泰勒科技 (TYL) 2004 Q1 法說會逐字稿

Good Morning. Welcome to the Tyler Technologies' first quarter fiscal year 2004 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 Jessie, and welcome to our first quarter 2004 earnings call. Joining me from our management team are John Marr, the Chief Operating Officer, Brian Miller, VP of Finance, and Ted Bathurst, our CFO. First I'd like for Brian to give the Safe Harbor statement, then I'll have some preliminary comments, Brian will review the details of our operating results, then John Marr will make some comments, and then we'll take questions. Brian?

Thank you John. 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. John?

This was another successful quarter for Tyler. This was our best first quarter ever as a technology company in terms of total revenues and operating income. While the first quarter is typically the weakest quarter of the year, we set a new record for quarterly revenues for any quarter. This was our 12th consecutive profitable quarter and earnings were in line with our expectations as well as the consensus estimate, and cash flow continues to be very strong.

We are pleased with the performance of our newest division Eden Systems, which was acquired in December. Eden was a significant contributor to the revenues for the quarter and have signed some very substantial contracts since becoming a part of Tyler. Throughout all of our divisions we have continued to sign business at a good pace. Our organic revenue growth is clearly better than the market growth rates reported by various research firms. We ended the first quarter with backlog at an all-time high, and need to build momentum and make strides towards improving our competitive position. Each quarter, our business units are finding new ways to work together, and together are becoming more competitive, to becoming a more competitive force in the local government marketplace. If you'd seen our proxy statement for our Annual Meeting next week, you know that we will have a couple of additions to our Board. Luther King, the Founder of Luther King Capital Management in Fort Worth, Texas and Don

, a private investor from Minneapolis will join our Board as Independent Directors. At the same time we are sorry to say that Ben Morris, who has served the company well as an Independent Director will be leaving the Board in accordance with his firm's policy. We appreciate Ben's service to Tyler and will miss his contributions. While we look forward to adding the expertise of our two new Board members and having the majority of our Board made up of outside directors. Now I'd like for Brian to review the numbers for the quarter.

Thank you John. Yesterday Tyler Technologies reported its results for the first quarter of 2004. Our results for the quarter include the results of our December 2003 acquisitions from their respective acquisition dates. For the quarter ended March 31, 2004, Tyler had revenues of $41.5m, up 28% from the first quarter of 2003. Organic revenue growth was approximately 19%, and Eden Systems accounted for approximately 9% of our revenue growth in the quarter. Operating income was $3.4m, an increase of 92% compared with operating income of $1.8m in the first quarter of 2003. Net income for the quarter was $2.1m or $0.05 per diluted share, compared to net income of $1.1m or $0.02 per diluted share in the first quarter of 2003, excluding the after-tax gain on the sale of our investment in HTE reported in last year's first quarter. Including the gain on the sale of HTE investment of $16.2m, Tyler's net income was $17.3m or $0.36 per share in last year's first quarter. EBITDA for the first quarter of 2004 increased 61% to $6.3m or $0.14 per share from EBITDA of $3.9m or $0.08 per share in last year's first quarter, excluding the HTE gains. A reconciliation of net income to EBITDA is provided in our earning release. Our software related revenues which include software licenses, software services, and maintenance increased in the aggregate 33% over the first quarter of 2003. Software license revenues grew 25% over last year's first quarter. Excluding even system software license revenues grew 20% in the first quarter. Appraisal services revenues for the first quarter grew 18% over the last year. The follow on contract was

New York along with the Franklin County, Ohio reappraisal contract, a major contributors to that revenue growth although with somewhat lower margins than we historically earned. The revenue mix for the first quarter of 2004 was as follows. Software licenses 17%, software services 28%, maintenance 33%, appraisal services 19%, and hardware another 3%. We continued our trend of seeing an overall positive shift in revenue mix with 77% of our revenues software related in the first quarter compared to 75% of our revenues in last year's first quarter. For the first quarter of 2004, our overall growth margin was essentially flat with last year's first quarter at 36%. The positive shift in revenue mix to a greater proportion of software related revenues together with improvements in margins for software services and maintenance offset a decline in our appraisal services margin. We were required to increase the use of sub-contractors on certain appraisal projects during this quarter, which put significant pressure on appraisal margin. We expect margins in the appraisal business for the remainder of the year to be below last year's level. Software license margins for the quarter declined slightly from 72% last year to 71% this year, and we expect to continue to see some pressure throughout the year as we have absorb the amortization of our new Odyssey Court and the RainTech product while the revenues for this products are ramping up. The blended margin for software services and maintenance increased to 31% from 29% last year reflecting the increased operating leverage that comes with economy to scale in our software related business. SG&A expense for the first quarter was $10.5m or 25% of revenues compared to $9.1m or 28% of revenues in the first quarter of 2003. Our backlog at March 31, 2004 was a $140m, compared to a $115m at March 31 of 2003 and a $139m at the end of the fourth quarter of 2003. We finished the quarter with $24.3m in cash and short-term investments and $7.5m of long-term investments for total cash investments of $31.8m.

