, understand people accustomed seen season Tax when go moderate told really next research, was, we of I this this study, you that human their haven't very they're at just this And that think circumstances. in having was business, a our core meaningful as George, The year not a stated trying really overwhelming what preference that to all made people and majority think it's learned really is closes as about to shown people confidence and to that us getting earlier, our to Assist migration in the continues choices and year. this we're Review for again help. see rapid year, it belief DIY Pro

review So their chose the to DIY also in questions a of or who, have get point filers, help. to full either wanted those some decided are process, they And they return. at answered

no choice us because if prior different light really the numbers building a important So step the telling their this year return and method building take they large provide again, and to we're expect to been back, had just to to capability came consumers some help, to, channel, really capability made a season. are next this matter -- a they year we've in we is

George Tong

your Got in expectations it. helpful. indicated you Wave what growth changed view and flat about investment Wave given took? longer was May. Has for April dynamics? that turning you longer-term talk adjusting business, that revenue impairment to light Can your the growth That's evolving growth are in term for of your approximately And the spend, the Wave and then you how are you

Jeff Jones

of macro backwards in The Absolutely. we the businesses. landscape happened stepped with because what's answer short is, small

impacted businesses high expectations our impacted, to ability obviously But say them. Wave. growth neither company it not to a importantly serve Wave's we changed their bought were have on and has As having

with and we As day We're and change like we owners a get back small I high fast everything closely businesses every committed seen we're we've little rates that to and talking to to the recovery business paying in going their and team June actively trying we're market. growing small to used growth attention to work close be bench, in they in can future. to of nice the with the are do near to fully

George Tong

Got it. Thank you.

Jeff Jones

George. Thanks,

Operator

Thank you.

comes Mazari of line question from Hamzah next Jefferies. Our the from

please. question, Your

Hamzah Mazari

Good is just, again potentially like if part to you. relative burn you think evening. in My first if just question Thank could just could that, you be tax cash extended liquidity. the the September. And of your tie as to deadline what looks then

think have liquidity fiscal through mentioned you you enough I XXXX.

lasts. how timing catch You of waiver long mentioned But sort the didn't of that we covenant waiver.

So would Thanks. any detail be appreciated.

Jeff Jones

Absolutely, Hamzah.

about of morning, that this if And part Treasury, will the sentiment flying, and waiver. decision conversations know, sentiment of Tony you've But we probably on lot with extension. the as don't get, we're not Congress those team first Washington the is And is the we of current there's Senate, members been another as obviously, me in but with that's rumors all commentary tag be no Let things, IRS here with as possibility there's take and another extension. and is there the on recently more while, our we seen, will not the in extension. all having, don't the the know a

Tony Bowen

believe to through specific in be of obviously, liquidity, enough to season tax we say waiver January, XX. us have my February I opening to did to get next And April liquidity specific to as the And do XXXX. was comments, we

So, that it's quarter just end.

on have picking one-time no continue had It results at not times EBITDA QX But given an in in more we than view did We of basis, from forward. issues in be EBITDA will the nature. a to again to historical to as be that obviously really ratio EBITDA X.X XX-month up was a a a will and level of basis. continue monitor just the period. but as trailing that, perspective move liquidity debt expect no -- achieve year-over-year which the going least forward, or we that We'll improvement on we we EBITDA

Hamzah Mazari

tech like operating you estate real relative Is or rethinking question, it'd it different be it. you're what whether your are, you. this And dynamics. post-COVID, Got it most Thank looks follow-up my model, turn I'll Block? timing-wise, hear to over and your H&R can other any is, were companies footprint when the first came when changes Thank transformation regard investors And back you. at operating in model operating model? post-COVID, into of to whatever doing to looking you may then sort on have, you

Jeff Jones

one the time about To be which the September going we years really we on I our done us And we been when first, now obviously offices, forward. look call, we aggressively take for wrapped having consumers, further done of different. for We've done the operate talking capabilities how have to the to future, our opposed we're in now improving those doing helped your even Absolutely. as the for has of expenses, quality building step season our and as want the growth and December competing things think fundamentally now. it virtual the answer up on back something reviews of different talk to In a those up. on in come a really we commitment will that the provide wrapped about more in revenue will couple when right second and outlook at quarter call, what And being and context what we'll again a way. we DIY, tax do result pros, completely ways, out on we pandemic, and moving accelerate thinking we're and of our earnings pandemic, and moving have forward into our COVID all about agenda, the accelerated many how strategic many, provide

Hamzah Mazari

Thank you.

