Acacia Research Corporation

And welcome to the Acacia Research Second Quarter 2023 Financial Results Conference Call. At this time, all participants are placed on a listen-only mode, and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Rob Fink of FNK IR. Sir, you may begin.

Thank you, Operator. Hosts in the call today are M.J. Milti, Interim Chief Executive Officer, and Kirsten Hoover, Interim Chief Financial Officer. Before beginning, I'd like to remind you that information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections about future events Better forward-looking is defined in the Private Security Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations and are based on the current estimate 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 report on Form 10-Q filed with the SEC. I'd also like to remind everyone that a press release disclosing the financial results was issued this afternoon just after the close of market. This release may be accessed on the company's website under the press release section of the investor relations tab at AcaciaResearch.com under the news and events tabs. With all that said, I'd now like to turn the call over to MJ. MJ, the call is yours.

Thanks, Robin. Thanks to everyone for joining the call today. So in mid-July and subsequent to the end of the second quarter, we completed our recapitalization transaction with our largest shareholder, Starboard Value, as you know. In many ways, this milestone signaled the completion of our larger transformation of Acacia. Since we announced this transaction in late October, along with new senior leadership and new members of our board of directors, we've significantly restructured and improved Acacia. We reorganized the team we had focusing on sourcing, evaluating, and executing potential transactions, putting in place a more defined methodology while significantly reducing headcount and associated costs. Like Printronics, our IP business is now managed as a division. This means We'll consider allocating additional capital as appropriate, and we're finalizing an incentive structure for our IP division management that's more aligned with their unique business. We reorganize Printronics under new leadership, reducing costs, improving efficiency, and setting the stage for an evolution of the business model that we believe will generate more predictable cash flows. And importantly, we've put a corporate incentive plan in place for employees of our parent company that clearly aligns our team's incentives with those of our shareholders. I realize that many of these achievements are behind the scenes, and I recognize that many shareholders are eager for us to deploy capital into our existing businesses as well as into new businesses. So let me take a second to speak to that initiative. Our pipeline of opportunities continues to grow, and we're maintaining rigor in the evaluation of each of those opportunities. We have a number of late-stage targets today, and we have many other opportunities on deck. In some of these cases, we're working with people we've partnered with in the past in their track record of success, that familiarity is accelerating our efforts. Our network of referral sources also continues to grow and improve. We're encouraged by our progress, and we continue to collaborate closely with our largest shareholder. And through this relationship, we enjoy ready access to their executive network of industry executives, extensive network of industry executives, and they help us source and evaluate appropriate acquisition opportunities. I'm reluctant to make any predictions about when a transaction will occur or the scope of any transaction, which we've talked about in the past. We continue to need willing counterparties and valuations that are accretive and attractive for our shareholders, and discussing the status of various projects doesn't work to anyone's benefit here, but I hope that you appreciate the progress that we've made. As part of this evolution of Acacia, we've significantly reduced our cost structure. As we mentioned previously, the element of our business for which we have the greatest control. Our annualized parent fixed costs have decreased by $6 million, an approximate 30% reduction from this time last year. The reduction is broad-based, and we're now positioned to cover our ongoing fixed corporate costs with interest earned from our cash and cash equivalents. This is an important achievement safeguarding our dry powder for acquisitions. As we mentioned in the past, where we evaluate potential opportunities in the public markets, we will from time to time, acquire stock in those companies. The positions that our new deal team have taken in public companies are up over 20% year-to-date, demonstrating the benefits of our targeting and evaluation process. Our legacy life sciences assets have been largely monetized, as everyone is aware, and we're anticipating monetization events with some of our remaining holdings in the not-too-distant future. Our intellectual property business continues to have expected quarter-to-quarter revenue fluctuations, but we haven't an important trial related to our Wi-Fi 6 patents that is expected to start in the near future. And we're optimistic that a favorable outcome would accelerate licensing activity. Additionally, we have a strong pipeline of potential opportunities to further invest in attractive IP assets. I'd now like to turn the call over to Kirsten to discuss her second quarter financial results.