TW Telecom Inc. Earnings Call Nuggets: Sales Force and Spending Initiatives
Simon Flannery – Morgan Stanley: I wanted to just get a little bit more color on the ramp of the sales force and the product roll out. I think you took your sales force up about 6% in Q4. Where do we see this ending up in this year and how – what sort of number, how quickly will that take? Then, in terms of the product roll outs what’s the timing of that? I think Mark you mentioned strong momentum on sales hitting revenues in the second half of the year, and then really setting up a good 2014, but are we going to see some of the fruits of this as early as Q2 or is that going to be another subdued quarter like Q1?
Mark A. Peters – EVP and CFO: Let me touch on the sales headcount and then pass it over to Larissa on the products little bit. We increased, really at the end of the last year by about 6%, largely in December. Then we expect to increase close to maybe 10% more by the end of this year. The timing – we’ll see all the timing comes in throughout the year, but we’d like to get them sooner than later, so we can start getting them productive. It’s quite — it’s interesting when you look at adding these sales force, you think about the timing of when they can get productive, so it does take a while. But Simon, this team has been for a while and we’ve done a lot of this before, in fact, we looked back to the end of 2009 – in 2010. We actually took a similar trajectory we added a similar percentage of headcount with them in 2009 and then continued it into 2010. 2010, this isn’t guidance, but in 2010, our bookings grew by about 18% because of all the activities that are going on there. Of course there is other factors that affect growth products and services delivery and competition and economy and all that kind of stuff. So again, I’m not giving guidance. But then, we saw very strong reported revenue growth in the subsequent year, after those bookings went up. So it takes a while, but we’ve done this before and we’re pretty confident as we go into the year.
Larissa L. Herda – Chairman, President and CEO: With regard to the product roll out, we generally don’t like to put dates on things until we are right on top of them because we want to make sure things are done right and people in the organization aren’t assured naturally for deadlines that might turn out to be unrealistic. We always set pretty aggressive deadlines internally. The fact that we are talking about it is about our new capabilities should indicate and we start talking about the intelligent network, I think it was a little over a year ago and we started deploying those services shortly thereafter. So these are things that are ahead of us but will take us some time. Nobody has ever done this before. Similar to things like Dynamic Capacity, no one had ever done it before. It was hard to determine exactly when we were going to be (standing) some of those things up at the time. But we will keep you posted on that. I would not expect to see the new products impact the first half of the year which is why we are talking about starting to see things in the second half of the year. But obviously we currently have a lot of great products out there today and I think some of the things that you are seeing in the first quarter are really the compilation of a number of things falling into the first quarter but as you know we don’t manage this business on a quarter by quarter basis. We manage it for the long-term and there are fluctuations and we like to let out investors know when we see a fluctuation it may seem off trend to them and that’s really what we are talking about in the first quarter.
Brett Feldman – Deutsche Bank: Just two questions and one just a housekeeping one. I think you had a customer – one-time $2.2 million benefit in the quarter. I am just wondering, if you could give us any color as to where that was recorded in terms of what revenue line item was impacted by that so we can get our run rates right?
Mark A. Peters – EVP and CFO: So that hit the enterprise data and internet line item.
Brett Feldman – Deutsche Bank: Then you talked about some margin issues during your prepared remarks, and there was a little commentary on that in the press release. I think we all understand that early in the year, in the first quarter, there is always some seasonality. But what I was having a harder time pulling apart is how do we think about some of the other spending initiatives that you have going on early in the year. Is most of the margin issue are going to be contained in the first quarter or will this be spread a little bit out over maybe the second and third quarters? Just as a modeling exercise, how do we sort of know when you are coming through that?
Mark A. Peters – EVP and CFO: So we started in particular the sales resources in December and we are going to continue adding both the direct sales and then the support resources to make them productive. We started that and we are going to continue that throughout the year too, so that’s going to add to our – the S part of it, SG&A. That’s going to be recurring cost, that particular item. Then where we see the EBITDA margin coming back is as we start selling with those sales associates as well as our embedded base growth there, just start driving that margin up again. So we take – so that’s from the recurring cost standpoint. That’s a recurring item. Now the other item we mentioned in the first quarter is around $4 million of increased costs that come in right in the first quarter because of the payroll taxes primarily and that one goes away throughout the year. So that cost gradually goes away throughout the year as everybody hits – whoever hits our taxes and those reverse themselves. So some of the costs are going to continue and then some will go away as the year progresses. So that’s way we say that as we get more sales momentum, our sales are pretty good. I just want to always say that, so as we grow more sales, converts to more revenue and build more density, that’s where we continue as the year progresses to see some of the big — the return of the margin.
Larissa L. Herda – Chairman, President and CEO: We’re moving faster on hiring the sales people than we have previously done, actually it’s kind of in line like you said with the ’09-2010 time frame because there is plenty of demand out there. We feel that if we start to bring those sales people on early in the year, by the time they are acclimated we will have a number of new product capabilities beyond the Intelligent Network capabilities by the way we’re also enhancing our managed services capabilities as well. So, we’ll have more for them to sell, and I think that – the timing is important and that’s why we started this process at the end of last year.
Brett Feldman – Deutsche Bank: Actually, I just wanted to ask one more question about a comment you made earlier. You said that one of the things you’ll be doing this year is looking to expand your network with an existing into adjacent markets. Can you give us an update, what is your geographic coverage right now, do you have a certain number of markets you’re in, or are you looking at specific number of markets. Just let me try to understand how to interpret that comment?
Larissa L. Herda – Chairman, President and CEO: that was kind of more a – it’s almost a business as usual type thing, but we are doing – we always do market expansions in our markets, it depends on how you count them, we’re in 75 markets around the country, I’d argue we’re probably in a lot more than that because we have tentacles that go out, all over the place. So, we have great opportunities to do that and so we’re going to continue to do that.
Michael A. Rouleau – SVP, Business Development and Strategy: We are in 75 markets and if you look at the map it covers a great portion of the U.S. and so what we do is we – when we say adjacent markets we might move or we have moved from Minneapolis to San Pablo, we leveraged all the infrastructure in Minneapolis.
Larissa L. Herda – Chairman, President and CEO: Or Spokane to Coeur D’alene.
Michael A. Rouleau – SVP, Business Development and Strategy: Spokane to Coeur D’alene. So those kind of things that we do to leverage our embedded infrastructure, but we haven’t since 2001 actually gone in and built the brand in a market.
Larissa L. Herda – Chairman, President and CEO: We are not expecting to do that. There are so many opportunities for us to leverage with our existing management teams in our existing markets we can stay busy for many, many, many years. We are in more buildings than any other non-incumbent carrier in the U.S. in terms of fiber but we still have less than 20,000 building. So there is a lot of opportunity for us to grow.
Mark A. Peters – EVP and CFO: We can reach any of our customer – virtually any of our customer’s location even if we are not in those markets. So we can provide that complete package to our enterprise customers.
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