HRB
#Yes, commercial paper has always been more of a luxury from our perspective.
It's really more of a cost savings.
I think in the last few years with the regulatory changes and the way that banks look at the economics of C-Locks, that that arbitraged, as it were.
It's changed a little bit.
We felt it very appropriate, given these broader announcements, about our capital structure to use this as an opportunity to relook at the C-Lock.
We have a great facility right now.
We've got great banks that are part of that.
We're going to relook at that and we've talked about the three major benefits in the prepared remarks.
I can't comment on what may come out of that because obviously it's not finalized at this point in time.
Of course, when it is finalized, we'll provide more details as appropriate.
As many of you know, we've got a tax rate that is naturally at the high end of the range for corporations in the United States, in the high 30% range.
We've been actively looking at a number of strategies and we've been successfully able to execute them pretty consistently over the last couple of tax seasons and also continuing through this current quarter.
Those are discrete in nature, and what I mean by that is they're one-time.
All really good.
There's real benefits to the Company.
We have not yet communicated what we think the more permanent or long-term view is, what we think the effective tax rate is, but we plan to do so at some point in the future.
Thanks, <UNK>.
Yes, I can't really give you a forecast at this point in time.
It's going to be subject to market conditions, timing.
We're going to look at 10-year structures.
Our view is we'll be consistent with other market transactions similar to this, but I can't give you more guidance than that.
Yes, I mean, provided through the Press Release and today's comments and guidance on how we think that we have additional incremental debt capacity on the balance sheet.
We're not at a point we are going to get more specific than that.
I don't think buying back shares with daily overnight money is the right sort of term structure to go with.
But we feel very comfortable with the tender that we've announced with the contingency around the C-Lock as well as other customer conditions, that we'll be able to fulfill the $1.5 billion tender offer.
And again, <UNK>, I would caution everyone.
What we're doing here and there's ---+ I'll leave it to <UNK> to talk about the sources and uses.
What we're trying to do here is not position this as incremental debt to do this or that.
We're trying to reset the capital structure here.
We're no longer a savings and loan holding company.
This gives us an ability to set up our capital structure in line with our true business model going forward.
And then from that, we will then make decisions within the framework of what we talked about today from a capital structure perspective.
Yes, we've been pretty consistent in communicating with you, especially last quarter or so, that when we expect at the time the bank transaction to close which is, of course, now closed, that we would have about $1 billion of extra capital available.
And I'm confirming that again today with you; that's one of the primary sources, of course, for what we're planning to do here and announced.
In terms of [mind assent] this structure outside of the country and/or restricted, that's not really ---+ in our minds, that's part of the permanent capital structure.
We have done a good job in the last couple of years bringing some of that back from Canada and Australia and that's part of what the $1 billion represents.
Thanks, <UNK>, for your comments and, yes, it has been a bit of a long journey here.
And again, you said it well and you and I have talked about this.
We now, if you will, have the Company that we wanted.
Yes, the core of our strategy is what we call tax-plus.
We're going to center the Company on the tax preparation event and that is consistent, whether we are talking about international or here in the US.
Our principle is to serve clients the way that they want to be served, whether that be through digital efforts or with assistance.
And we will continue to operate with ---+ that's consistent with our brand and determine ---+ and I think what we did last year with Tax Identity Shield as an example.
Where can we add value to our clients' lives.
If we're able to monetize that, but ultimately we want to be the place where we do the best job on taxes, the most accurate job, where we get the maximum refund for our clients, and do it in a way that protects their security.
And that will continue to be ---+ it's somewhat of a simple notion, but I think a lot of times in business ---+ and when I first started with this Company, a lot of investors said to me, can you ---+ your story is too complicated; your story is too complicated.
Well, I think we've got a nice, simple story right now that I'm really proud of and I think we can continue to drive a lot of value.
You want to take the second part, <UNK>.
Yes, to keep it simple, I think you did sort of a very nice, high-level summary there, <UNK>.
But cost, capital, what's next.
I mean, not next, we've been working on it already, but helps us to continue to focus on even more is really the revenue side of the business model.
As you know and many people on the phone know, we really want to get to a point where we are sustainably growing 4%-plus.
And to borrow a quote from my good friend Jason Houseworth, who runs our digital business and our product side, we're maniacally focused on that.
And we, at that point, will be able to spend much more time talking about the early season challenges that we've had the last few seasons; continue to talk about the value proposition; continuing to talk about all of the things we can do to execute to be more relevant for our clients and, frankly, to win more clients from some of our competitors.
Thanks, <UNK>.
Well, the opening number, we're kind of coming out with a big production, if you will.
