ACTG - Earnings call transcript Q2 2020 | Acacia Research Corporation

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Operator

Greetings and welcome to Acacia Research Second Quarter Financial Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. I will now turn the conference over to your host Rob Fink with FNK IR.

begin. may You

Rob Fink

Hosting Executive operator. and today Clifford are Rosentein, Thank and the Al Chief Officer Financial Officer, Tobia, Press, Chief you, Officer. call Chief Richard Investment

would Reform contain objectives forward-looking the as or and relating the I Before projections you forecasts expectations, relate defined are Act Private materially generally forward-looking results a plans, certain statements and as to that operations estimates the about this These may result may projected during in for to future and risks expectations to that company's uncertainties. based events beginning, and of call statements future projections, trends. XXXX. differ information current like on estimates, those of provided Litigation and future current Securities remind from results Actual forward-looking are

was would on company's all the at issued For This the under market the Clifford see that call tab. acaciaresearch.com events I news on call now I Press. on release uncertainties, the the the filed financial a risk like the annual company's a disclosing risks XX-K with to factors XX-Q and to and that of yours. website over be discussion report may and said, this With before the is remind release everyone Acacia's morning reports like accessed to quarterly are opened. Form in please turn press such that would results described SEC. Clifford

Clifford Press

for about transaction, deposition, large acquisition idea has Life we for Woodford £XXX former investment total with of everyone. another June process $XXX opportunity Thank during XX companies million. of from off and Starboard Equity of portfolio holders. the Fund, start that you, X, several investments. a flying alliance This first the discovered which very the the Sciences diligence an Public was Value a a Rob got approved and Private a In due consideration strategic announcement to of On Income million or good morning a with company

the in first were the pandemic Woodford fortunate the then be and transaction of was consummate June. Woodford UK remember we circumstances. potential which how a XX the April. investments Fund Fund due week extremely of secondary most markets liquidation. When in under in sure and transaction to lockdown were acting challenging in during of the diligence were are the early conduct to One position which We different we former to all able the I'm the sales of on the store by complete the hit

to Al Before I the turn acquisition. Woodford the call of over to details discuss portfolio

review me Let IP business. our

Harris. second LX Excalibur portfolio the quarter we from XXXX with Fi of patents And and a Wi more IoT spun A patents portfolio IP. of During off XXX nearly acquired than Yahoo.

a capital As that we able have believe realistic to continues noted be to available supply before, are we in market. limited pricing. the IP there we obtain And

Tobia, acquisitions, Importantly, evaluate we continue our to let turn Al Chief team over call from licensing and his the revenue With soft Officer. have me that Mark these to additional see Goods Investment Al? to acquisitions. began

Al Tobia

Thank you, Clifford.

questions opportunity many a is we of the we the that recognize a And high explain rather the and this transaction. unique to details investors. with other reached received go level transaction, Woodford to want of through from We have of and we Following increase shareholders, inbound this use to out transaction received our complexity. the

basis. is where and holding provide Nanopore value. exciting a continuing few portions investments private of technology our in Soon as The of significant applications a create value COVID a the we well precise transaction four the transaction, others. significant after largest other of public with broad XXX to pathogens positions assets in genetic acquired, of to the UK new entire on the in commercial detection contract we are purchase there the with Oxford sold a we derisk in range of have there Starboard closing announced realize believe to to We work recouped both million date, will To government incremental we our opportunities its price, as we of these swiftly position moved XXX and million believe rapid a many applicable in are is sequencing, companies in X% company having entities stake we unrealized markets. company disruptive just of opportunities. to Interestingly, the with Technologies. company An research and

continues Additionally, strategic identify investments. regularly and to meet to committee combined our evaluate additional

significant a potential opportunities number review. have currently investment under of We

to Let quarterly financials. Rich? to transaction. CFO discuss over the and have the accounting been methodologies in Rich onto sheet me bringing The call now financing our them our for turn GAAP applied our balance Rosenstein, that the

