Q1 2026 Acacia Research Corp Earnings Call

May 7, 2026

Jenny: Good morning, everyone. Thank you for joining Acacia Research's Q1 2026 Earnings Conference Call. My name is Jenny. I will be your conference facilitator today. All lines are currently muted to prevent any background noise. I would also like to remind you today's conference call is being recorded and is also available through audio webcast on Acacia's website. Following the speaker's remarks, there will be time for questions. Questions can also be directed at any time to Acacia at ir@acaciares.com. That's ir@a-c-a-c-i-a-r-e-s.com. I would now like to turn the conference over to Elizabeth Chiconas of Gagnon Communications. Elizabeth, you may begin the conference.

Operator: Good morning, everyone. Thank you for joining Acacia Research's Q1 2026 Earnings Conference Call. My name is Jenny. I will be your conference facilitator today. All lines are currently muted to prevent any background noise. I would also like to remind you today's conference call is being recorded and is also available through audio webcast on Acacia's website. Following the speaker's remarks, there will be time for questions. Questions can also be directed at any time to Acacia at ir@acaciares.com. That's ir@a-c-a-c-i-a-r-e-s.com. I would now like to turn the conference over to Elizabeth Chiconas of Gagnon Communications. Elizabeth, you may begin the conference.

Speaker #2: All lines are currently muted to prevent any background noise. I would also like to remind you today's conference call is being recorded and is also available through audio webcast on Acacia's website.

Speaker #2: Following the speakers' remarks, there will be time for questions. Questions can also be directed at any time to Acacia at ir@acaciaares.com. That's I-R at A-C-A-C-I-A-R-E-S dot com.

Speaker #2: I would now like to turn the conference over to Elizabeth Chaconis of Gagné Communications. Elizabeth, you may begin the conference. Thank you, operator. Leading today's call are MJ McNulty, Acacia's chief executive officer, and Michael Zambito, Acacia's chief financial officer.

Elizabeth Chiconas: Thank you, operator. Leading today's call are Martin D. McNulty, Jr., Acacia's Chief Executive Officer, and Michael Zambito, Acacia's Chief Financial Officer. Before MJ and Mike begin their prepared remarks, please be reminded that certain 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, and trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see the risk factors described in Acacia's most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC.

Elizabeth Chiconas: Thank you, operator. Leading today's call are MJ. McNulty, Acacia's Chief Executive Officer, and Michael Zambito, Acacia's Chief Financial Officer. Before MJ and Mike begin their prepared remarks, please be reminded that certain 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, and trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see the risk factors described in Acacia's most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC.

Speaker #2: Before MJ and Mike begin their prepared remarks, please be reminded that certain 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.

Speaker #2: 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 and trends.

Speaker #2: After results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see the risk factors described in Acacia's most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC.

Speaker #2: Earlier this morning, Acacia issued a press release disclosing its first quarter 2026 financial results. The press release may be accessed on the company's website under the Press Releases section of the Investor Relations tab at acaciaesearch.com.

Elizabeth Chiconas: Earlier this morning, Acacia issued a press release disclosing its Q1 2026 financial results. The press release may be accessed on the company's website under the Press Releases section of the Investor Relations tab at acaciaresearch.com. The company also posted its Q1 2026 earnings presentation to its website, which can be found under the Quarterly Results section of the Investor Relations tab. On today's call, the team will discuss certain non-GAAP financial measures, including adjusted EBITDA for the company and each of its operating segments. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations, can be found in the press release disclosing Q1 2026 financial results, available under the Press Releases section of the Investor Relations tab at acaciaresearch.com. I will now turn the call over to Acacia's Chief Executive Officer, Martin D. McNulty, Jr.

Speaker #2: The company also posted its Q1 2026 earnings presentation to its website. Which can be found under the Quarterly Results section of the Investor Relations tab.

Speaker #2: On today's call, the team will discuss certain non-GAAP financial measures, including adjusted EBITDA for the company and each of its operating segments. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations, can be found in the press release disclosing first quarter 2026 financial results.

Speaker #2: Available under the Press Releases section of the Investor Relations tab at acaciaesearch.com. I will now turn the call over to Acacia's chief executive officer, MJ McNulty.

Speaker #3: Thank you, Lizzie, and thanks to everyone for joining us this morning. Coming quickly off the back of our full year 2025 call, we're excited to share some updates with you as our business continues to progress.

Martin D. McNulty Jr.: Thank you, Lizzie, and thanks to everyone for joining us this morning. Coming quickly off the back of our full year 2025 call, we're excited to share some updates with you as our business continues to progress. As we have been, we continue to work diligently on our execution strategies across our businesses. At Benchmark, we drilled our first meaningful well in the Cherokee play, which we brought online late in March. The drilling of that well and a constructive commodity price environment have opened additional attractive return opportunities in the Benchmark business. We're continuing to make progress at Deflecto and Printronix, and we'll share some updates there. Further, in our intellectual property business, we're seeing some interesting monetization opportunities, both in our Atlas portfolio of Wi-Fi 6 assets and our R2 portfolio.

MJ McNulty: Thank you, Lizzie, and thanks to everyone for joining us this morning. Coming quickly off the back of our full year 2025 call, we're excited to share some updates with you as our business continues to progress. As we have been, we continue to work diligently on our execution strategies across our businesses. At Benchmark, we drilled our first meaningful well in the Cherokee play, which we brought online late in March. The drilling of that well and a constructive commodity price environment have opened additional attractive return opportunities in the Benchmark business. We're continuing to make progress at Deflecto and Printronix, and we'll share some updates there. Further, in our intellectual property business, we're seeing some interesting monetization opportunities, both in our Atlas portfolio of Wi-Fi 6 assets and our R2 portfolio.

Speaker #3: As we have been, we continue to work diligently on our execution strategies across our businesses. At Benchmark, we drilled our first meaningful well in the Cherokee Play, which we brought online late in March.

Speaker #3: The drilling of that well and a constructive commodity price environment have opened additional track-to-return opportunities in the Benchmark business. We're continuing to make progress at Deflecto and Printronics, and we'll share some updates there.

Speaker #3: Further, in our intellectual property business, we're seeing some interesting monetization opportunities both in our Atlas portfolio of Wi-Fi 6 assets and our R2 portfolio.

Speaker #3: I believe this quarter is another example of Acacia demonstrating the resilience of our evolving business despite persistent volatility in the market. Our strategy continues to remain the same, acquiring and building businesses where our operational excellence can create stable, long-term cash flow generation and scalability.

Martin D. McNulty Jr.: I believe this quarter is another example of Acacia demonstrating the resilience of our evolving business despite persistent volatility in the market. Our strategy continues to remain the same: acquiring and building businesses where our operational excellence can create stable, long-term cash flow generation and scalability. Importantly, we've done this in a way that allows us to capitalize upon a diverse set of capital allocation and operational opportunities to create value for our shareholders. Through the combined strengths of each of our businesses, we aim to create meaningful, enduring value. Our successful execution of this strategy, combined with our disciplined cost control, stable cash yields, and targeted operational initiatives, enable Acacia to achieve Q1 revenue of $54.2 million and operated segment adjusted EBITDA of $6.8 million.

MJ McNulty: I believe this quarter is another example of Acacia demonstrating the resilience of our evolving business despite persistent volatility in the market. Our strategy continues to remain the same: acquiring and building businesses where our operational excellence can create stable, long-term cash flow generation and scalability. Importantly, we've done this in a way that allows us to capitalize upon a diverse set of capital allocation and operational opportunities to create value for our shareholders. Through the combined strengths of each of our businesses, we aim to create meaningful, enduring value. Our successful execution of this strategy, combined with our disciplined cost control, stable cash yields, and targeted operational initiatives, enable Acacia to achieve Q1 revenue of $54.2 million and operated segment adjusted EBITDA of $6.8 million.

Speaker #3: Importantly, we've done this in a way that allows us to capitalize upon a diverse set of capital allocation and operational opportunities to create value for our shareholders.

Speaker #3: Through the combined strengths of each of our businesses, we aim to create meaningful, enduring value. Our successful execution of this strategy, combined with our disciplined cost control, stable cash yields, and targeted operational initiatives, enabled Acacia to achieve Q1 revenue of $54.2 million and operated segment adjusted EBITDA of $6.8 million.

Speaker #3: We look at these numbers before the impact. If we look at these numbers before the impact of our intellectual property operations, operated segment adjusted EBITDA was stable sequentially at $10.3 million.

Martin D. McNulty Jr.: If we look at these numbers before the impact of our intellectual property operations, operated segment adjusted EBITDA was stable sequentially at $10.3 million. I believe that our consistent execution across operating segments and the significant actions we've taken since our current team took over has created substantial intrinsic equity value in Acacia that is not yet reflected in our share price. We feel very strongly about our ability to continue to generate value for our shareholders as we move further into the year. We continue to be laser-focused on growing EBITDA and free cash flow at each of our operating businesses while continuing to strategically grow our pipeline of acquisition opportunities.

MJ McNulty: If we look at these numbers before the impact of our intellectual property operations, operated segment adjusted EBITDA was stable sequentially at $10.3 million. I believe that our consistent execution across operating segments and the significant actions we've taken since our current team took over has created substantial intrinsic equity value in Acacia that is not yet reflected in our share price. We feel very strongly about our ability to continue to generate value for our shareholders as we move further into the year. We continue to be laser-focused on growing EBITDA and free cash flow at each of our operating businesses while continuing to strategically grow our pipeline of acquisition opportunities.

Speaker #3: I believe that our consistent execution across operating segments and the significant actions we've taken since our current team took over has created substantial intrinsic equity value in Acacia.

