Q1 2024 Acacia Research Corp Earnings Call

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Operator: Good day, and welcome to the Acacia Research first quarter 2024 financial results conference call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to Rob Fink. Please go ahead.

Good day and welcome to the Acacia research first quarter 2024, our financial results Conference call. At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session I would now like to turn the call over to Rob Fink. Please go ahead.

Rob Fink: Thank you, operator. Thank you, everyone, for joining us today.

Rob Fink: Thank you operator.

Rob Fink: You everyone for joining us today posted on the call today are MJ Mcnulty Chief Executive Officer, and curious to Hoover interim Chief Financial Officer.

Rob Fink: Hosting the call today are MJ McNulty, Chief Executive Officer, and Kirsten Hoover, Interim Chief Financial Officer. Before beginning, I'd 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 operations and are based on current estimates and projections, future results, or trends. However, actual results may differ materially from those projected as a result of certain risks and uncertainties.

Rob Fink: For a discussion of such risks and uncertainties, please see the risk factors as described in Acacia's annual report on Form 10-K and quarterly reports on Form 10-Q, both of which are filed with the SEC. I'd also like to remind everyone that a press release disclosing the financial results was issued this afternoon, just after the close of market. The release may be accessed on the company's website under the press release section of the investor relations tab at acaciaresearch.com. With all that said, I'd now like to turn the call over to MJ. MJ, the call is yours.

Rob Fink: Before beginning I'd like to remind you that the information provided during this call may contain forward looking statements relating to <unk> patients estimates forecast and projections about future events that are forward looking as defined in the private Securities litigation reform that 1995.

MJ: 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.

MJ: Actual results may differ materially from those projected as a result of certain risks and uncertainties.

MJ: For a discussion of such risks and uncertainties. Please see the risk factors as described in Acacia that in your report.

MJ: K and quarterly reports on Form 10-Q, both of which are filed with the SEC.

MJ: I'd also like to remind everyone that a press release disclosing the financial results was issued this afternoon just after the close of the market.

MJ: Lisa maybe accessed when somebody's website under the press release section.

MJ: The Investor Relations tab at Acacia research Dot com.

MJ: With all that said I'd now like to turn the call over to Ajay MJ the call is yours.

Martin D. McNulty: Thanks very much, Rob. In the short time since our last call, we've continued to execute on our capital allocation strategy. We've realized gains from our IP monetization business and Cash Flow from Printronics, and we have deployed capital into our new oil and gas business. Our focus continues to be twofold.

MJ: Thanks, very much Rob.

Martin D. McNulty: In the short time since our last call.

Martin D. McNulty: Can you to execute on our capital allocation strategy realized gains from our IP monetization business and cash flows from Cardtronics and have deployed capital into a new oil and gas business.

Martin D. McNulty: Our focus continues to be twofold first growing cash flow and earnings from our current businesses and second continuing to evaluate opportunities to acquire new businesses into our platform.

Martin D. McNulty: First, growing cash flow and earnings from our current businesses, and second, continuing to evaluate opportunities to acquire new businesses into our portfolio. Our team has been busy identifying opportunistic situations where our research, execution, and operating partners can drive attractive earnings and book value per share, as it relates to the specifics. In terms of sources of capital, our IP monetization business generated $13.6 million, and Growth Settlement $3.6 million in gross settlement and patent license agreements in the first quarter.

Martin D. McNulty: Our team has been busy identifying opportunistic situations, where our research execution and operating partners can drive attractive earnings and book value per share.

Martin D. McNulty: As it relates to the specifics.

Martin D. McNulty: In terms of sources of capital are our IP monetization business generated $13 6 million and gross settlements.

Martin D. McNulty: Gross settlements and license agreements in the first quarter.

Martin D. McNulty: These agreements further bolster our position to pursue additional licensing agreements and settlements, and our team is advancing discussions with other potential licensees. The Wi-Fi 6 patent portfolio continues to represent a lucrative opportunity for periodic cash events, and we believe there's significant incremental value in these patents.

Martin D. McNulty: These agreements further bolster our position to pursue additional licensing agreements in settlements and our team is advancing discussions with other potential licensees.

Martin D. McNulty: Wi Fi six patent portfolio continues to represent a lucrative opportunity for periodic cash events and we believe there are significant incremental value with these pads.

Martin D. McNulty: Additionally, we continue to evaluate potential additional capital investment into this business to acquire new patent portfolios when we believe they're attractive risk-reward opportunities. Also, as you will recall, Acacia acquired the Pertronix operating business in October of 2021. At the time we acquired the business, we believed it represented an attractive price relative to the cash flow able to be generated and recognized there would be some level of operational and strategic restructuring required. Beginning in early 2023, this team began the detailed work of putting the restructuring in motion by replacing the Printronics management team and bringing an operating advisor into the business to formulate and execute on continuous improvement and efficiency initiatives, including significant cost rationalization. These initiatives are bearing fruit.

Martin D. McNulty: Additionally, we continue to evaluate potential additional capital investment into this business to acquire new patent portfolios. When we believe there are attractive risk reward opportunities.

Martin D. McNulty: Okay.

Martin D. McNulty: Also as you will recall Acacia acquired Cardtronics.

Martin D. McNulty: Trading business in October of 2021.

Martin D. McNulty: At the time, we acquired the business. We believed it represented an attractive price relative to the cash flow able to be generated and recognize there would be some level of operational and strategic restructuring required.

Martin D. McNulty: Beginning in early 2023. This team began the detailed work of putting the restructuring in motion by replacing the <unk> management team and bringing in operating advisor ended a bit as to formulate and execute on continuous improvement and efficiency initiatives, including significant cost rationalization. These initiatives are bearing fruit we've now.

Martin D. McNulty: We've now transitioned Printronics from consuming approximately $3.8 million in cash during the LTM period ended March 31, 2023 to generating approximately $6.8 million in cash during the LTM period ending March 31, 2024. We further defined and implemented the business's value proposition and go-to-market strategy for both printers and our high-margin consumables business. We're pleased with the progress of Printronics and believe its dual hardware and consumables business model, combined with its streamlined operating structure, represents a nice source of cash flow for Acacia.

Martin D. McNulty: <unk> transitioned <unk> from consuming approximately $3 8 million in cash during the LTM period ended March 31, 2023 to generating approximately $6 8 million in cash during the LTM period, ending March 31 2024.

Martin D. McNulty: We further defined and implemented the business's value proposition and go to market strategy for both printers and our high margin consumables business. We're pleased with the progress of print products and believe its dual hardware and consumables business model combined with its streamlined operating structure represent a nice source of cash flow for Acacia.

Martin D. McNulty: Turning to our capital allocation initiatives, early in the second quarter, Benchmark, our oil and gas business unit, closed its first significant acquisition, purchasing an attractive group of assets in Texas and Oklahoma. With the closing of the new acquisition now behind us, our experienced team at Benchmark has begun implementing its operational improvements. As we've stated previously, operational improvements are a meaningful part of our strategy.

Martin D. McNulty: Turning to our capital allocation initiatives early in the second quarter benchmark, our oil and gas business unit closed its first significant acquisition purchasing an attractive group of assets in Texas and Oklahoma.

Martin D. McNulty: With the closing of the new acquisition now behind US our experienced team of benchmark has begun implementing its operational improvement plan.

Martin D. McNulty: As we've stated previously operational improvements are a meaningful part of our strategy. Our goal is to acquire mature long lived assets and deploy various field enhancements, including artificial lift optimization, the more active well maintenance program and reopening previously closed wells benchmark core strategy of improving the production efficiency.

Martin D. McNulty: Our goal is to acquire mature, long-lived assets and deploy various field enhancements, including artificial lift optimization, a more active well maintenance program, and reopening previously closed wells. Benchmark's core strategy is improving the production and efficiency of its assets to maximize cash flow. As a reminder, this acquisition significantly expands the benchmark portfolio, adding approximately 140,000 net acres and approximately 470 operated producing wells in the Western Anadarko Basin, throughout the Texas Panhandle, and Western Oakland, including meaningful exposure to the emerging Cherokee development play via both operated acreage and non-operated arrangements with best-in-class operators. As we mentioned before, we like these assets because of their liquids-rich nature, being predominantly oil-based with a production base of approximately 6000 barrels of oil equivalent per day, and exhibit a low decline profile.

Martin D. McNulty: Of its assets to maximize cash flow as.

Martin D. McNulty: As a reminder, this acquisition significantly expands the benchmark portfolio, adding approximately 140000 net acres and approximately 470 operated producing wells in the Western Anadarko Basin.

Martin D. McNulty: Throughout the Texas, Panhandle, and western Oklahoma, including meaningful exposure to the emerging Cherokee development play via bolt operated acreage and now.

Martin D. McNulty: Non operated arrangements with best in class operators.

Martin D. McNulty: As we mentioned before we like these assets because of their liquids rich nature being predominantly oil based with a production base of approximately 6000 barrels of oil equivalent per day exhibiting a low to call it decline profile.

Martin D. McNulty: Kirsten will discuss the financial results for Benchmark, specific to the first quarter, before we close the transaction. And I would highlight that in our next earnings, you should begin to see the significant benefits we expect from the platform in terms of revenue and free cash flow generation. We expect the Consolidated Benchmark entity to generate approximately $50 million in asset-level cash flow over the next 12 months at current strip prices. As a reminder, Acacia owns 73.5% of Benchmark Energy Proforma for the transaction.

Martin D. McNulty: <unk> will discuss the financial results for benchmark specific to the first quarter.

Martin D. McNulty: Before we close the transaction and I would highlight that in our next earnings you should begin to see the significant benefits. We expect from the platform in terms of revenue and free cash flow generation.

Martin D. McNulty: We expect the consolidated benchmark at ADM to generate approximately $50 million in asset level cash flow over the next 12 months at current strip pricing as a reminder, acacia on 73, 5% of benchmark energy pro forma for the transaction.

Martin D. McNulty: Consistent with our risk management approach upon closing, Benchmark implemented hedges for over 70% of its operated oil and gas production for the next three years at attractive prices, protecting a significant portion of the returns we underwrote when we signed the deal in February. With Benchmark's additional scale, we've been able to bring on additional hedging counterparties that not only help us achieve the best prices but also allow us to diversify.

Martin D. McNulty: Consistent with our risk management approach upon closing benchmark implemented hedges for over 70% of its operated oil and gas production for the next three years at attractive price levels protecting a significant portion of the returns we underwrote when we signed the deal in February.

Martin D. McNulty: With benchmarks additional scale, we've been able to bring on additional hedging counterparties that not only help us achieve the best pricing, but also allow us to diversify risk.

Martin D. McNulty: Taking this acquisition into account, Acacia has approximately $400 million in capital to deploy into new acquisitions. We believe the oil and gas business represents an attractive complement to our acquisition initiatives in industrials, technology, and health care, where we also continue to evaluate operating businesses to add to our portfolio. Overall, the M&A environment is encouraging for the Acacia strategy, and we're seeing a strong pipeline of both public and private opportunities that fit well within our desired characteristics.

Martin D. McNulty: Taking this acquisition into account Acacia has approximately $400 million in capital to deploy into new acquisitions, we believe the oil and gas business represents an attractive complement to our acquisition initiatives Industrials technology and health care, where we also continue to evaluate operating businesses to add to our portfolio.

Martin D. McNulty: Overall, the M&A environment is encouraging for the Acacia strategy.

Martin D. McNulty: And we're seeing a strong pipeline of both public and private opportunities that fit well within our desired characteristics. While acacia is less relying on leverage for returns that are financial buyer counterparts. The lending environment appears to be opening up and we have seen traditional banks starting to reemerge after being on the sidelines for last year.

Martin D. McNulty: While Acacia is less reliant on leverage for returns than our financial buyer counterparts, the lending environment appears to be opening up, and we have seen traditional banks starting to re-emerge after being on the sidelines for the last year. This will allow us to be opportunistic in utilizing leverage as we evaluate the total cost of capital in each acquisition we make. In the public markets, will valuations generally remain elevated?

Martin D. McNulty: This will allow us to be opportunistic in utilizing leverage because we evaluate total cost of capital in each each acquisition we make.

Martin D. McNulty: In the public markets will valuations generally remain elevated.

Martin D. McNulty: We're searching for and finding opportunities that are not well understood or where we believe our ownership can unlock significantly more value. We're continuing to see more situations where the market is creating attractive opportunities for buyers willing to do the fundamental work to understand the situation and find value. As a result of these activities this quarter, our book value per share at March 31st, 2024 was $5.89 per share compared to $5.90 per share at December 31st, 2023.

Martin D. McNulty: We're searching for and finding opportunities that are not well understood or where we believe our ownership can unlock significantly more value.

Martin D. McNulty: We're continuing to see more situations, where the market is creating attractive opportunities for buyers willing to do the fundamental work to understand the situation at Phi value.

Martin D. McNulty: As a result of these activities this quarter our book value per share at March 31, 2024 was $5 89 per share compared to $5 90 per share at December 31, 2023.

Martin D. McNulty: Excluding an additional accrual of $6.2 million related to the AIP matter, which is discussed in greater detail in our 10-Q, our adjusted book value per share on March 31st, 2024 would have been $5.95 a share. As a reminder, the AIP matter relates to an ongoing legal matter involving a profits interest plan adopted by prior members of management on the board in 2017. The Profits Interest Plan granted a profit interest in ferritone by a 10% warrant.

Martin D. McNulty: Excluding an additional accrual of $6 $2 million related to the AIP matter, which as discussed in greater detail in our 10-Q, our adjusted book value per share on March 31, 2024 would have been $5.95 a share as a reminder, the AIP matter relates to an ongoing leader legal.

Martin D. McNulty: Matter involving a profits interest plan adopted by prior members of management and the board in 2017.

Martin D. McNulty: The profits interest plan granted a profit interest in baritone, 10% warrants certain members of management and the board as compensation for services rendered.

Martin D. McNulty: CERC members of management and the board as compensation for services rendered. Importantly, those members of management and the board separated from Acacia in 2018 and 2019, and the Veritone 10% warrants were exercised in 2020 and 2021. As we've mentioned before, book value per share is a metric we follow closely and is the primary metric on which our team's compensation is based. We believe this creates very close alignment with our show.

Martin D. McNulty: Importantly, those members of management and the board separated from Acacia in 2018 in 2019, and the very atoned, 10% warrants were exercised in 2020 and 2021.

Martin D. McNulty: As we've mentioned before book value per share is a metric we follow closely and as the primary metric on which our teams compensation is based we believe this creates very close alignment with our shareholders.

Martin D. McNulty: Finally, I'd like to note that the Board of Directors has nominated Michelle Feldman, an accomplished executive with more than three decades of experience in real estate, finance, and investing, to serve as an independent director for election at the company's annual meeting of stockholders to be held on May 21, 2024. Michelle is set to fill the vacancy left by Katherine Wallinick, who has served as an independent director since January 2019 and who is not standing for re-election for her term, which is set to expire at the annual meeting.

Martin D. McNulty: Finally, I'd like to note that the board of Directors has nominated Michelle Felman and accomplished executive with more than three decades of experience in real estate finance and investing to serve as an independent director for election at the Companys annual meeting of stockholders to be held on May 21 2024.

Martin D. McNulty: Michelle is set to fill the vacancy left by Catherine well Wallach, who has served as an independent director since January 2019, and who is not standing for reelection for a term which is set to expire at the annual meeting.

Martin D. McNulty: I'd like to thank Catherine for her service to Acacia during a period of transition. Her voice and counsel have been invaluable. And on behalf of Acacia and our shareholders, I'd like to express our gratitude. Ms. Feldman brings strong board and operating expertise to Acacia, having served on several public and private company boards. She currently serves on the Board of Directors of Cushman & Wakefield, chairing the Nominating and Governance Committee and serving as a member of the Compensation Committee. In addition, she recently completed her term as an advisory director at Invescorp, a leading provider and manager of alternative investment products.

Martin D. McNulty: I'd like to thank Catherine for her service to Acacia during a period of transition for voice and counsel have been invaluable and on behalf of Acacia and our shareholders I'd like to express our gratitude.

Martin D. McNulty: Mr. Perlman brings strong board and operating expertise to Acacia having served on several public and private company boards. She currently serves on the board of directors of Cushman and Wakefield sharing the nominating and governance committee and serving as a member of the compensation Committee. In addition, she recently completed her term as an advisory director at Invesco.

Martin D. McNulty: <unk>, a leading provider and manager of alternative investment products. She also served as a trustee of the progress group a global private equity firm, where she was chair of the investment oversight Committee and a member of the audit Committee and the compensation and government governance Committee.

Martin D. McNulty: Warren Misfeldt men's impressive background and experience can be found in our proxy materials located in the filings and financials section of our website.

Martin D. McNulty: She also served as a trustee of the Partners Group, a global private equity firm where she was chair of the Investment Oversight Committee and a member of the Audit Committee on Compensation and Governance. More on Ms. Feldman's impressive background and experience can be found in our proxy materials located in the filings and financial section of our website. We're confident that Ms. Feldman's deep and relevant industry expertise, as well as her experience on public company boards, will be invaluable to Acacia going forward. I'd now like to turn the call over to Kirsten to discuss our first quarter.

Martin D. McNulty: We're confident that Ms feldman's deep and relevant industry expertise as well as their experience on public company boards will be invaluable to acacia going forward.

Kirsten Hoover: Our GAAP book value at March 31st, 2024 was $589.6 million, or $5.89 per share. Excluding the impact of the additional accrual of $6.2 million related to the AIP matter MJ discussed earlier, our book value per share at March 31, 2024 would have been $5.95 per share. Printronics generated $2.8 million in cash during the quarter, reflecting the changes and process improvements to optimize operational efficiencies that have taken place over the past year.

Martin D. McNulty: I'd now like to turn the call over to Kirsten to discuss our first quarter results.

James: Thank you I'm James.

Kirsten Hoover: Our GAAP book value at March 31st 2024, with $589 6 million or $5.89 per share.

Kirsten Hoover: Excluding the impact of the additional accrual of $6 2 million related to the AIP matter M. J discussed earlier, our book value per share at March 31, 'twenty 'twenty four would have been $5.95 per share.

Kirsten Hoover: Printer Onyx generated 2.8 million in cash during the quarter, reflecting the changes and process improvements to optimize operational efficiencies that have taken place over the past year.

Kirsten Hoover: We expect Printronics to continue to generate free cash flow on an annual basis. Benchmark's operating income during the quarter was $0.2 million, which included $0.4 million of non-cash depreciation, depletion, and amortization, and does not reflect $0.8 million of realized derivative gain. Now, let me turn to the first quarter results.

Kirsten Hoover: We expect printer Onyx you continue to generate free cash flow on an annual basis.

Kirsten Hoover: Benchmarks operating income during the quarter with point 2 million, which included <unk> 4 million of noncash depreciation depletion and amortization and does not reflect point 8 million of realized derivative gains.

Kirsten Hoover: Now, let me turn to the first quarter results.

Kirsten Hoover: Total revenues were $24.3 million, compared to $14.8 million in the same quarter last year. Let me break this down by our operating segments. The intellectual property business generated $13.6 million in licensing and other revenue during the quarter, compared to $4.2 million in the same quarter last year, reflecting an increase in the number of license agreements executed quarter over quarter and higher average license fees. Printronics, our industrial operations business, generated $8.8 million in revenues during the quarter, compared to $10.6 million in the same quarter last year. Benchmark Our energy operations, which we acquired on November 13, 2023, generated $1.9 million in revenue in the quarter, which excludes gains on hedging contracts of $0.8 million.

Kirsten Hoover: Total revenues for 24.3 million compared to $14 8 million in the same quarter last year.

Kirsten Hoover: Let me break this down between our operating segments.

Kirsten Hoover: The intellectual property business generated $13 6 million in licensing and other revenue during the quarter.

Kirsten Hoover: Compared to $4 2 million in the same quarter last year.

Kirsten Hoover: Reflecting an increase in the number of license agreements executed quarter over quarter and higher average license fees.

Kirsten Hoover: Printer Onyx, our industrial operations business generated $8 8 million in revenues during the quarter compared to 10 6 million in the same quarter last year.

Kirsten Hoover: Benchmark, our energy operations, which we acquired on November 13th when he twenty-three generated $1 9 million in revenue in the quarter, which excludes gains on hedging contracts of <unk> 8 million.

Kirsten Hoover: As a reminder, in April, we closed Benchmark's first acquisition following Acacia's initial investment. Results from this acquisition will be reported beginning in our second quarter. Pro forma for the acquisition, we will own 73.5% of this subsidiary.

Kirsten Hoover: As a reminder, in April we closed benchmarks at first acquisition following Acacias initial investment fees.

Kirsten Hoover: Results from this acquisition will be reported beginning in our second quarter.

Kirsten Hoover: Pro forma for the acquisition, we will own 73.5% of the subsidiary.

Kirsten Hoover: General and administrative expenses were $12.4 million compared to $12 million in the same quarter of last year, with the increase due to an increase in variable performance-based compensation costs for the intellectual property segment, partially offset by a decrease in parent legal fees and a decrease in Printronics' GNA. The operating loss was $2.1 million compared to an operating loss of $9.3 million in the same quarter of last year, with the decrease due to higher revenues generated in the IP business.

Kirsten Hoover: General and administrative expenses were $12 4 million compared to $12 million in the same quarter of last year with the increase due to the increase in variable performance based compensation costs for the intellectual property segment, partially offset by a decrease.

Kirsten Hoover: And parent legal fees and a decrease in print Tronox G&A.

Kirsten Hoover: Operating loss was $2 1 million compared to an operating loss of $9 3 million in the same quarter of last year.

Kirsten Hoover: With the decrease due to higher revenues generated in the IP business.

Kirsten Hoover: Printer Onyx contributed 1.2 million and operating income, which included <unk> 7 million of noncash depreciation and amortization expense.

Kirsten Hoover: Benchmark contributed <unk> 2 million and operating income, which included <unk> 4 million and noncash depreciation and depletion expense.

Kirsten Hoover: GAAP net loss attributable to Acacia Research Corporation with point 2 million or zero cents per share compared to GAAP net income attributable to Acacia of nine 4 million or a loss of seven cents per diluted share in the first quarter of last year.

Kirsten Hoover: Diluted earnings per share adjusted the numerator used in the basic earnings per share computation for the fair value adjustments on warrant an embedded derivative liabilities, resulting in a diluted net loss attributable to common stockholders.

Kirsten Hoover: Excluding the impact of the additional accrual relating to the AIP matter, which represented six cents earnings per share our earnings per share for the first quarter of 'twenty 'twenty four would be six cents per share.

Kirsten Hoover: As of March 31st 2024, our NOL totaled approximately $18 million, we will continue to evaluate the most efficient ways to maximize this asset.

Kirsten Hoover: Printronics contributed $1.2 million in operating income, which included $0.7 million of non-cash depreciation and amortization expense. Benchmark contributed $0.2 million in operating income, which included $0.4 million in non-cash depreciation and depletion expense. Gap net loss attributable to Acacia Research Corporation was $0.2 million, or $0.00 per share, compared to gap net income attributable to Acacia of $9.4 million, or a loss of $0.07 per diluted share in the first quarter of last year. Diluted earnings per share adjusts the numerator used in the basic earnings per share computation for the fair value adjustments on warrants and embedded derivative liabilities, resulting in a diluted net loss attributable to common stockholders.

Speaker Change: Turning now to the balance sheet.

Kirsten Hoover: Excluding the impact of the additional accrual relating to the AIP matter, which represented $0.06 earnings per share, our earnings per share for the first quarter of 2024 would be $0.06 per share. As of March 31, 2024, our NOL totaled approximately $18 million; we will continue to evaluate the most efficient ways to maximize this asset. Turning now to the balance sheet, cash, cash equivalents, and equity securities at fair value totaled $461.7 million at March 31, 2024, compared to $403.2 million at December 31, 2023.

Kirsten Hoover: Cash cash equivalents and equity securities at fair value totaled $461 7 million at March 31st 2024, compared to 403.2 million at December 31st 2023.

Kirsten Hoover: Equity Securities without Readily Determinable Fair Value totaled $5.8 million at March 31, 2024, unchanged from December 31, 2023. Investment securities representing equity method investments net of non-controlling interest totaled $19.9 million at March 31st, 2024, unchanged from December 31st, 2023. Acacia owns 64% of Mallon J-1, which results in a 26% ownership stake in Viomet Pharmaceuticals for Acaci

Kirsten Hoover: Equity securities without readily determinable fair value totaled $5 8 million at March 31, 'twenty 'twenty four unchanged from December 31 2023.

Kirsten Hoover: Investment Securities representing equity method investments net of Noncontrolling interests totaled $19 9 million at March 31, 'twenty 'twenty four.

Kirsten Hoover: <unk> from December 31st 2023.

Kirsten Hoover: Acacia on 64% of Malin J one.

Kirsten Hoover: Which results in a 26% ownership stake in via met Pharmaceuticals for Acacia.

Kirsten Hoover: The company currently carries no parent debt, having paid off its senior secured notes on July 13, 2023, and $13 million in non-recourse debt at benchmark as of March 31, 2024. We continue to believe that cash per share is an important metric for measuring our progress. As of March 31st, 2024, our cash per share stood at $4.39 per share. More details on these results have been made available in the press release that was issued this afternoon and in our quarterly report on Form 10-Q, which we will file with the SEC later today. With that, we'd be pleased to take your questions.

Kirsten Hoover: The company currently carries no parent debt, having paid off at senior secured notes on July 13th 2023, and $13 million in non recourse debt at benchmark as of March 31, 2020 for them.

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

Kirsten Hoover: As of March 31, 'twenty, 'twenty, four or cash per share stood at $4 39 per share.

Kirsten Hoover: More details on these results have been made available in the press release that was issued this afternoon and in our quarterly report on Form 10-Q, which we will file with the SEC later today.

Kirsten Hoover: With that we'd be pleased to take your questions.

Operator: Certainly. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while asking your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold just a moment while we poll for questions. Your first question is coming from Brett Reiss with Janie Montgomery Scott. Please pose your question. Your line is live.

Speaker Change: Certainly the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we have several posing your question. Please pick up your handset if listing on a speaker phone to provide the optimum sound quality. Please hold just a moment, while we poll for questions.

Operator: Your first question is coming from Brett Reiss with Janney Montgomery Scott. Please pose your question your line is live.

Brett Reiss: Hi, MJ. Hi, Kirsten. Hey Brett, how are you doing? I'm good.

Brett Reiss: Hi, M J Hi, Kirsten.

Brett Reiss: Hey, Brad How're, you doing I'm good I'm good.

Brett Reiss: I just have a couple of questions to get my arms around the..., you know, the bench, um, um, yeah. And the best benchmark. Yeah. Benchmark. Sorry.

Brett Reiss: I just have a couple of questions to get my arms around the.

Brett Reiss: You know the bench.

Brett Reiss: Yeah and best Sandbox.

Brett Reiss: You are benchmark sorry.

Brett Reiss: So we basically have laid out $67 million for the 73.5% interest we have in it. Do we value it or mark it at $67 million? I am wondering why the book value after this investment did not, you know, move up.

Brett Reiss: So we basically have laid out $67 million for the 73, 5%.

Brett Reiss: Interest we have in it.

Brett Reiss: Do we value wood or market at 67 million you know I'm just.

Brett Reiss: Wondering why the book value. After this investment you know did not you know move move up.

Martin D. McNulty: Yeah, I mean, so that's a great question, Brett. So it is, it is valued. Well, two points to the $67 million for the second acquisition of Benchmark. Remember the first we made in November, and we invested roughly $10 million for half the company at marked cost. The second investment, which is much larger of the two that we closed this year, was actually closed in April. So it's not yet reflected in the numbers because it wasn't a first quarter event, but you'll start to see that in the second quarter.

Speaker Change: Yeah, I mean, so that's a great question Brad.

Martin D. McNulty: It is it is valued.

Martin D. McNulty: Well two points did the 67 million for the.

Martin D. McNulty: Second acquisition, a benchmark remember the first we made in November.

Martin D. McNulty: And we invested.

Martin D. McNulty: 10 million for half the company is marked at cost.

Martin D. McNulty: The second investment, which is the much larger of the two which we closed this year was actually closed in April. So it is not yet reflected in the numbers because it was in <unk>.

Martin D. McNulty: First quarter event, but youll see that youll start to see that in the second quarter.

Martin D. McNulty: But broadly, how we think about it when you do see it in the second quarter, is we're taking cash and investing it into those assets. And with those assets marked at cost, there's a little bit of expense that goes against it for deal-related expenses. You shouldn't see a material appreciation in book value because you're trading cash for an asset. So you're just moving around the asset side of the balance sheet. Okay.

Martin D. McNulty: Right.

Martin D. McNulty: But broadly how we think about it when you do see it in the second quarter is we're taking cash and we're investing it into those assets and with those assets marked at cost or there's a little bit of expense that goes against it.

Martin D. McNulty: Related expenses.

Martin D. McNulty: You shouldn't see a material appreciation of book value, because you're trading cash for an asset so you're just moving.

Martin D. McNulty: Around the asset side of the balance sheet.

Brett Reiss: Okay, I appreciate that. Now, somewhere in my notes... at the benchmark company level, it was anticipated or expected to generate $45 million in EBITDA or cash, operating cash flow. Do you recall?

Speaker Change: Okay I appreciate that now somewhere in my notes at the benchmark company level.

Speaker Change: It was anticipated or expected to generate 45 million in EBITDAR or cash operating cash flow do you do recall this number.

Martin D. McNulty: Yeah, that's what we mentioned on our last call, that it was cash flow at the asset level, which is effective. Yeah. All right.

Speaker Change: Yeah that that's what we mentioned on our last call as it was cash flow at the asset level, which okay effectivity yeah.

Martin D. McNulty: Yeah.

Martin D. McNulty: Alright.

Brett Reiss: So we're entitled to 73.5% of that, $45 million. And then what we don't know is what the SG&A on the benchmark is.

Speaker Change: So we're entitled to 73.5% of that.

Brett Reiss: 45 million.

Brett Reiss: And then what we don't know is what the SG&A on benchmark.

Brett Reiss: You know it was going to be I'm, just trying to get a handle on what or maybe you can just.

Brett Reiss:

Martin D. McNulty: short-cut it. I mean, what do we own with Benchmark?

Speaker Change: Shortcut, yeah, so I mean, what what.

Martin D. McNulty: What do we own with benchmark and and you know so we can begin to feel you get a sense of valuation.

Martin D. McNulty: of Valuation. Yes, so we own it with Benchmark. We are in a company called Benchmark. Benchmark owns two apps. They own the first asset that we bought half of, and they own the second asset, which we closed subsequent to the end of the quarter, which pro forma for our investment and our partners' equity investment into that, we will own 73.5% of the combination of those two assets. Okay, which one is it? which is roughly together, on a pro forma basis. $50 million of earnings, of which 73.5% would be net to ourselves.

Martin D. McNulty: So we own with benchmark.

Martin D. McNulty: We are in a a company called benchmark benchmark pose two asset.

Martin D. McNulty: They own the first asset that we bought half of.

Martin D. McNulty: And they own the second asset, which we closed subsequent to the end of the quarter, which pro forma for our investment and our partner's equity investment into that we will own 73, 5% of the combination of those two assets.

Martin D. McNulty: Which.

Martin D. McNulty: Is.

Martin D. McNulty: Which is roughly together on.

Martin D. McNulty: On a pro forma basis.

Martin D. McNulty: $50 million of earnings of which 73, 5% would be net to our stake.

Brett Reiss: Okay, now. That's aspirational, the $50 million in earnings. How long do you think it'll take to gear up, you know, to achieve that?

Martin D. McNulty: Okay.

Martin D. McNulty: Now.

Brett Reiss: That's aspirational the 50 million in earnings how how long do you think it'll take to to gear up you know to achieve that.

Martin D. McNulty: So, you're not going to see it all in 24 because we closed the larger of the two acquisitions in April, but that is at current oil and gas prices. And recall, we're hedged 3 years out, 70% on this trip. And so you'll start to see those numbers roll through on a monthly basis. They will ramp up because they'll come into our financial statements on a monthly and quarterly basis. Right, but the company is running at that level of earnings today.

Brett Reiss: So so you're not going to see it all in 24, because we closed the larger of the two acquisitions in April.

Martin D. McNulty: That is that is at current oil and gas prices and recall, we're hedged three years out 70%.

Martin D. McNulty: On the strip and so you'll start to see those numbers roll through on a monthly basis. They they will ramp because they'll come into our financial statements on a monthly and quarterly basis right, but like the company is running at that level of earnings today.

Martin D. McNulty: Right.

Brett Reiss: And so monthly, well, 0.735 times 50 million divided by 12. I mean, eventually, we're going to see $2.5-$3 million of cash flow come to us from this investment every month.

Martin D. McNulty: So monthly well 0.735 times 50 million divided by 12 I.

Brett Reiss: I mean, eventually we're going to see two and a half $3 million of cash flow come to come to us from this investment.

Martin D. McNulty: Every month you'll see a quarterly Brett, but yes, every month that's roughly the amount of cash flow that

Speaker Change: Everybody, you'll see a quarterly Brett, but yes every month, that's roughly the amount of cash flow.

Martin D. McNulty: B battery ovens.

Martin D. McNulty: Wanted to do some more of this stuff [laughter], Oh, well look I mean, that's you know it.

Brett Reiss: Why don't you do some more of these stuff?

Brett Reiss: We joke and laugh about it but those are the types of opportunities that we're looking for and so you know our strike zone is very tight in terms of risk management and risk reward and we do not want to be in oil and gas company, we want to have a diversified portfolio, but where we're looking at other opportunities.

Brett Reiss: In other industries, where the profile is similar to that.

Martin D. McNulty: And so those are the types of acquisitions that we're looking to add to our portfolio.

Brett Reiss: And so Brian or the types. Those are the types of acquisitions that we're looking to add into our portfolio.

Brett Reiss: Right, right. Now, one last one, a little change in direction. On the last conference call, you mentioned a strong pipeline of opportunities outside, oil and gas. Another quarter has passed, and we've not seen you pull the trigger on any of it. And then you said earlier in your comments that deals and bank credit are loosening up. Does this make it more likely you can get a deal, or less likely?

Speaker Change: Right right no one one last one a little you know change in direction last conference call you mentioned strong pipeline of opportunities outside.

Brett Reiss: Oil and gas.

Brett Reiss: Another quarter has passed and you know we've not seen you pull the trigger on any of it and then you said earlier in your comments.

Brett Reiss: Deals and and you know bank you know credit is loosening up does this make it more likely you you can get a deal or or or less likely.

Martin D. McNulty: I look the way I would answer that question is to say that we're not looking to buy companies for the sake of buying companies. We're looking to buy companies where we can have a really nice risk-reward profile associated with them, and the volume of M&A will be dictated by the types of opportunities we see. We are seeing a lot of things that are quite interesting right now. We're looking at things that are on the run. We're looking at things that others don't understand.

Speaker Change: I like the way I would answer that question is to say that where we're not looking too.

Martin D. McNulty: By companies for the sake of buying companies were looking to buy companies, where we can have a really nice risk reward profile.

Martin D. McNulty: All associated with them.

Martin D. McNulty: And it did the volume of M&A.

Martin D. McNulty: Will be dictated by the types of opportunities. We see we are seeing a lot of things that are quite interesting right. Now we are looking at things that are off the run we're looking at things that others don't understand.

Martin D. McNulty: And in these types of transactions, we have counterparties, and we need to negotiate to a point where both parties are willing to transact. And that's our job, to find those opportunities and get to a point where we can transact at a price and on terms that are attractive to our shareholders. And so we're not looking to do an acquisition every month. We're looking to do an acquisition when that acquisition makes sense collectively for all of us, to preserve and grow our gap.

Martin D. McNulty: And in in these types of transactions, we have counterparties and we need to negotiate to a point, where both counterparties are willing to transact and that's our job is to find those opportunities and get to a point, where we can transact at a price and on terms that are attractive to our shareholders and so we're you know we're we're not.

Martin D. McNulty: We're not looking to do an acquisition a month, we're looking to do an acquisition when that acquisition makes sense collectively for all of us to to preserve and grow our capital base.

Brett Reiss: Right. One last one. The macroeconomic backdrop is this Ballyhooed soft landing, or, alternatively, you know, we have a hard landing. Would a hard landing make it more likely that you can get a deal outside?

Martin D. McNulty: Right one last one if it's the macroeconomic back drop is this ballyhooed soft landing.

Brett Reiss: Our oil and the alternative you know we have a hard landing.

Brett Reiss: Would a hard landing make it more likely you can get a deal outside of oil and gas done.

Martin D. McNulty: I don't think it hurts, and it really just depends on the particular companies that we are seeing that we like and think there's opportunity in, and who owns the companies and what the situation is, but we're not looking to make macro-related bets. If we have a hard landing, historically, that has been a very good time to buy companies if you have conviction around the cycle. And so we're not predicting the macro picture. We're not waiting for a recession. We're not assuming that the market will continue to be in a Goldilocks phase indefinitely. It's really a case-by-case situation. And as I mentioned earlier, each of these

Speaker Change: I don't think it hurts and it really just depends on.

Martin D. McNulty: The particular companies that we are seeing that we like and think there's opportunity in.

Martin D. McNulty: And who owns the companies and what the situation is but we're not looking to make macro related bets.

Martin D. McNulty: If if we have a hard landing historically that has been a very good time to buy companies. If you have conviction around our cycle and so we're not calling the macro picture, we're not waiting for a recession, we're not assuming that the market will continue to be in a goldilocks phase.

Martin D. McNulty: Indefinitely, it's really a it's a case by case situation and as I mentioned earlier each of the companies that we're looking at as very idiosyncratic.

Brett Reiss: Great. Thank you for answering all my questions. I will drop back into the queue. Thank you. Yeah, of course. Thanks, Brett.

Speaker Change: Great. Thank you for answering all my questions I will drop back in queue. Thank you, yes of course, thanks, Brian Nice to hear from you.

Martin D. McNulty: Yeah, of course. Thanks, Brett. Nice to hear from you.

Martin D. McNulty: Yeah.

Operator: Once again, if you do have any remaining questions or comments, please press star 1 at this time. Your next question is coming from a private investor, Ron Heller. Please pose your question. Your line is live.

Speaker Change: Once again, if you do you have any remaining questions or comments. Please press star one at this time.

Ron Heller: Next question is coming from a private Investor Iran. Heller. Please pose your question your line is live.

Ron Heller: Hi, can you go through the cash on the balance sheet again? I think we went from $400 million, and I heard two numbers: $439 and $460.

Ron Heller: Can you go through the cash on the balance sheet again, we went from 400 million and I heard two numbers 439 six.

Ron Heller: Can you...

Ron Heller: <unk>.

Ron Heller: Verify that.

Kirsten Hoover: Yeah, Kirsten, do you want to take that one? Sure.

Ron Heller: Yeah, Hey, curious when you want to take that one.

Kirsten Hoover: Sure, one sec. So yeah, the 439 is our cash and cash equivalents as of the end of March, and then the 460 includes our cash and equity securities.

Speaker Change: Sherman Sac.

Kirsten Hoover: So yeah. The 439 is our cash and cash equivalents as of the end of March and then the 460 includes our cash and equity securities.

Ron Heller: And that's up from the previously reported 400 million. Can you tell me what the Delta is?

Kirsten Hoover: And that's up from the previously reported a $400 million can you tell me what the Delta is on that.

Kirsten Hoover: Sure, we had some receivables as of the end of December from our IP group that were all collected in the quarter. That was really the biggest driver of the increase. Yeah, and so there's some of the... Oh, sorry, excuse me. And also, as we mentioned, in the fourth quarter, we recorded an unrealized gain on our AERICS investment for the forward sale contract that we had that closed also in the quarter and turned into cash.

Kirsten Hoover: Sure we had.

Kirsten Hoover: Some receivables as of the end of December from our IP group that were all collected in the quarter.

Kirsten Hoover: That was really the biggest driver of the increase.

Kirsten Hoover: Yeah, So there's a little bit.

Kirsten Hoover: Oh, sorry, excuse me and and also as we mentioned in.

Kirsten Hoover: In the fourth quarter, we recorded an unrealized gain on our air X investment for the forward sale contract that we had that closed also in the in the quarter and turned to cash.

Martin D. McNulty: Yeah, so Ron, if you take the December 31st cash number, add the cash receipts from the intellectual property business and the Eric sale, which moved from a marketable security to cash with a slight gain associated with the 1231 marketable security number when we actually converted it into cash, that's how you get to the numbers that Kirsten is talking about. And then the other number that I mentioned is pro forma for the funding of the second benchmark acquisition, which will have approximately $400 million of cash and securities, but liquid marketable securities that we can use to go deploy into other acquisitions.

Kirsten Hoover: Yeah. So rod if you if you take the December 31st cash number and the cash receipts from the intellectual property business and the Eric sale.

Martin D. McNulty: Which moved from a marketable security to cash.

Martin D. McNulty: With a slight gain associated to the 12 31 marketable security number when we actually converted into cash.

Martin D. McNulty: That's how you get to the numbers that Kirsten is talking about and then the other a number that I mentioned this is pro forma for the funding.

Martin D. McNulty: The second benchmark acquisition will have approximately $400 million of cash and securities, but liquid marketable securities that we can use to go deploy into other acquisitions.

Ron Heller: Okay, two more questions. Back in November of 2023, the company announced a buyback of stock, no obligation to buy back the stock, but I think it was $20 million now to exceed five million shares. Has the company bought back any stock to date?

Speaker Change: Okay, two more questions back in November of 2023, the company announced a buyback of stock.

Ron Heller: No obligation to buy stock back, but I think it was $20 million not to exceed popularly chairs.

Ron Heller: Company bought any stock back to date.

Martin D. McNulty: We have not bought any stock back yet, Ron.

Speaker Change: Vietnam bought any stock back yet rod.

Ron Heller: Okay and.

Ron Heller: [inaudible] Did the company intend to buy back stock when it made the announcement in the fourth quarter? And if so, why hasn't the company bought any stock back considering it's been at, in some cases, a 30% discount to book value?

Ron Heller: Did the company intend to buy stock back back when they made the announcement in the fourth quarter and if so why haven't why hasn't the company bought any stock back considering it's been it.

Ron Heller: Some cases, a 30% discount to book value.

Martin D. McNulty: You know, I appreciate you asking the question. We're evaluating it on a consistent basis, and we're seeing a lot of opportunities to deploy cash and acquisitions. So we, you know, when we think it's opportunistic, we'll buy stock back, and if we don't think it's opportunistic, or it's less opportunistic than making acquisitions, then we use cash to make acquisitions.

Speaker Change: You know I I appreciate you asking the question you know we are evaluating it.

Martin D. McNulty: Consistent basis.

Martin D. McNulty: And we're seeing a lot of opportunities to deploy cash in acquisitions.

Martin D. McNulty: So we you know when we when we think it's a opportunistic we'll buy stock back and if we don't think it's opportunistic or its less opportunistic than making acquisitions that will use cash to make acquisitions.

Ron Heller: One footnote on a question regarding a lot of time and releases, time and conversation with CC, and the release has been on book value per share. And is my math correct that if you did buy stock back or any company bought stock back at a significant discount, that it would, by definition, increase the book value per share? as a general.

Martin D. McNulty: One footnote one question regarding the there's a lot of time and releases timing.

Ron Heller: Conversations with CDC and the release has been on book value per share.

Ron Heller: And is my math correct that if you did buy stock back or any company bought stock back at a significant discount that it would by definition increase to book value per share.

Martin D. McNulty: As a general theory, yes, that is correct. The magnitude at which this buyback increases book value per share is attractive. But again, we have attractive ways to deploy the capital.

Ron Heller: As a general theory, yes that is correct the macro which is the magnitude of which this buyback increases book value per share.

Martin D. McNulty: We have attractive, but again, we have we have attractive ways to deploy the capital.

Speaker Change: Okay. Thank you.

Martin D. McNulty: Of course.

Operator: Your next question is coming from Adam Eagleston with Formidable Asset Management. Please post your question. Your line is live.

Martin D. McNulty: Your next question is coming from Adam Eaglestone formidable asset management. Please pose your question your line is live.

Adam Thomas Eagleston: Hey, I'm Jay Kirsten. How are you today?

Adam Thomas Eagleston: Hey, I'm makers and how are you today.

Adam Thomas Eagleston: Hey Adam, how's it going? Hi. Good.

Adam Thomas Eagleston: Hey, Adam How's it going I, yeah, well rod.

Martin D. McNulty: Good, good, doing well. Ron beat me to the punch on the buyback question, but I would love to hear a little bit more or just echo his sentiment about that being the cost of capital, so to speak, and I hope that's the way you and the board are looking at it. In terms of the legacy Woodford, you don't talk much about it. They're sort of orphaned at this point. Any impetus by management to divest those or do something with them? Is there a market out there for those assets?

Martin D. McNulty: The punch on the buyback question, but would.

Martin D. McNulty: Would love to hear a little bit more aggregate sentiment about that being the cost of capital so to speak and I hope that's the way you and the board looking at it.

Martin D. McNulty: In terms of the legacy what Brad you don't talk much about those.

Martin D. McNulty: And that's sort of orphan does this point any evidence but.

Martin D. McNulty: Hi management.

Martin D. McNulty: The diverse those or do something with them that they are a market out there for those assets.

Martin D. McNulty: Yeah, I appreciate you asking the question. And you're right, we didn't mention it in the transcript. I would use the term non-core as opposed to orphan, maybe because we do work at that. That's pretty hard.

Speaker Change: Yeah, I I I appreciate you asking the question and you're right we didn't mention it in the transcript.

Martin D. McNulty: They I would use the term noncore as opposed to orphan maybe because we do work those out that's pretty hard.

Martin D. McNulty: The goal is the goal is to create liquidity on those assets and as you know there are two biotech companies.

Martin D. McNulty: And the goal is to create liquidity on those assets. And as you know, there are two biotech companies. The overwhelming majority of the value there is in biotech companies, and we are actively working to create liquidity in those positions.

Martin D. McNulty: The overwhelming majority of the value there is two biotech companies and we are actively working to create liquidity in those positions.

Adam Thomas Eagleston: Got it, great. And that's a good segue, actually, as we think about the market opportunities out there. You mentioned biotech, and there's clearly a lot of carnage in that space. But is there any opportunity in that orphan biotech space? And again, apologies for the pejorative term, but with regard to some publicly traded biotech companies that are subcash, et cetera, or is that one of those cliches, kind of two hard facts as you think about the public market opportunity?

Speaker Change: Got it great and that's a good segue actually as we think about the market opportunities out there you mentioned by attacking Theres clearly a lot of carnage in that vein is there any opportunity in that orphan biotech Bay and again apologies for the short term.

Adam Thomas Eagleston: With regard to the publicly traded biotech, they're sub cash et cetera, or is that one of those we see and its too hard back as you think about the public market.

Martin D. McNulty: I mean, I think the answer to the question is a little bit in between the two kinds of goalposts you put out there. I would say, in the past, we have evaluated some of the net nets in the pharmaceutical world. One of the issues is that without control, you can't really affect the change or the trajectory of the cash burn, which gives us a little bit of hard burn. And then without control, you're effectively taking a technological risk, and that's not really the business that we set out to be in.

Adam Thomas Eagleston: I mean, I think the answer to the question is a little bit in between the two kind of goalposts you put out there.

Martin D. McNulty: I would say in the past we have evaluated some of the net debts in the in the pharmaceutical world one of the issues is without control.

Martin D. McNulty: You you can't really affect the change or that the trajectory of the cash burn, which gives us a little bit of our Burger and then with the control you're effectively taking technology risk and that's not really the business that we've set out to be and we were looking for companies with durable earnings and so there is potential.

Martin D. McNulty: We're looking for companies with durable earnings, and so there is potential alpha in those names. But I'm candidly not sure that we are the right people with the right folks on staff and experience to be able to pick that horse. And so, while it is alluring from a valuation standpoint for us, we're not exactly sure.

Martin D. McNulty: Alpha in those names.

Martin D. McNulty: I'm candidly not sure that we're the right people with the right folks on staff.

Martin D. McNulty: And experience to be able to pick that horse and so while it is alluring.

Martin D. McNulty: From a valuation standpoint for US we don't you know we don't know we were not exactly sure how we create value out of those opportunities as opposed to just betting on ours.

Martin D. McNulty: Okay.

Adam Thomas Eagleston: Got it. I'm sure that's fair. Thanks for taking the call.

Speaker Change: Got it understood that fare.

Speaker Change: Thanks for taking the call.

Speaker Change: Yeah of course.

Operator: Your next question is coming from Todd Seltzer with 88 Management. Please pose your question on your line.

Todd Shelter: Your next question is coming from Todd shelter with 88 management. Please pose your question your line is less.

Todd Seltzer: Thank you. Congratulations on a solid quarter. Quick question. When I look at the income statement, you know, we're sitting with $400 million, and I know T-bills and money market accounts are yielding in the area of 5%, which should generate somewhere around $5 million a quarter. Where do we see any income generated from our liquidity on our income statement? Kirsten, do you want to take that one? Yeah, you'll see that in the other operating or other income and expense. And there's a line for interest income and other 4.9 million for the quarter rate.

Todd Seltzer: Thank you congratulations on solid quarter.

Todd Seltzer: Quick question when I, when I say, Saudi income statement I'm with you.

Speaker Change: We're sitting with 400 million large and I know T bills and money market accounts are yielding.

Kirsten Hoover: In the area of 5%, which should generate somewhere around $5 million a quarter.

Kirsten Hoover: Where do we see any income generated from a liquidity or a statement.

Speaker Change: Curious if you want to take that one yeah.

Kirsten Hoover: Yeah, you'll see that in the other operating or other income and expense and there's a line interest income and other.

Kirsten Hoover: It's $4 9 million for the quarter.

Todd Seltzer: Great.

Speaker Change: Okay I appreciate that Chris.

Todd Seltzer: Okay.

Todd Seltzer: Okay. Appreciate that, Kirsten. Okay. Okay, MJ, keep up the good work with the team. We appreciate you and thank you.

Speaker Change: Okay N J keep up the good work with the team. We appreciate you and thank you.

Speaker Change: Yeah. Thanks Todd.

Operator: There appear to be no further questions in queue at this time. I would now like to turn the floor back over to NJ for any closing remarks.

Moderator: There appear to be no further questions in queue. At this time I would now like to turn the floor back over to Jay for any closing remarks.

NJ: Hi, Thanks, Thanks for everyone's participation here today, thanks for paying attention and.

NJ: And we appreciate the questions and in the conversations and most importantly, we appreciate the idea flow that we get from you all because where where you know you're an investor in.

Martin D. McNulty: in us, but we're all in the same business in certain ways, and so we love to hear the ideas that come our way from you all, and we'll talk to you next quarter.

Operator: And us, but but we're all in the same business in certain ways and so we love to hear the ideas that that come our way from you all and and we'll talk to you next quarter.

Operator: Thank you, everyone. 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.

NJ: Thank you everyone. 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.