Acacia Research Reports Second Quarter 2024 Financial Results
Increased Consolidated Revenue 227% Compared to Q2 2023, Up 121% Compared to the First Six Months of 2023
Significant YoY Revenue and Operating Cash Flow Improvement During Q2 2024
Acacia Remains Focused on Free Cash Flow Generation and Book Value Per Share Accretion
Martin (“MJ”)
The Company also delivered significant improvements in year over year revenue and operating cash flow in the second quarter. With disciplined capital allocation and a commitment to operating and financial excellence, the Company increased its total revenues 121% to
Looking ahead, we will remain focused on free cash flow generation and book value per share accretion which we believe will deliver stock price growth and generate shareholder value.”
Key Business Highlights
-
Recorded book value per share at
June 30, 2024 of$5.95 compared to$5.90 per share atDecember 31, 2023 . Excluding the impact of the additional accrual of$12.9 million related to the AIP Matter (as defined below and which has now been settled), book value per share atJune 30, 2024 would have been$6.07 per share. -
Generated
$25.8 million in consolidated revenue for the quarter, including$5.3 million in license fee revenue from the Company’s intellectual property operations, up 227% compared to$7.9 million in revenue in the second quarter of 2023. -
Recorded a GAAP net loss of
$8.4 million , or$0.08 diluted net loss per share, for the second quarter and a GAAP net loss of$8.6 million , or$0.09 diluted net loss per share for the first half of 2024. Excluding the additional expense described above related to the AIP Matter, which represented$0.06 per share, diluted net loss per share for the second quarter of 2024 would have been$0.02 . -
Generated
$4.1 million and$10.4 million of adjusted EBITDA1 in the second quarter and first half of 2024, respectively. -
Generated
$71.0 million in operating cash flow in the first half of 2024. -
On
April 17, 2024 Benchmark completed the acquisition of certain upstream assets and related facilities inTexas andOklahoma from a private seller, expanding Benchmark’s portfolio by approximately 140,000 net acres and adding approximately 470 operated producing wells in the prolificWestern Anadarko Basin throughout the TexasPanhandle andWestern Oklahoma (the “Revolution Assets”). Acacia’s second quarter 2024 financials reflect the contributions from the Benchmark acquisition. -
Benchmark generated approximately
$14.2 million in revenue in the second quarter, which includes revenue from the Revolution Assets.
1Adjusted EBITDA is a non-GAAP financial measure. For the definition of this measure and a reconciliation of this measure to net loss, the most directly comparable GAAP financial measure, see the accompanying supplemental information table.
Second Quarter 2024 Financial Highlights
(In millions, except per share data)
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
||||||||||||
Intellectual property operations |
$ |
5.3 |
|
|
$ |
0.4 |
|
|
$ |
19.0 |
|
|
$ |
4.6 |
|
Industrial operations |
|
6.3 |
|
|
|
7.5 |
|
|
|
15.2 |
|
|
|
18.1 |
|
Energy operations |
|
14.2 |
|
|
|
— |
|
|
|
16.0 |
|
|
|
— |
|
Total revenues |
$ |
25.8 |
|
|
$ |
7.9 |
|
|
$ |
50.2 |
|
|
$ |
22.7 |
|
Operating loss |
$ |
(4.8 |
) |
|
$ |
(12.5 |
) |
|
$ |
(6.8 |
) |
|
$ |
(21.9 |
) |
Unrealized (losses) gains1 |
$ |
(4.7 |
) |
|
$ |
6.6 |
|
|
$ |
(31.4 |
) |
|
$ |
10.0 |
|
Realized gains (losses) |
$ |
— |
|
|
$ |
(8.0 |
) |
|
$ |
28.9 |
|
|
$ |
(9.4 |
) |
Legal liability fee |
$ |
(6.6 |
) |
|
$ |
— |
|
|
$ |
(12.9 |
) |
|
$ |
— |
|
Non-cash derivative liability (losses) gains2 |
$ |
— |
|
|
$ |
(9.9 |
) |
|
$ |
— |
|
|
$ |
6.7 |
|
GAAP Net loss |
$ |
(8.4 |
) |
|
$ |
(18.8 |
) |
|
$ |
(8.6 |
) |
|
$ |
(9.3 |
) |
GAAP Diluted net loss per share |
$ |
(0.08 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.26 |
) |
|
|
|
|
|
|
|
|
||||||||
1 Unrealized gains and (losses) are related to the change in fair value of equity securities as of the end of the reported period and for the six months ended Arix Bioscience Plc. position for a realized gain. |
