WASHINGTON (dpa-AFX) - H&R Block Inc. (HRB), the largest US tax service provider, Wednesday reported a net loss for the third quarter that narrowed from last year, as reduced provision for bad debts mainly offset lower revenue.
During the quarter, H&R Block's provision for bad debt and loan losses dropped to $53 million from $100 million in the prior year.
Revenue meanwhile slid 2.5 percent from last year. Tax preparation and related revenues in the quarter rose 10 percent from last year due to growth in total tax returns prepared. Nevertheless, this was offset by a decline in financial product revenue.
H&R Block said that due to focus on attracting clients through value offerings, refund anticipation checks (RAC) were offered free to certain clients, which impacted RAC revenue.
The company also changed its underwriting criteria for its Emerald Advance program in fiscal 2012, which led to a decline in interest income.
The Kansas City, Missouri-based company reported third-quarter net loss of $3.35 million or $0.01 per share, compared to net loss of $12.7 million or $0.04 per share last year. Results for the prior year included a loss from discontinued operations of $1.7 million.
On average, seven analysts polled by Thomson Reuters expected earnings of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter dropped to $663.3 million from $680.3 million a year earlier.
Detailing its interim U.S. tax results through February 28, 2012, the company said its total U.S. tax returns prepared grew 5.1 percent from last year. Total retail returns prepared increased 1.6 percent.
H&R Block also competes for a share of the digital market with its online tax programs and software. Total digital tax returns through February grew 12.6 percent from last year, and includes a 20.4 percent increase in online filings.
'With the first half of the tax season now behind us, I am pleased by the 5 percent growth in U.S. tax returns prepared to date,' said CEP Bill Cobb.
'We continue to work to position the company for long-term growth in revenue and earnings.'
H&R Block also revealed an amendment of its CLOC that reduced its minimum equity covenant by $150 million to $500 million. The company said it expects to refinance the CLOC, which expires in July 2013, during fiscal year 2013.
HRB closed Wednesday at $15.88, down $0.11 or 0.72%, on a volume of 3.9 million shares on the NYSE. In after hours, the stock dropped 2.65%.
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