ACTG - Earnings call transcript Q2 2024 | Acacia Research Corporation

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Operator

Good afternoon, ladies and gentlemen, and thank you for joining us for Acacia Research Second Quarter 2024 Earnings Conference Call. My name is Bria, and I will be your conference operator today paybacks. I would like to remind you that this conference is being recorded today and is available through audio webcast on the company's website.

Following these remarks, there will be time for questions. Analysts and investors are reminded that any additional inquiries can be directed to Acacia calling today's call at irtshares.com. to conference like to now would turn over the Mr. I of Gagnier Anderson Communication. Brent Mr. begin Anderson, conference. you your may

Brent Anderson

Thank Leading Interim Executive Officer; you, Acacia's and McNulty, operator. Kristen today's call Hoover, Acacia's Chief Officer. MJ Financial are Chief

Act as These and Securities generally projections future uncertainties. plans, information during and estimates relating statements XXXX. differ about that objectives those as that to and future MJ or are current materially be company's forward-looking of expectations, to Litigation the may current forward-looking may projected provided Kirsten remarks, results a forward-looking events this relate prepared on Before please Actual defined their future estimates, expectations operation Private reminded the and and result results contain from risks trends. Reform of call in the for projections, based statements begin forecasts are certain and

Form factors was on accessed Press the Acacia's A company's Events Over call posted a turn afternoon. Relations annual Mr. to Presentations uncertainties, the please the acaciaresearch.com. results to tab Officer, with disclosing the section Acacia's QX of the tab. McNulty. Investor For see press release corporate may like on The a company I This the to now the overview earnings to and and you. this on at risks website and be SEC. release of Chief Releases its under can MJ found also the described presentation in discussion new under XX-Q filed would XXXX and presentation over Executive XX-K financial website, risk which issued quarterly such report be Form reports

Martin McNulty

our us earnings thank for joining second much, you very today and thanks quarter Brent, call. all for

execution our with call driven in subsidiary. benchmark core the XXXX, last results delivered believe of and into have paying the and tap many relationships industrials and expertise heard acquire and million the Basin on vertical. through consolidated improvement, where improve in build deep across because technology, excellent the a create these significant quarter is the strong focused trajectory The our today's points compared operating markets, by Acacia opportunities energy financial industry within businesses than expertise highlight creative and as acquisition operating say, opportunities, second value industry unique base both the to up define growth. is we energy continual situations, long-term we differentiator meaningfully bring of X value-oriented We businesses This we We evolution, so our on for the drive do performance. and risk and These I as cash private transformative important, operators transaction by by as results and to wells XXX% corners. improve flexible Acacia's off quarter to we producing and strength financial the and compared free transaction quarter. We're characteristics on company's find public company Anadarko the being of large building of can generated providing Western believe businesses to revenue second purely in of and our second verticals, to relationships, story. materially me in of performance. case generation, transacting months stock and efforts value business in by first are the of segments. and XXX% industrial $XX.X part technology, we sourcing approach pillars focused for are appreciation flow reward Acacia capital We operated creates and acquisition rather acquire where value a the you investors. performance. to expertise book can it's asymmetric completion and through our and Acacia owners to improvement As I approach value of up relationships our this year price creating raise shareholders

In property of year-over-year $X.X revenue, the our intellectual increased to the in executed an operations agreements increase million consolidated license by quarter. terms of number during due

energy the year-over-year lower a a of improvement of $XX.X million delivered program little sold, of as to our result that continual due industrial million from $X.X we lower year. completed accompanied about this by And it we by Our while in business. revenue as this continue operations from printers was in were operating revenues pleased generate acquisition decreased our the including QX, cash impact mid-April operations a cost loss to

terms adjusted adjusted months X benchmark adjusted the X business adjusted intellectual $X.X generated first EBITDA during of the EBITDA $X.X EBITDA, property of the in EBITDA the during in first generated the and in In million of year. generated of Pentronic X months the million months year first $X.X XXXX, million during

of $X.X loss EBITDA adjusted an generated parent million. corporate Our

corporate accompanying website mentioned at we've offset which we in adjustments interest as on today. presentation, More our were in to corporate million release expenses past, the press $XX posted the and in provided income. However, our detail by is the

on book a XXXX, the was $X.XX Our share at share June share of end $X.XX a XXXX. XX, per compared value to

minutes, value briefly $XX.X share. the additional stage in share technology, interest been key team's this greater this shareholder in at of compensation members Excluding life. management Board which adjusted first, the verticals, matter is our our company's now aligns management detail and and share is our our quarterly core an prior XX-Q, let cover per impact which on June me which results and including energy our our the related of interest and legal matter, closed speak AIP settled additional and to million to the but by will Kirsten value XX relates would plan has AIP few details about closed in have discussed by in a a involving per industrials. of is based. primary a of been book The metric and accrual matter metric XXXX. adopted believe We profits $X.XX per is a Book the in

First on Energy.

Oklahoma. a Acacia recent Western an engaged and In resource stake company XX.X% assets. and Benchmark completed of the November following plays in acquired development this oil the oil year, now mature As Texas last gas April in Benchmark and Austin, the owns you and certain Benchmark, Basin. of oil-based and of facilities assets acquisition the gas upstream majority know, Acacia in and assets subsidiary acquisition, in these of low-decline Energy based production the and acquisition predominantly year, in of in liquids-rich, related independent Anadarko

acres wells producing approximately XXX of per equivalent the of acquisition, operated net X,XXX Panhandle and over over latest barrels day the the oklahama in through capital-light geographic Following our density in Western business acquisition energy throughout significant company consists a Texas Basin XXX,XXX oil scale. brings undeveloped Western of Oklahoma. which Benchmark's included and could acreage in variety the be recent formations, The Cleveland increased financial solutions. and monetized valuable acquisition Cherokee the

As managed we a mentioned on can properties and risk shallow PDP oil and with and flowing hedges before, optimization focused enhanced robust be predictable minimal cash benchmark a gas through strategy, leverage. acquiring strategy decline through capital low commodity field deploys and intensity that

maintenance including flow and for pursue to is production maximizing long-lived closed various to previously the artificial goal assets. cash mature program wells enhance well assets Our our of and more enhancements, active profile benchmarks acquire lift field reopening deploy status optimization, a strategy and quo

April our this its represents operations Further, began on the the a through this. strategy. derivative the losses the terms other plan, During completed results. $X second of the energy of these in from acquisition $XX.X oil of statement. will the hedge quarter, coming income future I discussed maturing experienced significant. the representing line gas I the This a through partial hedge part team In including hedges quarter. a will And that on second improvement expense over and seeking consolidated the losses are sometimes the mark-to-market is to month revenues well income of EBITDA, XX% of years. gains the or the next quarter, significant, implementing as would and movements on associated impact production XX note program both of the operational benchmark you our also now the meaningful of reported our notice delivered realized million, as gains as adjusted million protect the that represents hedges. be and we result unrealized previously production line of net hedging would with our and our size X book, Again, note realized during roughly of book

figures the enterprise. understand accounting We the hedge book realized you better impact of on the component versus to these unrealized to help continue our of disclose cash

our the licensees. and for our in periodic our where The opportunity agreements to other with Turning vertical, events, million $X.X is in agreements same further licensing These portfolio advancing position property bolster these compared to last value lucrative discussions intellectual revenue business patents. and to Wi-Fi potential year. patent generated X our to continues in and licensing there's team settlements, believe during represent other pursue additional a quarter significant we the incremental and cash quarter technology $XXX,XXX

Additionally, capital attractive this acquire we continue to are business patent believe when into opportunities. portfolios group to evaluate risk additional potential investments new we there

business represented an business. to industrials the price When Pentronic the attractive cash flow acquired to believed turning in of Now generation. XXXX, operating we potential our it we relative October

significantly Pentronic's and team would began brought an XXXX, operational team there be adviser the and improve to strategic in requirements. costs reduce and efficiency. recognize also restructuring operating We In the early replacing management

quarter the that key model, We $X.X sales continue dual structure $X.X to with flow on pleased business transitions we generate the on and Pentronic specialty from free with consumables flow to during turnaround undertake, Pentronic with business cash including Acacia. million Pentronic anticipate Despite it cash generated lower-margin of Pentronic the the focus believe we top cartridges million combined the line ribbons nice were for compared last to mix including its a in quarter of source and printer and basis. to pleased and annual revenue initiatives, the streamlined work a higher-margin consumables this same in year. lower team operating are progress hardware represents an revenue, to continues in as its products,

remain remains M&A. building markets cautious risk-adjusted Turning been generation with have while opportunistic on to and scale ability flexibility acquiring to make the the on flow acquisitions characteristics. market volatility keeping about We've that close to higher Acacia an current environment. recent return businesses retaining eye and a stable the cash with now in focused the

However, as be market to opportunities, system. the expect of be Prior businesses. public volatility of through given our disciplined believe way long-term potential the we to pipeline volatility, with and private market the its recent additional M&A the focus, opportunities may remains strong underlying the constructive created overall to negligible the impact a our we approach and works volatility current environment

earnings and evaluate research Our value growth. execution our businesses operating opportunities can per continues attractive share where book new team to to drive and partners acquire

We the I'd businesses continue attractive acquisition like and discuss to complement to evaluate and in believe quarter business to gas oil technology, now call our second continue to acquire. initiatives turn where represents we results. an operating the to our financial over Kirsten to industrials to

Kirsten Hoover

MJ. you, Thank

GAAP XX, share. per XXXX, or $X.XX value Our June was book $XXX.X million at

additional Excluding the earlier, the per related last which XXXX, at impact quarter year. value to the of book have to $X.X of AIP discussed MJ of $XX.X months X would settled million were our and first revenues $XX.X $X.XX closed, that share. has been million XXXX XX, per the million June accrual of matter in compared Total in share same the been now

$X.X up property increased license in license quarter-over-quarter and over Our $X.X of quarter. number in the executed generated the due of million other licensing same to fees. year revenue to the million business intellectual XXX% quarter agreements average compared and last higher during

million quarter, in generated during business the in revenues quarter million operations quarter. revenues the to $X.X of in in million down compared industrial in $X.X a sales. Benchmark Our decrease last the to year same printer due $XX.X generated

no XX, is As investment last revenue quarter the same comparable of in on benchmark year. Acacia's November in initial closed XXXX, there

$X.X investment. to down noncash with legal per results. our to the and As net quarter and of compared increase not to The last depreciation Acacia's same included GAAP year, of approximately in financial $X.X $X.X first fees of unrealized or does the loss General to $XX the loss, in realized quarter generated. parent second amortization in a in Results $X.X been for which Pentronic of was $XX.X of of second $X.X and last Benchmark's increase compared the loss were $X.X million reported included to year. decrease in the depletion million, this to equity following million part of Energy a last reminder, expenses million million due segment, million million attributable administrative remaining expenses. we million our quarter share an from have loss of attributable million acquisition G&A. G&A our Corporation for partially April, closed the in the quarter as operating loss a operating in of noncash the loss of $X.X Research initial Pentronic reflect million loss $X.X to Acacia in depreciation, same or by in Acacia operating amortization $XX.X revenues addition offset expenses recorded which quarter acquisition and contributed an $X.X company XX% contributed to year of a in of per decrease higher included due operating $X.XX value The million gains. of fair second compared share losses net and second XXXX million Benchmark GAAP net the quarter related of securities. in derivative $X.XX income,

quarter and $X.X in included administrative second The general nonrecurring million charges.

of impact quarter share. $X.XX earnings AIP additional which per XXXX accrual $X.XX would the of been of to for related the have per matter, the the second share our Excluding per loss represented share,

NOL XX, totaled million. December our XXXX, of $XX As approximately

maximize evaluate We the most efficient this continue ways asset. to will to

indebtedness from Investment to fair $XX.X to XXXX, compared balance payments securities, readily December securities a unchanged stake December sheet. at noncontrolling was ownership which $XX.X unchanged Acacia cash to Acacia XXXX. the million XXXX. representing and million Viamet XX, offset at value XXXX, The interest, Pharmaceuticals in due the for basis, $XXX.X of received paid XX, of On XX, was a XX, of $X.X XX, XXXX. Revolution cash Cash, XX, million in of timing nonrecourse XX, million total at June from primarily equity equivalents XX% June XXXX. as method at fair licensees was totaled investments million June company's net $XXX.X indebtedness results total parent MalinJX, December Turning totaled to XXXX. from debt benchmark XXXX, owns equity XX% million Equity increase at by The securities June totaled X assets. XX, consolidated without $XX determinable in Acacia. at at June in value acquire

an We important continue measuring to believe cash that progress. is for per metric share our

As $X.XX. our of per at cash share June XX, XXXX, stood

press I'd the our we will like For the report release more on this information afternoon see that, XX-Q, and With Acacia's on issued please second to today. Form results, our later which over call quarterly turn with to SEC quarter file back MJ.

Martin McNulty

flexibility you operating Our we creation and access resources, strategic company expanded relationship have and with Starwood expands with our acquisition and enhances sourcing of network business. the industry expertise advantage the potential know Fourth, that, and we compelling evaluate any dislocated we're sourcing of a which investors. an deep as network opportunities, and which trading providing which opportunity partners oversight and And pleased many take below value to book operating significant environments have whom opportunities. to with expanded resources Fifth, of our of uncertain to of acquisition the a your operating our value, finally, for supports situations. I represents executive reminded With we'd have network, be cultivated of take and questions. we and experienced me, evaluation

Operator

you. Thank

We will from now with first line session. the question-and-answer Instructions] question [Operator Eagleston the begin of Formidable. Your Adam comes

Adam Eagleston

change. look was question going my count. to share that It the didn't be like around So

you are how buyback So the all thinking now? about

Martin McNulty

just the buyback. you as and know, Well, are executing on authorized, evaluating it's we that of timing

So Board, it of that very it's is a and much timing are we still about as just enthusiastic matter buyback. our

Operator

Stoss the from Capital. comes question Craig-Hollum of next Anthony with line your And

Anthony Stoss

intra-quarter, range give revenues kind of if of the benchmark for second you think can that assets September might benchmark your PMG us about for was expected kind and wondering the purchase an you I'm quarter? a of Kirsten, since

Martin McNulty

the a Tony, a date investor we Yes. put because XX. of I I the have out -- the at think we we I would it's out great we've take encourage mean question. to deck the revenue, you that look broken

And based third data the of probably revenue quarter you interpolate so on can the some that's I there. for out the estimates think

Anthony Stoss

right. look. a I'll All give it

Operator

Reiss next line And Janney. the from Brett question of with your comes

Brett Reiss

on of look Is like is income was of going like forward? to ratio operating benchmark that going what the kind XX.X% The revenues.

Martin McNulty

Yes.

great a question. that's So

to think the reconciliations about the it income from I operating related of way we've the EBITDA EBITDA. think to revenue. given is some we And

look so around price and And cash terms that so better on that to and in how we about think metrics a disclosed I so metric and think you of the previously profitability some at may of be of business. But forth. flow the had

And so underwritten perform. is to far, the we performing, had business it how

as little half performing the Now is it's It's over a quarter, expected. a but business early.

Brett Reiss

going is wells driven existing of drive more What's benchmark, increase wells business? on have or right. that you bolt-on with revenue increased MJ, just from Right, to is oil drilling the the going acquisitions? be by more acreage part revenue in in to or extracting the

Martin McNulty

Yes.

So we follow a PDP strategy.

in for set with and paid have So associated They associated production will them. acquired that initial a only of the wells. them, these we natural at the curve benchmark Anadarko basis. for producing matter, And production Western assets with a curve

the The kind they wells because that's we own. we reduction good the do so is that natural of to And the reducing they have reason this base. very at for picked team with curve been the historically of picked that

to out of on is that's the own. and we kind what can do to above wells oil so of your get piece the more operationally And base point, we gas

X opposed there the I that sets are the revenue of one. structure the there cost do the fully scale advantage as optimize has I things as have that other with business a to team we and to of remember mentioned, of from with kind take its strategy So now implemented standpoint. assets can we

And this. and acreage for early Cherokee becoming top ends also on get it's the third, working and not up is reduction in the the That's But Cherokee acreage line. that That it a so think could with deal did costs. in they're mentioned that I we interesting. have then And we that. be

could early, I it interesting. think be And of it's we not but wells. drillers are

out we're drill PDP-focused, Our strategy wells. is to so not

drilling we a sort take the However, create way we in that doing with light capital can risk additional to potentially very acreage of partner can revenue that folks that a and structure. have

Brett Reiss

Okay.

addition the to segment from in release operations. the new energy the G&A addition there body, Now was of

of on a benchmarks portion you give is more us. color some picked So by up Could that? overhead us

Martin McNulty

Yes.

own XX.X% So we we -- benchmark. are of

And costs of it. of was the came and G&A with bit context in of business Again, how run the and so underwrote little in we to new that the XX.X% along with business. own There a the of the what deal. line economics we viewing were the we

because the benchmark onto where then And in correct our minority section wrong, will Kirsten the consolidating so of acquisition then consolidate fully it And me adjusted P&L. I'm interest no and will deal, can in it interest we're the showing that P&L. for be

Kirsten Hoover

That's right.

Brett Reiss

of of different like is look Okay. the part the next portfolio on What the trial quarters? business. patent over the calendar couple

Martin McNulty

Now talk we about don't that, Brett.

Kirsten Hoover

XX schedule in the upcoming months. We

XX-Q, is that X. disclosed upcoming those in our So

Brett Reiss

Okay. I'll look there.

to you traction, will business? gain that doesn't the try how the Now exit that in towel long you're turnaround you implement the and it in Pentronicsif trying turnaround throw before

Martin McNulty

business reduce first, we doing Well, the operate to well. consumables that regular turnaround business basis. step the to of moving that have the a quite towards so we plan continuing a on and sell costs is higher-margin actually

continually we and do the to profitability go costs business. want cut if we match of on quo, status So piece to the we reducing the let's be as to some decide consumables then to cost we're what said, want what it's not back

actually over quite year, turnaround the the progress thinking quarters a made last are throwing not the that over has are little we the with in that So team maybe pleased X here. towel. We about on

come but more that, looking promising. on so to it's And

Martin McNulty

more any there are Operator, questions?

Operator

of [indiscernible] question next Our with Instructions] the comes [Operator line from [indiscernible]. Todd

Unknown Analyst

$XX MJ, under million QX. to rate a Christine, seems run How quick XXXX. $XX cash for I question key we considering such get million. do robust QX the operating of highlights. business and for flow like first generated a half see in number the That

Martin McNulty

Yes.

struck QX So last as the you of last of of had through patent that agreed revenue to because first in the to QX half we got and the year came recorded we in year remember, that this Todd, in were deals year. settlements

X the a in so that of came lot year, that. portion of through And of first cash which big the months is driving a

Operator

McNulty further no are it questions this there like remarks. to to And closing for I would at time. back MJ turn

Martin McNulty

deck having summer. the and that I enjoys great the out. at put Please take website a everyone hope everyone's a rest our I see and appreciate joining. look corporate summer we of the

I of a think about lot it in questions we've that talked the answers past.

where a a us, appreciate followed going. of good are of know around I it the who think the here view it story. call bit gives we we I But more puts we're a and folks have that. and lot really on meat the little

we you appreciate soon. look and forward joining, to So talking you we to

Operator

call. you. This conference today's Thank concludes

may You disconnect. now

Acacia Research (ACTG) 8 Aug 242024 Q2 Earnings call transcript