Acacia(ACTG) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Acacia recorded total revenue of $124.4 million during the first quarter, a significant increase compared to the same quarter last year [21] - The company reported first quarter GAAP operating income of$38.3 million, compared to a GAAP operating loss of $2.1 million in the same quarter last year [23] - GAAP net income attributable to Acacia was$24.3 million or $0.25 per share, compared to a net loss of$0.2 million or $0 per share in the prior year period [24] - Adjusted net income attributable to Acacia was$33.1 million or $0.34 per share [24] - Cash, cash equivalents, and equity securities at fair value totaled$290 million as of March 31, 2025, compared to $297 million at December 31, 2024 [25] Business Line Data and Key Metrics Changes - Energy operations generated$18.3 million in revenue for the quarter, compared to $1.9 million in the same quarter of last year [21] - Manufacturing operations generated$28.5 million in revenue [21] - Industrial operations generated $7.7 million in revenue during the quarter, a slight decrease from$8.8 million in the same quarter last year [21] - Intellectual property operations generated $69.9 million in licensing and other revenue during the quarter, compared to$13.6 million in the same quarter last year [22] Market Data and Key Metrics Changes - Benchmark's energy segment has hedged over 70% of its production through the end of 2027, providing price protection and cash flow predictability [11] - Approximately 51% of Benchmark's last twelve months (LTM) revenue and 78% of LTM production was driven by gas and natural gas liquids, which have remained resilient [11] Company Strategy and Development Direction - The company focuses on acquiring and building businesses with stable long-term cash flow generation and scalability [6] - Acacia is actively evaluating strategic acquisitions and organic growth initiatives across its verticals [27] - The company is exploring avenues to monetize its Cherokee position and is monitoring attractive M&A targets due to recent oil price softness [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Acacia's resilience amid macroeconomic uncertainties and believes the current environment presents compelling opportunities [27] - The company is focused on disciplined cost management and operational excellence to navigate volatile periods [16] - Management highlighted the strong performance driven by realized gains from the intellectual property business and the integration of Revolution assets [7][14] Other Important Information - Total consolidated G&A expense was $17.3 million during the first quarter, an increase from$12.5 million in the same quarter last year, primarily due to the addition of Deflecto [22] - The company has zero capital commitments from a drilling perspective, allowing it to remain cash flow positive even in challenging price environments [11] Q&A Session Summary Question: Can you detail the total winnings from the WiFi portfolio? - Management indicated that since Q1 2023, approximately 178 million has been generated from the WiFi assets, with ongoing cases potentially adding more value [31] Question: Are you seeing prices coming down in M&A? - Management noted they are looking at three verticals: energy, industrials, and mature technology, with ongoing evaluations of acquisition opportunities [33][34] Question: What is the calculus on protecting tax attributes versus share buybacks? - Management confirmed they completed a 20 million buyback while monitoring tax attributes to determine the optimal time for further buybacks [40] Question: Does the recent settlement put pressure on the defendant in the $37 million judgment case? - Management expressed uncertainty but hoped that the recent settlement would encourage a quicker resolution [49]