Acacia Research Corp (ACTG) 2019 Q3 法說會逐字稿

Good day, and welcome, ladies and gentlemen, to the Acacia Research 2019 Quarter 3 Earnings Call.

(Operator Instructions) I would now like to turn the conference over to Rob Fink.

Please go ahead, sir.

Thank you, operator.

Hosting the call today are Clifford Press, Chief Executive Officer; and Al Tobia, President and Chief Investment Officer.

Before beginning, I would like to remind you that the information provided during this call may contain forward-looking statements relating to its current expectations, estimates, forecasts and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements generally relate to the company's plans, objectives and expectations for future operations, are based on the current estimates and projections, future results or trends.

Actual results may differ materially from those projected as a result of certain risk factors and uncertainties.

For a discussion of such risks and uncertainties, please see the risk factors described in Acacia's annual report on Form 10-K and quarterly reports on 10-Q that are filed with the SEC.

In addition, during the call, the company will present non-GAAP financial measures.

Please refer to its disclosures regarding the presentation of non-GAAP financial measures and other notes that were included in this morning's press release and 8-K that was filed with the SEC.

I would like to remind everyone that a press release disclosed in the company's financial results was issued this morning before the market opened.

This release may be accessed on the company's website at acaciaresearch.com under the News and Events tab.

With all that said, I would now like to turn the call over to Al.

Al, the call is yours.

Thank you, Rob, and good morning, everyone.

This was another quarter of progress for Acacia as we continue to advance our strategic transformation.

Specifically, during the third quarter, we established an executive leadership team and further rationalized our legacy investment portfolio.

We now have the right team in place with a focused strategy to diversify our business and build our portfolio of intellectual property-related absolute return assets.

In a dislocated and undervalued industry, Acacia is differentiated.

We have $169 million in cash and marketable securities.

We have $242 million in federal and state net operating loss carryforwards that expire between 2026 and 2038.

Additionally, we have $51 million in foreign tax credits.

Most importantly, we have investments, technology, life science and transaction skill sets, both in senior management and among the Board, which we will apply as we move forward.

We believe the IP investing landscape offers attractive potential returns for a well-capitalized company with a prudent asset allocation strategy.

We are actively advancing on a number of opportunities, both potential acquisitions and strategic partnerships.

We are eager to provide updates on these opportunities as they develop and are confident in our strategy and focus.

I'd like now to turn the call over to Clifford for a review of our Q3 results.

Thank you, Al.

Good morning.

I will provide an overview of the third quarter financial results, but more detail is available in the press release issued today and also in the upcoming quarterly report on Form 10-Q, which we will file with the SEC later today.

During the quarter, we sold the position in Miso Robotics for $2 million, thus exiting this position.

This contributed to the $4.4 million quarter-over-quarter increase in cash and short-term investments.

We ended the quarter with cash and short-term investments of $169.3 million, which is up by $34.4 million (sic) [$34.5 million] since the second quarter of 2018 when Al and I first joined the Board.

The existing portfolio of Acacia has a limited number of remaining licenses to be negotiated, and we did not generate significant revenues during the quarter.

Further, we believe the timing and magnitude of the remaining legacy revenues for the full year will be less than previously anticipated.

Accordingly, we are reducing our full year revenue guidance from approximately $25 million to between $15 million and $20 million.

I'd now like to open the call for questions.

(Operator Instructions) We'll take our first question from Brett Reiss with Janney Montgomery Scott.

Can you give us any color on the patent intake that occurred this quarter?

We didn't have a substantial amount of patent intake.

We're working -- as Al referred to, we expect -- we're working on some significant acquisitions and some of those will be patent assets, and we expect -- we're actively working on those.

So we hope we'll have something to announce shortly.

Okay.

And just the kind of broad overall question, when I attended the annual meeting, there were 3 broad categories that you were working on to enhance shareholder value, more patent intake, possibly pharma royalties and consolidation opportunities.

Now that you've been actively pursuing all 3 categories, what can you say are the speed bumps to progress in any of these category of initiatives that you're running into?

I wouldn't say that it is speed bumps, but we're doing it all from a standing start.

So we built a team.

And once Al and I committed to this during the quarter, we expect to be able to making significant progress from here.

The -- this is -- it's been some time to put the company in the position where it is now, it's cleaned up, has all the assets that it needs and is working on partnership and beginning the process of building the new IP-related absolute return assets strategy.

But I'd add, Brett, you're correct in what you've identified are areas of focus, and unfortunately, we did not close anything there in the quarter, but we are active in terms of -- in those 3 areas.

Of the 3 areas, in the next, let's say, 1 or 2 quarters, where do you think we'll see something concrete that you can release and be proud about?

Well, we'd rather talk about that afterwards, Brett, than in advance.

We have no more questions in the queue at this time.

Ladies and gentlemen, this concludes our conference for today.

Thank you all for participating, and have a nice day.

All parties may now disconnect.