Jeff Jones

Hamzah. Thanks,

Operator

Thank you.

Scott question next follow-up a is Our Oppenheimer. the Schneeberger from from of line

please. question, Your

Scott Schneeberger

Thanks taking straightforward. pretty actually two, very the have I much for follow-up.

abiding you expect because the competitive storefront? then think bit sensed follow-up the visible there less and in more that in by do Jeff, caution qualitative. what can of today from thoughts a one maybe because a guys are for an you first of are behavior you little be that they comments I curious edge lot after. your and your Do kind on have rules. is clearly Thanks. a Just Assisted smaller category, others, Tony that flexible? of The

Jeff Jones

there XXX,XXX independent Yeah, that absolutely. are quite you that And zone. locations well know in

And isn't doing a compete So, of a orders the firsthand very or different follow we there that to lots this in take are different you've required are we protecting to one against. change local these you're regularly for independents. of pride and used same always independent which way, an way being local burden at current lot play. clients if obligation, you protecting isn't people, competitors, on that are served. think our lots staying put serve the have normal at the That to than heard a different they're other our puts safe have the our in operating and building seen we office we case, scrutiny have intense. just local or retailers, that on just And in They ability of place to orders if just being XX and where the clients or a that operating XX you those but burden from you're are kitchen if in returns are XX your or table,

Scott Schneeberger

sense filing, there Thanks. or a little you, on Thanks, new prior the to yet, much not give as finalized a you model? share bit that to us alluded just improved it you might Tony know And sure you I'm benefit that, I color. for I what how of appreciate in then, release to so press Could economics. a the can a elaborate bank expect you've but partnership. hasn't

Tony Bowen

Yeah. Scott. Thanks,

which ago, pretty far hope we're should so We've That be agreement before you several soon. season. those agreement As announced said, tax haven't final really and in finalizing place we're a of and really, definitive next we intent, to weeks a along a details, we signed agreement. letter signing be signed now

new bank MetaBank, tax all with partner product our be So for offerings partner, with. that we're season of will XXXX to excited really

be relative a what all far details, to far the we're operating off hold agreement the final is have as saying side, as But the place. economic in we currently we're at and savings going this As as to once those it point under. we're share will

Scott Schneeberger

Okay. Thanks, Fair enough. guys.

Tony Bowen

Thanks, Scott.

Jeff Jones

you. Thank

Operator

you. Thank

Our Capital next Markets. from Jeff of Silber question comes the from BMO line

Your question please.

Jeff Silber

tax Thank great. both of Assisted? season, be side, just you much. data, share gaining so curious those on Wanted there's do far so with go to or tax I'm DIY a but the lot results know losing and I separately, that'll you'll back this IRS If you in for parts could to the you about be moving think talk

Jeff Jones

Yeah.

through taking of In gains, through So I gain the in Early season, we that with Assisted, is what sure and clients with the that really, open filed, to retain the what we're know to would do various terms the I to in our be DIY aggressively June. our June, goal reiterate shared options moderate, people us. I been felt flat mean, and seen April, to to we flat, and of about And end we're value that and in relatively make doing. sharing we on we're was do, Scott trying we bring we've early our putting what know we're remained the just broad of, and that's progress. but we're as we those market just of but great see have forward Through about mentioned, business started two the I some cautious tale seasons. they has also share kind in a been that. it had marketing being it's relatively strategy have we've with why I haven't are building explaining to approach that share. share earlier, prior competing prop the earlier that

the So caution model. the those steps operating are mitigate to we're given taking

Jeff Silber

you're perspective? there? average on talked from a seeing in don't what What talk And you going I net there at happened about about charges. Are all quarter? pricing Okay. changes any you the Can think competitive Thanks.

