ACTG - Earnings call transcript Q2 2022 | Acacia Research Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Acacia Research Second Quarter 2022 Financial Results Call. [Operator Instructions] 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; and Rich Rosenstein, Chief Financial Officer.

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

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

Clifford Press

good Thanks, Rob, morning, and everyone.

and acquisition over been added immense value last investments to the value the key initial it the rapid has to platform investments. if discussing results partnership initiate has facilitated Starboard the creation propelled Starboard's become ongoing This Acacia. capital company. enabled and has the commitment with years, initial Before of clear establish achieved past it's at I relationship the company what look X.X quarter, the back has over that our

buyer, acquire other an a has assets it importantly, others. mandates that to to advantaged develop the entities and approach by timelines constrained allowed and operating have as More differentiated unencumbered us

that the value built to on been next for believe has in particular, and on initial can revisit Value The in company expand appreciation arrangements development. now of Starboard of with clarity contractual the of on highlighted that resources with collaboration the In simplifying capital the has Acacia structure that phase have basis matured. Starboard's the Our terms we partnership. ownership position better need

We on Starboard current with are ownership simplifying structure. working this

a Our contractual with associated special financial advisers The arrangements. to and or of has not affiliated formed retained directors special Directors Board committee Starboard. resolution assist a and evaluating both these of of committee's legal negotiating with

Given an or transaction. a money, capital complexity the be will structure that even the when on no derivative not this be parties the and current of reach our this estimate and It able regarding fact new will that defined, if simple terms. assurance the to are instruments can will provide to structure be would agreement the premature be in there be

changes have M&A to potential transactions reevaluate pipeline Recent changes. markets active, are valuations of Our and our opportunities. these expanding equity to and credit specific of in us given reduced and program we continues be in the opportunity light

we significant have to experience situations especially opportunity transactions, unlock value. with see where We an complex

of that of clear capital. Simultaneously, increasing are seeking. are a have We base on established we type our opportunities focus the we

transaction. the quarter, $XXX generated additional date, portfolio of an monetization from the we proceeds During million as million we cash to To we've these of Life realized from gains positions. in realize $X continue this Sciences

companies. We continue equity or to hold at accounting at companies method $XXX for cost million and in market private value assets public for

this commercialization approval a stage year, sets has importantly, payment by benefited U.S. in the triggered product. One and Administration and end these infections. of the Acacia by of This recurring XXXX, treatment holdings Drug novel compound for a is from $XX.X Viamet, milestone of for the yeast approval Food of the to which million April for this due of

through largely related business This to Intellectual during Business, in our generated Property generate value quarter. revenue, acquired the patent to agreements addition, $X.X licensing recently portfolios. continues In million

the second $XX program our of completed Subsequent at price in April, per XXXX. of - $XX coupled an During that program to initiated own million share. with shares shares million we buyback announced repurchased average we million the in $X.XX the quarter, our we X.X the also quarter, late end of buyback

that, We XX.X discuss Rich? CFO, retired of Rich shares outstanding. million or XX% have shares financial the to Rosenstein, like our results. call to turn With to I'd over the

Richard Rosenstein

of $XXX.X $XXX.X million you, or Thank at value share compared warrant over was GAAP $XXX.X GAAP time. value reflects basic on per XX the the liabilities as book impact XX, company's per XXXX our share derivative or embedded the which of million includes balance per at the price and sheet, basic million turn of all March or Clifford. increase June December book $X.XX This $X.XX and share share XXXX. $X.XX in impact XX, to in

decline of share quarter XXXX $XXX.X basis, is would and this equity decline these the year markets these down billion think in value from book of expiration we $X.XX exercise these during share of our share, consider $XXX.X under converted. be preferred March million $X.X stock, and or XX, more As to all book value Acacia's million of of it as to as or liabilities reason year-to-date holdings and be convertible for exercise as would all or pro $X.XX XX, have broadly assuming upon the per pressure. value issued $X.XX our security primary book or On per The extinguished instruments of warrants useful in rise per derivatives, full been XXXX. should the is the prices December forma share

for the compared include $XX.X period Breaking that For year the ago. the a quarter million in of revenues revenue the million to second contributed down: year. were in $X.X first, Printronix XXXX the in contribution prior quarter no million $XX.X quarter, in our highlights the of performance with financial comparable following:

related the nature to business. organization. in administrative increased as of compared million year were last revenue Property expenses due Second, $X.X million company's $XX.X and a transaction generated which the from of $X.X uneven securities the of prices $X.X shares of in $X.X $XX.X on million million assertion the Intellectual expenses $XX.X did, we our personnel to Life in development continue $X.X a loss, second year in to security as positions Sciences Breaking sales million the year. patent a quarter ago. million to inclusion quarter the We the to $XX.X related down, income second loss months. million million revenue the seasonality this of last Portfolio, compared operating gains due Printronix's of the to and is our expenses of quarter operating operating Business the in bring This the compared timing quarter, was unrealized decline million from million $X.X Realized to reflection three business Operating our Printronix in well was in and of that of this of reflection the to business. contributed realize loss primarily in share quarter, over totaled sales however, in realization. securities last which General to during in

Our remains largest Oxford from position Nanopore. portfolio this public

while of was for realized earn June, IPO Nanopore, down we Also, approximately XX.X shares $XX its a we the our shares $XX end September. in royalty XX milestone million income the investment This from total the carried As milestone owned milestone did from the portfolio. bringing million the million income at income to of the in acquisition the in time to nearly in of future. not $XX prior our date to at Viamet gain, investment and share million of Oxford that of with million prospect quarter, approximately of additional of

second to share million loss was expense $XX.X to in We $X.XX liabilities $XX.X GAAP share per XXXX compared last carryforward quarter did during $X.XX Acacia or of in to and fair appreciation million diluted in the We ended change Starboard or the Our warrants a the the recognize net of million share per with the related of year. of $XX.X operating net income approximately noncash the quarter. million. value $XXX net price loss derivative due diluted

the During been SEC at gains XXXX, of able Debt our $XX to nearly senior Starboard million that at the on just to notes brought notes NOL later beginning as stood $XXX.X in quarter, two-third million. Value, release at loss at Form December XX, realize in million with was down at XXXX. the been we the our issued and our these during year the in compared $XXX secured the value to another from carryforward $XX XX $XXX.X the our file the harvested will end over securities $XXX.X June down at to $XX largely Cash outstanding detail down fair XX-Q, in available $XXX quarterly morning and a issued this quarter, now NOL million which December notes More of XX, the at Recall million, of July, in results through repaid report press realized $XXX.X to we and in we million Subsequent capital have have just million balance plus meaning we've million. made of in over that totaled gains. million on the quarter. month today. stands paid

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

Clifford Press

our I attributable forma by In opportunities direct Rich. that that, our the value volatility market embedded have with to we developed, the our be way conclusion, primarily investment in also In with in the enabling Thanks, value with that potential are withstand continued to questions. take note Holdings. declined our pleased types during of overall would your strategy partnership to we reviewing XX% book these establish has per pro share we the platform. And Technologies future. value to decline us to of the Nanopore Starboard events has year-to-date, pleased period, to realization this Oxford

Operator

question And Craig-Hallum. Instructions] from Stoss Anthony from first [Operator comes our

Anthony Stoss

Good and morning, crew. guys, Rich and Cliff

think the like won't the out? Also, Clifford, And they restructure I comments in and done helping I to Starboard? the I no wanted both activity little and follow-ups internal in involved you if any Does past, those looking to external. - two. that that. between have have bit, signal if dig it Starboard, yourselves you've give a you Are capital down I know mind, a in after could, the to us Just that total of paying access way independent committee longer less effectively you couple or on

Clifford Press

and relationship the the we expanding I I us thought clear was I'll Starboard Tony, be that Starboard that. very will first, total regard strategic the through and go Rich pretty capital. we that Okay. for will take relationship as then

I think would period a this how - we've of that during can how learned we we operate. lot

transaction something should this we have pretty interesting if we can announce think to get done. I

derivative resolved. As at have time obviously be company to those Their you values when know, come so in much lower. have value, instruments significantly they into invested were the an earlier

development go last think of the we've learned which what value on be to I the is And think future there's I for around. extremely over valuable focusing years, will then company. enough the we X.X

- So I that's how about we it. think

As the can we With transaction there's can no availability, a assurance I complex, give happen. said, regard numbers. on to you It's it. that working Rich but are capital

Richard Rosenstein

Clifford, and Thanks, thanks, Tony. Sure.

before, we and as So would include additional an as availability. very the with $XXX under have approximately $XXX notes facility quarter. I marketable in end structure available the we our about XXX of cash simplification still mentioned the path securities Starboard at capital And clear Clifford million capital Starboard of had discussions - There's of million mentioned, that and a a approximately we're arrangement. forward

would I that? impact million $XXX of that million even $XXX to the say considering approximately before So it's

Anthony Stoss

Clifford, Got an hear you. for And love then update. to I'd maybe

following of patent just in that? private that out You've reduction WiFi and valuations, on portfolio. opportunities your up near-term been Any comments just about in overall shake public companies. the think you And then successful could

have number the way speeding your year deals last guys of potential as or up the result? Is patient now a coming over been You smartly so.

Clifford Press

asset have looking Marc very That distressed been larger a involved. his portfolios. interesting. somewhat got done And have an job. patterns and at They're we The team class excellent was first Sure. when Booth now

there's numbers. that found we think I strength in

deep, very were hard something some potential. we there it's have broad a think opportunities that We're there. better looking and out are while a a you now, to been have able we we since portfolio, you liked. attractive - I buy really If And really

did values who long - transactions yes, somewhat. time. model In us, that we type do the same Others of terms transactions, experience to a can similar a take The reset of thing. business have approach

completed that can future. significant to transactions, to to I near those about the they transactions intend in regard think happen, but do best talk obviously when we we have it's discuss with

Anthony Stoss

color the luck. for Best thanks of Great, guys.

Clifford Press

Thanks.

Operator

question from Thorpe comes next Jeff Capital. from Henriksen Abbotts Our

Jeff Henriksen

of questions then a Hi guys. How're doing. one and couple Good A Rich. Maybe morning. couple Cliff me. for from for

opportunities. are, So I where Cliff, area. know private we you're us dry in can little but on maybe color given markets about financing give you a both kind public more also how in we've then market of opportunities thinking that up seen

reflecting the you private then know about - on on conversation include you to be converted the the woefully that you And any kind wrongly, market look, any Rich, a that's the through price one a inadequate finally, restructure also true price the value, current Starboard is then $X.XX And And grasped could where it conversion. just shine I two-third Do B restructuring never the another those? public on to more the intrinsic the buyback. could and doing is that, think of then financing great. in think better rightly there's your those? interest then mean would how would Series cash completed just on assume get or way market understand? And balance going how it. between we that of warrants. a think I of any you But I permanently share weren't how that I warrants really to be structure color to So of of you color economics really about I given strike this to on the can think the that and the assume

Clifford Press

Jeff. Okay,

there, opportunities, most first about very we be situations and on think are generally, between So forced enough, and we we opportunities carefully your not into interesting kind competitive, and auction I and where can a terms public the private, situations. competitive. we often oddly in question, think public an are of of are we think the in where where scenario Interestingly,

to a this detail So way internally. some of these best And is lot discuss complete the really, the explain to we is we've what market, in something talking concluded transactions. to we're about

I will it think we then clearer so. be when do

would transactions the what it type say that's at. in of about now we're terms So looking I that of

of the the of one-fourth we shares. buyback, terms In bought nearly

have them have process more authority at announced would about clearly they're moment. those be the in issue opened detail, in to in Starboard, the no with any the we We we're large. more And Rich for appropriate for and the small, way the the at they're conversations, with be market the is others, say moment. talking it I buyback on recapitalizing will but they're not And you and - since not instruments, of answer us will complex,

this The to it go and is through simplify. solution, forma you So for pro when the them, significantly changes. said we've before,

Starboard and all think on basis. shareholders I to exactly we'd identical have an like

much So add can enable that and stock trade we between its hopefully, we much to intrinsic structure, simplified can eliminate think anything - the would you Rich, difference in way more a capital to I primary value. with want to, and diluted and do to get be have a that? which consistent the

Richard Rosenstein

Clifford, like think add. more unless you'd I actually, covered No, you there's it us something to

Jeff Henriksen

cash? on comments Any $X.XX converted in the permanently on strike, mean, the that I two-third weren't

Clifford Press

say. were you, without instruments can't But the shareholders strike by the the of going can there's in middle are to we're and I Yes, Jeff, shareholders. negotiations voted will the the change I when set on think We really prices the were I terms issued. don't so of back anything unilaterally now, instruments tell

that's technical So changed. that whether can't. just to can It answer the be

Richard Rosenstein

But add I - that, add may. I I would would if to

it than So the was and recall, structure arrangement place, was was Clifford mentioned stock put meaningfully in as this is when financing this put lower before. you place in may today,

of these outgrown facility. a were that or place. in approximately And $X.XX so we put sort have was share stock instruments The $X.XX when

be triggered that remaining at notes And $X.XX of $XX.X exercise so million the would upon price. that warrants the on issuance would convert

look asset and to value that our since financing in given price would we the at more take share in what be so growth time. have growth appropriate And a would

Jeff Henriksen

you. Great, okay. Very helpful. Thank

Richard Rosenstein

you. Thank

Operator

We now Brett Janney. Reiss hear from with

Brett Reiss

here Can me? you guys

Clifford Press

Yes. We can Brett.

Brett Reiss

Great. Great. Great.

helping of is terms them name structure firm third-party in to In us the and who that the capital retained Starboard simplify - well. as of what a you the retained firm help

Clifford Press

Okay.

add sure that capable the them advisers, it there their appropriate making the handling sophistication I probably retain announcement to Starboard, out could advisers. to an do So on whether but internally, I will as And so of not think to it's could of just not apparently, advisers any Starboard own. yet. be what they're has it's - I'm say, would we at they any we dependent time up this

Brett Reiss

Okay. Thank taking you for my question.

Operator

from question Enterprises. comes Hoff Our from David Kubhera next

David Hoff

Hi, morning. good

litigating Just of potential quarter licensees. looking defendants it of of kind projecting back RPX everyone has the there years, the the at the past, once. guess, license into signed kind universe lump the of of four a XX in another newer Acacia, quarter instead get portfolio license license in it doing XXXX, Is to kind for comp with sum any and of I of with I'm that kind kind projecting was executed thoughts at four for, a payment? license or taking of

Clifford Press

privately get you determined I property sort to, a companies what into large built a legal to long in were And committed of referring XX-year to go tends and And monetizing up we say that. think Acacia out items as universe I'd of users and significant others initial its a very the to like viable the interesting question. still last a with But when is portfolio to the as single It's do RPX - we RPX was It's owned is time, transact. But a case participant license talk and of over think a actor of I explained counterparty. there. market. years, there. that It's in very, for we has way many terms interest. the in reputation have which in a very have now. It out that do, that case preclude we very others battles.

is of a it's perfectly it's and It in are think Acacia, to is capable to just and to knows tends the generally the whole going this. contract they doing, when very result. getting an seasoned people that timing distance, know talking that organization I of what

David Hoff

any in a Europe? in Great. very license successful Currently, and lot bands. there's pending Okay. Can or of Germany Germany? Is basically sales there's litigation in confirm you if have through forcing current defendants been any injunctions litigation there plaintiffs to

Clifford Press

enforced We have establish We're so can benefits place, China to effort the European is tell as well but that have including litigation, be themselves that making this now ensuring They're - with over significant have familiar all novel put one, going litigations for system, in intellectual of a of jurisdictions. enough, we many property the property. territories rights determined can the intellectual made well. I all of They There's oddly a into jurisdictions assertion an lot resources India. contract you, and them. actually, attractive the these is place over of

David Hoff

question. some close of transactions spinning spinning I of after the know made? kind thoughts to Any Last Sure. out on are division is possibly property Xperi out intellectual getting theirs. these

curious, any it out. Just on possibly thoughts spinning

Clifford Press

so well regard. there's don't to I and subject it's made been structure to debates value - difficult I discussed. aware regard what any that for of or earnings plans any class is say that that as we're the It's made an obviously ongoing think will division. is, ownership that revenue kind much and of long stream, with correct in an to no we've asset a been we decisions is which have on that

David Hoff

for you. it me. Thank that's Okay,

Operator

finish are there queue. closing questions with? have would no in comments like Do to you Sir, you further the any

Clifford Press

good a and that next for opportunity, the We - intensely while, announce take platform We to and X.X. now with appreciate refer been have on level. executed very to created which a to stock great we're as to partnership coming like next would very phase. that the in we've is We it our a something the engaged which Acacia Starboard, think We sometimes we hope that. buyback, with to the is everyone's now something We've built we've has support. it much

of achieve can can that we there next be that much that no phase the said, a I there be of like will development you completed, relationship. but I would assurance As to very transaction tell

Yes. I think it for that's the call.

Operator

This and ladies does today's gentlemen. Okay. conclude call. Thank conference you,

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

Acacia Research (ACTG) 11 Aug 222022 Q2 Earnings call transcript