PAR Technology Corp (PAR) 2012 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2012 Par Technology Earnings Conference Call. My name is Derek and I will be your operator for today. At this time, all participants are in a listen only mode. We shall facilitate a question and answer session at the end of the conference.

(Operator Instructions)

As a reminder, the conference is being recorded for replay purposes. I would like to now turn the conference over to Mr. Paul Domorski, Chairman and Chief Executive Officer. Please proceed.

Good morning, everyone and thank you for joining us today. I'd like to welcome you to the Par Technology fourth quarter and year-end 2012 conference call. Joining me is Ron Casciano, Par's Chief Financial Officer.

Before we begin, I want you to know that any statements made during the course of this call regarding product expectations, program opportunities, schedules and future financial results are forward-looking statements. Actual events or results could of course differ materially.

I'll refer you to the statement of risk factors in our annual report, on the Form 10K for the year ended December 31st, 2011, and to our press release. These are documents that identify important factors that can cause such a variance. During the course of this call, we will take questions from participants. Under FCC rules, we cannot provide material information in subsequent private settings but will continue this public call as needed to discuss and respond to appropriate questions.

After I provide my summary on the quarter, and year-end performance, I will then turn it over to Ron for his comments. From there, we will answer any questions you might have. Thank you for your continued interest in Par Technology.

Par Technology reported fourth quarter revenues of $66.4 million, a 10% increase over the $60.1 million reported in the fourth quarter of 2011. Non-GAAP net income from continuing operations was $1.2 million versus the $1.8 million reported a year ago, and non-GAAP per diluted share from continuing operations were $0.08 versus the $0.12 per share reported in the same period in 2011.

We also recorded a $7.6 million charge in the quarter, the majority of which was non-cash, which I will comment on in a few minutes. For the year 2012, the company reported revenues of $245.2 million, a 7% increase over the $229 million reported in 2011, despite the fact that revenues were $18 million less from our largest customer.

Non-GAAP net income from continuing operations, was $3 million versus the $5.5 million reported for 2011 and non-GAAP earnings per diluted share from continuing operations were $0.20 versus the $0.36 per share reported last year in 2011. Overall hospitality technology revenues for the fourth quarter were $45.9 million, a 14.7% increase over the same period in 2011, as our actions to backfill the revenue gap showed progress.

As you've heard me say previously, in 2010 and 2011, our hardware products were deployed in more than half of the McDonald's restaurants in the US. We knew going into last year that that equipment would need to be, would not need to be refreshed, so we embarked upon a mission to make up as much of that as possible. We continue to have an excellent relationship with our largest customer.

Hardware revenue increased 26% for the quarter, compared to last year, and 22% sequentially. International business revenues increased 32%. Revenue to Young Brands increased 23% and Subway also grew 23%. Unfortunately, a higher peripheral to terminal mix hurt profitability.

Par was selected by CK Restaurants to install our [Everserve] 7700 platform in their network of approximately 900 corporate stores. We began that deployment in the fourth quarter and we will complete the initiative in the first half of 2013. In the second half of last year, we announced our new hardware platform portfolio and a little more than a week ago, we announced the newest addition to that, the Everserve 500 for global distribution through our channel partners.

Software revenue increased 32% for the quarter, year over year, as well as 64% sequentially. 4300 Wal-Mart stores are up and running on SureCheck and we completed in January 620 Sam's Clubs. We have signed on additional individual property ATRIO customers in the past quarter and are negotiating other deals as well.

We signed five additional customer properties for our Heritage Host property management software product, and it included two of Mandarin Oriental's new hotels in China and three additional five-star properties in the US. We also signed 11 new clients for Par's standalone Spa Soft Software package. These included several five-star properties in Mexico, China, Panama, in the US with Marriott, [Pares], Valley, Western and Mandarin Rental.

