H&R Block

(HRB) - Get Report

shares fell in premarket trading Wednesday after the No. 1 tax preparation firm reported a lower third-quarter profit and offered a tempered outlook on the 2004 tax filing season.

After the markets closed Tuesday, the company reported net income of $106.7 million, or 59 cents a share, on revenue of $977.2 million, compared with $132.3 million, or 73 cents a share, on revenue of $958.4 million, a year ago. The analysts' consensus estimate for the quarter ended Jan. 31 was for 45 cents a share, according to Thomson First Call.

Results for the company's 2004 fiscal third quarter included a gain of $17 million on the sale of mortgage assets. The company had a $130.9 million gain on a similar transaction in the year-ago period. Excluding that factor, third-quarter net income increased $42.9 million.

The company's U.S. tax operations had net income of $68.2 million, compared with $34.1 million last year. Revenue rose almost 15% to $463.6 million. Profit at its mortgage unit fell to $154.5 million from $262.5 million a year ago.

"Performance in the tax filing season thus far is consistent with our overall expectations for a good, but not great, tax season," the company said. "After a slow start, growth in retail tax filing has accelerated in the month of February and our digital tax services are growing very well."

It's the first time in the company's history that it has reported a profit in each of the first three quarters of its fiscal year.

The company said it still expects full-year earnings of $3.65 to $3.85 a share and revenue growth at the high end of its 10% to 15% forecast. The consensus expectation is $3.82 a share.

In recent premarket trading, shares were down 65 cents, or 1.1%, to $57.85.