But again, I would go back to the facts here.
The Board has authorized a $3.5 billion authorization through June of 2019, that's essentially four tax seasons.
We will have a tender offer we will launch tomorrow which we think is a great way to take immediate action.
And then from there, we are not going to be ---+ we have options in front of us, but I think what I would focus on is that we're looking at this over that four-year time frame.
I don't know, <UNK>, if you have anything you want to add.
Yes, our focus right now is what we've announced today and we don't have much comments in our dividend policy.
Obviously everyone knows we pay a dividend and the yield, depending where the stock price is at, is in the mid 2% range and we've been in that range now for a couple years.
But we have no (multiple speakers).
We did raise the dividend 33% a few years ago, but we don't have any comment beyond what we stated today.
Yes, a very fair question and consistent with the way we've handled this, I think in the past.
I'm not going to get into that, certainly, on September 1.
As we get closer to Investor Day and the actual tax season, we will share more of those plans then.
Thanks, <UNK>.
Thanks.
Yes, so we have regular conversations with Standard & Poor's and Moody's.
We have good relationships.
We have a lot of respect for the team at both firms.
We would, in a normal course, talk about our business performance.
What we've said today is we believe that with this plan that we'll maintain investment grade metrics.
But ultimately that's a decision that the rating agency is going to make and that's really their call, not ours.
Yes, I don't know that we've commented on certainly the upcoming tax season.
The extensions are still out there.
We're still doing tax returns for tax season 2015, so we haven't come out with a position on growth going forward.
Again, as we get closer to the tax season and/or at Investor Day, we'll have an indication on that.
We'll be able to study ---+ the tax season will have fully closed and then we'll give you what our belief is as a best estimate.
No.
Sorry, no, just to be clear.
Yes, so this is one of those awkward questions, because of the tender situation, I'm not able to get into in much detail.
All I can tell you is that it was well-considered and discussed with the Board and Management and outside advisors, and we felt it was the appropriate number.
Yes, I was going to say the same thing.
There was great deliberation given to this.
Obviously, during the time when we were in the regulatory approval process we couldn't talk too much about it but obviously we spent a lot of time on that.
And we had said consistently that upon closing of the transaction and us being deregistered we would come out with our plan shortly thereafter.
And, hopefully, we hit that marker.
Thanks, <UNK>.
Do you want to go, <UNK>.
Yes, we've been ---+ thanks for the question, Mike.
So we've been very consistent in our perspective on this, but it's a well-considered discussion of topic with the Board and Management.
We've talked to a lot of external people over the last couple of years and we've gone public and said we believe there's value in maintaining investment-grade metrics for H&R Block.
We've not been specific as to why.
There are a number of considerations that are unique to Block, but there are some general things as well.
We don't think it's very valuable at this point to get into a specific articulation of that.
Sir, can you repeat the question.
I'm not sure I understood question that question there, Mike.
Can you ---+
Yes, I mean, as we said and say again, we are not going to get into specific articulation of the pros and cons.
We think consistent ---+ we think there's value in it and we are not going to share more than that.
So thank you for that question.
It wouldn't be a call if we didn't have a Sand Canyon one, so thanks, Mike, for bringing that here at the end of this.
So as I said in the script, there was no real major change this quarter in Sand Canyon's perspective of things.
The representation of warranty reserve continues to be at $150 million and there are several counterparties that are in [tolling] arrangements that they are moving along with Sand Canyon.
In addition to that $150 million, there's a couple hundred ---+ $200 million plus of equity.
And if you sort of reverse-tax effect that, that means there's net assets, as it were, of $450 million-odd in total.
The view that H&R Block has and I think that Sand Canyon would have, is that it's a time bound issue.
It will take multiple years to resolve.
My personal view is getting sort of a situation where there's no exposure to Block is really kind of the expected outcome at this point in time.
I don't think we would be in a position where we would be able to forecast down the road anything more in terms of positive cash back to the Company.
And as always, we point you to the quarterly disclosures and the annual disclosures for a lot more detail on this.
Yes, with regard to making the documentation requirements consistent, we are certainly in active discussion as part of an overall software working development group with the IRS and with Treasury.
And I think that there's been a lot of discussion.
It's a policy question, but I think we are ---+ the ball is being advanced.
I just don't know how far for this tax season, but we certainly believe that it's the right principle, that no matter what your method of filing, that it be consistent and in terms of what you need to document and I'm hopeful that will happen for certainly for this tax season.
Thanks, Mike.
Okay, thank you, everyone, for joining us on today's call.
We will look forward to talking to you down the road.