Higher development expenses and too many priorities were some of the reasons we've taken some of the actions that we've taken. Our government segment again grew revenues in the quarter, but at a more modest rate than in the previous quarter of 2012. Revenue increased for 2012 but only 2.1% in the fourth quarter over the same period in 2011.

Business continues to be driven by contracts to support the US Army and US Air Force with intelligent surveillance and reconnaissance technologies and services, Eagle and [Tel-X]. To date, we have seen consistent funding of programs, and we are focused on intelligence, surveillance and reconnaissance programs. But as we were in 2012, we remain cautious as market conditions continue to make the timing of new contract awards difficult to predict.

New contracts win in the quarter came from a new US Navy facility operation contract in Africa, the Defense Contract Management Agency support contract, for $11.4 million and a new contract with the Air Force research laboratory. Contract margins were 8.9% in the fourth quarter, above our historical range of 5 to 6%.

This spike in margins can be attributed to a license sale of the company's full motion video product which happened last year as well. Our government business ended the quarter with a healthy backlog of $140 million which gives us a buffer going forward.

As part of our continuing effort to align resources, and streamline our product and service offerings, we took a charge this quarter of $7.6 million. The majority of that charge, $5.4 million was non-cash and associated with the ESQSR restaurant software product. The balance of the charge is for legal costs related to the intellectual property and patent matter that have since been settled.

Over the past few months, we have done a deep dive into where we are with our portfolio businesses and products and made some tough choices. As I said above, we have refreshed our hardware portfolio and made some inroads into areas of growth. We have, we've had to go and to do things to improve our mix and profitability, but it will take some time.

We have a government unit that continues to grow nicely, and make money, and we have our SureCheck product with a marquee launch partner, Wal-Mart and on top of that, we have ATRIO that we have great faith in. Given the potential that we see with these products, we will continue to invest more in the short term, than we would deliver to the bottom line.

Our host software product is running many of the greatest resorts around the world. We are a leader in spa soft software. Our pixel point and other restaurant software products are running tens of thousands of restaurants today. Today's announcement does not change any of that.

As I've said previously, our strategy has been to create a compelling solution, find a marquee launch partner, and then productize it for larger scale department. With SureCheck, we have the solution and we are continuing to grow with our launch customer, Wal-Mart. Mid-year 2013, we will complete its transition from a solution to a product, making it much more easy to replicable, making it much more replicable to more clients. In the meantime, we are piling in new accounts and we have a great prospect list.

With ATRIO, we have advanced the product feature functionality and completed necessary multi-tenancy enhancements. By this, I mean the ability to run a single instance of software on a server, serving multiple client organizations. This is important, as it enables the product for a single product to scale to a chain.

This was deploying our ability to economically replicate and create multiple editions of our application, but we are now back on track. We are not the only company who's had this issue. As we've done with SureCheck, we will identify in time a major launch partner. Property management systems running hotel chains today are archaic, and every brand is going to have to figure out sooner or later how they introduce a new two-way interface between their customer and the property.

As time goes by, the hotel chains will have to deal with this issue. Our solution is not slide ware, it is running properties today and we've added multi-tenancy capability, enabling individual property functionality to be replicated across multiple properties.

Software technology initiatives of the magnitude of ATRIO and SureCheck take time. They're difficult, and they hit unexpected bumps because they represent a sea change in technology. There are probably some characteristics of which are similar to venture-based endeavors.

Over the past couple of months, we completed an analysis that add characteristics of noted strategist Michael Porter's work, looking at our portfolio. We looked at it in a discipline way, and all of its economics. What we found was, is that where we were investing did not always match where the market is today, and where we anticipate where we'll be in the future.

As a result, we've made some tough choices, one of which was to cease new development on, and to reduce the net book value of our ASQSR restaurant software product, reducing some headcount and redirecting others. We have also looked at our hardware mix and taken actions to alter our compensation plans, to sell more terminals, to lower overhead, focusing more on profitability.

