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Acacia(ACTG) - 2024 Q3 - Earnings Call Transcript
ACTGAcacia(ACTG)2024-11-12 18:01
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Financial Data and Key Metrics Changes - The company generated 23.3millioninconsolidatedrevenueforQ32024,up13123.3 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 1.7million,with1.7 million, with 6.9 million and 26.1millioninoperatedsegmentadjustedEBITDAforthethreeandninemonthsendedSeptember30,respectively[23][21]−GAAPnetlossattributabletothecompanywas26.1 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 0.14pershare,comparedtoanetincomeof0.14 per share, compared to a net income of 1.6 million or 0.02pershareinthesamequarterlastyear[52]BusinessLineDataandKeyMetricsChanges−Energyoperationsgenerated0.02 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 14.2millioninQ2,reflectingthefullquarterimpactoftheBenchmarkacquisition[24]−Industrialoperationsgenerated14.2 million in Q2, reflecting the full quarter impact of the Benchmark acquisition [24] - Industrial operations generated 7 million in revenues, up 11% from 6.3millioninQ2,duetoincreasedprinterandconsumablesales[24]−Intellectualpropertyoperationsdelivered6.3 million in Q2, due to increased printer and consumable sales [24] - Intellectual property operations delivered 0.5 million in revenue, down from 5.3millioninthepriorquarterduetonopaid−uplicensingagreementsexecuted[25]MarketDataandKeyMetricsChanges−Thecompany’scashpositiongrewtoapproximately5.3 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 242millionasofSeptember30,2022,demonstratingrobustfinancialcapacity[27]−BookvaluepershareonSeptember30was242 million as of September 30, 2022, demonstrating robust financial capacity [27] - Book value per share on September 30 was 5.85, down from 5.95atJune30,butwouldhavebeen5.95 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 103.7millionisalignedwiththecompany′slong−termstrategy,enhancingscaleandprovidinggrowthopportunities[18][16]−Thecompanyaimstocreateplatformsforgrowththroughbothorganicmeansandstrategicacquisitionswithinitstechnologyvertical[15][14]ManagementCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceintheoperationalenhancementsbeingimplementedintheenergyvertical,particularlywithBenchmark,andexpectstoseemorerevenuecomingonline[64]−Thecompanyviewsitsintellectualpropertybusinessasanattractiveassetclass,despiteitsdecreasingsignificanceinoverallrevenue[34]−Managementremainscautiousaboutenteringthecryptospace,focusinginsteadontraditionalvalueinvestments[76][77]OtherImportantInformation−Thecompanyrepurchasedapproximately3millioncommonsharesforabout103.7 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]