Acacia Research Corporation (Nasdaq: ACTG) ("Acacia" or the "Company") today reported financial results for the three months and full year ended December 31, 2023.
Martin ("MJ") D. McNulty, Jr., Chief Executive Officer, stated, "Through the last quarter of 2023 and into the beginning of 2024 we continued to meaningfully advance our business strategy in an effort to drive earnings and book value per share growth in disciplined and unique ways. For example, in the fourth quarter our Intellectual Property team generated $82 million in gross revenue from its WiFi-6 licensing initiatives. We were able to commit a portion of this income as well as proceeds from the sale of a life science asset into a highly attractive near-team addition to our oil and gas business, which we expect to close in Q2. We expect to execute on additional acquisitions, including in the oil and gas space, and anticipate further IP-related income setting the stage for meaningful future cash flows while preserving our capital base. Our scale, including more than $430 million in cash as of today, gives us significant advantages as we seek to acquire future cash flows to continue to drive value for shareholders."
Mr. McNulty continued, "I am pleased with the progress we have made. In particular, our book value increased from $5.04 per share at September 30, 2023 to $5.90 at December 31, 2023. Additional opportunities are moving forward, including both public and private targets, demonstrating the significant optionality built into our model, and enabling us to exploit inefficiencies and unlock value from a diverse variety of assets. I believe we enter 2024 with accelerating momentum in our existing stable of businesses and our M&A activity."
Key Business Highlights
Fourth Quarter and Full Year 2023 Financial Highlights |
|||||||||||||||
(In millions, except per share data) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Years Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(unaudited) |
|
(unaudited) |
||||||||||||
Intellectual property operations |
$ |
82.8 |
|
|
$ |
2.5 |
|
|
$ |
89.2 |
|
|
$ |
19.5 |
|
Industrial operations |
|
8.6 |
|
|
|
10.6 |
|
|
|
35.1 |
|
|
|
39.7 |
|
Energy operations |
|
0.8 |
|
|
|
? |
|
|
|
0.8 |
|
|
|
? |
|
Total revenues |
$ |
92.3 |
|
|
$ |
13.1 |
|
|
$ |
125.1 |
|
|
$ |
59.2 |
|
Operating income (loss) |
$ |
55.9 |
|
|
$ |
(14.5 |
) |
|
$ |
20.9 |
|
|
$ |
(40.1 |
) |
Unrealized gains (losses)1 |
$ |
12.6 |
|
|
$ |
2.5 |
|
|
$ |
31.4 |
|
|
$ |
(263.7 |
) |
Realized (losses) gains |
$ |
(1.6 |
) |
|
$ |
10.9 |
|
|
$ |
(10.9 |
) |
|
$ |
125.3 |
|
Non-cash derivative liability gains (losses)2 |
$ |
? |
|
|
$ |
(21.5 |
) |
|
$ |
8.2 |
|
|
$ |
13.1 |
|
GAAP Net income (loss) |
$ |
74.8 |
|
|
$ |
(18.4 |
) |
|
$ |
67.1 |
|
|
$ |
(125.1 |
) |
GAAP Diluted net income (loss) per share |
$ |
0.75 |
|
|
$ |
(0.50 |
) |
|
$ |
0.58 |
|
|
$ |
(3.13 |
) |
|
|
|
|
|
|
|
|
||||||||
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. |
Fourth Quarter 2023 Financial Summary:
Full-Year 2023 Financial Summary:
Life Sciences Portfolio
Acacia has generated $507.1 million in proceeds from sales and royalties of the Life Sciences Portfolio, which was purchased for an aggregate price of $301.4 million in 2020. At the end of the fourth quarter, the remaining positions in the Life Sciences Portfolio represented $82.8 million in book value, inclusive of the Company's holdings in Arix Bioscience Plc:
Balance Sheet and Capital Structure
Book Value as of December 31, 2023
At December 31, 2023, book value was $589.6 million and there were 99.9 million shares of common stock outstanding, for a book value per share of $5.90. Acacia's book value reflects the exercise of the Series B warrants and conversion of the Series A Redeemable Convertible Preferred Stock, which occurred on July 13, 2023 as part of the recapitalization transactions.
