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Business Wire 13-Nov-2023 4:06 PM
Acacia Research Corporation (NASDAQ:ACTG) ("Acacia" or the "Company") today reported financial results for the three and nine months ended September 30, 2023.
Key Business Highlights
Third Quarter 2023 Financial Highlights |
|||||||||||||||
(In millions, except per share data) |
|||||||||||||||
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
(unaudited) |
|
(unaudited) |
||||||||||||
Intellectual property operations |
$ |
1.8 |
|
|
$ |
6.3 |
|
|
$ |
6.3 |
|
|
$ |
17.0 |
|
Industrial operations |
|
8.3 |
|
|
|
9.6 |
|
|
|
26.5 |
|
|
|
29.1 |
|
Total revenues |
$ |
10.1 |
|
|
$ |
15.9 |
|
|
$ |
32.8 |
|
|
$ |
46.1 |
|
Operating loss |
$ |
(15.4 |
) |
|
$ |
(11.4 |
) |
|
$ |
(37.3 |
) |
|
$ |
(25.5 |
) |
Unrealized gains (losses) 1 |
$ |
8.8 |
|
|
$ |
(36.4 |
) |
|
$ |
18.8 |
|
|
$ |
(266.2 |
) |
Realized gains (losses) |
$ |
— |
|
|
$ |
36.1 |
|
|
$ |
(9.4 |
) |
|
$ |
114.4 |
|
Non-cash derivative liability gains 2 |
$ |
1.5 |
|
|
$ |
41.6 |
|
|
$ |
8.2 |
|
|
$ |
34.6 |
|
GAAP Net income (loss) |
$ |
1.6 |
|
|
$ |
28.1 |
|
|
$ |
(7.7 |
) |
|
$ |
(106.7 |
) |
GAAP Diluted (loss) income per share |
$ |
(0.03 |
) |
|
$ |
0.02 |
|
|
$ |
(0.23 |
) |
|
$ |
(2.63 |
) |
|
|
|
|
|
|
|
|
||||||||
1 Unrealized gains and (losses) are related to the change in fair value of equity securities as of the end of the reported period. |
|||||||||||||||
2 The non-cash derivative liability gains and (losses) are related to the change in fair value of Acacia's Series A and B warrants and embedded derivatives and gains and (losses) from the exercise of warrants. |
Martin D. McNulty, Jr. "MJ", Interim Chief Executive Officer, stated, "In the last few weeks, our value-creation strategy has accelerated. We established a platform, in collaboration with accomplished executives we have worked with in the past, to acquire producing, cash generating oil and gas assets at what we believe will be favorable valuations. Acacia and our new partners are already evaluating potential asset acquisitions to take advantage of this new structure. Simultaneously, we reached an agreement to sell our stake in the last public holding in our life science portfolio, allowing us to recognize a meaningful profit on the trade once complete and further bolstering our capital position."
"Our pipeline of acquisition targets continues to grow, mature, and advance," continued Mr. McNulty. "We are methodically advancing specific opportunities, including both public and private targets. With the right processes in place and a growing number of opportunities, I am confident that 2024 will be a year of tangible progress."
Third Quarter 2023 Financial Summary:
Life Sciences Portfolio
Acacia has generated $506.5 million in proceeds from sales and royalties of the Life Sciences Portfolio through September 30, 2023, which was purchased for an aggregate price of $301.4 million. At the end of the third quarter, the remaining positions in the Life Sciences Portfolio represent $76.1 million in book value, inclusive of Arix:
Balance Sheet and Capital Structure
Book Value as of September 30, 2023
At September 30, 2023, book value was $503.6 million and there were 99.9 million shares of common stock outstanding, for a book value per share of $5.04.
Book value and book value per share calculations are performed in accordance with GAAP. The calculation of book value under GAAP requires the Company to reflect the impact of liabilities associated with issuances of shares related to the exercise of the Company's Series B warrants and conversion of the Company's Series A preferred stock. The value of those liabilities varies over time based on fluctuations in the trading price of the Common Stock. The recapitalization transaction with Starboard which occurred on July 13, 2023 streamlines the Company's capital structure and strengthens its financial position (the "recapitalization transactions") and eliminated all of these instruments and the associated liabilities.
