Investment Valuation and Risks - As of December 31, 2024, the carrying value of the company's equity investments in public and private companies was $59.9 million, down from $99.8 million in 2023[461]. - A hypothetical 10% adverse change in the market price of the company's investments in publicly traded common stock would have resulted in a decrease of approximately $2.3 million[462]. - The company is exposed to investment risks related to changes in the underlying financial condition of certain equity investments in technology companies, which can significantly impact fair value due to market volatility[460]. - The primary objective of the company's short-term investment activities is to preserve principal while maximizing income from equity securities without significantly increasing risk[459]. - The company intends to maintain a diversified portfolio of cash equivalents and equity securities to minimize investment risks in the future[459]. - The company evaluates equity investments in private companies for impairment when there are indications of a decline in fair value below carrying value[462]. Foreign Currency and Interest Rate Exposure - The company has no foreign denominated equity securities as of December 31, 2024, indicating limited exposure to foreign currency exchange risk[463]. - The company has historically not had material foreign operations, limiting its exposure to foreign currency exchange rate fluctuations[463]. - A 100 basis point increase in interest rates or a 10% decline in the value of the U.S. equity markets would not be expected to have a material impact on the value of the company's money market funds[459]. Competitive and Economic Risks - The company faces risks related to competition, pricing, regulations, and other economic factors that may impact its operating businesses[21].

Financial Data and Key Metrics Changes - For Q4 2024, consolidated revenue was $48.8 million, with total company adjusted EBITDA of $4.9 million and operated segment adjusted EBITDA of $9.6 million [14][29] - For the full year 2024, consolidated revenue was $122.3 million, down from $125.1 million in 2023, with total company adjusted EBITDA of $17 million [36][40] - The net loss for Q4 2024 was $13.4 million, or $0.14 per share, compared to a net income of $74.8 million, or $0.75 per share in Q4 2023 [34][36] Business Line Data and Key Metrics Changes - Energy operations generated $17.3 million in revenue for Q4 2024, significantly up from $0.8 million in the same quarter last year [29] - Manufacturing operations, following the acquisition of Deflecto, generated $23.2 million in revenue for Q4 2024 [30] - Industrial operations generated $8.2 million in revenue for Q4 2024, a slight decrease from $8.6 million in the same quarter last year [30] - Intellectual property operations generated $0.1 million in licensing revenue during Q4 2024, down from $82.8 million in the same quarter last year [30][26] Market Data and Key Metrics Changes - The energy vertical reported Benchmark's highest ever revenue this quarter, demonstrating effective operational strategies [19] - The manufacturing operations are expected to improve earnings leverage as market conditions rebound [24] Company Strategy and Development Direction - The company aims to maximize value through disciplined capital allocation and strategic acquisitions, focusing on operational efficiencies and integration of acquired businesses [9][45] - The strategy includes evaluating potential acquisition targets in both private and public markets while maintaining a strong balance sheet [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and highlighted the stability offered by the company's diversified asset base [47] - The company plans to continue optimizing existing assets and exploring new acquisition opportunities to unlock shareholder value [48] Other Important Information - The company repurchased $20 million of stock at an average price of $4.61 per share, reflecting a strategic use of shareholder capital [16] - Cash, cash equivalents, and equity securities totaled $297 million at year-end 2024, down from $403.2 million at the end of 2023, primarily due to acquisitions and stock repurchases [41][42] Q&A Session Summary Question: Thoughts on the overall economy and tariffs - Management indicated that the company is insulated from tariffs due to its market position and has plans to adjust manufacturing operations if necessary [52][54] Question: Acquisition of more wells and Cherokee play potential - Management confirmed ongoing evaluation of asset packages for acquisition, focusing on operational scalability rather than geographical expansion [61][64] Question: Deflecto's gross margin performance - Management acknowledged that the fourth quarter is seasonally weak but remains committed to achieving the targeted gross margin of 15% [66] Question: Cash levels and acquisition strategy - Management clarified that the increase in cash levels is due to effective cash flow generation from acquired businesses [92] Question: Flexibility in private equity pricing - Management noted that while private equity firms typically seek high prices, there are opportunities for reasonable valuations, especially for businesses that may not fit traditional private equity models [96][97]

Q4 2024 Earnings Presentation As of December 31, 2024 | Nasdaq: ACTG Disclosures Forward-Looking Statements This presentation 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 current expectations of Acacia Research Corporation ("Acacia" or the "Company") and speak only as of the date hereof. All statements other than statements of historical fact are forward-looking statements a ...

