# EDGAR Filing Document

**Accession Number:** 0000012659
**File Stem:** 0001838862-23-000008
**Filing Date:** 2023-2
**Character Count:** 31093
**Document Hash:** 3e1d076518a96ec2c0b27703dd77bf1f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001838862-23-000008.hdr.sgml**: 20230207

**ACCESSION NUMBER**: 0001838862-23-000008

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230207

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230207

**DATE AS OF CHANGE**: 20230207

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** H&R BLOCK INC
- **CENTRAL INDEX KEY:** 0000012659
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PERSONAL SERVICES [7200]
- **IRS NUMBER:** 440607856
- **STATE OF INCORPORATION:** MO
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-06089
- **FILM NUMBER:** 23595119

**BUSINESS ADDRESS:**
- **STREET 1:** ONE H&R BLOCK WAY
- **CITY:** KANSAS CITY
- **STATE:** MO
- **ZIP:** 64105
- **BUSINESS PHONE:** 8168543000

**MAIL ADDRESS:**
- **STREET 1:** ONE H&R BLOCK WAY
- **CITY:** KANSAS CITY
- **STATE:** MO
- **ZIP:** 64105

?xml version="1.0" ? hrb-20230207

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 8-K** 

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

Date of Report (date of earliest event reported): February 7, 2023

**H&R BLOCK, INC.** 

(Exact name of registrant as specified in charter)

---

| | | |
|:---|:---|:---|
| **Missouri** | **1-06089** | **44-0607856** |
| (State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer |
| incorporation or organization) | | Identification No.) |

---

**One H&R Block Way, Kansas City, MO 64105** 

(Address of Principal Executive Offices) (Zip Code)

**(816) 854-3000** 

(Registrant's telephone number, including area code)

**Not Applicable**

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐&nbsp;&nbsp;&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐&nbsp;&nbsp;&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐&nbsp;&nbsp;&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐&nbsp;&nbsp;&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered <br> <u>Common Stock, without par value</u> <u>HRB</u> <u>New York Stock Exchange</u>

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 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. ☐

------

**Item 2.02.**&nbsp;&nbsp;&nbsp;&nbsp;**Results of Operations and Financial Condition.**

On February 7, 2023, H&R Block, Inc. (the "Company") issued a press release regarding the Company's results of operations for the fiscal quarter ended December 31, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

**Item 9.01.**&nbsp;&nbsp;&nbsp;&nbsp;**Financial Statements and Exhibits.**

(d) Exhibits

<u>Exhibit Number</u>&nbsp;&nbsp;&nbsp;&nbsp;<u>Description</u>

<u>[99.1](q2fy23earningrelease.htm)</u>&nbsp;&nbsp;&nbsp;&nbsp;<u>[Press Release Issued February 7, 2023.](q2fy23earningrelease.htm)</u>

104&nbsp;&nbsp;&nbsp;&nbsp;Cover Page Interactive Data File (embedded within the Inline XBRL document)

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
| | | | **H&R BLOCK, INC.** |
| Date: | February 7, 2023 | By: | /s/ Katharine M. Haynes |
|  |  |  | Katharine M. Haynes |
|  |  |  | Vice President and Secretary |

---

## Exhibit 99.1

![image7.jpg](image7.jpg)

<u>Exhibit 99.1</u>

**News Release**

For Immediate Release: February 7, 2023

**H&R Block Reports Fiscal 2023 Second Quarter Results; Reaffirms Full Year Outlook**

KANSAS CITY, Mo. - H&R Block, Inc. (NYSE: HRB) (the "Company") today released its financial results<sup>1</sup> for the fiscal 2023 second quarter ended December 31, 2022.

*• Revenue grew 5% and the Company saw a strong ending to the 2022 tax season*

*• The Company reiterates its previously provided fiscal year 2023 outlook*

*• Repurchased $130.4 million of shares in the quarter, another 2% of shares outstanding*

*• Spruce*<sup>SM</sup>*, the new mobile banking platform, was launched in the Assisted channel in January*

"Our second quarter results demonstrate ongoing momentum across our business, and I am pleased with the path we are on," said Jeff Jones, H&R Block's president and chief executive officer. "We continue to make progress in our Block Horizons journey and feel well positioned for the 2023 tax season. By blending technology with human help, we are empowering clients to choose how they want to be served at tax time — fully virtually, or fully in person, and everything in between."