In connection with the recently completed recapitalization transactions with Starboard, which occurred on July 13, 2023:
Investor Conference Call
The Company will host a conference call today, November 13, 2023 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). To access the live call, please dial 888-506-0062 (U.S. and Canada) or 973-528-0011 (international) and if requested, reference conference ID 435061. The conference call will also be simultaneously webcasted on the investor relations section of the Company's website at http://www.acaciaresearch.com under Events & Presentations. Following the conclusion of the live call, a replay of the webcast will be available on the Company's website for at least 30 days.
About the Company
Acacia is a publicly traded (NASDAQ:ACTG) company that is focused on acquiring and operating attractive businesses across the industrial, healthcare, energy, and mature technology sectors where it believes it can leverage its expertise, significant capital base, and deep industry relationships to drive value. Acacia evaluates opportunities based on the attractiveness of the underlying cash flows, without regard to a specific investment horizon. Acacia operates its businesses based on three key principles of people, process and performance and has built a management team with demonstrated expertise in research, transactions and execution, and operations and management. Additional information about Acacia and its subsidiaries is available at www.acaciaresearch.com.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon the Company's current expectations and speak only as of the date hereof. This news release attempts to identify forward-looking statements by using words such as "anticipate," "believe," "could," "expect," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "will," or other forms of these words or similar words or expressions or the negative thereof, although not all forward-looking statements contain these terms. The Company's actual results may differ materially and adversely from those expressed or implied in any forward-looking statements as a result of various factors and uncertainties, including the Company's ability to successfully implement its strategic plan, changes to the Company's relationship and arrangements with Starboard Value LP, the Company's ability to successfully identify and complete strategic acquisitions of businesses, divisions, and/or assets, the performance of businesses, divisions, and/or assets the Company acquires, the ability to successfully develop licensing programs and attract new business, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments addressing licensing and enforcement of patents and/or intellectual property in general, the decrease in demand for Printronix' products, general economic conditions, and the success of the Company's investments. The Company's Annual Report on Form 10-K, and other SEC filings discuss these and other important risks and uncertainties that may materially affect the Company's business, results of operations and financial condition. In addition, actual results may differ as a result of additional risks and uncertainties of which the Company is currently unaware or which the Company does not currently view as material. Except as otherwise required by applicable law, the Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
The results achieved by the Company in prior periods are not necessarily indicative of the results to be achieved by us in any subsequent periods. It is currently anticipated that the Company's financial results will vary, and may vary significantly, from quarter to quarter.
ACACIA RESEARCH CORPORATION |
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(In thousands, except share and per share data) |
|||||||
|
September 30, 2023 |
|
December 31, 2022 |
||||
|
(Unaudited) |
|
|
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
344,733 |
|
|
$ |
287,786 |
|
Equity securities |
|
64,511 |
|
|
|
61,608 |
|
Equity securities without readily determinable fair value |
|
5,816 |
|
|
|
5,816 |
|
Equity method investments |
|
30,934 |
|
|
|
30,934 |
|
Accounts receivable, net |
|
5,896 |
|
|
|
8,231 |
|
Inventories |
|
12,375 |
|
|
|
14,222 |
|
Prepaid expenses and other current assets |
|
20,182 |
|
|
|
19,388 |
|
Total current assets |
|
484,447 |
|
|
|
427,985 |
|
|
|
|
|
||||
Property, plant and equipment, net |
|
2,647 |
|
|
|
3,537 |
|
Goodwill |
|
7,541 |
|
|
|
7,541 |
|
Other intangible assets, net |
|
27,557 |
|
|
|
36,658 |
|
Deferred income tax assets, net |
|
321 |
|
|
|
— |
|
Leased right-of-use assets |
|
1,488 |
|
|
|
2,005 |
|
Other non-current assets |
|
5,146 |
|
|
|
5,202 |
|
Total assets |
$ |
529,147 |
|
|
$ |
482,928 |
|
|
|
|
|
||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
8,530 |
|
|
$ |
6,036 |
|
Accrued expenses and other current liabilities |
|
5,256 |
|
|
|
14,058 |
|
Accrued compensation |
|
5,202 |
|
|
|
4,737 |
|
Royalties and contingent legal fees payable |
|
1,296 |
|
|
|
699 |
|
Deferred revenue |
|
1,149 |
|
|
|
1,229 |
|
Senior secured notes payable |
|
— |
|
|
|
60,450 |
|
Total current liabilities |
|
21,433 |
|
|
|
87,209 |
|
|
|
|
|
||||
Deferred revenue, net of current portion |
|
497 |
|
|
|
568 |
|
Series A embedded derivative liabilities |
|
— |
|
|
|
16,835 |
|
Series B warrant liabilities |
|
— |
|
|
|
84,780 |
|
Long-term lease liabilities |
|
1,535 |
|
|
|
1,873 |
|
Deferred income tax liabilities, net |
|
— |
|
|
|
742 |
|
Other long-term liabilities |
|
2,084 |
|
|
|
1,675 |
|
Total liabilities |
|
25,549 |
|
|
|
193,682 |
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
||||
|
|
|
|
||||
Series A redeemable convertible preferred stock, par value $0.001 per share; stated value $100 per share; zero and 350,000 shares authorized, issued and outstanding as of September 30, 2023 and December 31, 2022, respectively; aggregate liquidation preference of zero and $35,000 as of September 30, 2023 and December 31, 2022, respectively |
|
— |
|
|
|
19,924 |
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding |
|
— |
|
|
|
— |
|
Common stock, par value $0.001 per share; 300,000,000 shares authorized; 99,886,322 and 43,484,867 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively |
|
99 |
|
|
|
43 |
|
Treasury stock, at cost, 16,183,703 shares as of September 30, 2023 and December 31, 2022 |
|
(98,258 |
) |
|
|
(98,258 |
) |
Additional paid-in capital |
|
905,200 |
|
|
|
663,284 |
|
Accumulated deficit |
|
(314,485 |
) |
|
|
(306,789 |
) |
Total Acacia Research Corporation stockholders' equity |
|
492,556 |
|
|
|
258,280 |
|
|
|
|
|
||||
Noncontrolling interests |
|
11,042 |
|
|
|
11,042 |
|
|
|
|
|
||||
Total stockholders' equity |
|
503,598 |
|
|
|
269,322 |
|
|
|
|
|
||||
Total liabilities, redeemable convertible preferred stock, and stockholders' equity |
$ |
529,147 |
|
|
$ |
482,928 |
|
ACACIA RESEARCH CORPORATION |
|||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(In thousands, except share and per share data) |
|||||||||||||||
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Intellectual property operations |
$ |
1,760 |
|
|
$ |
6,320 |
|
|
$ |
6,330 |
|
|
$ |
16,997 |
|
Industrial operations |
|
8,324 |
|
|
|
9,558 |
|
|
|
26,461 |
|
|
|
29,105 |
|
Total revenues |
|
10,084 |
|
|
|
15,878 |
|
|
|
32,791 |
|
|
|
46,102 |
|
|
|
|
|
|
|
|
|
||||||||
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenues - intellectual property operations |
|
5,470 |
|
|
|
5,282 |
|
|
|
15,218 |
|
|
|
14,480 |
|
Cost of revenues - industrial operations |
|
4,377 |
|
|
|
4,648 |
|
|
|
13,530 |
|
|
|
13,432 |
|
Engineering and development expenses - industrial operations |
|
172 |
|
|
|
156 |
|
|
|
593 |
|
|
|
491 |
|
Sales and marketing expenses - industrial operations |
|
1,613 |
|
|
|
2,119 |
|
|
|
5,385 |
|
|
|
6,429 |
|
General and administrative expenses |
|
13,872 |
|
|
|
15,038 |
|
|
|
35,338 |
|
|
|
36,813 |
|
Total costs and expenses |
|
25,504 |
|
|
|
27,243 |
|
|
|
70,064 |
|
|
|
71,645 |
|
Operating loss |
|
(15,420 |
) |
|
|
(11,365 |
) |
|
|
(37,273 |
) |
|
|
(25,543 |
) |
|
|
|
|
|
|
|
|
||||||||
Other income (expense): |
|
|
|
|
|
|
|
||||||||
Equity securities investments: |
|
|
|
|
|
|
|
||||||||
Change in fair value of equity securities |
|
8,823 |
|
|
|
(36,352 |
) |
|
|
18,783 |
|
|
|
(266,202 |
) |
(Loss) gain on sale of equity securities |
|
— |
|
|
|
36,060 |
|
|
|
(9,360 |
) |
|
|
114,434 |
|
Earnings on equity investment in joint venture |
|
3,375 |
|
|
|
850 |
|
|
|
3,375 |
|
|
|
42,935 |
|
Net realized and unrealized gain (loss) |
|
12,198 |
|
|
|
558 |
|
|
|
12,798 |
|
|
|
(108,833 |
) |
Change in fair value of the Series A and B warrants and embedded derivatives |
|
1,525 |
|
|
|
41,638 |
|
|
|
8,241 |
|
|
|
34,590 |
|
(Loss) gain on foreign currency exchange |
|
(70 |
) |
|
|
(1,905 |
) |
|
|
25 |
|
|
|
(4,532 |
) |
Interest expense on Senior Secured Notes |
|
(130 |
) |
|
|
(1,072 |
) |
|
|
(1,930 |
) |
|
|
(5,532 |
) |
Interest income and other, net |
|
4,462 |
|
|
|
1,221 |
|
|
|
12,210 |
|
|
|
3,091 |
|
Total other income (expense) |
|
17,985 |
|
|
|
40,440 |
|
|
|
31,344 |
|
|
|
(81,216 |
) |
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes |
|
2,565 |
|
|
|
29,075 |
|
|
|
(5,929 |
) |
|
|
(106,759 |
) |
|
|
|
|
|
|
|
|
||||||||
Income tax benefit (expense) |
|
197 |
|
|
|
(679 |
) |
|
|
(641 |
) |
|
|
14,399 |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) including noncontrolling interests in subsidiaries |
|
2,762 |
|
|
|
28,396 |
|
|
|
(6,570 |
) |
|
|
(92,360 |
) |
|
|
|
|
|
|
|
|
||||||||
Net income attributable to noncontrolling interests in subsidiaries |
|
(1,126 |
) |
|
|
(306 |
) |
|
|
(1,126 |
) |
|
|
(14,319 |
) |
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Acacia Research Corporation |
$ |
1,636 |
|
|
$ |
28,090 |
|
|
$ |
(7,696 |
) |
|
$ |
(106,679 |
) |
|
|
|
|
|
|
|
|
||||||||
(Loss) income per share: |
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to common stockholders - Basic |
$ |
(1,740 |
) |
|
$ |
20,587 |
|
|
$ |
(15,703 |
) |
|
$ |
(112,507 |
) |
Weighted average number of shares outstanding - Basic |
|
94,328,452 |
|
|
|
38,052,426 |
|
|
|
67,072,835 |
|
|
|
42,830,700 |
|
Basic net (loss) income per common share |
$ |
(0.02 |
) |
|
$ |
0.54 |
|
|
$ |
(0.23 |
) |
|
$ |
(2.63 |
) |
Net (loss) income attributable to common stockholders - Diluted |
$ |
(3,163 |
) |
|
$ |
1,531 |
|
|
$ |
(15,703 |
) |
|
$ |
(112,507 |
) |
Weighted average number of shares outstanding - Diluted |
|
99,122,973 |
|
|
|
71,164,236 |
|
|
|
67,072,835 |
|
|
|
42,830,700 |
|
Diluted net (loss) income per common share |
$ |
(0.03 |
) |
|
$ |
0.02 |
|
|
$ |
(0.23 |
) |
|
$ |
(2.63 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20231113821268/en/