Speaker #3: That is not yet reflected in our share price. We feel very strongly about our ability to continue to generate value for our shareholders as we move further into the year.

Speaker #3: We continue to be laser-focused on growing EBITDA and free cash flow at each of our operating businesses, while continuing to strategically grow our pipeline of acquisition opportunities.

Speaker #3: Our strong balance sheet is $330 million in total cash, securities, and loans receivable as of March 31st, puts us in a strong position to pursue accretive organic and inorganic growth opportunities in each of our core verticals.

Martin D. McNulty Jr.: Our strong balance sheet, $330 million in total cash securities and loans receivable as of 31 March, puts us in a strong position to pursue accretive, organic, and inorganic growth opportunities in each of our core verticals. I'd like to take a moment to give you more of an update on our operating segments. Starting with Benchmark, our energy operations performed ahead of our expectations for the first three months of the year. We achieved record quarterly revenue of $18.7 million and generated $7.7 million in adjusted EBITDA for the quarter. Over the last 12 months, the team at Benchmark has been working hard to assemble an attractive set of drilling units from the land package that we were blessed with from the original Revolution purchase.

MJ McNulty: Our strong balance sheet, $330 million in total cash securities and loans receivable as of 31 March, puts us in a strong position to pursue accretive, organic, and inorganic growth opportunities in each of our core verticals. I'd like to take a moment to give you more of an update on our operating segments. Starting with Benchmark, our energy operations performed ahead of our expectations for the first three months of the year. We achieved record quarterly revenue of $18.7 million and generated $7.7 million in adjusted EBITDA for the quarter. Over the last 12 months, the team at Benchmark has been working hard to assemble an attractive set of drilling units from the land package that we were blessed with from the original Revolution purchase.

Speaker #3: I'd like to take a moment to give you more of an update on our operating segments. Starting with Benchmark, our energy operations performed ahead of our expectations for the first three months of the year.

Speaker #3: We achieved record quarterly revenue of $18.7 million and generated $7.7 million in adjusted EBITDA for the quarter. Over the last 12 months, the team at Benchmark has been working hard to assemble an attractive set of drilling units.

Speaker #3: From the land package that we were blessed with from the original revolution purchase, these actions consist of buying, selling, and swapping acreage to maximize our monetizable units in what we felt were the most attractive parts of our basin.

Martin D. McNulty Jr.: These actions consist of buying, selling, and swapping acreage to maximize our monetizable units in what we felt were the most attractive parts of our basin. These efforts started to shine through in December when we spun our first well, which we are very excited about. The executive and land team at Benchmark continue to work hard to build our inventory of high-return projects, of which we now have many in the queue. Our production and revenue were up, our extraction costs were down on a per barrel equivalent basis. Our G&A was in line. Notably, we've continued to generate attractive cash flow at this asset, which enabled Benchmark to self-fund the drilling of our first Cherokee well with the cash flow the businesses generated. As we indicated on our last call, this new well started producing in late March. Initial results from this well are strong.

MJ McNulty: These actions consist of buying, selling, and swapping acreage to maximize our monetizable units in what we felt were the most attractive parts of our basin. These efforts started to shine through in December when we spun our first well, which we are very excited about. The executive and land team at Benchmark continue to work hard to build our inventory of high-return projects, of which we now have many in the queue. Our production and revenue were up, our extraction costs were down on a per barrel equivalent basis. Our G&A was in line. Notably, we've continued to generate attractive cash flow at this asset, which enabled Benchmark to self-fund the drilling of our first Cherokee well with the cash flow the businesses generated. As we indicated on our last call, this new well started producing in late March. Initial results from this well are strong.

Speaker #3: These efforts started to shine through in December when we spun our first well, which we are very excited about. The executive and land team at Benchmark continue to work hard to build our inventory of high-return projects, of which we now have many in the queue.

Speaker #3: Our production and revenue were up. Our extraction costs were down on a per-barrel equivalent basis. And our G&A was in line. Notably, we've continued to generate attractive cash flow at this asset, which enabled Benchmark to self-fund the drilling of our first Cherokee well, with the cash flow the business has generated.

Speaker #3: As we indicated, on our last call, this new well started producing in late March. Initial results from this well are strong. Development costs of $11.5 million came in line with budget, and we're anticipating a greater than $2.5 times MOIC or 60% plus IRR on the project.

Martin D. McNulty Jr.: Development costs of $11.5 million came in line with budget, and we are anticipating a greater than 2.5x MOIC or 60%+ IRR on the project. Investors should see the full impact of this project beginning in Q2 and Q3, and we're proud to say that we set a company record for production in April, selling over 63,000 barrels of oil in the month. We have many more of these high-return projects within our portfolio and are eager to monetize these in the medium term. We had strong production volumes in the quarter despite some severe winter weather.

MJ McNulty: Development costs of $11.5 million came in line with budget, and we are anticipating a greater than 2.5x MOIC or 60%+ IRR on the project. Investors should see the full impact of this project beginning in Q2 and Q3, and we're proud to say that we set a company record for production in April, selling over 63,000 barrels of oil in the month. We have many more of these high-return projects within our portfolio and are eager to monetize these in the medium term. We had strong production volumes in the quarter despite some severe winter weather.

Speaker #3: Investors should see the full impact of this project beginning in Q2 and Q3, and we're proud to say that we set a company record for production in April, selling over 63,000 barrels of oil in the month.

Speaker #3: We have many more of these high-return projects within our portfolio and are eager to monetize these in the medium term. We had strong production volumes in the quarter despite some severe winter weather.

Speaker #3: As I'm sure everyone has seen, we also had and continue to have a strong commodity price environment, specifically in oil. While crude prices didn't really begin their ascent until the early part of March, the elevated price environment has continued into the second quarter, which, of course, is a benefit to us.

Martin D. McNulty Jr.: As I'm sure everyone has seen, we also had and continue to have a strong commodity price environment, specifically in oil. Crude prices didn't really begin their ascent until the early part of March, the elevated price environment has continued into the second quarter, which of course is a benefit to us. I will remind everyone that we are 75% to 80% hedged for existing production, so it's not a one-for-one relationship. That said, we've been hedging volumes for our new Cherokee well into a more constructive environment, and the rise in prices increases the value of our asset overall. Based on the success we're seeing with our first drilled well, as well as with the current pricing environment, additional drilling, both in our Cherokee acreage as well as our Cleveland acreage, has become more attractive, and we're in advanced stages of evaluating additional projects.

MJ McNulty: As I'm sure everyone has seen, we also had and continue to have a strong commodity price environment, specifically in oil. Crude prices didn't really begin their ascent until the early part of March, the elevated price environment has continued into the second quarter, which of course is a benefit to us. I will remind everyone that we are 75% to 80% hedged for existing production, so it's not a one-for-one relationship. That said, we've been hedging volumes for our new Cherokee well into a more constructive environment, and the rise in prices increases the value of our asset overall. Based on the success we're seeing with our first drilled well, as well as with the current pricing environment, additional drilling, both in our Cherokee acreage as well as our Cleveland acreage, has become more attractive, and we're in advanced stages of evaluating additional projects.

Speaker #3: I will remind everyone that we are 75% to 80% hedged for existing productions, so it's not a one-for-one relationship. That said, we've been hedging volumes for our new Cherokee well into a more constructive environment, and the rise in prices increases the value of our asset overall.

Speaker #3: Based on the success we're seeing with our first drilled well, as well as with the current pricing environment, additional drilling, both in our Cherokee acreage as well as our Cleveland acreage, has become more attractive.

Speaker #3: And we're an advanced stages of evaluating additional projects. As we mentioned in the past, we approach drilling in a very deliberate way. The Cherokee well we just drilled was drilled with cash produced inside the company, we did not borrow money to drill the well.

Martin D. McNulty Jr.: As we've mentioned in the past, we approach drilling in a very deliberate way. The Cherokee well we just drilled was drilled with cash produced inside the company. We did not borrow money to drill the well. We're also actively evaluating capital and operating partnerships to drill additional wells that we believe could be attractive for our shareholders. Before I move on, there's one thing I'd like to note around our hedging strategy. Michael Zambito will get into this in more detail when he walks through the numbers for the quarter. Given the significant rise in oil prices in the quarter and our large hedge position, which covers more than 2 years of future production, we recorded an unrealized loss from the mark-to-market impact of the hedge book, which adversely impacted GAAP net income, EPS, and book value. Importantly, this is a non-cash line item.

MJ McNulty: As we've mentioned in the past, we approach drilling in a very deliberate way. The Cherokee well we just drilled was drilled with cash produced inside the company. We did not borrow money to drill the well. We're also actively evaluating capital and operating partnerships to drill additional wells that we believe could be attractive for our shareholders. Before I move on, there's one thing I'd like to note around our hedging strategy. Michael Zambito will get into this in more detail when he walks through the numbers for the quarter. Given the significant rise in oil prices in the quarter and our large hedge position, which covers more than 2 years of future production, we recorded an unrealized loss from the mark-to-market impact of the hedge book, which adversely impacted GAAP net income, EPS, and book value. Importantly, this is a non-cash line item.

Speaker #3: We're also actively evaluating capital and operating partnerships to drill additional wells that we believe could be attractive for our shareholders. Before I move on, there's one thing I'd like to note around our hedging strategy.

Speaker #3: Mike will get into this in more detail when he walks through the numbers for the quarter, but given the significant rise in oil prices in the quarter, and our large hedge position—which covers more than two years of future production—we recorded an unrealized loss from the mark-to-market impact of the hedge book.

Speaker #3: Which adversely impacted gas net income. EPS and book value. Importantly, this is a non-cash line item. Because of the multi-year duration of the hedge book, the mark-to-market swings can have a disproportionate impact on a single quarter's results.

