Liberty Tax, Inc. (TAX) has reported a 48.18 percent plunge in profit for the quarter ended Jan. 31, 2017. The company has earned $2.46 million, or $0.18 a share in the quarter, compared with $4.74 million, or $0.34 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $2.60 million, or $0.19 a share compared with $4.74 million or $0.34 a share, a year ago.
Revenue during the quarter dropped 9.69 percent to $48.42 million from $53.62 million in the previous year period. Total expenses were 89.46 percent of quarterly revenues, up from 83.28 percent for the same period last year. That has resulted in a contraction of 618 basis points in operating margin to 10.54 percent.
Operating income for the quarter was $5.10 million, compared with $8.97 million in the previous year period.
However, the adjusted operating income for the quarter stood at $5.35 million compared to $8.97 million in the prior year period.
"The 2017 tax season marks another period of change for the industry as filing patterns continue to shift later into the season," stated John Hewitt, chief executive officer. "The whole industry has been slow, but we are clearly not satisfied with how we have performed in comparison to the market. There is still a lot of season in front of us and we are focused on delivering a strong second half and on implementing the appropriate changes to be successful in an evolving landscape."
Operating cash flow remains negative
Liberty Tax, Inc. has spent $62.04 million cash to meet operating activities during the nine month period as against cash outgo of $68.28 million in the last year period.
The company has spent $65.71 million cash to meet investing activities during the nine month period as against cash outgo of $92.83 million in the last year period. It has incurred net capital expenditure of $11.15 million on net basis during the nine month period, up 16.82 percent or $1.61 million from year ago period.
Cash flow from financing activities was $121.44 million for the nine month period, down 14.39 percent or $20.41 million, when compared with the last year period.
Cash and cash equivalents stood at $3.46 million as on Jan. 31, 2017, up 93.56 percent or $1.67 million from $1.79 million on Jan. 31, 2016.
Working capital decreases marginally
Liberty Tax, Inc. has witnessed a decline in the working capital over the last year. It stood at $155.06 million as at Jan. 31, 2017, down 4.45 percent or $7.22 million from $162.28 million on Jan. 31, 2016. Current ratio was at 4.48 as on Jan. 31, 2017, down from 4.92 on Jan. 31, 2016.
Days sales outstanding went up to 229 days for the quarter compared with 219 days for the same period last year.
Debt comes down
Liberty Tax, Inc. has recorded a decline in total debt over the last one year. It stood at $156.14 million as on Jan. 31, 2017, down 10.42 percent or $18.17 million from $174.31 million on Jan. 31, 2016. Total debt was 52.44 percent of total assets as on Jan. 31, 2017, compared with 57.38 percent on Jan. 31, 2016. Debt to equity ratio was at 1.75 as on Jan. 31, 2017, down from 2.18 as on Jan. 31, 2016. Interest coverage ratio deteriorated to 5.23 for the quarter from 12.72 for the same period last year.
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