Primedia (PRM) Q3 Loss of $38.1 million

Primedia (PRM), the owner of rentals.com, rentalhouses.com, apartmentguide, and apartmentguide.com which represented 77% of the 3rd quarter advertising revenue, released their Q3 2007 earnings report.

Primedia’s loss from continuing operations for the third quarter was $38.1 million or $0.86 per share, compared to $37.0 million or $0.84 per share in the same quarter of the prior year.

The company’s adjusted earnings before interests, taxes, depreciation and amortization for the third quarter fell to $11.7 million from $13.6 million in the same quarter of the previous year.

Primedia reported that its third quarter revenues of $83.3 million were 2.5% higher than $81.3 million in the same quarter of last year, primarily due to growth in Apartment Guide, Rentals.com and New Home Guide, partially offset by a decline in Auto Guide.

To put this into perspective, the inflation rate for 2007 is around 2.6%.

Portions of the earnings call transcript:

Bob Metz – President, CEO

Within Apartments, Rentals.com continued to outpace our other product lines. Single unit rentals make up approximately 85% of the total rental industry. During the third quarter, Rentals.com revenue grew a solid 29% on a pro forma basis, reflecting the ongoing opportunity in this market and our investment in capturing it.

First is the salesforce and as of the end of the third quarter, Rentals.com achieved full salesforce staffing. We expect to begin to see the revenue impact from these salespeople in the first half of 2008, as there is a typical lag period between the hiring of salespeople and the corresponding increase in revenue.

Second is marketing. In the third quarter, we conducted a one-time limited Rentals.com targeted marketing and advertising campaign. The campaign was effective in generating leads and increasing sales volume but not at an acceptable cost, and we’re working on other ways to achieve the desired results.

The third element of our strategy is finding opportunities for line extensions and providing more targeted offerings. For example, over the summer we launched Vacation Rentals and late in the third quarter began to roll out a Spanish language version and a special section for senior living, though it is too soon to obtain meaningful results from these extensions.

One question from the investment analysts was:

Robert Simmons - Oppenheimer

For Rentals.com, you said revenue grew 29% in the quarter. Can you give me an idea of how much, what kind of a percent? Are we talking 1% or 10% or what? I don’t need an exact number, but just a general area.

Kim Payne, PRM’s CFO didn’t answer this question as she said they didn’t disclose that.