Liberty Tax Service Reports Fiscal 2013 Second Quarter Results

 

Press Information
For Immediate Release
Dec 4, 2012 
   

 

 
CONTACT: Martha O’Gorman
Chief Marketing Officer
(800) 790-3863 ext. 8022
martha@libtax.com
 

 

Liberty Tax Service Reports Fiscal 2013 Second Quarter Results 

 

(Virginia Beach, VA) December 4, 2012 -- JTH Holding, Inc. (NASDAQ:TAX) (the “Company”), the parent company of Liberty Tax Service, today reported a net loss for the fiscal second quarter ended October 31, 2012, of $6.7 million, or $0.51 per share, compared to a loss of $4.3 million, or $0.38 per share, in the prior year period.  Total revenue in the quarter declined 17% mainly because more area developer (AD) sales occurred in the first quarter of fiscal 2013, compared to the previous year, when more sales occurred during the second quarter.  In addition, operating expenses in the quarter included approximately $503,000 of costs associated with being a public company that were not incurred in the prior year quarter.  

“Our second quarter results were in line with our expectations and we are making preparations for the upcoming tax season,” said Mark Baumgartner, CFO.  “As Liberty expands, we expect the losses in our first and second quarters to reflect the increase in off-season operating expenses that correlate to a growing company such as ours.”   

Net loss for the six months ended October 31, 2012 was $12.9 million, or $1.02 per share, compared to a net loss of $9.3 million, or $0.82 per share, for the six months ended October 31, 2011.  Total revenue for the first six months of the year increased 3% compared to the prior year period.  Operating expenses for the first six months of the fiscal year included approximately $1.0 million of costs associated with being a public company that were not incurred in the prior year. 

“During the second quarter of fiscal 2013, 197 new franchisees joined our team, a 27% increase over the prior year period.  Year-to-date, new franchisees have totaled 227, or 14% more than last year,” said John Hewitt, Chairman and CEO.  “These are tough economic times for small business, and yet an increasing number of entrepreneurs are choosing to join Liberty.  We are excited to welcome these franchisees to the team and look forward to working closely with them this coming tax season.”  

The 197 new franchisees purchased 157 new territories during the quarter and 64 existing territories either from current or former franchisees or company owned stores.  Although territories sold to new franchisees grew, total territories sold during the second quarter decreased approximately 9% versus the prior year period because fewer new territories were sold to existing franchisees during the quarter.  In October, the Company announced that it had reached an agreement to provide tax preparation services in over 300 Walmart stores.  Because the agreement was signed relatively late in the second quarter, the sales process for current franchisees looking to expand was delayed and the ability to close those territories by the end of the quarter was affected.  In addition, more expanding franchisees are choosing the “rent to own” (RTO) option for the Walmart expansions, thus delaying the recognition of the sale to the fourth quarter of fiscal 2013, if the franchisee purchases the territory at that time.   

“Whether the franchisee outright purchases the territory or tries the territory using our RTO option, we expand our office footprint.  We are encouraged by franchisee reception to the Walmart opportunity; however, many of the stores are in rural areas that are more difficult to sell.  As a result, we expect to operate more company stores this tax season with the expectation to sell these stores prior to future tax seasons.  We believe this will give us a foothold in parts of the country sooner than would have normally been possible,” said Hewitt.   

Earlier this year, the Company postponed its initial public offering because of market conditions involving IPOs and because it did not need the proceeds of an offering for liquidity purposes.  In the second quarter, the Company filed an amendment to its registration statement, which had the effect of re-starting the SEC review process.  This was done for two reasons.  First, because the most recent financial statements included in previous SEC filings had been the Company’s fiscal 2011 financial statements, the Company wished to update its filing with its audited 2012 financial statements, in order to afford the greatest flexibility to move quickly if and when the Company determines that an offering will be appropriate.  Second, because there are several large shareholders whose status as affiliates effectively prevents them from having any significant liquidity in their shares, the Company continues to look for the appropriate market opportunity to conduct a public offering that would allow these shareholders the opportunity to sell stock.  The Company can advise at this time that it does not anticipate initiating an offering prior to the fiscal fourth quarter.   

 

Conference Call 

At 8:30 a.m. ET on Tuesday, December 4, 2012, the Company will host a conference call for analysts, investors and shareholders.  To access the call, please dial the number below approximately 5 to 10 minutes prior to the scheduled starting time: 

              U.S./Canada     (800) 215-2410 

            International    (617) 597-5410 

            Passcode:         26092040 

The call will also be webcast in a listen-only format.  The link to the webcast may be accessed on the Company’s investor relations website at www.libertytax.com.   

A replay of the call will be available beginning at approximately 10:30 a.m. ET on Tuesday, December 4, 2012 and continuing until Tuesday, December 11, 2012, by dialing (888) 286-8010 (U.S./Canada) or (617) 801-6888 (International).  The participant passcode is 50609516.  

 

Investor Day 

The company will be hosting its initial Investor Day on Wednesday, December 12, 2012, at the Millennium Broadway Hotel New York.  The company will webcast the presentations given by the management team beginning at 2:00 p.m. eastern.  In conjunction with its Investor Day, the company intends to introduce its fiscal 2013 financial guidance.  Please RSVP to Darby Schoenfeld by Wednesday, December 5, 2012. 

   

Forward Looking Statements 

In addition to historical information, this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including implied and express statements regarding the Company’s anticipated growth and expansion of its business.  These forward-looking statements, as well as the Company's guidance, are based upon the Company's current expectations and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties and speak only as of the date on which they are made, the Company's actual results could differ materially from these statements. These risks and uncertainties relate to, among other things, uncertainties regarding the Company's ability to attract and retain clients; meet its prepared returns targets; competitive factors; the Company's effective income tax rate; litigation defense expenses and costs of judgments or settlements; and changes in market, economic, political or regulatory conditions. Information concerning these risks and uncertainties is contained in the Company’s annual report on Form 10-K and in other filings by the Company with the Securities and Exchange Commission. The Company does not undertake any duty to update any forward-looking statements, whether as a result of new information, future events, or otherwise. 

 

 

About JTH Holding, Inc.    

JTH Holding, Inc. is the parent company of Liberty Tax Service. Liberty Tax Service is the fastest-growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 10 million individual income tax returns. With 43 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation industry, having also founded Jackson Hewitt Tax Service. Liberty Tax Service is the only tax franchise on the Forbes “Top 20 Franchises for the Buck.” 

Contact for JTH Holding, Inc.:
Darby Schoenfeld
Director, Investor Relations 
757-453-6047 
darby.schoenfeld@libtax.com