Q3 2023 Acacia Research Corp Earnings Call
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Speaker 1: Greetings, and welcome to the Acacia Research 3rd Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode, and a question-and-answer session will follow the formal presentation.
Greetings and welcome to the Acacia research third quarter 2023 financial results Conference call. At this time, all participants are in a listen only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the call. Please.
Speaker 1: If anyone should require operator assistance during the call, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Jeff Stamliss of FNK IR. Jeff, you may begin.
Press Star Zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Jeff Sad list.
K I R gap you may begin.
Thank you for hosting the call today are M. J, Mcnulty interim Chief Executive Officer, and Kirsten Hoover interim Chief Financial Officer before we before beginning I would like to remind you that the information provided during this call may contain forward looking statements relating to current expectations estimates forecasts and projections about future events that are forward looking as to.
Speaker 2: Thank you. Hosting the call today are MJ McNulty, Interim Chief Executive Officer, and Kirsten Hoover, Interim Chief Financial Officer.
Speaker 2: Before beginning, I would like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operation and are based on the current estimates and projections, future results, or trends.
Find in the private Securities Litigation Reform Act of 1095.
Forward looking statements generally relate to the company's plans objectives and expectations for future operation and are based on the current estimates and projections future results or trends.
Speaker 2: Actual results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see the risk factors described in Acacia's annual report on Form 10-K in court of the reports on Form 10-Q filed with the SEC.
Actual results may differ materially from those projected as a result of certain risks and uncertainties for a discussion of such risks and uncertainties. Please see the risk factors described in Acacias annual report on Form 10-K, and quarterly reports on Form 10-Q filed with the SEC.
Speaker 2: I'd also like to remind everyone that a press release disclosing financial results was issued this afternoon just after the close of the market. This release may be accessed on the company's website under the press releases section of the investor relations tab at acaciaresearch.com under the news and events tab. With all that said, I would now like to turn the call over to MJ McDulty. MJ, the call is yours.
But also like to remind everyone that a press release disclosing financial results was issued this afternoon just after the close of the market. This release may be accessed on the company's website under the press releases section of the Investor Relations tab at Acacia research Dot com under the news and events tab with all that said I would now like to turn the call over to M. J Mcduffy.
<unk> the call is yours.
Speaker 3: Thanks, Jeff, and thanks to everyone for joining us this afternoon.
Thanks, Jeff and thanks to everyone for joining us this afternoon.
Speaker 3: We've had a highly productive few months here and have several recent developments that I'd like to review on today's call. As you may have seen today, we announced that we acquired a majority stake in Benchmark Energy 2 LLC.
<unk> had a highly productive few months here and had several recent developments that I'd like to review on today's call.
As you may have seen today, we announced that we acquired a majority stake in benchmark energy to LLC.
Speaker 3: Benchmark is an independent oil and gas company engaged in the acquisition, production and development of long-lived oil and gas assets and mature resource plays in Texas and Oklahoma.
Thanks, Mark as an independent oil and gas company engaged in the acquisition production and development of long life oil and gas assets and mature resource plays in Texas, and Oklahoma I will speak more about this in a few minutes, but benchmark as an established entity managed by executives with whom we have a positive history.
Speaker 3: I'll speak more about this in a few minutes, but Benchmark is an established entity managed by executives with whom we have a positive history and a team with a demonstrated track record of success across market sites.
With a demonstrated track record of success across market cycles.
We have long lead agenda, the oil and gas assets and believe the timing for capital access in the industry, especially in terms of evaluation is ideal.
Speaker 3: We have long waited to invest in oil and gas assets and believe the timing for capital access in the industry, especially in terms of valuation, is ideal. The benchmark platform specifically gives Acacia access to high return, predictable cash flows while employing a conservative risk management philosophy.
<unk> platform, specifically gives acacia access to high return predictable cash flows while employing a conservative risk management philosophy.
Speaker 3: We also signed an agreement to sell our stake of approximately 25% in Eric's Bioscience PLC.
We also signed an agreement to sell our stake of approximately 25% and Eric's Bioscience plc.
Speaker 3: This is our last publicly traded life sciences asset as part of the portfolio that we acquired in 2020, and once completed, this sale will result in a significant return on our investment. Moreover, it further augments our capital base, enabling us to reallocate this capital in new ways, more core to our strategy.
This is our last publicly traded life science asset as part of the portfolio that we acquired in 2020 and once completed this sale will result in a significant return on our investment. Moreover, it further augments our capital base, enabling us to reallocate this capital in new ways for quality of our strategy.
Our board has also approved a new share repurchase program I will discuss the details later in the call, but we believe that we have sufficient cash to support both our current growth initiatives and the share buyback.
Speaker 3: Our board has also approved a new share repurchase program. I'll discuss the details later in the call, but we believe that we have sufficient cash to support both our current growth initiatives and the share buyback.
Speaker 3: Turning to Benchmark, we're enthusiastic about the acquisition announced today, which we believe is a good example of the flexibility of our capital and where we're able to find value others are overlooking. For typical oil and gas models can rely on acquiring land and drilling wells, Benchmark's particular operating model drives returns to investors through its focus on cash flow.
Turning to benchmark Uzi asked about the acquisition announced today, which we believe is a good example of the flexibility of our capital and where we're able to find value others are out there looking for.
We're capable of oil and gas models had to rely on acquiring land and drilling wells benchmarks particular operating model drives returns to investors through its focus on cash flow.
Speaker 3: Specifically, benchmark strategy involves acquiring mature assets rather than undeveloped acreage and hedging up to 80% of its oil and gas production. The result is lower capital requirements and greater predictability of cash flows. Once an asset is acquired, Benchmark and their team undertake a holistic approach to increasing the ultimate recoverable volume.
Typically benchmark strategy involves acquiring mature assets, rather than undeveloped acreage and hedging up to 80% of its oil and gas production.
Resolved is lower capital requirements and greater predictability of cash flows once the assets acquired benchmark and her team undertake a holistic approach to increasing ultimate recoverable volumes from these wells through disciplined field optimization strategy with low leverage.
Speaker 3: from these wells through a disciplined field optimization strategy with low leverage.
Speaker 3: Simply acquire under-operated assets and give them some time and attention to increase their production volume.
<unk> acquire under operated assets and give them some time and attention to increase their production volumes.
Additionally, benchmark keeps G&A and seeks to hold assets for the long term with a focus on maximizing distributions to investors.
Speaker 3: Additionally, Benchmark keeps GNA lean and seeks to hold assets for the long term with a focus on maximizing distribution to investors.
Speaker 3: This results in returns closer to the wellhead than a typical oil and gas company and significant optionality where we can harvest cash flows that are not encumbered by a drilling program and redeploy them either to our shareholders or through M&A.
Results and returns closer to the level. It had been a typical oil and gas company and significant Optionality, where we can harvest cash flows that are not encumbered by a drilling program and redeploy them either to our shareholders or through M&A over.
Speaker 3: Over the long term, we believe that even though Benchmark is running a robust hedging program, the platform is well positioned to benefit from long exposure in the event the oil and gas markets outperform our expectations.
Over the long term, we believe that even though benchmark is running a robust hedging program. The platform is well positioned to benefit from long exposure in the event, the oil and gas market outperformed our expectations.
Speaker 3: For example, through increased production or reserves relative to how we value the assets or mean reversion in the market discount rates buyers assign to such assets.
For example through increased production or reserves relative to how the value of the assets or mean reversion in the market discount rates buyers side of such assets.
Speaker 3: Acacia has invested $10 million in Benchmark, resulting in a 50.4% ownership.
Acacia has invested $10 million in benchmark, resulting in a 54% ownership.
Speaker 3: The assets we're acquiring in this first transaction consist of over 13,000 net acres and an interest in over 125 wells, the majority of which are operated wells.
The assets we're acquiring in this first transaction consists of over 13000 net acres and an interest in over 125 wells the majority of which are operated wells.
Speaker 3: We view this platform as just the beginning of a larger strategy, and we intend to utilize our capital base and this platform to support future growth through acquisition.
We view this platform as just to be getting a larger strategy and we intend to utilize our capital base and its platform to support future growth through acquisition.
The Jones family Office Mccarron partners led by Johnny Johns is our partner in this acquisition.
Speaker 3: The Jones Family Office, McCarran Partners, led by Johnny Jones, is our partner in this acquisition. McCarran will maintain its interest and commit additional capital to support growth.
Karen will maintain its interests and commit additional capital to support growth.
Speaker 3: Benchmarks management team includes chief executive officer, Kurt Garing, who previously served as chief operating officer of both Benchmark and Jones Energy.
As far as management team includes Chief Executive Officer Kirk Gary.
Previously served as Chief operating officer benchmark and Jones energy.
Speaker 3: Other Acacia executives and I have worked with Kirk and Johnny in the past, and we know this team to comprise accomplished professionals with deep expertise in the
Other Acacia executive and I have worked with Perkin Johnny in the past and we know this team to comprise accomplished professionals with deep expertise in the industry.
Shifting to Eric's and early November RTW biotech opportunity is a leading specialized life sciences investor agreed to acquire for cash are Eric position for approximately $57 million.
Speaker 3: Tipping to Eric's, in early November , RTW Biotech Opportunities, a leading specialized life sciences investor, agreed to apply for cash for Eric's position for approximately $57 million.
Speaker 3: which represents a purchase price of £1.43 per share.
Which represents a purchase price of a pound 43 per share.
Speaker 3: RTW's purchase of Akisha's Eric's share.
Rtw's purchase merits.
Pieces Eric shares.
Speaker 3: is conditioned solely upon RTW receiving the necessary approval from the United Kingdom's Financial Conduct Authority and is expected to be completed in the first quarter of 2024.
Conditions solely upon RTW received the necessary approval from the United Kingdom Financial conduct authority and is expected to be completed in the first quarter of 2024 separate and.
Speaker 3: Separately and independently, Eric's announced that its board has approved an agreement for Eric's to be acquired in an all share transaction by additional upon regulatory and Eric.
And independently Ericsson announced that its board has improved an agreement for Eric to be acquired in an all share transaction by RTW.
Upon regulatory and Eric shareholder approval.
Speaker 3: The sale of our stake in Erics enables us to monetize this position in a single transaction converting a relatively illiquid asset into cash that we can redeploy.
Sale of our stake in Eric's enables us to monetize disposition in a single transaction.
Hurting a relatively illiquid asset into cash that we can redeploy.
Yes.
Speaker 3: We continue to hold positions in three life sciences companies, and we remain excited about their prospects, including AML Pharma, a clinical stage specialty biopharmaceutical company focusing on rare childhood onset neurological disorders with limited or no treatment options.
We continue to hold positions in three life Sciences companies and we remain excited about.
Their prospects, including AML pharma, a critical stage specialty biopharmaceutical company.
On rare childhood onset neurological disorders with negative or no treatment options.
Speaker 3: AMO recently announced positive initial preclinical data from a study of the use of the company's investigational therapy, AMO2, in the treatment of Duchenne muscular dystrophy that showed strong potential in treating the muscle damage and weakness that occurs with BMD and other muscle weakness.
<unk> recently announced positive initial preclinical data from our study of the <unk>.
Use of a <unk> based investigational therapy ammo too in the treatment of Duchenne muscular dystrophy that showed strong potential in treating the muscle damage and weakness that occurs with DMD and other muscle wasting conditions as well.
Speaker 3: as well as the potential to improve cardiac and skeletal muscle health and function. We continue to closely monitor the AMO team's progress as they continue to develop AMO.
Potential tenant great cardiac and skeletal muscle health and function. We continue to closely monitor the ammo team's progress as they continue to develop too.
As a reminder.
We acquired this life sciences portfolio for a total of $301 million. The Eric's transaction once closed will add an additional $57 million and returns on top of the $506 $5 million, we generated through the end of Q3.
Speaker 3: and we retain still more value to unlock in these remaining years.
And we retain still more value to unlock in these remaining holdings.
Speaker 3: Next, let me speak to the buyback. Our board of directors has approved a $20 million share repurchase program, which is subject to a cap of 5.8 million shares. We have a significant capital base and we have reduced our fixed costs so that ongoing operations and interest should cover our recurring expenses.
Yes.
Let me speak to the buyback our board of directors has approved a $20 million share repurchase program, which is subject to a cap of $5 8 million shares we have a significant capital base that we have reduced our fixed costs. So the ongoing operations and interest should cover our recurring expenses as such we believe we have the necessary capital to both return.
Speaker 3: As such, we believe we have the necessary capital to both return some capital to shareholders at this time, as well as execute against our strategic acquisition.
In capital to shareholders at this time as well as execute against our strategic acquisitions.
Speaker 3: As always, we'll continue to evaluate the most advantageous capital allocation opportunities for us to pursue as we continue to execute our strategy.
As always we will continue to evaluate the most advantageous capital allocation opportunities for us to pursue as we continue to execute our strategy.
Speaker 3: Turning to other aspects of our business, our IP monetization business received a favorable jury award and a key patent infringement case related to our Wi-Fi 6 patent.
Turning to other aspects of our business our IP monetization business received a favorable jury award in the patent infringement case related to our Wi Fi six patents.
Speaker 3: setting the stage for further licensing agreements in seven and that verdict is already driving productive
Setting the stage for further licensing agreements et cetera, and that verdict is already driving productive conversations.
Speaker 3: Our printronics business is operating more efficiently, delivering positive operating income, and additional cash.
Great products business is operating more efficiently delivering positive operating income and additional cash flow.
Speaker 3: Finally, I recognize that many shareholders are eager for us to deploy capital into our existing businesses as well as into new businesses.
Finally, I recognize that many shareholders are eager for us to deploy capital into our existing businesses as well as into new businesses.
Speaker 3: Our pipeline of opportunities continues to grow. We have a number of late-stage targets today, and we have many other opportunities on deck. In some of these cases, we are working with people we have partnered with in the past, and we have confidence in their track record of success, much like we did with Benchmark.
Our pipeline of opportunities continues to grow we have a number of late stage targets today and we have many other opportunities on deck and some of these cases, we're working with people. We have partnered with in the past and we have confidence in their track record of success much like we did with benchmark.
This familiarity of accelerating outlets.
Speaker 3: Our network of referral sources also continues to grow, and we continue to collaborate closely with our largest shareholders. They provide us with access to their extensive network of industry executives.
Our network of referral sources also continues to grow and we continue to collaborate closely with our largest shareholder as they provide us with access to their extensive network of industry executives. Additionally, and most importantly, the work to grow our pipeline has not come at the expense maintaining the rigor and high standards, we put into evaluating each opportunity.
Speaker 3: Additionally, and most importantly, the work to grow our pipeline has not come at the expense of maintaining the rigor and high standards we put into evaluating each opportunity. I'm reluctant to make any predictions about when future transactions will occur or the scope of any of those transactions.
I'm reluctant to make any predictions about when future transactions will occur.
If any of those transactions.
Speaker 3: We continue to need willing counterparties evaluations that are created for our shareholders and discussing the status of various projects does not work to anyone's benefit, but I hope you appreciate the progress we've made.
We continue to need willing counterparties at valuations that are accretive for our shareholders and discussing the status of various projects does not work to anyone's benefit right.
I Hope you appreciate the progress we've made.
Speaker 3: As we've mentioned in the past, when we evaluate potential opportunities in the public markets, we will from time to time acquire stock in those companies. In some cases, buying stock may be a first step leading to an offer for the rest of the company.
As we've mentioned in the past when we evaluate potential opportunities in the public markets. We will from time to time acquire stock and those companies in some cases buying stock maybe a first step.
Leading to an offer for the rest of the company our policy will be to not comment on individual positions as it will inhibit our ability to execute our strategy right.
Speaker 3: Our policy will be to not comment on individual positions as it will inhibit our ability to execute our strategy.
Speaker 3: I'd now like to turn the call over to Kirsten to discuss our third quarter financial results.
I'd now like to turn the call over to Kirsten to discuss our third quarter financial results.
Thank you M. James.
Speaker 4: Our GAAP book value at September 30, 2023 was $503.6 million, or $5.04 per basic share.
Our GAAP book value at September 30th 2023, with $503 6 million or $5.04 per basic share.
Speaker 4: Our book value reflects the exercise of the Series B warrants through a combination of no cancellation and limited cash exercise and the conversion of the preferred stocks which occurred on July 13, 2023 as part of the recapitalization transaction.
Our book value reflects the exercise of the series B warrants through a combination of no cancellation and limited cash exercise.
And the conversion of the preferred stocks, which occurred on July 13th 2023, as part of the recapitalization transaction.
As <unk> said interest income has covered Acacia is fixed current cost in the first nine months of the year and we expect this to continue through the rest of this fiscal year.
Speaker 4: As MJ said, interest income has covered Acacia's fixed parent costs in the first nine months of the year, and we expect this to continue through the rest of this fiscal year.
A key part of this was the elimination of approximately 6 million in annualized current G&A cost compared to the prior fiscal year.
Speaker 4: A key part of this was the elimination of approximately $6 million in annualized parent GNA costs compared to the prior fiscal year. We expect Printronics to generate free cash flows on an annual basis. Let me now turn to
We expect <unk> to generate free cash flows on an annual basis.
Let me now turn to the third quarter results.
Speaker 4: Total third quarter revenues were $10.1 million compared to $15.9 million in the same quarter last year.
Total third quarter revenues were $10 1 million compared to $15 9 million in the same quarter last year.
Printer tonics generated $8 3 million in revenue in the quarter compared to $9 6 million last year.
Speaker 4: Printronics generated $8.3 million in revenue in the quarter compared to $9.6 million last year.
Speaker 4: The intellectual property business generated $1.8 million in licensing and other revenue during the quarter, compared to $6.3 million in the same quarter last year.
Intellectual property business generated $1 8 million in licensing and other revenue during the quarter compared to $6 3 million in the same quarter of last year.
Speaker 4: As M.J. mentioned, given the nature of the intellectual property business, we have expected fluctuations in revenue quarter to quarter.
As Sanjay mentioned, given the nature of the intellectual property business, we have expected fluctuations in revenue quarter to quarter.
Speaker 4: General and administrative expenses, which includes GNA at IP and Printronics, decreased to $13.9 million compared to $15 million in the same quarter of last year due to a decrease in personnel and compensation costs related to reduced head count and a reduction in Printronics' GNA.
General and administrative expenses, which includes G&A at IP and printer Onyx decreased to $13 9 million compared to 15 million in the same quarter of last year due to a decrease in personnel and compensation costs related to reduced head count and the reduction.
In printer Onyx G&A.
Speaker 4: Operating loss was $15.4 million compared to an operating loss of $11.4 million in the same quarter of last year with the reduction due to lower revenues.
Operating loss was $15 4 million compared to an operating loss of $11 4 million in the same quarter of last year with the reduction due to lower revenues.
Speaker 4: We recognized $2.2 million in earnings net of non-controlling interest in our equity investment and joint venture for milestones reached during the period.
We recognized 2.2 million and earnings net of Noncontrolling interests in our equity investment in joint venture for milestones reached reached during the period.
Third quarter 2023, GAAP net income was one 6 million.
Speaker 4: third quarter 2023 gap net income was $1.6 million.
Speaker 4: or a $0.03 loss per diluted share compared to GAAP net income of $28.1 million or $0.02 per diluted share in the third quarter of last year.
Or a <unk> <unk> loss per diluted share compared to GAAP net income of $28 1 million or two cents per diluted share in the third quarter of last year.
Speaker 4: Diluted earnings per share adjusts the numerator used in the earnings per share computation for the return on settlement of Series A redeemable convertible preferred stock, resulting in a diluted net loss attributable to common stockholders for the 2023 period.
Diluted earnings per share adjusted the numerator used in the earnings per share computation for the return on settlement our series a redeemable convertible preferred stock, resulting in a diluted net loss attributable to common stockholders for the 2023 period.
Net income included $8 8 million in unrealized gains related to the increase in share price of certain holdings.
Speaker 4: Net income included $8.8 million in unrealized gains related to the increase in share price of certain holdings.
We also incurred noncash income of 1.5 million related to the gain on exercise of Starboards series B warrants.
Speaker 4: We also incurred non-cash income of $1.5 million related to the gain on exercise of the Starboard Series B warrants.
Speaker 4: The third quarter also included $6 million in non-recurring charges related to severance, legal, and other professional fees associated with the separation of our former CEO and other non-recurring charges.
The third quarter also included 6 million and nonrecurring charges related to severance legal and other professional fees associated with the separation of our former CEO and other nonrecurring charges.
As of September 30th 2023, our NOL totaled approximately $85 million.
Speaker 4: As of September 30, 2023, our NOL totaled approximately 85 million.
Speaker 4: We will continue to evaluate the most efficient ways to maximize this asset.
We will continue to evaluate the most efficient ways to maximize this asset.
Turning to the balance sheet.
Speaker 4: Cash, cash equivalents, and equity securities at fair value totaled $409.2 million at September 30, 2023, compared to $349.4 million at December 31, 2022.
Cash cash equivalents and equity securities at fair value totaled $409 2 million at September 30th 2023, compared to $349 4 million at December 31 2022.
Speaker 4: Equity securities without readily determinable fair value totaled $5.8 million at September 30, 2023, which amount was unchanged from December 31, 2022.
Equity securities without readily determinable fair value totaled $5 8 million at September 30th 2023, which amount was unchanged from December 31 2022.
Investment Securities representing equity method investments totaled $19 9 million at September 30th 2023, net of Noncontrolling interests, which amount was unchanged from December 31 2022.
Speaker 4: Investment securities representing equity method investments totaled $19.9 million at September 30, 2023, net of non-controlling interest. Which amount was unchanged from December 31, 2022?
Acacia owns 64% of Mylan, J, one which results in a 26% ownership stake environment pharmaceuticals for Acacia.
Speaker 4: Acacia owns 64% of Malin J1, which results in a 26% ownership stake in Viamet Pharmaceuticals for Acacia.
Okay.
Speaker 4: The company currently carries no debt, having paid off its senior secured notes on July 13, 2023.
The company currently cat carries no debt, having paid off its senior secured notes on July 13th 2023.
More details on these results have been made available in the press release issued this afternoon and in our quarterly report on Form 10-Q, which we will file with the SEC later today.
Speaker 4: More details on these results have been made available in the press release issued this afternoon and in our quarterly report on Form 10-Q , which we will file with the SEC later today.
Speaker 4: The completion of the recapitalization transactions in July resulted in an incremental $166.8 million increase in book value and an incremental $41.1 million increase in shares outstanding.
The completion of the recapitalization transactions in July resulted in an incremental $166 8 million increase in book value and an incremental 41.1 million increase in shares outstanding.
Speaker 4: We continue to believe our cash per share is an important metric for measuring our progress.
We continue to believe our cash per share is an important metric for measuring our progress.
Speaker 4: As of September 30, 2023, our cash per share stood at $3.45. With that, we'd be pleased to take your call.
As of September 30th 2023, our cash per share stood at $3.45 with that we'd be pleased to take your questions.
Thanks, Gary.
Okay.
Speaker 1: Floor is now open for questions. If you'd like to enter the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speakerphone today that you pick up your handset while asking your question to provide optimal sound quality. Once again, that'll be star one on your keypad now to enter the queue. If you wish to ask a question, please hold a moment while we pull for questions.
The floor is now open for questions if you'd like to enter the queue to ask a question at this time. Please press star one on your telephone keypad, we do ask if listening on speaker phone today that you pick up your handset while asking your question to provide optimal sound quality once again that'll be star one on your keypad now to enter into.
Q if you wish to ask a question. Please hold a moment, while we poll for questions.
And your first question today is coming from Anthony Stoss from Craig Hallum. Anthony Your line is live. Please go ahead.
Speaker 1: And your first question today is coming from Anthony Stoss from Craig Hallam. Anthony, your line is live, please go ahead.
Speaker 5: Thanks. Good afternoon, M.J. Just a question quickly.
Thanks.
Good afternoon MJ.
Just a question quickly.
It seems like a relatively small investment of $10 million for 54% you talked about.
Speaker 5: It seems like a relatively small investment, $10 million for 50.4%. You talked about pretty decent expected returns. Can you maybe expand on that expectation? And I had probably two or three follow-ups.
Pretty decent expected returns can you maybe expand on that expectation and had probably two or three follow ups.
Speaker 3: Yeah, so so it is small, it's the beginning of a platform to to to take advantage of a market where we think there are incredible opportunities to buy these cash flowing assets.
Yeah. So so it is small at the beginning of a platform too.
To take advantage of a market, where we think there are incredible opportunities to buy these cash flowing assets.
Speaker 3: uh from existing producers that have uh that have kind of neglected the assets and from others and so while this initial investment is small it's really an investment in the existing set of assets which is about six
From existing producers that have it.
It is kind of neglected the assets and from others and so while this initial investment is small it's really an investment in the existing set of assets, which is about $6 million.
Speaker 3: LPM cash flow, and then to continue to pursue this strategy, and the team has a pretty good pipeline of incremental opportunities. In this case, we're really partnering with a family that's been in the oil and gas business for the last hundred years and has a deep, deep set of relationships and a pretty fulsome opportunity set to continue to grow. The beginning of this platform is something much larger.
LTM cash flow.
And then to continue to pursue this strategy and the team is a pretty.
A pretty good pipeline of incremental opportunities.
In this case, we're really partnering with a family that's been in the oil and gas business for the last 100 years.
And has a deep deep set of relationships.
At a pretty fulsome opportunity set to continue to grow at the beginning of this platform is something much larger.
Speaker 5: Got it. OK, I think you answered my question. Let me just follow up with a second one. With your large cash balance, so it's correct to assume that you could go after much bigger oil and energy type of assets? Or this still signifies that you're going to be looking at all industries out there?
Got it.
Okay. I think he asked my question, but let me just follow up with the second one with your large cash balance. So it's correct to assume that you could go after much bigger oil and energy type of assets or there's still signifies that youre going to be looking at all industries.
We're going to continue to look at the industries that we've we've we've indicated.
Speaker 3: We're going to continue to look at the industries that we've, we've, we've indicated that we're going to look at, you know, industrials, mature technology, energy, health care. You know, I do think that this will be a large part of our holdings or a good part of our holdings over time pursuing the strategy, but that doesn't mean that we're shifting gears away from the other industries that we've been evaluating.
They were gonna look at industrials and mature technology energy health care.
I do think that this will be a large part of our holdings are a good part of our holdings over time pursuing this strategy.
But that doesn't mean that we're shifting gears away from the other industries that we've been evaluating it dimension that we have several things in it.
Speaker 3: Yeah, I mentioned that we have several things in it, you know, in the opera, those, you know, there are a handful of healthcare related technology, healthcare related industrials.
In the Hopper of those you know there are a handful of health care related technology health care related industrial businesses.
Speaker 3: In that bucket, so we're not turning ourselves into an oil and gas company. We do think this strategy is very attractive in oil and gas. We think it's very different from the way that others, including private equity and other public companies, are pursuing the industry. So we are very enthusiastic about deploying more capital here, but this is not mutually exclusive from our other areas of focus.
That bucket, so we're not turning ourselves into it all of the gas company. We do think this strategy is very attractive and oil and gas. We think it is very different from the way that others, including private equity and other public companies are pursuing the.
The industry.
So so we are very enthusiastic about deploying more capital here, but but this is not mutually exclusive from our other areas of focus.
Speaker 5: Got it. By the way, congrats on the Eric's deal. That's wonderful for Acacia. One of the shareholders, it looks like, in Eric's is kind of disputing the fact that you guys are getting cash and others are getting stock. I'm curious if you can share your thoughts.
Got it by the way congrats on the Eric's deal that's wonderful for Acacia one of the shareholders. It looks like in Eric's is kind of disputing. The fact that you guys are giving cash and others are getting stock I'm curious if you can share your thoughts on that.
Yeah, I mean, we saw that news too.
Speaker 3: Yeah, I mean, we saw that news, too. I think there is there a small broker that that shouldn't take away from the value of their opinion.
I think there is there a small broker that shouldn't take away from the value of their opinion.
Speaker 3: Um, we are getting cash and other shareholders are getting, getting stock. Um, other shareholders have a say in the way that.
We are getting cash and other shareholders are getting getting stock.
Other shareholders have a say in the way that the.
Speaker 3: the deal ultimately happens, we did have a sizable position, and so we got a premium in terms of the consideration being cash instead of stock because of that position.
The deal ultimately happens.
We did have a sizable position and so we got a premium in terms of the consideration being cash instead of stock because of that position.
Speaker 6: Got it. By the way, thanks for the conversion of Starboard. I mean, it definitely cleans up the model, makes everything a lot more clear. Thank you. Best of luck. Yeah, of course.
Got it by the way thanks for the conversion of Starboards definitely pleased if the model makes everything a lot a lot more clear.
Thank you best of luck, yes of course.
Thanks, Tony good to talk to you.
Thank you and as a reminder, if you wish to ask a question today you May press.
Speaker 1: Thank you and as a reminder if you wish to ask a question today you may press star one on your telephone keypad tend to the queue once again it'll be star one on your telephone keypad at this time if you wish to join the queue to ask a question.
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Speaker 1: And your next question today is coming from Brett Reese from Jannie Montgomery Scott. Brett, your line is live, please go ahead.
And your next question today is coming from Brett Reiss from Janney Montgomery Scott Bret Your line is live. Please go ahead.
Speaker 7: Yeah, thank you. Hi, MJ. Hi, Kirsten. How are you guys doing? Hey, Brett. How you doing? Great. Thank you. Good. Good. Good.
Okay. Thank you Hi M. J, Hi, Kirsten how are you guys doing a Brad how're you doing great. Thank you good good good.
Speaker 7: Um, there are a lot of, uh, credit opportunities now, you know, making, uh, you know, all sorts of loans because the banks have kind of pulled back from that type of lending. Are we looking at any of those type of opportunities with the big cash hoard we're building?
There are a lot of.
Credit opportunities now you know, making you know all sorts of loans because the banks have kind of pulled back from that type of lending.
Are we looking at any of those type of opportunities with the big cash hoard we're building.
Yes, so thats a great question, Brad it's something we certainly talk about a lot.
Speaker 3: Yeah, so that's a great question, Brad. It's something we certainly talk about a lot. You know, our primary business is to acquire operating entities and have them under Acacia's umbrella. And we do have, you know, some capacity to do things like that. I think, you know, we're we're cautiously evaluating it. Our team is not in the business of originating and syndicating loans.
Our primary business is to acquire operating entities and had them under our cases umbrella and we do have some capacity to do things like that I think we're cautiously evaluating it.
Our team is not in the business of originators.
And then syndicating loans.
Speaker 3: Uh, so, so, you know, we, we would have to build out a.
So so.
We'd have to build out.
Speaker 3: an effort to do that. We've certainly seen individual companies where we could put structured securities.
In an effort to do that we've certainly seen individual companies, where we could put structured securities.
Speaker 3: into them with returns that are kind of commensurate with what you're suggesting. We've also seen loans that we could acquire and control fulcrum securities. I would, what I would say is those are very interesting to us. Our primary objective here is to acquire operating businesses and have them in a case-stable of companies, but that doesn't preclude us from, you know, from evaluating some of these credit structure opportunities.
Incidentally with returns that are kind of commensurate with what you're suggesting we've also seen loans that we could acquire.
And control bulk rate Securities I would what I would say is those are very interesting to us. Our primary objective here is to acquire operating businesses and have them.
Indications stable companies.
But that doesn't preclude us from from evaluating some of these credit structure opportunities.
Okay.
Speaker 7: in terms of the thought process.
In terms of the thought process to go with a share buyback rather than declaring a dividend.
Speaker 7: to go with a share buyback rather than declaring a dividend, you know, as a way to get this stock.
As a way to get the stock price up.
Speaker 7: as potential currency for other deals, you know, why did you go with the buyback versus
As potential currency for other deals.
Why did you go with the buyback versus you know declaring a dividend if you could share with some of the thought process there.
Speaker 7: you know, declaring a dividend, if you could share with me some of the thought process there.
Speaker 3: Yeah. I mean, look, you could do either. I think from a tax perspective and from an optimization perspective, we think the buyback is attractive. And at the valuation of our stock today, I think it's beneficial to our shareholders to own more of that stock. And so ultimately, our board landed on a buyback as opposed to a dividend to accomplish that goal.
Yeah, I mean look we you can do either.
I think from.
Tax perspective, and from an optimization perspective.
We think you know that the buyback is attractive and at the valuation of our stock today I think it's beneficial to our shareholders.
Telling more of that stock and so ultimately our board landed on a buyback as opposed to a dividend a.
To accomplish that goal.
Okay.
Speaker 7: On a scale of 1 to 10, 10 being metaphysical certainty, what would you, you know, the Ariks deal closing, what do you think it is, a seven, eight, nine?
On a scale of one to 10 10 being met a physical certainty.
What would you use the aric still closing what where do you think it is 789.
Speaker 6: I love it, Brett, when you ask me to put things on a scale. What what I will tell you is that there is there is one condition.
I Love It Brad when you asked me to put things out of scale.
What what I will tell you is that there there is there is one condition.
Speaker 3: to the closing of our Acacia's Ericsh shares to RTW, and that is approval from the Financial Conduct Authority in the United Kingdom for the transaction. I will say that the entity within Ericsh that triggered this approval requirement is currently FCA.
The closing of our our Acacias, Eric shares to RTW and that is approval from the financial conduct authority in the United Kingdom.
For the transaction I will say that yeah, Eddie and Erich.
That triggered this approval requirement is currently FCA.
Speaker 6: approved or certified as is RTW so I don't I don't want to handicap it but we're we're being advised that that this is a routine approval process by the
Approved are certified as his RTW.
I don't want to handicap, it, but where we're being advised that that this is a routine approval process by the FCA.
Speaker 8: Now, it's you know, there are things that are out of our control, but that's what we're being advised. Okay.
Now it's you know there are things that are out of our control, but that's what we're being advised.
Okay.
Pivoting to the to the patent business.
Speaker 7: The jury award that we recently got, do you know when we'll know whether, you know, the defendant will elect to appeal or just ante up and pay? You know, what's the timelines on that?
The jury award.
We recently got do you know when we'll know whether you know the defendant will elect to appeal or just any up and pay.
What's the timelines on that.
Speaker 6: Um, we, we do not have a specific timeline on that. Um, it, the, the award in and of itself, uh, the, the defendants have an opportunity to appeal that. Um, they have an opportunity to settle that that's a process that, you know, we, we can't comment any more on. Um, as I did mention, it has created some other productive conversations around that portfolio. Uh, and we'll see how those play out.
We do not have a specific timeline on that.
The award in and of itself.
The defendants have an opportunity to appeal that.
They have an opportunity to settle that that's a process that we can't comment any more on.
As I did mention it has created some other productive conversations around that portfolio.
And we'll see how those play out.
Speaker 7: Right, right. And one last one on the on the patent.
Right right and one last one on the AR on the patents.
Speaker 7: Do you know what the court calendar for firm trial dates with other defendants in the Y5-6 portfolio are over, let's say, the next six to nine months?
Do you know what the court calendar for firm trial dates with other defendants in the Wi Fi six portfolio are you know over let's say the next six to nine months.
I mean, well in art.
Speaker 4: Sorry, I'm going to go ahead. I was just going to say we do disclose all trials, not just Atlas within the next 12 months. And that's at 7 that that is publicly disclosed in our 10-Q .
Sorry, Yeah. Go ahead go ahead I was just going to say, we do disclose them all trials not just Atlas within the next 12 months and that's at seven that that is publicly disclosed in our 10-Q.
So it's.
Speaker 7: So in the 10-Q, there are seven trial dates, you know, from seven different defendants?
So in the 10-Q, there there were seven Ah trial dates from seven different defendants.
Yes.
Speaker 7: Well, that's music to my ears. I'm going to drop back in queue. Thank you very much for answering my questions. Both of you.
Well that's the.
Music to my ears, I'm going to drop back in queue. Thank you very much for answering my questions both of you.
It was great starchy red.
Yeah.
Thank you. Your next question is coming from John <unk> from <unk> capital Dan. Your line is why yes go ahead.
Speaker 1: Thank you. Your next question is coming from John Levin from Levin Capital. John , your line is live. Please go ahead. Can you hear me?
Can you hear me.
We can't hear you out how are you.
You can hear me.
Yes.
Speaker 9: Good. Okay. So it follows that question. So I think that award was $27 million. Is an inference, same kind of question of percentage, inference that that is less than half of what you might ultimately obtain or a quarter? What's the potential magnitude here that this could produce? Because we know it's significant.
Right. Okay. You still follows that question. So I think that award was $27 million is an inference Hussein calling a question your percentage infant would that is less than half of what you might also be a pain or quarter, what what's the potential magnitude here does this could produce because we know it's significant.
Speaker 6: Yeah. Hey, John , just quickly on the numbers, the jury award was $37.5 million. Yeah, my bad. I'm wrong on everything these days. Go ahead. No, that's okay. I don't want to handicap what the total value of the portfolio is, but it's substantial. When you look at the end market for Y5-6, and then
Yeah, Hey, John just quickly on the numbers that the jury award was 37 5 million.
Yeah My dad.
Everything these days go ahead.
That's okay.
I don't want to handicap, what the total value of the portfolio is but it is substantial when you look at the end market for Wifi six.
And the total number of products.
Speaker 3: uh that that use wi-fi the the market opportunity there is very large um so i i'm not gonna you know i'm not gonna estimate that it's half or a quarter or three quarters or a hundred percent what i would say is that the market is is very large for products that use uh the wi-fi technology um that we have a patent on and uh mark and his team are continuing to execute very aggressively on taking advantage of that opportunity
That that use Wi Fi that the market opportunity there is very large.
So I am not going to you know I'm not going to estimate that it's half our quarter three quarters of a 100% what I would say is that the market is very large for products that use Wi.
Wi Fi technology.
We have a patent on and market. His team are continuing to execute very aggressively on taking advantage of that opportunity.
Great. Thank you recognize me. The question was designed as a leading question you do that thank you.
Speaker 9: Good. Thank you for recognizing me. The question was designed as a leading question. You knew that. Thank you.
Thanks, John.
Speaker 1: Thank you. There are no further questions in queue at this time. I would now like to turn the floor back to management for closing remarks.
Thank you.
No further questions in queue at this time I would now like to turn the floor back to management for closing remarks.
Speaker 6: Thanks, Tom. Thanks everyone for joining the call. We're really enthusiastic about the forward motion here. We're very enthusiastic about Benchmark and our partnership with McCarran and Kirk and the team at Benchmark and we appreciate everyone joining the call. Thanks very much.
Thanks, Tom.
Thanks, everyone for joining the call we're really enthusiastic about the forward motion here.
We're enthusiastic about benchmark and our partnership with Mccarran, and Kirk and the team at benchmark.
And we appreciate everyone joining the call thanks very much.
Yeah.
Thank you. This does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Speaker 1: Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.