Financial Performance - Consolidated revenue of $48.8 million for Q4 2024 and $122.3 million for the full year 2024[1] - GAAP net loss of $(13.4) million for Q4 2024, resulting in a GAAP diluted EPS of $(0.14), and a net loss of $(36.1) million for the year, with a diluted EPS of $(0.36)[10] - Adjusted net loss of $(6.8) million for Q4 2024, with an adjusted diluted EPS of $(0.07), and an adjusted net income of $14.2 million for the year, leading to an adjusted diluted EPS of $0.14[10] - Total revenue for the quarter was $48.8 million, with Energy Operations revenue at $17.3 million, Manufacturing Operations revenue at $23.2 million, and Industrial Operations revenue at $8.2 million[18] - Total revenue for the year reached $122.3 million, with Energy Operations revenue contributing $49.2 million[18] - The company reported an operating loss of $32.9 million for the year ended December 31, 2024, compared to an operating income of $20.9 million in 2023[32] - Net loss attributable to Acacia Research Corporation for the year ended December 31, 2024, was $36.1 million, compared to a net income of $67.1 million in 2023[32] - The company reported a basic net loss per share of $0.14 for 2024, compared to earnings of $0.75 per share in 2023[32] Adjusted EBITDA - Total company adjusted EBITDA of $4.9 million for Q4 2024 and $17.0 million for the full year 2024[10] - Operated segment adjusted EBITDA of $9.6 million for Q4 2024 and $35.7 million for the year[10] - Total Company Adjusted EBITDA for the quarter was $4.9 million, while Operated Segment Adjusted EBITDA was $9.6 million[18] - Total Adjusted EBITDA for the year ended December 31, 2024, was $16,952, with a cumulative GAAP Operating Loss of $(32,926)[45] Cash and Assets - The company ended the year with a healthy cash balance of $273.9 million for future transactions[7] - Cash, cash equivalents, and equity investments totaled $297.0 million at December 31, 2024, down from $403.2 million at December 31, 2023[24] - Cash and cash equivalents decreased to $273.9 million as of December 31, 2024, down from $340.1 million in 2023, representing a decline of 19.4%[30] - Total assets increased to $756.4 million as of December 31, 2024, compared to $633.5 million in 2023, reflecting a growth of 19.4%[30] Liabilities and Equity - The company’s total liabilities rose significantly to $203.8 million in 2024, compared to $43.9 million in 2023, marking an increase of 364.5%[30] - Acacia's book value as of December 31, 2024, was $552.6 million, with a book value per share of $5.75[21] - The number of shares outstanding decreased from 99.9 million in 2023 to 96.0 million in 2024[30] Acquisitions and Investments - Acacia completed the acquisition of upstream production assets from Revolution for $145.0 million on April 17, 2024[10] - The acquisition of Deflecto was completed on October 18, 2024, for $103.7 million[10] - A share repurchase program was executed, repurchasing $20.0 million in Acacia shares during the year[7] - The company completed a stock repurchase program totaling $20.0 million as of December 31, 2024[22] - Acacia generated $564.1 million from its Life Sciences Portfolio, purchased for $301.4 million in 2020[19] Other Financial Metrics - Adjusted EBITDA for the three months ended March 31, 2024, was $6,332, with a GAAP Operating Loss of $(2,087)[44] - For the three months ended June 30, 2024, Adjusted EBITDA was $4,089, while GAAP Operating Loss was $(4,758)[44] - The three months ended September 30, 2024, reported Adjusted EBITDA of $1,674, with a significant GAAP Operating Loss of $(10,272)[44] - For the three months ended December 31, 2024, Adjusted EBITDA reached $4,857, and GAAP Operating Loss was $(15,809)[45] - The company incurred transaction-related costs of $222 for the three months ended June 30, 2024[44] - Legacy matter costs for the three months ended September 30, 2024, were $368[44] - Parent interest income for the three months ended December 31, 2024, was $2,793[45] - Stock-based compensation for the three months ended June 30, 2024, amounted to $891[44] - The company reported a realized hedge gain of $800 for the three months ended March 31, 2024[44]

Core Insights - Acacia Research (NASDAQ: ACTG) has shown sideways performance since October, indicating that the market continues to overlook ACTG stock [1] Company Performance - The market's indifference towards ACTG stock suggests a lack of investor interest or confidence in the company's future prospects [1]

Revenue Performance - Total revenues for the three months ended September 30, 2024, were $23.31 million, a significant increase from $10.08 million in the same period of 2023, representing a 131.5% year-over-year growth[14]. - The company reported a total revenue of $73.47 million for the nine months ended September 30, 2024, compared to $32.79 million in the same period of 2023, representing a 124.7% increase[14]. - For the nine months ended September 30, 2024, total revenues from license agreements were $19.4 million, with recurring license revenue agreements contributing $2.2 million[53]. Costs and Expenses - The total costs and expenses for the three months ended September 30, 2024, were $33.58 million, up from $23.24 million in the same period of 2023, indicating a 44.4% increase[14]. - The cost of revenues for intellectual property operations was $5.71 million for the three months ended September 30, 2024, compared to $5.47 million in the same period of 2023, a slight increase of 4.4%[14]. - General and administrative expenses for the three months ended September 30, 2024, were $11.12 million, slightly down from $11.61 million in the same period of 2023, a decrease of 4.2%[14]. - Engineering and development expenses for industrial operations were $0.11 million for the three months ended September 30, 2024, compared to $0.17 million in the same period of 2023, a decrease of 35.3%[14]. Net Loss and Earnings - Net loss attributable to Acacia Research Corporation was $13.996 million for the quarter, compared to a net income of $1.636 million in the same period last year[15]. - Basic net loss per common share was $0.14, compared to a loss of $0.02 per share in the previous year[15]. - The company reported a net loss including noncontrolling interests of $11.657 million, compared to a net income of $2.762 million last year[17]. - The company reported a net loss of $20,675 for the nine months ended September 30, 2024, compared to a net loss of $6,570 for the same period in 2023, indicating a significant increase in losses[23]. Cash Flow and Financial Position - Cash flows from operating activities provided $70,384 during the nine months ended September 30, 2024, compared to a cash outflow of $17,962 for the same period in 2023[23]. - The company had cash and cash equivalents of $360,050 at the end of September 30, 2024, up from $344,733 at the end of the previous year[23]. - The total accumulated deficit increased to $262.357 million as of September 30, 2024[20]. Strategic Acquisitions and Investments - The company anticipates continued growth in revenues driven by strategic acquisitions and market expansion efforts[5]. - On November 13, 2023, the company invested $10.0 million to acquire a 50.4% equity interest in Benchmark Energy II, LLC, which has over 13,000 net acres and an interest in over 125 wells[34]. - On October 18, 2024, the company acquired Deflecto for $103.7 million, funded by a $48.0 million secured term loan and cash on hand[38]. - Benchmark's strategy focuses on acquiring cash-flowing oil and gas properties with low leverage and robust commodity hedges[34]. Share Repurchase and Stockholder Actions - The Board approved a stock repurchase program for up to $20.0 million, with a cap of 5,800,000 shares of common stock[196]. - As of November 7, 2024, a total of 3,007,294 shares have been repurchased at an average price of $4.67 per share, with $6.0 million remaining under the repurchase program[197]. - During the quarter, a total of 1,537,122 shares were repurchased at an average price of $4.70 per share[200]. Tax and Legal Matters - The effective tax rates for the three months ended September 30, 2024, and 2023 were 89% and (8)%, respectively, while for the nine months ended September 30, 2024, and 2023, they were (11)% and 11%[103]. - The Company has total unrecognized tax benefits of approximately $757,000 as of September 30, 2024, which would impact the effective tax rate if recognized[104]. - Acacia incurred a non-recurring legacy legal expense of $12.9 million for the nine months ended September 30, 2024, primarily due to the settlement of the AIP Matter[191]. Inventory and Asset Management - Total inventories increased to $12.2 million as of September 30, 2024, from $10.9 million as of December 31, 2023[116]. - The total carrying amount of other intangible assets was $30.9 million as of September 30, 2024, compared to $33.6 million as of December 31, 2023[124]. - The Company recorded an impairment loss for long-lived assets when expected undiscounted future cash flows are less than the carrying amount of the asset[87]. Operational Efficiency and Management - The company supports existing management in initiatives to reduce costs and enhance operational efficiency[33]. - The company evaluates and records provisions for excess and obsolete inventory based on forecasted demand and market conditions[77]. - The Company contracts third parties for on-site repair services, with maintenance service agreements recognized on a straight-line basis over the contract period[60].

Financial Data and Key Metrics Changes - The company generated $23.3 million in consolidated revenue for Q3 2024, up 131% compared to $10.1 million in the same quarter last year, driven by the full quarter impact of the Benchmark acquisition [22][48] - Adjusted EBITDA for the third quarter was $1.7 million, with $6.9 million and $26.1 million in operated segment adjusted EBITDA for the three and nine months ended September 30, respectively [23][21] - GAAP net loss attributable to the company was $14 million or $0.14 per share, compared to a net income of $1.6 million or $0.02 per share in the same quarter last year [52] Business Line Data and Key Metrics Changes - Energy operations generated $15.8 million in revenues during the quarter, up 12% from $14.2 million in Q2, reflecting the full quarter impact of the Benchmark acquisition [24] - Industrial operations generated $7 million in revenues, up 11% from $6.3 million in Q2, due to increased printer and consumable sales [24] - Intellectual property operations delivered $0.5 million in revenue, down from $5.3 million in the prior quarter due to no paid-up licensing agreements executed [25] Market Data and Key Metrics Changes - The company’s cash position grew to approximately $280 million compared to $242 million as of September 30, 2022, demonstrating robust financial capacity [27] - Book value per share on September 30 was $5.85, down from $5.95 at June 30, but would have been $6 per share excluding nonrecurring legal matters [26][47] Company Strategy and Development Direction - The company focuses on acquiring and building businesses with stable cash flow generation and the ability to scale, while also making opportunistic acquisitions [6][15] - The acquisition of Deflecto for $103.7 million is aligned with the company's long-term strategy, enhancing scale and providing growth opportunities [18][16] - The company aims to create platforms for growth through both organic means and strategic acquisitions within its technology vertical [15][14] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational enhancements being implemented in the energy vertical, particularly with Benchmark, and expects to see more revenue coming online [64] - The company views its intellectual property business as an attractive asset class, despite its decreasing significance in overall revenue [34] - Management remains cautious about entering the crypto space, focusing instead on traditional value investments [76][77] Other Important Information - The company repurchased approximately 3 million common shares for about $14 million as part of its stock repurchase program [58] - Total indebtedness was $70 million in non-recourse debt at Benchmark as of September 30, 2024 [56] Q&A Session Summary Question: Insights on Deflecto's margin profile and synergy plans - Management indicated that Deflecto has mid-teen EBITDA margins with opportunities for further cost rationalization and product expansion [61][62] Question: Performance of Benchmark assets - Management confirmed that Benchmark's performance is meeting expectations, with operational enhancements underway to optimize production [63][65] Question: Changes in Deflecto's business focus - Management noted that Deflecto has undergone significant transformation, focusing on higher-margin products and rationalizing its portfolio [67][68] Question: Revenue expectations from the IP business - Management acknowledged the variability in IP revenue and emphasized the attractiveness of the underlying asset class [73]

Q3 2024 Earnings Presentation As of September 30, 2024 | Nasdaq: ACTG Disclosures Forward-Looking Statements This presentation 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 current expectations of Acacia Research Corporation ("Acacia" or the "Company") and speak only as of the date hereof. All statements other than statements of historical fact are forward-looking statements ...

Revenue Performance - Generated $23.3 million in consolidated revenue for Q3 2024, up 131% from $10.1 million in Q3 2023[4] - Total revenues for the three months ended September 30, 2024, were $23.3 million, a significant increase from $10.1 million in the same period last year, representing a 130.7% growth[13] - Total revenues for the three months ended September 30, 2024, were $23.31 million, a significant increase from $10.08 million in the same period of 2023, representing a 131.5% year-over-year growth[25] - Energy Operations contributed $15.8 million in revenue, while Industrial Operations generated $7.0 million, reflecting a decrease from $8.3 million in the same quarter last year[10] - Intellectual property operations generated revenues of $0.49 million for the three months ended September 30, 2024, compared to $1.76 million in the same period of 2023, reflecting a decline of 72.2%[25] - Energy operations reported revenues of $15.82 million for the three months ended September 30, 2024, with no revenues recorded in the same period of 2023, indicating a strong market entry[25] Financial Losses - Recorded a GAAP net loss of $14.0 million, or $0.14 diluted net loss per share, compared to a net income of $1.6 million, or $0.03 diluted net income per share in Q3 2023[10] - GAAP net loss for the three months ended September 30, 2024, was $(14.0) million, compared to a net income of $1.6 million in the same period last year[13] - Net loss attributable to Acacia Research Corporation for the three months ended September 30, 2024, was $(13.99) million, compared to a net income of $1.64 million in the same period of 2023[26] - The company reported a basic net loss per common share of $(0.14) for the three months ended September 30, 2024, compared to $(0.02) for the same period in 2023[26] Operating Performance - Achieved Total Company Adjusted EBITDA of $1.7 million for Q3 2024, with Operated Segment Adjusted EBITDA of $6.9 million[4] - Total Company Adjusted EBITDA for the three months ended September 30, 2024, was $6,332 thousand, compared to a GAAP operating loss of $2,087 thousand[34] - For the nine months ended September 30, 2024, the consolidated total Adjusted EBITDA was $6,332 thousand, with Parent Costs at $(4,103) thousand[34] - The operating loss for the three months ended September 30, 2024, was $(10.3) million, an improvement from $(13.2) million in the prior year[13] - The operating loss for the three months ended September 30, 2024, was $(10.27) million, an improvement from $(13.15) million in the same period of 2023[25] - The Energy Operations reported a GAAP operating income of $156 thousand, with depreciation, depletion, and amortization expenses of $422 thousand[34] - The Industrial Operations had a GAAP operating loss of $(234) thousand, with depreciation and amortization expenses of $683 thousand[30] - Intellectual Property Operations Adjusted EBITDA was not specified for the three months ended September 30, 2024, but the GAAP operating loss was $(7,138) thousand[36] Cash Flow and Assets - Generated $70.4 million in operating cash flow during the nine months ended September 30, 2024[3] - Cash, cash equivalents, and equity investments measured at fair value totaled $374.2 million as of September 30, 2024, down from $403.2 million at December 31, 2023, primarily due to acquisitions and stock repurchases[16] - Cash and cash equivalents increased to $360.05 million as of September 30, 2024, up from $340.09 million as of December 31, 2023[24] - Total assets rose to $707.57 million as of September 30, 2024, compared to $633.55 million as of December 31, 2023, reflecting a growth of 11.6%[24] Liabilities and Equity - Total liabilities increased to $129.01 million as of September 30, 2024, compared to $43.94 million as of December 31, 2023, indicating a significant rise in financial obligations[24] - Acacia's total indebtedness was $70.0 million in non-recourse debt as of September 30, 2024, while the parent company's total indebtedness was zero[16] - Book value per share was $5.85 at September 30, 2024, down from $5.90 at December 31, 2023[3] - The book value per share as of September 30, 2024, was $5.85, which would have been $6.00 excluding non-recurring legal expenses of $14.9 million[17] Stock Repurchase and Acquisitions - Acquired Deflecto Acquisition, Inc. for $103.7 million, expected to generate approximately $128-$136 million in revenue in 2024[4] - Repurchased 3.0 million shares for $14.0 million as part of the stock repurchase program[3] - The company has repurchased 3,007,294 common shares for $14.0 million as part of its stock repurchase program, which has a cap of $20.0 million[18] - The company’s cash reserves were approximately $280 million for potential future transactions following the Deflecto acquisition[3] Other Financial Metrics - General and administrative expenses were $11.1 million, a decrease from $11.6 million in the same quarter last year[10] - Unrealized losses for the three months ended September 30, 2024, were $(4.1) million, compared to unrealized gains of $8.8 million in the prior year[13] - The company reported a realized hedge gain of $800 thousand for the three months ended September 30, 2024[34] - Legacy matter costs for Parent were $2,193 thousand for the three months ended September 30, 2024[34] - Stock-based compensation for the three months ended September 30, 2024, was $858 thousand, with $415 thousand attributed to Parent Costs[34] - The company emphasizes that Adjusted EBITDA is a non-GAAP financial measure intended to provide investors with useful supplemental information[34]

Core Viewpoint - The article discusses the investment position of the analyst in ACTG shares, indicating a beneficial long position through various means such as stock ownership and options [1]. Group 1 - The analyst expresses personal opinions regarding the investment without receiving compensation from any company mentioned [1]. - There is an emphasis on the lack of business relationships with any companies whose stocks are discussed in the article [2]. - The article highlights that past performance is not indicative of future results, and no specific investment recommendations are made [3].