Give Me Liberty or Give Me Debt

Published on: 21 Jun, 2017

Liberty Tax, Inc. (NASDAQ: TAX), the parent company of Liberty Tax Service and most noted for their Sign Holders positioned in front of their stores in ‘Statue of Liberty’ garb, prepares over 2-million individual tax returns in over 4,000 offices throughout the U.S. and Canada. After release of their Q4 financials, Liberty Tax is experiencing a “very disappointing” quarter with Revenue Growth up by only .3% from last year with a negligible hop from $173-million to a higher $173-million (rounded to $174-million).

As a result of the underperformance in company owned stores this tax season, the company either impaired or closed multiple store locations and reflecting a $4.9-million non-cash charge. Average returns processed per US office remained relatively flat with Total Returns falling by 1% in the US and rising 8% in the Canadian market. GAAP earnings were set at a modest $0.94 per share and a dcrease in diluted shares of 32%.

The recent disappointment has prompted Liberty Tax to bring aboard a new Chief Operations Officer, Edward Brunot. CEO John Hewitt explained their need to right the ship sayng, “We are carefully evaluating changes to our operations to enable us to return to our past pattern of growth in market share, revenue and earnings.” Hewitt seemed excited by their new acquisition to lead the next quarters operations and said, “As we plan for this fiscal year, I am extremely pleased to welcome Edward Brunot as our new Chief Operating Officer […] Ed’s background in growing retail service businesses through a disciplined, processed approach is an asset that will be leveraged throughout the franchisee base and the entire organization.”

As of June 12th, Liberty Tax’s Board of Directors has approved a less-than-impressive quarterly dividend of $0.16 per share to be paid on July 28, 2017. The year ended with 16.4-million of cash on hand compared to 9.9-million last year.

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Giovanni Lopez

Email: Lopez@financialinsiders.com

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