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Tax prepare H&R Block posts slightly smaller 2Q loss, dip in revenue

KANSAS CITY, Mo. - H&R Block Inc. posted a smaller loss in its fiscal second quarter than a year ago, when the tax preparer booked a bigger loss from operations that have since been discontinued.

The Kansas City, Mo., company typically reports a loss in the August-October period because it takes in most of its revenue during the U.S. tax season.

Bill Cobb, H&R Block's president and CEO, said he's confident that the company is well-positioned to deliver strong results this year as the company wades into the upcoming tax season.

The nation's largest tax-preparation company benefited in the latest quarter from growth in interest income and product and other revenue. But service revenue declined from a year ago, primarily because of timing differences in the company's Australian operations.

Operating expenses grew to roughly $315 million from $302.3 million a year earlier, driven by higher compensation and benefits, as well as selling, general and administrative costs.

Cobb also noted that the company has made progress in its goal of divesting itself from its banking arm. Investors will be looking for more details on that on Wednesday morning, when the company is scheduled to discuss its latest financial results during a conference call with Wall Street analysts.

Block agreed in July to sell its H&R Block Bank assets to Republic Bank and Trust Co., a subsidiary of Republic Bancorp Inc. As a condition of the deal, Republic applied with regulators to convert into a national bank, but ultimately withdrew its application. As a result, Block terminated its agreement with Republic in October.

Block has said it remains committed to no longer being regulated a savings and loan holding company by the Federal Reserve and partnering with a lender to expand its financial services business.

All told, Block reported a loss of $104.9 million, or 39 cents per share, for the three months ended Oct. 31. That compares with a loss of $105.2 million, or 39 cents per share, a year earlier.

Block's adjusted loss amounted to 38 cents per share.

Analysts polled by FactSet anticipated a loss of 37 cents per share.

Revenue slipped to $134.3 million, from $137.3 million.

Analysts had forecast $137.9 million in revenue.

Shares ended regular trading down 22 cents at $28.80. The stock slipped another 30 cents, or 1 per cent, to $28.50 in extended trading.

The Canadian Press


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