ACTG - Earnings call transcript Q4 2021 | Acacia Research Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Acacia Research Fourth Quarter Financial Results At this time all participants have been placed on a listen-only mode and the floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Rob Fink of FNK IR. Sir, the floor is yours.

Rob Fink

Thank you, operator. Hosting the call today are Clifford Press, Chief Executive Officer; Rich Rosenstein, Chief Financial Officer; and MJ McNulty, Acacia's newly appointed Chief Operating Officer and Head of M&A.

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

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

Clifford Press

morning, to good and am Rob, looking I forward you, Thank much the very ahead. year everyone.

a We our foundation strong have differentiated built execute to strategy.

process We be to starting transactions, and participants. have recognized advantaged and identifying permanent by robust developed is capital our buyer a completing for position with as market an

income industries, was range food purchase its and customers the a which Printronix beverage, serving of including many a market adjustments. and Printronix, During impact quarter, Reported and well-developed consumables included logistics. and manufacturer distributor in strong target acquired the healthcare, of onetime operating manufacturing accounting in we fourth from a across modest quarter, with certain related industrial position printers

$X.X operating has year. in potential times cash profitable million generated these or in results non-recurring and during items, latest this grow. We quarter. the fiscal $XX Printronix it for its and X.X adjusted million income EBITDA in the paid has Printronix generated business expenses noncash Excluding approximately consistently to

we're to experienced working led that executive, this by growth. We an Printronix company with to are And team at Kiefaber, introduced management was Clay us that operating an exceptional by fortunate Starboard. who our engagement is with facilitate

continue from our intellectual In generate sciences and to holdings. we life addition, business value property

During IP license revenue, transaction generated the agreement, reinforces confidence strength proven property licensing benefited have quarter, our of business validates operating than at to more in His our business and million intellectual quarter. our led recently valuable the asset, $XX this future particularly for our Intellectual it. one This monetizing from about adept very Chief $XX the agreements. this portfolio Marc achieving million Booth team acquired they patent is the large and income in and Officer. from Wi-Fi X identified exceptionally which Property

our gains We and also quarter gain portfolio, sciences fourth life the million with for in realize a million full continue year. a during the $XX to gain $XXX.X

professionals portfolio we evolved. transactions to as and process and are match capital of This period we benefit portfolio, sciences demonstrated the and market deploy uncertainty. quickly. as clear acquisition, believe this assets value. remaining of move considerable well-defined transactional a rigorous our at of was that The significant during companies to ability acquisition time life we experienced well our evaluating the opportunity an of a our As identifying, required acquisitions, pursuing noted the this with and in a understanding as complex Today, robust of Since and the saw a strategy. we for situation have has acquiring underlying ability portfolio decisively team the have along to expertise

be to continues active. process M&A Our

approximately $X companies is well-capitalized started with acquiring criteria. our in fit of have to that We the access Acacia capital. process billion

including transactions, value. that complex where significant the situations to we opportunity mispriced have unlock market experience in see are with or an public We

our have seeking and we and have fortunate companies, LP. Starboard to be we with on We operate we fashion. to in companies are partnership can able to established acquire participate or Together, are to flexible a able complete of public Value a develop dynamic divisions the or to strategic larger discrete continue or we of type consortia a in transactions. We lead opportunities private also built are clear of and investors focus

in stock most program Acacia completed are well own $XX early While trading can our a additional attractive an $XX we at we that in operating we buyback times, February. focus buyback on the shares investment certain make. authorization. announced million is acquisitions, below may we announcing With December our be value, million book Today,

opportunities make to extent the to shares. to in us market the acquire will continue our that to investments the own opportunity and businesses, evaluate We affords

of our We have have Officer to our M&A. significantly pleased joining very MJ as been and fortunate I'm leadership Head Chief Operating to enhance senior team, me and McNulty

recently Additionally, he I'd of Officer. direct as a Starboard SVAC which through Cyxtera with Technologies, speak Starboard Value M&A activity. now. most and Executive transaction Value the the on led Chief at MJ and role member a all him the asked Directors like to aspects Acacia, new Corp., Investment approximately combined $X.X of the me served at to Wes to of a In Director named Acquisition MJ Inc., billion. at I've Board of was valued deal invite MJ and LP today, Chief Golby his was call Managing Officer join will where our

