SFE - Earnings call transcript Q3 2017 | Safeguard Scientifics, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Safeguard Scientifics' Third Quarter 2017 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to John Shave, Senior Vice President, Investor Relations and Corporate Communications. Please go ahead.

John Shave

Good morning, and thank you for joining us for this update on Safeguard Scientifics' third quarter 2017 financial results.

call and are Vice Jeff CFO. today's President Zarrilli, President on CEO; and McGroarty, me and Steve webcast Safeguard's and Joining Safeguard's Senior

today's strategies. partner take companies. the Jeff will lines highlights other During to financial your at we Then will results will Safeguard's well the and developments our as that, as of and Safeguard discuss Steve call, After questions. quarter, review open

other including, risks certain but includes presentation statements. on interest risks or forward-looking that our uncertainty in filings. and and of decisions effect are involves future partner about risks deployment uncertainties, SEC our limited As in of always, today's of disposition and associated not forward-looking the Reliance with economic the our uncertainties associated partner to, companies, and our statements acquisition of described capital performance of regulatory the companies, with generally the conditions

words statements. We the which including and and to obligation with goals statements in today. used Safeguard's encourage expect, forward-looking read of made assurance During as our anticipate, will XX-K, such The risks that course in future managing events Form or our uncertainties not believe you detail the with our assume any expect, cannot filings describe associated our in business. SEC, does to described future. results the company today's update provide the forward-looking in any as Management any be will discussion call, be intend of

here Zarrilli. Now and President is Safeguard's Steve CEO,

Steve Zarrilli

Trice available Recently weeks is an we our our companies, Clutch today of Luncheon City we Medical Safeguard presentation in is for replay on update at comparable A and for provided our and update ago. and Three York of and good information Safeguard shared held during to joining thank website on two IR.safeguard.com. companies. morning information this Investor meeting companies. us partner an John, everyone, today New which on also The you Thanks, and our in Transactis Holdings, presented. our an partner we the

September XXXX. through However it's updated now XX,

companies executing between exit transactions companies support to exceed and XX achievements expect primary million million. track XXXX of In Our value. turn, strategic for Safeguard's to continue year. Safeguard's XXX XX% XXX partner developmental the partner their aggregate to or company meet goals and to shareholder majority The remain revenue we increase driving objectives partner now approximately on of for

of company's pace as exit yet transactions has the However our in of expectations. XXXX not met

XXXX analysis privately sector eight partner to at XXXX the levels now to PitchBook. companies longer exit moving Safeguard's months to number stands the financial according annually we have interest about exit six Genetics. to over transactions from and time XX to since IPO continues strategic on of $XX.X as seeing that available, time transactions decline years. average exceeds years past outreach by the We median exits investors ended talented and the toward Safeguard's or Beyond.com companies months known and U.S.-based is potential Safeguard. of During The larger to private abilities generate raising that meaningful exit and our confident Safeguard. According are PitchBook, in we will by actively significant lowest energized by XX, exploring believe in are opportunities ownership and interest number venture team substantial to our portfolio. in Safeguard elicit these XXXX. shows formerly the in A Nexxt, track realized Based compiled execute. Good our of Inc., to remain experience prospects returns to capital the most current not September exit PitchBook the exclusive executing million nine sale upon funds Start the are data since data asset of to more held the challenges than IPOs. The rather

amount total a revenue, drivers teams who developments the but possible as are key this our company Technology model, size and are initially in and capital traded more and soon of minimal ownership than of alternative as for interest. know our strong and disciplined our from Internet We digital as achieve the equity prefer to to in markets value for are A our features underway themselves committed media differentiators stage solutions are on large of is to technology healthcare, remind of an include growth technology a achieved. in value. focus these are structures security, market or to assessing as execution and our a and XX full other Safeguard's recurring developing companies. expanding. significant opportunities other always business approximately an as to Presently quarterly stage development. Safeguard management and itself. promising target vertical and capital is businesses in can evolving partial what are variety risk, we in of at companies investors capture with our sectors appropriate ourselves enterprises more interest milestones by shareholder definition of model our of growth such activities Chief enhanced differentiates positions. broad early We stage an driven of business monetization We predictive among controlling in services, is about these focusing of that We relatively We anyone opportunities financial equal remain minority alignment million potentially strategic hold $X believe regard million regulatory presentations with potential not deploy targets MediaMath among follow-on also select generally us We drivers exit. publicly the and that business-to-business management on where significant analytics. capital. deliberately positions Everything, limit

Safeguard's experience. domain As other of operating their team these and partner companies by mature, members we also and forms deep support expertise personified deploy

revenue. companies and Our and growth capital plans, earnings help drive products their operating sharpen and expertise and their business commercialize services in

to value times. least transactions deliver of is at exit that at well-timed cash-on-cash the two goal returns realize Our aggregate

pace believe offers model increasing earlier, and capital monetizations the is patient the Safeguard work reasons goal investors accretive explained of many important business their portfolio an essential transactions and our to other team. to in company. I put of the As We

strong such partner technology markets on involving Our is the of artificial and services as themes growing companies digital dynamic, healthcare media focused in Internet-of-Things, stable tech enabled financial security intelligence. and

Our deep team and brings experience bear operating the of support domain growth expertise to portfolio. the to

our by that than company carrying in typical value The Safeguard's partner cost. In equity compensation currently incentivized for companies financial value. addition that align appropriate and drive our the the team not corporate does to of with shareholders by the interest less flexibility, value a accounting sheet original is limited fair the our accounting partner in structure XX% our results reflect under features fund of structure. holdings of value. is method interest not Carrying aggregate balance demonstrates partner lean and our is constrained strength necessarily

scalable positioned and funding value. Safeguard evergreen deliver flexible, capital we believe grow to improved multiple is model deploy us allows across an performance In is of that Our stages that to shareholder and well development. enterprise's short, enhances

review call the So financial over with that, turn quarters I'll results. to of Jeff for the a

Jeff McGroarty

and value companies carrying our September of been at carrying average September that and of $XX.X the interest companies the companies XX At in partner XXXX takes time was years. have end million the capital for was partner quarter or those of XX deployed of slide has partner and length million At value Safeguard two the of million. was the been XX those forma $XXX.X next Safeguard Thanks a cost value $XXX.X and three cost the third companies different the X.X shareholder shows in under This the of years had is pro our a Steve. assumptions. these partner weighted Average companies XX company companies. companies less. we XX, in our

objective deployments, worth X.XX of exits on return stated times could achieve we in a minimum companies a as well Our million value million that our be If been two write-offs. $XXX successful aggregate can to carrying compared $XXX that's achieve as today target our inclusive is XX deployed on our cash that's to deployments beginning cash of At $XXX currently $XXX provides million. XXXX form. in next the return the since worth slide data for same track in for of Alternatively of deployed which approximately level, an cash the $XXX our graphical have we million return This times. million. be new could exited cash aggregate and that record

cost returns. the forma You to companies can pro track and value historical compared two and of our times partner carrying based our goal record the see values on the of cash-on-cash

million Genetics During interests of Good to Invitae in [sort] our capital in XX Based In million. Invitae XXXX transactions, September an exchange deployed Start Months Corporation million XX valued received price follow-on quarter held $X.X of companies. as seven companies. is on $X.X escrow the valued $X.X shares we capital in additional in existing common quarter stock to the and we $XX.X other initial ended at market September deployed stock. for the XX, third partner third million we ownership at partner

XXXX. $XX million We at totaled expect securities value at carrying to to million million XXXX. end during and our September debt in The follow-on $XX.X additional equivalents partner of remainder of million cash, year September $XX.X XXXX. $XX Safeguard's to $XX.X compared the our million capital companies marketable deploy at was XX, outstanding cash to XX

same XXXX. and million corporate compensation During based forward the $X expense versus September XX, were three months expenses stock depreciation million excluding the ended $X.X in quarter

$XX.X those million nine the the expenses For $XX.X for same to period million XXXX. compared months of totaled

for now corporate million has the to for million expenses million partner million. Aggregate cost basis. equity solely same those partner and XXXX quarter revenue one prior basis. and aggregate to periods be partner We reflects data $XXX a XXXX. Safeguard's revenue the $XX to revenue for on years to by and are net Genetics of Revenue involvement project companies certain Good method $XXX for company Aggregate of the partner will million partner Nexxt XXXX revenue companies Start and was companies been expect on on companies. of for company its between provided revised $XXX all Safeguard Pneuron. information and for revenue We XXXX $XXX a write-off be companies with for exit approximately Aggregate the to those Safeguard lag and based pertain revenue reports for XXXX. reflect

here's Now the the Q&A call. lead to of through Steve segment us

Steve Zarrilli

let's any Thanks for lines phone open the Jeff. questions. Operator,

Operator

comes your [Operator with Instructions] Bob And from Labick the CJS first Securities. line question of

is open. Your line

Bob Labick

those you about contributors growth, and down penning please. expect we the could - and - key to I to the talking key specific a without companies, to could start strong you’re talk number, that you for you next strong drivers contributors talk talk to show drivers from growth outlook your just revenue partner little then if year the a continue and about wanted and about to the about

Steve Zarrilli

that's be and what saw number the as is majority which to Last seeing companies to some a us also if vast that you expect, than should So smaller year generally of would see these less of XX% less and an aberration in at but a to stronger we some this MediaMath rate revenue we to thus the market. into point come reach aggregate on at look sustain continue strong annual basis this growth allows excess what it's for growth that bit into Bob year as an in how growth the be that would we're quarter be today. when was but guidance the two will the for maturation growing basis not well, ways lost going which of bit of XX% as these XXXX. us determined XX% on March the think I XXXX and to little so and from we lot and A were do mature younger XX% that all next able maybe, a basis as in to a also well is think an companies from normalize and but - you that think that seeing are their strong that believe were we as growth it rates XXXX performance of guidance should for having lead are when it a some to historically play. aggregate was back far in 'XX expected growth, we’re companies I provide the I of Could also on providing in have of in reflective is to in XXXX going indications you of or this transition accelerated of regular beyond, would 'XX the strong 'XX number they the could is into I it's performing companies

Operator

Jim of next First Analysis. the line [Operator Instructions] And your comes MacDonald from question with

is line Your open.

Jim MacDonald

to exit, in is still this pen year? be it try to you down possible of MediaMath's I but hate timing on any could idea it

Steve Zarrilli

fact to we is working interest. part I they are and of that very opportunity as I exit tell all and Anything they continue desire find that their needs, clearly growth very or of to is know possible potentially are to to our diligently a think future this a cognizant our investment. you capital growth to monetize got of needs Jim, and well, as about and MediaMath mindful

a partnering that and we there's able to explore goes in which other value. that so on ways we that process be continue in And to unlock might

in and whatever we three or any asset we expected. to provide different have we’re given MediaMath asset considered do, four that We shareholders the sure the to to at have value probably as but we time less it the minimizing the initiatives no want than not make result want that that being ultimate relates

Jim MacDonald

any of activity what kind expect? you comments other Can on level make of you further exit

Steve Zarrilli

I are in around been you outcome of about few ago, XX for stronger of ultimately resulted and active some we’re to months I'll to it form this remind more exit, way and have outcome those know. on a a some a businesses the extra months process everyone but take an our it about find an think a Patni - build starting time for better us. may processes as call in much took who can third ultimately

businesses the on say our So portfolio offer position behalf. engage the them we diligently their of for the looking and are advisors Jim with could with their exit them teams assets working these help I looking meaning to and what in third to they see actively advisors an very are when that market these with management actively so

of. of are take We us XXXX advantage a opportunities for is confident to that going for different provide number to

on months we clock next so And a year. here have two report months even and have we the we XXXX still of in March before few in

happen could a late fair as there's February businesses. amount these So we work and continue to that between now with

Jim MacDonald

talk follow-on to of of quarter that? I that would high activity about maybe you your consider talk monetize couple a and had technical mentioned a little you level got also could fourth $XX you $XX for sort of stock million what of a so ones the I million Invitae to plans about the

Jeff McGroarty

expires, investment monetizing to when assets - both have policy regard our interest. we with that we Invitae is so want Yes, of take to let’s that the those take the advantage lockup

will So in the pretty if that six with the count months from to? of you was of approximation second that date good transaction a sorry I'm monetization August, you’ll question when occur. regard get

Jim MacDonald

$XX million follow-on you that expect? the to million $XX Yes,

Jeff McGroarty

XXXX, be we rational look is $XX the as getting now pretty and we good then required additional fully and be $XX in provide to most tail it's so Yes, of what it's point When QX funded models. to million the reasonable are in see going that business what's and of the is - of companies required follow-on, is March quickly in news small. a what going to to million we having that we consider these you’re fairly and coming as think guidance to to at

capital the deployed on that into NovaSom range I So keeps within million, of companies outliers of believe at be the we some while less. realistic been anyone that a the $XX a is And is range. have There and into between million in bit that of we’re and is amount for but what of the of capital will call what may have is deploy XX the the somewhere with and those InfoBionic have even within need it pursuing we to are $XX vast described - of with average been the closing we manageable, or coupled XX majority midpoint at around million the few next that million. generally companies be provide it what which obviously little vast additional of these that $XX is construct which XXXX, experiencing a portfolio about these today follow-ons that we to have over companies MediaMath majority us $XX months in to or

in years we checks point in forth initial to So that of continue substantial we’re if the may now which that’s and its will cash exits really net the does net we right path of see data from expense see find inferred with XXXX pretty beginning let's on now but of exits maturation way a that of what routine reflect as relationship efficiency into to and the of even you companies. forward monetization the also providing in get scenario little starting XXXX. you strategy numbers ago the lifecycles we all just create in our this the better a also tell that to trying we of we’ll probably we're think into is a companies, Keep means to stable start the required greater enlarging that went what some mode. that wave should evolution outflow into on as we also be attention group and mind, have the focused inflow go earlier may associated we this this and with we set It in to and you partner our manage is can of that smaller process will to the even next be be if get went business grips kind their structure four about come of of

Operator

question Sam SER from line Management. Asset from Rebotsky next of your And the comes

is line Your open.

Sam Rebotsky

it together, was luncheon It the knowing that you're helpful where was very going. put positive in you very corporate

May transaction will a believe so raise pay convertibles to funds don't have on as this that XXXX of to our that corporate that are have do the thoughts far what's monetization that we we due event? in off the As additional we

Jeff McGroarty

Yes a some fronts working of our to exits generate Sam Steve our of including number we’re other goal mentioned as and companies. some on MediaMath

So flexibility of we always current that if so we proceeds to do option converts, our goal the we our could that to the to pay convert would facility an from that credit beyond refinance exits the up be do that out the is well. have portion as had generate the

Sam Rebotsky

have will we or think at But to - we do you before moment? difficult is due that mean period amounts transaction happen of - May that something of may I is it too before do sort money the expect the this or predict

Jeff McGroarty

certainty Exits with are been to is generating we some that's current our always predict our difficult but - as portfolio. said exits focus from

Steve Zarrilli

want us to emphasize very necessary Jeff the debt to convertible ultimately give just monetizations working to to reissue having that, create diligently any we’re that what to has avoid try should some to instruments. opportunity just I generate cash

Operator

And your from Advisors. Financial from the next question of Seaman] line [Anthony comes Corporate

Your line open. is

Unidentified Analyst

of case recouped the in you especially MediaMath wondering and and in how the from much development was hiring I have federal credits governments? research state

Jeff McGroarty

not that's any that get have something MediaMath to ability way. that as in Yes, credit the a investor we minority in

Operator

further the no turn time. call Zarrilli Steve back for now to over I'll questions this there And at remarks. closing

Steve Zarrilli

just just you in I with repeat everyone today. participating and what call we've thank to want for to today's shared

a and and have are built of that we companies to realize companies to can that focus shareholders. our of the value All position get that around maturity efforts into and these we value to begin for our ability our so revolving activities exits state demonstrate to of these

much. thank So very you

Operator

call. conference today's concludes this And

disconnect. may You now

Safeguard Scientifics (SFES) 26 Oct 172017 Q3 Earnings call transcript