|||||||||||||||
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. |
|||||||||||||||
Second Quarter 2024 Financial Summary:
-
Total revenues were
$25.8 million , up 227% compared to$7.9 million in the same quarter last year.-
The Intellectual Property business generated
$5.3 million in licensing and other revenue during the quarter, compared to$0.4 million in the same quarter last year. Printronix generated$6.3 million in revenue during the quarter, compared to$7.5 million in the same quarter last year. The decrease in revenue was primarily due to a decrease in printer sales.-
Benchmark generated
$14.2 million in revenue in the quarter. As the Company’s initial investment in Benchmark closed onNovember 13, 2023 , there is no comparable revenue in the same quarter last year.
-
The Intellectual Property business generated
-
General and administrative (G&A) expenses were
$10.0 million , compared to$9.4 million in the same quarter of last year. The increase was primarily due to an increase in G&A due to the addition of the new energy segment operations partially offset by a decrease in parent legal fees and a decrease in G&A fromPrintronix . -
The Company recorded an operating loss of
$4.8 million , down 62% compared to a loss of$12.5 million in the same quarter of last year primarily due to higher revenues generated.Printronix contributed$0.2 million in operating loss which included$0.7 million of non-cash depreciation and amortization expenses.-
Benchmark contributed
$3.2 million in operating income, which included$3.5 million of non-cash depreciation, depletion and amortization expenses, and does not reflect$0.1 million of realized derivatives gain. Such income includes revenue from the Revolution Assets. -
The second quarter included
$0.8 million in non-recurring parent general and administrative charges.
-
On
August 2, 2024 , Acacia settled a dispute involving former executives of the Company regarding a profit interest inAIP Operation LLC (the “AIP Matter”) that had been granted to those former executives at the direction of prior management and the Board of Directors at that time. The settlement resulted in a$14.5 million accrual as ofJune 30, 2024 and will result in a$14.5 million payment by Acacia in the third quarter of 2024. Accordingly, for the six months endedJune 30, 2024 other income (expense) includes an aggregate additional expense of$12.9 million , or$0.13 per share, which is incremental to amounts expensed in prior periods. -
The Company recorded GAAP net loss of
$8.4 million , or$0.08 diluted net loss per share, compared to GAAP net loss of$18.8 million , or$0.36 diluted net loss per share, in the second quarter of last year.-
Net loss included
$4.7 million in unrealized loss related to the fair value of equity securities atJune 30, 2024 . -
Excluding the impact of the additional expense relating to the AIP Matter, which represented
$0.06 per share, Acacia’s loss per share for the second quarter of 2024 would be$0.02 .
-
Net loss included
Life Sciences Portfolio
Acacia has generated
-
Acacia holds interests in three private companies, valued at an aggregate of
$25.7 million , net of non-controlling interests, 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
$405.2 million atJune 30, 2024 compared to$403.2 million atDecember 31, 2023 . The increase in cash was primarily due to timing of payments received from licensees, offset by$59.9 million paid to acquire the Revolution Assets. -
Equity securities without readily determinable fair value totaled
$5.8 million atJune 30, 2024 , unchanged fromDecember 31, 2023 . -
Investment securities representing equity method investments totaled
$19.9 million atJune 30, 2024 (net of noncontrolling interests), unchanged fromDecember 31, 2023 . 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
June 30, 2024 . On a consolidated basis, Acacia’s total indebtedness was$82.0 million in non-recourse debt at Benchmark as ofJune 30, 2024 .