We have shifted resources in development, sales and support to where demand is. A company the size of Par has to prioritize its investments. We will work to balance the short-term need for profit, with a medium to longer term need to extend our competitive advantage and grow profits.

As we regularly do, we will continue to evaluate actions to adjust our cost structure with an emphasis on optimization and efficiency improvements. Doing this, we believe, we'll deliver what our customers want, as well as what our shareholders want.

I would now like to turn the call over to Ron for his remarks on our financials.

Thank you, Paul and good morning everyone. Just a quicker dive on the 4th quarter details. First, product revenue for the quarter was $27.9 million, an increase of 26%, compared to 2011. This growth was due to sales to Young Brands, CKE and to International McDonald's. The company also increased its sales through its worldwide dealer channel.

Service revenue for the quarter was $18 million, basically unchanged from the $17.9 million in the fourth quarter of 2011. Contract revenue was $20.5 million for the quarter, an increase of 2%, from 2011. The company continues to benefit from its ISR integration contracts.

Product margins for the quarter were 8.1% versus 32.2% last year. This reflects the charge in the current quarter for the capitalized restaurant software asset in our hospitality segment. Margins were also impacted by product mix as the company sold more peripheral equipment in the quarter.

Service margins for the quarter were 32.7% in 2012, compared to 29.8% last year. This was due to a favorable mix in service offerings. Contract margins were 8.9% compared to 7.8% last year. Both periods achieved higher than our normal historical range of 5% to 6% due to license sales of the company's GB2F full motion video product.

SG and A for the quarter was $11.6 million, compared to $8 million in 2011. The primary reason for this increase was the expense related to the litigation and settlement costs associated with a non-practicing entity patent claim. The company is also continuing to invest in sales and marketing in its hospitality business and its government video technology. R&D expenses were at $3.7 million, a small increase from the $3.4 million a year ago.

Par's financial condition remains strong. We have over $19 million of cash on the balance sheet, the company's debt level is at $1.3 million, cash flow from continuing operations was $2.1 million for the quarter and $15.8 million for the year. The company expects to fund future working capital requirements from cash flow through operations.

I'm pleased to report the DSOs for our hospitality business were at 49 days, and DSOs for our government business were at 43 days. Depreciation and amortization for the quarter, excluding the capitalized software charge was $800,000. Capital expenditures for equipment was $200,000 and capitalized software in the quarter was $900,000.

This concludes my remarks. I would like to open up the call for questions.

(Operator Instructions). And our first questions is coming from the line of Sam Bergman from Bayberry Asset Management.

Good morning, Paul, Ron and Chris. How are you?

Good, good morning.

So you had a lot of things going on in the fourth quarter and it became a real nice quarter on the top line and bottom line even though there was a, a restructuring for a resulting software deletion for price software in other years.

But what I want to find out is can you give us a little bit of flavor for the McDonald's US business in 2013, and the international business that you can see right now?

Well, I think we see more the opportunities based on the discussions that we have more outside the US than we do inside the house. We continue to, you know, we continue to have an active business in the US, but it is mostly replacement business and new franchise location business in the US.

In the US, we see services being a great opportunity for us, and we've reaped the benefit of some of those. And internationally, there are opportunities that we are actively engaged in that, you know, hopefully will change that down that we had this year in 2012 from our largest customer. As I said earlier in my comments, Sam, I think we have a good relationship with them and that hasn't changed by virtue of the decrease.

And in terms of other restaurant customers, you said CKE is, was shipped somewhat in the fourth quarter and will be finished towards the first half of the year. Do you have any other beta sites that will become customers in the next six months, similar to CKE?

Sam, this is Ron. Yes, we have a few restaurant customers that we're working on. I'm not able to mention any names at this time. We also have a growing pipeline for our SureCheck product that will be later in the year. So there's been a lot of activity going on and we hope and expect in 2013 you'll see a few other names out there besides, you know, McDonald's and Young.

What's your expectations, Ron, for that, towards the bottom line with the extra sales and marketing that you plan to add on for the growth areas?

Well, for our restaurant business, Sam, as I just mentioned, we are focusing our sales efforts on new customers and we're also, we've also been focusing our efforts on growing our channel business. We had a nice growth of percentage-wise in our worldwide channel business, primarily in international markets, so we're focusing our sales and marketing efforts there.

Regarding our ATRIO product, we've been ramping up our organization there. The pipeline and the interest is better than ever for our ATRIO product. So we expect to start seeing some returns in the future for those efforts.

I would add to what Ron said, Sam, that the other part that I would say is that we have, we have clearly rebalanced our teams. I mean we had, we were spending our time on some of the products that demand wasn't as high as it was in other areas. And we've redirected those resources to where we see the demand, and we think that will pay dividends in 2013.

The last question I want to ask is a comment made in the 2012 first, actually it was the fourth quarter earnings report from 2011 and this is in regard to ATRIO. "Giving the compelling operating and financial benefits of ATRIO, our prospect pipeline is expanding, reflecting growing enthusiasm for its SASS model.

Now that was a year ago. I'm just wondering which -- I realize it's a long cycle. But a year or longer seems to me much more than investors would expect. Can you elaborate on that?

Well, I think your comment is fair, Sam. I don't think you're, I don't think there's anything -- I think what, as you recall, it was the latter part of 2012, 2011, excuse me, when we deployed our first, our first installation that was there. And over the last year, we have continued to add functionality to the product and we have continued to add this multi-tenancy which gives us the ability to more easily and more economically replicate what the benefit that occurs at an individual property to a chain.

And those two things took time. And it took longer than what we had thought. But as I said in my opening remarks, and you know, really throughout the press release, we remain, you know, we believe in ATRIO. The market believes in ATRIO and it's just a matter of us getting, getting it and getting some of these things done and getting the deployment to occur.

So you know, again, I hesitate to put time frames on it, because I haven't done a good job of that in the past, but we believe it will, it will have adoption of the product upcoming.

And the only other thing I want to ask on the ATRIO, regarding revenue and recurring revenue, the SASS model is a very slow model for revenue growth. Yes, there's some great margins on the software side, and to the bottom line, but isn't that going to take a number of years to really make a difference on the top line and also on the bottom line, if it remains a SASS model?

It does take, you're right, it does take time. It's certainly, but it also, you know, if you can think about it this way, we are a hardware company who has to go every year and identify new hardware customers. So what we are trying to do is to build a recurring base and you can see some, some success in that in 2012, in that area, to build a recurring base so that as we go into the new years, we already have that in our, in our backlog, so it becomes a little like, pardon my analogy, a little like bricks on the wall that we continue to add.

So as our volume, as our volume increases on our hardware, and we continue to have a backbone of recurring revenue. Given the profitability of this company, it can make a material difference. But your point is well taken that it's not, it's not the same as an enterprise license which is a bigger pops in there.

Should we expect some to be enterprise license, versus SASS models, or going forward you expect when ATRIO does hit, it's going to be mostly SASS.

I think it will be mostly SASS. I think that's what I would, that's what I would assume. I mean, obviously, we listen to our customers and we will continue to have discussions with them, but I think our business model is SASS.

Thank you very much.

Thank you, Sam.

(Operator Instructions). The next question is coming from the line of [Keith Hussef], North Coast Design.

Thanks guys. Thanks for taking my call. Can you guys just elaborate more on the software charge that you had, I guess and what it means for the software side of your restaurant business?

I understand the restaurant side of your business has been mostly the hardware business in the past, but you added Pixel Point. Does this take you even further, you know, toward the hardware only aspect of that business?

Keith, no, it doesn't take us further towards the hardware part of our business. What is does is it allows us to focus on fewer software products that have the highest potential for future sales. And I think that will result in steady, more predictable growth of our software business.

Okay, so the ESQ, I saw that you guys are taking the charge for in-season production. That's totally separate than Pixel Point and wasn't a next generation or anything like that?

It was a totally separate product from our Pixel Point product and we found that it didn't make economic sense to continue to invest in that particular product.

Got it. Okay, makes sense. And I guess you can speak to the environment. Obviously, you know, we had questions from investors and it comes to this topic in the BOS companies, about tablets and current RFP activity. But, you know, what's your thoughts, I guess on the tablet scene and moving more into the hardware market and what it may mean to your business down the road.

Well, I think that we continue to evaluate that. I mean, you know, there are certain properties and chains that are looking at tablets type devices. Typically, they're in concept stores as opposed to doing sort of large deployments of them. But we continue to monitor that actively, and you know, and we have some products coming out in the back end for the year, that I think will help to enable our customers to more directly, you know, serve the needs of their customers in varying environments. But I'm not prepared to make any kind of announcement on that today.

Understood, understood. And I guess as you're looking at the current environment, how would you describe I guess the current RFP environment for restaurants and hospitality now versus, say where it was this time last year?

Keith, I think it's picking up a little bit. We mentioned the CK roll out that we began. As Paul mentioned in answer to the question regarding the future of McDonald's, I think you'll see us with more opportunities with McDonald's internationally, and some, hopefully in some countries that we're not selling into.

You know, Paul mentioned service project opportunities domestically with McDonald's, and I had previously had mentioned that the pipeline and interest is growing with new customers both for restaurants and for our SureCheck product. So I think we've seen a pick-up in that area, Keith.

Great. Thanks, guys, I appreciate it.

Thank you.

Thank you.

Your next question is coming from the line of Bill Lauber, Sterling Capital Management.

Yes, Paul, if my figures are correct, there's about 25%, a little bit better than 25% of the market cap is in the form of cash, right now. What are your plans with the cash on the book?

Well, we continue to do as Ron said, we continue to fund our own, our own investments. I mean, we've not gone into the debt markets at all on this. Our plans, we have no plans to at present, to do a share buyback. We continue to evaluate that over time, but we continue to just fund our own resources, and we fund our own investments going forward. Ron, do you want to add anything to that?

Yes, just that we will continue Bill, throughout the year, to look at if there's any opportunities from an investment standpoint that makes sense, and this will give us a little more flexibility by building up the cash reserve to be able to execute on those investments if we so choose.

And we have fairly large line of credit as well.

Yes.

Okay, last question. Paul, how would you characterize this coming year, or the current year of 2013? It looks like, you know, as you mentioned and we've, you've communicated to us in the last six months that the ATRIO is, and for that matter, SureCheck, it's a long sales process and so on and so forth.

But going into this year, are we still in a transition period? Are we going to see any meaningful, or do you think that there's a possibility of a meaningful increase in the bottom line?

Well, we don't provide guidance, so my comments are general in nature, which is that -- I mean, we have a large hardware business that is much larger than our ShareCheck and ATRIO parts of our business today. I believe we'll make, we'll make traction in that, but as I said in my prepared comments, when we look at the market in those two products, we see great opportunity.

And, you know, in 2012, largely the profits if you will, that we got our of our ShareCheck product, we reinvested in the business because we believe in its potential, and its future. And as I said in my earlier comments, you know, I think we'll have some, I think we'll have some signature wins. Again, I'm hesitant to put time frames on that, but I think that, you know, that the company will continue to be more, more investment in 2013, than it will be in kind of reaping profits.

Okay, well, it's just -- and I know you understand this, Sam alluded to it earlier, that long-term shareholders are getting rather impatient, and we're just looking for, we're looking for that inflection point, and I'm just wondering when it's going to occur. I was very optimistic about a year ago or a year and a half ago, that things were turning up, but it looks like we've stalled out again, and I'm just getting, just getting a little impatient, that's all. Thank you.

I appreciate your comment, thank you.

Your next question is coming from the line of Robert Henderson, Rutabaga Capital Management.

Hi. Getting back to the software question again, could you just explain what it was about ESQ that made it not viable in the marketplace. And now that ESQ is not going to be in your portfolio, the products that are left in restaurant, what are they?

Okay, so --

The software products, I mean.

I mean, and this kind of goes to Bill's question just a few minutes ago. The company has been making investments on a number of different fronts, and we are a company that has $220 million of revenue and so life becomes a series of choices. And as I said in my preparatory comments, we've made some tough choices and we've taken action to be able to match our investments to where we thought we would be able to get the greatest returns associated with it.

So by that, by that scale and that measure of continuing to invest in Everserve QSR when we were continuing to enhance our existing products and make major investment in SureCheck and in ATRIO became uneconomic for us. So we still continue to have, you know, we still continue to have software products that are running names that you would know from our, that are Pixel Point, we have a product called TSR, we have a product called Heritage Infusion and they're running tens of thousands of restaurants.

But our foray into this other area didn't meet our tough scale of investment going forward, so we made the decision that we did this quarter.

Okay, thank you.

Thank you.

Your next question is coming from the line of Greg Cove from Sidoti and Company.

Good morning everyone, thanks for having me. Just one question. On the hardware side, it sounds like CKE is pretty big but it should fall off in the second half of the year. Is that pretty fair to say, or is there, or should the new initiatives like SureCheck and ATRIO pretty much offset the decline in revenue from that in the second half?

Well, you're correct that the CKE roll out will be completed in the first half of the year, but we expect to have replacement business with some newer accounts and some growth with existing accounts. You know, Subway has been a very constant, good, good account for us. It continues to grow.

We have international opportunity, so we expect that these opportunities will more than offset the completion of the CKE roll out.

Okay, and just one follow up. On the margins with these newer customers, should they be higher than with the larger chains, the gross margins?

We're not going to comment on the difference in the margins, by customer. But you know, it's a case by case basis, so.

Okay, thank you very much.

But thank you.

Your next question is coming from the line of Lee Matheson, Broadview Capital.

Good morning guys.

Hi, Lee.

Good morning. So going back to the software write-down a little bit, you know, obviously I like the fact that you guys have gone through and taken a look at the portfolio in detail and starting to cull some product lines. Any sense of head count reduction, or R&D in this unit cost-savings from eliminating the product? And I guest secondary to that, are you just going to recycle it into sort of growth categories?

Well, I won't -- there was a head count reduction that occurred associated with that. I'm not going to comment on the amount of that. We have, as I said in my earlier comments, redeployed some of those folks onto other products, so if you were to look at R&D spending, you would see R&D spending, you know, being rebalanced and going into that area, but some of it, some of it will go to the bottom line.

I guess I'm not prepared to comment on how much, but some of it will go to the bottom line, and some of it will be invested in products that we think will have near-term demand.

Okay, and again, looking at the software portfolio, I mean, I think I would imagine there's a certain amount of nervousness around the delay and adoption of ATRIO, considering what happened to one of your publicly traded peers, which wrote off quite a substantial amount of invested work on a, on a PMS system.

You know, can you just, can you sort of comment on why you think, why you think the fate of ATRIO will be much better than Guess 360?

Well our -- again, I won't comment on what the other are doing, but I will comment that, you know, we, our belief is that time is in our favor and our belief is, is that as we look at, you know, our competitors out there and we look at what's occurring in the market with our customers, you know, there are, there are numerous articles if you read the, if you're, if you're following that story that you followed as well, you'll also have read many other articles that talk about the archaic systems that exist today in the hotel world, and how -- and all you have to do is think about, as a user of those systems, how unfriendly they are, if you would, given some of the changes that are occurring in mobility and technology.

And with our user experience, which we think is one of the key differentiators on the product, and the economics, and the technology platform, we think, as I said in my earlier comments, that you know, going from, from having individual properties that you're running the product today, that will lead us to our marquee customer, which is what we set out to go do, and then that will put us in a much better position going forward.

Plus that, plus the work we're doing, the product ties it, to get, to create, to turn the solution into something which is more easily replicable. And that is a major effort that impacted our results in 2012, both in ATRIO and in SureCheck, and we think will help us going forward.

Okay, and in terms of the feedback you're getting from installed, the installed customers, they're your, it's 100% clean, there's nothing that worries you in that?

We went, in the beginning we went through teething problems, like any new deployment occurs, but what our -- we continue to have an active pipeline and we continue to actively work with customers.

Okay. And then in terms of the software product portfolio, you know, what, I guess what did this sort of Porter model assessment turn up and where do you feel you are most competitively advantaged? And obviously, the write-off of ESQ is an example of where you weren't, but I'm just curious on where you feel you stack up, relative to, particularly to some of the larger players, and, you know, where you think you have the opportunity to, to really drive this business forward.

Well, I don't want to overstate it. We compete against billion dollar companies, multiple billion dollar companies that have much wider customer portfolios and have much larger customer bases. So, our, what we did is we went back and looked at our products and our services and the demand that we had, and we realized that we were, we had the resources in the wrong places, and we had bottlenecks.

Because we had groups of people who were doing a great job, but the demand that was coming in was swamping the development that was there. You can imagine deploying 4,300 Wal-Mart stores in 2012 and that was a, you know, that was an example of where there was demand, but just the sheer, the sheer effort to complete swamped the development area.

And then there were other areas where we had people working on development efforts, that there wasn't that great of a demand. So this effort is to align that more closely so that we can reap the benefits of the growth that we believe is there on some of these products, and so, and accelerate some of the development efforts.

Okay, my last question, I guess, just, you know, given your comments around the net cash position on the balance sheet, and you know, looking at opportunity. I mean, is there --- I guess the issue that we worry about is, you know, the equity is so inexpensive currently, and obviously, it's a space that has generally, you know, generally high M and A multiples.

You know, do you guys feel, do you guys feel that you need to do a transaction to build out the product portfolio or to enhance something or, you know, do you, given the R&D and its expanse cumulatively over the last five years, and the fact basically every product in your portfolio is sort of refreshed or brand new, you know, our initial thought is that, you know, that shouldn't, you shouldn't have to again and buy something. Is that, you know, can you kind of comment on that?

Well, I think we continue to evaluate as we go forward, you know, opportunities to increase value. I mean, that may come through a partnership, it may come from acquiring bits of technology that we think will accelerate our position in the market.

I mean on the ATRIO product, we have modules that were not created by, by Par, that were not created by us and those are, part of our portfolio that we sell to our, to our customers. So we will continue to go through that process in 2013.

Okay, okay, thanks, guys.

Thank you.

We have a follow up question coming from the line of Sam Bergman, Bayberry Asset Management.

Hi, Paul, can you tell me what percentage of the Subway business is complete at this time?

It's just an ongoing, it's an ongoing deployment, because as I've said, it's continued to be a great customer for us. We've continued to talk about them every quarter. You know, for the, from based on what I know right now, it's going to continue in some present form.

Through this year and next year or just this year?

I don't know the, I don't know -- for the foreseeable future, I think it will continue. I can't, I can't give you -- I mean Subway continues to grow, we continue to be a great partner of theirs and I have nothing, I know nothing that would preclude growth going forward.

Are you the only POS vendor they have.

No.

Okay. Thank you.

Thank you, Sam.

At this time, I'm showing no further questions in queue. I would like to turn the call back over to Paul Domorski for any closing remarks.

Okay, Derek, thank you very much and again, thank you all for coming on the call. Thank you for your continued interest in Par Technology. Have a great day.

Ladies and gentlemen, that concludes today's conference. We thank you for your participation.