**Fiscal 2023 Second Quarter Results and Key Financial Metrics**

"We performed well in the second quarter, managed expenses effectively, and continued to return value to shareholders through our capital allocation," said Tony Bowen, H&R Block's chief financial officer. "We repurchased 3.2 million shares in the quarter. In the first half of the year, we retired a total of 5% of shares outstanding for $350 million. We are also pleased to reiterate our full year outlook for 2023, which calls for topline growth, EBITDA that outpaces revenue, and EPS that grows even faster."

• Total revenue of $166.4 million, increased by $7.6 million, or 5%, to the prior year. The increase was primarily driven by volumes and net average charge as we had a strong end to the 2022 tax season, partially offset by lower Emerald Card revenues related to the impact of Advanced Child Tax Credit payments in the prior year.

• Total operating expenses of $449.6 million increased by $13.5 million, or 3%, primarily due to higher corporate and field wages, along with increased bad debt expense, which was partially offset by lower consulting and outsourced services as well as favorable developments in insurance loss reserves.

• Pretax loss was effectively flat to the prior year at $298.0 million.

• Loss per share from continuing operations<sup>2</sup> increased from $(1.09) to $(1.43) and adjusted loss per share<sup>2</sup> from continuing operations increased from $(1.02) to $(1.37), primarily due to the larger net loss from lower income tax benefits in the quarter and fewer shares outstanding.

<sup>1</sup>All amounts in this release are unaudited. Unless otherwise noted, all comparisons refer to the current period compared to the corresponding prior year period.

<sup>2</sup>All per share amounts are based on fully diluted shares at the end of the corresponding period. The company reports non-GAAP financial measures of performance, including adjusted earnings per share (EPS), earnings before interest, tax, depreciation, and amortization (EBITDA) from continuing operations, free cash flow, and free cash flow yield, which it considers to be useful metrics for management and investors to evaluate and compare the ongoing operating performance of the company. See "About Non-GAAP Financial Information" below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).

------

**Capital Structure**

The Company reported the following related to its capital structure:

• Repurchased and retired 3.2 million shares for $130.4 million, or 2% of shares outstanding. The Company has approximately $900.0 million remaining on its latest $1.25 billion authorization available through fiscal year 2025.

• As previously announced, a quarterly cash dividend of $0.29 per share is payable on April 5, 2023 to shareholders of record as of March 7, 2023. H&R Block has paid quarterly dividends consecutively for over sixty years, since the Company became public in 1962.

Since 2016, the Company has returned over $3 billion to shareholders in the form of share repurchases and dividends, buying back over one third of its shares outstanding<sup>3</sup>.

**Fiscal Year 2023 Outlook Reaffirmed**

The Company continues to expect:

• Revenue to be in the range of $3.535 to $3.585 billion

• EBITDA<sup>4</sup> to be in the range of $915 to $950 million

• Effective tax rate to be approximately 22%

• Adjusted diluted earnings per share<sup>4</sup> to be in the range of $3.70 to $3.95

• Double-digit adjusted diluted earnings per share<sup>4</sup> growth annually through 2025

**Conference Call**

A conference call for analysts, institutional investors, and shareholders will be held at 4:30 p.m. Eastern time on Tuesday, February 7, 2023. During the conference call the company will discuss fiscal 2023 second quarter results, outlook, and give a general business update. To join live, participants must register at https://register.vevent.com/register/BId8885f32eac141fe9a86d51d888e5810. Once registered, the participant will receive a dial-in number and unique PIN to access the call. Please join approximately 5 minutes prior to the scheduled start time.

The call, along with a presentation for viewing, will also be webcast in a listen-only format for the media and public. The webcast can be accessed directly at https://edge.media-server.com/mmc/p/o83t7vbn and will be available for replay 2 hours after the call is concluded and continuing for 90 days.

**About H&R Block**

H&R Block, Inc. (NYSE: HRB) provides help and inspires confidence in its clients and communities everywhere through global tax preparation services, financial products, and small-business solutions. The company blends digital innovation with human expertise and care as it helps people get the best outcome at tax time and also be better with money using its mobile banking app, Spruce. Through Block Advisors and Wave, the company helps small-business owners thrive with innovative products like Wave Money, a mobile-first, small-business bank account and bookkeeping solution that manages bookkeeping automatically. For more information, visit H&R Block News or follow @HRBlockNews on Twitter.

**About Non-GAAP Financial Information** 

This press release and the accompanying tables include non-GAAP financial information. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable

<sup>3</sup>Shares outstanding calculated as of April 30, 2016.

<sup>4</sup>Adjusted Diluted Earnings Per Share (EPS) and earnings before interest, tax, depreciation, and amortization (EBITDA) from continuing operations are non-GAAP financial measures. Future period non-GAAP outlook includes adjustments for items not indicative of our core operations, which may include, without limitation, items described in the below section titled "Non-GAAP Financial Information" and in the accompanying tables. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual, or unanticipated charges, expenses or gains, or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this non-GAAP outlook to the most comparable GAAP measures.

------

financial measures prepared in accordance with generally accepted accounting principles, please see the section of the accompanying tables titled "Non-GAAP Financial Information."

**Forward-Looking Statements** 

This press release contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as "expects," "anticipates," "intends," "plans," "believes," "commits," "seeks," "estimates," "projects," "forecasts," "targets," "calls for," "would," "will," "should," "goal," "could" or "may" or other similar expressions. Forward-looking statements provide management's current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. They may include estimates of revenues, client trajectory, income, effective tax rate, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volumes or other financial items, descriptions of management's plans or objectives for future operations, products or services, or descriptions of assumptions underlying any of the above. They also include the expected impact of the coronavirus (COVID-19) pandemic, including, without limitation, the impact on economic and financial markets, the Company's capital resources and financial condition, the expected use of proceeds under the Company's revolving credit facility, future expenditures, potential regulatory actions, such as extensions of tax filing deadlines or other related relief, changes in consumer behaviors and modifications to the Company's operations related thereto. All forward-looking statements speak only as of the date they are made and reflect the Company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, factors, or expectations, new information, data or methods, future events or other changes, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to a variety of economic, competitive and regulatory factors, many of which are beyond the Company's control, that are described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 in the section entitled "Risk Factors" and additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. You may get such filings for free at our website at https://investors.hrblock.com. In addition, factors that may cause the Company's actual estimated effective tax rate to differ from estimates include the Company's actual results from operations compared to current estimates, future discrete items, changes in interpretations and assumptions the Company has made, future actions of the Company, or increases in applicable tax rates in jurisdictions where the Company operates. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

---

| | |
|:---|:---|
| **For Further Information** | **For Further Information** |
| Investor Relations: | Michaella Gallina, (816) 854-3022, michaella.gallina@hrblock.com |
|  | Jordyn Eskijian, (816) 854-5674, jordyn.eskijian@hrblock.com |
| Media Relations: | Angela Davied, (816) 854-5798, angela.davied@hrblock.com |

---

TABLES FOLLOW

------

![image7.jpg](image7.jpg)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **FINANCIAL RESULTS** | (unaudited, in 000s - except per share amounts) | (unaudited, in 000s - except per share amounts) | (unaudited, in 000s - except per share amounts) | (unaudited, in 000s - except per share amounts) |
|  | Three months ended December 31, | Three months ended December 31, | Six months ended December 31, | Six months ended December 31, |
|  | **2022** | 2021 | **2022** | 2021 |
| **REVENUES:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;U.S. tax preparation and related services: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Assisted tax preparation | $**41216** | $30845 | $**77528** | $64452 |
| &nbsp;&nbsp;&nbsp;&nbsp;Royalties | **4946** | 3404 | **11174** | 10762 |
| &nbsp;&nbsp;&nbsp;&nbsp;DIY tax preparation | **12150** | 9210 | **15308** | 13271 |
| &nbsp;&nbsp;&nbsp;&nbsp;Refund Transfers | **1542** | 777 | **2826** | 2442 |
| &nbsp;&nbsp;&nbsp;&nbsp;Peace of Mind® Extended Service Plan | **17320** | 17315 | **42090** | 42151 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax Identity Shield® | **5350** | 5200 | **10517** | 10353 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | **8513** | 7407 | **17873** | 17152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total U.S. tax preparation and related services | **91037** | 74158 | **177316** | 160583 |
| &nbsp;&nbsp;&nbsp;Financial services: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Emerald Card® and Spruce<sup>SM</sup> | **12478** | 24830 | **24090** | 53088 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest and fee income on Emerald Advance<sup>SM</sup> | **12903** | 12424 | **13517** | 12903 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total financial services | **25381** | 37254 | **37607** | 65991 |
| &nbsp;&nbsp;International | **28046** | 27907 | **86880** | 86232 |
| &nbsp;&nbsp;Wave | **21941** | 19497 | **44587** | 38634 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | $**166405** | $158816 | $**346390** | $351440 |
| Compensation and benefits: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Field wages | **76204** | 70058 | **137877** | 126137 |
| &nbsp;&nbsp;&nbsp;Other wages | **70530** | 64067 | **134283** | 122131 |
| &nbsp;&nbsp;&nbsp;Benefits and other compensation | **34277** | 30207 | **69109** | 55657 |
|  | **181011** | 164332 | **341269** | 303925 |
| Occupancy | **101173** | 99296 | **198763** | 195118 |
| Marketing and advertising | **15142** | 17141 | **25791** | 27214 |
| Depreciation and amortization | **32723** | 35631 | **66347** | 71346 |
| Bad debt | **22416** | 13666 | **22745** | 14709 |
| Other | **97143** | 106050 | **183789** | 191200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | **449608** | 436116 | **838704** | 803512 |
| Other income (expense), net | **4185** | 1467 | **7796** | 1751 |
| Interest expense on borrowings | **(18985)** | (23085) | **(34809)** | (45915) |
| Pretax loss | **(298003)** | (298918) | **(519327)** | (496236) |
| Income tax benefit | **(77140)** | (109845) | **(131097)** | (157218) |
| Net loss from continuing operations | **(220863)** | (189073) | **(388230)** | (339018) |
| Net loss from discontinued operations | **(2716)** | (1532) | **(3770)** | (3188) |
| **Net loss** | $**(223579)** | $(190605) | $**(392000)** | $(342206) |
| **BASIC AND DILUTED LOSS PER SHARE:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Continuing operations | $**(1.43)** | $(1.09) | $**(2.48)** | $(1.93) |
| &nbsp;&nbsp;&nbsp;Discontinued operations | **(0.02)** | (0.01) | **(0.02)** | (0.02) |
| &nbsp;&nbsp;&nbsp;Consolidated | $**(1.45)** | $(1.10) | $**(2.50)** | $(1.95) |
| **WEIGHTED AVERAGE DILUTED SHARES** | **154119** | 173378 | **156701** | 175739 |
| Adjusted diluted EPS <sup>(1)</sup> | $**(1.37)** | $(1.02) | $**(2.36)** | $(1.80) |
| EBITDA <sup>(1)</sup> | $**(246295)** | $(240202) | $**(418171)** | $(378975) |

---

<sup>(1)</sup> All non-GAAP measures are results from continuing operations. See "<u>[Non-GAAP Financial Information](#iedf3559e48254808a84ab1dde4671a0c_28)</u>" for a reconciliation of non-GAAP measures.

------

![image7.jpg](image7.jpg)

---

| | | |
|:---|:---|:---|
| **CONSOLIDATED BALANCE SHEETS** | (unaudited, in 000s - except per share data) | (unaudited, in 000s - except per share data) |
| As of | **December 31, 2022** | June 30, 2022 |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $**264455** | $885015 |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents - restricted | **27733** | 165698 |
| &nbsp;&nbsp;&nbsp;Receivables, net | **328616** | 58447 |
| &nbsp;&nbsp;&nbsp;Income taxes receivable | **46646** | 202838 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | **108405** | 72460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | **775855** | 1384458 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | **136824** | 123912 |
| &nbsp;&nbsp;&nbsp;Operating lease right of use assets | **382723** | 427783 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | **304539** | 309644 |
| &nbsp;&nbsp;&nbsp;Goodwill | **764802** | 760401 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets and income taxes receivable | **181721** | 208948 |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets | **46760** | 54012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $**2593224** | $3269158 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| **LIABILITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | $**137118** | $160929 |
| &nbsp;&nbsp;&nbsp;Accrued salaries, wages and payroll taxes | **68089** | 154764 |
| &nbsp;&nbsp;&nbsp;Accrued income taxes and reserves for uncertain tax positions | **73572** | 280115 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | **184343** | 206898 |
| &nbsp;&nbsp;&nbsp;Deferred revenue and other current liabilities | **182711** | 196107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | **645833** | 998813 |
| &nbsp;&nbsp;&nbsp;Long-term debt and line of credit borrowings | **2067937** | 1486876 |
| &nbsp;&nbsp;&nbsp;Deferred tax liabilities and reserves for uncertain tax positions | **231041** | 226362 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | **205409** | 228820 |
| &nbsp;&nbsp;&nbsp;Deferred revenue and other noncurrent liabilities | **86483** | 116656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | **3236703** | 3057527 |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **STOCKHOLDERS' EQUITY:** |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, no par, stated value $.01 per share | **1854** | 1936 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | **767683** | 772182 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | **(44683)** | (21645) |
| &nbsp;&nbsp;&nbsp;Retained earnings (deficit) | **(708437)** | 120405 |
| &nbsp;&nbsp;Less treasury shares, at cost | **(659896)** | (661247) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity (deficiency) | **(643479)** | 211631 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $**2593224** | $3269158 |

---

------

![image7.jpg](image7.jpg)

---

| | | |
|:---|:---|:---|
| **CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS** | (unaudited, in 000s) | (unaudited, in 000s) |
| Six months ended December 31, | **2022** | 2021 |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $**(392000)** | $(342206) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | **66347** | 71346 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision | **16581** | 14639 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred taxes | **41534** | 16685 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | **17893** | 13233 |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and liabilities, net of acquisitions: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables | **(262293)** | (216071) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses, other current and noncurrent assets | **(32983)** | (46928) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses, salaries, wages and payroll taxes | **(121156)** | (121926) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue, other current and noncurrent liabilities | **(52703)** | (50882) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax receivables, accrued income taxes and income tax reserves | **(60163)** | (247088) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other, net | **(1515)** | (4373) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | **(780458)** | (913571) |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Capital expenditures | **(41495)** | (39371) |
| &nbsp;&nbsp;&nbsp;Payments made for business acquisitions, net of cash acquired | **(39757)** | (19333) |
| &nbsp;&nbsp;&nbsp;Franchise loans funded | **(17491)** | (14480) |
| &nbsp;&nbsp;&nbsp;Payments from franchisees | **3861** | 6213 |
| &nbsp;&nbsp;&nbsp;Other, net | **(4208)** | 9527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | **(99090)** | (57444) |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Repayments of line of credit borrowings | **(170000)** | (210000) |
| &nbsp;&nbsp;&nbsp;Proceeds from line of credit borrowings | **750000** | 485000 |
| &nbsp;&nbsp;&nbsp;Dividends paid | **(89193)** | (96938) |
| &nbsp;&nbsp;&nbsp;Repurchase of common stock, including shares surrendered | **(365633)** | (324589) |
| &nbsp;&nbsp;&nbsp;Proceeds from exercise of stock options | **1427** | 4067 |
| &nbsp;&nbsp;&nbsp;Other, net | **2212** | (7423) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities | **128813** | (149883) |
| Effects of exchange rate changes on cash | **(7790)** | (3330) |
| Net decrease in cash and cash equivalents, including restricted balances | **(758525)** | (1124228) |
| Cash, cash equivalents and restricted cash, beginning of period | **1050713** | 1584164 |
| Cash, cash equivalents and restricted cash, end of period | $**292188** | $459936 |
| **SUPPLEMENTARY CASH FLOW DATA:** |  |  |
| &nbsp;&nbsp;&nbsp;Income taxes paid (received), net | $**(114385)** | $72169 |
| &nbsp;&nbsp;&nbsp;Interest paid on borrowings | **31812** | 36539 |
| &nbsp;&nbsp;&nbsp;Accrued additions to property and equipment | **2499** | 1393 |
| &nbsp;&nbsp;&nbsp;New operating right of use assets and related lease liabilities | **79917** | 73710 |
| &nbsp;&nbsp;&nbsp;Accrued dividends payable to common shareholders | **44569** | 46497 |
| &nbsp;&nbsp;&nbsp;Accrued purchase of common stock | **—** | 4845 |

---

------

![image7.jpg](image7.jpg)

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| | | | | |
|:---|:---|:---|:---|:---|
| (in 000s) | (in 000s) | (in 000s) | (in 000s) | (in 000s) |
|  | Three months ended December 31, | Three months ended December 31, | Six months ended December 31, | Six months ended December 31, |
| **NON-GAAP FINANCIAL MEASURE - EBITDA** | **2022** | 2021 | **2022** | 2021 |
| Net loss - as reported | $**(223579)** | $(190605) | $**(392000)** | $(342206) |
| Discontinued operations, net | **2716** | 1532 | **3770** | 3188 |
| Net loss from continuing operations - as reported | **(220863)** | (189073) | **(388230)** | (339018) |
| Add back: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Income tax benefit | **(77140)** | (109845) | **(131097)** | (157218) |
| &nbsp;&nbsp;&nbsp;Interest expense | **18985** | 23085 | **34809** | 45915 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | **32723** | 35631 | **66347** | 71346 |
|  | **(25432)** | (51129) | **(29941)** | (39957) |
| EBITDA from continuing operations | $**(246295)** | $(240202) | $**(418171)** | $(378975) |

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| | | | | |
|:---|:---|:---|:---|:---|
| (in 000s, except per share amounts) | (in 000s, except per share amounts) | (in 000s, except per share amounts) | (in 000s, except per share amounts) | (in 000s, except per share amounts) |
|  | Three months ended December 31, | Three months ended December 31, | Six months ended December 31, | Six months ended December 31, |
| **NON-GAAP FINANCIAL MEASURE - ADJUSTED EPS** | **2022** | 2021 | **2022** | 2021 |
| Net loss from continuing operations - as reported | $**(220863)** | $(189073) | $**(388230)** | $(339018) |
| Adjustments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangibles related to acquisitions (pretax) | **12839** | 14292 | **25535** | 29162 |
| &nbsp;&nbsp;&nbsp;Tax effect of adjustments <sup>(1)</sup> | **(2787)** | (1922) | **(6008)** | (5557) |
| Adjusted net loss from continuing operations | $**(210811)** | $(176703) | $**(368703)** | $(315413) |
| Diluted loss per share from continuing operations - as reported | $**(1.43)** | $(1.09) | $**(2.48)** | $(1.93) |
| Adjustments, net of tax | **0.06** | 0.07 | **0.12** | 0.13 |
| Adjusted diluted loss per share from continuing operations | $**(1.37)** | $(1.02) | $**(2.36)** | $(1.80) |

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<sup>(1)</sup> Tax effect of adjustments is the difference between the tax provision calculated on a GAAP basis and on an adjusted non-GAAP basis.

**Non-GAAP Financial Information**

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Because these measures are not measures of financial performance under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures for other companies.

We consider our non-GAAP financial measures to be performance measures and a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business. We make adjustments for certain non-GAAP financial measures related to amortization of intangibles from acquisitions and goodwill impairments. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

We measure the performance of our business using a variety of metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations, adjusted diluted earnings per share from continuing operations, free cash flow and free cash flow yield. We also use EBITDA from continuing operations and pretax income of continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.

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