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Analyst Blog

Liberty Tax Service’s parent company, JTH Holding Inc., (TAX) reported first-quarter fiscal 2015 (ending Jul 31) adjusted net loss of 67 per share, wider than the Zacks Consensus Estimate loss of 54 cents and year-ago loss of 46 cents.

The weak operational results were also reflected in the share price that lost 3.7% in the last trading session to close at $33.60.
 

 

Behind the Headlines

JTH Holding reported total revenue of $7.8 million, missing the Zacks Consensus Estimate of $9 million and declining 2.8% year over year. The decrease stemmed from lower franchise fees.

JTH Holding’s total operating expenses escalated 25.3% year over year to $21.9 million. Higher staff and management expenses, and an increase in depreciation, amortization and impairment charges due to the rollout of the NextGen software platform for online customers prompted the overall increase.

A higher magnitude of increase in revenues offset the increase in expenses, resulting in operating loss of $14 million, wider than the year-ago loss of $9.4 million.

Financial Update

Total assets of JTH Holding were approximately $165.5 million as of Jul 31, up 3% from $158.7 million in the year-ago level.

Total cash and cash equivalents increased 0.9% year over year to $8.6 million as of Jul 31.

Total long-term debt amounted to $21.1 million as on Jul 31, reflecting an improvement of about 10.6% from $23.6 million at the end of the year-ago quarter.

JTH Holding’s cash used in operations totaled $22.7 million in the quarter, higher than $14.5 million used in the year-ago quarter.

Looking Forward

Management expects revenue growth to outpace operating expense rise in 2014.

Management also expects the Affordable Care Act (ACA) to drive significant growth for the next two to three years. It is estimating a 2 1/2–3% fee increase in 2015 related to ACA.

Zacks Rank and Others

JTH Holding presently carries a Zacks Rank #3 (Hold). Among other business service providers, Avis Budget Group, Inc. (CAR - Analyst Report), Cardtronics Inc. (CATM - Snapshot Report) and Viad Corp. (VVI - Snapshot Report) surpassed their respective Zacks Consensus Estimate in last reported quarter.

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