H&r Block, Inc. · NYSE:HRB
H&r Block — Q3 2023 Earnings Presentation
26 slides from H&r Block's earnings presentation, May 9, 2023
Slide 1: Q3 FY23 Financial Results Conference Call
Q3 FY23 Financial Results Conference Call May 9, 2023
Slide 2: Michaella Gallina, VP, Investor Relations
Michaella Gallina VP, Investor Relations
Slide 3: Safe Harbor Statement: Forward-Looking Statements
Safe Harbor Statement H&R BLOCK Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include wor
Slide 4: Safe Harbor Statement: Non-GAAP Measures
Safe Harbor Statement H&R BLOCK Non-GAAP Measures We refer to certain Non-GAAP financial measures in this presentation, including adjusted earnings per share, earnings before interest, taxes, depreciation, and amortization (EBITDA), free cash flow and free cash flow yield, which management believes
Slide 5: Jeff Jones, President & Chief Executive Officer
Jeff Jones President & Chief Executive Officer
Slide 6: Tax Season Different from Expectations
Tax Season Different from Expectations The industry declined 1% — More Balance due Filing deadline stimulus filers postponed in filers rolled increased several states, off than including anticipated California
Slide 7: Our DIY Strategy Worked
Our DIY Strategy Worked Grew DIY Online clients 2.5% YoY Goal: Result: Improved unaided awareness by 200 basis points Created customized experience; very pleased with how many TurboTax® clients switched Largest segment of new clients was Gen Z, between the ages 18-25
Slide 8: DIY Clients Upgrade to Expert Help
DIY Clients Upgrade to Expert Help Tax Pro Review continues to grow double digits YoY — Online Assist Tax Pro Review = On-demand access to an H&R = H&R Block tax pros check the Block tax pro entire return for accuracy = Access help before or during « Ensures clients get their filing process maximum
Slide 9: Driving Growth Among Greater Lifetime Value Clients
Driving Growth Among Greater Lifetime Value Clients 2017 2018 2019 2020 2021 2022 2023 Jan 1- April 30 Jan 1- April 30 Jan 1- April 30 Jan 1- July 16 Jan 1- May 18 Jan 1- April 30 Jan 1- April 30
Slide 10: Three Factors Drove the Volume Decline in Assisted
Three Factors Drove the Volume Decline in Assisted Stimulus filers back to the sidelines; appears they have returned to pre- pandemic levels, and we believe this headwind is now behind us Better focus marketing on relevant value propositions at the right time, such as Refund Advance in the early sea
Slide 11: Clients with <$5K of Income Return to Pre-Pandemic Levels
Clients with <$5K of Income Return to Pre-Pandemic Levels il We believe stimulus filers are now behind us | == | = im = 2019 2020 2021 2022 2023 Jan 1- April 30 Jan 1- July 16 Jan 1- May 18 Jan 1- April 30 Jan 1- April 30
Slide 12: Progress in the Assisted Business
Progress in the Assisted Business +4% Assisted NAC >30% of Assisted increase YoY; clients leveraged a successfully offset virtual tool two-point revenue headwind Note: Assisted NAC includes both Com|
Slide 13: Small Business Imperative
Small Business Imperative Creating value for clients through year-round services — BLOCK Advisors ®& wave by H&R BLOCK = NAC +5% YoY in Assisted small =» +10% revenue business tax growth YoY in Q3 = Positive client satisfaction metrics = Focused on demonstrate value verses CPAs accelerating revenue
Slide 14: Spruce: Mobile Banking Platform
Spruce: Mobile Banking Platform Launched in Assisted channel in January Since launch through April 30, 2023: : Millions of refunds 291K signups deposited to Spruce accounts up to 5 days early $288M Sea == New feature to easily set up direct deposit in the app with just a few clicks deposits Extra Sa
Slide 15: Jeff Jones, President & Chief Executive Officer
Jeff Jones President & Chief Executive Officer
Slide 16: Tony Bowen, Chief Financial Officer
Tony Bowen Chief Financial Officer
Slide 17: Q3 FY23 Financial Results
Q3 FY23 Financial Results For the three months ended For the three months ended March 31, 2023 March 31, 2022 In millions, except per share amounts Q3 FY23 Q3 FY22 Revenue $2,093.6 $2,061.8 1.5% Pretax Income $855.4 $861.9 (0.7%) Net Income $646.1 $675.0 (4.3%) Weighted Avg Shares - Diluted 155.6 16
Slide 18: Updated FY23 Outlook
Updated FY23 Outlook H&R BLOCK Previous Outlook Updated Outlook Revenue $3,535 - $3,585M $3,440 - $3,465M EBITDA' $915 - $950M $895 - $910M Effective Tax Rate ~22% ~22% Adjusted EPS! $3.70 - $3.95 $3.65 - $3.80 ‘EBITDA and adjusted EPS from continuing operations are non-GAAP financial measures. Futu
Slide 19: Where We Are Going
Where We Are Going Total shareholder return Revenue EBITDA' Share Repurchase Adjusted EPS' Dividend Free Cash Flow’ 3 - 6% long term Can grow up to ~1.5x revenue $1.25B authorization through 2025 uble digit growth $0.29/share quarterly >100% FCF generation relative to net income H&R BLOCK Industry g
Slide 20: Jeff Jones, President & Chief Executive Officer
Jeff Jones President & Chief Executive Officer
Slide 21: Q&A
Q&A
Slide 22: Appendix
Appendix
Slide 23: H&R Block Filing Volumes
H&R Block Filing Volumes U.S. Tax Operating Data Tax Retu rns Prepared! ret ¥ 6, 2098 ret ‘ 6 2009 % Change Company-owned 8,528 8,568 (0.5%) Franchise Operations? 2,713 3,092 (10.3%) Total Assisted 11,301 11,660 (3.1%) Desktop 1,776 1,845 (3.7%) Online 6,655 6,495 2.5% Total DIY 8,431 8,340 11% Tota
Slide 24: Non-GAAP Measure: EBITDA
Non-GAAP Measure: EBITDA The following is a reconciliation of EBITDA, which is a non-GAAP financial measure: EBITDA (in 0OO's) Net income - as reported Discontinued operations, net e months ended March 31, 2023 Three months ended March 31, 2022 H&R BLOCK Net income from continuing operations - as re
Slide 25: Non-GAAP Measure: Adjusted EPS
Non-GAAP Measure: Adjusted EPS The following is a reconciliation of Adjusted EPS, which is a non-GAAP financial measure: Adjusted EPS. Three months ended (in 000's except for amounts per share) March 31, 2023 Net income from continuing operations - as reported Adjustments: Amortization of intangible
Slide 26: Non-GAAP Measures: FY22 Free Cash Flow and Free Cash Flow Yield
Non-GAAP Measures: FY22 Free Cash Flow HER and Free Cash Flow Yield BLOCK The following is a reconciliation of Free Cash Flow and Free Cash Flow Yield, which are non-GAAP financial measures: Free Cash Flow Yield Year ended (in 000's except for amounts per share) June 30, 2022 Operating cash flow - a