Martin D. McNulty Jr.: Because of the multi-year duration of the hedge book, the mark-to-market swings can have a disproportionate impact on a single quarter's results, particularly given the magnitude of changes in commodity prices in the last quarter. To put this into context, our oil hedges are struck at approximately $70 a barrel, and the price of WTI at 31 March was $101 per barrel, up 77% from 31 December. If oil prices were to stay flat at $101 per barrel through 30 June, the unrealized gain or loss on the hedge book would be 0. The ultimate goal of our hedge book is to reduce the volatility of cash flows from the benchmark investment. The knock-on effect of this is in periods of price volatility, we may experience unrealized hedge gains or losses.

MJ McNulty: Because of the multi-year duration of the hedge book, the mark-to-market swings can have a disproportionate impact on a single quarter's results, particularly given the magnitude of changes in commodity prices in the last quarter. To put this into context, our oil hedges are struck at approximately $70 a barrel, and the price of WTI at 31 March was $101 per barrel, up 77% from 31 December. If oil prices were to stay flat at $101 per barrel through 30 June, the unrealized gain or loss on the hedge book would be 0. The ultimate goal of our hedge book is to reduce the volatility of cash flows from the benchmark investment. The knock-on effect of this is in periods of price volatility, we may experience unrealized hedge gains or losses.

Speaker #3: Particularly given the magnitude of changes in commodity prices in the last quarter. To put this into context, our oil hedges are struck at approximately $70 a barrel.

Speaker #3: And the price of WTI at March 31st was $101 per barrel. Up 77% from December 31st. If oil prices were to stay flat at 101 per barrel through June 30th, the unrealized gain or loss on the hedge book would be zero.

Speaker #3: The ultimate goal of our hedge book is to reduce the volatility of cash flows from the benchmark investment. The knock-on effect of this is that in periods of price volatility, we may experience unrealized hedge gains or losses.

Speaker #3: Today, as we look forward, we're earning more on our unhedged volumes, earning the hedge rate on our hedge volumes, and we're putting on additional hedges at elevated prices as we bring on new production.

Martin D. McNulty Jr.: Today, as we look forward, we're earning more on our unhedged volumes, earning the hedge rate on our hedged volumes, and we're putting on additional hedges at elevated prices as we bring on new production. Turning now to our manufacturing segment. Deflecto delivered another solid quarter, increasing revenue 4.6% and adjusted EBITDA 1.3% sequentially. Since acquiring the business in Q4 2024, we've made meaningful progress enhancing operational performance, reflecting the impact of several targeted initiatives, including price increases, the reshoring and consolidation of select manufacturing operations, and a focus on reducing overhead and G&A expenses. These initiatives have greatly enhanced the future earnings potential of the business. While tariff pressures and macroeconomic headwinds persist, Deflecto has been navigating this environment effectively under the world-class leadership of our Operating Partner, Clay Kiefaber.

MJ McNulty: Today, as we look forward, we're earning more on our unhedged volumes, earning the hedge rate on our hedged volumes, and we're putting on additional hedges at elevated prices as we bring on new production. Turning now to our manufacturing segment. Deflecto delivered another solid quarter, increasing revenue 4.6% and adjusted EBITDA 1.3% sequentially. Since acquiring the business in Q4 2024, we've made meaningful progress enhancing operational performance, reflecting the impact of several targeted initiatives, including price increases, the reshoring and consolidation of select manufacturing operations, and a focus on reducing overhead and G&A expenses. These initiatives have greatly enhanced the future earnings potential of the business. While tariff pressures and macroeconomic headwinds persist, Deflecto has been navigating this environment effectively under the world-class leadership of our Operating Partner, Clay Kiefaber.

Speaker #3: Turning now to our manufacturing segment. Deflecto delivered another solid quarter, increasing revenue 4.6% and adjusted EBITDA 1.3% sequentially. Since acquiring the business in the fourth quarter of 2024, we've made meaningful progress enhancing operational performance, reflecting the impact of several targeted initiatives, including price increases, the reshoring, and consolidation of select manufacturing operations, and a focus on reducing overhead and G&A expenses.

Speaker #3: These initiatives have greatly enhanced the future earnings potential of the business. We'll tariff pressures and macroeconomic headwinds persist, Deflecto has been navigating this environment effectively under the world-class leadership of our operating partner, Clay Key Faber.

Speaker #3: We're blessed to have talent like Clay on our team, which speaks to the capacity of this team's ability to scale a much larger business.

Martin D. McNulty Jr.: We're blessed to have talent like Clay on our team, which speaks to the capacity of this team's ability to scale a much larger business. Specifically, during the quarter, Deflecto successfully completed the consolidation of our Portland, Oregon, facility into our Dover, Ohio, facility. While we did incur restructuring costs and CapEx associated with this move, we believe the payback should be quick as we anticipate meaningful annualized cost savings beginning in the H2 of the year. While early days, we believe that the improved absorption and efficiency from these initiatives could result in even greater earnings uplift, particularly when volumes return to more normalized levels. Further, we completed the sale of a small unoccupied portion of our UK facility, the proceeds of which were used to pay down additional principal on our Deflecto term loan, which has a current balance today of $31.3 million.

MJ McNulty: We're blessed to have talent like Clay on our team, which speaks to the capacity of this team's ability to scale a much larger business. Specifically, during the quarter, Deflecto successfully completed the consolidation of our Portland, Oregon, facility into our Dover, Ohio, facility. While we did incur restructuring costs and CapEx associated with this move, we believe the payback should be quick as we anticipate meaningful annualized cost savings beginning in the H2 of the year. While early days, we believe that the improved absorption and efficiency from these initiatives could result in even greater earnings uplift, particularly when volumes return to more normalized levels. Further, we completed the sale of a small unoccupied portion of our UK facility, the proceeds of which were used to pay down additional principal on our Deflecto term loan, which has a current balance today of $31.3 million.

Speaker #3: Specifically, during the quarter, Deflecto successfully completed the consolidation of our Portland, Oregon facility into our Dover, Ohio facility. While we did incur restructuring costs and CapEx associated with this move, we believe the payback should be quick as we anticipate meaningful annualized cost savings beginning in the second half of the year.

Speaker #3: While early days, we believe that the improved absorption and efficiency from these initiatives could result in even greater earnings uplift, particularly when volumes return to more normalized levels.

Speaker #3: Further, we completed the sale of a small unoccupied portion of our UK facility, the proceeds of which were used to pay down additional principal on our Deflecto term loan, which has a current balance today of $31.3 million.

Speaker #3: Deflecto's transportation segment is primarily focused on selling essential, non-discretionary products such as mud flaps, and emergency warning triangles that are mandated by key regulatory authorities.

Martin D. McNulty Jr.: Deflecto's transportation segment is primarily focused on selling essential non-discretionary products such as mud flaps and emergency warning triangles that are mandated by key regulatory authorities. That said, since our initial acquisition, we've seen macroeconomic headwinds in the Class 8 market that have reduced overall demand for the product set. During the quarter, we started to see an inflection in Class 8 order volumes, which has translated into a modest increase in demand for our products, with revenue for the vertical increasing 3.6% sequentially and 3.8% year over year. This gives us confidence that our product set has retained and perhaps gained share during the market downturn. We're hopeful that the positive macroeconomic trends driving these results continue.

MJ McNulty: Deflecto's transportation segment is primarily focused on selling essential non-discretionary products such as mud flaps and emergency warning triangles that are mandated by key regulatory authorities. That said, since our initial acquisition, we've seen macroeconomic headwinds in the Class 8 market that have reduced overall demand for the product set. During the quarter, we started to see an inflection in Class 8 order volumes, which has translated into a modest increase in demand for our products, with revenue for the vertical increasing 3.6% sequentially and 3.8% year over year. This gives us confidence that our product set has retained and perhaps gained share during the market downturn. We're hopeful that the positive macroeconomic trends driving these results continue.

Speaker #3: That said, since our initial acquisition, we've seen macroeconomic headwinds in the Class 8 market that have reduced overall demand for the product set. During the quarter, we started to see an inflection in Class 8 order volumes, which has translated into a modest increase in demand for our products, with revenue for the vertical increasing 3.6% sequentially and 3.8% year over year.

Speaker #3: This gives us confidence that our product set is retained and perhaps gained share during the market downturn, and we're hopeful that the positive macroeconomic trends driving these results continue.

Speaker #3: Deflecto's consumer product segment focuses on essential, everyday, workplace, and household items. Such as sign holders, wall pockets, storage, and organization products. Literature holders and desk accessories.

Martin D. McNulty Jr.: Deflecto's consumer products segment focuses on essential everyday workplace and household items such as sign holders, wall pockets, storage and organization products, literature holders, and desk accessories that are supported by recurring demand. Within this segment, ongoing tariff and global trade uncertainty have led some customers to delay purchasing decisions, creating some manageable near-term headwinds combined with significant channel disruption as certain partners have exited the space. We appear to be reaching a steady state within this segment as revenue increased sequentially by 2.2% during the quarter and was flat year-over-year. We are enthusiastic about the months to come and are excited about the new channel opportunities that are emerging within e-commerce.

MJ McNulty: Deflecto's consumer products segment focuses on essential everyday workplace and household items such as sign holders, wall pockets, storage and organization products, literature holders, and desk accessories that are supported by recurring demand. Within this segment, ongoing tariff and global trade uncertainty have led some customers to delay purchasing decisions, creating some manageable near-term headwinds combined with significant channel disruption as certain partners have exited the space. We appear to be reaching a steady state within this segment as revenue increased sequentially by 2.2% during the quarter and was flat year-over-year. We are enthusiastic about the months to come and are excited about the new channel opportunities that are emerging within e-commerce.

