UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

______________

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  June 14, 2016

(Exact name of registrant as specified in charter)

 

(Address of Principal Executive Offices)  (Zip Code)

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

   

 

Item 2.02.     Results of Operations and Financial Condition.

 

On June 14, 2016, Liberty Tax, Inc. (the "Company") issued a press release regarding its earnings for the fiscal year ended April 30, 2016.  A copy of the release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference.  In addition, on June 14, 2016 at 4:30 p.m. Eastern Time, the Company will hold a teleconference for analysts, institutional investors and stockholders to discuss results for the fiscal year ended April 30, 2016.

The information under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 8.01.    Other Events

On June 14, 2016, the Company also announced that its Board of Directors approved a cash dividend to its stockholders.  The quarterly dividend of $0.16 per share will be paid on July 22, 2016 to stockholders of record at the close of business on July 12, 2016.

Item 9.01.     Financial Statements and Exhibits

   

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

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CONTACTS:		Media: Martha O'Gorman
Investors: Kathy Donovan		Liberty Tax, Inc.
Liberty Tax, Inc.		Chief Marketing Officer
Vice President, Chief Financial Officer		(757) 301-8022
(757) 493-8855		[email protected]
[email protected]

 

                      

Liberty Tax Service Announces Fiscal Year 2016 Results

Virginia Beach, Va. (June 14, 2016) – Liberty Tax, Inc. (NASDAQ: TAX) (the "Company"), the parent company of Liberty Tax Service, today reported its results for fiscal year 2016. The Company reported that total revenue increased 7% to $173.4 million and GAAP earnings per share of $1.38 up 126% vs prior year. Non-GAAP earnings per share were $1.41 up 4% vs prior year.

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

The Company is continuing to implement several new initiatives such as SiempreTax+, which is already one of the fastest growing tax preparation franchises in history, even out pacing the initial growth of Liberty Tax Service. The Company will also be focusing on customer retention and enhanced compliance efforts to address an evolving industry environment.

"Our franchisees and leadership team have worked hard to overcome challenges facing Liberty and the entire tax industry," said John Hewitt, CEO. "Liberty was founded on a principle of delivering friendly and accurate tax preparation. Improving our standards and delivering an exceptional customer experience remains our highest priority."

Fiscal 2016 Results

($ in thousands except per share data)		GAAP												Non - GAAP*
		2016				2015				Change				2016				2015				Change
Revenue		$	173,429			$	162,172				7	%		$	173,429			$	162,172				7	%
Operating expenses			140,941				146,780				-4	%			140,276				129,283				9	%
Income before taxes			30,478				13,501				126	%			31,143				30,998				0	%
Diluted EPS			1.38				0.61				126	%			1.41				1.36				4	%
*See reconciliation of GAAP to Non-GAAP measures in Table E

Highlights

·

The company reported revenue growth of 7% to $173.4 million.

o

Financial products revenue grew 22% to $45.3 million due to the company's new Refund Advance product as well as favorable pricing.

o

Tax preparation fees increased 39% to $19.3 million due to an increase in the number of company-owned offices.

o

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

·

GAAP earnings per share increased 126% to $1.38 from $0.61. Non-GAAP earnings per share increased 4% to $1.41 from $1.36.

·

SiempreTax+ has successfully grown to 144 offices, an increase of roughly 150% over last season.

Dividend

On June 10, 2016, the Board of Directors approved a quarterly dividend to shareholders of $0.16 per share. The dividend will be paid on July 22, 2016 to holders of record of common stock and common stock equivalents on the close of business on July 12, 2016.

Conference Call

At 4:30 p.m. Eastern time on June 14, 2016, the Company will host a conference call for analysts, institutional investors and stockholders.  To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:

Conference ID code:           24717726

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, under the "About" tab.

A telephonic replay of the call will be available beginning shortly after the call continuing until Tuesday, June 21, 2016, by dialing 855-859-2056 (domestic) or 404-537-3406 (international).  The conference ID code is 24717726.  A replay of the webcast will also be available at the site listed above beginning shortly after its conclusion.

About Liberty Tax, Inc.

Founded in 1997 by CEO John T. Hewitt, Liberty Tax, Inc. (NASDAQ: TAX) is the parent company of Liberty Tax Service. Liberty Tax is one of the fastest-growing tax preparation franchises and has prepared nearly 22 million individual income tax returns in more than 4,400 offices and online. Liberty Tax's online services are available through eSmart Tax, Liberty Online and DIY Tax, and are all backed by the tax professionals at Liberty Tax locations and its nationwide network of approximately 21,000 seasonal tax preparers. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor for many charitable causes. For a more in-depth look, visit Liberty Tax Service and interact with Liberty Tax on Twitter and Facebook.

About Non-GAAP Financial Information

This press release and the accompanying tables include non-GAAP financial information. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with generally accepted accounting principles, please see the section of the accompanying Tables E&F titled "Non-GAAP Financial Information."

 

 

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 future growth.  These forward-looking statements, as well as Company 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; the ability to continue to pay a quarterly dividend; the effect of health care reform on tax preparation-related revenue; the impact of the launch of a new franchise brand; uncertainties regarding the Company's ability to 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 U.S. 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.

 

 

 

 

Table A
Liberty Tax, Inc.
Condensed Consolidated Statements of Operations
Unaudited, amounts in thousands, except per share and share data
		Fiscal Years ended April 30,
		2016				2015				$ change				% change
Revenues:
Franchise fees		$	5,038			$	6,246				(1,208	)			(19.3	%)
Area developer fees			6,008				6,901				(893	)			(12.9	%)
Royalties and advertising fees			80,274				80,469				(195	)			(0.2	%)
Financial products			45,327				37,058				8,269				22.3	%
Interest income			13,578				14,707				(1,129	)			(7.7	%)
Tax preparation fees, net of discounts			19,292				13,877				5,415				39.0	%
Other revenue			3,912				2,914				998				34.2	%
Total revenues			173,429				162,172				11,257				6.9	%
Operating expenses:
Employee compensation and benefits			42,882				41,079				1,803				4.4	%
Selling, general, and administrative expenses			43,927				40,604				3,323				8.2	%
Area developer expense			27,686				28,497				(811	)			(2.8	%)
Advertising expense			16,420				18,308				(1,888	)			(10.3	%)
Depreciation, amortization and impairment charges			10,026				9,900				126				1.3	%
Impairment of online software and assets			-				8,392				(8,392	)			100.0	%
Total operating expenses			140,941				146,780				(5,839	)			(4.0	%)
Income from operations			32,488				15,392				17,096				111.1	%
Other income (expense):
Foreign currency transaction income (loss)			29				(2	)			31				1,550.0	%
Interest expense			(2,039	)			(1,889	)			(150	)			(7.9	%)
Income before income taxes			30,478				13,501				16,977				125.7	%
Income tax expense			11,058				4,811				6,247				129.8	%
Net income		$	19,420			$	8,690				10,730				123.5	%
Net income attributable to Class A and Class B common stockholders		$	18,014			$	8,057				9,957				123.6	%
Net income per share of Class A and Class B
common stock
Basic		$	1.41			$	0.63				0.78				123.8	%
Diluted			1.38				0.61				0.77				126.2	%
Weighted-average shares outstanding
Basic			12,814,775				12,738,887				75,888				0.6	%
Diluted			14,024,761				14,294,773				(270,012	)			(1.9	%)

 

 

 

 

 

Table B
Liberty Tax, Inc.
Condensed Consolidated Statements of Operations
Unaudited, amounts in thousands, except per share and share data
		Three months ended April 30,
		2016				2015				$ change				% change
Revenues:
Franchise fees		$	2,513			$	3,250				(737	)			(22.7	%)
Area developer fees			1,517				1,835				(318	)			(17.3	%)
Royalties and advertising fees			51,685				52,119				(434	)			(0.8	%)
Financial products			27,545				23,031				4,514				19.6	%
Interest income			6,075				7,507				(1,432	)			(19.1	%)
Tax preparation fees, net of discounts			14,487				11,029				3,458				31.4	%
Other revenue			592				148				444				300.0	%
Total revenues			104,414				98,919				5,495				5.6	%
Operating expenses:
Employee compensation and benefits			14,429				12,453				1,976				15.9	%
Selling, general, and administrative expenses			14,831				9,685				5,146				53.1	%
Area developer expense			16,964				17,721				(757	)			(4.3	%)
Advertising expense			2,348				4,286				(1,938	)			(45.2	%)
Depreciation, amortization and impairment charges			4,400				3,045				1,355				44.5	%
Impairment of online software and assets			-				8,392				(8,392	)			100.0	%
Total operating expenses			52,972				55,582				(2,610	)			(4.7	%)
Income from operations			51,442				43,337				8,105				18.7	%
Other income (expense):
Foreign currency transaction income			68				43				25				58.1	%
Interest expense			(447	)			(339	)			(108	)			(31.9	%)
Income before income taxes			51,063				43,041				8,022				18.6	%
Income tax expense			18,775				16,298				2,477				15.2	%
Net Income		$	32,288			$	26,743				5,545				20.7	%
Net income attributable to Class A and Class B common stockholders		$	29,961			$	24,795				5,166				20.8	%
Net income per share of Class A and Class B
common stock
Basic		$	2.33			$	1.95				0.38				19.5	%
Diluted			2.31				1.89				0.42				22.2	%
Weighted-average shares outstanding
Basic			12,877,919				12,728,341				149,578				1.2	%
Diluted			13,967,568				14,155,818				(188,250	)			(1.3	%)

 

 

 

 

 

Table C
Liberty Tax, Inc.
Condensed Consolidated Balance Sheets
Unaudited, amounts in thousands
		April 30,				April 30,
		2016				2015
Current assets:
Cash and cash equivalents		$	9,906			$	21,387
Current receivables, net			74,122				65,927
Assets held for sale			9,886				5,160
Deferred income tax asset			3,496				6,921
Other current assets			5,838				6,470
Total current assets			103,248				105,865
Property, equipment, and software, net			40,957				36,232
Notes receivable - non-current, net			23,504				20,753
Goodwill			4,228				3,377
Other intangible assets, net			16,270				14,672
Other assets			7,524				3,247
Total assets		$	195,731			$	184,146
Current liabilities:
Current installments of long-term debt		$	5,947			$	3,934
Accounts payable and accrued expenses			14,064				17,321
Due to area developers			24,977				24,340
Income taxes payable			3,581				2,147
Deferred revenue - current			4,682				6,076
Total current liabilities			53,251				53,818
Long-term debt, excluding current installments			17,601				21,463
Revolving credit facility			-				-
Deferred revenue - non-current			7,056				7,640
Deferred income tax liability			6,322				2,363
Total liabilities			84,230				85,284
Stockholders' equity:
Special voting preferred stock, $0.01 par value per share			-				-
Class A common stock, $0.01 par value per share			120				119
Class B common stock, $0.01 par value per share			9				9
Exchangeable shares, $0.01 par value			10				10
Additional paid-in capital			7,153				4,082
Accumulated other comprehensive loss, net of taxes			(1,698	)			(697	)
Retained earnings			105,907				95,339
Total stockholders' equity			111,501				98,862
Total liabilities and stockholders' equity		$	195,731			$	184,146

 

 

 

 

 

Table D
Liberty Tax, Inc.
Condensed Consolidated Statements of Cash Flows
Unaudited, amounts in thousands
		Fiscal Years ended April 30,
		2016				2015
Cash flows from operating activities:
Net Income		$	19,420			$	8,690
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts			7,282				5,726
Depreciation, amortization and impairment charges			10,026				18,292
Stock-based compensation expense related to equity classified awards			1,863				2,477
Gains on bargain purchases and sales of Company-owned offices			(855	)			(414	)
Deferred tax expense			7,384				(3,545	)
Changes in accrued income taxes			1,758				(7,491	)
Changes in other assets and liabilities			(17,061	)			782
Net cash provided by operating activities			29,817				24,517
Cash flows from investing activities:
Issuance of operating loans to franchisees			(101,552	)			(93,365	)
Payments received on operating loans to franchisees			89,786				88,776
Purchases of Company-owned offices and area developer rights			(4,787	)			(8,246	)
Proceeds from sale of Company-owned offices and area developer rights			2,934				3,687
Purchase of available-for-sale securities			(4,999	)			-
Purchases of property, equipment, and software			(10,692	)			(11,463	)
Net cash used in investing activities			(29,310	)			(20,611	)
Cash flows from financing activities:
Proceeds from the exercise of stock options			2,286				11,983
Repurchase of common stock			(1,977	)			(36,308	)
Payment of dividends			(8,852	)			(2,205	)
Repayment of long-term debt			(4,170	)			(5,850	)
Borrowings under revolving credit facility			166,232				154,633
Repayments under revolving credit facility			(166,232	)			(154,633	)
Payment for debt issuance costs			-				(917	)
Tax benefit of stock option exercises			899				4,803
Net cash used by financing activities			(11,814	)			(28,494	)
Effect of exchange rate changes on cash and cash equivalents, net			(174	)			(105	)
Net decrease in cash and cash equivalents			(11,481	)			(24,693	)
Cash and cash equivalents at beginning of period			21,387				46,080
Cash and cash equivalents at end of period		$	9,906			$	21,387

 

 

 

 

 

 

 

 

Table E
Liberty Tax, Inc.
Non-GAAP Financial Information
Reconciliation of Other Non-GAAP Financial Measures
Unaudited, amounts in thousands, except per share data
We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, we believe certain non-GAAP performance measures and ratios used in managing the business may provide additional meaningful comparisons between current year results and prior periods. Reconciliations to GAAP financial measures are provided below. These non-GAAP financial measures should be viewed in addition to, not as an alternative for, our reported GAAP results.
Fiscal Year Ended April 30, 2016
		Revenues				Expenses				Income from Operations				EBITDA				Income before Taxes				Net Income				Diluted EPS
As Reported		$	173,429			$	140,941			$	32,488			$	42,543			$	30,478			$	19,420			$	1.38
Adjustments:
Executive severance(1)			-				(413	)			413				413				413				263				0.02
Executive Task Force and compliance related costs			-				(252	)			252				252				252				161				0.01
Subtotal of adjustments			-				(665	)			665				665				665				424				0.03
As Adjusted		$	173,429			$	140,276			$	33,153			$	43,208			$	31,143			$	19,844			$	1.41
Stock-based compensation expense(2)		$	-			$	(1,771	)		$	1,771			$	1,771
Fiscal Year Ended April 30, 2015
		Revenues				Expenses				Income from Operations				EBITDA				Income before Taxes				Net Income (3)				Diluted EPS
As Reported		$	162,172			$	146,780			$	15,392			$	33,682			$	13,501			$	8,690			$	0.61
Adjustments:
Executive severance(1)			-				(1,488	)			1,488				1,488				1,488				915				0.06
Litigation costs			-				(7,617	)			7,617				7,617				7,617				4,685				0.33
Impairment of online software and assets			-				(8,392	)			8,392				-				8,392				5,161				0.36
Subtotal of adjustments			-				(17,497	)			17,497				9,105				17,497				10,761				0.75
As Adjusted		$	162,172			$	129,283			$	32,889			$	42,787			$	30,998			$	19,451			$	1.36
Stock-based compensation expense(2)		$	-			$	(1,883	)		$	1,883			$	1,883
(1) Includes stock-based compensation expense
(2) Excludes costs related to executive severance
(3) The non-GAAP tax rate of 38.5% used above excludes the income tax effects of the non-GAAP income before taxes adjustments described above and is consistent with our average and forecasted tax rate.