Investor Conference Call
The Company will host a conference call today, March 14, 2024 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 248690. 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, Benchmark's ability to execute on its business strategy, risks relating to price and other fluctuations in the oil and gas market, environmental liability risk, regulatory changes related to the oil and gas industry, other risks inherent in the ownership and operation of oil and gas assets, Benchmark's ability to close the Transaction, 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 materially 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 CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) |
|||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
|
|
|
|
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
340,091 |
|
|
$ |
287,786 |
|
Equity securities |
|
63,068 |
|
|
|
61,608 |
|
Equity securities without readily determinable fair value |
|
5,816 |
|
|
|
5,816 |
|
Equity method investments |
|
30,934 |
|
|
|
30,934 |
|
Accounts receivable, net |
|
80,555 |
|
|
|
8,231 |
|
Inventories |
|
10,921 |
|
|
|
14,222 |
|
Prepaid expenses and other current assets |
|
23,127 |
|
|
|
19,388 |
|
Total current assets |
|
554,512 |
|
|
|
427,985 |
|
|
|
|
|
||||
Property, plant and equipment, net |
|
2,356 |
|
|
|
3,537 |
|
Oil and natural gas properties, net |
|
25,117 |
|
|
|
? |
|
Goodwill |
|
8,990 |
|
|
|
7,541 |
|
Other intangible assets, net |
|
33,556 |
|
|
|
36,658 |
|
Operating lease, right-of-use assets |
|
1,872 |
|
|
|
2,005 |
|
Deferred income tax assets, net |
|
2,915 |
|
|
|
? |
|
Other non-current assets |
|
4,227 |
|
|
|
5,202 |
|
Total assets |
$ |
633,545 |
|
|
$ |
482,928 |
|
|
|
|
|
||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
3,261 |
|
|
$ |
6,036 |
|
Accrued expenses and other current liabilities |
|
8,405 |
|
|
|
14,058 |
|
Accrued compensation |
|
4,207 |
|
|
|
4,737 |
|
Royalties and contingent legal fees payable |
|
10,786 |
|
|
|
699 |
|
Deferred revenue |
|
977 |
|
|
|
1,229 |
|
Senior secured notes payable |
|
? |
|
|
|
60,450 |
|
Total current liabilities |
|
27,636 |
|
|
|
87,209 |
|
|
|
|
|
||||
Deferred revenue, net of current portion |
|
458 |
|
|
|
568 |
|
Series A embedded derivative liabilities |
|
? |
|
|
|
16,835 |
|
Series B warrant liabilities |
|
? |
|
|
|
84,780 |
|
Long-term lease liabilities |
|
1,736 |
|
|
|
1,873 |
|
Deferred income tax liabilities, net |
|
? |
|
|
|
742 |
|
Revolving credit facility |
|
10,525 |
|
|
|
? |
|
Other long-term liabilities |
|
3,581 |
|
|
|
1,675 |
|
Total liabilities |
|
43,936 |
|
|
|
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 December 31, 2023 and 2022, respectively; aggregate liquidation preference of zero and $35,000 as of December 31, 2023 and 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; 99,895,473 and 43,484,867 shares issued and outstanding as of December 31, 2023 and 2022, respectively |
|
100 |
|
|
|
43 |
|
Treasury stock, at cost, 16,183,703 shares as of December 31, 2023 and 2022 |
|
(98,258 |
) |
|
|
(98,258 |
) |
Additional paid-in capital |
|
906,153 |
|
|
|
663,284 |
|
Accumulated deficit |
|
(239,729 |
) |
|
|
(306,789 |
) |
Total Acacia Research Corporation stockholders' equity |
|
568,266 |
|
|
|
258,280 |
|
|
|
|
|
||||
Noncontrolling interests |
|
21,343 |
|
|
|
11,042 |
|
|
|
|
|
||||
Total stockholders' equity |
|
589,609 |
|
|
|
269,322 |
|
|
|
|
|
||||
Total liabilities, redeemable convertible preferred stock, and stockholders' equity |
$ |
633,545 |
|
|
$ |
482,928 |
|
ACACIA RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Years Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Intellectual property operations |
$ |
82,826 |
|
|
$ |
2,511 |
|
|
$ |
89,156 |
|
|
$ |
19,508 |
|
Industrial operations |
|
8,637 |
|
|
|
10,610 |
|
|
|
35,098 |
|
|
|
39,715 |
|
Energy operations |
|
848 |
|
|
|
? |
|
|
|
848 |
|
|
|
? |
|
Total revenues |
|
92,311 |
|
|
|
13,121 |
|
|
|
125,102 |
|
|
|
59,223 |
|
|
|
|
|
|
|
|
|
||||||||
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenues - intellectual property operations |
|
18,946 |
|
|
|
3,549 |
|
|
|
34,164 |
|
|
|
18,029 |
|
Cost of revenues - industrial operations |
|
4,479 |
|
|
|
5,927 |
|
|
|
18,009 |
|
|
|
19,359 |
|
Cost of production - energy operations |
|
656 |
|
|
|
? |
|
|
|
656 |
|
|
|
? |
|
Engineering and development expenses - industrial operations |
|
142 |
|
|
|
135 |
|
|
|
735 |
|
|
|
626 |
|
Sales and marketing expenses - industrial operations |
|
1,523 |
|
|
|
2,192 |
|
|
|
6,908 |
|
|
|
8,621 |
|
General and administrative expenses |
|
10,623 |
|
|
|
15,867 |
|
|
|
43,694 |
|
|
|
52,680 |
|
Total costs and expenses |
|
36,369 |
|
|
|
27,670 |
|
|
|
104,166 |
|
|
|
99,315 |
|
Operating income (loss) |
|
55,942 |
|
|
|
(14,549 |
) |
|
|
20,936 |
|
|
|
(40,092 |
) |
|
|
|
|
|
|
|
|
||||||||
Other income (expense): |
|
|
|
|
|
|
|
||||||||
Equity securities investments: |
|
|
|
|
|
|
|
||||||||
Change in fair value of equity securities |
|
12,640 |
|
|
|
2,507 |
|
|
|
31,423 |
|
|
|
(263,695 |
) |
(Loss) gain on sale of equity securities |
|
(1,570 |
) |
|
|
10,884 |
|
|
|
(10,930 |
) |
|
|
125,318 |
|
Earnings on equity investment in joint venture |
|
792 |
|
|
|
(404 |
) |
|
|
4,167 |
|
|
|
42,531 |
|
Net realized and unrealized gain (loss) |
|
11,862 |
|
|
|
12,987 |
|
|
|
24,660 |
|
|
|
(95,846 |
) |
Change in fair value of the Series A and B warrants and embedded derivatives |
|
? |
|
|
|
(21,488 |
) |
|
|
8,241 |
|
|
|
13,102 |
|
Gain (loss) on foreign currency exchange |
|
28 |
|
|
|
1,208 |
|
|
|
53 |
|
|
|
(3,324 |
) |
Interest expense on Senior Secured Notes |
|
? |
|
|
|
(900 |
) |
|
|
(1,930 |
) |
|
|
(6,432 |
) |
Interest income and other, net |
|
5,523 |
|
|
|
2,351 |
|
|
|
15,466 |
|
|
|
5,442 |
|
Total other income (expense) |
|
17,413 |
|
|
|
(5,842 |
) |
|
|
46,490 |
|
|
|
(87,058 |
) |
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes |
|
73,355 |
|
|
|
(20,391 |
) |
|
|
67,426 |
|
|
|
(127,150 |
) |
|
|
|
|
|
|
|
|
||||||||
Income tax benefit |
|
2,145 |
|
|
|
1,812 |
|
|
|
1,504 |
|
|
|
16,211 |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) including noncontrolling interests in subsidiaries |
|
75,500 |
|
|
|
(18,579 |
) |
|
|
68,930 |
|
|
|
(110,939 |
) |
|
|
|
|
|
|
|
|
||||||||
Net (income) loss attributable to noncontrolling interests in subsidiaries |
|
(744 |
) |
|
|
193 |
|
|
|
(1,870 |
) |
|
|
(14,126 |
) |
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Acacia Research Corporation |
$ |
74,756 |
|
|
$ |
(18,386 |
) |
|
$ |
67,060 |
|
|
$ |
(125,065 |
) |
|
|
|
|
|
|
|
|
||||||||
Income (loss) per share: |
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to common stockholders - Basic |
$ |
74,611 |
|
|
$ |
(20,528 |
) |
|
$ |
55,140 |
|
|
$ |
(133,035 |
) |
Weighted average number of shares outstanding - Basic |
|
99,697,447 |
|
|
|
41,361,988 |
|
|
|
75,296,025 |
|
|
|
42,460,504 |
|
Basic net income (loss) per common share |
$ |
0.75 |
|
|
$ |
(0.50 |
) |
|
$ |
0.73 |
|
|
$ |
(3.13 |
) |
Net income (loss) attributable to common stockholders - Diluted |
$ |
74,611 |
|
|
$ |
(20,528 |
) |
|
$ |
53,208 |
|
|
$ |
(133,035 |
) |
Weighted average number of shares outstanding - Diluted |
|
99,932,858 |
|
|
|
41,361,988 |
|
|
|
92,411,818 |
|
|
|
42,460,504 |
|
Diluted net income (loss) per common share |
$ |
0.75 |
|
|
$ |
(0.50 |
) |
|
$ |
0.58 |
|
|
$ |
(3.13 |
) |
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