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 mature technology, energy, and industrial/manufacturing 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 identify and complete strategic acquisitions of businesses, divisions, and/or assets, the performance of businesses, divisions, and/or assets the Company acquires, 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.
|
|||||||
|
|
|
|
||||
|
(Unaudited) |
|
|
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
386,988 |
|
|
$ |
340,091 |
|
Equity securities |
|
18,174 |
|
|
|
63,068 |
|
Equity securities without readily determinable fair value |
|
5,816 |
|
|
|
5,816 |
|
Equity method investments |
|
30,934 |
|
|
|
30,934 |
|
Accounts receivable, net |
|
18,772 |
|
|
|
80,555 |
|
Inventories |
|
12,289 |
|
|
|
10,921 |
|
Prepaid expenses and other current assets |
|
20,961 |
|
|
|
23,127 |
|
Total current assets |
|
493,934 |
|
|
|
554,512 |
|
|
|
|
|
||||
Property, plant and equipment, net |
|
2,315 |
|
|
|
2,356 |
|
Oil and natural gas properties, net |
|
192,587 |
|
|
|
25,117 |
|
|
|
8,990 |
|
|
|
8,990 |
|
Other intangible assets, net |
|
36,017 |
|
|
|
33,556 |
|
Operating lease, right-of-use assets |
|
1,639 |
|
|
|
1,872 |
|
Deferred income tax assets, net |
|
13,854 |
|
|
|
2,915 |
|
Other non-current assets |
|
4,257 |
|
|
|
4,227 |
|
Total assets |
$ |
753,593 |
|
|
$ |
633,545 |
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
3,191 |
|
|
$ |
3,261 |
|
Accrued expenses and other current liabilities |
|
15,207 |
|
|
|
8,405 |
|
Accrued compensation |
|
3,983 |
|
|
|
4,207 |
|
Asset retirement obligation |
|
1,543 |
|
|
|
— |
|
Royalties and contingent legal fees payable |
|
4,869 |
|
|
|
10,786 |
|
Deferred revenue |
|
911 |
|
|
|
977 |
|
Accrued loss contingency |
|
14,500 |
|
|
|
— |
|
Total current liabilities |
|
44,204 |
|
|
|
27,636 |
|
|
|
|
|
||||
Asset retirement obligation |
|
27,718 |
|
|
|
— |
|
Long-term lease liabilities |
|
1,447 |
|
|
|
1,736 |
|
Revolving credit facility |
|
82,000 |
|
|
|
10,525 |
|
Other long-term liabilities |
|
1,479 |
|
|
|
4,039 |
|
Total liabilities |
|
156,848 |
|
|
|
43,936 |
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Preferred stock, par value |
|
— |
|
|
|
— |
|
Common stock, par value |
|
100 |
|
|
|
100 |
|
|
|
(98,258 |
) |
|
|
(98,258 |
) |
Additional paid-in capital |
|
907,215 |
|
|
|
906,153 |
|
Accumulated deficit |
|
(248,361 |
) |
|
|
(239,729 |
) |
|
|
560,696 |
|
|
|
568,266 |
|
|
|
|
|
||||
Noncontrolling interests |
|
36,049 |
|
|
|
21,343 |
|
|
|
|
|
||||
Total stockholders' equity |
|
596,745 |
|
|
|
589,609 |
|
|
|
|
|
||||
Total liabilities and stockholders' equity |
$ |
753,593 |
|
|
$ |
633,545 |
|
|
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Intellectual property operations |
$ |
5,333 |
|
|
$ |
394 |
|
|
$ |
18,956 |
|
|
$ |
4,570 |
|
Industrial operations |
|
6,335 |
|
|
|
7,510 |
|
|
|
15,176 |
|
|
|
18,137 |
|
Energy operations |
|
14,170 |
|
|
|
— |
|
|
|
16,026 |
|
|
|
— |
|
Total revenues |
|
25,838 |
|
|
|
7,904 |
|
|
|
50,158 |
|
|
|
22,707 |
|
|
|
|
|
|
|
|
|
||||||||
