• Consolidated Revenue: $25.8 million, up 227% year-over-year.

• Intellectual Property Revenue: $5.3 million, up over 200% from the previous year.

• Energy Operations Revenue: $14.2 million in Q2.

• Industrial Operations Revenue: $6.3 million, down from $7.5 million last year.

• Adjusted EBITDA: Intellectual Property: $8.5 million; Printronix: $2.3 million; Benchmark: $8.4 million.

• Book Value Per Share: $5.95 as of June 30, 2024.

• Net Loss: $8.4 million or $0.08 per share.

• Cash, Cash Equivalents, and Equity Securities: $405.2 million as of June 30, 2024.

• Total Indebtedness: $82 million in non-recourse debt at Benchmark.

• Warning! GuruFocus has detected 5 Warning Signs with ACTG.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Acacia Research Corp (NASDAQ:ACTG) reported a significant increase in consolidated revenue, reaching $25.8 million, up 227% compared to the same quarter last year.

• The company's intellectual property operations saw a year-over-year revenue increase of $4.9 million due to more license agreements.

• Benchmark, Acacia's energy subsidiary, generated $14.2 million in revenue in Q2, contributing to the company's strong financial performance.

• The company reported a decrease in operating loss by 62% compared to the same quarter last year, indicating improved operational efficiency.

• Acacia's book value per share increased to $5.95, with an adjusted book value of $6.07, reflecting strong financial health.

Negative Points

• The industrial operations segment experienced a revenue decline of $1.2 million due to lower printer sales.

• Acacia reported a GAAP net loss of $8.4 million or $0.08 per share, despite improved revenue figures.

• The company's corporate parent generated an adjusted EBITDA loss of $8.8 million, highlighting ongoing challenges at the corporate level.

• General and administrative expenses increased to $10 million, partly due to the addition of the energy segment.

• The company faced $4.7 million in unrealized losses related to the fair value of remaining equity securities, impacting overall financial performance.

Q & A Highlights

Q: How is Acacia Research Corp thinking about the share buyback program? A: MJ McNulty, Chief Executive Officer, stated that the buyback is authorized and they are evaluating the timing for executing it. The company and the board are enthusiastic about the buyback, and it's just a matter of timing.

Q: Can you provide an expected range of revenues for Benchmark assets for the September quarter? A: MJ McNulty suggested looking at the investor deck for detailed revenue breakdowns and estimates for the third quarter, as it contains relevant data.

Q: Is the operating income ratio for Benchmark expected to remain at 22.5% of revenues? A: MJ McNulty explained that EBITDA related to revenue might be a better metric for assessing profitability. The business is performing as expected, and they have disclosed metrics around cash flow and pricing.

Q: What will drive increased revenues in the Benchmark business? A: MJ McNulty mentioned that the strategy involves optimizing existing wells and potentially partnering with others for drilling on acquired acreage. The focus is on operational improvements and cost optimization rather than drilling new wells.

Q: How is the turnaround in Printronix progressing, and is there a timeline for exiting if it doesn't succeed? A: MJ McNulty stated that the turnaround is progressing well, with a focus on higher-margin consumables and cost reductions. They are pleased with the progress and are not considering exiting the business at this time.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.