Liberty Tax (TAX) Beats On Q4 Earnings As Revenues Rise

Liberty Tax Service’s parent company, Liberty Tax, Inc. (NASDAQ:TAX) reported fourth-quarter fiscal 2016 (ending Apr 30) net income of $2.32 per share, beating the Zacks Consensus Estimate of $2.25. On a year-over-year basis, earnings improved by a penny.

The improvement came on the back of higher revenues coupled with lower expenses.

Fiscal 2016 Highlights

Fiscal 2016 earnings per share came in at $1.41, beating the Zacks Consensus Estimate of $1.31. Earnings improved 4% year over year.

Revenues improved 7% year over year to $173.4 million.

The total number of customers served in company-owned and independently owned and operated franchise offices was 2.16 million, down 3.8%. Tax returns prepared in U.S. offices declined 3.9%, while total returns in Canada offices decreased 2.9%.

Average net fee for tax preparation services in the U.S. improved 5.1%.

Behind the Headlines

Liberty Tax reported total revenue of $104.4 million, up 5.6% year over year and ahead of the Zacks Consensus Estimate of $102 million. The improvement was prompted by better performance given by the financial products group and higher tax preparation fees driven by the launch of a new company store cluster program.

Total operating expenses of $53 million decreased 4.7% year over year primarily due to lower advertising costs and area developer expense. The company now operates more than 250 stores.

Income from operations was nearly $51.4 million, 18.7% higher year over year.

Financial Update

Liberty Tax exited fiscal 2016 with cash and cash equivalents of approximately $9.9 million, down 58% year over year.

Total assets increased 6% year over year to $195.7 million at the end of fiscal 2016.

Total long-term debt amounted to $17.6 million as of Apr 30, down about 18.1% year over year.

Cash from operations was $29.8 million in fiscal 2016, up 22% year over year.

Dividend

The board of directors approved a quarterly dividend of 16 cents per share payable on Jul 22 to shareholders of record on Jul 12.

The board of directors approved a share repurchase authorization to $10 million.

Zacks Rank

Liberty Tax presently carries a Zacks Rank #4 (Sell).

Performances of Other Business Service Providers

The bottom line at WNS (Holdings) Ltd. (NYSE:WNS) and Cardtronics Inc. (NASDAQ:CATM) surpassed Zacks Consensus Estimate while Avis Budget Group, Inc. (NASDAQ:CAR) missed the same in its recently reported quarterly results.