Acacia Research Reports Fourth Quarter 2023 Financial Results
Martin (“MJ”)
Key Business Highlights
-
Generated
$92.3 million in consolidated revenue for the quarter compared to$13.1 million in revenue in the fourth quarter of 2022, including$82.8 million in license fee revenue from the Company’s intellectual property operations. -
Entered into an agreement to sell our shares of Arix Bioscience Plc for a cash purchase price of
$57.1 million (which represents a purchase price of1.43 British pounds (or GBP) per share, based on the exchange rate on the date that the parties agreed to the purchase price). The share sale closed onJanuary 19, 2024 . -
Recorded
$11.9 million of net realized and unrealized gains during the quarter, inclusive of unrealized gains as ofDecember 31, 2023 related to the Arix shares. -
Acquired a majority stake in
Benchmark Energy II LLC , an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays inTexas andOklahoma . OnFebruary 16, 2024 , Benchmark entered into a Purchase and Sale Agreement to acquire certain upstream assets and related facilities inTexas andOklahoma from a private seller (the “Transaction”), which will expand the Benchmark portfolio by adding approximately 140,000 net acres and approximately 470 operated producing wells in the prolificWestern Anadarko Basin throughout the TexasPanhandle andWestern Oklahoma .
Fourth Quarter and Full Year 2023 Financial Highlights |
|||||||||||||||
(In millions, except per share data) |
|||||||||||||||
|
Three Months Ended |
|
Years Ended |
||||||||||||
|
|
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:
-
Total revenues were
$92.3 million , compared to$13.1 million in the same quarter last year.-
The Intellectual Property business generated
$82.8 million in licensing and other revenue during the quarter, compared to$2.5 million in the same quarter last year. Printronix generated$8.6 million in revenue during the quarter, compared to$10.6 million in the same quarter last year.-
Benchmark generated
$0.8 million in revenue in the quarter subsequent to the completion of the acquisition of Benchmark that closed onNovember 13, 2023 .
-
The Intellectual Property business generated
-
General and administrative expenses were
$10.6 million , compared to$15.9 million in the same quarter of last year, with the decrease due to the decrease in expenses related to the agreement withStarboard Value LP to streamline the Company’s capital structure and strengthen its financial position (the “recapitalization transactions”) and a decrease in severance expense. -
Operating income of
$55.9 million , compared to operating loss of$14.5 million in the same quarter of last year, with the increase due to higher revenues generated.Printronix contributed$0.5 million in operating income which included$0.7 million of non-cash depreciation and amortization expense.-
Benchmark contributed
$0.1 million in operating loss which included$0.3 million of non-cash charges.
-
GAAP net income of
$74.8 million , or$0.75 per diluted share, compared to GAAP net loss of$18.4 million , or$0.50 per diluted share, in the fourth quarter of last year.-
Net income included
$12.6 million in unrealized gains related to the increase in share price of certain holdings and the gain for the forward sale agreement with for the shares of Arix. -
The fourth quarter included
$2.5 million in non-recurring charges.
-
Net income included
Full-Year 2023 Financial Summary:
-
Total revenues were
$125.1 million , compared to$59.2 million last year.-
The Intellectual Property business generated
$89.2 million in licensing and other revenue, compared to$19.5 million last year. Printronix generated$35.1 million in revenue, compared to$39.7 million last year.-
Benchmark generated
$0.8 million in revenue for the year (subsequent to the completion of the acquisition onNovember 13, 2023 ).
-
The Intellectual Property business generated
-
General and administrative expenses were
$43.7 million , compared to$52.7 million last year due to the decrease in expenses related to the recapitalization transactions and a decrease in severance expense. -
Operating income was
$20.9 million , compared to an operating loss of$40.1 million last year.Printronix contributed$0.7 million in operating income.-
Benchmark contributed
$0.1 million in operating loss which included$0.3 million of non-cash charges.
-
GAAP net income was
$67.1 million , or$0.58 per diluted share, compared to GAAP net loss of$125.1 million , or$3.13 per diluted share, last year.-
Net income included
$10.9 million in realized loss, offset by$31.4 million in unrealized gain, related to the increase in share price of certain holdings and the gain for the forward sale agreement for the shares of Arix. -
The Company recognized non-cash income of
$8.2 million related to the change in fair value of the Series A and B warrants and embedded derivatives.
-
Net income included
Life Sciences Portfolio
Acacia has generated
-
On
November 1, 2023 , Acacia through its wholly owned subsidiary entered, into an agreement withRTW Biotech Opportunities Ltd. to sell its Arix shares to RTW Bio for a purchase price of$57.1 million in aggregate (representing £1.43 per share at an exchange rate of1.2087 USD /GBP). -
On
January 19, 2024 , the Company completed its sale of Arix shares. Following the completion of the share sale, the Company and its subsidiaries no longer own any shares of Arix. -
Acacia holds interests in three private companies, valued at an aggregate of
$25.7 million , net of non-controlling interest, including an approximately 26% interest inViamet Pharmaceuticals, Inc. , an approximately 18% interest inAMO Pharma, Ltd. , and an approximately 4% interest inNovaBiotics Ltd. Values are based on cost or equity accounting.
Balance Sheet and Capital Structure
-
Cash, cash equivalents and equity investments measured at fair value totaled
$403.2 million atDecember 31, 2023 compared to$349.4 million atDecember 31, 2022 . The increase in cash was primarily due to the completed Rights Offering and concurrent Private Rights Offering and the proceeds from the exercise of the Series B warrants. -
Equity securities without readily determinable fair value totaled
$5.8 million atDecember 31, 2023 , which amount was unchanged fromDecember 31, 2022 . -
Investment securities representing equity method investments totaled
$19.9 million atDecember 31, 2023 (net of noncontrolling interests), which amount was unchanged fromDecember 31, 2022 . Acacia owns 64% of MalinJ1, which results in a 26% indirect ownership stake inViamet Pharmaceuticals, Inc. for Acacia. -
The parent company’s total indebtedness was zero at
December 31, 2023 following the conversion of the Senior Secured Notes issued to Starboard inJuly 2023 . On a consolidated basis, Acacia’s total indebtedness was$10.5 million atDecember 31, 2023 , which includes$10.5 million in non-recourse debt at Benchmark.
Book Value as of
At
Investor Conference Call
The Company will host a conference call today,
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
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.
CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) |
|||||||
|
|
|
|
||||
|
|
|
|
||||
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 |
|
|
|
— |
|
|
|
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 |
|
— |
|
|
|
19,924 |
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Preferred stock, par value |
|
— |
|
|
|
— |
|
Common stock, par value |
|
100 |
|
|
|
43 |
|
|
|
(98,258 |
) |
|
|
(98,258 |
) |
Additional paid-in capital |
|
906,153 |
|
|
|
663,284 |
|
Accumulated deficit |
|
(239,729 |
) |
|
|
(306,789 |
) |
|
|
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 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) |
|||||||||||||||
|
Three Months Ended |
|
Years Ended |
||||||||||||
|
|
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 |
$ |
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 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240314485401/en/
Investor Contact:
FNK IR
rob@fnkir.com
Source: