Acacia Research Corporation(1) (“Acacia” or “the Company”)
(Nasdaq: ACTG) today reported results for the three months ended
March 31, 2019.
Statements from Alfred V. Tobia Jr. and Clifford Press
“Acacia continued to execute a disciplined approach to developing its
intellectual property business,” commented Clifford Press, Director. “A
crucial initial step was completing the reconstitution of our Board with
four highly experienced directors with significant expertise in a
wide-range of intellectual property and investing disciplines. Acacia is
prudently developing a pipeline of opportunities to capitalize on
investments that meet our criteria and are capable of producing
substantial returns. During the first quarter, the Company closed the
acquisition of two patent portfolios. We have eight legacy portfolios
currently active and are methodically evaluating additional
opportunities to grow the overall IP portfolio.”
Al Tobia, Director, added, “With a streamlined cost structure, a
strengthened board and an active licensing team in place, we are
systematically advancing our IP business. As our activity to identify
new investments and deploy capital has increased, so has the scale,
scope and quality of our deal flow. We are evaluating an increasing
number of potential investments while advancing new partnership
opportunities with patent owners that we have optioned.”
Business Outlook
Mr. Tobia added, “The existing portfolio of Acacia has a limited number
of remaining licenses to be negotiated. As expected, we did not generate
significant revenues in the first quarter of 2019. For the full year
2019, we continue to expect gross revenues of approximately $25 million,
all from the existing portfolio.”
First Quarter Financial Summary:
- Gross revenues were $3.4 million during the quarter.
-
After deducting inventor royalties and contingent legal fees, net
revenues were $1.9 million, or 55% of gross revenues. - Operating loss was $6.9 million.
- GAAP net loss was $4.4 million or $0.09 per diluted share.
-
Non-GAAP net loss was $5.1 million or $0.10 per diluted share. See
below for information regarding non-GAAP financial measures. -
Cash used in operating activities for the 3 months ended March 31,
2019 was $2.0 million.
Balance Sheet
-
Cash and short-term investments totaled $167.9 million as of March 31,
2019, as compared to $165.5 million as of December 31, 2018.
Investor Conference Call:
The Company will host an investor conference call and live webcast to
provide a business update on Friday, May 10, 2019, to begin at 11:00 AM
(EDT) / 8:00 AM (PDT). To access the live call, please dial (800)
289-0438 (U.S. and Canada) or (323) 794-2423 (international) and
reference conference ID 2573190.
The conference call will also be webcasted on the Company’s website at http://acaciaresearch.com/events/.
Following the conclusion of the live call, a replay of the webcast will
be available on the Company’s website for at least 30 days.
INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES
As used herein, “GAAP” refers to accounting principles generally
accepted in the United States of America. This earnings release includes
financial measures, including (1) non-GAAP net income and (2) non-GAAP
Earnings Per Share (“EPS”), that are considered non-GAAP financial
measures as defined in Rule 101 of Regulation G promulgated by the
Securities and Exchange Commission. Generally, a non-GAAP financial
measure is a numerical measure of a company’s historical or future
performance, financial position, or cash flows that either excludes or
includes amounts that are not normally excluded or included in the most
directly comparable measure calculated and presented in accordance with
GAAP. The presentation of this non-GAAP financial information is not
intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP.
Non-GAAP Net income and EPS. We define non-GAAP net income as net
income calculated in accordance with GAAP, plus unrealized change in
fair value of investments, loss on investment, non-cash stock
compensation charges and non-cash patent amortization charges. Non-GAAP
EPS is defined as non-GAAP net income divided by the weighted average
outstanding shares, on a fully-diluted basis, calculated in accordance
with GAAP, for the respective reporting period. Additional information
regarding these non-GAAP measures is available in previously disclosed
SEC filings.
Non-GAAP net income does not reflect realized losses and unrealized
changes to the fair value of our investment in Veritone, Inc. We had
previously included unrealized changes to the fair value of our
investment in Veritone, Inc. in Non-GAAP net income in our previously
reported earnings releases. However, given the volatility of Veritone’s
market price, we believe excluding our Veritone investment from Non-GAAP
net income more accurately reflects our financial performance.
These non-GAAP measures are presented because they are important metrics
used by management as a means to assess financial performance.
There are a number of limitations related to the use of non-GAAP net
income and EPS versus net income and EPS calculated in accordance with
GAAP. These non-GAAP measures should not be considered alternatives to
financial metrics derived in accordance with GAAP. Management
compensates for these limitations by providing specific information
regarding the GAAP amounts excluded from non-GAAP net income and EPS and
evaluating non-GAAP net income and EPS in conjunction with net income
and EPS calculated in accordance with GAAP.
The table below titled “Reconciliation of GAAP Net Income (Loss) and EPS
to Non-GAAP Net Income (Loss) and EPS (In thousands, except share and
per share data)” provides a reconciliation of the non-GAAP financial
measures presented to the most directly comparable financial measures
prepared in accordance with GAAP.
Due to uncertainties related to our ability to utilize certain deferred
tax assets in future periods, we have recorded a full valuation
allowance against our net deferred tax assets for the periods presented
herein. Tax expense for the periods presented reflects foreign taxes
withheld on revenue agreements with licensees in foreign jurisdictions
and other state taxes, and the impact of the full valuation allowance
recorded for net operating loss and foreign tax credit related tax
assets generated during the periods. As such, no tax benefit was
recognized for net operating loss and foreign tax credit related tax
benefits generated during the applicable periods presented. Accordingly,
there are no income tax effects related to our adjustments to arrive at
our non-GAAP measures included herein.
______________________________________________
ABOUT ACACIA RESEARCH CORPORATION
Founded in 1993, Acacia Research Corporation (ACTG) invests in
Intellectual Property Assets and partners with inventors and patent
owners to realize the financial value in their patented inventions.
Acacia bridges the gap between invention and application, facilitating
efficiency and delivering monetary rewards to the patent owner.
Information about Acacia Research Corporation and its subsidiaries is
available at www.acaciaresearch.com.
Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995
This news release contains forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based upon
our current expectations and speak only as of the date hereof. Our
actual results may differ materially and adversely from those expressed
in any forward-looking statements as a result of various factors and
uncertainties, including the ability to successfully implement our
strategic plan, the ability to successfully build out a new leadership
team within a certain timeframe, the ability to streamline financial
reporting, the ability to successfully develop licensing programs and
attract new business, changes in demand for current and future
intellectual property rights, legislative, regulatory and competitive
developments addressing licensing and enforcement of patents and/or
intellectual property in general, general economic conditions and the
success of our investments. Our Annual Report on Form 10-K,
recent and forthcoming Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K, and any amendments to the forgoing, and other SEC
filings discuss some of the important risk factors that may affect our
business, results of operations and financial condition. We
undertake no obligation to revise or update publicly any forward-looking
statements for any reason.
The results achieved in the most recent quarter are not necessarily
indicative of the results to be achieved by us in any subsequent
quarters, as it is currently anticipated that Acacia Research
Corporation’s financial results will vary, and may vary significantly,
from quarter to quarter. This variance is expected to result from
a number of factors, including risk factors affecting our results of
operations and financial condition referenced above, and the particular
structure of our licensing transactions, which may impact the amount of
inventor royalties and contingent legal fees expenses we incur period to
period.
|
ACACIA RESEARCH CORPORATION SUMMARY FINANCIAL INFORMATION (In thousands, except share and per share information) (Unaudited) |
||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||
|
Three Months Ended March 31, |
||||||||||
| 2019 | 2018 | |||||||||
| Revenues | $ | 3,387 | $ | 62,093 | ||||||
| Portfolio operations: | ||||||||||
| Inventor royalties | 1,353 | 21,744 | ||||||||
| Contingent legal fees | 177 | 15,759 | ||||||||
| Patent acquisition expenses | — | 4,000 | ||||||||
| Litigation and licensing expenses – patents | 3,801 | 2,989 | ||||||||
| Amortization of patents | 656 | 5,330 | ||||||||
| Other portfolio expenses | 650 | — | ||||||||
| Total portfolio operations | 6,637 | 49,822 | ||||||||
|
Net portfolio income (loss) |
(3,250 | ) | 12,271 | |||||||
| General and administrative expenses | 3,695 | 3,301 | ||||||||
| Operating income (loss) | (6,945 | ) | 8,970 | |||||||
| Other income (expense): | ||||||||||
| Change in fair value of investment, net | 6,908 | (41,097 | ) | |||||||
|
Loss on sale of investment |
(5,590 | ) | — | |||||||
| Interest income and other | 1,543 | 207 | ||||||||
| Total other income (expense) | 2,861 | (40,890 | ) | |||||||
| Loss before provision for income taxes | (4,084 | ) | (31,920 | ) | ||||||
| Provision for income taxes | (314 | ) | (191 | ) | ||||||
| Net loss including noncontrolling interests in subsidiaries | (4,398 | ) | (32,111 | ) | ||||||
| Net loss attributable to noncontrolling interests in subsidiaries | 14 | 73 | ||||||||
| Net loss attributable to Acacia Research Corporation | $ | (4,384 | ) | $ | (32,038 | ) | ||||
|
Net loss attributable to common stockholders – basic and diluted |
$ | (4,384 | ) | $ | (32,038 | ) | ||||
| Basic and diluted loss per common share | $ | (0.09 | ) | $ | (0.63 | ) | ||||
|
Weighted average number of shares outstanding – basic and diluted |
49,655,881 | 50,632,958 | ||||||||
|
Reconciliation of GAAP Net Loss and EPS to Non-GAAP Net Income (In thousands, except share and per share data) |
|||||||||
|
Three Months Ended March 31, |
|||||||||
| 2019 | 2018 | ||||||||
| GAAP net loss | $ | (4,384 | ) | $ | (32,038 | ) | |||
| Add back: | |||||||||
| Change in fair value of investment, net | (6,908 | ) | 41,097 | ||||||
| Loss on sale of investment | 5,590 | — | |||||||
| Non-cash stock compensation expense | (8 | ) | (1,024 | ) | |||||
| Non-cash patent amortization | 656 | 5,330 | |||||||
| Pro forma non-GAAP net income (loss) | $ | (5,054 | ) | $ | 13,365 | ||||
| Pro forma non-GAAP net income (loss) per common share – diluted | $ | (0.10 | ) | $ | 0.26 | ||||
| GAAP weighted-average shares — diluted | 49,655,881 | 50,713,645 | |||||||
|
ACACIA RESEARCH CORPORATION SUMMARY FINANCIAL INFORMATION, (CONTINUED) (In thousands) (Unaudited) |
|||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||||
|
March 31, 2019 |
December 31, 2018 |
||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 73,285 | $ | 128,809 | |||||
| Trading securities – debt | 93,756 | 33,642 | |||||||
| Trading securities – equity | 831 | 3,012 | |||||||
| Accounts receivable | 23,964 | 32,884 | |||||||
| Prepaid expenses and other current assets | 3,686 | 3,125 | |||||||
| Total current assets | 195,522 | 201,472 | |||||||
| Investment at fair value | 5,483 | 7,459 | |||||||
| Investment – other | 8,195 | 8,195 | |||||||
| Patents, net of accumulated amortization | 9,681 | 6,587 | |||||||
|
Other non-current assets |
216 | 236 | |||||||
| $ | 219,097 | $ | 223,949 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable and accrued expenses | $ | 11,448 | $ | 8,347 | |||||
| Accrued patent investment costs | 3,750 | — | |||||||
| Royalties and contingent legal fees payable | 16,149 | 22,688 | |||||||
| Total current liabilities | 31,347 | 31,035 | |||||||
| Other liabilities | 916 | 1,674 | |||||||
| Total liabilities | 32,263 | 32,709 | |||||||
| Total stockholders’ equity | 186,834 | 191,240 | |||||||
| $ | 219,097 | $ | 223,949 | ||||||
|
ACACIA RESEARCH CORPORATION SUMMARY FINANCIAL INFORMATION, (CONTINUED) (In thousands) (Unaudited) |
||||||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||
|
Three Months Ended March 31, |
||||||||||
| 2019 | 2018 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss including noncontrolling interests in subsidiaries | $ | (4,398 | ) | $ | (32,111 | ) | ||||
|
Adjustments to reconcile net loss including noncontrolling interests in subsidiaries to net cash provided by operating activities: |
||||||||||
| Change in fair value of investment, net | (6,908 | ) | 41,097 | |||||||
|
Loss on sale of investment |
5,590 | — | ||||||||
| Depreciation and amortization | 660 | 5,344 | ||||||||
| Non-cash stock compensation | (8 | ) | (1,024 | ) | ||||||
| Income from trading securities | (1,077 | ) | — | |||||||
| Other | — | (87 | ) | |||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable | 8,920 | (59 | ) | |||||||
| Prepaid expenses and other assets | (541 | ) | (863 | ) | ||||||
| Accounts payable and accrued expenses | 2,343 | 1,065 | ||||||||
| Royalties and contingent legal fees payable | (6,539 | ) | 36,608 | |||||||
| Net cash provided by (used in) operating activities | (1,958 | ) | 49,970 | |||||||
| Cash flows from investing activities: | ||||||||||
| Sale of investment | 3,294 | — | ||||||||
| Investments in Investees | — | (7,000 | ) | |||||||
| Purchase of available-for-sale investments | (60,193 | ) | (33,309 | ) | ||||||
| Maturities and sales of available-for-sale investments | 3,339 | 4,000 | ||||||||
| Purchases of property and equipment | (6 | ) | — | |||||||
| Net cash used in investing activities | (53,566 | ) | (36,309 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Repurchased restricted common stock | — | (7 | ) | |||||||
| Proceeds from exercises of stock options | — | 31 | ||||||||
| Net cash provided by financing activities | — | 24 | ||||||||
| Increase (decrease) in cash and cash equivalents | (55,524 | ) | 13,685 | |||||||
| Cash and cash equivalents, beginning | 128,809 | 136,604 | ||||||||
| Cash and cash equivalents, ending | $ | 73,285 | $ | 150,289 | ||||||
|
Footnotes: |
||
| (1) |
As used herein, “Acacia Research Corporation,” “we,” “us,” and “our” refer to Acacia Research Corporation and/or its wholly and majority-owned operating subsidiaries. All intellectual property investment, development, licensing and enforcement activities are conducted solely by certain of Acacia Research Corporation’s wholly and majority-owned operating subsidiaries. |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005915/en/