Acacia Research Corporation

Good day, ladies and gentlemen, and welcome to the Acacia Research Fourth Quarter Financial Results. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Rob Fink of FNK IR. Sir, the floor is yours.

Thank you, Operator. Hosting the call today are Clifford Press, Chief Executive Officer, Rich Rosenstein, Chief Financial Officer, and MJ McNulty, Acacia's newly appointed Chief Operating Officer and head of M&A. Before beginning, I'd like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations are based on the current estimates, projections, future results, or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties. For discussion of such risks and uncertainties, please see the risk factors section described in Acacia's annual report on Form 10-K and quarterly reports on Form 10-Q that are filed with the FCC. I would also like to remind everyone that a press release disclosing 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'd now like to turn the call over to Clifford Press. Clifford, the call is yours.

Thank you, Rob, and good morning, everyone. I am very much looking forward to the year ahead. We have built a strong foundation to execute our differentiated strategy, We have developed a robust process for identifying and completing transactions, and our position as an advantaged buyer with permanent capital is starting to be recognized by market participants. During the fourth quarter, we acquired Printronics, a manufacturer and distributor of industrial impact printers and related consumables. With a strong, well-developed position in its target market, serving a range of customers across many industries, including healthcare, food and beverage, manufacturing, and logistics. Reported operating income from Printronics was modest in the quarter, which included certain one-time purchase accounting adjustments. Excluding these non-recurring expenses and non-cash items, Printronics generated $2.5 million in operating income during the quarter. We paid $33 million in cash for this business, or approximately 3.6 times adjusted EBITDA in its latest fiscal year. Printronics has generated consistently profitable results, and it has the potential to grow. We are fortunate that we're working with an experienced management team at Printronics to facilitate that growth. And our engagement with this company is led by Clay Kiefhaber, an exceptional operating executive who was introduced to us by Starboard. In addition, we continue to generate value from our intellectual property business and life sciences holdings. During the quarter, our intellectual property business generated more than $51 million in revenue, which benefited from one particularly large license agreement, and this led to $40 million in operating income from the IP business for the quarter. This transaction validates the strength of our recently acquired Wi-Fi 6 patent portfolio and reinforces our confidence about achieving future licensing agreements. Mark Booth is our Chief Intellectual Property Officer. His team identified this exceptionally valuable asset and they have proven very adept at monetizing it. We also continue to realize gains in our life sciences portfolio with a $63 million gain during the fourth quarter and a $115.2 million gain for the full year. As we noted at the time of the portfolio acquisition, this was an opportunity that we saw during a period of significant market uncertainty. The remaining assets in this portfolio are companies we believe have considerable value. This acquisition demonstrated the benefit of our ability to deploy capital as required to match the underlying situation. as well as our understanding of complex transactions and ability to move decisively and quickly. Since acquiring the Life Sciences portfolio, our transactional expertise has evolved. Today, we have a well-defined and rigorous process for identifying, evaluating, and pursuing acquisitions, along with a robust team of experienced professionals and a clear strategy. Our M&A process continues to be active. We have started the process of acquiring companies that fit our criteria. Acacia is well capitalized with access to approximately $1 billion in capital. We have significant experience with complex transactions, including situations that are mispriced in the public market or where we see an opportunity to unlock value. We have built and continue to develop our dynamic strategic partnership with Starboard Value LP. Together, we have established a clear focus on the type of opportunities we are seeking, and we are fortunate to be able to operate in a flexible fashion. We can acquire public or private companies or discrete divisions of companies, and we are also able to participate in or lead consortia of investors to complete larger transactions. While our focus is on operating acquisitions, at certain times our own stock may be the most attractive investment we can make. With Acacia shares trading well below book value, we announced a $15 million buyback program in December that we completed in early February. Today, we are announcing an additional $40 million buyback authorization. We will continue to evaluate opportunities to make investments in businesses and to the extent that the market affords us the opportunity to acquire our own shares. We've been fortunate to significantly enhance our senior leadership team, and I'm very pleased to have MJ McNulty joining me as our chief operating officer and head of M&A. Additionally, Wes Golby was named chief investment officer. MJ most recently served as a managing director of Starboard Value LP and was the chief executive officer and a member of the board of directors at Starboard Value Acquisition Corp. where he led the transaction through which SVAC combined with Sextera Technologies Inc, a deal valued at approximately 3.4 billion. In his new role at Acacia, MJ will direct all aspects of our M&A activity. I've asked MJ to join me on the call today, and I'd like to invite him to speak now.