泰勒科技 (TYL) 2003 Q4 法說會逐字稿

Welcome to the Tyler Technologies fourth-quarter 2003 earnings results conference call. Today's call is being recorded. At this time for opening comments and introductions, I would like to turn the call over to the President and, CEO Mr. John Yeaman.

Thank you, Amanda, and welcome to our fourth-quarter 2003 earnings call. Joining me from our management team are John Marr, our Chief Operating Officer, Brian Miller, VP of Finance, Ed Bathurst, our CFO, and Lynn Moore, our General Counsel.

First I would like for Brian to give the Safe Harbor statement, then I will have some preliminary comments, and Brian will review details of our operating results and we will hear from John Marr and then we will take questions.

During the course of this conference call, management may make statements that provide information other than historical information, and may include projections concerning the Company's future prospects, revenues, expenses and profits. Such statements are considered forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and uncertainties which could cause actual results to differ materially from these projections. We would refer you to our Form 10-K and other SEC filings for more information on those risks.

Once again, it was a great quarter and a great year for Tyler. Fourth quarter was our best ever as a technology company in terms of both total revenues and operating income. This was our 11th consecutive profitable quarter. And results exceeded our expected our expectations in guidance as well as the consensus estimate.

I would like to recap some of Tyler's accomplishments in 2003. Earnings were strong, even in a market that has not yet strengthened significantly. We grew at above market rates with success in geographic expansion and becoming increasingly competitive in the overall market. We generated strong cash flow. We started the year with 13.7 million in cash and investments and finished the year with 29.4 million in cash after generating 14 million in free cash flow from operations.

We sold our investment in HTE for 39 million in cash, most of which we used to repurchase stock. We bought back over 6 million shares at an average price of $4, including 5.1 million shares in a Dutch auction tender. We also invested heavily in product development, building new products and enhancing existing products. In December, we made our first acquisition in more than four years, which should enhance our growth and profitability in 2004 and beyond.

The market has responded to the positive events at Tyler. We started the year at a $4.17 stock and finished the year at $9.63, up 131 percent. Our trading volume also has increased significantly and our institutional ownership has grown. As a result, we have entered the year of 2004 in our strongest financial and competitive position ever. And the opportunities in front of us are most encouraging. Now I would like for Brian to review the numbers for the quarter.

Yesterday, Tyler Technologies reported its results for the fourth quarter of 2003. Our year-over-year comparisons continued to be very good as they were throughout the year. Our results for the quarter include the results of our December 2003 acquisitions from their respective acquisition dates. For the quarter ended December 31, 2003, Tyler had revenues of 39.1 million, up 7 percent from the fourth quarter of 2002. Operating income was 5.6 million, an increase of 34 percent compared with operating income of 4.2 million in the fourth quarter of 2002. Income from continuing operations also increased 34 percent over 2002 from 2.6 million in 2002 to 3.5 million in 2003. Net income for the quarter was 3.9 million or 9 cents per diluted share compared to net income of 4.4 million or 9 cents per diluted share in 2002. The fourth quarter of 2003 included income from the disposal of discontinued operations of $424,000 or 1 cent per share, compared to income from discontinued operations of 1.8 million or 4 cents per share in the fourth quarter of 2002.

EBITDA for the fourth quarter the fourth quarter of 2003 increased 26 percent to 7.9 million or 18 cents per share from EBITDA of 6.3 million or 13 cents per share in last year's fourth quarter. A reconciliation of net income to EBITDA is provided in our earnings release. Our software-related revenues, which in the aggregate increased 13 percent over the fourth quarter of 2002, once again drove our overall growth. Although software license revenues were lower than in the fourth quarter of 2002, software services and maintenance revenues both showed strong growth. You may recall that the third quarter of '03 included $3.4 million of license revenue related to the Odyssey court system installations in Minnesota and Florida. And as a result, we expected that software license revenues would be lower sequentially in the fourth quarter. For the year 2003, software licenses grew 7 percent over last year, while software services grew 44 percent. This reflects the fact that some of our larger software contracts had a greater proportion of services revenues. Appraisal services revenues for the fourth quarter declined 8 percent over last year, in line with our expectations and clearly an improvement over the level of decline we saw in the first three quarters. The revenue mix for the fourth quarter of 2003 was as follows -- software licenses, 15 percent; software services, 27 percent; maintenance, 33 percent; appraisal services, 22 percent; and hardware and other, 3 percent. We continued our trend of seeing an overall positive shift in revenue mix, with 75.2 percent of our revenues software-related in the fourth quarter compared to 71.2 percent of our revenues in last year's fourth quarter.

For the fourth quarter of 2003, our overall gross margin improved to 40.5 percent from 39.1 percent in the fourth quarter of '02. The higher overall margin compared to last year is the result of both a shift in the revenue mix to a greater proportion of software-related revenues, which carry higher margins than appraisal services, combined with improvements in margins for software services and maintenance, resulting from more efficient utilization of our people and increased operating leverage that comes with economies of scale in our software-related business. The blended fourth-quarter gross margin for our software services and maintenance was 36 percent compared to 29 percent in last year's fourth quarter and 33 percent in the fourth quarter of this year.

SG&A expense for the fourth quarter was $9.6 million or 24 percent of revenues compared to 9.2 million or 25 percent of revenues in the fourth quarter of '02. Our backlog at December 31, 2003 was $139 million compared to 89 million at December 31 of '02 and 124 million at the end of the third quarter of '03. We finished the quarter with 21.9 million in cash and short-term investments and 7.5 million of restricted long-term investments. Cash flow from operations during the fourth quarter was $2.9 million and our free cash flow after capital expenditures was $800,000. For the year 2003, cash flow from operations was $22.5 million, and free cash flow was 14 million compared to 10.1 million in 2002.

We had not repurchased any stock during the fourth quarter of 2003. For the full year 2003, we repurchased 6 million shares of our common stock at an average cost of approximately $4. In the first quarter of 2004, to-date, we have repurchased 170,300 shares on the open market at an average cost of approximately $9.31. Our remaining board authorization for repurchases covers approximately 1.8 million shares.

Our capital expenditures during the fourth quarter were quarter were 2.2 million, which includes $1.5 million of software development. For the year, total CAPEX was 8.6 million, including 6.8 million of software development. Total CAPEX in 2002 was 9.7 million.

DSOs at the end of 2003, excluding Eden Systems, which we acquired in December, were 86 days compared to DSOs at December 31 of last year of 85 days. Our stockholders' equity at December 31, 2003 was $117.9 million and we continued to have no outstanding debt.

Now I would like to turn the call over to John Marr for his comments on the quarter.

Good morning, everybody. I would like to just offer some comments and observations surrounding the numbers; provide a little update on the market condition; as well as talk a bit about our guidance for 2004.

Obviously, we are pleased with the numbers and the progress that Tyler has made financially throughout 2003. We saw nice growth in a market that was probably flat at best, and that speaks to outcompeting the different players in this particular marketplace. As most of you probably remember, our original guidance for the year was 16 to 18 cents, which would have been considerably growth over 2002. We raised that guidance to 17 to 19 cents as a result of the shares we repurchased. And then very much toward the end of the year, we raised it again to 20 cents as we had better visibility. And ultimately, we earned 22 cents excluding the gain on HTE. So we are pretty pleased with the progress we made from an earnings prospective throughout the year. We finished the year with a very strong balance sheet with considerable cash and no debt. And that is after, obviously, having repurchased 6 million shares and executed two different transactions that were primarily cash transactions. So we are very pleased with those numbers. Again in terms of some observations around that, that is behind us now, and what does it mean going forward?

The history of Tyler's strategy over recent years as we put a software Company and professional services company together, has been to build new products that we can market across the Company and across the country successfully at a high level, and to take the products that we acquired that have the potential to become industry-leading products into investing those and extend them and sell them outside their traditional markets, and build a company with a national presence that had very highly competitive products across the country, and offer it across a broad range of applications that local governments use. I think you see some of those results reflected in the numbers of 2003, but probably have to look a little bit deeper really to appreciate that I think progress as a Company, structurally and organizationally, has been made at least at the rate the numbers reflect. As you'll notice for 2003, our license revenues actually grew at 7 percent marginally below the overall company growth rate. I don't think that fully reflects the progress we've made in terms of the competitiveness and the improvement in the competitive position of the products; the sales channels that we have established around the country; and the market presence we now have in geographies where we had a limited presence traditionally. If you look at the software services that we delivered in the fourth quarter being extremely high, those services clearly are people busy deploying new licenses to our customers in new customer situations, and are an indication of the volume of software that we are currently deploying. And that does not necessarily always match up quarter-by-quarter from a revenue license standpoint. So this past year, we saw nice license growth of about 7 percent in a relatively weak marketplace. And we are certainly relatively pleased with that. But I would say going forward, you can count on seeing Tyler's license growth rate being in excess of our overall company growth rate. And as you know, we have already issued guidance that we expect the overall company growth rate to be at or above 20 percent for 2004. So that is a reflection of the backlog we currently have; it's reflection of the awards that we have or are awaiting; and it's a reflection again, of a lot of activity and our service channel deploying new software. And again, our analysis of where we are in the marketplace suggests that all our products have improved competitively. We have a stronger sales channel with more capacity and we have a broader marketplace to sell these more competitive products into. And as a result, as I indicated, I think you can expect license sales to be growing going forward in excess of the overall company growth rate. However, that may not happen in every individual quarter. But as a trend, that is certainly the direction that we would be going.

As you know, we acquired Eden Systems in December of this past year. And as you probably have seen following them, we have announced several significant contracts that they have been able to get done in the short time they have been with Tyler. Obviously, those processes were underway prior to the acquisition. But we're very pleased with the initial performance of Eden since they have joined Tyler.

In terms of the marketplace, our guidance and all the assumptions that we have offered are generally based on the current market conditions. And our experience is that at least in pockets, geographically and from a type of product standpoint, we see modest improvement in the marketplace. Some of our products and some of our geographies are seeing some more noticeable recovery in the marketplace, but probably on balance across all our products and across the country, our experience is that the market seems to be modestly better at this time than it was certainly entering '03.

In terms of guidance going forward, our outlook for 2004 is as follows -- revenue growth in the area of 20 to 24 percent; about half or maybe a little less than half of that coming from the December acquisitions that we did; net income in the range of 12 to $13 million for the year; 60 to 65 percent of that expected to come in the second half of the year, is typical for Tyler; fully diluted EPS of 27 to 29 cents; and our total CAPEX for the year would be in the area of 8 to $8.5 million. That would be around or marginally less than what it was in '03; and down about 1 million or $1.5 million from '02. And again, this is consistent, I think, with the strategy since its inception. We made a significant investment in some new products and extending some existing products. And we have told people that you should expect our capital needs to stay at about the same level or to drop modestly, even with a company that is experiencing pretty significant growth. So as a percentage of our resources, CAPEX continues to decline pretty significantly. With that, we would be happy to take questions.

(OPERATOR INSTRUCTIONS). David Yuschak, Sanders Morris Harris.

I want to get a more expanded view of your outlook on the software licensing side of it, with the kind of guidance you've given on revenue, which suggests greater software sales than that. How much would you attribute to maybe Eden's performance here early in the current quarter to those kind of objectives versus maybe looking at other areas of your product categories where you think there could be some significant opportunity over and above maybe the financials?

I will take the Eden part first. Eden's contracts tend to be relatively good size for the size of the company they are. So they have been announced, those three contracts. But they will not be contributing disproportionately to our license growth. I guess I could clarify what I said earlier -- even excluding Eden, we would expect our licenses in '04 and as a trend going forward, to grow at a rate above the overall company growth rate. As we have indicated, our overall company growth rate, being half or a little more than half of the overall growth we are guiding on, is up from last year. And again, we would expect license growth to be higher than that company growth rate. With Eden in, we would expect the same thing. So Eden will contribute proportionately to the license growth. The blend of revenues isn't that much different than our other software companies. I think the feeling that this will be up is based on experience that we currently have in the marketplace. And we have a strong backlog across the board. We have awards that we are working on contracting. And we are very much in touch with our competitive position and the decisions that are being made around the country. And in our view, we have been successful in improving the competitive position of all of our different products. Again, that is not a task we accomplished in 2003. That is something we have tried to build the company around, that every product knows where it is; the people managing it know where it is competitively; and that we are deploying our resources in terms of development those products in a way that improves its competitive position on an ongoing basis. And we are pretty confident that where we are competitively in these situations shows that, and we are pretty confident that the license growth will begin to be at a level higher than the company growth.

It sounds like you are pretty optimistic about most of your product offerings, courts in Justice (inaudible) potentially, praise (ph) or whatever? Is that kind of what you are saying then?

Yes, I think it's pretty much across the board. That is definitely the case. The financial systems are doing very well. I think the three that we market are all improved competitively. They all have deeper and better sales channels than they have had. They are all represented in geographies they were not represented in a year or two ago. And certainly we're enthusiastic about the competitive position of the Odyssey product. And that platform now applied to our appraisal solution has good early results, as well. It's pretty much across the board.

One follow-up question then. I always like to try to understand why companies over-or under-spend, particularly when they're doing a strong up-cycle like you guys have been demonstrating here in the last several of quarters, producing operating results better than expected. If there was a place that you would want to overspend sort of speak plant some seeds for some future opportunities, whether it's in extra marketing or some other things, with some wind in your sales, it certainly gives you certainly a good opportunity to do some of that. Where would you be looking to do that kind of strategy for future growth?

I really the thing we have done well is to stay focused. And so the first place we always look are the current products that are generating revenue for us. So the court systems, the appraisal systems and the financial systems and recording systems, again, we are doing competitive analysis and have intelligence on how they are doing. Literally, when we lose an opportunity, if the reasons have any pattern to them, we are very responsive to that in our product development in order to, again, continue to improve our competitive position. So, again, that is an ongoing process. It is really not -- our CAPEX is not a good indication of where we are necessarily investing, because these deployed revenue-generating products, we have a lot of resources on those that are expensed. And so we are making significant investments in those all the time. Outside our current products, we are always looking at the applications that are an extension of what we are already doing. So we can use our existing sales channels and we can use selling to the customer bases we are already in. And things like public safety, things like education, come to mind as areas we're are always looking at, either organically or externally.

Thanks a lot, appreciate it. Great quarter.

Charles Strauzer, CJS Securities.

A couple of quick questions for you. John, you just mentioned you have some awards that you are working on contracting. Is it safe to assume that at least one of those is maybe an Odyssey contract?

Yes, I'm not sure what Brian said now. But yes, we have a couple of processes that we have effectively been awarded business in that are not contracted and not announceable (ph) at this point in time. But the progresses we have indicated we are active in continue to move forward.

If I did my math correctly, if you hit the 24 percent bogey on your top line, you almost tend to come out a little bit higher than your net income (inaudible) as well. Is that because you expected to have more of the lower margin appraisal revenue in there; is that what you are assuming in that?

A lot of variables. Brian, do you want to comment on that?

One of the things, we said we expect that in general, the appraisal services revenues will grow slower than our software-related business. But one of the variables is how fast that business grows, and if that business contributes more to the growth, as they are lower margins. The one other thing to keep in mind is that we do have more amortization coming online next year, both in software products with some of the development we have done over the last couple of years; and with amortization of intangibles associated with the Eden acquisition. So you have to be sure those are factored into your models. But yes, they are variable both in terms of how the revenue mix falls out and what the growth rate turns out to be.

Could you share some of those metrics, what the (indiscernible) you are expecting for amortization to be, what your is expected to be in those assumptions?

The assumption on the share count is about 45 million shares, fully diluted for the year. I think our current outstanding is a little over 41, 41.4. And if we assume a stock price of -- I think if you assume a stock price of around 9.50 and no additional impact of -- additional stock repurchases or option exercises, which is the other variable in that calculation, we would come out with around 45 million shares on a fully diluted basis for next year.

Your amortization -- and actually your D&A assumptions, if you could?

Hang on just a second. Acquisition -- total amortization? Total amortization of the intangibles from acquisitions would be about $2.7 million for the year '04. That number will be disclosed in our to-be-filed Form 10-K.

One last question, and I will turn it back over. Can you talk a little bit more about when we expect to see a ramp up of the backlog and talk a little bit more about that if you can?

Do you mean current backlog being converted to revenues or backlog growing?

Actually, the backlog converting to revenue. But while you are on it, why don't you touch on the latter as well?

It's grown pretty nicely. It's 139 over I think to 89 same time last year and up sequentially, 15 million as well. I think it's pretty consistent how it gets converted to revenues. Some of the appraisal contracts, as you know, are long-term. The current NASA contract, I believe, is a six-year contract. But most of the software and smaller appraisal contracts happen over a shorter period of time. Brian, do you know how much of that is the next 12 months?

139, about 45 million is after 2004.

Thank you, very much. Congratulations again, guys.

Tom Meagher, BB&T Capital Markets.

Congratulations, as well. Brian, could you just start off -- I did not catch the complete services -- revenue breakout that you had?

In terms of percentages?

Exactly.

For the quarter, licenses were about 15 percent of revenues; software services were 27 percent; maintenance was 33 percent; appraisal services, 22 percent; and hardware and other was 3.

Could you talk a little bit about how the sales force is structured now that Eden Systems is in there. In other words, is a potential account seeing two people coming in from Tyler, or have you reassigned the sales folks, such that one individual is in there pitching both the Eden as well as the Tyler products?

Those channels are independent. Obviously, it's been a short period of time they have been on board. The salespeople are expert at selling the product they're most familiar with in the territories they're most familiar with. So the integration of that channel will be a long-term process. And you are right in your assumption, a city or a county or a school district that falls in a geography and a size range that is targeted by two of our -- we have three financial systems including the City Solutions division -- could see two different Tyler reps there. There isn't an enormous amount of overlap, but certainly that happens. Our view is, and our experience is, that having both of those companies represented separately gives Tyler a better chance of winning that business. In other words, if Eden and UNIS were two of five bidders and we were to decide to bid one of those two systems instead, that one system would not necessarily get all the incremental opportunity there that the one we eliminated had originally. Over time, certainly, that will be further integrated. But right now but best we are best represented to actually have both channels active.

I assume you have got some sort of corporate firewall or something in there between those two independent efforts?

In terms of what?

In terms of when you're bidding, one sales guy is not going to know what the other proposal is going to look like.

We have rules of engagement between the reps and the management teams as to how they characterize each other, obviously. Our objective is that Tyler wins the business. And we have pretty clear direction on how they are to manage those situations. And I think they are adhered to pretty well.

Thank you, I appreciate it. Good quarter.

Brian Kinstlinger, Sidoti & Company.

I am sorry I missed the first five or six minutes of the call, which I am sure you addressed. But my question relates to the fourth-quarter software license. If you could just comment on -- it's typically seasonally the strongest one; it looks like the second weakest; and clearly the third quarter had some of that Minnesota contract and that is why. But still it showed a little bit more weakness than I had expected and I'm sure others expected. So I am curious if you could comment on that. And if you expect some of that revenue to push in '04, or if it was just a light demand for the quarter?

Clearly, that is a fair observation. And obviously, what you try to learn is whether that is just the timing of different things or whether it is any trend. And as we have indicated in our view, it's just a timing issue. As you said, there were good licenses recognized in Q3 and as we've indicated, the backlog is strong; the awards are strong; our position in the decision processes that are nearing their end, we feel very good about. And our outlook -- we have pretty clear visibility, obviously, for several months. And, obviously, it gets less and less the further out you go. But based on all these different variables that we look at and manage, we do not at all believe that is a trend. It's just a timing situation. And I think that's why on this call, we have said that while licenses for the year in '03 were marginally below our overall growth rate, and while our outlook and guidance is for a higher growth rate, we expect licenses in '04 to grow in excess of the overall company growth rate. So we feel very good about the competitive position and our expanded market presence. And clearly, based on what we are looking at, expect licenses to grow at a higher rate next year.

I guess a follow-up to that to make some of the analysts a little more comfortable and investors -- you've talked about the backlog -- one, it gives you visibility and it does seem like that number is growing very nicely. So I am just wondering basically if -- how much of that backlog represents software license, to give us an indication of your visibility please.

We do not break that out for you. But what I did said really is that is one of the things. We look at a lot of different things. And obviously, the actual results is one. The backlog is one. We have a lot of software contracting. Awards are another, deals where we have been told that it is our business. And we know some of those get turned into a contract in a week and others take two months. And some of those actually bring revenue into the quarter year-end, and others that may be further down the road. We also look at the competitive situations we are in, where decisions are close, and our position in those. And we have been measuring this for some time. And we can add all those variables up and look at it as compared to 90 days ago or a year ago. All of that blended together is very positive trend. So our expectation for the year is that our licenses will be up pretty significantly over last year. And we expect that growth rate to exceed the company growth rate. So it's not just the backlog, which as you know, has considerable appraisal in it because they are longer-term contracts, as well as all of our maintenance agreements or whatever remains on them -- their annual agreements; and then services and software as well. But that is just one of the variables we look at in kind of getting our overall position on this to communicate to you.

The last question I know I'm handling on software licenses only -- and I don't want to give you the impression I don't think you guys are doing your job because you are. But I want to talk about Odyssey real quickly. I think you guys mentioned that there's a couple of contracts that are moving forward; you think you have got commitments, though not to the point you can announce because they are just not at that point yet. So I am wondering if you look back a year ago, I feel like we were in the same situation -- what gives you better confidence that we are closer -- the message is different that we are closer to a deal than say we were a year ago when you gave us that message, please ?

We are talking to these prospects all the time, and we know what they tell us. And if it were not for the fact these things have taken so long -- these are the same opportunities and some of them are where they were year ago. And it's for that reason that we are particularly cautious in what we say about them. If you looked at what they are currently telling you and what their current situation is, then you would believe that we are very close to contracts and moving forward. But we have got this history, they have been very slow to move. So we are kind of cautious in what we say about them. I think the point is, and what we have tried to do the last couple of quarters is say that we are satisfied with the competitive position of Odyssey. It's not an extremely robust market right now. But there are enough opportunities that we are active in that it should generate the revenue it needs to to be a successful contributor to Tyler going forward. But it's really no more than one of five different product sets we have. And we are as enthusiastic about it and its ability to contribute going forward as any of the other ones. But our results will be a blend of all of them. And if you look at all of them in their positions and the activity they have around them, we're confident that we are going to perform at a higher level. The history is what it is. We have been active in a lot of deals for a long time, they have been slow to make decisions. And when they make decisions, they have been slow to convert to contracts. But we see those processes moving forward and contributing this year.

Given the slowness and I know all your competitors are having the same slowness as well in that space, do you think prices are going to be able to stay where you have been bidding them right now? Or do you think you're going to have to change your pricing strategy, if at all?

We have not seen price be a real issue. On the higher end, on the very high end, we tend to be pretty price competitive. So price pressure could actually be a competitive advantage for us. Those deals we have been tracking for some time, having entered the market on the high-end, I think price pressure, if anything, might help us competitively if the others did not respond to it. As we drive these products down into the traditional marketplace, there could be some pressure. But I think the margins would hold pretty good with the volume that we expect. In general, pricing has held up pretty good throughout the marketplace, not just focusing on courts now. In general prices have held up pretty good. And again what I said about Odyssey is true across the Tyler products. Our mid-range products that have the functionality -- and all of them have been stalled in at least a few tier one implementations successfully, so they have some credibility there. Again, if there is some pressure on government to weight price more heavily in the decision process, that is a good thing for us. Because often we are less money than the tier one vendor -- the typical large horizontal tier one vendor. And we would like price to be a criteria with some weight in the decision process and that would favor us. Obviously, we are more money than the local person who generally does not reach up that high in the market.

(OPERATOR INSTRUCTIONS). Tom Meagher, BB&T Capital Markets.

One follow-up question, now that Eden is onboard, can you tell us a little bit if the competitive landscape has changed? I know you said you had new, geographies, obviously. I was curious if you're seeing any change in whom you are going up against out there.

It does change a little. I don't know if we want to get into naming names, some which you would be familiar with. But I would just say in general, the larger vendors and the vendors that are part of larger companies, these are the companies that when we talk about improving our competitive position, those are the companies we are measuring ourselves against. And we are talking about win and loss percentages. And we are talking about de-briefings after product demonstrations. In our view, we have made a lot of progress there in terms of our competitive position. It's an observation; it may or may not be accurate from other people's perspective. But with the market being a little weak, as you know, we have continued to broaden our market presence and broaden our products and grow in that market. There may be some companies that have de-emphasized market presence growth and new business growth in favor of focusing on their installed base and recurring revenue etc. And in our view, we have made progress there as well. So yes, sure, the market continues to revolve. When Tyler grows in a year that a flat, obviously, we took that business away from somebody.

Jack Salzman, Kings Point Partners.

Nice quarter, gentlemen. Just a quick question on acquisition strategy. I know you folks are constantly looking. Are you finding a lot of good tactical acquisitions to add to the Company in the future, John? Or are the prices that you are seeing are too high? Can you sort of give us a feel for where you are in the acquisition thing?

We are pretty patient and we are happy with what we did in December. So there is not any urgency on the next deal, so to speak. We think in kind of the size range of the deal we did that the values are pretty good because there isn't as much competition in that particular space as when you get into larger companies that obviously some of the larger suitors might be after. So in a certain size range, that is a comfortable deal for us to do, we expect the deals will be available at pretty good values. So that is probably where we are more focused. That is not to say we would not pursue something that was larger. But I think as you get to a certain size, you are going to start running into competition from other companies that could change the value proposition.

Presumably, these would be accretive acquisitions?

(Multiple speakers) to make absolute, because obviously if somebody was poised for a very clear improvement in the business condition and it meant that temporarily it would not be, we would not necessarily disqualify something. But generally, yes, generally, we would expect they would be accretive and probably meaningfully.

Charles Strauzer, CJS Securities.

One quick question for you -- we haven't talked about this in a while -- but can you talk now that you have a more national presence and a broader platform, what your plans are to try and ramp to cross-selling initiatives internally?

Yes, what we tried to do -- what we're doing currently, long-term, we clearly have strategies in the sales channels, very clear definitions of the markets that all our products address. And it can make sense for us to have overlap in products. As I have always said, I would rather have some overlap than have voids in the marketplace. So we ultimately will continue to have that. Currently, there are products from some of our smaller divisions, especially, that can have a broader appeal to the market than they can reach with their own sales channel. So those are the products that we are currently focused on leveraging over the other divisions. We actually have our first full Tyler sales meeting -- national sales meeting -- in May. All of the senior reps, nearly 100 people are involved in that. And reps from some divisions will see products from other divisions they have not seen before that will be available for them to sell; they will be commissioned on them similarly as they are on the products in the divisions they have come out of. So there is a lot of progress there and a lot going on. But it's a process like the rest of building this company. It's not that everybody is going to be selling everything anytime real soon. But everybody is picking up another product or two here and there from another division that they can sell, along with their existing offerings to prospects and customers. Some of our products that are successful in pockets are being leveraged into our installed bases by our installed sales staff. So those are the areas where maybe it's low hanging fruit that exists, and that we are focused on say, over the next 12 or 18 months.

That's terrific, thank you.

At this time gentlemen, there are no further questions. Are there any closing remarks?

Yes, thank you. Thank you for joining us today. If you have any further questions, please feel free to call Brian or myself. Good day.

Thank you for participating in today's conference call. You may now disconnect.