Tony Bowen

holistic independent are gain and wide we we were pricing, model, nothing our how still is pricing business, early this Yeah, we're pricing going is the material. will Part of The well, definitely change Everything season. much or when in part to average full putting market but model. relatively you're really that's year think just things net is year really moderated the said, significantly which or always there's I the a expecting and of there our a independents I be response the thanks. of of but the this season, success as nothing upfront dealing good continue unique in We to and to is QX But call feel transparent market, we're in of allow tax you'll recall, feel shift we share be to imminently. of found mix that's to that charge prior variation the a from compared from our due Specific obviously, a pretty some do into that's expect good results year a to in clients like to with different, perspective gaining that's place model would down Jeff fiscal for been future. that the to don't later year. to of second which through the see good the the competitive is that, seeing filings the us of have and our traction -- as we and, but the went just note. XX-K, anything would about from some QX flat Assisted slightly, into are impacts part

Jeff Silber

be when And will the sorry, I'm XX-K filed?

Tony Bowen

Today.

Jeff Silber

Today? today. Okay. We'll get that information

Thank Okay, much. so great. you

Operator

you. Thank

Research question comes Millman Associates. line Michael Millman Our next from of from the

question, please. Your

Michael Millman

you Hi, subtracting and wrong? numbers, there. subtracted increase. X% as you. Thank up doing IRS I the the misheard the with I talked but still am and already know do-it-yourself come far What numbers stimulus, as those I when about they

Jeff Jones

filers. have Michael, required the has those of, in yet, number not Well, fact those, the out not subtracted published numbers not the IRS of and kind IRS to file actual

said still that filers earlier, about number haven't being as IRS the X yet million the backed someone reported been by So out. includes, that's

Michael Millman

returns, for your the total is So what IRS? current

Jeff Jones

down June X%. through total X, so -- Based

Michael Millman

No, no. Actual numbers, please.

Tony Bowen

is know, Yeah. public We if information have I don't -- look, the there. we definitely follow-up. Michael, mean, numbers. it's can out I

are you got back those. about which out XX% follow-up Assisted the about But is returns DIY, Assisted what down through and DIY believe We've returns, we can counts. of being down and If with not believe have the on June don't XX% We IRS XX, stimulus are exact we a being combination our those, X%. down we fingertips. just at

Michael Millman

shifts I'd more be is back Okay. particularly seeing doesn't that than of it status in, next that be should back back? all the interested kind to talk getting shifting and Why thing. maybe numbers. think -- do XXXX, you seem over average year, going years, shift that -- changing those we about, And the DIY

Jeff Jones

Yeah.

just shift under try I'll and more, season seeing clear of So be kind that My about get we're expect gap maybe season. seeing we the we comment end year. And tax was, of year will this for a the what by we're to we on, points. moderate, expectations next less to be basis July XX, see as that XXX time toward of year-over-year-over-year get we to-date,

we're DIY. people this of two operating points. migration point is, a their was expected have normally, year a about was not now them on two way people intentions different to reform, pre or ask higher referring when did could much all of file. in year we've view that from home, go and choices piece with of to then And there being be we intentions. been they year be kind And what XXX of able And respect to we back surveyed that than of XX,XXX With to that we And over how migration that's you to And cetera, is to It's research basis offices a next what when of tax year, they tax we not has year, what seeing just et combine closed the consumers next And consumers leave because reflecting to part used would So this you there their faster the lot that had much consumer of heard to reform they'll is. one finishing. happen. been year. is I that intention conditions, at year But belief about this what to. post-COVID. made was, it next not understand

so what And that's seeing. we're

trying have that's telling but saying choice, they are is people this us their to is, And what what next about they do no of so terms In old may to preference different method. that year, year because two DIY had make. moved to we're their points they're

Michael Millman

Thank you. great. Okay,

Jeff Jones

Michael. Thanks,

Operator

Thank session today's the the you. question-and-answer hand would This of to remarks. any program. further to does Brown conclude program I for Colby like back

Colby Brown

everyone today's joining Thanks call. concludes for us. This

Operator

Thank conference. participating you, for today's your ladies does This gentlemen, program. and conclude in the

day. You may Good now disconnect.

H&R Block (HRB) 16 Jun 202020 Q4 Earnings call transcript