Speaker #3: That are supported by reoccurring demand. Within this segment, ongoing tariff and global trade uncertainty have led some customers to delay purchasing decisions, creating some manageable near-term headwinds combined with significant channel disruption as certain partners have exited the space.

Speaker #3: We appear to be reaching a steady state within this segment as revenue increase sequentially by 2.2% during the quarter and with flat year over year.

Speaker #3: We are enthusiastic about the months to come and are excited about the new channel opportunities that are emerging within e-commerce. Lastly, in Deflecto's building products business, which includes products such as air ducts, dryer vents, and vent deflectors, performance has been in line with the housing market and is going through a temporary pullback.

Martin D. McNulty Jr.: Lastly, in Deflecto's building products business, which includes products such as air ducts, dryer vents, and vent deflectors, performance has been in line with the housing market and is going through a temporary pullback. While the segment was up 8.3% sequentially, we're still down 13.1% year over year. While still too early to call a recovery, we have full confidence in the essential and generally non-discretionary nature of Deflecto's building products portfolio. We retain our overall positive view on the long-term positive demand trends for housing in both US and Canada. Now turning to our industrial segment.

MJ McNulty: Lastly, in Deflecto's building products business, which includes products such as air ducts, dryer vents, and vent deflectors, performance has been in line with the housing market and is going through a temporary pullback. While the segment was up 8.3% sequentially, we're still down 13.1% year over year. While still too early to call a recovery, we have full confidence in the essential and generally non-discretionary nature of Deflecto's building products portfolio. We retain our overall positive view on the long-term positive demand trends for housing in both US and Canada. Now turning to our industrial segment.

Speaker #3: While the segment was up 8.3% sequentially, we're still down 13.1% year over year. While still too early to call a recovery, we have full confidence in the essential and generally non-discretionary nature of Deflecto's building products portfolio.

Speaker #3: And retain our overall positive view on the long-term positive demand trends for housing in both US and Canada. Now turning to our industrial segment.

Speaker #3: Frontronics continues to deliver consistent results and serves as a reliable source of cash flow for Acacia, having generated approximately $4.8 million of cash flow in the past 12 months.

Martin D. McNulty Jr.: Printronix continues to deliver consistent results and serves as a reliable source of cash flow for Acacia, having generated approximately $4.8 million of cash flow in the past 12 months, representing a 15% cash flow yield relative to the price we paid to acquire the business. Our ongoing efforts to evolve Printronix into a dual hardware and consumables model, supported by a more streamlined operating structure, have expanded the product mix while driving meaningful cost efficiencies across the business. These initiatives are driving tangible results and reflect our broader approach to value creation, where we implement operational improvements across our portfolio to strengthen performance and position each of our businesses for long-term success rather than optimize them for a near-term exit. The business had a strong quarter in each of its products and geographies.

MJ McNulty: Printronix continues to deliver consistent results and serves as a reliable source of cash flow for Acacia, having generated approximately $4.8 million of cash flow in the past 12 months, representing a 15% cash flow yield relative to the price we paid to acquire the business. Our ongoing efforts to evolve Printronix into a dual hardware and consumables model, supported by a more streamlined operating structure, have expanded the product mix while driving meaningful cost efficiencies across the business. These initiatives are driving tangible results and reflect our broader approach to value creation, where we implement operational improvements across our portfolio to strengthen performance and position each of our businesses for long-term success rather than optimize them for a near-term exit. The business had a strong quarter in each of its products and geographies.

Speaker #3: Representing a 15% cash flow yield relative to the price we paid to acquire the business. Our ongoing efforts to evolve Frontronics into a dual hardware and consumables model supported by a more streamlined operating structure have expanded the product mix while driving meaningful cost efficiencies across the business.

Speaker #3: These initiatives are driving tangible results and reflect our broader approach to value creation. Where we implement operational improvements across our portfolio to strengthen performance, and position each of our businesses for long-term success.

Speaker #3: Rather than optimize them for a near-term exit. The business had a strong quarter in each of its products and geographies. As a reminder, the legacy impact printing business within Frontronics is in structural decline.

Martin D. McNulty Jr.: As a reminder, the legacy impact printing business within Printronix is in structural decline. We're excited about the pivot to a more consumables-heavy model and new product growth. Lastly, to our Intellectual Property Segment. We recorded total revenue and adjusted EBITDA of $700,000 and -$3.5 million respectively for the quarter. As I've noted previously, this segment is inherently episodic in terms of its revenue generation, given the unpredictable timing of settlements. This unpredictability in receipt of settlements is more noticeable in quarters where we do not have revenue to offset the ongoing operational cost of our team, who have done a great job extracting value from the IP portfolio.

MJ McNulty: As a reminder, the legacy impact printing business within Printronix is in structural decline. We're excited about the pivot to a more consumables-heavy model and new product growth. Lastly, to our Intellectual Property Segment. We recorded total revenue and adjusted EBITDA of $700,000 and -$3.5 million respectively for the quarter. As I've noted previously, this segment is inherently episodic in terms of its revenue generation, given the unpredictable timing of settlements. This unpredictability in receipt of settlements is more noticeable in quarters where we do not have revenue to offset the ongoing operational cost of our team, who have done a great job extracting value from the IP portfolio.

Speaker #3: But we're excited about the pivot to a more consumables-heavy model and new product growth. Lastly, to our intellectual property segment. We recorded total revenue and adjusted EBITDA of $700,000 and a negative 3.5 million, respectively, for the quarter.

Speaker #3: As I've noted previously, this segment is inherently episodic in terms of its revenue generation given the unpredictable timing of settlements. This unpredictability in receipt of settlements is more noticeable in quarters where we do not have revenue to offset the ongoing operational cost of our team.

Speaker #3: Who have done a great job extracting value from the IP portfolio. While the confidential nature of our settlements limits the level of detail I can provide on a potential future activity for the IP business, we continue to see meaningful value in our IP monetization platform, which is delivered attractive returns over the past 12 months.

Martin D. McNulty Jr.: While the confidential nature of our settlements limits the level of detail I can provide on a potential future activity for the IP business, we continue to see meaningful value in our IP monetization platform, which has delivered attractive returns over the past 12 months. Of note, our R2 Solutions portfolio, which was originally owned by Yahoo and covers a broad array of innovative computing technologies in the database, internet search, AI, and big data analytics industries, has been particularly active in recent months. R2 Solutions is currently enforcing the portfolio in the big data analytics space and anticipates further developments in the coming months.

MJ McNulty: While the confidential nature of our settlements limits the level of detail I can provide on a potential future activity for the IP business, we continue to see meaningful value in our IP monetization platform, which has delivered attractive returns over the past 12 months. Of note, our R2 Solutions portfolio, which was originally owned by Yahoo and covers a broad array of innovative computing technologies in the database, internet search, AI, and big data analytics industries, has been particularly active in recent months. R2 Solutions is currently enforcing the portfolio in the big data analytics space and anticipates further developments in the coming months.

Speaker #3: Of note, our R2 Solutions portfolio which was originally owned by Yahoo and covers a broad array of innovative computing technologies in the database internet search, AI, and big data analytics industries has been particularly active in recent months.

Speaker #3: R2 Solutions is currently enforcing the portfolio in the big data analytics space and anticipates further developments in the coming months. Before passing it over to Mike to discuss our results in more detail, I'd like to reiterate that while I'm pleased with the improvement in execution of our operating segments, we're equally focused on acquiring and building businesses with stable long-term cash flow generation and scalability that can create compounding value over the long term.

Martin D. McNulty Jr.: Before passing it over to Mike to discuss our results in more detail, I'd like to reiterate that while I'm pleased with the improvement in execution of our operating segments, we're equally focused on acquiring and building businesses with stable long-term cash flow generation and scalability that can create compounding value over the long term. As you know, we put together a highly talented team that we believe, together with the strength of Acacia's value-oriented business model, positions us to deliver across market cycles. While it may seem quiet on the M&A side of things, please trust that we continue to leverage our institutional approach to due diligence and valuation discipline to ensure that we're spending our time on acquisition opportunities that will deliver the most value to our platform and shareholders.

MJ McNulty: Before passing it over to Mike to discuss our results in more detail, I'd like to reiterate that while I'm pleased with the improvement in execution of our operating segments, we're equally focused on acquiring and building businesses with stable long-term cash flow generation and scalability that can create compounding value over the long term. As you know, we put together a highly talented team that we believe, together with the strength of Acacia's value-oriented business model, positions us to deliver across market cycles. While it may seem quiet on the M&A side of things, please trust that we continue to leverage our institutional approach to due diligence and valuation discipline to ensure that we're spending our time on acquisition opportunities that will deliver the most value to our platform and shareholders.

Speaker #3: As you know, we put together a highly talented team that we believe together with the strength of Acacia's value-oriented business model, positions us to deliver across market cycles.

Speaker #3: And while it may seem quiet on the M&A side of things, please trust that we continue to leverage our institutional approach to due diligence, valuation discipline, to ensure that we're spending our time on acquisition opportunities that will deliver the most value to our platform and shareholders.

Speaker #3: I'm genuinely excited about the acquisition opportunities set emerging across our target universe over the next few fiscal quarters. As financing conditions gradually improve, and sellers become more realistic around valuation.

Martin D. McNulty Jr.: I'm genuinely excited about the acquisition opportunity set emerging across our target universe over the next few fiscal quarters as financing conditions gradually improve and sellers become more realistic around valuation. For well-capitalized buyers such as Acacia, I believe this will open a window to pursue opportunities where operational improvement and focused integration can drive meaningful value. To that end, our leadership team and board remain focused on evaluating both internal and external strategic capital allocation opportunities where we believe our experience and approach can help augment underappreciated businesses, creating lasting value for our shareholders and sustaining Acacia's long-term growth trajectory. With that, I'd like to turn things over to Mike to walk through the quarter's results.