 

 

 

 

Table F
Liberty Tax, Inc.
Non-GAAP Financial Information
Reconciliation of Other Non-GAAP Financial Measures
Unaudited, amounts in thousands, except per share data
We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, we believe certain non-GAAP performance measures and ratios used in managing the business may provide additional meaningful comparisons between current year results and prior periods. Reconciliations to GAAP financial measures are provided below. These non-GAAP financial measures should be viewed in addition to, not as an alternative for, our reported GAAP results.
Three Months Ended April 30, 2016
		Revenues				Expenses				Income from Operations				EBITDA				Income before Taxes				Net Income				Diluted EPS
As Reported		$	104,414			$	52,972			$	51,442			$	55,910			$	51,063			$	32,288			$	2.31
Adjustments:
Executive Task Force and compliance related costs			-				(252	)			252				252				252				159				0.01
Subtotal of adjustments			-				(252	)			252				252				252				159				0.01
As Adjusted		$	104,414			$	52,720			$	51,694			$	56,162			$	51,315			$	32,447			$	2.32
Stock-based compensation expense		$	-			$	(515	)		$	515			$	515
Three Months Ended April 30, 2015
		Revenues				Expenses				Income from Operations				EBITDA				Income before Taxes				Net Income(1)				Diluted EPS
As Reported		$	98,919			$	55,582			$	43,337			$	54,817			$	43,041			$	26,743			$	1.89
Adjustments:
Executive severance			-				129				(129	)			(129	)			(129	)			(79	)			(0.01	)
Litigation costs			-				(1,421	)			1,421				1,421				1,421				874				0.06
Impairment of online software and assets			-				(8,392	)			8,392				-				8,392				5,161				0.37
Subtotal of adjustments			-				(9,684	)			9,684				1,292				9,684				5,956				0.42
As Adjusted		$	98,919			$	45,898			$	53,021			$	56,109			$	52,725			$	32,699			$	2.31
Stock-based compensation expense		$	-			$	(475	)		$	475			$	475
(1) The non-GAAP tax rate of 38.5% used above excludes the income tax effects of the non-GAAP income before taxes adjustments described above and is consistent with our average and forecasted tax rate.

 

 

 

 

 

Table G
Liberty Tax, Inc.
Operational Data
Unaudited
		Fiscal years ended April 30,
		2016				2015
Franchisees
U.S.			1,856				1,907
Canada			130				125
Total Franchisees			1,986				2,032
Offices
U.S.
Franchised			3,967				3,944
Company-Owned			258				125
Total U.S.			4,225				4,069
Canada
Franchised			210				202
Company-Owned			52				57
Total Canada			262				259
Total
Franchised			4,177				4,146
Company-Owned			310				182
Total Offices			4,487				4,328
Tax Returns Processed
U.S.			1,832,000				1,907,000
Canada			330,000				340,000
Total Returns Processed in Offices			2,162,000				2,247,000
Online			145,000				167,000
Total Tax Returns Processed			2,307,000				2,414,000
Systemwide Revenue1
U.S.		$	417,600,000			$	413,200,000
Canada (CDN $)			27,400,000				26,400,000
Canada (USD $)			21,200,000				21,800,000
US Average Net Fee Per Return2		$	228			$	217
1 Our systemwide revenue represents the total tax preparation revenue generated by our franchised and company-owned offices. It does not represent our revenue. But because franchise royalties are derived from the operations of our franchisees, and because we maintain an infrastructure to support systemwide operations, we consider growth in systemwide revenue to be an important measurement.
2 The net average fee per tax return prepared reflects amounts for our franchised and company-owned offices.

 

 

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