Martin D. McNulty

Clifford. you, Thank

it. a this everyone to appreciate proud part building, We're the we're First, of we very excited joining for morning. I'm that platform really us of be and

of As owner Clifford an advantaged mentioned, really businesses. we are

flexibility private the or the flexibility, whole both initiate our either public acquisitions shareholder. with in market the and to advantages as have of investors beginning a transactional and We

and complement not. operational differentiated executive to this others find the believe have also other situations the We highly values flexibility in operating where market. expertise may folks navigate We is complex to with

us. going a capital long-term and working owner to industrial, technology, on partner the and excellent lens view alongside which and consumer focus with partnering in our the doing this We're of Importantly, affords though, all through healthcare senior segments we us. our a acquisitions executives base

pathways these multiple acquisitions. fund have to We

balance strong have We sheet. a

We continue to Value transactions. models Starboard to develop new partner with our build as execute strategic we

Finally, we're other partner positioned buyers also. with to well

We can fee opportunistic well Clifford. world-class of alternative talent. to with as evaluate building Acacia revenue. very turn And M&A I'll situations, where generate call a to excited continue the I'm with group will structures as funding world-class back function a operating that,

Clifford Press

Thanks, MJ.

leadership We on your team. to experience benefit are and excited our from

recently and Financial Manager. Seven manager recognition identify we at in he With own cap investment Wes at small Canyons of was wide investing. of catalysts us Earlier a advantaged We research Acacia value results. in turn organization. call to approach where Investment execution to continue is our mandate, and an to to Chief buyer. investment discuss Rich? research August role that, the we vital Rich Technology, position in creating Officer. I a opportunities small since Wes and Canyons served has we Under and As positioning in I'd With S-Squared for Advisers and firm maximum mentioned, Co-Founder also Officer, Director the Research of the promoted deployment, strategy joined positioned. from enhanced an Seven Golby to as He Portfolio appointment creation, innovative have serves for that are of believe actionable as Wes is over Acacia uniquely career, team a flexibility our adviser. like Wes' that capital can our a to we that partner his Chief was an technology-focused an the that a specializes leadership, Rosenstein, this portfolio provides XXXX. cap and

Rich Rosenstein

Thank you, Clifford.

First, this closed results today new October. of business. that like in note include to from acquisition of three reported the nearly I'd contribution months Printronix Accordingly, early the

moment. result are segments, addition, will and our reporting along operations now to this Industrial a in Operations. of we As segment turn Intellectual Property I providing two a

currently substantial continue the to marketable asset we build in has Acacia our cash very value securities. and businesses, operating of form As

useful For our is believe very value of this value. reason, measure we a book

at December GAAP to XX, XXXX December basic value XX, XXXX. per per compared million $X.XX share was Our $XXX.X $X.XX at basic share book or

the in value company's price embedded our balance over liabilities our in year. the book last the turn, warrant reflect derivative of GAAP the Our sheet, impact share which increase the impact includes and on of

will of on value these all the of think these basis, warrants more exercise exercise same book assuming and share, share as upon full of from we converted. is be $X.X derivatives, all value extinguished per be of pro book convertible would up it rise preferred liabilities basis this Acacia's stock, should XXXX. or or our per $X.XX $X.XX instruments these expiration XX, useful December billion forma issued As On to consider to

a million quarter as fourth quarter, following, year the were broken revenues $XX.X is million highlights the This of For to financial follows. performance compared $X.X the our of XXXX ago. down include for

fourth licensing business The First, generated related X of compared $X.X and patent in our of in our revenue intellectual the of this much last to portfolio successful performance. quarter Wi-Fi licensing newly acquired property drove year. million $XX.X million

activity is Second, of note of $X.X expenses Printronix compared expenses, comparable totaled last last G&A onetime $X.X quarter due per parent and $XX.X $X.X income, million million million was over year. increased income to compared important then $X.XX share $X.X a reflected as fourth last million $X.X the year the $X.XX $X.X business. purchase in operating $XX.X million other million Printronix of intellectual period million, incurred. our driven capitalize and share a G&A, this, $XX.X million the mentioned. revenue no in Clifford General of of was operating development, G&A which but that diluted in rather ago, not year gains do of million related stockholders Printronix the Intellectual the property Operating in It's items impact our deal were by common the and to was company's the year diluted On the income and unrealized we Realized contributed fourth personnel to per a income and Property $XX the in in a to basis, parent quarter, to and GAAP basic contribution per $X.XX acquisition that expenses up compared last quarter diluted of year. million quarter $XX $X.X represented contributed $XX.X million which in net $X.X with over quarter with or reported the to loss $XX,XXX from year. million business administrative accounting ago. up to the million increase The and of initiatives. million share expense deal in

year, For Printronix for the compared the million revenue in total $XX million of to contributed Again, year. $XX year. acquired early $XX.X million last revenues were October

increase, our expenses, a million The net and included gains. science million compared the million and $XX.X million realized $X.XX $XX.X share net to million or the last million per for life million related year. to portfolio gains team noncash $XX recognized due income expenses loss year, net year. generated expense business over was December price inclusion expanded year. liabilities administrative diluted fair the in reflecting unrealized a Printronix, a and $XXX.X IP discretionary $XX.X million Of General I warrant XX, million $X.X million million $XXX the million another due that And to are IP in $X.XX during would carryforwards $XX.X $XX.X income positive current of year to ago. $X.X income in revenue again $XX business was to and year compared We of $XX.X which not $XXX.X related GAAP per last growth $XXX in approximately income the million to year to value or compared variance were $X.X capitalized. diluted million parent $XX.X the Our share million. were derivative of the increase in operating was the of a loss million the note to share the to of in during was Operating year. the at Starboard our to compared last and net $XX.X expense, related million Acacia's last XXXX increase year's deal due was improvement

to notes senior million and NOLs operating future than loss income $XXX.X to and December NOL fair our value totaled XX, Over to the compared shield $XXX.X secured LP. carryforwards marketable at at $XXX.X XX, XX%. XXXX. at securities was And from taxes. million by at Cash our XXXX more realized debt remains million Starboard issued available in year-end Value capital gains year, we past last, have and reduced December This

also first which are We quarter, today. preannouncing for the close results will

The the available period fees in today. related and working of our in of million the administrative certain made quarter. in revenue General report the during reflecting SEC on acquisition press of issued we we to will $XXX.X cash $XX.X Form million, the and than indebtedness you to of of earnings presentation One full deals More similar the contribution million XXXX, been in to XXXX. hold expect release financing incurred XX-K, is Starboard our less XXXX, which $XX.X organization million, expenses million today see of Printronix We will XX-K, and issuing will notes And this XXXX to reflecting X% morning that in going last, resulted business. the IP comment of forward. on fee million and $XX value issued $X.X we marketable in We asset was we're with and detail June a annual million which in Value. ownership anticipate in financing have an from reduction million our benefit a actually range, on report a later $X.X amortization expected quarter $XX Total to be we operating Starboard are first securities. modest currently corrected $XXX.X loss development as our to upon file a change the of today, on. this specifically to then have a and results the in notes reflecting benefit these result to to Value

and As repurchase a XX% capital. and launched announcing our approximately of otherwise asset of million a repurchases are XXXX, value represented reduction the been. new value we book represent would in end February the million this $XX mentioned, Last, accretive now Clifford trading and share completed December per to With shares adjustment that pro share at in discount as our X.X% our program. $XX an we forma program what of attractive an buyback use early share, have

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

Clifford Press

partners seasoned of to In closely Value pursue operating our execution acquisitions conclusion, identify and our with we and research, at Rich. out a Thanks, stated have and goal. professionals, strategic we work team to built continue with aligned Starboard strategic

do us following. seen the have You

performance assets. First, that in acquisitions. and operating $XXX life add the nearly extract enabled Two, three, of value sciences strong to we what the be closed improving value from from deliver expect a our opportunity first million us company our company. property onetime And to has to portfolio, several intellectual

us additions team expand M&A steadily and growing the capital this grow our to pipeline. our are We strategy our base recent to will help

forward I the to year. will I'm coming said, to that, take As much we looking pleased With very be questions.

