TWST: What is SmartPros?
Mr. Greene: SmartPros is a leader in continuing professional education in different media - videotape, DVD and online - and focuses on portals or industries that are at a high level. For example, the base of this company historically was accountants and financial professionals. We have expanded that to engineering and legal, and expanded our engineering and custom work through acquisitions over the last 15 months.
TWST: If we had been speaking a year ago, what were your goals and expectations? Give yourself a report card. How have you done?
Mr. Greene: I'd probably give myself an 85% to 90%. Our goal over the last couple of years was to make acquisitions to grow the business. We can grow internally, generally from 8% to 15%. But the real growth is going to come from acquisitions and being able to get more savings as a result of those acquisitions. We have not been able to find a large acquisition today that meets our criteria of being accretive within one year. But we have made several acquisitions that have been accretive within one year and are very positive to both our top line and our bottom line.
TWST: What is the agenda for the next 12 to 24 months? What would make that time frame a success?
Mr. Greene: Just the continuation of what we have been doing and hopefully getting more acquisitions. We would like to see a larger acquisition, but if people are still back in 1999 with their idea of valuations, we are just going to continue to keep our hoard of cash that we have of over $7 million.
TWST: What items are you focused on for improvement? Will you need additional funding for any of the current activities on the agenda?
Mr. Greene: Not in the near term. We are sitting with about $7.5 million in cash at year-end, which was basically about the same as the year before. During that year, we spent about $0.5 million repurchasing our own stock. We made four acquisitions and, in doing that, we still ended up with the same cash because we are generating a lot of cash - we have no debt on the balance sheet. The only real liability there of any consequence is deferred income. Our product is a subscription product. I don't see us needing funding unless we make a large acquisition and decide not to use stock because it's undervalued. But as I said, we have no debt on the balance sheet, and I don't think raising capital would be a problem today.
TWST: What compels investors to include PED as part of their current portfolios and as part of their longer-term investment strategies?
Mr. Greene: If you look at us, you will see we have a strong balance sheet. We have been profitable now for 11 or 12 consecutive quarters. I don't think anybody else can say that. We have a very strong management team in here and we are advocates of shareholder value. I have come out of that mentality, and the people here aren't going to win if the shareholders don't win. We are not a company where management is going to take out everything at the expense of the shareholders. So we have tremendous management, people who are shareholder sensitive, a strong balance sheet, good earnings and a good outlook to try to make acquisitions. We have made five in the last 15 months.
PED 1-yr chart