H&R Block's 2Q loss narrows as revenue rises

KANSAS CITY, Mo. (AP) -- H&R Block's fiscal second-quarter loss narrowed, helped by cost-cutting efforts. Revenue climbed mostly because of a strong tax season in Australia. The nation's largest tax preparation company typically turns in a loss in the August-to-October period because it takes in most of its revenue during the U.S. tax season. H&R Block's quarterly performance beat analysts' estimates and its stock hit the highest level in more than two years. The company is optimistic and gearing up for its busy season. "The U.S. tax season is right around the corner and we believe we're on pace to deliver significant earnings and margin expansion in fiscal 2013," President and CEO Bill Cobb said in a statement last Thursday. For the three months ended Oct. 31, H&R Block Inc. lost $105.2 million, or 39 cents per share. A year earlier it lost $141.7 million, or 47 cents per share, for the quarter. Its loss from continuing operations was 37 cents per share. Analysts surveyed by FactSet expected a bigger loss of 41 cents per share. Selling, general and administrative expenses declined and the quarter was free of any impairment charges. The prior-year period included a $4.3 million impairment charge. Revenue rose 6 percent to $137.3 million from $129.2 million. This topped Wall Street's forecast of $129.6 million. Shares of H&R Block gained 89 cents, or 5.1 percent, to close at $18.26. Earlier in the session the stock reached $18.40, its highest point since May 2010. Tax services revenue increased 7 percent primarily due to the strong Australian tax season. Corporate revenue fell because of lower interest income from H&R Block Bank's shrinking mortgage loan portfolio. H&R Block disclosed in October that it hired Goldman Sachs to help it explore options for its banking arm, H&R Block Bank. Those options, Block said, could result in the company no longer being regulated as a savings and loan holding company by the Federal Reserve. The Federal Reserve announced some proposed rules in June that would impose higher capital requirements on savings and loan holding companies. H&R Block contends that if the proposed rules are enacted it would have to hold on to significant additional capital. H&R Block, based in Kansas City, Mo., prepared 25.6 million tax returns worldwide in fiscal 2012. Published: Mon, Dec 10, 2012