MJ McNulty: I'm genuinely excited about the acquisition opportunity set emerging across our target universe over the next few fiscal quarters as financing conditions gradually improve and sellers become more realistic around valuation. For well-capitalized buyers such as Acacia, I believe this will open a window to pursue opportunities where operational improvement and focused integration can drive meaningful value. To that end, our leadership team and board remain focused on evaluating both internal and external strategic capital allocation opportunities where we believe our experience and approach can help augment underappreciated businesses, creating lasting value for our shareholders and sustaining Acacia's long-term growth trajectory. With that, I'd like to turn things over to Mike to walk through the quarter's results.

Speaker #3: For well-capitalized buyers such as Acacia, I believe this will open a window to pursue opportunities where operational improvement and focused integration can drive meaningful value.

Speaker #3: To that end, our leadership team and board remain focused on evaluating both internal and external strategic capital allocation opportunities where we believe our experience and approach can help augment underappreciated businesses creating lasting value for our shareholders and sustaining Acacia's long-term growth trajectory.

Speaker #3: With that, I'd like to turn things over to Mike to walk through the quarterly.

Speaker #2: Thank you, Andrei. As MJ outlined, we delivered solid results for the first quarter despite persistent and in some cases escalating macroeconomic and geopolitical headwinds.

Michael Zambito: Thank you, MJ. As MJ outlined, we delivered solid results for the first quarter despite persistent, and in some cases, escalating macroeconomic and geopolitical headwinds. A few key highlights before moving to the details. Total operated segment revenue, excluding IP, was $53.5 million, a sequential increase of $3.7 million or 7% over Q4 2025. Benchmark delivered record revenue in Q1 and successfully completed its first Cherokee well at the end of the quarter, well in line with budgeted expenditures and with an on-time completion. You should see this well start to impact results in Q2 and Q3. As MJ mentioned above, with Deflecto, we completed the move and consolidation of our Portland manufacturing facility into our Dover facility effective at the end of April.

Speaker #2: A few key highlights before moving to the details. Total operated segment revenue excluding IP was $53.5 million, a sequential increase of $3.7 million, or 7%, over Q4 2025.

Speaker #2: Benchmark delivered record revenue in Q1 and successfully completed its first Cherokee well at the end of the quarter. Well in line with budgeted expenditures and with an on-time completion.

Speaker #2: You should see this well start to impact results in Q2 and Q3. As MJ mentioned above, at Deflecto, we completed the move and consolidation of our Portland manufacturing facility into our Dover facility effective at the end of April.

Speaker #2: We expect to see the benefits of this consolidation beginning the end of Q2 and into the second half of the year. Additionally, our streamlining of the SG&A functions is well underway with benefits expected in the second half of the year.

Michael Zambito: We expect to see the benefits of this consolidation beginning the end of Q2 and into H2. Our streamlining of the SG&A functions is well underway, with benefits expected in H2. We paid down $1.6 million of Deflecto debt in Q1, a net neutral cash event, as we utilized proceeds from an unused portion of our UK building to make the payment. Our GAAP diluted EPS this quarter was impacted by the unprecedented run in oil prices, which resulted in a $9.7 million unrealized loss from the mark-to-market valuation of our energy hedge at Benchmark. The net impact attributable to Acacia's EPS was $0.10 per share. On a fully adjusted basis, excluding the unrealized hedge loss and other items, Acacia's adjusted diluted EPS loss was $0.07 per share.

Speaker #2: Lastly, we paid down $1.6 million of Deflecto debt in Q1, a net neutral cash event as we utilized proceeds from an unused portion of our UK building to make the payment.

Speaker #2: Our gap diluted EPS this quarter was impacted by the unprecedented run in oil prices, which resulted in a 9.7 million unrealized loss from the mark-to-market valuation of our energy hedge at Benchmark.

Speaker #2: The net impact attributable to Acacia's EPS was 10 cents per share. On a fully adjusted basis, excluding the unrealized hedge loss and other items, Acacia's adjusted diluted EPS loss was 7 cents per share.

Speaker #2: As discussed more fully below, Acacia's cash, equity securities, and loans receivable decreased by 9.7 million during the quarter. Cash generated from operations at our operated segments excluding IP was strategically reinvested in high ROI opportunities.

Michael Zambito: As discussed more fully below, Acacia's cash, equity securities, and loans receivable decreased by $9.7 million during the quarter. Cash generated from operations at our operated segments, excluding IP was strategically reinvested in high ROI opportunities. Notably, the Cherokee well discussed above, a small investment in our IP business and the transformation at Deflecto. We are excited about the near term returns from these investments. Our book value this quarter was primarily impacted by three drivers: the $9.7 million unrealized loss from the mark-to-market valuation of our energy hedge of Benchmark, a $1.6 million unrealized loss on our equity portfolio, and a quarter with no major IP settlements. As discussed by MJ, the IP businesses settlement revenue is episodic and unpredictable. In Q1, we did not have revenue to offset the ongoing operational costs of our team.

Speaker #2: Notably, the Cherokee Well discussed above a small investment in our IP business and the transformation at Deflecto. We are excited about the near-term returns from these investments.

Speaker #2: Our book value this quarter was primarily impacted by three drivers. The 9.7 million unrealized loss, from the mark-to-market valuation of our energy hedge at Benchmark, a 1.6 million unrealized loss on our equity portfolio, and a quarter with no major IP settlements.

Speaker #2: As discussed by MJ, the IP businesses settlement revenue is episodic and unpredictable in the first quarter. We do not have revenue to offset the ongoing operational costs of our team.

Speaker #2: Onto the numbers. Acacia recorded total revenue of $54.2 million during the first quarter. Our energy operations generated $18.7 million in revenue for the quarter.

Michael Zambito: Onto the numbers. Acacia recorded total revenue of $54.2 million during Q1. Our energy operations generated $18.7 million in revenue for the quarter, the strongest revenue quarter for Benchmark under our ownership, compared to $18.3 million in the same quarter of last year. As mentioned, we hedged approximately 75% of our operating production at Benchmark. Realized hedge loss is not included in revenue. $1 million in Q1 2026 versus a realized loss of $43,000 Q1 2025. Manufacturing operations generated $27.7 million in revenue for the quarter compared to $28.5 million in Q1 2025, primarily driven by lower revenue in our air distribution business, where we're seeing some weakness in the Canadian housing market.

Speaker #2: The strongest revenue quarter for Benchmark under our ownership compared to $18.3 million in the same quarter of last year. As mentioned, we hedged approximately 75% of our operated production at Benchmark.

Speaker #2: Realized hedge losses not included in revenue were $1 million in Q1 '26 versus a realized loss of $43,000 in Q1 '25. Manufacturing operations generated $27.7 million in revenue for the quarter compared to $28.5 million in the first quarter of 2025, primarily driven by lower revenue in our air distribution business where we're seeing some weakness in the Canadian housing market.

Speaker #2: Our industrial operations generated $7.2 million in revenue during the quarter. A slight decrease compared to $7.7 million in the same quarter of last year.

Michael Zambito: Our industrial operations generated $7.2 million in revenue during the Q, a slight decrease compared to $7.7 million in the same Q of last year. Our intellectual property operations generated $0.7 million in licensing and other revenue during the Q, compared to $70 million in the same Q last year. The year-over-year decrease in the IP revenue is primarily due to the Atlas portfolio settlement that took place in the Q1 of 2025, with no comparable settlement in 2026. Total consolidated G&A expense was $17.3 million during the Q1, compared to $17.3 million in the same Q of last year. Deflecto reported G&A expense for the Q1 of 2026 was $4 million, compared to $5.7 million in the prior Q.

Speaker #2: Our intellectual property operations generated $0.7 million in licensing and other revenue during the quarter, compared to $70 million in the same quarter last year.

Speaker #2: The year-over-year decrease in the IP revenue is primarily due to the Atlas portfolio settlement that took place in the first quarter of 2025, with no comparable settlement in 2026.

Speaker #2: Total consolidated G&A expense was $17.3 million during the first quarter, compared to $17.3 million in the same quarter of last year. Deflecto reported G&A expense for the first quarter of 2026 was $4 million, compared to $5.7 million in the prior quarter.

Speaker #2: Of the $4 million, Deflecto G&A expense approximately $800,000 was related to depreciation of fixed assets and amortization of intangible assets, and $800,000 was related to non-recurring severance, restructuring, and transaction-related costs.

Michael Zambito: Of the $4 million in Deflecto G&A expense, approximately $800,000 was related to depreciation of fixed assets and amortization of intangible assets, and $800,000 was related to non-recurring severance, restructuring, and transaction-related costs. The decline year over year is due to realization of our efforts to streamline SG&A. Our energy operations reported G&A expense was $1.7 million for the first quarter of 2026, compared to $1.6 million for the prior year quarter in 2025. The intellectual property business reported G&A expense decreased by $0.3 million for the first quarter, going from $3.5 million to $3.2 million. Printronix reported G&A expense decreased by $0.1 million in the first quarter from $1.7 million to $1.6 million.

Speaker #2: The decline year-over-year is due to realization of our efforts to streamline SG&A. Our energy operations reported G&A expense was $1.7 million for the first quarter of 2026, compared to $1.6 million for the prior year quarter in 2025.

Speaker #2: The intellectual property business reported G&A expense decreased by 0.3 million for the first quarter, going from $3.5 million to $3.2 million. Pentronics reported G&A expense decreased by 0.1 million in the first quarter, from $1.7 million to $1.6 million.

