10-Q 1 hrb-20220331.htm 10-Q hrb-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-06089

H&R Block, Inc.
(Exact name of registrant as specified in its charter)
Missouri44-0607856
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
One H&R Block Way, Kansas City, Missouri 64105
(Address of principal executive offices, including zip code)
(816) 854-3000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, without par valueHRBNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes     No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer            Accelerated filer         Non-accelerated filer           Smaller reporting company  Emerging growth company
    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No  
The number of shares outstanding of the registrant's Common Stock, without par value, at the close of business on April 29, 2022: 159,594,159 shares.




Form 10-Q for the Period ended March 31, 2022
Table of Contents



PART I    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(unaudited, in 000s, except 
per share amounts)
Three months ended March 31,Nine months ended March 31,
2022202120222021
REVENUES:
Service revenues$1,841,122 $1,763,693 $2,151,824 $2,262,663 
Royalty, product and other revenues220,635 219,871 261,373 280,212 
2,061,757 1,983,564 2,413,197 2,542,875 
OPERATING EXPENSES:
Costs of revenues831,455 795,494 1,362,310 1,350,730 
Selling, general and administrative344,937 336,833 617,594 621,209 
Total operating expenses1,176,392 1,132,327 1,979,904 1,971,939 
Other income (expense), net238 449 1,989 3,491 
Interest expense on borrowings(23,746)(22,471)(69,661)(78,657)
Income from continuing operations before income taxes861,857 829,215 365,621 495,770 
Income taxes186,884 69,543 29,666 50,997 
Net income from continuing operations674,973 759,672 335,955 444,773 
Net loss from discontinued operations, net of tax benefits of $539, $793, $1,495 and $3,317
(1,796)(1,425)(4,984)(4,533)
NET INCOME$673,177 $758,247 $330,971 $440,240 
BASIC EARNINGS PER SHARE:
Continuing operations$4.13 $4.15 $1.95 $2.38 
Discontinued operations(0.01)(0.01)(0.03)(0.03)
Consolidated$4.12 $4.14 $1.92 $2.35 
DILUTED EARNINGS PER SHARE:
Continuing operations$4.06 $4.09 $1.92 $2.35 
Discontinued operations(0.01)(0.01)(0.03)(0.02)
Consolidated$4.05 $4.08 $1.89 $2.33 
DIVIDENDS DECLARED PER SHARE$0.27 $0.26 $0.81 $0.78 
COMPREHENSIVE INCOME:
Net income$673,177 $758,247 $330,971 $440,240 
Change in foreign currency translation adjustments5,595 3,955 (3,926)34,753 
Other comprehensive income (loss)5,595 3,955 (3,926)34,753 
Comprehensive income$678,772 $762,202 $327,045 $474,993 
See accompanying notes to consolidated financial statements.










H&R Block, Inc. |Q3 FY2022 Form 10-Q
1

CONSOLIDATED BALANCE SHEETS(unaudited, in 000s, except 
share and per share amounts)
As ofMarch 31, 2022June 30, 2021
ASSETS
Cash and cash equivalents$1,041,740 $1,434,381 
Cash and cash equivalents - restricted135,314 149,783 
Receivables, less allowance for credit losses of $61,512 and $77,518
261,602 88,932 
Income taxes receivable340,355 330,872 
Prepaid expenses and other current assets89,025 76,414 
Total current assets1,868,036 2,080,382 
Property and equipment, at cost, less accumulated depreciation and amortization of $881,841 and $842,861
133,036 139,276 
Operating lease right of use assets390,758 445,847 
Intangible assets, net322,836 351,093 
Goodwill764,428 754,521 
Deferred tax assets and income taxes receivable236,792 181,996 
Other noncurrent assets65,241 61,273 
Total assets$3,781,127 $4,014,388 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses$225,708 $164,269 
Accrued salaries, wages and payroll taxes227,075 168,989 
Accrued income taxes and reserves for uncertain tax positions337,363 238,863 
Current portion of long-term debt499,395 — 
Operating lease liabilities187,263 214,190 
Deferred revenue and other current liabilities216,073 196,175 
Total current liabilities1,692,877 982,486 
Long-term debt1,486,530 1,983,719 
Deferred tax liabilities and reserves for uncertain tax positions218,461 301,658 
Operating lease liabilities210,866 244,932 
Deferred revenue and other noncurrent liabilities127,537 113,535 
Total liabilities3,736,271 3,626,330 
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, stated value $0.01 per share, 800,000,000 shares authorized, shares issued of 193,571,309 and 216,655,616
1,936 2,167 
Additional paid-in capital767,869 779,465 
Accumulated other comprehensive income (loss)(3,838)88 
Retained earnings (deficit)(56,790)286,694 
Less treasury shares, at cost, of 33,978,937 and 34,842,125
(664,321)(680,356)
Total stockholders' equity44,856 388,058 
Total liabilities and stockholders' equity$3,781,127 $4,014,388 
See accompanying notes to consolidated financial statements.
2
Q3 FY2022 Form 10-Q| H&R Block, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in 000s)
Nine months ended March 31,20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$330,971 $440,240 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization107,462 117,037 
Provision59,778 60,428 
Deferred taxes(85,122)5,763 
Stock-based compensation19,988 21,232 
Changes in assets and liabilities, net of acquisitions:
Receivables(233,362)(336,868)
Prepaid expenses, other current and noncurrent assets(16,525)(37,054)
Accounts payable, accrued expenses, salaries, wages and payroll taxes122,112 257,034 
Deferred revenue, other current and noncurrent liabilities36,960 30,783 
Income tax receivables, accrued income taxes and income tax reserves36,244 (52,516)
Other, net(5,378)(4,723)
Net cash provided by operating activities373,128 501,356 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(52,718)(44,220)
Payments made for business acquisitions, net of cash acquired(25,465)(15,495)
Franchise loans funded(18,468)(26,745)
Payments from franchisees17,714 28,477 
Other, net7,831 7,969 
Net cash used in investing activities(71,106)(50,014)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of line of credit borrowings(705,000)(3,275,000)
Proceeds from line of credit borrowings705,000 1,275,000 
Repayments of long-term debt (650,000)
Proceeds from issuance of long-term debt 647,965 
Dividends paid(143,435)(147,887)
Repurchase of common stock, including shares surrendered(555,247)(188,892)
Proceeds from exercise of stock options4,605 2,228 
Other, net(13,389)(19,680)
Net cash used in financing activities(707,466)(2,356,266)
Effects of exchange rate changes on cash(1,666)10,370 
Net decrease in cash and cash equivalents, including restricted balances(407,110)(1,894,554)
Cash, cash equivalents and restricted cash, beginning of period1,584,164 2,769,947 
Cash, cash equivalents and restricted cash, end of period$1,177,054 $875,393 
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid, net of refunds received$76,894 $100,118 
Interest paid on borrowings58,009 77,398 
Accrued additions to property and equipment1,336 977 
New operating right of use assets and related lease liabilities126,726 94,260 
Accrued dividends payable to common shareholders43,041 47,181 
See accompanying notes to consolidated financial statements.
H&R Block, Inc. | Q3 FY2022 Form 10-Q
3

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(amounts in 000s, except
per share amounts)
Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Income (Loss)(1)
Retained
Earnings
(Deficit)
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of July 1, 2021216,656 $2,167 $779,465 $88 $286,694 (34,842)$(680,356)$388,058 
Net loss    (151,601)  (151,601)
Other comprehensive loss   (11,177)   (11,177)
Stock-based compensation  5,627     5,627 
Stock-based awards exercised or vested  (10,328) (291)705 13,765 3,146 
Acquisition of treasury shares(2)
     (205)(4,817)(4,817)
Repurchase and retirement of common shares(6,802)(68)(4,081) (161,619)  (165,768)
Cash dividends declared - $0.27 per share
    (47,940)  (47,940)
Balances as of September 30, 2021209,854 $2,099 $770,683 $(11,089)$(74,757)(34,342)$(671,408)$15,528 
Net loss    (190,605)  (190,605)
Other comprehensive income   1,656    1,656 
Stock-based compensation  5,640     5,640 
Stock-based awards exercised or vested  (1,709) (219)122 2,400 472 
Acquisition of treasury shares(2)
     (2)(52)(52)
Repurchase and retirement of common shares(6,589)(66)(3,953) (154,778)  (158,797)
Cash dividends declared - $0.27 per share
    (46,497)  (46,497)
Balances as of December 31, 2021203,265 $2,033 $770,661 $(9,433)$(466,856)(34,222)$(669,060)$(372,655)
Net income    673,177   673,177 
Other comprehensive income   5,595    5,595 
Stock-based compensation  5,619     5,619 
Stock-based awards exercised or vested  (2,595) (201)244 4,771 1,975 
Acquisition of treasury shares(2)
     (1)(32)(32)
Repurchase and retirement of common shares(9,694)(97)(5,816) (219,868)  (225,781)
Cash dividends declared - $0.27 per share
    (43,042)  (43,042)
Balances as of March 31, 2022193,571 $1,936 $767,869 $(3,838)$(56,790)(33,979)$(664,321)$44,856 
(1) The balance of our accumulated other comprehensive income (loss) consists of foreign currency translation adjustments.
(2)Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.
See accompanying notes to consolidated financial statements.
4
Q3 FY2022 Form 10-Q| H&R Block, Inc.

Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Income (Loss)(1)
Retained
Earnings
(Deficit)
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of July 1, 2020228,207 $2,282 $772,943 $(39,781)$(18,455)(35,478)$(692,187)$24,802 
Net loss— — — — (62,256)— — (62,256)
Other comprehensive income— — — 8,816 — — — 8,816 
Stock-based compensation— — 7,259 — — — — 7,259 
Stock-based awards exercised or vested— — (2,613)— (636)215 4,176 927 
Acquisition of treasury shares(2)
— — — — — (42)(596)(596)
Repurchase and retirement of common shares(5,957)(60)(3,514)— (84,884)— — (88,458)
Cash dividends declared - $0.26 per share
— — — — (50,154)— — (50,154)
Balances as of September 30, 2020222,250 $2,222 $774,075 $(30,965)$(216,385)(35,305)$(688,607)$(159,660)
Net loss— — — — (255,751)— — (255,751)
Other comprehensive income— — — 21,982 — — — 21,982 
Stock-based compensation— — 5,181 — — — — 5,181 
Stock-based awards exercised or vested— — (134)— (220)8 144 (210)
Acquisition of treasury shares(2)
— — — — — (3)(44)(44)
Repurchase and retirement of common shares(3,531)(35)(2,083)— (59,566)— — (61,684)
Cash dividends declared - $0.26 per share
— — — — (47,689)— — (47,689)
Balances as of December 31, 2020218,719 $2,187 $777,039 $(8,983)$(579,611)(35,300)$(688,507)$(497,875)
Net income— — — — 758,247 — — 758,247 
Other comprehensive income— — — 3,955 — — — 3,955 
Stock-based compensation— — 6,943 — — — — 6,943 
Stock-based awards exercised or vested— — (1,071)— (214)111 2,174 889 
Acquisition of treasury shares(2)
— — — — — (2)(39)(39)
Repurchase and retirement of common shares(2,063)(20)(1,219)— (36,832)— — (38,071)
Cash dividends declared - $0.26 per share
— — — — (47,181)— — (47,181)
Balances as of March 31, 2021216,656 $2,167 $781,692 $(5,028)$94,409 (35,191)$(686,372)$186,868 
(1) The balance of our accumulated other comprehensive income (loss) consists of foreign currency translation adjustments.
(2) Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.
See accompanying notes to consolidated financial statements.

H&R Block, Inc. |Q3 FY2022 Form 10-Q
5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             (unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATIONThe consolidated balance sheets as of March 31, 2022 and June 30, 2021, the consolidated statements of operations and comprehensive income for the three and nine months ended March 31, 2022 and 2021, the consolidated statements of cash flows for the nine months ended March 31, 2022 and 2021, and the consolidated statements of stockholders' equity for the three and nine months ended March 31, 2022 and 2021 have been prepared by the Company, without audit. In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows as of March 31, 2022 and 2021 and for all periods presented, have been made.
"H&R Block," "the Company," "we," "our," and "us" are used interchangeably to refer to H&R Block, Inc., to H&R Block, Inc. and its subsidiaries, or to H&R Block, Inc.'s operating subsidiaries, as appropriate to the context.
On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30. The Company's 2022 fiscal year began on July 1, 2021 and will end on June 30, 2022. As a result of this change, the Company filed a Transition Report on Form 10-Q that included the financial information for the transition period from May 1, 2021 to June 30, 2021 (Transition Period). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our April 30, 2021 Annual Report to Shareholders on Form 10-K and our June 30, 2021 Transition Report filed on Form 10-Q.
MANAGEMENT ESTIMATESThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses arising from our discontinued mortgage business, contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, fair value of reporting units, and related matters. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates.
SEASONALITY OF BUSINESS – Our operating revenues are seasonal in nature with peak revenues typically occurring in the months of February through April. Therefore, results for interim periods are not indicative of results to be expected for the full year.
On March 21, 2020, the federal tax filing deadline in the U.S. for individual 2019 tax returns was extended from April 15, 2020 to July 15, 2020, shifting a portion of revenues and expenses from that tax season into the nine months ended March 31, 2021. This extension impacted the typical seasonality of our business and the comparability of our financial results.
DISCONTINUED OPERATIONS – Our discontinued operations include the results of operations of Sand Canyon Corporation, previously known as Option One Mortgage Corporation (including its subsidiaries, collectively, SCC), which exited its mortgage business in fiscal year 2008. See note 9 for additional information on litigation, claims, and other loss contingencies related to our discontinued operations.
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Q3 FY2022 Form 10-Q| H&R Block, Inc.

NOTE 2: REVENUE RECOGNITION
The majority of our revenues are from our U.S. tax services business. The following table disaggregates our U.S. tax services revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:
(in 000s)
Three months ended March 31,Nine months ended March 31,
2022202120222021
Revenues:
U.S. assisted tax preparation$1,392,142 $1,290,892 $1,456,594 $1,532,079 
U.S. royalties158,786 150,117 169,548 178,126 
U.S. DIY tax preparation175,184 181,294 188,455 234,871 
International65,232 62,869 151,464 148,282 
Refund Transfers132,223 134,799 134,665 141,309 
Emerald Card®50,660 73,647 103,748 96,045 
Peace of Mind® Extended Service Plan17,222 17,668 59,373 63,430 
Tax Identity Shield®9,078 8,643 19,431 22,446 
Interest and fee income on Emerald AdvanceSM
30,535 38,247 43,438 52,812 
Wave20,111 16,082 58,745 44,656 
Other10,584 9,306 27,736 28,819 
Total revenues$2,061,757 $1,983,564 $2,413,197 $2,542,875 
Changes in the balances of deferred revenue and wages for our Peace of Mind® Extended Service Plan (POM) are as follows:
(in 000s)
POMDeferred RevenueDeferred Wages
Nine months ended March 31,2022202120222021
Balances as of July 1,$172,759 $167,827 $17,867 $18,707 
Amounts deferred80,801 87,175 9,006 8,712 
Amounts recognized on previous deferrals(69,075)(