H&R Block Inc. (NYSE:HRB), a leading provider of tax preparation services, has extended its partnership with Pathward, N.A., formerly known as MetaBank, N.A., through June 30, 2027. The extension, effective as of Monday, October 18, 2024, is part of a Fourth Amendment to the Program Management Agreement (PMA) between Emerald Financial Services, LLC, a wholly-owned subsidiary of H&R Block, and Pathward.
The amendment not only extends the existing contract by two years but also revises the terms of the Emerald Advance participation agreement. This revision is expected to slightly reduce the overall share of participation interests held by Emerald Financial Services at the portfolio level, with variations by jurisdiction.
The PMA, originally entered into on August 5, 2020, has Pathward serve as the bank provider for H&R Block-branded financial products, among other services. While the recent amendment introduces some changes, the core material terms of the PMA remain largely unchanged.
The continuation of this agreement signifies H&R Block's commitment to providing financial products through its partnership with Pathward. The information regarding this extension is based on a press release statement and the full text of the Fourth Amendment to Program Management Agreement, which is incorporated by reference into H&R Block's recent SEC filing.
In other recent news, H&R Block has reported significant increases in revenue, EBITDA, and earnings per share (EPS) for fiscal year 2024. This is attributed to substantial market share gains in the company's do-it-yourself (DIY) tax preparation business. The company also announced a 17% increase in its quarterly dividend and initiated a new share repurchase program valued at $1.5 billion. For fiscal year 2025, H&R Block projects revenue between $3.69 billion and $3.75 billion, EBITDA between $975 million and $1.02 billion, and EPS between $5.15 and $5.35.
However, Goldman Sachs maintained its Sell rating on H&R Block shares, citing challenges such as the ongoing shift towards DIY tax solutions and increased competition. In addition to these financial developments, the company also saw changes in its board with the resignation of Yolande G. Piazza, reducing the board size from nine to eight directors. Despite these challenges and changes, H&R Block remains committed to improving the client experience, maintaining market share, and attracting TurboTax clients.
InvestingPro Insights
H&R Block's extension of its partnership with Pathward aligns well with the company's strong financial performance and market position. According to InvestingPro data, H&R Block boasts a market capitalization of $8.39 billion and a healthy revenue of $3.61 billion over the last twelve months as of Q4 2024. The company's commitment to shareholder value is evident in its dividend policy, with an InvestingPro Tip highlighting that H&R Block has raised its dividend for 8 consecutive years and maintained dividend payments for an impressive 54 consecutive years.
The company's financial health is further underscored by its profitability, with a P/E ratio of 14.45 and an adjusted P/E ratio of 14.05 for the last twelve months as of Q4 2024. This relatively low P/E ratio, combined with the company's dividend track record, suggests that H&R Block may be an attractive option for value-oriented investors.
Another InvestingPro Tip indicates that H&R Block operates with a moderate level of debt, which could provide financial flexibility as it continues to expand its services and partnerships. For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights that could be valuable in assessing H&R Block's future prospects in light of this extended partnership.
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