Operator

coming Thank live. Stoss, Stoss you. [Operator Mr. [Operator Instructions] Our first question Anthony today from line is is at your Instructions] Craig-Hallum.

You may begin.

Anthony Stoss

Wi-Fi morning, Good we a little more patents. get MJ. on and you. deal the the can in Thank on licensing detail bit welcome aboard, X QX everybody, Clifford, perhaps

in deal. And so, For starters, sizable the have with follow-ups. of If that players congrats customer? Can pretty that that you on market confirm several other customer percentage what I represent? you notified did And that's the then one one space? have

Clifford Press

be the in there, Tony. do percentage total the is will by important this initial to be it. to it on of discussions, a I carry the validating I majority bodes the that And counterparty transaction a think, anything well since it obviously, important That portfolio that. represents, what market, future. a calculation a into future the of of points was very for particularly but a for of was and think have transaction. means and or think it of the That I I not value it like I was large Well, transaction, no extremely significant think you're foundational forward, Yes. -- importance considered to

Wi-Fi this used -- area this all used virtually there's almost no providers very As technology very X of deployed. of and technology I in is broadly application know, -- particular patents. And broad is providers X. And you Wi-Fi version particularly Wi-Fi a think these

Anthony Stoss

or kind other patents? to out Also calendar that licensees or could chance reached in sometime license get you of is have that, same some in there a resolution Clifford, coming off potential XXXX the already? monies you additional any

Clifford Press

to It's return absolute make predictions type. of this very difficult assets about

can of recover We're recurring it and look they leave this validated just on Mark will -- a team to that I'll it is value I It at the to going be pleased you good the monetize well investments and kind see I it's basis a or think able basis. now, fit. on business the and that we've to to It's just keep revenue made earnings as on it a not return it. very to strong portfolio. and his with

So Tony, we'll know, plays be does. it as you out, it letting how

Anthony Stoss

you, Okay. for And question a then or MJ maybe Clifford.

you've still of Thanks. might source you and disclosed be further you forward, comments deals? that one any gone any And Kohl's kind towards Are publicly of in every you guys after, do would helpful. Going kind companies those? each how of are interested of make the

Clifford Press

the there. wasn't repeat hear, able it, question, Sorry, it Could of I operator, just Tony's beginning to out at faded Tony? you

Anthony Stoss

about Absolutely. to does or The that. Clifford, if could new question in? are every some Is make Have is, towards, continue that what bring how you to could strategy, source any have other off? still disclosed deals segments of overtures rumored he in guys MJ? the a comments comment would can regarding are then he be made any there of maybe And And different you going And expertise about comment or fallen helpful. publicly with those? Kohl's you one you you interested companies

Clifford Press

Okay.

a a equity. where strategy advantaged. primarily we our developed transaction MJ we So private from environment, the I'd can more evolved. say in be on focus in long comes transactional think most We've has type of career

us pleased to think So for why to transactions, basis and Starboard is And to ongoing us have with those discuss reason the which joins him when reason that's Acacia now. said on they're is that I -- completed. with best time here he at the regard the we the absolutely

you forward it So here you outlook to we'll for your Tony? if now for like like talk look we mind, past how taken they've MJ, place. you're very to much the bit discussing and don't seeing would that leave about little once transactions roles do and a

Martin D. McNulty

nice Yes. And Tony, Clifford, speak do to that. you. to absolutely, happy with

As Clifford you last SPAC ran Starboard question mentioned, sure I'm the sourcing of at is where the [ph] the with I XX my worked background years, end funds three then the I've in for as and imagine, private SPAC day, can equity. market. over

and bring have in. mean, out but mentioned can comments, part buy something we operators, worked to that we're I lot to that owners that about suite, think to we're bench also industries we're a be historically focusing C I of naturally several from and and the be to And a there differentiated a win us able in see they Acacia. make my because bring build industry the we we that to on handful opportunities deals, our believe folks companies, of where sourcing operating As to it ways companies win a differentiated the of continuing world-class business we really of seats it are those that. doing spot but with executives, executives, reason, they're

in owner We very But those up successful. those It's been sourcing strategic the with this done building in executive internally, past, a partnership worked lot relationships. function We've solely couple focused an and different relationships places. with hired and we've have of company opportunities. business our whom sees I've building on and Starboard, building of this and individual Starboard we're importantly, and a

and will the us good to it's prioritize putting focus against. really execute deals, pull after and finding I and we're it's industries around for that the opportunities the the going rise opportunities not focus us the think process to -- through best help and deals that finding that we're

Anthony Stoss

you. and Perfect. best for Thanks MJ color, luck, Thank guys. of the

Clifford Press

Yes, thanks, Tony.

Operator

you. Thank

Scott. coming from Reiss Brett Our Montgomery Janney next is today at question

Your line is live.

begin. may You

Brett Reiss

gentlemen. to Hats morning, Great off Good interesting you. quarter.

the run annual G&A to run million kind rate? is question, $XX $XX First million rate, of an

Rich Rosenstein

I'll Good morning that. Brett. take

So businesses. clear, across to be our yes, G&A the is

and But the there's proportion and of for of similar opportunities. active and in So it's a fixed. acquisitions we're property parent. G&A Obviously, said, as intellectual it's the very the business, G&A the G&A for pursuing deals our parent it's that's I G&A Printronix,

so we items as expense those incurred. And

it very of then not so So if will opportunities, a on in will we're where lower. particularly We're investment. as higher. if seeing be And period mindful return we're we're not and are active, run many active, it

spending factoring And we're acquisitions money assessment pursue just at. our to the We're these the just so costs not overall looking deals. we're attractiveness out of into of

happen active right So be it vary. now. to But will we particularly

And so more. incurring we're a bit

as you know, is more Our acquire goal, operating companies. or to one

a of quite little So for we're a active higher that in time, period it be running while pursuit. may

And so really I it. about say that's can what

Brett Reiss

Right.

Clifford Press

cost expensed into of Brett. expensed way treats the kind the activity, I'll is cap all the the transaction our not add incurred. capitalized of is GAAP It's or The for -- cost asset. something it you, not of as

run added the the a all a level So do you're ironically, costs all transaction basis expensed, cost, high transactions, the because very if to successful and the nothing of lot of lawyers, all you gets are asset. G&A the of

Rich you much, think were very we said. as would look it G&A were on because getting doing were if done. should If that lot, deals not be variable, a down we And I the doing it'd we if high go basis. at it's G&A

Brett Reiss

have maybe I Okay. business land you or plans of off that. part two, business you that another and the company? rename any patent the do appreciate spin to operating Once

Clifford Press

have to it When market which have we business. excellent that are appreciate. at but was good very very a we going fortunate asset value good It's Marc we available enough something didn't that's prices. I came And an the such there's Acacia, think to Booth realistic much leading No. team. on, And

So the we like business.

Brett Reiss

price? worth $XX many the million average back, And how the was Richard, buy what shares bought back? we we did Okay. of stock

Rich Rosenstein

was $X It was share. average and over under just million X shares the a price just

Brett Reiss

to McNulty, management and maybe appropriate, in call to, Mr. overtures have initial of go our a DNA on corporate is at intentions? in it kind [ph] for rebuffs the one responses our and looking CMTL, SPOK from icon And Okay. that last one where

Clifford Press

for a that I kind think it's of MJ new -- little is question.

Martin D. McNulty

colorful Very analogy. colorful, very

Clifford Press

after about as the itself. and I as what that write initiate. think careful happens are to transactions And colorful. but that, let maybe history Yes, not we We're very deliberate we'll we --

Brett Reiss

answer last between be investment $XX Okay. One million you assume liberty that divided securities, CMTL down? you Are The And I and to forgive at may one, to me. able break SPOK, is not it. KSS. which

Clifford Press

for go Brett. Probably not to idea us there, a good

Brett Reiss

right. All

Clifford Press

report We what can. we

Brett Reiss

you my for Thank enough. taking Fair Yes. questions. all

Rich Rosenstein

value think in $XX I'm that's you the investment business. at which securities balance an actually billion say I positions shown position. life just sorry, that other under Brett, that $XXX portfolio securities, is our equity and just have, investment when you science sheet, to we includes royalty life be of outside method the science equity million, fair one other a But and on investments the of remainder the the is as of some of mentioned, clear, then It's investments.

Brett Reiss

Thank quarter. all Thank you. drop for back going queue. questions. to I'm Great Great. my taking in you

Clifford Press

coming. Keep Brett. them always, as Pleasure,

Operator

[ph]. next coming is [Operator Instructions] Our David today Seeburk question from

Your is live. line

You may begin.

Unidentified Analyst

Mycovia. wrapped to plans. And be issues, quarter. significant very My I is up just be know could which, your said royalty about a business for ago. on the website question think future on amazing me, I that a and signal a congratulations, have surrounding interest that did delayed future seems that And the Cliff, in months was something X.X drugs their believe, relatively that quickly. it was to approved, And you on and one FDA perspective packaging an positive it like of from supposed the you job a an outlining of guys I guys amazing that

drug. still this a website for of Mycovia, launch indicate that good second quarter they the of On also they're

update This have Can think XX% billion interest the of a that? $X an you drug. be a in could on us that. you give royalty I

Clifford Press

Yes.

in their packaging The of as to with treat Mycovia from approval, not that, an very completing other many drug. So hear as to and of you will it complex. largest said, a the drug is royalty we holders we proceed. It's getting and is moment able to expect That going many, a other effectively afflicts do effectively that the the drug. We're we're is exceptional its things at royalty holder. agreed that condition upon FDA than And wait, be the treated. progress. process We women

the So process we front lines we're not than at be any to that. provide the to that able color would that extent of more really

Unidentified Analyst

Question off stock to be still approval a provided your -- that price. launch, a within Acacia could it Understood. after approval? But they're gets very quarter positive and seems any it drug they approval? a the significant receive do this on launch. their with I the very there thing royalty website, royalty you're it's indicated based well, for that's outlined? on mean as that me still second value that's upfront they That -- structure structure you Or current is the as for that been is that -- of after receiving royalty payment not just comfortable

Clifford Press

and tied payments very milestone substantial are There thereafter. royalty a to approval

gets the be clarified, it once So and better compound particular likely market a penetration. the in we'll much position to understand launch of this

Unidentified Analyst

out did very helpful. really expect would that I the nice think you amazing very really guys properly. have business color. should And I congratulations, great. outlining you And much. because That's a an I the job appreciate you That's today. it Thank reaction to that stock laid

Clifford Press

David. you, Thank

Operator

Thank you.

would like to now to Press Clifford back no at remarks. I time. closing further in for turn floor the We queue this have questions

Clifford Press

It's pretty through went this. can. provide the of activities. business to extremely as I the here. forward and proceed point results to we say we think of shareholders future to as could all report And be a our we we've transition to supportive so whenever our much to pleasure can said at about where of We're report everything grateful finally we the possibly continuing of we period updates been the the who've we look create

speaking quarter. thank next forward look you much, and So to very

Operator

does and This ladies gentlemen. Thank today's conclude event. you,

We day. time, have wonderful a may You participation. and your at disconnect lines your this you thank for

Acacia Research (ACTG) 31 Mar 222021 Q4 Earnings call transcript