Acacia(US:ACTG)2022-03-31 20:09Financial Data and Key Metrics Changes - For Q4 2021, revenues were $63.3 million, a significant increase from $4.4 million in the same quarter last year [19] - Operating income was $31.3 million compared to a loss of $6.4 million a year ago, driven by $40 million of operating income from the intellectual property business [21] - GAAP net income was $149.2 million or $1.91 per diluted share compared to net income of $109.2 million or $1.48 per diluted share last year [23] - Cash and marketable securities at fair value totaled $670.7 million at December 31, 2021, compared to $274.6 million at December 31, 2020 [24] Business Line Data and Key Metrics Changes - The intellectual property business generated $51.3 million in licensing and related patent revenue compared to $4.4 million in Q4 last year, largely due to the successful licensing of the Wi-Fi 6 portfolio [19][7] - Printronix contributed $12 million in revenue in Q4 2021, with no contribution in the comparable period a year ago [19] - For the full year, the intellectual property business generated $76 million in revenue compared to $29.8 million last year [22] Market Data and Key Metrics Changes - The company has access to approximately $1 billion in capital for acquisitions, indicating a strong market position [10] - The company reported a pro forma book value of $1.1 billion or $6.51 per share, up from $5.38 per share a year ago [18] Company Strategy and Development Direction - The company is focused on acquiring businesses in the industrial, technology, consumer, and healthcare segments, leveraging its capital base for long-term ownership [13] - A new $40 million buyback program was announced, reflecting the company's strategy to utilize capital effectively as shares trade below book value [11][26] - The company aims to build a world-class M&A function and has enhanced its leadership team to support this strategy [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its differentiated strategy and capitalize on market opportunities [5] - The company anticipates continued growth from its intellectual property business and is optimistic about future licensing agreements [7] - Management noted the importance of the recent acquisition of Printronix and its potential for growth [6] Other Important Information - The company has reduced its net operating loss carryforwards by more than 40% over the past year, which remains available to shield future income from taxes [23] - The company corrected its presentation of certain financing fees in 2020, resulting in a less than 1% reduction in asset value in 2020, which benefited earnings in 2021 [25] Q&A Session Summary Question: Details on the licensing deal for Wi-Fi 6 patents - Management confirmed that the licensing deal was significant and validated the portfolio's value, but did not disclose the market percentage represented by the customer [31] Question: Future licensing opportunities - Management indicated that while it is difficult to predict future returns, they are pleased with the current portfolio and will continue to explore monetization opportunities [33] Question: Deal sourcing strategy - The company is focusing on specific industries where it can add value and is building relationships with operating executives to source deals [39] Question: G&A run rate - Management clarified that G&A expenses are variable and depend on the level of deal activity, with current expenses reflecting an active pursuit of acquisitions [43][45] Question: Share buyback details - The company repurchased just over 3 million shares at an average price just under $5 per share [49] Question: Update on Mycovia and royalty interests - Management confirmed they hold a significant royalty interest in Mycovia's drug and expect it to proceed through FDA approval, with milestone payments tied to the approval [56][58]