H&R Block, Inc. · NYSE:HRB
H&R Block — Q3 FY2005 Earnings Presentation
14 slides from H&R Block's earnings presentation, Feb 24, 2005
Slide 1: Earnings Release - Third Quarter FY2005
Earnings Release - Third Quarter FY2005 February 24, 2005
Slide 2: Forward-Looking Statements
H&R BLOCK Forward-Looking Statements This presentation and various comments made in connection with this conference call include certain estimates, projections and other forward-looking statements. The words “will,” “plan,” “estimate,” “approximate,” “project,” “intend,” “remain,” “expect,” “believe
Slide 3: Consolidated Results
H&R BLOCK Consolidated Results (millions, except per share amounts) Third Quarter Nine Months YTD FY05 FY04 % Change FY05 FY04 % Change Revenue $ 1,032 $ 963 7% $ 2,054 $ 2,027 1% Net income (loss): Before change in accounting principle $ 92 $ 107 -14% $ (5) $ 129 ** Net income (loss) 92 107 -14% (5
Slide 4: Tax Services
H&R BLOCK Tax Services ($ millions) Third Quarter FY05 Third Quarter FY04 U.S. International U.S. International Operations Operations Total Operations Operations Total % Change Service revenues: Tax preparation and related fees $ 365 $ 10 $ 375 $ 330 $ 9 $ 339 11% Online tax services 11 - 11 8 - 8 3
Slide 5: Tax Services - Nine Months YTD
H&R BLOCK Tax Services ($ millions) Nine Months YTD FY05 Nine Months YTD FY04 U.S. International U.S. International Operations Operations Total Operations Operations Total % Change Service revenues: Tax preparation and related fees $ 395 $ 33 $ 428 $ 355 $ 29 $ 384 11% Online tax services 12 - 12 9
Slide 6: Calendar Impact of Date-to-Date Reporting
H&R BLOCK Calendar Impact of Date-to-Date Reporting TS2005 Client Growth Within Reporting Periods Period Ending Feb 28 Mar 15 Mar 31 Apr 15 Illustrative for: 0% Growth from Feb (14%) (3%) 0% 11% 16 to Apr 15 Note: This slide is for illustrative purposes only, and represents the estimated growth in c
Slide 7: Mortgage Services
H&R BLOCK Mortgage Services ($ millions) Third Quarter Second Quarter Nine Months YTD FY05 FY04 % Change FY05 % Change FY05 FY04 % Change Components of gains on sales, net: (1) Gain on mortgage loans $ 172 $ 218 -21% $ 187 -8% $ 544 $ 685 -21% Gain (loss) on derivatives 31 (8) ** (3) ** 29 (4) ** Ga
Slide 8: Mortgage Services - Operating Statistics
H&R BLOCK Mortgage Services - Operating Statistics Third Quarter Second Quarter FY05 FY04 % Change FY05 % Change Volume of loans originated ($000s): Wholesale (non-prime) $ 7,378,071 $ 4,732,182 56% $ 5,528,361 33% Retail: Prime 238,867 157,438 52% 183,647 30% Non-prime 776,797 464,926 67% 800,975 (
Slide 9: Mortgage Services - Sources of Pretax Income
H&R BLOCK Mortgage Services - Sources of Pretax Income ($ millions) Q1-Q3 FY05 FY04 FY03 FY02 Wholesale $ 187 $ 410 $ 392 $ 275 National accounts 26 60 54 38 Retail 15 56 25 16 Total origination 228 526 471 329 Servicing 12 - 7 15 Residuals 87 137 91 20 Re-NIM gain on sale - 41 131 - (1) Other (16)
Slide 10: Mortgage Services - Loan Sale Strategy and Key Business Drivers
H&R BLOCK Mortgage Services - Loan Sale Strategy ($ millions) Q1-Q3 FY05 FY04 FY03 FY02 Sales mix: Whole loan sale 88% 76% 41% 11% Securitization 12% 24% 59% 89% Cash proceeds from capital market transactions: Cash 87% 91% 95% 86% Non-cash (1) 13% 9% 5% 14% Loan delivery: Loan sales $ 21,653 $ 23,23
Slide 11: Business Services
H&R BLOCK Business Services ($ millions) Third Quarter Nine Months YTD FY05 FY04 % Change FY05 FY04 % Change Service revenues: Accounting, tax and consulting $ 91 $ 75 21% $ 259 $ 214 21% Capital markets 17 19 -11% 49 54 -9% Payroll, benefits and retirement services 7 5 40% 16 15 7% Other services 8
Slide 12: Investment Services
H&R BLOCK Investment Services ($ millions) Third Quarter Second Quarter Nine Months YTD FY05 FY04 % Change FY05 % Change FY05 FY04 % Change Service revenues: Transactional revenue $ 25 $ 27 -7% $ 20 25% $ 65 $ 75 -13% Annuitized revenue 18 15 20% 17 6% 54 42 29% Total production revenue 43 42 2% 37
Slide 13: Corporate
H&R BLOCK Corporate ($ millions) Third Quarter Nine Months YTD FY05 FY04 % Change FY05 FY04 % Change Operating revenues $ 3 $ 2 50% $ 10 $ 7 43% Eliminations (2) (1) -100% (7) (4) -75% Total revenues $ 1 $ 1 0% $ 3 $ 3 0% Corporate expenses: Compensation & benefits $ 2 $ 3 33% $ 8 $ 7 -14% Interest
Slide 14: Balance Sheet - Residuals and Share Repurchases
H&R BLOCK Balance Sheet - Residuals ($ millions) Q1-Q3 FY05 FY04 FY03 FY02 Beginning balance $ 211 $ 264 $ 365 $ 239 Additions from NIM transactions 16 9 1 26 Cash received (100) (194) (141) (67) Accretion 87 166 145 50 Write-ups and other 40 19 36 117 Cash received on sale of NIMs - (53) (142) - En