John Hewitt, Liberty Tax ServiceThe cost of being a publicly held company helped increase the loss for JTH Holding, the parent of Liberty Tax, by 23.6 percent, for the first quarter ended July 31. That came as a doubling of franchise fees was a key part of a 37.3-percent rise in revenue for the period.
JTH reported a loss of $6.2 million for the most recently ended period, compared to just under $5 million in red ink a year ago. Revenue for the first quarter was $6.8 million, up from $4.9 million in last year's corresponding period. A rise in franchise fee revenue to $2.4 million from $1.2 million was a major factor in the increase.

The company typically loses money in the quarter after tax season ends as it ramps up spending to prepare for the next year's tax return filing. Also, JTH became a publicly held company late in 2011 and the current quarter included $525,000 in costs associated with being public that were not incurred a year earlier. JTH postponed an initial public offering and began reporting results and trading its stock publicly after it determined that the number of shareholders the company had required it to publish its financial reports.

CEO John Hewitt said during this morning's earnings conference call that there were increased contacts by "mom-and pop operations that want to become franchisees or to be acquired by Liberty." These businesses are  under pressure from factors that include the new regulation of tax preparers by the Internal Revenue Service and they must either seek affiliates "or get out,"
Last modified on Sunday, 02 June 2013
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