H&R Block CEO says a changing tax code has always been good for business

Source: HRB Tax Group, Inc.

Jeff Jones, CEO, H&R Block

Despite H&R Block reporting a loss in its most recent quarter Wednesday, shares of the tax preparer rallied 10 percent in midday trading after the CEO’s comments about the GOP tax reform bill.

“No matter what changes were ultimately made [to the bill], I’m convinced the value of H&R Block remains our ability to help,” chief executive Jeffrey Jones said on a conference call with investors.

H&R Block weathered a second quarter where it saw losses in EPS and revenue reach 74 cents per share and $153 million, respectively. While the EPS results were 4 cents above what Wall Street expected, H&R Block stock was trading lower in premarket. That changed when Jones got on the conference call.

“Changes to the tax code are nothing new,” Jones said. “Since our founding in 1955, there have been 33 significant changes.”

He cautioned that the outcome of the tax legislation overhaul is difficult to predict, saying H&R Block is “monitoring these developments very closely.” Then Jones’ tone shifted, saying H&R Block’s 80,000 tax preparers will help Americans “understand what the new tax law means for them.”

“The proposed 14-line postcard tax return includes refundable credits, something we know taxpayers want help with,” Jones said.

The H&R Block boss also emphasized how a lower corporate tax rate would boost the company’s cash flow and bottom line. Jones says the U.S.-based company has a historical tax rate in the mid 30 percent, meaning the new reform would be a boon.

“We’re excited about the upcoming tax season,” Jones added, before handing off the call to CFO Tony Bowen.

Before Wednesday, the stock was down more than 14 percent from highs reached in August as investors worried the simplified tax plan would hurt business.