Jackson Hewitt Tax Service Inc
Jackson Hewitt Tax Service — Investor Presentation (November 2007)
29 slides from Jackson Hewitt Tax Service's investor presentation, Nov 5, 2007
Slide 1: Investor Presentation November 2007
Investor Presentation November 2007 Michael C. Yerington President and Chief Executive Officer Mark L. Heimbouch Chief Operating Officer 11/5/07 Exhibit 99.1
Slide 2: Important Disclosure
Important Disclosure • This presentation contains statements including, without limitation, those statements relating to office growth, tax return growth, share repurchases, dividends, industry trends, territory sales and location strategy, same store sales, franchisee support and growth, financial
Slide 3: Jackson Hewitt is Focused on Shareholder Value, Franchisee Partnership, and Long-Term Growth
Jackson Hewitt is Focused on Shareholder Value, Franchisee Partnership, and Long-Term Growth Simple Business Model Focus on Customer Attraction/ Retention Improved Distribution Strong Cash Flow Strong Brand Professional Tax Preparation Large Growing Market Shareholder Value Franchisee Partnership Lo
Slide 4: Overview
The Opportunity is Large and Growing We Have A Proven Track Record Excellent Customer and Brand Experiences Drive Same Store Sales Growth Our Distribution Network Has Room for Growth Overview The Opportunity is Large and Growing We Have A Proven Track Record Excellent Customer and Brand Experiences
Slide 5: The Opportunity is Large and Growing
The Opportunity is Large and Growing Simple Business Model Long Runway for Growth The Opportunity is Large and Growing
Slide 6: The Opportunity is Large and Growing
The Opportunity is Large and Growing • The market is large, fragmented, and growing – Today, we have a 4% share of paid tax preparation market – We are convenient to about 40% of the addressable market – Top two players own 23% of total paid preparer market • Strong franchise model – High margin, lo
Slide 7: Simple Business Model
Franchise Tax Returns (3.2 million) Avg. Revenue Per Tax Return ($192) Royalty and Mkt. & Adv. Rate (19.4%) Avg. Revenue Per Tax Return ($191) Service Revenue ($80 million) Royalty and Mkt. & Adv. Revenue ($120 million) Financial Product Fees ($80 million) The Opportunity is Large and Growing Simple
Slide 8: Total U.S. Market: Individual Tax Returns
Paid Prepared 50% 61mm Self Prepared 50% 60mm The Opportunity is Large and Growing - - Total U.S. Market Total U.S. Market 121 Million Individual Tax Returns 121 Million Individual Tax Returns - - Total U.S. Market Total U.S. Market 137 Million Individual Tax Returns (Est.) 137 Million Individual Ta
Slide 9: Market growth has occurred in late season
Market growth has occurred in late season, and Jackson Hewitt has grown faster in the late season than in the early season The Opportunity is Large and Growing Early Season Late Season Market growth has occurred in late season, and Jackson Hewitt has grown faster in the late season than in the early
Slide 10: We Have A Proven Track Record
We Have A Proven Track Record Growing the Business Generating Strong Cash Flows Aggressively Returning Capital to Shareholders We Have A Proven Track Record
Slide 11: Growth Since IPO
We Have A Proven Track Record Growth Since IPO *Total revenues and diluted earnings per share as adjusted. Full reconciliation of adjustments provided in Appendices. 15% $293 million $192 million Total Revenues* 5% 3.65 million 3.14 million Tax Returns 31% $1.98 $0.88 Diluted EPS* 10% 6,501 4,935 Of
Slide 12: Free Cash Flow Has Consistently Exceeded Net Income
Free Cash Flow Has Consistently Exceeded Net Income We Have A Proven Track Record Strong Cash Flow Generation * All figures as adjusted. Full reconciliation of adjustments provided in Appendices. ** Based on closing stock price on last day of fiscal year, April 30, 2007 ($27.58). Free Cash Flow Has
Slide 13: Commitment to Shareholder Value
We Have A Proven Track Record Commitment to Shareholder Value – Share Repurchase & Dividends (mm) $73 $158 • As % of Prior Year Net Income* 158% 260% • As % of Prior Year Total Revenues* 33% 58% – Total Payout Yield** 6.9% 6.9% 18.4% 18.4% – Flexible capital structure • Supported by committed, long-
Slide 14: Our Distribution Network Has Room for Growth
Our Distribution Network Has Room for Growth 1/3 of New Territories Still Available Currently Only Convenient to 40% of Addressable Market; 60% yet to be reached Alternative Channels Have Good Growth Possibilities *Summary of Growth Initiatives in Appendix. Our Distribution Network Has Room for Grow
Slide 15: New Territories Availability Map
Washington Oregon Montana California Nevada Utah Idaho Wyoming Colorado Arizona New Mexico Texas North Dakota South Dakota Nebraska Minnesota Michigan Illinois Oklahoma Ohio Pennsylvania New York Kentucky Virginia Tennessee Missouri Louisiana Iowa Indiana Wisconsin Kansas Arkansas North Carolina Sou
Slide 16: New Territory Sales Tactics
Our Distribution Network Has Room for Growth Ranked within Top 5 Best Franchise Overall 7 out of 9 years - Entrepreneur Magazine’s “Annual Top 500 Franchises” • New Territory Sales Tactics – Target high growth, low share and low distribution markets – Look to add new franchisees to the mix • Start-u
Slide 17: Existing Territory – New Office Locations
Our Distribution Network Has Room for Growth • Existing Territory – New Office Locations – Utilize tools to target best office expansion locations • Offer special financing for targeted incremental locations • Locate to attract late season customers • Increase focus on Hispanic footprint • Consider
Slide 18: Excellent Customer and Brand Experiences Drive Same Store Sales Growth
Excellent Customer and Brand Experiences Drive Same Store Sales Growth Customers Want Product Choice Customer Experience is Key to Acquisition and Retention Commitment to High Quality Tax Preparation Excellent Customer and Brand Experiences Drive Same Store Sales Growth
Slide 19: Improve Same Store Sales by Driving Retention
Excellent Customer and Brand Experiences Drive Same Store Sales Growth – Customer • Renewed focus on “the customer experience” • Piloting customer loyalty program • Continue successful history of product innovation through partnership – Tax preparer is primary point of contact for customer • New tax
Slide 20: Improve Same Store Sales by Driving Customer Acquisition
Excellent Customer and Brand Experiences Drive Same Store Sales Growth – Repositioning to connect message of convenient, high quality tax preparation – Improved database and tele-sales capabilities – Highest growth DMAs receive prioritized marketing allocations – Hispanic focus to build franchisee a
Slide 21: Looking to the Future: Leadership changes recently announced
– Leadership changes recently announced • Michael Yerington named President and Chief Executive Officer • Mark Heimbouch named Chief Operating Officer • Margaret Richardson, former IRS Commissioner and current Board member, named Non-Executive Chair – Internal review completed – Acquisitions in Atla
Slide 22: Long-Term, Five-Year Financial Targets
– Total Revenues Growth 10% - 15% / year – Diluted EPS Growth 15% - 20% / year *Targets updated as of September 6, 2007. Targets are not intended to imply revenues or earnings expectations for any single year. Looking to the Future Looking to the Future Long-Term, Five-Year Financial Targets* Long-T
Slide 23: Looking to the Future: Summary
• Simple business model with strong cash flow • Large, growing market • Improving distribution • Improving customer attraction and loyalty • Commitment to high quality, professional tax preparation • Proven track record of delivering shareholder value Looking to the Future Looking to the Future
Slide 24: For more information, please contact
For more information, please contact: David J. Kraut Vice President, Treasury & Investor Relations (973) 630-0821 [email protected]
Slide 25: Appendices
Appendices Appendices
Slide 26: Summary of Growth Drivers
New Territory Sales Locations within current territories Same Store Sales Growth New Services/ Channels Summary of Growth Drivers New Territory Sales Locations within current territories Same Store Sales Growth New Services/ Channels Current New Conversion Special Open company- franchisees franchise
Slide 27: Slide 27
Slide 28: Strong Cash Flow
Strong Cash Flow (FY 2005, 2006, 2007 - As adjusted reconciliations) Net Cash Provided by Operating Activities (a) 114.9 $ 113.0 $ 79.8 $ Add: Interest expense related to debt 6.3 8.2 10.0 Less: Capital expenditures (4.9) (10.7) (8.9) Less: Funding provided to franchisees,net (2.3) (4.1) (4.4) Free
Slide 29: Jackson Hewitt Tax Service
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