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenues - intellectual property operations |
|
5,765 |
|
|
|
5,010 |
|
|
|
12,766 |
|
|
|
9,748 |
|
Cost of revenues - industrial operations |
|
3,277 |
|
|
|
3,933 |
|
|
|
7,326 |
|
|
|
9,153 |
|
Cost of production - energy operations |
|
10,038 |
|
|
|
— |
|
|
|
11,353 |
|
|
|
— |
|
Engineering and development expenses - industrial operations |
|
178 |
|
|
|
205 |
|
|
|
312 |
|
|
|
421 |
|
Sales and marketing expenses - industrial operations |
|
1,387 |
|
|
|
1,859 |
|
|
|
2,942 |
|
|
|
3,772 |
|
General and administrative expenses |
|
9,951 |
|
|
|
9,426 |
|
|
|
22,304 |
|
|
|
21,466 |
|
Total costs and expenses |
|
30,596 |
|
|
|
20,433 |
|
|
|
57,003 |
|
|
|
44,560 |
|
Operating loss |
|
(4,758 |
) |
|
|
(12,529 |
) |
|
|
(6,845 |
) |
|
|
(21,853 |
) |
|
|
|
|
|
|
|
|
||||||||
Other (expense) income: |
|
|
|
|
|
|
|
||||||||
Equity securities investments: |
|
|
|
|
|
|
|
||||||||
Change in fair value of equity securities |
|
(4,744 |
) |
|
|
6,617 |
|
|
|
(31,445 |
) |
|
|
9,960 |
|
Gain (loss) on sale of equity securities |
|
— |
|
|
|
(7,999 |
) |
|
|
28,861 |
|
|
|
(9,360 |
) |
Net realized and unrealized (loss) gain |
|
(4,744 |
) |
|
|
(1,382 |
) |
|
|
(2,584 |
) |
|
|
600 |
|
Legal liability fee |
|
(6,613 |
) |
|
|
— |
|
|
|
(12,856 |
) |
|
|
— |
|
Change in fair value of the Series B warrants and embedded derivatives |
|
— |
|
|
|
(9,935 |
) |
|
|
— |
|
|
|
6,716 |
|
(Loss) gain on foreign currency exchange |
|
(70 |
) |
|
|
15 |
|
|
|
(88 |
) |
|
|
95 |
|
Interest expense on Senior Secured Notes |
|
— |
|
|
|
(900 |
) |
|
|
— |
|
|
|
(1,800 |
) |
Interest income and other, net |
|
295 |
|
|
|
4,307 |
|
|
|
5,185 |
|
|
|
7,748 |
|
Total other (expense) income |
|
(11,132 |
) |
|
|
(7,895 |
) |
|
|
(10,343 |
) |
|
|
13,359 |
|
|
|
|
|
|
|
|
|
||||||||
Loss before income taxes |
|
(15,890 |
) |
|
|
(20,424 |
) |
|
|
(17,188 |
) |
|
|
(8,494 |
) |
|
|
|
|
|
|
|
|
||||||||
Income tax benefit (expense) |
|
7,061 |
|
|
|
1,645 |
|
|
|
8,170 |
|
|
|
(838 |
) |
|
|
|
|
|
|
|
|
||||||||
Net loss including noncontrolling interests in subsidiaries |
|
(8,829 |
) |
|
|
(18,779 |
) |
|
|
(9,018 |
) |
|
|
(9,332 |
) |
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to noncontrolling interests in subsidiaries |
|
383 |
|
|
|
— |
|
|
|
386 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to |
$ |
(8,446 |
) |
|
$ |
(18,779 |
) |
|
$ |
(8,632 |
) |
|
$ |
(9,332 |
) |
|
|
|
|
|
|
|
|
||||||||
Loss per share: |
|
|
|
|
|
|
|
||||||||
Net loss attributable to common stockholders - Basic |
$ |
(8,446 |
) |
|
$ |
(21,155 |
) |
|
$ |
(8,632 |
) |
|
$ |
(13,962 |
) |
Weighted average number of shares outstanding - Basic |
|
100,079,803 |
|
|
|
58,408,711 |
|
|
|
99,912,854 |
|
|
|
53,219,152 |
|
Basic net loss per common share |
$ |
(0.08 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.26 |
) |
Net loss attributable to common stockholders - Diluted |
$ |
(8,446 |
) |
|
$ |
(21,155 |
) |
|
$ |
(8,632 |
) |
|
$ |
(13,962 |
) |
Weighted average number of shares outstanding - Diluted |
|
100,079,803 |
|
|
|
58,408,711 |
|
|
|
99,912,854 |
|
|
|
53,219,152 |
|
Diluted net loss per common share |
$ |
(0.08 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.26 |
) |
NON-GAAP FINANCIAL MEASURE
This earnings release includes adjusted EBITDA, which is a supplemental non-GAAP financial measure used by management and external users of the Company’s consolidated financial statements. GAAP refers to generally accepted accounting principles in
Adjusted EBITDA is defined as net income / (loss) before net income / (loss) attributable to noncontrolling interests, income tax (benefit) / expense, interest income and other, net, loss / (gain) on foreign currency exchange, net realized and unrealized loss / (gain) on investments, legal liability fee, depreciation, depletion and amortization, stock-based compensation, realized hedge gain / (loss), transaction-related costs, and costs related to certain legacy items. We are providing Adjusted EBITDA, a non-GAAP financial measure, because management believes the metric provides investors with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of core operating performance. This measure is not intended to replace the presentation of financial results in accordance with GAAP and may be different from or otherwise inconsistent with similar non-GAAP financial measures used by other companies. The presentation of this non-GAAP financial measures supplements other metrics the Company uses to internally evaluate its subsidiary businesses and facilitate the comparison of past and present operating performance. This measure should not be considered in isolation or as a substitute for measures calculated and presented in accordance with GAAP.
The following table provides a reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP measure.
|
Three Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||
Adjusted EBITDA |
|
2024 |
|
|
|
2024 |
|
|
|
2024 |
|
|
(In thousands) |
||||||||||
|
(Unaudited) |
||||||||||
GAAP Net Loss |
$ |
(186 |
) |
|
$ |
(8,446 |
) |
|
$ |
(8,632 |
) |
Net Loss Attributable to Noncontrolling Interests |
|
(3 |
) |
|
|
(383 |
) |
|
|
(386 |
) |
Income Tax Benefit |
|
(1,109 |
) |
|
|
(7,061 |
) |
|
|
(8,170 |
) |
Interest Income and Other, Net |
|
(4,890 |
) |
|
|
(295 |
) |
|
|
(5,185 |
) |
Loss on Foreign Currency Exchange |
|
18 |
|
|
|
70 |
|
|
|
88 |
|
Net Realized and Unrealized (Gain) / Loss on Investments |
|
(2,160 |
) |
|
|
4,744 |
|
|
|
2,584 |
|
Legal liability fee |
|
6,243 |
|
|
|
6,613 |
|
|
|
12,856 |
|
GAAP Operating Loss |
$ |
(2,087 |
) |
|
$ |
(4,758 |
) |
|
$ |
(6,845 |
) |
Depreciation, Depletion & Amortization |
|
4,568 |
|
|
|
7,407 |
|
|
|
11,973 |
|
Stock-Based Compensation |
|
858 |
|
|
|
891 |
|
|
|
1,749 |
|
Realized Hedge Gain |
|
800 |
|
|
|
113 |
|
|
|
913 |
|
Transaction-Related Costs |
|
— |
|
|
|
222 |
|
|
|
222 |
|
Legal Costs - Legacy Management |
|
2,193 |
|
|
|
216 |
|
|
|
2,408 |
|
Adjusted EBITDA |
$ |
6,332 |
|
|
$ |
4,091 |
|
|
$ |
10,420 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240808356458/en/
Investor Contact:
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Source: