Southern Hospitality
Recently, Agilysys bought Eatec Corp., Emeryville, Calif., a developer of inventory and procurement software. The acquisition is the third in slightly more than a year for Agilysys' Hospitality Solutions Business Unit; the company completed the acquisition of Visual One Systems in January 2007 and of InfoGenesis Inc. in June 2007, significantly expanding its hospitality solutions offerings.
Arthur Rhein, chairman, president and CEO of Agilysys, Boca Raton, Fla., talked with VARBusiness recently about the new acquisitions, as well as future growth areas.
VARBUSINESS: How does Eatec fit into Agilysys' offerings?
ARTHUR RHEIN: Eatec will be integrated immediately into Agilysys. It provides us a materials management system for hotels with an open architecture. It's one of the pieces we were missing. It specifically allows us to move further into the pyramid of customers who require open systems. [Eatec's software] EatecNetX's core functions include purchasing, inventory, recipe, forecasting, production and sales analysis. Additionally, the solution offers catering, restaurant, concessions, manufacturing, retail/merchandising and airline catering modules in one integrated solution.
It's a rock-solid system; it never goes down. EatecNetX software is installed in virtually every type of food and beverage operation. Agilysys has established itself as one of the leading providers of integrated property management systems to the hospitality and gaming sectors. We're at the Venetian [casino] in Macau, and they're opening one in Singapore and we're going with them. With Eatec, we want to move further into more broad-based hotels and internationally.
VARBUSINESS: In June 2007, you completed the purchase of InfoGenesis, a $42 million independent software vendor and solution provider to the hospitality market. How is that integration going?
RHEIN: With Visual One [an acquisition that was also completed in 2007], as with InfoGenesis, each had presence in Europe to varying degrees, and we brought them under one umbrella. We see great opportunity internationally--to expand in Europe and potentially further into Europe and into Singapore. We have offices on mainland China. Hospitality is a $100 million business for Agilysys. The services we provide include business services, implementation, proprietary software systems and software enhancements.
VARBUSINESS: Is Agilysys expanding abroad to mitigate any impact from a slowing U.S. economy?
RHEIN: Our acquisitions have nothing to do with how the economy is in the United States; they are just part of our overall growth strategy.
We are an acquisitive company. We'll continue to expand through acquisition, and we're looking forward to [that] and looking to move faster in integrating them and having the business run a bit more smoothly. If the right opportunity presents itself, we have no debt, $130 million in cash in the bank and a $200 million credit line not tapped into. From a financial perspective, if we're not the best financed, we are among the best financed. I think it's unusual in the solution space, being debt free with financial flexibility and with access to cash. ... I feel good about the prospects.
VARBUSINESS: How challenging is it to fold [new companies] into your company culture?
RHEIN: Assimilating and matching cultures is always difficult, but we've come out of it fine. The team members listen well. When our team begins to work with the acquired company's executives, we understand. I came from an acquisition [Rhein was CEO of Pioneer-Standard Electronics Inc., which became Agilysys in 2003], and we are sensitive to the anxiety it can cause. Employees worry about what the organization will look like--they want to know if they will have jobs. We listen, and then communicate on a detailed basis to provide information as much as we can to reduce that anxiety level.
VARBUSINESS: What are your financial goals overall?
RHEIN: This year, we'll have a better than $850 million run rate. In March of 2009, we plan to reach $1 billion. And, by March of 2010, $1.5 billion.