Hey Guys,
H&R Block Inc. (NYSE: HRB) today reported a net loss of $131.4 million, or 41 cents per share, for the first quarter of fiscal 2007, compared with a $28.0 million loss, or 8 cents per share, in the prior-year period. First quarter revenues were $540.8 million versus $615.0 million a year ago.
“Except for Mortgage Services, each of our business segments performed in line with expectations during this seasonally slow quarter when we normally report an operating loss,” said Mark A. Ernst, chairman and chief executive officer. “But that was overshadowed by the impact of recent increases in mortgage loan repurchases.”
As previously announced, the quarter’s net loss includes a total provision for losses of $102.1 million ($61 million after-tax, or 19 cents per share) reflecting the estimated recourse liability recorded by Option One Mortgage Corp. for loan repurchases and premium-recapture reserves. The provision includes $46.1 million related to loans originated during the quarter ended July 31 and $56.0 million related to loans originated in previous quarters, and it compares with a $16.9 million provision in the first quarter of last year.
“We’ve modified our operating procedures and loan products to improve loan performance and profitability,” Ernst noted. “We have tightened underwriting criteria and pricing guidelines — especially in parts of the Midwest and other regions where delinquencies have been highest — while continuing to reduce origination costs.”
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