ACTG - Earnings call transcript Q4 2020 | Acacia Research Corporation

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Operator

Greetings and welcome to the Acacia Research Fourth Quarter and Full Year Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Rob Fink of Investor Relations. Thank you.

You may begin.

Rob Fink

operator. you, Thank today Al call Chief Press, Chief Acacia’s Officer. Hosting Chief are Investment Officer; Tobia, Rosenstein, Officer; Executive the Clifford and Financial Rich

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

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

Clifford Press

and transformation Rob you, everyone. has for significant Thank morning of This a been good Acacia. year

transactions increase on strategy a opportunities. flexibility of the to to our creation in Value committed potential a directions. million We range of sciences the of cash we capital, we an $XXX.X access LP. share we strategic approximately that an value have adopted remain or balance with $X life opportunistic On value, positioned wide $XXX.X per including of the the our focused strong and to $XXX With million million company XX% and approximately of sheet, foundation Starboard executing a transaction, the alliance pursue variety strength for book of as added in

structural we believe value discount; develop; to to impediments complexity ready our operational a invest which continue creation; corporate or resolve we enabling significant execute that that can expertise to resolve several to situations take advantages, can including out-of-favor suffer We help important and us in to we market of to complex committed to ability industries transactions advantage inefficiencies. a important willingness as restructuring, governance us multifactor proven be access that businesses rapidly from in capital, have

astute Finally, Directors. we and have very a of nimble Board

and is with point relevant have Board’s of created expertise the Board way, when the opportunities but not by accelerated a the engaged the approving is a processes Our been Board to process has we are company, step and involve all transaction relevant have oversight streamlined as of members only in the transactions questions also robust Board our a Each we been decision. get bring the time final of early to identified. which answered ongoing

we is we significant business divisions strategic operational to our acquire stated, companies, other assets, restructuring. where previously or can As believe operating or an following value realize

Chief will technology, on to is now and mature financial focus primary in segments. Officer. services the Investment healthcare, our Tobia, industrial operating Al certain Our companies over I call turn

Al Tobia

Thank Clifford. you,

million. companies $XXX acquired approximately originated of of holdings have $XXX acquisition To-date, from potential total Acacia million of As a for life consideration $XXX.X representing million private candidate. and public and million This and $XXX.X we reminder, a $XXX.X in and recovered worth XX an evaluating the sciences worth our positions hold approximately identifying additional positions or million, acquisition £XXX million. a public process private second quarter,

sheet, balance in million portfolio on over our this gain approximately our more initial of than $XXX a So, investment. represents and which cash is value XX% equity

industrial we from to portfolio particular Turning we and various Of subsequent group IP the importance the targeting our range primary automation, applications, This digital and fourth healthcare consists individuals during portfolio automation. home completed industries a and devices, acquired our quarter, build that the acquisitions. Wi-Fi wearables, home, experience, business, year, including spanning consists both of This mobile of of public our of focus the with team. operations cover foundational equity Newracom. end patents to a for of investment private broad

this, Soncini, Jason our we General hired welcomed recently of part Counsel. As

now our over appropriate like call to to scale to our would Rich With I the is Rich? an team at discuss Our Rosenstein, CFO, to that, the turn advance acquisition results. strategy.

Rich Rosenstein

Al. Thank you,

our Our $XXX note derivative million book XX. liabilities. embedded non-cash basic or $XXX.X to XX share XXXX basic at compared per was and December XX, million or per to that share $XXX.X at share million and June treatment September $X.XX important GAAP of value It per reflects $X.XX book warrant at the at is value $X.XX or this

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

$XXX.X $X.X our million senior notes revenue was issued in results fourth December XX, quarter, $XXX.X December Debt million Starboard. included to compared For XXXX. to at cash we and And the short-term secured million. $XXX had the million of totaling XX at in financial quarter, investments

discussing moment at a ago. per mentioned moment value XXXX XX, spend share, as I XX.X Book me a December outstanding. have shares was our million currently diluted $X.XX We structure. current capital Let

and preferred stock notes of would preferred have preferred these to Value We per and into would have count. all $X.XX with million net million and outstanding. be it issued $XXX a can in add $XX each were liabilities These to notes million associated result shares converted preferred instruments. is common XX have million we and of total shares Starboard the eliminate If would shares notes we shares in shares, A converted, and shares in but Series XX share. at of notes The million this our share those liability $XXX we

Additionally, Starboard coming result in the more company. that, would exercised, warrants if cash additional holds into

Let me break those down.

would First, of shares. can in Starboard August holds $XX.X $X.XX another $XXX million B cash If be we share at warrants expire and exercised, notes. if exercised XX.X Those issued Series million even that additional in per that million add XXXX. never

outstanding, Second, bring stock. result terms we or analysis at of $XX In have Relative aggregate, to in exercising if $XXX diluted been by in these beneficially the would In X.XX% in the share such per but elimination stock, all Starboard by impact our the If policies, of preferred plus exercised, its securities One cash of or preferred it our in additional with on X existing share and a would includes loss in XX-K, the and Starboard on liabilities file results all book and value shares Series of upcoming per would reduction cash. Report this of shares, exercisable first, value of undiluted XXX shares Value of Form plus warrants with prevent basis. important warrants. such our million in of also preservation cash. extent stock XX.X and these versus available the shares. of notes Value the own warrant in of these shares, warrants are all exercise. book second, Annual cause have together this an current million that notes on or the additional other issued and warrants holds press add cash; preferred, operating $X.XX Starboard will $X.XX excess and another these book release discusses add conversion aggregate, Starboard company’s we $X in More to and these million current million the $XX shares which A million in million and detail while total potential its of XX.X the the is third, remember liabilities warrants following exercised, preferred were from comprised point, remaining these preferred our morning $XXX exercise would exercise stock $X.XX a that common million of were diluted million outstanding if from the of associated Value which the of and and conversion derivative affiliates following: to XX increase of notes net exercise last $XXX stock conversion converting million; on of made million consistent with would following shares the value from shares $XXX Under outstanding instruments of such SEC million, exercised, million of XX preferred all impact to scenario, the million these today. of later would this with an in and

Let closing to me the now turn back Clifford? Clifford comments. call for

Clifford Press

continues conclusion, investment to its on execute Acacia Rich. In Thanks, strategy.

on As book we improvement balance a continues investments. focus additional can in always, our our to strong and sheet be which value make with

key we scale greater today’s flexibility. with Together to and are economy. pursue a Starboard, asset in of Our strategic flexibility transactions remains well-positioned

questions. We are Operator? answer now to happy

Operator

your Thank Instructions] of proceed Stoss with Our from Craig-Hallum. questions. line come the Anthony with questions first you. Please [Operator

Anthony Stoss

Good morning, guys.

as basis? of maybe an layout And on maybe the then on Nanopore a on any share well, on to one potential this any three public Oxford for any I the update etcetera where value on this fully what as that? Rich, I or basis finding maybe have acquisition? field operating thoughts wants and would maybe business for questions thoughts talk a think what Clifford, you book securities, you of diluted of but Thanks. a about, somebody have guess, IPO, the lastly, total. is I more on be timeline And can both heard Starboard terms in filing in then with you Friday close to with stand the difficult basic for And Rich.

Clifford Press

first and to other Rich, of part do I’ll you that question, answer then the answer want the two.

Rich Rosenstein

Sure.

stock XX/XX the Immunocore, in change since Sensyne is which change only the trading So, Arix, now be and for price publicly. would

XX/XX So $XX And Immunocore in value Sensyne Arix, to increased how million. that’s would in million it, $XX at look check, about in I precisely much but total, approximately to and I’d by has alone need higher. have since call value, increased

that $X.XX So, current a fully will a and that diluted another would be on share? a $X.XX basis, be count our share share on about

Clifford Press

lot Okay. With company very that’s of dynamic regard a to it. a available options Nanopore, with to

With they range best probably illustrated which supportive we there of I more are will we extremely looking we that would than don’t we and potential things of at anything I but a shortly see do of have are Starboard, know to and looking the to one, are a when do decide type they that. is to We lot do, to to at. that shareholders transactions then what and regard options transaction we what is and particular hope do clarify like I think will going with

Anthony Stoss

Thank you.

Operator

you. Thank

line Montgomery proceed Our next the Reiss questions of from with with Scott. come Please questions. Janney your Brett

Brett Reiss

for gentlemen. you through being? release well the Good Good the carry-forward, job a and loss I common press time you first until Thanks the net not notes for into will guess so morning that the preferred tax that. loss the convert the run all crafted don’t on jeopardize operating question, with Starboard, information. carry-forward,

Clifford Press

Yes, Brett. public. These are documents

to are the documents. Starboard’s is for people see so in restriction they conversion available that the on And

Brett Reiss

will… I Okay.

Clifford Press

on requests that compliment from all the we’ve And and explicit it number very there. for of was to a you these make try your thank others sure press on you subjects, in and release we had

Brett Reiss

the good not? they be thought X.XX%, GAAP in to I $XXX the entitled warrants financing. the No, provide million past million in Starboard so that on or the or would stop that that. unclear – XX.X I’m little that. still is on just Yes. show have a on to had Yes. at That’s to And for additional case

Rich Rosenstein

I’ll take Yes, that.

until into issue a we would $X.XX proof share, So at these $X.XX we exercise do, could to warrants August issuance. transaction is those ways. we an the notes those XXXX. investment through exercisable If an issue at do two that be feature then those feature have still in exchangeable warrants – and And notes, of any One share. finance approved not available equity those is note are warrants notes independent that a were if Starboard

would until Starboard will those August million million that be $XXX if notes, XX.X into warrants which $XXX additional in any we in issued million up haven’t So could cash, for company. come exercise ‘XX, the cash the

Brett Reiss

looking looking Okay. for you competitors the year for. I With appreciate that available declaring Supposed mean, market special or price? of in if stack at more just I the Would operating would find you an that. there patent company all in issuance, you’re something, can’t get so, dividend? the consider operating so a we in would are can’t many portfolio aggressive cash, company you the business? happens intake the you find all with What decent a a

Clifford Press

that’s Well, question. a highly hypothetical

that good have far, are we able approach to change to not We intend value. assets I do think we’ve shown so that find now. that

to now I highly ways on we we and our very, we that of the very unlikely think public we are our mandate range – We I these specs the specs things. I come companies, have, year found will by at buy cannot will from that not by can haven’t say, transactions do. relaxing with – that have it’s invest constructive also the time can discipline different whole vehicles it’s and these think other capital. a that be we can only where would than But Brett, a

Brett Reiss

Okay. Thank drop questions. for Thank my you. taking back. you will I

Operator

Thank you.

Our from line Pacific of next Dominic Marshall questions the with Ridge Please with questions. come your proceed Capital.

Dominic Marshall

Good morning.

questions on last the – one. asked, most but of have Just been wanted kind already follow-up to of my

intake different you like I I due describing on looking of diligence you a with you pipeline can kind what at of there? hoping of secondly, detail could just different And that maybe guys on kind your side operating expectations look bit we kind could you are if but over just what’s more got little your just the the then the that guess, all was with you on know in or have valuations. front. can, two, then what is next and of IT little as But bit front, Obviously, give you happening Just, the for just year done maybe you space, are to about already little company the talk talk a both hoping you’re color where that on business? there, a what seeing little about the business, of what just a way. more you’re ask course extent

Al Tobia

Dominic. Thanks,

take Rich would this the the want companies What – IP bit the at that to call, I’ll question, whatever of we’re can always a when is beginning micro-cap then So a business. as doing little say about and I you in to talk look we’ve our the research, market, public looked at range.

sub-$X like to on seen public companies this time, more revenue. that that we’ve hit continues up, markets, often, find sub-$X often there the billion. billion. at. the have at said But come versus going inorganic for sector while find when on we’ve much return that just you’re on be public And And depends the a So oftentimes, It’s side. grow companies may actually probably be been the a is pressure And you and them growth too on theme all down we equity which sideways. in gas looking to

try to it’s array mandate sheet before of and private back balance instruments, is equity it’s the an the looking private. to public whether take to of operate and division our company, of intersection of versus sort of just up point or use recapitalization whether a a at so specs, straight Clifford’s at And the

areas, just And but micro-cap public on and so all will in We see kind utilizing we’re focused of the sectors that markets. we’ll opportunities in tools looking different are them. sort look in different to those we And have of stay terms at marketplace. of

Clifford Press

I what the format lot we This in there is type transactions. working very once a to away, much a now. things collaboration a It a earlier have very with I excited here. And Dominic, start this doing that I before Al a we even secondly, have what interesting it’s we will pipeline, have of described. bit describe And have is feel said the conceptually. be I’ll One Starboard. of clearer, we new very about we but looking at were in things difficult these active transaction little type think, add gone are Obviously, of has to market. thing as

itself a So speak we’re it working lot and still seeing will, comes think, for – we it have on, when I we’re that out.

SPAC. the think different I’ll we make point is I are a than very that

intend We’re very a out. out that of prove other we entities to lot than different there, and

Dominic Marshall

That’s on a move before IP to you. question, following more. little Thank helpful you just the up on bit that

the I there think you acquisitions. used term

many goes what other you small over you of an how talked go? And if after kind my willing small bit. to But just maybe or answer, you companies exact go if that can So guess it $X Al, Obviously, might kind but the which don’t frame? question, of might and ballpark how end, you multiple front, is, the you are be high to do deals on is willing answer, to many $X about billion little billion. time operating potentially you how have the a I

Al Tobia

want million be I is the and right? about to would don’t to by We opportunities talking we I to of spot want to million to a lot where low think I looking end, you’re on $XXX would also probably, $XXX mean small you we��re deal. sweet So tiny, at $XXX million million think And $XXX is deals. operate. do obviously And the probably what a like tiny maximize of your be efficient, sort

that’s where that think most see well. Starboard collaborating do with that’s work if also comes said, we ability have the can up opportunity. and we’ll to larger, the I as along to probably With that we something scale

your spot extremely range. have the be to million lot in obviously rates hit going the we’re that business process have I to sort high. minus we not going because plus the is to a of – think, of front So be, And $XXX going sweet to end on are or

possible. utilizing at efficiently as as overhead So our we’re looking

Dominic Marshall

Sounds good. makes That sense.

the next is it the of or two sounds than or spot number, one over a Given size likely than year bigger then, like that? course more probably that sweet two much

Clifford Press

have I’ll type that’s Board you the interesting. very answer your in of that where that’s been Yes. tell range. drawn incentive comp question parameters the by our to on just environment, IP been And

that appeared that has There have recall, settlements distressed through transformed a being outlook. say through That I’d essentially little became other had XXX%, we outcomes. gone IP upheld. when here, said gone with capital terms declining recently the business first it to and with of very the in and business may was way. XXX IP we some a been degrees You the judgments of have to been, provided involved appeared period it’s that have been almost gone astounding have

group Our good job I a it’s some – very think interesting seems be a to And doing see wind we in in will their opportunities there. a sales.

Dominic Marshall

Great. all love we answers. appreciate I would appreciate but Well, certainly your and detail, more that

Operator

you. Thank

come from Please questions next Partners. Investment of with Our proceed [indiscernible] questions. your the line

Unidentified Analyst

thoughts Thank questions. the Hi. you on from deal a it. had potential offering wanted hear in to rights offering. Thanks. Starboard for I rights guys taking The you component timing of any just a

Clifford Press

much It particularly available of exactly look in to is very to that our And be on to the important feature. giving consider terms invest Starboard-type forward opportunity shareholders an think something as when have the We Starboard. it’s shareholders. we rights existing the transaction. true making we And same an Acacia distributing I those and what first, transaction for negotiated get I to

Unidentified Analyst

Thank you very much.

Operator

There today’s teleconference. no participation. We at conclude you. does your further Thank this are appreciate This questions time.

a this time. You Have your at great lines may day. disconnect

Acacia Research (ACTG) 29 Mar 212020 Q4 Earnings call transcript