Speaker #2: Reported G&A at the parent level for the first quarter increased by 1.9 million year-over-year, from $4.8 million to $6.7 million. The increase was due to transaction-related costs in Q1 of 2026 that were not incurred in 2025, as well as certain timing-related adjustments impacting the comparability of Q1 in 2025.

Michael Zambito: Reported G&A at the parent level for Q1 increased by $1.9 million year-over-year from $4.8 million to $6.7 million. The increase was due to transaction-related costs in Q1 of 2026 that were not incurred in 2025, as well as certain timing-related adjustments impacting the comparability of Q1 in 2025. Parent G&A on an adjusted basis for our non-GAAP parent costs, as shown on our adjusted EBITDA reconciliations, increased to $5.2 million in the quarter ended 31 March 2026, versus $4.0 million in the prior year. The company recorded a Q1 GAAP operating loss of $8.4 million compared to GAAP operating income of $38.3 million in the same quarter last year. This decline was primarily due to the lapping of the Atlas portfolio settlement.

Speaker #2: Parent G&A on an adjusted basis or our non-gap parent costs as shown on our adjusted EBITDA reconciliations increased to $5.2 million in the quarter ended March 31, 2026, versus $4.0 million in the prior year.

Speaker #2: The company recorded a first quarter gap operating loss of $8.4 million compared to gap operating income of $38.3 million in the same quarter last year.

Speaker #2: This decline was primarily due to the lapping of the Atlas portfolio settlement. Total company adjusted EBITDA for the quarter ended March 31, 2026, was 1.6 million.

Michael Zambito: Total company adjusted EBITDA for the quarter ended 31 March 2026 was $1.6 million. Given certain one-time and non-cash charges, we believe adjusted EBITDA provides a clearer picture of our underlying performance. Energy operations contributed $5.3 million in GAAP operating income during the quarter, which included $3.4 million in non-cash depreciation, depletion, and amortization expense, and does not reflect the realized hedge loss of $1 million we realized during the quarter, which is reported below operating profit. Adjusted EBITDA for our energy operations was $7.7 million, and free cash flow for our energy operations was -$1.9 million in the quarter. This free cash flow included approximately $8.5 million of CapEx, primarily related to the development and completion of Benchmark's first well in the Cherokee play.

Speaker #2: Given certain one-time and non-cash charges, we believe adjusted EBITDA provides a clearer picture of our underlying performance. Energy operations contributed $5.3 million in gap operating income during the quarter, which included $3.4 million in non-cash, depreciation, depreciation, depletion, and amortization expense and does not reflect the realized hedge loss of $1 million we realized during the quarter, which was reported below operating profit.

Speaker #2: Adjusted EBITDA for our energy operations was 7.7 million and free cash flow for our energy operations was -1.9 million in the quarter. This free cash flow included approximately $8.5 million of capex, primarily related to the development and completion of Benchmark's first well in the Cherokee Play.

Speaker #2: Excluding this growth capital, free cash flow at Benchmark would have been over $6 million. Manufacturing operations had a 0.5 million gap operating loss during the quarter, which included $800,000 in non-cash depreciation and amortization expense and $800,000 in non-recurring transaction-related expenses.

Michael Zambito: Excluding this growth capital, free cash flow at Benchmark would have been over $6 million. Manufacturing operations at a $0.5 million GAAP operating loss during the quarter, which included $800,000 in non-cash depreciation and amortization expense and $800,000 in non-recurring transaction related expenses, restructuring costs, and severance costs as part of our operational initiatives at Deflecto. As MJ mentioned above, while Deflecto continues to experience cyclical headwinds, our restructuring efforts are showing positive initial results. We are utilizing the cyclical lows in the safety business to transform our safety manufacturing operations, having successfully closed the Portland facility effective 30 April and consolidated the operations into our existing footprint in Dover. As part of this transformation, we are also implementing new processes and creating a leaner, more efficient environment.

Speaker #2: Restructuring costs and severance costs. As part of our operational initiatives at Deflecto, as MJ mentioned above, while Deflecto continues to experience cyclical headwinds, our structuring efforts are showing positive initial results.

Speaker #2: We are utilizing the cyclical lows and the safety business to transform our safety manufacturing operations. Having successfully closed the Portland facility effective April 30th and consolidated the operations into our existing footprint in Dover.

Speaker #2: As part of this transformation, we are also implementing new processes and creating a leaner, more efficient environment. While these efforts will have a modest negative impact on free cash flow in the first and second quarters, the execution of these activities will drive cost savings in the second half of 2026 and position Deflecto well when volumes return to incrementally add to EBITDA and cash flow.

Michael Zambito: While these efforts will have a modest negative impact on free cash flow in Q1 and Q2, the execution of these activities will drive cost savings in H2 2026 and position Deflecto well when volumes return to incrementally add to EBITDA and cash flow. Adjusted EBITDA for our manufacturing operations was $1.2 million and free cash flow was -$0.2 million in the quarter, primarily due to the consolidation efforts just discussed. Industrial operations contributed $0.9 million in GAAP operating income during the quarter, which included $500,000 in non-cash depreciation and amortization expense. Adjusted EBITDA for our industrial operations was $1.4 million, free cash flow was $3.1 million in the quarter, primarily due to working capital improvements.

Speaker #2: Adjusted EBITDA for our manufacturing operations was 1.2 million and free cash flow was -0.2 million in the quarter, primarily due to the consolidation efforts just discussed.

Speaker #2: Industrial operations contributed 0.9 million in gap operating income during the quarter, which included $500,000 in non-cash, depreciation, and amortization expense. Adjusted EBITDA for our industrial operations was 1.4 million and free cash flow was 3.1 million in the quarter, primarily due to working capital improvements.

Speaker #2: Gap net loss attributable to occasional research corporation in the fourth quarter was 15.7 million or -16 cents per share. Compared to net income of 24.3 million or 25 cents per share in the prior year period.

Michael Zambito: GAAP net loss attributable to Acacia Research Corporation in Q4 was $15.7 million, or -$0.16 per share, compared to net income of $24.3 million or $0.25 per share in the prior year period. Included in GAAP net loss for Q1 was a $10.7 million loss on our derivative hedges from our energy operations. Of this amount, $1 million was realized and $9.7 million was unrealized, which significantly impacted our Q1 GAAP net loss. As noted previously, we hedge approximately 75% of our operating production at Benchmark. The unrealized loss associated with our hedging program reflects mark-to-market accounting on derivative positions that extend over a multi-year horizon and does not correspond to realized economic outcomes within the quarter.

Speaker #2: Included in gap net loss for the first quarter was a 10.7 million loss on our derivative hedges from our energy operations. Of this amount, $1 million was realized and $9.7 million was unrealized.

Speaker #2: Which significantly impacted our first quarter gap net loss. As noted previously, we hedge approximately 75% of our operated production at Benchmark. The unrealized loss associated with our hedging program reflects mark-to-market accounting on derivative positions that extend over a multi-year horizon and does not correspond to realized economic outcomes within the quarter.

Speaker #2: The charge is driven by changes in future price expectations and does not impact current period cash flows. Additionally, included in GAAP net loss for the first quarter was $1.6 million in unrealized losses relating to changes in the fair value of equity securities, and a realized loss of $600,000 in the sale of equity securities.

Michael Zambito: The charge is driven by changes in future price expectations and does not impact current period's cash flows. Additionally, included in GAAP net loss for Q1 was $1.6 million in unrealized losses relating to changes in the fair value of equity securities and a realized loss of $600,000 in the sale of equity securities. Adjusted net loss attributable to Acacia in Q1 2026 was -$6.6 million or -$0.07 per share. Among other items, our adjusted net loss attributable to Acacia excludes Acacia's portion of the unrealized loss on energy hedges discussed above. Further detail on these adjustments can be found in our press release. Moving on to our balance sheet.

Speaker #2: Adjusted net loss attributable to occasion in the first quarter of 2026 was -6.6 million or -0.7 cents per share. Among other items, our adjusted net loss attributed to occasion excludes Acacia's portion of the unrealized loss on energy hedges discussed above.

Speaker #2: Further detail on these adjustments can be found in our press release. Moving on to our balance sheet, cash, cash equivalents, and equity securities measured at fair value and loans receivable totaled $329.9 million at March 31st, 2026, compared to $339.6 million at December 31st, 2025.

Michael Zambito: Cash, cash equivalents, and equity securities measured at fair value and loans receivable totaled $329.9 million at 31 March 2026, compared to $339.6 million at 31 December 2025. Our core operated segments, Benchmark, Deflecto, and Printronix, generated $10.2 million in operating cash flows, which was reinvested in high ROI activities. Specifically, Benchmark used cash flows from operations and balance sheet cash to drill its first well during the quarter, while Deflecto invested its cash flow to complete the consolidation of its Portland facility into its Dover location. Remaining cash flow generation at Printronix plus interest income was offset by the acquisition of additional interests in the Wi-Fi 7 portfolio and cash flows to support parent-level and IP operating costs.

Speaker #2: Our core operated segments, Benchmark, Deflecto, and Pentronics, generated $10.2 million in operating cash flows, which was reinvested in high-ROI activities. Specifically, Benchmark used cash flows from operations and balance sheet cash to do its first well during the quarter, while Deflecto invested its cash flow to complete the consolidation of its Portland facility into its Dover location.

Speaker #2: Remaining cash flow generation at Pentronics plus interest income was offset by the acquisition of additional interest in the Wi-Fi 7 portfolio and cash flows to support parent-level and IP operating costs.

