NEW YORK ? H&R Block Inc. on Thursday said its fiscal second-quarter loss widened by 30 percent including charges for closing its ExpressTax business and other items.
The nation's largest tax preparer reported a loss of $141.7 million, or 47 cents per share for the three months ended Oct. 31. That compared with 36 cents per share a year earlier.
Excluding the ExpressTax charges and losses from discontinued operations, H&R Block said it lost 38 cents per share.
Analysts expected an adjusted loss of 35 cents per share, on average, according to data provided by FactSet.
Kansas City, Mo.-based Block earlier announced it was selling its RSM McGladrey consulting unit and said the sale closed Wednesday.
The earnings shortfall reflects the shift of RSM revenue to discontinued operations, but Block typically posts a second-quarter loss because most of its revenue comes during the U.S. tax season.
Growth in its Australian tax business helped the quarter's revenue rise 8 percent to $129.2 million, from $119.6 million last year.
Analysts were expecting revenue of $328.9 million for the quarter, but that included revenue from the company's RSM McGladrey business consulting unit.
Block moved its accounting for RSM to discontinued operations after the sale closed. Last year, RSM McGladrey took in revenue of $203.4 million in the fiscal second quarter.
Block's discontinued subprime mortgage unit, formerly called OptionOne but renamed Sand Canyon Corp., set aside $20 million to cover claims from investors who purchased securities backed by mortgages that have since failed.
The number of claims received during the second quarter spiked to $483 million from $21 million a year ago. Sand Canyon reviewed $61 million in claims during the quarter, resulting in incurred losses of $3 million.
While the incurred losses remained in line with prior quarters, the company received more than three times as many claims during the second quarter as it had in the previous four combined. Block CEO Bill Cobb said the increased reserve was "prudent in light of second-quarter activity" and maintained that the unit is financially strong enough to handle all valid claims.
Wall Street has fretted over the potential for big claims payouts, however, fearing Block would have to kick in cash to support Sand Canyon if losses exceed reserves.
The issue has weighed on the stock for some time but didn't ignite concern after hours Thursday.
Block shares lost 26 cents in the late session after ending regular trading up 33 cents, or 2.1 percent, at $16.06.
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