Acacia(US:ACTG)2022-11-10 19:20Financial Data and Key Metrics Changes - Acacia's GAAP book value as of September 30 was $282.5 million, or $7.33 per basic share, compared to $268.2 million, or $6.60 per share as of June 30, and $430.5 million, or $8.80 per share at December 31, 2021 [21][22][24] - Pro forma book value will be $520.1 million or $5.22 per share after the completion of the Starboard transactions [19][23] - Cash and equity securities at fair value totaled $323.2 million at September 30, down from $670.7 million at December 31, 2021 [27] Business Line Data and Key Metrics Changes - Revenues for Q3 2022 were $15.9 million, compared to $1.6 million a year ago, with Printronix contributing $9.6 million and the intellectual property business generating $6.3 million [24][25] - General and administrative expenses were $15 million, up from $10.3 million in the same quarter last year [25] - Operating loss was $11.4 million, slightly improved from an operating loss of $12.7 million a year ago [25] Market Data and Key Metrics Changes - The current market conditions have shifted the acquisition pipeline more towards public targets due to elevated valuations in private markets [11] - Acacia expects to have more than $320 million in cash on the balance sheet by the end of the first quarter of 2023 following the initial steps of the Starboard transaction [23] Company Strategy and Development Direction - Acacia aims to establish a hybrid acquisition platform that combines elements of hedge fund activism and private equity [9][13] - The company is focused on acquiring businesses in industrials, healthcare, and mature technology sectors, while remaining open to other opportunities [42][56] - The partnership with Starboard is seen as crucial for accessing capital and enhancing acquisition capabilities [5][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the acquisition pipeline, which is described as the most robust seen to date [11][12] - The company is committed to a disciplined approach to acquisitions, emphasizing the importance of valuation and strategic fit [41][52] - Management highlighted the importance of demonstrating value to shareholders to encourage participation in the upcoming rights offering [50] Other Important Information - The agreement with Starboard will streamline Acacia's capital structure, eliminating complex derivatives and preferred shares [15][20] - Acacia has a strong internal team and a network of advisors to enhance acquisition processes and operational improvements post-acquisition [10][11] Q&A Session Summary Question: How does Acacia plan to monetize its investment in Viamet? - Acacia owns approximately 26% of Viamet and anticipates receiving milestone and royalty payments, with a larger payment expected before year-end [34] Question: What is the expected go-forward rate for operating expenses? - Operating expenses are expected to vary based on business activity, but $17.3 million is a reasonable starting point [35][36] Question: What is the status of the Wi-Fi IP portfolio? - The Wi-Fi IP portfolio has exceeded initial capital expectations and generated significant discussions with potential licensees [38][39] Question: What is the focus of Acacia's acquisition strategy? - Acacia is focused on acquiring businesses that can be improved in partnership with experienced executives, with a current emphasis on industrials, healthcare, and mature technology [41][42][56] Question: Are there conditions that need to be met before making the first acquisition? - There are no specific conditions such as shareholder approval that need to be met before pursuing acquisitions [47] Question: How important is the additional capital from the rights offering? - The rights offering is important for demonstrating value to shareholders, but the company will not rush into acquisitions solely to drive participation [50][52] Question: What criteria does Acacia use for acquisitions? - Acacia has a checklist of criteria for evaluating potential acquisitions, focusing on businesses that can be improved and are aligned with their strategic goals [53][56]