Speaker #2: We continually assess capital allocation priorities across our existing businesses while actively evaluating new investment opportunities to drive long-term value creation for shareholders. Through disciplined decision-making, and strategic investment, we remain focused on strengthening our portfolio and positioning the company for sustainable growth and shareholder returns.

Michael Zambito: We continually assess capital allocation priorities across our existing businesses while actively evaluating new investment opportunities to drive long-term value creation for shareholders. Through disciplined decision-making and strategic investment, we remain focused on strengthening our portfolio and positioning the company for sustainable growth and shareholder returns. The parent company's total indebtedness was zero at 31 March 2026. On a consolidated basis, Acacia's total gross indebtedness as of 31 March 2026, was $90.5 million, consisting of $59.5 million and $31 million in non-recourse debt at Benchmark and Deflecto, respectively. Since closing the acquisition of the Revolution assets in April 2024, Benchmark has paid down approximately $23 million in total debt, underscoring the strong free cash flow generation of the business.

Speaker #2: The parents companies' total indebtedness was zero at March 31st, 2026. On a consolidated basis, Acacia's total gross indebtedness as of March 31st, 2026, was 90.5 million consisting of 59.5 million and 31 million in non-recourse debt at Benchmark and Deflecto, respectively.

Speaker #2: Since closing the acquisition of the Revolution Assets in April 2024, Benchmark was paid down approximately 23 million in total debt underscoring the strong free cash flow generation of the business.

Speaker #2: Additionally, since acquiring Deflecto, in October 2024, the company has paid down approximately 17.3 million in total Deflecto debt. These capital allocation decisions have significantly reduced our consolidated debt and interest expense providing further operational flexibility.

Michael Zambito: Additionally, since acquiring Deflecto in October 2024, the company has paid down approximately $17.3 million in total Deflecto debt. These capital allocation decisions have significantly reduced our consolidated debt and interest expense, providing further operational flexibility. For more information on Acacia's Q1 results, please see our press release issued this morning and our quarterly report on Form 10-Q, which we will file with the SEC later this week. I'll now turn the call back over to MJ.

Speaker #2: For more information on Acacia's first quarter results, please see our press release issued this morning and our quarterly report on Form 10-Q, which we will file with the SEC later this week.

Speaker #2: I'll now turn the call back over to MJ. Thanks, Mike. As you've heard today, Acacia continues to execute well across our operating segments. Delivering on our strategy despite the challenges presented by the current market environment.

Martin D. McNulty Jr.: Thanks, Mike. As you've heard today, Acacia continues to execute well across our operating segments, delivering on our strategy despite the challenges presented by the current market environment. I'm really proud of our team's hard work and our productive start to 2026. I firmly believe that one of Acacia's greatest strengths is our talented team, and I'm thrilled to work with this group as we continue to grow the business together. We have an excellent portfolio of assets here at Acacia, where diverse exposure across multiple industries and the strength of each of our businesses in the portfolio positions us to generate significant value for our shareholders moving forward. Our approach to managing the business has been, and will continue to be measured. Taking care not to let volatility across the market impact our objectives for organic and inorganic growth within each of our core verticals.

MJ McNulty: Thanks, Mike. As you've heard today, Acacia continues to execute well across our operating segments, delivering on our strategy despite the challenges presented by the current market environment. I'm really proud of our team's hard work and our productive start to 2026. I firmly believe that one of Acacia's greatest strengths is our talented team, and I'm thrilled to work with this group as we continue to grow the business together. We have an excellent portfolio of assets here at Acacia, where diverse exposure across multiple industries and the strength of each of our businesses in the portfolio positions us to generate significant value for our shareholders moving forward. Our approach to managing the business has been, and will continue to be measured. Taking care not to let volatility across the market impact our objectives for organic and inorganic growth within each of our core verticals.

Speaker #2: I'm really proud of our team's hard work and our productive start to 2026. I firmly believe that one of Acacia's greatest strengths is our talented team and I'm thrilled to work with this group as we continue to grow the business together.

Speaker #2: We have an excellent portfolio of assets here at Acacia where our diverse exposure across multiple industries and the strength of each of our businesses in the portfolio positions us to generate significant value for our shareholders moving forward.

Speaker #2: Our approach to managing the business has been and will continue to be measured. Taking care not to let volatility across the market impact our objectives for organic and inorganic growth within each of our core verticals.

Speaker #2: I'm confident that our value-oriented and diligent management team will enable us to continue driving positive momentum throughout the year and beyond. With that, I'll turn it back over to Jenny to open up for questions.

Martin D. McNulty Jr.: I'm confident that our value-oriented and diligent management team will enable us to continue driving positive momentum throughout the year and beyond. With that, I'll turn it back over to Jenny to open up for questions.

MJ McNulty: I'm confident that our value-oriented and diligent management team will enable us to continue driving positive momentum throughout the year and beyond. With that, I'll turn it back over to Jenny to open up for questions.

Speaker #3: Thank you very much, MJ. At this time, we will be conducting our question-and-answer session. If you would like to ask a question, please press star one on your phone keypad now.

Jenny: Thank you very much, MJ. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please wait a moment while we poll for questions. Thank you. Our first question is coming from Anthony Stoss of Craig-Hallum. Anthony, your line is live.

Operator: Thank you very much, MJ. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please wait a moment while we poll for questions. Thank you. Our first question is coming from Anthony Stoss of Craig-Hallum. Anthony, your line is live.

Speaker #3: A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue.

Speaker #3: And for anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please wait a moment whilst we poll for questions.

Speaker #3: Thank you. Our first question is coming from Anthony Stoss of Craig Hallam. Anthony, your line is live.

Speaker #4: Thank you, good morning, everybody. MJ, maybe can you lay out how many new wells at Benchmark are contemplated and, I guess, the expected timing and when you think you can get those wells up?

Anthony Stoss: Thank you. good morning, everybody. MJ, maybe can you lay out how many new wells at Benchmark are contemplated and the, I guess, the expected timing on when you think you can get those wells up? I have a follow-up after that.

Speaker #4: And then I have a follow-up after that.

Speaker #5: Yeah, hey, Tony, great to talk. So we are evaluating several different locations. As I said, the team really spent the better part of the last six to nine months taking what we had and making it better.

Martin D. McNulty Jr.: Yeah. Hey, Tony. Great to talk. We are evaluating several different locations. As I said, the team really spent, you know, the better part of the last six to nine months taking what we had and making it better. We bought, we swapped, we sold different anchorages to put together units so that those units are then ready to be drillable. We have several of those units that are at or close to that stage. I don't wanna comment on the number of wells we're gonna drill, I am pretty excited about the units that we have and the opportunity set with some partnerships that we have as a potential operator of units to go ahead on some more drilling.

MJ McNulty: Yeah. Hey, Tony. Great to talk. We are evaluating several different locations. As I said, the team really spent, you know, the better part of the last six to nine months taking what we had and making it better. We bought, we swapped, we sold different anchorages to put together units so that those units are then ready to be drillable. We have several of those units that are at or close to that stage. I don't wanna comment on the number of wells we're gonna drill, I am pretty excited about the units that we have and the opportunity set with some partnerships that we have as a potential operator of units to go ahead on some more drilling.

Speaker #5: We swapped, we sold different acreages to put together units so that those units are then ready to be drillable. And we have several of those units that are at or close to that stage.

Speaker #5: I don't want to comment on the number of wells we're going to drill, but I am pretty excited about the units that we have and the opportunities set with some partnerships that we have as a potential operator of units.

Speaker #5: To go ahead on some more drilling.

Speaker #4: Okay. And shifting gears over to the Deflecto side, now that you've closed the Portland facility, how much do you think you'll save or just remind us, maybe over the next 12 months, and when will all the other actions be complete on Deflecto?

Anthony Stoss: Okay. Shifting gears over to the Deflecto side. Now that you've closed the Portland facility, how much do you think you'll save, or just remind us, you know, maybe over the next 12 months, and when will all the other actions be complete on Deflecto? Seems to be running about half of what you expected in terms of adjusted EBITDAs.

Speaker #4: It seems to be running about half of what you expected in terms of adjusted EBITDA.

Speaker #5: Yeah, I mean, so when we look at the Portland facility, our team's initial estimates are kind of $2 million in annualized cost savings from the consolidation.

Martin D. McNulty Jr.: Yeah, I mean, when we look at the Portland facility, our team's initial estimates are kinda $2 million in annualized cost savings from the consolidation. You know, with the consolidation, we've actually taken out excess capacity as well. As we see an uptick in volumes associated with Class 8, we move more volume through those plants. We should see an enhanced margin as well. There's continued a cost rationalization at the G&A level. We continue to work through that. As you probably remember, Tony, this is a complex business in the sense that it's both, you know, small relative to a lot of other businesses, international, and has three different sets of businesses inside it. I wouldn't say that it's going slower.

MJ McNulty: Yeah, I mean, when we look at the Portland facility, our team's initial estimates are kinda $2 million in annualized cost savings from the consolidation. You know, with the consolidation, we've actually taken out excess capacity as well. As we see an uptick in volumes associated with Class 8, we move more volume through those plants. We should see an enhanced margin as well. There's continued a cost rationalization at the G&A level. We continue to work through that. As you probably remember, Tony, this is a complex business in the sense that it's both, you know, small relative to a lot of other businesses, international, and has three different sets of businesses inside it. I wouldn't say that it's going slower.

Speaker #5: And with the consolidation, we've actually taken out excess capacity as well. And so as we see an uptick in volumes associated with Class A, we move more volume through those plants.

Speaker #5: We should see an enhanced margin as well. There's continued cost rationalization at the G&A level. So we continue to work through that. And as you probably remember, Tony, this is a complex business in the sense that it's both small relative to a lot of other businesses international and has three different sets of businesses inside it.

Speaker #5: And so I wouldn't say that it's going slower. I would characterize it as we're making sure that we understand all the interoperability of those businesses to facilities and the people so that we do it the right way for a long-term positive outcome, long-term durable positive outcome.

Martin D. McNulty Jr.: I would characterize it as we're making sure that we understand all the interoperability of those businesses, the facilities and the people, so that we do it the right way for a long-term positive outcome, long-term durable positive outcome.

MJ McNulty: I would characterize it as we're making sure that we understand all the interoperability of those businesses, the facilities and the people, so that we do it the right way for a long-term positive outcome, long-term durable positive outcome.

Speaker #4: Got it. Thanks for the color. Best of luck.

Anthony Stoss: Got it. Thanks for the color. Best of luck.

Speaker #5: Yeah, thanks, Tony.

Martin D. McNulty Jr.: Yeah. Thanks, Tony.

MJ McNulty: Yeah. Thanks, Tony.

Speaker #3: Thank you very much. Just a reminder there, you can still join the queue if you press star one on your phone keypad. Our next question is coming from Brett Reese of Jenny Montgomery Scott.

Jenny: Thank you very much. Just a reminder there, you can still join the queue if you press star one on your phone keypad. Our next question is coming from Brett Reiss of Janney Montgomery Scott. Brett, your line is live.

Operator: Thank you very much. Just a reminder there, you can still join the queue if you press star one on your phone keypad. Our next question is coming from Brett Reiss of Janney Montgomery Scott. Brett, your line is live.

Speaker #3: Brett, your line is live.

Speaker #6: Hi, I'm MJ. Hi, Mike. A couple from me.

Brett Reiss: Hi, MJ. Hi, Mike. A couple from me.

Operator: Hi, MJ. Hi, Mike. A couple from me.

Speaker #4: Hey, Brett, good morning.

Speaker #6: Hi. The MOIC of two and a half times on Cherokee can you share with us the timing and cadence of that two and a half return two and a half times return on capital?

Martin D. McNulty Jr.: Hey, Brett. Morning.

MJ McNulty: Hey, Brett. Morning.

Brett Reiss: Hi. The MOIC of 2.5x on Cherokee, can you share with us the timing and cadence, you know, of that 2.5x return, 2.5x return on capital?

Speaker #4: Yeah, so the way we I'll tell you how we think about it broadly. The these wells, when they come on, come on at high volumes and over time, the volumes coming out of those wells decline.

Martin D. McNulty Jr.: Yeah. The way we I'll tell you how we think about it broadly. These wells, when they come on, come on at high volumes, and over time, the volumes coming out of those wells decline, as you'd expect to see in any oil and gas well. Cash flows from the well come out pretty quickly. The two and a half times is an undiscounted number. As you think about payback on the wells, we're, you know, kinda inside 2-year payback on the wells. We think that's a pretty attractive return opportunity.

MJ McNulty: Yeah. The way we I'll tell you how we think about it broadly. These wells, when they come on, come on at high volumes, and over time, the volumes coming out of those wells decline, as you'd expect to see in any oil and gas well. Cash flows from the well come out pretty quickly. The two and a half times is an undiscounted number. As you think about payback on the wells, we're, you know, kinda inside 2-year payback on the wells. We think that's a pretty attractive return opportunity.

Speaker #4: As you'd expect to see in any oil and gas well. And so cash flows from the well come out pretty quickly. And the two and a half times is an undiscounted number.

Speaker #4: So as you think about payback on the wells, we're kind of inside two-year payback on the wells. So we think that's a pretty attractive return opportunity.

Speaker #6: Yeah, I should say so. MJ, I listened the other day to the Devon Energy conference call. And they're a very good operator of oil properties.

Brett Reiss: Yeah, I should say so. MJ, you know, I listened the other day to the Devon Energy conference call, and, you know, they're a very good operator of oil properties, and they focused a lot on their ability to use AI to crunch data and improve returns on their properties. Are we, you know, doing some of that on our end? If so, you know, the high double-digit returns, you know, could they be greater, you know, in the future because of greater efficiencies?

Speaker #6: And they focused a lot on their ability to use AI to crunch data and improve returns on their properties are we doing some of that on our end?

Speaker #6: And if so, the high double-digit returns? Could they be greater? In the future, because of greater efficiencies?

Speaker #5: So, I love ChatGPT, and it's really helpful in my daily life. We at Benchmark are evaluating different AI tools that can help us. Somebody like a Devon is a significantly larger company, with fields that are interconnected, not interconnected, is drilling wells all the time.

Martin D. McNulty Jr.: I love ChatGPT, and it's really helpful in my daily life. We, at Benchmark Energy, are evaluating different AI tools that can help us. Somebody like a Devon Energy is a significantly larger company with fields, you know, that are interconnected, not interconnected, is drilling wells all the time. I don't know exactly what they mean by using AI, but I would say that we're evaluating, in the, in the early stages, different tools that we can use, whether it's partnering with drilling partners as we drill wells that incorporate AI into their process of drilling the well, folks that frack the well incorporating AI. We're using best-of-breed service providers, we look for folks that are using the best technology, whether it's AI or not, to help enhance the performance, and the cost profile and the time to depth.

MJ McNulty: I love ChatGPT, and it's really helpful in my daily life. We, at Benchmark Energy, are evaluating different AI tools that can help us. Somebody like a Devon Energy is a significantly larger company with fields, you know, that are interconnected, not interconnected, is drilling wells all the time. I don't know exactly what they mean by using AI, but I would say that we're evaluating, in the, in the early stages, different tools that we can use, whether it's partnering with drilling partners as we drill wells that incorporate AI into their process of drilling the well, folks that frack the well incorporating AI. We're using best-of-breed service providers, we look for folks that are using the best technology, whether it's AI or not, to help enhance the performance, and the cost profile and the time to depth.

Speaker #5: I don't know exactly what they mean by using AI. But I would say that we're evaluating in the early stages different tools that we can use whether it's partnering with drilling partners as we drill wells that incorporate AI into their process of drilling the well.

Speaker #5: Folks that frac the well incorporating AI. We're using best-of-breed service providers, so we look for folks that are using the best technology, whether it's AI or not.

Speaker #5: To help enhance the performance and the cost profile and the time to depth. And so we're kind of evaluating all opportunities. We don't have a broad AI-related initiative that we are in a position to announce to the market that we're drilling wells with AI.

Martin D. McNulty Jr.: We're kind of evaluating all opportunities. We don't have a broad AI-related initiative that we are in a position to announce to the market that we're drilling wells with AI, but we are using AI in different places in our business to enhance the productivity.

MJ McNulty: We're kind of evaluating all opportunities. We don't have a broad AI-related initiative that we are in a position to announce to the market that we're drilling wells with AI, but we are using AI in different places in our business to enhance the productivity.

Speaker #5: But we are using AI in different places in our business to enhance the productivity.

Speaker #6: Okay. And last one from me. Share buybacks. Did you buy back any stock this quarter? How much of a window do you have to buy back stock?

Brett Reiss: Okay. Last one from me. Share buybacks. Did you buy back any stock this quarter? How much of a window do you have, you know, to buy back stock? What's the existing authorization in place?

Speaker #6: And what's the existing authorization in place?

Speaker #5: I mean, I'll answer this question as I usually answer this question. We evaluate the buyback in the context of other capital allocation opportunities. As you heard Mike say, we invest in capital and wells.

Martin D. McNulty Jr.: I'll answer this question as I usually answer this question. We evaluate the buyback in the context of other capital allocation opportunities. As you heard Mike say, we invest in capital in wells, we invest in capital in rationalization at Deflecto that we think we have a very attractive payback on, and we invested a little bit of capital in the IP business. That's where we invest in capital at work.

MJ McNulty: I'll answer this question as I usually answer this question. We evaluate the buyback in the context of other capital allocation opportunities. As you heard Mike say, we invest in capital in wells, we invest in capital in rationalization at Deflecto that we think we have a very attractive payback on, and we invested a little bit of capital in the IP business. That's where we invest in capital at work.

Speaker #5: We invest in capital in rationalization at Deflecto that we think we have a very attractive payback on. And we invested a little bit of capital in the IP business.

Speaker #5: And so that's where we invest in capital with work.

Speaker #6: Okay. Thanks a lot for taking my questions. Appreciate it.

Brett Reiss: Okay. Thanks a lot for taking my questions. Appreciate it.

Speaker #4: Yes.

Speaker #5: Thanks, Brett.

Martin D. McNulty Jr.: Yeah. Thanks, Brett.

MJ McNulty: Yeah. Thanks, Brett.

Speaker #3: Thank you very much. Just a reminder there, if you'd like to ask a question, you can join the queue now by pressing star one.

Jenny: Thank you very much. Just a reminder there, if you'd like to ask a question, you can join the queue now by pressing star one. Okay. We don't appear to have any further questions in the queue, so I will now turn the call back over to MJ for any closing comments.

Operator: Thank you very much. Just a reminder there, if you'd like to ask a question, you can join the queue now by pressing star one. Okay. We don't appear to have any further questions in the queue, so I will now turn the call back over to MJ for any closing comments.

Speaker #3: Okay. We don't appear to have any further questions in the queue. So I will now turn the call back over to MJ for any closing comments.

Speaker #4: Thanks, Jenny. Thanks for everyone joining us today. We look forward to talking to you after Q2.

Martin D. McNulty Jr.: Thanks, Jenny. Thanks for everyone joining us today. We look forward to talking to you after Q2.

MJ McNulty: Thanks, Jenny. Thanks for everyone joining us today. We look forward to talking to you after Q2.

Speaker #3: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.

Jenny: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.

Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.