Cash flow from operations during the first quarter was very strong at $5.6m compared to a $105,000 in the first quarter of 2003. Our free cash flow after capital expenditures was $3.8m in the first quarter compared to negative $2.0m in the comparable quarter last year. We repurchased a 191,300 shares of our common stock on the open market at an average cost of approximately $9.33 per share during the first quarter this year. Our remaining board authorization for repurchases covers approximately $1.8m shares. Our capital expenditures during the first quarter were $1.8m which includes $1.5m of software development. This is down slightly from CAPEX of $2.1m in the first quarter of last year as our capitalized software development declined by 19%. DSOs at March 31, 2004 were very good at 80 days compared to 88 days at December 31 and 93 days at March 31 of 2003. Our stockholders equity at March 31, 2004 was $119.1m and we have no debt outstanding. With that I would like to turn the call over to John Marr for his comments on the quarter.

Good morning and thank you Brian. Overall, as you can tell we're quite pleased with the results of the quarter. Generally, I think a lot of the things we're achieving in the market place are evident that we are making progress on all of our various strategies in two different areas, particularly I think the growth organically as a result of the investments we've made in our products and all of those products virtually across the board enjoying a better competitive position than we have in years past. So, we certainly believe that our market presence and competitive position have improved and these results show that, we've also broadened the geography and the sales channel and we have more capacity and more states and regions that we plan and with a larger broader market we've been able to have more consistency in these results, and then I think the third factor contributing to the growth is just an improved market place in general and I think over recent quarters, we have indicated that we have seen some marginal improvement in this market place. And I would say over the last 90 days since we last spoke, that has been reaffirmed at the least and maybe the market is starting to turn around and improve itself. As a result I think the combination of having more competitive products for broader market and in improving markets, really speaks for the strategy being executed and a lot of progress in those areas. Really across the board, as you have seen the last few days, we have announced a couple of Odyssey contracts, was pretty high in New Hampshire. And I know people have been anxious to see that. And that reaffirms the position that Odyssey has in the market place. Eden clearly has come in and executed on our expectations of what they would deliver. We have announced Fort Myers in Southfield. In the financial sector in general, we have seen strong performance across the board.

are other financial offerings. We have had strong progress as well, both in terms of broadening the market as well as their competitive position. Pretty confident that across the country at this point, from small to a higher side of the mid range, Tyler is represented in virtually every deal for financial systems and generally finally saw a successful vendor. So, we have a very strong presence and made a lot of progress in that space. Hope with our existing divisions as well as through the addition of Eden. We announced in the quarter the club county contract in Virginia. We continue to have better awards year-over-year with the tax and appraisal division, we have a very strong backlog and as we have indicated, we would expect them to contribute more significantly this year than last year, and we are pleased with that. And lastly we announced an extension or a new contract with a subsidy of Philadelphia with our document management system. So again across the board, we have seen good progress, we see all our divisions contributing, all of them with better competitive positions and broader markets as they are addressing and with a market showing some improvements. All of that makes us more and more comfortable with the strategy as we go forward. In terms of margins, as you have seen a number of things came on line over the last quarter, the amortization of

and Odyssey. That is the kind of thing that happens from time-to-time and create a little lumpiness in our progress in terms of margins. We obviously also see some of acquisition intangibles with Eden, and there was some pressure on the appraisal margins. We are pretty flat in terms of margins as compared to last year. But I would want to observe that as we have indicated to you, we do expect margins to continue to improve every year going forward for a number of years, and none of this affected our outlook on that. These are things that happen from time-to-time. It may hold you up one quarter of our previous year, but again in the long run we would expect as we told you in the past a 100-200 basis points a year for a number of years going forward as we execute on the strategies. So, this isn't anything we wouldn't expect from time-to-time. We are also pleased with the growth of our recurring revenues. This is something we watch very closely as we work hard to improve the product's position competitively in attracting new customers. It is very important that we keep the existing customers that we have, that we get reasonable increases from that in solid base, and as the new customers add, we are recurring revenues. And if you look at maintenance alone, it is up 45% over just two years ago. So, what that tells you is, again we are retaining our customers very well. We are getting reasonable increases from the installed base. And the new customers that we are bringing in are successfully being implemented and converted to ongoing maintenance revenues, all things that we watch very closely. In terms of our outlook, it remains unchanged at this point after a quarter in the year, obviously as the year goes on and 90 days later establishing this, we had a little better visibility and we would become certainly more comfortable with that original guidance. But again we will stay with the guidance as it was originally announced which is growth overall of 20-24%, roughly half of that from the accusations we have done and the other half organically, net income in the range of $12m to $13m, with 60%-65% of that recurring in the second half of the year, as it is normal for us. We will have an effective tax rate of around 40%, our fully diluted EPS should be in the range of $0.27-$0.29 and our capex should be around $8m-$8.5m for the year. Which is below last year's and this is consistent with what we have talked about for years that we made some significant investments some of those we see coming online in terms of the amortization now, for a period of time to get all our products that at a point that they are very competitive and at this point we would expect capex to be where it is which is on a absolute basis below previous years and on a percentage basis, pretty meaningfully below the run rate from past year. So our guidance remains unchanged from that perspective. At this point, we are happy to take questions.

Thank you Mr. Marr. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. And questions will be taken in the order they are received. If you would like to withdraw your question, you may do so by pressing star then the number two. To allow everyone the opportunity to ask a question, please limit your questions to one, plus one follow up. As a reminder, if you're on a speakerphone, please pick up your handset before presenting your question. We'll pause for just a moment to compile the Q&A roster.

Your first question comes from the line of David Yuschak with Sanders Morris Harris.

Hi. Congratulations on a good quarter guys. First question is, I just want to draw down a bit on the appraisal of segment first. Looking at margins in that space looks like it could be up $500,000, just kind of curious as to what may have changed in your needs to go out with subcontract versus the traditionally way of doing it. As well as give an update on where your stand on the UK, EDS initiatives I think that's supposed to unwind some time in, summer time and then how

has taken up its growth with that potential driving revenue in that space?

Well. I can address the subcontract issue on sort of a appraisal contract and particularly the Nassau County contract in -- the follow-on contract, the way that was structured with the nature of the follow-on work was that was a significant amount of local content from local subcontractors that was part of the arrangement in obtaining that contract and so going into that the way it was structured that we would use local subcontractors to perform a significant amount of that work and clearly there is a thinner margin on that, there is much risk for us in that we have fixed priced subcontracting on it. But it simply the way that contract was structured and its a little different from the way our typical revaluation projects are done. But that is a long-term update contract. With respect to the EDS contract, I think its -- I'm not sure, which question is this, progressing we are doing consulting work help them to develop a valuation methodology and we are continuing to do that work for EDS for the UK.

Talk little about the, on the software side as Eden is doing well, finances are doing well looks like ending is picking up in the IT space for local county state and where we sold that 18 months to go. If you take a look at your current product line, where do you think the potential prices rather than finance that could come out of there. Is it Odyssey, is it maybe Ryan that can pick you up? And given -- as you look at that product line and the spending ramping up, would you think that acquisitions that comes sooner than later to fill some of the holes that you may think you have the way of ramping up to this increased spending in the IT space?

Well. Finance as was indicated has been pretty strong and we're going to hold it like that-- these things don't shift from slow to explosive. But we are pretty pleased with the marketplace. It's definitely at a level that we can execute our plan on and that's really we are looking for in. And as I indicated, with the addition of Eden I really think Tyler is very well represented in all the deals that we ought to be and in a very good position competitively. Our market share is very strong and our competitive position is strong. As a result, we would think that we become more comfortable with our plans and the guidance we've given in that area. And sure there is probably at least this much potential for us to vary from that on a high end now as it would have been on the low end. So we're excited about that. Having said that, you would probably conclude from that, we're probably not going to do acquisitions of the same type in that space. We are well represented across the country in that particular space and an acquisition in that particular segment of the market would probably be for a complimentary type of application or some vertical integration or something that allows us to leverage our presence there as its pretty well established at this point. The other area as I indicated earlier, we really believe that the other products have all improved competitively as well. The

product as you asked about earlier is doing well both in our traditional markets and our install base where it gets sold back into as well as in the new business side of things. So, that something is clearly isn't fully ramped up, but later in the year and into subsequent years we would expect to be a significant contributor, Odyssey obviously we signed contracts that we've indicated we have been working on for sometime, but there remains a pretty good forecast there as well although as we all know it moves slow at times than we would have liked. So, I guess David financial is a lot of that built into the plan, but we clearly have become more comfortable with that market and in the position of our product in that space and it has the possibility obviously of performing at a higher level in the other areas, all have good potential as well. At the end of the day, obviously, our results are a blend of all those things, so we are careful not to take every bright spot and jump out of our guidance for it, because everything doesn't always execute exactly as planned. But, on balance as I indicated earlier, we have become that much more comfortable with our guidance for the year.

To summarize your guidance for the year could suggest the IT spending ramping up could lead to some better products relative to which you are currently thinking of financing?

Sure, but we are confirming our guidance and we would be cautious not have an expectation beyond that at this point, but--

I will think with 45% growth you have to be real aggressive on it, want to push the limit. But

certainly has improved considerably since 18 months ago?

Yes there is. We are seeing more deals. We are in the finals of deals we know are going to happen in those numbers in terms of the sales channel has improved. To be honest with you it's hard to differentiate exactly how much of that is market share and improved competitive position versus just more deals available in the first place. So, it's blend of those three factors as I indicated earlier. We have a got a broader market. We are in more states. Our proposals more often make it to the finals from the demo stage and so forth and so the numbers we track at that level are clearly up and I think that the combination of all three of those factors are presence in the market place, our competitive position, and a better market place in general.

Okay, thanks a lot. Take care.

Thank you, our next question comes from Charles Strauzer with CJS securities.

Good afternoon gentlemen, this is actually Joe J Michael calling in for Charles Strauzer. I just want to touch upon something you just said. You said you are seeing more deals and your proposals are making a final round. Would you say the average size of this available deals has been increasing over the last eighteen months.

Yes, I think again that may not be a market reflection. We've indicated before that with most of our products along with geographic growth which is something we very pleased with our progress on. We also

ladder at that the time, but clearly the average deal and if you look at it and like a square of the deals that having more deals are happening in the tough quadrant of the square than in the lower end of that. And that's by design and we are happy with that, but that progress certainly has been a little slower than the geographic progress, but there are indications there are more deals on the higher end of that mid range.

Got it and I know even, been an indication that you are obviously still very active in the acquisition work. What you are seeing and going forward in terms of potential acquisition targets.

Well, it's more than likely there would be complementary products, vertical integration, things that broaden what we offer to our customer, our current market place, we also look closely and consider building those types of products and services as well. Those are kind of a criteria and we have a patient strategy on that. We are not necessarily real aggressively looking for those things, but we are focused on the organic execution and we have some resources and we would expect from time-to-time something would be available that would be attractive to us and we would do something with that.

Got it, would you say if you are not seeing these potential fairly priced acquisition targets. Your priority for your free cash will be just carrying out the repurchase that you have authorized already?

Well I think it's a dynamic equation and I think as Brian reported, we have purchased a 191,000 shares at around 930 a share and as long as we have opportunities to execute that will continue to do it. I don't think above that level we would be tremendously more aggressive than we have been but we will continue to work away with that. But I think when we find opportunity like these and then I think from time-to-time we will, that they provide even more value for the shareholder than just repurchasing our own stock. So even if we don't do something in the next quarter or two or three we would like to continue to improve our position and our resources to execute on an opportunity like that when it does present itself. So, we will be repurchasing shares in the right market but I wouldn't say it would become the primary use of our resources.

Got it. Thank you and congratulations on a good quarter. I'll get out of the line now.

Thanks.

Your next question comes from Brian Kinstlinger with Sidoti & Company.

Hi guys. Couple of questions, the first two being on maintenance. First of all, of the backlog how much is from Eden?

Eden backlog is roughly 20m.

Okay and the sort of maintenance question is the share counts over the last two quarters is going up, a decent amount of almost 2m shares. I am curious is that a function of options and the price going up?

That would be the primary reason. There we've had a little bit of - I think we've issued a little bit more in shares issued under option exercises when we repurchased. But I think mainly the effect would be the

dilutive effect of options.

As well as the acquisitions there - -

Yes we also did issue little over 200,000 shares in the second quarter in connection with the acquisitions. But if you look just at the dilutive effect of option. Well, the first quarter of last year the dilutive effect in May 8 in first quarter this year it is 3.6m. May be a functional price.

That is actually my next question. It would have cost about $0.05 last year and $0.22 - - it did last year options. I am curious going forward is there a plan to curb the option program given that some of the roles may change in the accounting roles. What's your thought there?

Well I think we do not have a regular option-granting program in place. We do not - - this whole strategy was put together and a lot of people were brought into it in the late '90s, in the year 2000, 2001 etcetera a lot of acquisitions were done. The team WAS built, the companies were brought in and it was important to get options or shares in the hands of the key contributors to that. That's been accomplished and I think a lot of the options outstanding were issued in relation to that. I think going forward really not necessarily a result of the climate in terms of the accounting of options but just from our strategy evolving and having most of the pieces in place because we wouldn't have the need to aggressively grant options going forward, and may be that's an opportunity that, you know, common on the options in the proxy as well. There is not a specific program or use for those in mind. Those are again there for the purpose of flexibility of management. I am sure the acquisitions should be a attraction of key executive technologists except represent itself and if options were one of the right vehicle in order to bring that person on board

we think it is appropriate to have the flexibility to have those available but there is not an ongoing grant of options program and given that the company is pretty well established at this point and the resources are in place. Certainly the granting of options will have lower rates than it did say in the late '90s or early 2000.

Okay. If I look

pretty much every quarter. I am curious the number outstanding proposals that I think more importantly what I am interested in now we

that I think everyone is probably really happy to see. But they were a little bit smaller than may be at occasion that were set may be two years ago and now it is short of with some of the tasks that we have had with the expectation

maybe $20m contracts there. So I am curious are there the contracts in the pipeline or do you think that the - - maybe prices have to come down or what's your thought in regard to the pricing of the REC contracts going forward?

Well, clearly and we -- I think pretty clear about it. Clearly the opportunity that we saw that we were genuine about that potentially many contracts at a higher level could occur within the same time frame hasn't materialized the way we might have thought it would two or three ago. And I think everybody appreciates that fact at this point of time. So what we are pointing to now is the product is well developed. It is in the market place. It is competitive. We have four good contracts in four different states around the country and so we are very satisfied with its competitive position and ability to win new contracts. Do we expect that a multi million-dollar deal on a regular basis is going occur? That probably is too ambitious given the current market climate around that particular product and I think we have been more cautious with that more recently. These two contracts have been signed. We are pleased with that. There are certainly a number of other opportunities that we are engaged in that we feel good about. But I think that the last couple of quarters we have said we would really encourage you look at this. There is no difference in the other divisions. This should be a good a contributor in terms of growth, in terms of earnings. But, no we don't think it is necessarily any more likely that we will win three $5m deals with Odyssey and necessarily we would with a financial growth rate all day. They are really all good strong competitive products at this point of time and you know as a result Brian we really were more specific about numbers of contract, and prospects and maybe even early on names of opportunities. Because we have made a significant investment and brought peoples attention to that and we thought that a reasonable thing for us to do. Certainly for competitive reasons and others we would like not write that down and give specific guidance on that. Other than -- other than to say now that you know we have four contracts, the installed customers are doing well. We are wining new business in the market place. We are engaged in a fair number of opportunities and certainly confident that that's going to be -- turn out to be a good investment. However maybe not as explosive in the short run as at one time we might have thought it would have been.

Okay just one follow up to that. You know I look at New Hampshire and looked at the -- and so too the two states. One was a little bit smaller than the other. Clearly I agree with you. I am not -- I wouldn't look for three to four contracts a year -- especially large ones that is real. Much too difficult to tell the timing but what I am more curious about is that when you do get some of the medium size states like Minnesota do you still think those one off products got the potential to be very large or do you think that the New Hampshire deal is more reflective of what you are achieving for when you do sign these deals?

I think that -- I forgot that your first question. I don't think that is necessary market condition. I think that these contracts in terms of their size are more reflective of the scope of the project than market conditions. We do still believe that very large counties or mid-size states that would procure this system for a very broad deployment with significant scope on the project. There still is a potential of a very large contracts there. So, I think the pricing is more a reflection of the size and scope of the deals we happen to have one more recently rather than our market conditions.

So you mean it is a base to have more time deals and maybe taking on to more modules.

It is a very good project in terms.

Okay that good.

May be some more counties supported the significant projects and both services and if you look at it that way, I mean the services were probably a greater multiple of the size of the New Hampshire deal than the licenses were and that obviously put a question in the scope of the projects.

Last question I have for you John is, you will be taking over the CEO role pretty soon. I don't know of the date but I am curious when you look at the company that you take over. Are there any infrastructural changes you are looking at or anything that you want to -- in your first couple of months as the Chief Executive Officer there take care of that -- you might want to do a little bit differently.

Well this is a three-year transition as was designed and the idea was that we think we are doing a number of things quite well. We think we are making good progress in the market place and that the company is working well and when that is the case, we want to protect the things that we have done well and the relationships and the contribution in our name is made as well as position ourselves for further down the road and taking advantage of new opportunities. So it isn't like a switch will be flipped on some date this summer. Those executions started with this plan beginning a year ago and we will continue through. So I don't think you will see any major changes some point in time. Some of things we are doing though again are to take advantage of the incremental opportunities without risking the core business.

Next week we've our first national sales meeting with the sales people from all the different divisions. There'll be products from different divisions that historically have only been marketed through their own resources that'll be introduced and leveraged over sales resources from other divisions. Again it's a good example of -- we won't all of the sudden move to an integrated national sales channel that would risk a lot of the success and presence that we have in certain markets, now but it'll keep that in place, so the historical strength and in introducing opportunities for incremental revenue that would eventually drive further integration in the deployment channel and product development etc., So, that'll be an example of something that we're doing and it would be things of that type and we see it as a process that goes on over period of time rather than the need to execute some past that restructures the company. There clearly won't be anything that dramatic.

Okay. Thank you.

Thank you. Our next question comes from the line of Tom Meagher with BB&T Capital Markets.

Thanks very much. Good quarter but my question has been answered. Thank you.

Okay. Thanks Tom.

Once again, if you would like to ask a question please press star then the number one on your telephone keypad. Again, we'll pause for just a moment to compile the Q&A roster. You have a follow-up question from Brian Kinstlinger with Sidoti and Company.

Yes.

one last question. The records division that you guys have is pretty small. What's the plan with that? Is that maybe a potential place for an acquisition? I thought something you want to focus on or something you want to de-emphasize in the future?

Records can do well on it's own. This is a much bigger market there than our current presence, so potentially we can do something externally there but we've done a lot of things in that area. We've invested in that product a lot over the last 18 months and it's near the lease in terms of the significant enhancements to it. It also, I just indicated the national sales meeting, this scenario where records is also imaging in document management and applications that lend themselves to our other applications. So, it is a division that can be leveraged overall of our other applications and would be an example of certain components of their application will be some of the applications that'll be presented at the sales meeting where MUNIS and Eden and our

sales people, for example, would go away and have the ability to sell document management systems and imaging systems. Their functionality that compliments their core system. So, it's one of the best examples of being able to leverage a small division with inside over the other channels.

And just a last question on that is, how small -- how big is that or what percent roughly? Percentage of revenue, is in is that a growing business this far is it going to same time for the investments to take again, and maybe next year of reasonable growing business?

6% to 7% of our business I guess. We don't really break it out much. But it's in that range that would be 5, but certainly not 10. Its growth rate is - I don't know consistent with or marginally below our overall growth rate. The best way to grow real small division like that rather than build it on sales channel and infrastructure which can be expensive is that I think what we're doing, we adjust the packages, products and the way that can be leveraged over our existing or the established sales channels and in our view, that's the way we get in that small division to grow at a higher growth rate than the overall company growth rate and that's the current strategy with us.

Okay. Thanks Ted.

There are no further questions at this time, Mr. Yeaman are there any closing remarks?

Well, thank you for joining us today, if anybody has any further questions, please feel free to contact Brian Miller or myself. Good day.

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