Liberty Tax, Inc. (TAXA) SEC Filing 8-K Material Event for the period ending Thursday, June 20, 2019

Liberty Tax, Inc.

CIK: 1528930 Ticker: TAXA


Liberty Tax Service Announces Fiscal Year 2019 Results

Average Returns for U.S. and Canadian Offices Show Growth
U.S. Average Net Fee per Return Increased by 3.6%

VIRGINIA BEACH, Va., June 20, 2019 (GLOBE NEWSWIRE) -- Liberty Tax, Inc. (OTC PINK: TAXA) (the “Company”), the parent company of Liberty Tax Service, today reported its unaudited results for fiscal year 2019. The Company reported total revenue of $132.5 million.  The Company’s revenue in fiscal 2019 was impacted by the Company’s adoption of ASC 606, “Revenues from Contracts with Customers” effective May 1, 2018. The Company experienced a net loss of $2.2 million, in fiscal 2019 resulting in a GAAP loss per share of $0.16. Non-GAAP earnings per share for fiscal 2019 (as defined in Table D) were $0.63. The Company delivered adjusted EBITDA (as defined in Table D) of $28.0 million in fiscal 2019 and net cash provided by operating activities of $17.1 million.

The average returns processed per U.S. office increased 5.62% to 470 returns compared to 445 in the prior year. Total U.S. federal assisted tax returns of 1.33 million were lower than the 1.49 million U.S. federal assisted tax returns in the prior year, due to reductions in the number of U.S. locations. Total returns processed in Canada increased to 0.39 million from 0.38 million.

“Despite incurring a significant amount of one-time expenses, the Company continues to deliver solid cash flows from operating activities,” commented Chief Executive Officer, Brent Turner. “As I begin work in the role of CEO, we are sharply focused on delivering results through meaningful initiatives that position our brand for growth. We have recognized the need for change and are well underway toward making those changes.”

Fiscal 2019 Results (unaudited)

($ in millions except per share data)GAAP Non - GAAP*
  2019  2018 Change  2019  2018 Change
Revenue$  132.5 $  174.9 -24% $  134.2 $  174.9 -23%
Operating expenses 133.4  167.3 -20%  120.1  154.1 -22%
Income (loss) before taxes (4.0)  4.5 -189%  10.9  17.6 -38%
Net Income (loss) (2.2)  0.1 -1697%  8.7  8.5 2%
Diluted EPS (0.16)    0.01 -1700%    0.63    0.60 5%
*See reconciliation of Non-GAAP to GAAP financial measures in Table D and additional information under Non-GAAP Financial Information. 

Financial Highlights

  • Adjusted EBITDA of $28.0 million compared to $35.2 million for fiscal year 2018 (see Table D).
  • Net cash provided by operating activities was $17.13 million compared to $27.65 million for fiscal year 2018.
  • Average net fees for tax preparation services in the U.S. increased 3.6%.
  • The Company entered into a new $135 million Credit Facility last month and has full availability under the facility.
  • The Company ended the fiscal year with $23.0 million of cash on hand and repaid the balance of its term debt of $12.0 million on May 1, 2019.
  • The optional electronic filing fee charge for U.S. federal returns generated $2.68 million of revenue compared to $2.15 million in fiscal 2018 (gross versus net accounting adjusted for ASC 606).
  • Average net fees for tax preparation services in U.S. Company-owned offices increased 14.1%.
  • Revenue from franchise and Company-owned Canadian offices increased 1% in Canadian dollars.

About Liberty Tax, Inc.
Founded in 1997, Liberty Tax, Inc. (OTC PINK: TAXA) is the parent company of Liberty Tax Service. In the U.S. and Canada, last year, Liberty Tax prepared approximately two million individual income tax returns in more than 3,100 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 seasonal tax preparers. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor to 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 U.S. generally accepted accounting principles, please see the section of the accompanying Table D titled “Reconciliation of Non-GAAP Financial Information to the Most Directly Comparable GAAP Financial Measures.” 

Forward Looking Statements
In addition to historical information, this press 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 strategic initiatives, and statements regarding future growth. These forward-looking statements 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; uncertainties regarding the Company’s strategic plans related to Company-owned stores; uncertainties regarding the Company’s ability to meet its prepared returns targets; competitive factors; regulatory factors; the Company's effective income tax rate; litigation defense expenses and costs of judgments or settlements; costs associated with compliance efforts; and changes in market, economic, political or regulatory conditions. Additional information concerning these risks and uncertainties is contained in the Company’s filings 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 except as may be required by law.

Table A
Liberty Tax, Inc.
Consolidated Statement of Operations
Unaudited, amounts in thousands, except per share and share data
 Twelve months ended April 30,
  2019   2018  $ change % change
Franchise fees$2,766  $1,793   973  54.3%
Area Developer fees 3,146   2,751   395  14.4%
Royalties and advertising fees 63,716   68,559   (4,843)  -7.1%
Financial products 33,478   47,225   (13,747)  -29.1%
Interest income 8,189   9,895   (1,706)  -17.2%
Assisted tax preparation fees, net of discounts 14,611   26,645   (12,034)  -45.2%
Electronic Filing Fee 2,675   10,772   (8,097)  -75.2%
Other revenue 3,965   7,232   (3,267)  -45.2%
Total revenue 132,546   174,872   (42,326)  -24.2%
Operating expenses:       
Employee compensation and benefits 39,822   50,003   (10,181)  -20.4%
Selling, general, and administrative expenses 42,038   69,012   (26,974)  -39.1%
Area Developer expense 15,584   16,564   (980)  -5.9%
Advertising expense 12,532   12,326   206  1.7%
Depreciation, amortization, and impairment charges 14,084   14,416   (332)  -2.3%
Restructuring expense 9,345   4,952   4,393  88.7%
Total operating expenses 133,405   167,273   (33,868)  -20.2%
Income (loss) from operations (859)   7,599   (8,458)  -111.3%
Other income (expense):       
Foreign currency transaction gain (loss) (113)   63   (176)  -279.4%
Gain on sale of available-for-sale securities -   -   -  100.0%
Interest expense (3,023)   (3,181)   158  -5.0%
Income (loss) before income taxes (3,995)   4,481   (8,476)  -189.2%
Income tax expense (benefit) (1,839)   4,346   (6,185)  -142.3%
Net Income (loss)$(2,156)  $135  $(2,291)  -1697.0%
Net Income (loss) per share of Class A and Class B       
common stock:       
Basic and diluted$(0.16)  $0.01  $(0.17)  -1700.0%
Weighted-average shares outstanding basic 13,800,884   12,928,762   872,122  6.7%
Weighted-average shares outstanding diluted 13,800,884   13,977,748   (176,864)  -1.3%

Table B
Liberty Tax, Inc.
Consolidated Balance Sheets
Amounts in thousands
 Apr 30, Apr 30,
  2019   2018 
Current assets:(Unaudited)  
Cash and cash equivalents$22,983  $18,522 
Current receivables, net 58,643   66,816 
Bank Products receivable 7,277   4,025 
Assets held for sale -   8,941 
Income taxes receivable 1,784   - 
Other current assets 2,405   1,404 
Total current assets 93,092   99,708 
Property, equipment, and software, net 32,676   38,636 
Notes receivable, non-current, net 6,812   5,589 
Deferred income taxes 315   343 
Goodwill 6,566   8,640 
Other intangible assets, net 19,161   22,837 
Other assets 1,379   2,250 
Total assets$160,001  $178,003 
Current liabilities:   
Current installments of long-term obligations$13,108  $18,113 
Accounts payable and accrued expenses 13,672   14,521 
Due to Area Developers 17,282   17,906 
Income taxes payable 447   4,511 
Deferred revenue - current 3,679   2,021 
Total current liabilities 48,188   57,072 
Long-term obligations, excluding current installments, net 1,940   2,270 
Deferred revenue and other - non-current 5,622   4,692 
Deferred income tax liability 537   1,397 
Long-term income taxes payable -   1,070 
Total liabilities 56,287   66,501 
Stockholders' equity:   
Special voting preferred stock, $0.01 par value per share -   - 
Class A common stock, $0.01 par value per share 140   128 
Class B common stock, $0.01 par value per share -   2 
Exchangeable shares, $0.01 par value per share -   10 
Additional paid-in capital 12,552   11,570 
Accumulated other comprehensive loss, net of taxes (1,910)   (1,347) 
Retained earnings 92,932   101,139 
Total stockholders' equity 103,714   111,502 
Total liabilities and stockholders' equity$160,001  $178,003 

Table C
Liberty Tax, Inc.
Consolidated Statements of Cash Flows
Unaudited, amounts in thousands
 Twelve months ended April 30,
  2019   2018 
Cash flows from operating activities:   
Net (loss) income$(2,156)  $135 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Provision for doubtful accounts 8,738   12,396 
Depreciation and amortization 13,631   11,454 
Amortization of deferred financing costs 38   155 
Impairment of goodwill and other assets 453   2,962 
Other loss including sale of property, equipment and software 5,833   5,261 
Stock-based compensation expense related to equity classified awards 999   3,680 
Loss (gain) on bargain purchase and sales of Company-owned offices 694   (2,401) 
Equity in gain of affiliate (63)   (71) 
Deferred tax expense (benefit) 586   (2,369) 
Change in income taxes receivable (6,886)   (798) 
Changes in other assets and liabilities (4,738)   (2,759) 
Net cash provided by operating activities 17,129   27,645 
Cash flows from investing activities:   
Issuance of operating loans to franchisees and Area Developers (ADs) (68,283)   (73,796) 
Payments received on operating loans to franchisees and ADs 67,556   72,647 
Purchases of Company-owned offices, AD rights, and acquired customers lists (229)   (2,926) 
Proceeds from sale of Company-owned offices and AD rights 1,229   451 
Purchases of property, equipment and software (2,939)   (5,388) 
Net cash used in investing activities (2,666)   (9,012) 
Cash flows from financing activities:   
Proceeds from the exercise of stock options 153   95 
Repurchase of common stock and tax impact of stock compensation (88)   1 
Dividends paid (2,244)   (8,922) 
Repayment of other long-term obligations (7,502)   (7,432) 
Borrowings under revolving credit facility 123,615   178,251 
Repayments under revolving credit facility (123,615)   (178,251) 
Cash paid for taxes on exercises/vesting of stock-based compensation (83)   (576) 
Net cash used in financing activities (9,764)   (16,834) 
Effect of exchange rate changes on cash, net (238)   296 
Net increase in cash and cash equivalents 4,461   2,095 
Cash and cash equivalents at beginning of year 18,522   16,427 
Cash and cash equivalents at end of year$22,983  $18,522 

Table D
Liberty Tax, Inc.
Reconciliation of Non-GAAP Financial Information to the Most Directly Comparable 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 that earnings before interest, taxes, depreciation, amortization and impairment ("EBITDA") and non-GAAP results should be evaluated, in addition to, and not as an alternative for, net income (loss) as determined in accordance with GAAP.  We consider our non-GAAP financial results to be a useful metric for management and investors to evaluate and compare current year results with prior periods.  Because not all companies use the same calculations, our definition of EBITDA may not be comparable to similarly titled figures from other companies.  In addition, when evaluating non-GAAP results, we exclude certain items that are not considered to be part of future operating results.
The following is a reconciliation of GAAP Net Income (loss) as shown in Table A to EBITDA.
       Twelve months ended April 30,  
       2019  2018   
       (in thousands)  
Net Income (loss) - as reported       (2,156)  135   
Add back:            
Interest expense      3,023  3,181   
Income tax expense (benefit)      (1,839)  4,346   
Depreciation, amortization, and impairment charges         
As Reported      14,084  14,416   
Included in restructuring expense*      5,559  2,415   
Total Adjustments      20,827  24,358   
EBITDA      18,671  24,493   
*Impairments related to contract termination costs and property and intangibles included in Restructuring expense     
The following is a reconciliation of our non-GAAP financial measures to the most comparable GAAP financial measures.
Amounts may not add or recalculate due to rounding.  See page 9 for a description of the items excluded which we believe
to not be considered part of future operating results.         
For the twelve months ended April 30, 2019
    Loss from   Pre-tax  Net  Basic & Diluted
 Revenues Expenses Operations EBITDA Loss  Loss  EPS
As Reported132,546 133,405 (859) 18,671 (3,995)  (2,156)  $  (0.16) 
Adjustments: (1)           
Executive severance and related costs including stock-based compensation  (933) 933 933 933  677     0.05 
Executive recruitment costs  (725) 725 725 725  526     0.04 
Shareholder litigation costs  (472) 472 472 472  343     0.02 
Settlements, net of estimated recoveries (2)  (972) 972 972 972  706     0.05 
Unsolicited offer costs (2)  (311) 311 311 311  226     0.02 
Corporate governance costs  (303) 303 303 303  220     0.02 
Divestiture of year-round accounting offices1,643 (203) 1,846 1,846 1,846  1,340     0.10 
Restructuring expense  (9,345) 9,345 3,785 9,345  6,784     0.49 
Total Adjustments1,643 (13,264) 14,907 9,347 14,907  10,822     0.79 
Non-GAAP134,189 120,141 14,048 28,019 10,912  8,666  $  0.63 
For the twelve months ended April 30, 2018
    Income from   Pre-tax  Net  Basic & Diluted
 Revenues Expenses Operations EBITDA Income  Income  EPS
As Reported174,872 167,273 7,599 24,493 4,481  135  $  0.01 
Adjustments: (1)           
CEO Separation and related costs  (3,503) 3,503 3,503 3,503  2,228     0.16 
Executive severance and related costs including stock-based compensation  (2,965) 2,965 2,965 2,965  1,886     0.13 
Executive recruitment costs  (325) 325 325 325  207     0.01 
Compliance Task Force and related costs  (881) 881 881 881  560     0.04 
Shareholder litigation costs  (529) 529 529 529  337     0.02 
Restructuring expense  (4,952) 4,952 2,537 4,952  3,149     0.23 
Total Adjustments- (13,155) 13,155 10,741 13,155  8,367     0.59 
Non-GAAP174,872 154,118 20,754 35,233 17,636  8,502  $  0.60 
(1)  The net income (loss) impact of the adjustments is calculated using the incremental tax rate for the period.
(2)  Adjustment included for prior period amounts.

Table E
Liberty Tax, Inc.
Operational Data
  Twelve months ended April 30,
   2019  2018
U.S.  1,445  1,582
Canada  144  138
Total Franchisees  1,589  1,720
Franchised  2,737  3,047
Company-owned  99  296
Total U.S.  2,836  3,343
Franchised  231  219
Company-owned  41  48
Total Canada  272  267
Franchised  2,968  3,266
Company-owned  140  344
Total Offices  3,108  3,610
Tax Returns Processed    
U.S.  1,334,000  1,487,000
Canada  392,000  377,000
Total Returns Processed in Offices  1,726,000  1,864,000
Online  121,000  125,000
Total Tax Returns Processed  1,847,000  1,989,000
Systemwide Revenue1    
U.S.  $341,900,000  $366,900,000
Canada (CDN $)  32,700,000  31,000,000
Canada (USD $)  24,600,000  24,100,000
U.S. Average Net Fee Per Return2  $256  $247
1 Our systemwide revenue represents the total tax preparation revenue generated by our franchised and company-owned offices.  It does not represent our revenue. Because franchise royalties are derived from the operations of our franchisees, and because we maintain an infrastructure to support systemwide operations, we consider systemwide revenue to be an important measurement.
2 The average net fee per tax return prepared reflects amounts for our franchised and company-owned offices.

Non-GAAP Financial Information
The Company believes that EBITDA and non-GAAP net income (loss) should be evaluated, in addition to, and not as an alternative for, net income as determined in accordance with GAAP.  Both metrics are used by management when evaluating the performance of the Company.  Because not all companies use the same calculations, our definition of EBITDA may not be comparable to similarly titled figures from other companies.  In addition, when evaluating non-GAAP financial information, we exclude certain items that are not considered to be part of future operating results and which management excludes when evaluating the performance of the Company.  Descriptions of the items which are excluded are as follows:

Executive severance and related costs, including stock-based compensation:  We exclude from our non-GAAP financial measures cash and non-cash stock-based compensation, related third-party expenses and perquisites associated with the separation of employment with executives of the Company.

Executive recruitment costs:  We exclude from our non-GAAP financial measures one-time costs incurred to recruit and hire new executives.

Shareholder litigation costs:  We exclude from our non-GAAP financial measures one-time costs incurred related to shareholder litigation.

Accrued judgment:  We exclude from our non-GAAP financial measures recoveries of and accruals recorded in the period ending April 30, 2019.

Unsolicited offer costs:  We exclude from our non-GAAP financial measures costs incurred related to the unsolicited offer received by the Company in November 2018.

Corporate governance costs:  We exclude from our non-GAAP financial measures third-party consulting expenses related to corporate governance costs.

Divestiture of year-round accounting offices: We exclude from our non-GAAP financial measures loss on the disposal of assets, lost revenues and brokerage and lease expenses associated with the divestiture of our year-round accounting offices.

Restructuring:  We exclude from our non-GAAP financial measures cash and non-cash expenses of restructuring activities.  These costs include property and intangible impairments and exit costs.

Michael S. Piper
Liberty Tax, Inc.
Vice President and Chief Financial Officer
(757) 493-8855

View differences made from one to another to evaluate Liberty Tax, Inc.'s financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Liberty Tax, Inc..


Assess how Liberty Tax, Inc.'s management team is paid from their Annual Proxy

Definitive Proxy Statement (Form DEF 14A)
Screenshot example of actual Proxy Statement

Liberty Tax, Inc.'s Definitive Proxy Statement (Form DEF 14A) filed after their 2019 10-K Annual Report includes:

  • Voting Procedures
  • Board Members
  • Executive Team
  • Salaries, Bonuses, Perks
  • Peers / Competitors


SEC Filing Tools

Material Contracts, Statements, Certifications & more

Liberty Tax, Inc. provided additional information to their SEC Filing as exhibits

Ticker: TAXA
CIK: 1528930
Form Type: 8-K Corporate News
Accession Number: 0001171843-19-004071
Submitted to the SEC: Thu Jun 20 2019 6:35:43 AM EST
Accepted by the SEC: Thu Jun 20 2019
Period: Thursday, June 20, 2019
Industry: Patent Owners And Lessors
  1. Earnings Release
  2. Financial Exhibit

External Resources:
Stock Quote
Social Media

Bookmark the Permalink: