Q4 2024 Acacia Research Corp Earnings Call
They exhibit the characteristics, we seek significant operational and strategic Optionality stable and risked managed cash flows and acquired at attractive valuations, which allows us to drive attractive risk adjusted returns for our shareholders.
Yeah.
We continue to build on our momentum from 2024.
As of year end, we had approximately $274 million of cash to deploy thanks to existing cash on hand, and cash generated from our operating businesses.
We continue to see attractive opportunities within both the public and private markets and continue to take positions in public companies, we believe would be good acacia businesses.
We've mentioned in the past discussing the specifics of any one of these situations is disadvantageous to our strategy, but we believe 2024 illustrates that our process works and we'll continue to follow and improve upon that process to acquire additional businesses to benefit our shareholders.
Speaker Change: <unk> will provide additional financial details in a few minutes, but before her remarks I'd like to highlight a few key metrics for the fourth quarter and for the year.
Speaker Change: For the fourth quarter, we generated consolidated revenue of $48 $8 million.
Speaker Change: Produced $4 9 million of total company adjusted EBITDA and recorded a $9 6 million of operated segment adjusted EBITDA.
Excluding our intellectual property operations, which we've mentioned in the past.
Speaker Change: Episodic cash flows.
Speaker Change: We delivered $12 $4 million and operated segment adjusted EBITDA for the quarter.
Speaker Change: For the year, we generated consolidated revenue of $122 3 million total company adjusted EBITDA of 17 million op.
Speaker Change: Operated segment adjusted EBITDA of $35 7 million and operated segment adjusted EBITDA, excluding our intellectual property business of $32 $2 million.
Speaker Change: Well, the amortization of patents and intellectual property portfolio combined with the cost associated with acquiring de facto.
Speaker Change: Including one time charges related to legal compliance and accounting functions led to an increase in our GAAP operating costs and a net loss of $13 $4 million on a GAAP basis for the quarter.
Speaker Change: Our team remains diligent in our cost management strategy and I'm confident in our balanced and strategic approach to long term value creation.
Speaker Change: We've included a bridge from GAAP to adjusted EPS in our press release to provide further detail on these costs.
We recorded book value per share of $5.75 as of December 31, 2024, compared to $5 90 per share at December 31, 2023.
Speaker Change: As a reminder, this book value per share metric includes minority interest in is burdened by all of the one time items included in the add backs to adjusted EPS.
Speaker Change: Finally during the latter part of 2024, we repurchased $20 million of stock at an average price of $4 61 per share.
Speaker Change: Our year end versus our year end book value attributed attributable to Acacia of $5 75 per share.
Speaker Change: We believe this was a good use of shareholder capital. This also represented the maximum amount we're comfortable repurchasing while simultaneously protecting our valuable tax attributes.
Speaker Change: Turning to a breakdown of our results by operations.
Speaker Change: For the three and 12 months ended December 31, 2024 cases energy operations generated adjusted EBITDA of $8 4 million.
And $25 $2 million respectively.
Our industrial operations <unk>.
Speaker Change: We delivered adjusted EBITDA of $1 6 million in the quarter and $4 5 million for the year.
Speaker Change: While our intellectual property operations generated an EBITDA loss for the quarter, a $2 7 million.
Speaker Change: And an EBITDA gain of $3 6 million for the year.
Speaker Change: Our newly formed manufacturing operations, consisting entirely of the <unk> acquisition generated EBITDA of $2 $4 million in the quarter, reflecting a partial quarter of results in the seasonally weakest time of the year.
Speaker Change: In our energy vertical since our investment in the benchmark. The team has consistently performed well on the operated production fraud and our hedging strategy has proven to be an effective buffer for near term commodity price fluctuations.
Speaker Change: This is now our fifth quarter owning benchmark in the third quarter since the revolution assets were acquired <unk>.
Speaker Change: Notably this quarter, we reported benchmarks highest ever revenue demonstrating our ability to drive significant returns on this investment.
Speaker Change: Following the Revolution acquisition. The benchmark team has completed over 40 capital Workover projects, which would help bring unproductive wells back online and improve the production of wells that were underperforming.
This is a core part of our strategy.
Speaker Change: The net impact of these investments is that we've been able to replenish the oil and gas produced sensor acquisition. Our reserve base is a key metric we measure and success of this investment is offsetting the natural decline of the asset should allow us to meet and potentially outperform our underwriting expectations over the long term.
We also expect rising demand for electricity and increasing LNG export capacity could provide broad tailwind through the oil and gas industry, which we're poised to benefit from particularly given our strategically important geographic location in the mid con and ability to sell gas in a variety of markets.
Speaker Change: This is an enviable position if you were to study our peers in plays like the Permian or the Marcellus.
Speaker Change: Our hedging strategy remains consistent underwriting protecting approximately 70% of our operated net oil and gas production over the next three years.
Speaker Change: As a reminder in line with last quarter, we've reported adjusted EBITDA in our financials, including the impact of realized hedge gains, but they are not included in the quarter's top line revenue figure.
Speaker Change: Our manufacturing operations consistent consisting of the newly acquired <unk> business generated $23 3 million in revenue during the partial quarter.
Speaker Change: Recall that we acquired the <unk> because of the significant operational opportunity we saw within the business its market, leading position and selling diversified and in many cases regulatory mandated products and the opportunity for strategic M&A and each operating vertical.
Speaker Change: Since closing the <unk> acquisition, we've been working with the team to organize the company into three distinct business units to drive operational efficiencies management accountability and to reduce overhead costs.
Speaker Change: Well the transportation and office end markets are experiencing some cyclicality, we begun to offset this with the process improvement initiatives mentioned above we remain opportunistic that these efforts within <unk> should create more earnings leverage and a cyclical rebound with these end markets.
Speaker Change: Looking forward the actions we are taking with the flat go will allow us to better capitalize on the companys growth potential.
Speaker Change: Which combined with its substantial market share diversified customer and supplier base and moderate capital needs provides a promising opportunities for this business going into 2025 and beyond.
Speaker Change: <unk> continues to be a nice source of cash for Acacia.
Speaker Change: And I am pleased with the work our team has done to date to transition this business to a dual hardware and consumables business model with a streamlined operating structure.
Speaker Change: The <unk> team generated $7 3 million in operating cash flow during the calendar year, representing 22% of our initial purchase price. We believe this is a good example of the value we can drive over the long term through improving the operations of the under managed assets we acquire.
Speaker Change: Turning now to our intellectual property vertical.
Our intellectual property operations generated a $100000 in licensing and other revenue during the quarter compared to $82 8 million in the same quarter last year.
Speaker Change: Year over year decrease in revenue is primarily due to a decrease in the number of new license agreements in the quarter.
Speaker Change: We remain open to Opportunistically deploying additional capital to capitalize on any attractive opportunities that might become available in this area.
Speaker Change: Given our team's well regarded reputation as leaders in the IP space intellectual property owners continue to actively seek us out as a partner.
Speaker Change: While our life Sciences portfolio is not a core vertical for us our interest in buying that.
Ammo and Novo biotics represent $25 $7 million in book value at the end of last year.
Speaker Change: Net of Noncontrolling interests.
Speaker Change: We're encouraged by the catalysts, we see coming down the pipe for our holdings in this sector and we continue to actively work these businesses to seek ways to maximize the value of our life Sciences assets.
Speaker Change: I'd now like to turn the call over to Kirsten to provide additional detail on our fourth quarter and full year financial results.
Kirsten: Thank you M J.
Acacia recorded total rapid now at $48 8 million during the fourth quarter.
Kirsten: Our energy operations generated $17 3 million in revenue for the quarter compared to point 8 million in the same quarter last year.
Kirsten: The increase in revenue was primarily driven by the addition of the revolution assets that benchmark of acquired earlier in 2024.
Manufacturing operations generated $23 2 million in revenue for the quarter.
Kirsten: Which reflects a partial quarter following the acquisition of deflect out in October and the seasonally weakest time of the year for the business.
Kirsten: Our industrial operations generated $8 2 million in revenue during the quarter, a slight decrease compared to $8 6 million in the same quarter last year.
Kirsten: But an increase of $1 2 million compared to the prior quarter.
Our intellectual property operations generated point $1 million in licensing and other revenue during the quarter.
Kirsten: Compared to $82 8 million in the same quarter last year.
Kirsten: The quarter over quarter decrease in revenue was primarily due to a decrease in the number of new license agreements in the quarter and a decrease in average license fees.
Kirsten: Yeah.
Kirsten: General and administrative expenses were 21.5 million during the fourth quarter compared to $10 8 million in the same quarter of last year.
Kirsten: The increase in G&A was primarily due to the addition of the company's new manufacturing operations and an increase in one time acquisition related charges for legal compliance and accounting functions.
Kirsten: The fourth quarter included $5 2 million and nonrecurring parent G&A charges, which can be seen in the adjusted EBITDA tables provided in the earnings release.
Kirsten: Yeah.
Kirsten: The company recorded fourth quarter operating loss of $15 8 million compared to operating income of $55 9 million in the same quarter last year, primarily due to lower revenues generated and higher costs and expenses.
Kirsten: Energy operations contributed 3 million and operating income, which included $4 4 million of noncash depreciation depletion and amortization expenses and does not reflect 1 million of realized derivative gains.
Kirsten: These figures include the impact of the Revolution assets that benchmark acquired earlier in 2024.
Kirsten: Adjusted EBITDA for energy operations was $8 4 million.
Kirsten: Industrial operations contributed <unk> 9 million in operating income, which included <unk> 7 million in noncash depreciation and amortization expenses.
Kirsten: Adjusted EBITDA for Acacia industrial operations with one 6 million.
Net loss attributable to Acacia Research Corporation in the fourth quarter was $13 4 million or 14 cents per share.
Kirsten: Compared to net income attributable to Acacia 74.8 million or 75 cents per share in the fourth quarter of 2020 three.
Kirsten: This was primarily due to the patent amortization expense in our IP business combined with limited IP revenues, which as a reminder is episodic as well as one time nonrecurring costs associated with the acquisition and integration of deflect out and benchmark.
Kirsten: Net loss included $4 1 million and unrealized gains related to the fair value of equity Securities at December 31st 'twenty 'twenty four.
Kirsten: Adjusted net loss attributable to Acacia Research Corporation in the fourth quarter of 'twenty, 'twenty, four with $6 8 million or seven cents per share.
Kirsten: Further details on these adjustments can be found in our press release.
Kirsten: Turning to the full year results.
Kirsten: Yeah.
Kirsten: Total 'twenty 'twenty four revenues were $122 3 million compared to $125 1 million in the prior year period.
Kirsten: Our energy operations generated $49 2 million for the year compared to point 8 million last year, while our manufacturing operations generated $23 2 million in revenue for the year. Following the completion of the <unk> acquisition on October 18th 'twenty 'twenty four.
Kirsten: Our industrial operations generated $30 4 million in revenue compared to 35.1 million last year.
Kirsten: And our intellectual property operations.
Kirsten: Generated 19 million in licensing and other revenue compared to $89 2 million last year.
Kirsten: General and administrative expenses were $55 4 million compared to $44 4 million last year due to the addition of the Companys manufacturing segment operations and full year results for the energy segment.
Kirsten: Yeah.
Operating loss was $32 9 million compared to operating income of $20 9 million in the prior year period.
Kirsten: Our energy operations contributed $9 5 million and operating income, which included $12 6 million of depreciation depletion and amortization charges.
Kirsten: Our industrial operations contributed 1.8 million and operating income, which included $2 7 million of depreciation and amortization charges.
Kirsten: Net loss was $36 1 million or 36 cents per diluted share compared to net income of $67 1 million or 58 cents per diluted share last year.
Kirsten: Yeah.
Net loss included $28 9 million and realized gains from the sale of equity securities offset by 31.4 million an unrealized loss.
The 'twenty 'twenty four period unrealized loss, primarily relates to the reversal of unrealized gains previously recorded.
Eric: Eric shares that were sold in January 'twenty 'twenty four for realized gains.
Eric: Adjusted net income attributable to Acacia Research Corporation for the full year of 'twenty 'twenty four was $14 2 million or 14 cents per diluted per share.
Eric: Further details on these adjustments can be found in our press release.
Eric: Okay.
Eric: Acacia has generated $564.1 million and proceeds from sales and royalties of its life Sciences portfolio.
Eric: Which was purchased for an aggregate price of 301.4 million and 2020.
Eric: At December 31st 2024 cases remaining positions and it's life Sciences portfolio represented $25 7 million in book value.
Eric: Now turning to the balance sheet.
Eric: Cash cash equivalents and equity securities at fair value totaled 297 million at December 31, 2024, compared to $403 2 million at December 31st 2023.
Eric: The decrease in cash was primarily due to 60 million paid to acquire deflect, though 60 million paid to acquire the revolution assets.
Eric: And approximately $20 million and repurchases of common stock offset by cash provided by operating activities.
Eric: Equities securities without readily determinable fair value totaled $5 8 million at December 31, 'twenty 'twenty four unchanged from December 31, 'twenty two 'twenty three.
Eric: Investment Securities representing equity method investments totaled $19 9 million at December 31, 2024 net of Noncontrolling interests unchanged from December 31st 2023.
Acacia owns 64% of Mylan, J, one which results in a 26% indirect ownership stake in biomass pharmaceuticals for Acacia.
Eric: The parent company's total indebtedness with zero at December 31, 'twenty 'twenty four.
On a consolidated basis. The cases total indebtedness as of December 31st 'twenty 'twenty, four with 114 million.
Eric: Consisting of $66 5 million and $47 5 million in nonrecourse debt at benchmark and deflect a respectively.
Eric: Since closing the acquisition of the Revolution assets in April benchmark has paid down 15 million and total debt.
Eric: For more information on Acacia fourth quarter and full year results. Please see our press release issued this morning, and our annual report on Form 10-K, which we will file with the SEC next week.
UMJ: With that I'd like to turn the call back over to U M J.
Speaker Change: Thanks Kirsten.
UMJ: I'm incredibly proud of our team's accomplishments in 2024.
UMJ: Looking ahead integration, particularly with deflect a remains a key priority for us as we aim to diligently maximize the value of our investments through integration synergies.
UMJ: With improvements and targeted cost reductions at the same time, we'll continue to evaluate potential acquisition targets in both the private and public markets. We.
UMJ: We have a disciplined capital allocation strategy and our strong balance sheet enables us to be selective in choosing the right companies to partner with.
UMJ: We have the optionality to grow and reinvest free cash flow or look to monetize in building platforms with regard to future acquisitions, we continue to consider various value adding opportunities.
UMJ: But we will only act when the timing and opportunity is right and the potential target is aligned with our long term objectives.
UMJ: While macroeconomic conditions are creating uncertainties in the market in 2025, I'd like to point out the relative stability, we believe acacia offers to our investors.
UMJ: Well, we have exposure across a wide range of industries. Our current group of assets were acquired at attractive valuations with a margin of safety, providing investors potential upside even in times of broader uncertainty.
UMJ: Further our substantial cash balance allows us to continue to be opportunistic during these uncertain times.
UMJ: As we look to 2025 and beyond I'm confident in our strategy and our ability to continue to successfully unlock value for shareholders through organic growth opportunities within each of our platforms, while retaining the optionality to be a strategic acquire and consolidate or within their respective industries.
Holly: With that I'll turn the call back over to Holly.
Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we hold pole for questions.
Speaker Change: Your first question for today is from Anthony Stoss with Craig Hallum.
Speaker Change: Good morning team, let me start by saying they've got it.
Speaker Change: Hi, nice to see consistent execution, especially in this rougher environment.
Speaker Change: Speaking of which MJ I'm curious your thoughts on just the economy overall, especially on the tariff side, maybe that's having an impact on <unk> or any thoughts on just tariffs in general one on your business.
Speaker Change: Yeah, I mean, it's a great question Tony.
Speaker Change: Look we have been following the tariffs since probably the election cycle.
Speaker Change: There there there's some information out there.
The information changes you know every morning, when I turn on the T V.
Speaker Change: To hear the update I would say on the oil and gas side of things, where we're pretty insulated our position in the mid con allows us to sell our hydrocarbons to multiple markets. So we're not beholden to Canada or the Gulf coast or you know any particular area that might be tariffs I think.
Speaker Change: You will see some impact of tariffs on oil and gas companies that focus on drilling because of the steel costs book, but if you recall, we're not really a drilling focused.
Speaker Change: Model, so the steel costs don't impact us as much. So that's that's the benchmark piece of it onto flat go we do have manufacturing operations in Canada, we have manufacturing operations in the U S. The team has been very focused on this issue, we have optionality to move manufacturing or PC.
Speaker Change: <unk> of manufacturing depending upon the ultimate impact of tariffs. We are we have plans in place to be able to do that we don't want to start executing on those plans until we kind of have a better understanding of where this is going just given the back and forth and in the fast moving pace of that back and forth, but we feel pretty confident that we can ensue.
Speaker Change: The late ourselves from from most if not all of the impact.
Speaker Change: Got it and then if I could throw two more questions.
Speaker Change: I'm curious on benchmark if there is a larger number of wells being targeted and then I just wanted to point to your press release talking about Cherokee play in Cleveland formations that you see a potential upside you know and love to hear more color related to that.
Speaker Change: Just on the on the first piece when you say wells being targeted I just wanted to make sure I understand the question to acquire to acquire more and more wells to acquire yeah. So so you know Kirk and the team and we continue to look for different asset packages to acquire.
Speaker Change: The there are there are there is activity and there are asset packages that are out there are we're pretty disciplined on the valuations that we that we acquire those asset packages for the.
Speaker Change: The market has appears to be moving up.
Speaker Change: In in valuation ranges and so were being pretty patient. There. We have you know when we bought the when we partnered on the original bench.
Speaker Change: Benchmark acquisition in 'twenty three.
Speaker Change: We had a small asset package and we liked it and it's a great package the win rate field it does really well.
Speaker Change: When we ended up than acquiring in April.
Speaker Change: The Revolution asset package, it really increased the scale of the business.
And it gave us a fantastic position in the mid con in the Anadarko basin and the team I think we noted this in our press releases built the services organization around that which helps us to control and optimize costs and so as we work, we're really thinking about acquisitions that we can tuck in around.
Our existing position as opposed to trying to expand and add in other geographies. So we're really looking for a pretty tight tack ons. So that we could increase the production with a lot of scalability in our in our operations.
Speaker Change: So that's kind of 0.1, when we see them and we can do them at attractive valuations we will.
Speaker Change: But where we're not growing for growth's sake from an acquisition strategy.
Speaker Change: Hmm.
Speaker Change: And on the Cherokee.
Speaker Change: So so what when we acquired the benchmark assets, there was a little bit of chatter.
Speaker Change: About the Cherokee and if you remember we kind of we paid for the existing production. The P. D PS and then.
Speaker Change: What they call pilots proved undeveloped wells in future locations.
Speaker Change: We didn't really assign any value in our in our purchase price to those we had a view that the Cherokee was attractive and the team understood. The Cherokee that areas become or appears to be becoming a.
Speaker Change: An area of interest for more players.
Speaker Change: And so we're.
Speaker Change: Evaluating the best way to monetize those assets its a little bit early in in kind of the ball game of that area.
Speaker Change: Growing and gaining interest, but we're pretty enthusiastic about the well results that we see out there and what it means for future growth and the Cherokee and and and others are seeing what we saw which is the mid cons, a really good place to be producing oil and gas because of the optionality of the takeaway in the markets that you can that you can.
Felt here.
Speaker Change: Got it thanks for all the color and then the last question for me.
Speaker Change: First quarter with the <unk> and.
Speaker Change: The targeted gross margin of 15% you know that came in a little bit below that I'm curious was that just a function of the weaker seasonal quarter as highlighted on the prepared remarks or is there something else going on and where do you think that is 15% still the goal.
Speaker Change: Yeah. It is still the goal there.
Speaker Change: The fourth quarter is seasonally weak in that business I, we we can't.
Speaker Change: Isolate the impact of the election, and and buyer behavior around that but that could be playing a piece of it but we do.
Speaker Change: We do keep to the school and and as we've gotten into the business we've found more opportunity from.
Speaker Change: And operational perspective to improve how the business runs you know we we look at businesses that have historically been under managed where there's opportunity.
And we're finding that with just like that.
Speaker Change: Got it thanks, Sanjay and again congrats on the consistent execution.
Sanjay: Yeah. Thanks, Toni I appreciate you taking the time.
Speaker Change: Your next question is from Brett Reece with Janney Montgomery Scott.
Brett Reece: Good morning M J good morning Kirsten.
Brett Reece: Hey, Brian.
Speaker Change: Hi, Hi.
Speaker Change: Clay keep up.
Speaker Change: Faber he farber, yes.
Speaker Change: Okay with that because it's yes.
Speaker Change: Yeah is he's a guy from Danaher, that's helping us with the flex though.
Yeah, So clay's been working with us for a while as an operating partner, we have a pretty deep relationships.
Speaker Change: With him enclaves been helping us both with printer Onyx and with this lack though.
Speaker Change: And he's kind of you know he is an integral member of our team.
Speaker Change: Right right, but he's from Danaher.
Speaker Change: Correct.
Speaker Change: Okay Yeah.
Speaker Change: Have a great deal of.
Speaker Change: Respect for the talent that's come out of our you know Danaher could you give me one or two examples of you know.
Speaker Change: Something that he saw with deflect, though that you're doing that's going to improve the operations.
Speaker Change: Yeah, I mean, I'll give you a couple of examples we we've we've we've restructured the cost pretty significantly since we acquired the asset.
Speaker Change: And from an operating soon but we own a lot of plants. We have three different business units. One of the first things. We wanted to do was to kind of cut to the.
Speaker Change: The combined.
Speaker Change: Oversight of those businesses as as one business.
Speaker Change: And divisional is those businesses and so our view is that decisions alignment of interest alignment of comp performance accountability all happen at the local level.
Speaker Change: Not at the global level and so step one is let's make these locally right.
Speaker Change: And I have the team to be compensated for that and be accountable to the results as opposed to one team being accountable for the results of three of our businesses. So that's kind of one piece piece too we've identified significant areas, where we can improve the operations of those business.
Speaker Change: And it's things from you know mundane or maybe not so Monday plant floor.
Speaker Change: Layouts.
Speaker Change: The consolidation of facilities.
Speaker Change: Trading of folks on optimizing processes. So a lot of Brad what you might recall from Danaher playbook business system that danaher, what's in place and the businesses that they they acquire that's that's kind of part of our playbook in what we strive to do and I guess, if at all at a third to <unk>.
Speaker Change: Round it out.
Speaker Change: A key focus on cash flow and cash flow management. So it's earnings growth, but it's also right sizing capital capital allocation and working capital and inventory improving a our collections kind of nuts and bolts of how businesses are run well and one you know we we we have the opportunity to acquire.
Speaker Change: Is that a good businesses. They have good products disliked it has products that people need they're not discretionary they're products that people need and in a lot of cases are mandated to have.
Speaker Change: And when you got a portfolio of products like that where there's been a historical under management of you know of.
Speaker Change: Most or all the aspects of the business, we like those opportunities because we can go in and fix those things and really create scale and leverage in the business.
Great.
Speaker Change: I've got a question you know just trying to get a handle on on cash levels.
Speaker Change: You know before you started to make these acquisitions you know under your stewardship.
Speaker Change: We start at $403 million.
Speaker Change: And then we spent 60 million on Revolution 60 million on deflect, though 15.5 million debt repayment 20 million on share buybacks I.
Kirsten: I guess this is for Kirsten so that that's $155 5 million.
Speaker Change: I subtract that from the 403.
Speaker Change: That's to 47.7, you know we're at 297, the only thing I don't have is how much came in from the monetization of of Eric's.
Speaker Change: Eric's with 37 million.
Okay.
Speaker Change: So I add back the 37 million so.
Speaker Change: 247.7, plus 37 million.
Speaker Change: Yeah, Yeah, I mean, you basically done all of this stuff and have more cash into corporate coffers than you started with.
Speaker Change: Am I missing something here or do I have it right.
Speaker Change: No Brad that I don't I don't think you're missing anything I mean that that's what we kind of have sat in and it's starting to bear fruit, which is why we're moving cash.
Speaker Change: From from a cash and securities account on the balance sheet to assets that are generating cash and that's the plan, which is the business as we buy our cash flow generating businesses.
Speaker Change: Combined with the conversation, we just had about the operational improvement so that we're effectively creating more cash.
Speaker Change: Through any of these businesses great great now.
Speaker Change: Now I know you you're looking at things and in private equity.
Speaker Change:
Speaker Change: You know between the.
Speaker Change: Private equity.
Speaker Change: It has to monetize some of their assets.
You know between that and the stress in the system are you finding a little bit more flexibility.
Speaker Change: Price wise on on private equity, maybe letting some things go it realistic prices. So that we can get more deal flow.
Speaker Change: I mean, I kind of think about it as like buying as a public investor on the buy side buying the market versus single names.
Speaker Change: There are always opportunities and single names irrespective of what the market is doing.
Speaker Change: And I don't think it's dissimilar to private equity I, you know private equity.
Speaker Change: Is incentivize to get the most for their assets I think there are exceptions to that when they're high volume private equity shops that are happy to see you know exchange businesses at reasonable valuations, because they buy and sell a lot of businesses.
I think in this base and size in the market that we're looking at you know remember we're looking at like kind of B and C. Quartile assets are not the as I mean, we we see the a quartile assets and we love them, but but we're not the right buyer for those.
Speaker Change: So where it's more challenging for private equity sellers to sell a business because there's a story of maybe there's a little bit of hair. There's some work that needs to be done I think there are less buyers of those assets generally I think a lot of private equity buyers want to buy pristine assets that you know potentially high prices.
Speaker Change: Because they they just take less work.
Speaker Change: We have our own views on that.
Speaker Change: So I would say, it's not necessarily a market driven phenomenon, that's generating deal flow for us as much as it is really being in the flow and understanding who owns what how long they've been in it.
Where did they maybe haven't marked and what their goals are for it and so we're seeing a good amount of private equity businesses, where we think we can go in and change the trajectory of that business, but we're also seeing you know in a broadly the private markets. We're also seeing.
Speaker Change: Businesses that private equity, we think is not seeing and so having been in private equity for a long time, you kind of see what you see because it it's coming to private equity as a potential buyer, we're seeing a lot of opportunities that they don't want to go to private equity as a buyer and so the business model that we have and in the team that we have.
Speaker Change: <unk> is an attractive option for a lot of folks who who have excluded for one reason or another private equity as a potential source of capital in our partner and their future.
Speaker Change: Great and.
Speaker Change: Benchmark is 70% hedged in the.
Speaker Change: 30%, where you're not hedged do you have a metric that indicates that if oil prices go up 10, $10, a barrel or down $10 a barrel what that does to the cash flow from our benchmark Revolution investment.
Speaker Change: Yeah.
We so we monitor it.
Speaker Change: And we watch it but it's not a metric that we publish oh sure.
Speaker Change: Okay.
Speaker Change: That's it for me.
Good show on a you know continued our execution.
Brett Reece: Thanks, Brett.
Speaker Change: Okay.
M. J: We have reached the end of the question and answer session and I will now turn the call over to M. J for closing remarks.
M. J: Thanks to everyone for joining us we're looking forward to a productive 2025, both with our existing assets.
M. J: And optimizing those existing assets and then towards future deal opportunities.
M. J: As they present themselves and we look forward to talking to everyone in a few weeks for Q1.
M. J: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Thanks Ali.
Yeah.
M. J: Okay.