Rich Rosenstein

Al. you, Thank

to in a plus portfolio financed GAAP of our addition early the held value approved of As market level depressed. account purchased in company fair securities, initial we with The XX which were are cash issuance portfolio fair this to preferred based of the company cash as at when representing we is at the assets this securities which value on a Under portfolio follows. at previously which of Woodford April the We the was noted for value markets the price. were investment public Starboard balance valued of in paid hand which private first million private a private on total value of as securities agreement. restricted one made prices public components the Starboard, the stock assets. $XXX notes under and The purchase discount mix million in we the new public a million utilizing with and our $XXX terms for of

the the with assets value. for a mark discount valued portfolio public we public of reflects securities market. whole private end each As quarter, our At in securities bulk at the result, basis the cost the to purchase market the

our primary we companies’ those not transactions in positions. on recognize carrying For impairments, shares for value these adjust adjust secondary any or or private no value observable or are If securities, there the we our impairment. observed based carrying will transactions

we released sheet, escrow As a paid full note or result, of for all in our of cost balance market end private into are on early largely value quarter securities To our transferred. escrow purchase price closing reflected at of that the at our are as million this and the carrying our follow £XXX.X June. million public the Funds securities $XXX securities. of value from second

today. securities securities all the in June XX, nearly final as of now been had all have While transferring are transferred. of On not or stages been

remain includes June $XX totalling XX. asset represents million. purchase remaining called prepaid of continue adjustment themselves on assets sheet these price see cost the these to cost be the an securities gain June the There this Note at securities June that the the our to value For will transferred shares on moving our this reason, transferred transferred at derivative investment, at any shares That forward to that of XX balance to not by balance for any attributed be two to sheet. embedded first These public also XX. at be private market you at our value us, on gain any million of private securities the balance versus securities represent prepaid balance and items equity stakes for securities contract eliminated are equity the sheet XX embedded carried point. June $XX and and replaced remaining reflecting fair to the again, at our most at forward derivatives. Once totalling cost called contract

using not our financing You Starboard contemplated The represented. have funding which original term funding, this agreement in will financials. these is see September for short this notes what

the returned million we Starboard not longer million preferred of exercise our X% proceeds pay revert issued the even $X.XX the funds will us and and Starboard preferred the warrants million $XXX and per it of in $XXX cash. may does modification, already beyond will million that repayment our following share have to B interest return to any with to collaboration warrants notes when modified the so notes funding exercise This upon preferred this add series retained notes of restricted this after been modification warrants have $XX repaid. for $XX.X the asked Investors cash additional dividend the agreed Through opportunity to permit Starboard by full back retain escrow. of related be on the draw has the stock X% the should no to In rate repay in So return will of X-year agreement the in right we this year-end and amount of on we impact the future. from notes to notes about to are dilution exercised. notes to $XXX the repayment million warrants of of all

in reflected of no which June our Accordingly, First we've date. XX, all value. liabilities recorded have number warrants of of are exercised been a book as to

warrant reflects is It XX. book XX treatment based $XXX preferred liabilities the two, million these money share or exercisable shares. Each $XX to note a outstanding. GAAP warrant as derivative or of June preferred $X.XX basis instruments notes of these and the value per of of million share three, potential meaning and value $X.XX million the on $XXX.X the this warrants repaid, four, were million book of associated are value the at on June in First, stock. at A be convertible to the that per is XX liability conversion in with stock, important

are those and all eliminated in reported liabilities warrant $X.XX reflect future be substantially liabilities appreciation our Upon exercise now at the issuance aggregate warrants liabilities outstanding balance charges price, our Given and of on reclassified to per GAAP non-cash an as value expiration, these $XX the value significant equity. increased shares. our Those potential will share. sheet and quarter share the or million of during recognized

book our XX approximately future this million As were book would warrants to any of share. the acquisition, is most and includes or X.X the be Note book share were rise $X.XX per $X increase to realization to million X used of value than securities A that notes $XXX the meaning were would will all On per I accretive million million to will value. be a shares more observation share exercise our share which value today reflects our be recent liabilities. count of share, million. increased $X.XX the still million this that preferred warrant our XX.X cost the value roughly be by and mentioned, and carrying in count these to at warrants book value of value exercised, private Series If the converted at to $XX

the Now will for XXX results March million Cash million XXst. at December the million to expectations. in at at line million was to to Revenues June compared million XXth, at Book Debt XXst compared issued our XXX June of discuss investments million and million second notes I and short XXX.X term financial quarter. secured XXX XXth, $X.X senior for XXXX in quarter XXX of Starboard. XXst. as our totaled with value were XXX.X totaled December

More the SEC are see been the IP today. have results beginning these file on available which upcoming just release also issued contributions to the our XX-Q, with this will press from acquired morning in report Form detail We on and quarterly made portfolios. we in recently later

Now, comments, call let me the Clifford to for Clifford? closing back turn

Clifford Press

of to When existing build stock of to offer to of reduce the up science as taken still million that The Rich. significant of on notes commence stockholders the notes as In them. assets, the conclusion, up we the assets strategic stock of goal is private to the the notes in intend Thanks, at warrants to positioned by to environment retained as million opportunity inherent date the XX out we designed books well we and to adept partnership practicable. same in in team acquiring a strategic indicated base public common and shares We flexible. at including purchase or can soon potential a Taking risks of date of inclusive asset with security a Starboard, secured rights allocated through to acquisition be warrants this multiple acquire million cost investments XX.X substantially to offering management believe we portfolio the meaningful fluctuations is strategically up in It the senior assets. the purchase warrants directly. we Acacia to have a step terms senior of acquiring on or XXX life offering common Acacia of common reaffirm extremely private complicated purchase upside market assets Starboard, and announced an secured navigating and reasonably we entities selling Acacia’s have initial this portfolio and ways, works we our assets many ahead. today, transactions. highly liquid pursue this motivated advantage and between remaining of Acacia price the immediately

flexibility. positioned that greater are You scale we of Starboard, development corporate opportunities well with and together to pursue believe

We questions any are now have. happy that to answer you

Operator

session. is this we be Instructions] with Please you. Craig-Hallum. Thank [Operator from your our time, proceed At Stoss a Anthony question-and-answer question. And will conducting with first question

Anthony Stoss

Why philosophy any of interest hear Good over up you you your if even jewels I a to couple transferred think that to this morning, level of all start the think that hold. Also we a will entities interest in if that you with at don't have them you hang there's to that selling the are want afterwards? I'm And of private in them. curious just guys. there's I'm private curious then companies quarter? on follow be that questions. the

Rob Fink

liquidity companies our the about the talk for Thanks, process future? Tony. Clifford, looking to would in you private for like and

Clifford Press

Yes.

have trade, we will soon to shortly to possible. be hold substantial now a as the we providing to the assets upside. it So and of details portfolio for to believe the through assets them. getting waterfall with we for intend do assets as we process We've outlooks as we practically have but board, And provide realize that timetables realize that. what that some do we of the that, cash these for view continue several a expect on on we established all any And

Anthony Stoss

please, I'm sorry. Continue,

Clifford Press

of stage have a which of a of Sciences overview factor whole. our portfolio we investments, think remember XX late of And in period that's the are a commercial point. an I very not a operating early assets. after these to XX to liquidation of that most assets buying the months inflection on was Life As important here, What matter nature within because about They're stage time. for long

in that near the So realizable term.

Anthony Stoss

been Starboard you if deal know release. highlighting active. with no a engagement active for if deal. can Thank commenting there's businesses. in until out curious then folks about comment the on has I press very that. And mind you them And or of I the is, you wouldn't how your know you're gate just I'm operating there's Clearly you

you an before. you're goals, of acquisition. closer timelines So thoughts or on kind have perhaps maybe secure try business that getting Any operating to than to

Clifford Press

as So we I terms we the transaction the are put of it that Tony, flexible are what can our understand -- transaction as into laid it. we occurred work as possible. fairly are is original quickly. looked our And moved We're you out, this in of that markets And mandate, a if timeline not at rates was dramatically see. say rapidly and you continuing amount to have hit I progress would difficult low. in that we complexity

aggressively constant along possible. we Starboard And I as expeditiously so expect. in of collaborating continue And that's work say would to kind what that. We're contact as with you as would and as

Anthony Stoss

What in it should terms of I'm here Rich professionals? small -- more tough going talking you're Is question say hiring in of know but can or to business and think a the up an operating acquisition, ahead we forward? bump curious, for you it's give. just I a OpEx Al whatever release, Maybe Rich detail and about Clifford press of

Rich Rosenstein

and I'll want start jump then Clifford to on there. may

deliberately. so doing mentioned, to we've And all very team as hard. but investment been team, have it and we place adding that research We're we're and working in

we up our both it specific ramping We're hires, not execution around we're significantly. research So through have operating doing deliberate and where expense our needs process.

add that, to to want you If Clifford. anything

Clifford Press

execution now exceptional doing. we've you, capability. configured, would some very we've Rich. the look need We to stretched been on I And add executing an as say platform. is particularly thank do been Yes, transactions Acacia thin, And is

team dynamic research a with our we very increased interaction our well. also have Starboard our with as representatives, which And us. committee, for have generates strategic activity We potential

capacity So of need to team. improve definitely we at throughput the increasing the

Anthony Stoss

Thanks, guys. Clifford, luck, of best

Rob Fink

Thanks.

Operator

[Operator Brett Janney Instructions] Scott. from Our question your is with Reiss from question. next proceed Montgomery Please

Brett Reiss

pipeline acquisition guys? how them, more, couple morning forward? Got does a going many look Good how of patents gentlemen. the What’s with

Al Tobia

very capital, we a bring would very a to Brett, ability date two say one Mark's that high acquired are, on patents. and of what well a at pretty that the way, to One market in we in vet of diligence place I pipeline continue quality a allocate vetted the process those So, that hopefully impressed wind evaluate some Board we in that about is very dislocation. the substantial patents partnership would for been, we are the the think pricing, And and hope with there's to to company of company. of positive were very for Clifford's front in very and sort the the we would Mark's after formally down platform point was think But we're both puts of requests a now we us with end developments Mark we group, tail years in allocating and any to you were active from the we rationality develop. market have

Brett Reiss

Okay.

Al Tobia

to want you to do add anything Clifford, that?

Clifford Press

think I that's correct. No,

Brett are believe realistic that opportunities that pursuing. available are there to continue prices We as worth

Brett Reiss

Okay. one? there kind passed a you've we I did looked deal of on, that royalty because the looking with Royal Pharmaceutical thing something I deals, at, is XXX you’re for thing day, noted million. that at, were type Farmer doing the was farmer other Biohaven familiar know of a with the that royalty Is

Al Tobia

efforts. segment that. of I specific stream, one similar our IP, within business. that with. wouldn't with licensing piece may companies some jump just deal. sort was comment that specific portfolio. royalty the that's familiar and Brett, portfolio royalty overly relatively are investment want Woodford so in Clifford, researching one research to is in And it's obviously up here of type I of Any an in We there it on something dwell we're A to ongoing wouldn't stream that on ending of one

Brett Reiss

us Okay. we a rundown can you where And this. -- just I've questions of gotten on give on number a

monetize On left do them we warrants there? have the some what we and did remaining with of Veratone,

Rich Rosenstein

So can I answer that.

We have the some warrants. And those our those about portion XX-Q opportunity. that market sold more XX%. There the we of sold warrants will a of tranches advantage this of of the so detail were but the in warrants and we we already June money exercised of number of in them quarter, be and shares took in

Brett Reiss

the I'll understanding bit on and final warrants on on million I your need in common may the ultimately you the Starboard. paid then Okay. you instrument notes. circle to at on the back embedded I the a The notes XXX But share rates and Richard, that. will given back offline, the And derivative. the circle accounting liabilities to more the to right warrants parity because little $XX.X one, be non-cash warrants actual shareholders purchase that will be with with what and will that interest to one

Rich Rosenstein

they'll term. So, same on the be

on So the also warrants the rate, same the the at And stroke. same note. rate the interest interest will X% be

Brett Reiss

XXX. Which is

Rich Rosenstein

Correct.

Brett Reiss

when will the Okay. And doing the that. when milestone even we dates filing on are and

Rich Rosenstein

said to is when to reasonably we practicable as we as have report. soon say which will So more to report we've

do we're quickly working this. So, to

Brett Reiss

enough. Thank for taking you that good on portfolio. Fair Alright. the And show questions.

Rob Fink

Thank you, Brett.

Operator

And we session. you time. answer at the Thank and question the that today's with And participation. this may your you of concludes for conference. disconnect end have reached And this

Acacia Research (ACTG) 10 Aug 202020 Q2 Earnings call transcript