Interpublic Group of Cos Earnings Call Nuggets: Client Budget and Recovery in Europe
Alexia Quadrani – JPMC: Can you give us a sense of how revenues are trending so far in 2013 I guess any colors you can give us in terms of client budget and outlook and do you think you’ll get positive organic revenue growth in the first quarter?
Frank Mergenthaler – EVP and CFO: Look the trends from the third quarter to the fourth quarter was positive. So obviously we would hope that to continue. We don’t give quarterly guidance Alexia as you know. The good news is for example in 2013, we had some nice wins in our portfolio, most notably was the SABIC win in Saudi Arabia. They are a global petrochemical diversified company and what we were most proud about that was that it was a pitch head-to-head against all of our holding company competitors and the integrated offering including Weber Shandwick and McCann really showed well in that pitch and we are really excited about it. There are other wins so far in 2013. So as we indicated, we are positioned for 2013 to deliver peer level organic performance and expand margins. While you’re here, let me just comment on the 9.8% because I know that’s one of the questions. When we come to year-end, we take a look at a lot of actions we can do in terms of achieving our targets and our stated goals. Particularly at the end of the – in the fourth quarter, we faced issues like severance and obviously incentive comp and we can take actions that potentially could hurt us in the future to achieve short-term goals. So for example, we made some changes at McCann as we all know and that carried with it severance expense. So if you recall, we had indicated severance expense in the range of 1%, we ended up for the year at 1.3% and we’ve decided that these are the actions that we need to take to position us for 2013 and as a result that additional severance impacted our margin. The same is on incentive, although we’ve indicated incentive comp is one of the key variables in our variable cost model. We still have to pay incentives to motivate and reward good performance and certainly among our agencies we had very high performing agencies that we had to compensate appropriately for their performance. So, all of this together sort of indicates that we were a little disappointed in the margin, we’re hitting 2013 with some good news behind us. Frankly, in our pipeline, we see some potential opportunities that if they come to fruition I think you’d be very pleased, as we would be in terms of the revenue outlook for 2013.