Business

H&R Block profits exceeded even the company’s expectations as CEO Bill Cobb retires

H&R Block saw slightly fewer tax customers in the latest tax season but posted higher profits thanks to cost cutting and higher average customer charges.
H&R Block saw slightly fewer tax customers in the latest tax season but posted higher profits thanks to cost cutting and higher average customer charges. Bloomberg News

H&R Block beat its own expectations with a nearly 9.3 percent jump in profits during the tax season that ended in April.

The Kansas City-based tax preparation company earned more despite filing returns for fewer taxpayers than it did a year earlier.

Last fall, the company had guided analysts to expect profits at the lower end of its expected long-term range of profits, even after lowering that range a bit. Results came in at the high end of the new range.

“Obviously, we did better than we thought we were going to do,” chief financial officer Tony Bowen said in a conference call with analysts.

Business improved in part because H&R Block collected higher average charges from customers, enough that it offset a slight decline in the number of returns the Kansas City-based company handled. Revenues were essentially unchanged at $3.04 billion, the company’s announcement said.

H&R Block said its profits got a boost from better-than-expected results from its cost-cutting efforts, saving money in essentially every category it tracks such as marketing, consulting fees, compensation and bad debt charges.

The company earned $408.9 million in the 12 months that ended April 30, compared with $374.3 million a year earlier.

Block was able to spend some of those savings to reverse a sharp decline in its customer count a year earlier. H&R Block previously said it handled 0.8 percent fewer tax returns in the most recent tax season.

It declared the recent small decline a victory because total tax filings declined more. It meant H&R Block had grabbed a larger share of the total market.

Tuesday’s results were a farewell for CEO Bill Cobb, who is retiring at the end of July after six years at Block’s helm. He called the decision personal, with his youngest child having graduated from high school and heading off to college at Notre Dame.

“I fell in love with the company,” Cobb said, but added, “It’s a grind. It’s a lot of work.”

Cobb had accepted responsibility for the company’s unacceptable tax season in 2016 that also had cost him a $1.24 million bonus.

He said the recent results show the company is in good shape for its next top officer. General counsel Tom Gerke is taking over as interim CEO while a search for a permanent CEO continues.

H&R Block had announced Cobb’s retirement on the sixth anniversary of the day he started the job.

Mark Davis: 816-234-4372, @mdkcstar

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