ACTG

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 8:00 a.m. ET Chief Executive Officer - Martin McNulty Chief Financial Officer - Michael Zambito Gagnier Communications - Elizabeth Chaconas Operator: Good morning, everyone, and welcome to Acacia Research Corporation's Second Quarter 2026 Earnings Conference Call. My name is Holly, and I will be your conference facilitator today. [Operator Instructions] Please note that today's call is being recorded and is also being webcast through the Investor Relations section of Acacia Research's website. I would now like to turn the conference over to Elizabeth Chaconas of Gagnier Communications. Elizabeth, please go ahead. Elizabeth Chaconas: Thank you, operator. Joining today's call are MJ McNulty, Acacia's Chief Executive Officer; and Michael Zambito, Acacia's Chief Financial Officer. Before management begins its prepared remarks, I'd like to remind everyone that certain statements made during today's call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations, estimates and projections regarding future events and operating performance and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Please refer to Acacia's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q for a discussion of these risks. Earlier this morning, Acacia issued a press release announcing its second quarter 2026 financial results. That release, together with our earnings presentation, is available on the Investor Relations section of our website. During today's call, management will discuss certain non-GAAP financial measures. Reconciliations are included in this morning's earnings release. With that, I'll turn the call over to Acacia's Chief Executive Officer, MJ McNulty. Martin McNulty: Thank you, Lizzy, and good morning, everyone. Thank you for joining us today and for your continued support for what we're building here at Acacia. We're pleased with our performance during the second quarter. Our results reflected continued execution across our operating businesses, disciplined capital allocation and the benefits of our diversified business model. Our operating companies continue to perform well and our streamlined Intellectual Property platform generated meaningful licensing revenue. During the quarter, we generated total revenue of $114.6 million, operated segment adjusted EBITDA of $22.8 million and total company adjusted EBITDA of $17.3 million. We ended the quarter with $334.6 million of cash, securities and loans receivable, while continuing to maintain no parent company debt, providing us with significant financial flexibility. Our objective has never been to maximize short-term earnings. Instead, we focus on compounding long-term intrinsic value per share through disciplined capital allocation, acquiring businesses at attractive valuations, improving their operations through active ownership and deploying capital where we believe it can generate attractive long-term returns, whether in our existing businesses or by acquiring new platforms. As we discussed during our annual meeting, we continue to evaluate a broad range of acquisition opportunities. We remain patient and disciplined, pursuing only those opportunities where we believe our operational expertise and investment approach can create value beyond the purchase price. In our view, one of the greatest competitive advantages a capital allocator can have is the ability to wait for the right opportunity rather than feeling compelled to acquire companies under a specific time line. Across our existing portfolio, we continue to execute against our strategic and operational priorities. Benchmark generated strong cash flow while advancing its well development program. Deflecto continued its manufacturing optimization and restructuring initiatives that are shaping the platform for profitable growth. Printronix once again demonstrated the resiliency of its business model through strong cash generation and an improved product mix. Our Intellectual Property platform also delivered meaningful licensing activity through the Wi-Fi 6 portfolio. As always, licensing activity should be viewed over longer periods given the inherently episodic nature of settlement timing. We've also significantly rationalized the platform's cost structure and streamlined the business to better align expenses with the timing and nature of licensing opportunities. Looking ahead, our acquisition pipeline remains active. We continue to see attractive opportunities across a range of industries, and we believe Acacia's strong balance sheet, disciplined underwriting process and operational capabilities position us well to capitalize on those opportunities as they arise. With that overview, let me turn to our operating businesses, beginning with Benchmark. Benchmark delivered another record revenue quarter with operating performance and cash flow exceeding our expectations. Benchmark continues to deliver exceptional results, reinforcing our conviction in the quality of the business, the strength of its management team and its long-term value creation potential. Our recently developed drilling inventory continues to demonstrate attractive economics. During the quarter, production from our Cherokee development performed in line with expectations, while we continued evaluating additional drilling opportunities using the same disciplined underwriting framework we've applied since acquiring the business. Benchmark generated revenue of $20.5 million, adjusted EBITDA of $9.8 million and free cash flow of $6.5 million during the quarter. Looking ahead, our priority remains maximizing long-term value rather than simply maximizing near-term production. We continue to evaluate additional drilling opportunities, potential capital partnerships and other initiatives that we believe can generate attractive risk-adjusted returns while preserving balance sheet flexibility. We also continue to actively manage our commodity hedging program. The objective is straightforward: generate strong free cash flow, reduce earnings volatility and protect downside risk. We do not speculate on commodity prices. As a result, quarterly mark-to-market movements should not be viewed as indicative of the underlying economics of the business. Turning to Deflecto. We're encouraged by the continued progress across the business. Since acquiring Deflecto, we focused on positioning the business for long-term growth through manufacturing optimization, organizational streamlining, disciplined cost management and pricing initiatives. Revenue for the quarter was $27.1 million, while adjusted EBITDA totaled $1.1 million. Importantly, many of the operational improvements we've implemented are structural in nature. As demand improves, we believe Deflecto is well positioned to benefit from meaningful operating leverage going forward. Turning to Printronix. Printronix continues to generate consistent cash flow while creating opportunities to improve profitability through disciplined operational execution. While the traditional line matrix printer market remains mature, we continue to see attractive opportunities to create value at Printronix. We're leveraging the strength of the installed base and our global distribution network to expand our sales of higher-margin consumable products, introduce complementary products and operate the business with disciplined cost management. This approach has enabled Printronix to remain a strong cash-generating business while we continue -- while it continues to evolve. During the quarter, Printronix generated revenue of $6 million, adjusted EBITDA of $1 million and free cash flow of $900,000. Turning to our Intellectual Property platform, which we view as a differentiated asset class rather than a traditional operating business. The second quarter produced a strong result driven primarily by a significant licensing settlement within our Wi-Fi 6 portfolio. Licensing revenue totaled approximately $60.6 million, as we've discussed previously, licensing revenue does not translate directly into adjusted EBITDA or cash flow because a portion of successful recoveries is contractually shared with contingency fee counsel in ventures and when we have them in our deals, partners, which is the case for our Wi-Fi 6 portfolio. Given the episodic nature of licensing activity, we continue to manage the platform aggressively from a cost perspective. Over the past quarter, we've significantly reduced operating expenses, while amortization associated with certain legacy intangible assets has declined significantly relative to 2025 and will continue at the current lower run rate through next year. We believe these actions should enhance the platform's earnings profile as future licensing opportunities are realized. Second quarter results also included approximately $3.7 million of nonrecurring expense associated with the legacy litigation matter that we believe is substantially complete and not representative of the platform's ongoing cost structure. While we do not take lightly the cost of litigation, we remain optimistic in our ability to obtain a potential recovery that could meaningfully exceed the associated cost, although, the timing and outcome remain uncertain. As a reminder, this expense has not been adjusted in our EBITDA. Looking ahead, we believe the Wi-Fi 6 portfolio presents additional licensing opportunities, and we remain encouraged by the long-term potential of our R2 portfolio as artificial intelligence drives demand for high-performance computing and data infrastructure. We are also using AI to analyze larger data sets and identify potential Intellectual Property acquisition opportunities more efficiently. Overall, the platform provides Acacia with exposure to a specialized noncorrelated asset class that complements our operating businesses and creates an additional avenue for disciplined capital deployment and shareholder value creation. Turning to our Life Sciences portfolio. We were highly encouraged by AMO Pharma's recently announced regulatory update regarding AM02, its lead therapeutic candidate for congenital myotonic dystrophy. During the quarter, AMO announced that it had received constructive scientific advice from the FDA, MHRA in the U.K. and Health Canada, supporting the design of its planned registrational clinical study. The agency has provided alignment on key elements of the proposed study, representing an important milestone in establishing a regulatory path toward potential approval. As the second largest shareholder of AMO Pharma, we continue to work closely with the company and its lead shareholder as we evaluate the path. While significant work remains before a registrational study can begin and its successful completion is not assured, the regulatory feedback provides greater clarity regarding the development pathway for AM02. Our objective is to help position AM02 with the best sources of capital to advance the program through its next stage of development. Turning to our legacy investment in Viamet Pharmaceuticals held through MalinJ1. During the second quarter, we recorded a full write-down following developments impacting Mycovia Pharmaceuticals, the underlying biotechnology company. As a reminder, we acquired this interest as part of our 2020 Life Sciences portfolio acquisition. Through MalinJ1's investment in Viamet, Acacia had an indirect economic interest in potential milestone and royalty payments related to the antifungal drug, VIVJOA, which Mycovia acquired from Viamet 2018. Although VIVJOA is FDA approved, its current label includes a contraindication that significantly limits the drug's addressable patient population. Mycovia and its sponsor have been working diligently to narrow or remove this contraindication by undertaking the necessary studies and seeking regulatory approval to expand the patient population. However, Mycovia has encountered liquidity issues as the time line for the FDA readout has been extended, which led us to fully impair the carrying value of our investment in MalinJ1. We continue to believe VIVJOA is an attractive drug supported by the compelling safety and efficacy data. Accordingly, we've been actively working with Mycovia to evaluate potential financing alternatives that would allow it to fund operations through certain upcoming FDA milestones. One potential transaction under consideration would give Acacia a direct ownership interest in Mycovia rather than an indirect economic interest through milestone and royalty rights and provide us with significantly greater participation in any value created if Mycovia achieves its regulatory and monetization objectives. Biotechnology investments are inherently risky, and there can be no assurance that a transaction will be completed or that Mycovia will achieve its regulatory objectives. Nevertheless, Mycovia has invested considerable time and resources to position VIVJOA for the upcoming FDA review, and we believe that a favorable regulatory outcome could create significant value. Although our life sciences investments are noncore and represent a modest portion of Acacia's overall value, we'll continue to manage them actively and with discipline, seeking to maximize value and pursue monetization opportunities when appropriate. While we're not traditional biotech investors, situations like Mycovia and our ability to potentially create an opportunity is an example of what Acacia is uniquely positioned to execute. Lastly, turning to our public securities portfolio. We continue to see compelling opportunities in the small-cap public markets. Market volatility, limited research coverage and constrained access to capital can create meaningful gaps between market prices and the underlying value of high-quality businesses. Our public market activity is closely connected to our broader acquisition strategy. When we identify a business that could be an attractive fit for the Acacia platform, we may establish an initial toehold position while we deepen our diligence, engage with management where appropriate and evaluate the potential for a broader strategic transaction. Importantly, we remain flexible and focused on generating the best risk-adjusted return while avoiding value traps. A public market investment may lead to an acquisition or other strategic transaction. but that's not the only path to value creation. When market developments cause a position to be more -- to more fully reflect or exceed our assessment of its value, we will actively and decisively trim or exit our investment and redeploy the capital into more attractive opportunities. During the quarter, this strategy contributed meaningfully to our results. One of our public company investments announced an agreement to be acquired, resulting in a significant increase in the value of our position. We subsequently exited the investment and realized an attractive return. Although, we do not intend to discuss individual positions unless appropriate, this outcome demonstrates our ability to identify undervalued businesses, build positions with discipline and monetize those investments when the risk reward becomes compelling. We remain highly selective and valuation-driven. We believe our flexible mandate, long-term capital base and transaction experience allow us to pursue opportunities across the public and private markets and to choose the path that we believe will create the greatest long-term value for Acacia shareholders. With that, I'll turn the call over to Mike to review our financial results in greater detail. Michael Zambito: Thank you, MJ. As MJ discussed, we believe the second quarter showcased continued disciplined execution across our operating businesses and the benefits of Acacia's diversified business model. Strong operating performance, combined with meaningful licensing activity within our Intellectual Property segment contributed to another robust earnings quarter. Before reviewing the financial statements in more detail, I'd like to highlight a few key financial takeaways. Total company revenue was $114.6 million, Total operating segment revenue, excluding Intellectual Property, was $53.6 million. Total company adjusted EBITDA was $17.3 million, while operated segment adjusted EBITDA totaled $22.8 million. We ended the quarter with $334.6 million of cash, equity securities and loans receivable while continuing to maintain no parent company debt. Turning to our income statement. Total revenue for the quarter was $114.6 million compared to $51.2 million in the prior year period. Energy operations generated revenue of $20.5 million. Manufacturing operations generated revenue of $27.1 million Industrial operations generated revenue of $6 million, while our Intellectual Property business generated licensing and related revenue of $60.9 million. As we've discussed previously, licensing activity is inherently episodic and quarterly results can vary significantly depending on the timing of settlements. Accordingly, we believe the platform is best evaluated over longer periods. Turning to expenses. Consolidated G&A expense for the quarter totaled $19.6 million. Across our operating businesses, we continue to emphasize disciplined cost management and operational efficiency. Deflecto's restructuring and manufacturing initiatives continue to improve the business' go-forward cost structure, while Printronix continues to benefit from disciplined expense management and an improved product mix. Additionally, as MJ mentioned, we have recently reduced costs at our IP business to better align expenses with licensing opportunities. Operating income for the quarter was $8.5 million and total company adjusted EBITDA was $17.3 million. We believe adjusted EBITDA remains a useful supplemental measure of operating performance because it helps investors evaluate the underlying earnings power of our businesses by excluding certain noncash and nonrecurring events. Turning to our operating segments. Benchmark generated adjusted EBITDA of $9.8 million and free cash flow of $6.5 million for the quarter, while continuing to invest in attractive development opportunities consistent with our disciplined capital allocation framework. Deflecto generated adjusted EBITDA of $1.1 million, while focusing on continued operational improvement despite softer conditions in certain end markets. Printronix generated adjusted EBITDA of $1 million and continued to produce strong free cash flow. Within our Intellectual Property segment, adjusted EBITDA totaled $10.9 million. As MJ noted earlier, licensing activity was particularly strong during the quarter. It's important to remember that a portion of licensing proceeds is contractually shared with inventors, litigation partners and outside contingency fee counsel under customary commercial arrangements. and therefore, reported revenue should not be viewed as directly translating into retained earnings. The IT business also incurred certain legal expenses associated with a legacy matter that is now substantially complete. We do not see these costs as an ongoing component of the cost structure of the business. Turning to earnings. GAAP net income attributable to Acacia Research Corporation was $47,000 or $0.00 per diluted share. Adjusted net income attributable to Acacia Research Corporation was $12.8 million or $0.13 per diluted share. A reconciliation of GAAP and non-GAAP results is included in this morning's earnings release. Turning to the balance sheet. At quarter end, cash, cash equivalents, equity securities measured at fair value and loans receivable totaled $334.6 million, an increase of approximately $4.7 million during the quarter. We continue to maintain no parent company debt. On a consolidated basis, total gross indebtedness was $90.4 million, consisting of $59.5 million of nonrecourse debt at Benchmark and $30.9 million of nonrecourse debt at Deflecto. Book value at quarter end was $557 million or $5.71 per common share compared to $567.2 million or $5.87 per share at prior quarter end. Increases to book value were primarily driven by $15.9 million in operating income from our operating segments and $9.4 million in gains from our public equity portfolio. These increases were offset by parent expenses and the write-off of our investment in MalinJ1 discussed earlier. Overall, we believe our balance sheet remains one of Acacia's key competitive advantages. Our liquidity, conservative capital structure and strong cash generation provide meaningful flexibility to continue investing in our existing businesses while evaluating new investment opportunities. I'll now turn the call back to MJ. Martin McNulty: Thanks, Mike. As you've heard today, Acacia delivered another quarter of strong execution across our portfolio. Our operating businesses continue to perform well. Our Intellectual Property platform generated meaningful licensing activity, and we maintain the financial flexibility that continues to differentiate Acacia. Our strategy remains straightforward and unchanged. We seek to acquire businesses at discounts to what we believe is intrinsic value, fundamentally improve them through active ownership and build them into market leaders for their niches. We believe allocating capital with this discipline will compound Acacia's intrinsic value per share over the long term. The current market environment is creating significant dislocation in both privately owned and public businesses, and we believe there is an increased number of opportunities for disciplined buyers. Our balance sheet remains a meaningful strategic advantage. $334.6 million of cash, securities and loans receivable, no parent company debt and operating businesses that continue to generate strong free cash flow, we believe Acacia is well positioned to capitalize on attractive opportunities while maintaining financial discipline that has defined our investment approach. Operator, we'd now be happy to take questions. Operator: [Operator Instructions] Your first question for today is from Brett Reiss with Janney Montgomery Scott. Brett Reiss: I got a couple of questions. First on the Benchmark. The free cash flow and EBITDA, is that including a full quarter's contribution from your wholly owned operated well? Martin McNulty: Yes. So that's a good question. It does. We opened that well right at the beginning of the second quarter. If you remember, it was drilled and completed at the end of the first quarter and started producing a few days, maybe a week into Q2. Brett Reiss: Okay. And because things are doing well there, it's my understanding you're thinking of investing in other similar wells. How many and will the metrics on these additional wells be better, less better of this existing well? Martin McNulty: Yes. So I think we mentioned this before, but the Benchmark team, this acreage that we got with the Revolution acquisition in the Cherokee created a pretty strategic angle for us in the Panhandle in Texas and Oklahoma. The team had spent post acquisition a good amount of time turning the blocks of land that we have into units and the unit is the pieces of land you put together, continuous pieces of land you put together that then you can drill a well on. And we have several units at this point that we are looking to continue to drill wells on. You can usually drill 2 wells per unit. What we're trying to do is drill 1 well per unit, so we create a producing well in the form of PDPs and then we have an offsetting well in the form of a PUD that creates value. And so the team's work on creating several units to go drill is pretty well advanced. In terms of well performance, each well is independent of one another, but we're underwriting to type curves in future wells that look similar to the performance of the Cherokee well that we drilled in Q1. Brett Reiss: All right. That sounds good. Pivoting to Deflecto. I was a little disappointed. There seem to be tailwinds with Class A trucking some of the firms that released earnings. They were good. It just still hasn't been reflected in Deflecto's numbers yet? Martin McNulty: Yes. I mean, we look at that as an attractive leading indicator for Deflecto. If you recall, if you wind the tape back, a lot of those firms you're talking about, Brett, had built significant inventory in advance of what was a further decline in that market associated with Liberation Day. And so their numbers are very good, and we're very encouraged by those numbers. I think a lot of the sales are sales of existing, not newly manufactured OEM inventory. And so as that works through the system, we think that Deflecto will be a beneficiary of those incremental volumes. Brett Reiss: Okay. A question on potential deal flow. Since interest rates have remained higher for longer and as time passes, the tenor of the investments in private equity and credit pass on. Has that resulted in a level of stress so that any potential deals you're looking to do with private equity and private credit might be closer to the finish line? Martin McNulty: So we're certainly encouraged by that. Our friends in private equity have been investing as they always do through up cycles and down cycles. which is their remit -- a lot of the acquisitions that were done in the COVID era, call it, end of '20, '21, '22 are, as you point out, Brett, now starting to mature into longer hold assets inside these private equity funds. Our deal flow has never been stronger actually. And we have been talking to folks that are in the position where they have on the -- to address your point on the private credit side, have private credit lenders that want out of those businesses and don't want to or not necessarily well situated to take the keys. So we have a handful of conversations going on there. And then in private equity, we see a lot of opportunities are not reluctant to engage in those, but we don't want to engage in situations where there are broad auction processes. And we're one of 100 people that get a confidential information memorandum and then submit an indication of interest, meet management, spend money, time, so on and so forth. So we're really focused on the acute situations in the private equity world. And right now, we're seeing a lot of things that are not private equity owned that we think are really attractive and themes that we've liked over time and have studied and developed strong thesis on over time, where it's a bilateral discussion, and it's not a process and certainty of outcome is related to our diligence and not a potential competitive buyer that's willing to pay another $10, $50 a share for a business. So we're actually pretty encouraged by the deal flow. We continue to see a lot of deal flow. We are sitting kind of in the center of almost if not all, of the deal flow that fits into our purview, but the quality of that deal flow, both from a company perspective, an operating model perspective, but as well as the ability to get something done as opposed to wasting time is very encouraging right now. Brett Reiss: Right. One last one for me. The EBITDA on the Intellectual Property business was $10.9 million. Is that a rough back of the envelope what you net from the $60 million after paying the lawyers, investors and inventors -- and is the cash that came in from what you booked in the IP portfolio included in the second quarter cash number? Martin McNulty: Yes. So on the first question, the EBITDA is not the best proxy for that particular deal. And as we close licensing settlements in the IP business, in the Wi-Fi 6 portfolio, we have a partner in that, that is in -- that has earned into the splits of their share. We also have -- we do all of our litigation on a contingency fee basis to be conservative with cash and potential downside cases. The settlement that came in was TP-Link. And as everyone knows, that's been sitting out there for a long time. The cost of the contingency fee grows as the case goes farther and farther through the court system and TP-Link went almost all the way through the court system. So it's a higher contingency rate than what we typically see. And then in terms of EBITDA being a metric for cash on that settlement, you got to remember, there were $3.7 million of legal expenses in that EBITDA that we don't anticipate spending again related to a legacy a legacy litigation matter that we think we hope we have an ability to recover in excess of that $3.7 million on and their operating expenses that go against that cash amount. On your question around cash being booked, the cash for the settlement was received in Q3, but it's booked as AR at the end of Q2. Sorry, just to finish that out, it's not in the cash number on the balance sheet at the end of the quarter, but it has been added to our balance sheet subsequent to the end of the quarter. Operator: [Operator Instructions] We have reached the end of the question-and-answer session and conference call. Thank you for participating. You may now disconnect. Before you buy stock in Acacia Research, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Acacia Research wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Acacia Research (ACTG) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Acacia Research Corporation? Here are five stocks we like better. Q2 revenue more than doubled to $114.6 million from $51.2 million a year earlier, supported by IP licensing and operating businesses. Adjusted net income was $12.8 million, while adjusted EBITDA totaled $17.3 million. The IP segment generated approximately $60.9 million in licensing revenue, primarily from a Wi-Fi 6 settlement with TP-Link. Acacia said settlement cash was received in Q3, while contractual sharing and legal fees reduce the amount translating into cash flow and EBITDA. Benchmark delivered record revenue and EBITDA, while Deflecto and Printronix continued operational improvements; however, Acacia fully impaired its MalinJ1 investment after liquidity and regulatory-timing concerns surrounding Mycovia’s VIVJOA program. The company ended the quarter with $334.6 million in cash, equity securities and loans receivable and no parent-company debt. How to Screen for Cash Value Stocks in a Bear Market Acacia Research (NASDAQ:ACTG) reported second-quarter 2026 revenue of $114.6 million, up from $51.2 million in the prior-year period, as licensing activity in its intellectual property business and contributions from its operating companies supported results. The company posted operating income of $8.5 million, GAAP net income attributable to Acacia of $47,000, or $0.00 per diluted share, and adjusted net income of $12.8 million, or $0.13 per diluted share. Total company adjusted EBITDA was $17.3 million, while adjusted EBITDA from operated segments was $22.8 million. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Acacia ended the quarter with $334.6 million in cash, equity securities measured at fair value and loans receivable, an increase of about $4.7 million during the quarter. The company said it had no parent-company debt, although consolidated gross indebtedness totaled $90.4 million, including non-recourse debt at Benchmark and Deflecto. Chief Executive Officer MJ McNulty said the company’s results reflected execution across its operating businesses, disciplined capital allocation and its diversified business model. Acacia’s strategy, he said, is focused on compounding long-term intrinsic value per share rather than maximizing short-term earnings. → 3 Drone Stocks That Should Soar After the Summer Slump Benchmark, Acacia’s energy operation, delivered record quarterly revenue of $20.5 million, adjusted EBITDA of $9.8 million and free cash flow of $6.5 million. McNulty said production from the Cherokee development performed in line with expectations and that the business was continuing to assess additional drilling opportunities. In response to an analyst question, McNulty said the quarter included a full-quarter contribution from a wholly owned operated well that began producing shortly after the start of the second quarter. Benchmark has several units under review for further drilling, he said, and is underwriting future wells to type curves similar to the Cherokee well’s performance. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure McNulty said Benchmark’s priority is to maximize long-term value rather than near-term production, while evaluating potential capital partnerships and managing commodity hedges to support free cash flow, reduce volatility and protect against downside risk. Deflecto, the manufacturing business, generated $27.1 million in revenue and $1.1 million in adjusted EBITDA. Acacia said it has continued manufacturing optimization, organizational streamlining, cost-management and pricing initiatives at Deflecto. McNulty said those improvements are structural and could provide operating leverage if demand improves. Addressing conditions in the Class 8 trucking market, McNulty said favorable results reported by some companies were an encouraging leading indicator for Deflecto. He added that some sales appeared to involve existing inventory rather than newly manufactured original-equipment inventory, and said Deflecto could benefit as inventory moves through the system. Printronix generated quarterly revenue of $6 million, adjusted EBITDA of $1 million and free cash flow of $900,000. McNulty said the company continues to use its installed base and global distribution network to increase sales of higher-margin consumables and complementary products while maintaining disciplined costs. Acacia’s intellectual property business generated approximately $60.9 million in licensing and related revenue during the quarter, driven primarily by a significant settlement involving its Wi-Fi 6 portfolio. The company reported $10.9 million in adjusted EBITDA for the segment. Management emphasized that licensing revenue does not translate directly into cash flow or adjusted EBITDA because recoveries are shared contractually with contingency-fee counsel, inventors and, in some cases, partners. McNulty said the Wi-Fi 6 portfolio has a partner entitled to a share of recoveries, while litigation is conducted on a contingency-fee basis. During the question-and-answer session, McNulty identified TP-Link as the counterparty in the settlement and said the matter had progressed nearly through the court system, resulting in a higher contingency-fee rate than Acacia would typically experience. He said cash from the settlement was received in the third quarter but was booked as accounts receivable at the end of the second quarter. The IP segment also incurred about $3.7 million in non-recurring expense tied to a legacy litigation matter that management said is substantially complete. Acacia has reduced operating costs in the segment and said amortization from certain legacy intangible assets has declined significantly from 2025 levels and is expected to remain at a lower run rate through next year. McNulty said Acacia sees further licensing opportunities in Wi-Fi 6 and remains encouraged by the longer-term potential of its R2 portfolio as artificial intelligence increases demand for high-performance computing and data infrastructure. Acacia recorded a full write-down of its legacy MalinJ1 investment during the quarter following developments involving Mycovia Pharmaceuticals. Through MalinJ1’s investment in Viamet Pharmaceuticals, Acacia held an indirect economic interest in potential milestones and royalty payments related to VIVJOA, an FDA-approved antifungal drug. McNulty said VIVJOA’s current label includes a contraindication that limits its addressable patient population. Mycovia has been working to narrow or remove that contraindication, but liquidity issues emerged as the timing of an FDA readout extended, leading Acacia to impair the investment’s carrying value. Acacia said it is evaluating financing alternatives with Mycovia. One potential transaction could give Acacia a direct ownership stake in Mycovia instead of its indirect economic interest through Viamet’s milestone and royalty rights. Management cautioned that biotechnology investments are inherently risky and that there is no assurance a transaction will be completed or that regulatory objectives will be met. The company also cited an update from AMO Pharma, in which AMO said it received constructive scientific advice from the FDA, the U.K.’s MHRA and Health Canada regarding a planned registrational study for AMO-02, a treatment candidate for congenital myotonic dystrophy. Acacia is AMO Pharma’s second-largest shareholder. Book value at quarter-end was $557 million, or $5.71 per common share, compared with $567.2 million, or $5.87 per share, at the end of the prior quarter. Chief Financial Officer Michael Zambito said operating income from operating segments and gains in the public equity portfolio were offset by parent expenses and the MalinJ1 write-off. McNulty said Acacia continues to evaluate acquisition opportunities across industries and remains focused on situations where its operational expertise and investment approach can create value beyond the purchase price. He said deal flow has been strong, including discussions involving private-credit lenders and private-equity-owned businesses, but Acacia is seeking more targeted situations rather than broad auction processes. The company also said a public-equity investment announced an agreement to be acquired during the quarter, increasing the value of Acacia’s position. Acacia subsequently exited the investment and realized what management described as an attractive return, without identifying the company involved. Acacia Research Corporation is a publicly traded patent licensing company based in New York City. The firm specializes in acquiring patented technologies through a network of wholly owned subsidiaries and seeking licensing agreements or settlements with companies that utilize those technologies. Since its founding in 1993, Acacia has built a business model centered on identifying innovative inventions and monetizing them through patent enforcement and strategic partnerships. The company's activities span a broad range of technology sectors, including life sciences, medical devices, software, telecommunications and consumer electronics. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Acacia Research Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Total Revenue: $114.6 million for Q2 2026, compared to $51.2 million in the prior year period. Operated Segment Revenue (excluding IP): $53.6 million. Total Company Adjusted EBITDA: $17.3 million. Operated Segment Adjusted EBITDA: $22.8 million. Energy Operations Revenue (Benchmark): $20.5 million, with adjusted EBITDA of $9.8 million and free cash flow of $6.5 million. Manufacturing Operations Revenue (Deflecto): $27.1 million, with adjusted EBITDA of $1.1 million. Industrial Operations Revenue (Printronix): $6 million, with adjusted EBITDA of $1 million and free cash flow of $900,000. Intellectual Property Licensing Revenue: $60.9 million, with adjusted EBITDA of $10.9 million. Consolidated G&A Expense: $19.6 million. Operating Income: $8.5 million. GAAP Net Income: $47,000, or $0.00 per diluted share. Adjusted Net Income: $0.13 per diluted share. Cash, Securities, and Loans Receivable: $334.6 million at quarter end, an increase of approximately $4.7 million during the quarter. Book Value: $557 million, or $5.71 per common share. Total Gross Indebtedness: $90.4 million, consisting of $59.5 million of Benchmark non-recourse debt and $30.9 million of Deflecto non-recourse debt. Warning! GuruFocus has detected 8 Warning Signs with ACTG. Is ACTG fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Acacia Research Corp (NASDAQ:ACTG) delivered strong Q2 2026 results with total revenue of $114.6 million and adjusted EBITDA of $17.3 million, reflecting robust performance across its diversified business model. The company's intellectual property platform generated significant licensing revenue of $60.6 million, driven by a major settlement in its WiFi 6 portfolio, showcasing the platform's value creation potential. Benchmark, a key operating segment, achieved record revenue and strong free cash flow of $6.5 million, with successful drilling results and a promising development pipeline for future wells. Acacia Research Corp (NASDAQ:ACTG) maintains a robust balance sheet with $334.6 million in cash, securities, and loans receivable, and no parent company debt, providing significant financial flexibility for future investments. The company successfully exited a public equity investment at an attractive return after an acquisition announcement, demonstrating its ability to identify undervalued opportunities and monetize them effectively. AMO Pharma's regulatory feedback from FDA, MHRA, and Health Canada for its lead candidate represents a positive milestone, potentially enhancing the value of Acacia's life sciences portfolio. Acacia Research Corp (NASDAQ:ACTG) recorded a full writedown of its investment in Mycovia Pharmaceuticals due to liquidity issues and extended FDA timelines, highlighting the inherent risks in its life sciences portfolio. The intellectual property segment's licensing revenue is inherently episodic, leading to significant quarterly volatility and making it difficult to predict consistent earnings from this platform. Deflecto, a manufacturing segment, continues to face softer demand conditions, with adjusted EBITDA of only $1.1 million, indicating ongoing challenges in its end markets despite restructuring efforts. The company incurred $3.7 million in non-recurring legal expenses related to a legacy litigation matter, which negatively impacted EBITDA and underscores potential ongoing legal risks. GAAP net income was minimal at $47,000, reflecting the impact of impairments and other charges, which may concern investors focused on bottom-line profitability. The company's book value per share declined to $5.71 from $5.87 in the prior quarter, driven by the Mycovia writedown and parent company expenses, indicating a reduction in shareholder equity. Q: Regarding Benchmark's free cash flow and EBITDA, does this include a full quarter's contribution from the new well?A: MJ McNulty (CEO) confirmed that the results include a full quarter's contribution. The well was drilled and completed at the end of the first quarter and began producing just a few days into Q2. Q: Given the success of the Cherokee well, how many additional wells are you considering, and will their performance metrics be better or worse than the existing well?A: MJ McNulty (CEO) explained that the team has been turning land blocks into drillable units. They plan to drill one well per unit, creating a producing well (PDP) and an offsetting well (PUD) to generate value. The program is well advanced, and future wells are underwritten to type curves similar to the successful Cherokee well's performance. Q: Deflecto's results seem disappointing despite tailwinds in Class A trucking. Why hasn't this strength been reflected in the numbers yet?A: MJ McNulty (CEO) views the strong results from trucking firms as an attractive leading indicator. He noted that OEMs built significant inventory ahead of a market decline, so current sales are drawing down existing inventory. As this inventory works through the system, Deflecto is expected to benefit from incremental volumes. Q: With interest rates higher for longer, has the stress in private equity and private credit led to potential deals being closer to the finish line?A: MJ McNulty (CEO) stated that deal flow has never been stronger. Acacia is seeing opportunities from private credit lenders wanting to exit businesses and from private equity funds with maturing assets. The company is focused on bilateral, non-auction processes where certainty of outcome is tied to their own diligence, rather than competitive bidding wars. Q: Is the $10.9 million EBITDA from the intellectual property business a rough proxy for what you net from the $60 million in licensing revenue after paying lawyers, inventors, and partners? Also, is the cash from the IP portfolio included in the Q2 cash balance?A: MJ McNulty (CEO) clarified that EBITDA is not the best proxy for this specific deal. The settlement was with TP Link, which went far through the court system, resulting in a higher contingency fee rate. The $3.7 million in legal expenses are non-recurring. Regarding cash, the settlement was received in Q3 but booked as accounts receivable at the end of Q2, so it was not in the Q2 cash balance but was added to the balance sheet shortly after the quarter ended. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Total Revenue of $114.6 million, up 124% from the Prior Year Quarter GAAP Net Income of $47 thousand and GAAP Diluted EPS of $0.00 for the Quarter Adjusted Net Income1 of $12.8 million and Adjusted Diluted EPS1 of $0.13 for the Quarter Total Company Adjusted EBITDA1 of $17.3 million and Operated Segment Adjusted EBITDA1 of $22.8 million for the Quarter Total Cash, Cash Equivalents, Equity Securities Measured at Fair Value and Loans Receivable of $334.6 million, or $3.43 per share NEW YORK, August 05, 2026--(BUSINESS WIRE)--Acacia Research Corporation (Nasdaq: ACTG) ("Acacia" or the "Company"), which acquires and operates businesses across the industrial, energy and technology sectors, today reported financial results for the three and six months ended June 30, 2026. The Company also posted its second quarter 2026 earnings presentation on its website at www.acaciaresearch.com under Quarterly Results. Martin ("MJ") D. McNulty, Jr., Chief Executive Officer, stated, "Acacia delivered strong financial and operating results for the second quarter, generating total revenue of $114.6 million, Operated Segment Adjusted EBITDA of $22.8 million and Total Company Adjusted EBITDA of $17.3 million. Revenue increased 124% year over year compared to the second quarter of 2025, driven primarily by higher paid-up licensing revenue from our Intellectual Property Operations segment. Our operating companies also continued to execute well, led by Benchmark Energy, which generated revenue of $20.5 million—its strongest revenue quarter. As we look ahead to the remainder of 2026, we remain focused on compounding long-term intrinsic value per share through disciplined capital allocation, active ownership of our operating businesses and selective investments across the public and private markets. As of the end of the second quarter, cash, cash equivalents, equity securities and loans receivable was approximately $334.6 million, or $3.43 per share, and we continued to maintain no parent-company debt. Our acquisition pipeline remains active, and our strong balance sheet, flexible investment mandate and experienced management team position us well to pursue opportunities where we believe we can generate attractive long-term returns and create differentiated value for our shareholders." Second Quarter 2026 Highlights: Total revenue of $114.6 million, compared to $51.2 million for the prior-year quarter, primarily driven by higher paid-up license revenue from our Intellectual Property Operations segment. Benchmark Energy recorded revenue of $20.5 million, the strongest revenue quarter for the business under Acacia ownership following the Revolution Acquisition in April 2024. GAAP Net Income of $47 thousand, or $0.00 GAAP Diluted EPS. Adjusted Net Income of $12.8 million, or $0.13 Adjusted Diluted EPS. Operated Segment Adjusted EBITDA of $22.8 million. Total Company Adjusted EBITDA of $17.3 million. At quarter end, cash, cash equivalents, equity securities measured at fair value and loans receivable totaled approximately $334.6 million, or $3.43 per share. Revenue The following table provides a breakdown of the Company’s total revenue for the three and six months ended June 30, 2026 and June 30, 2025. For the purposes of financial reporting, Acacia's operations are broken out as follows: Energy Operations (Benchmark), Industrial Operations (Printronix), Manufacturing Operations (Deflecto) and Intellectual Property Operations (Acacia Research Group). Total Company Adjusted EBITDA The following table provides a reconciliation of consolidated Net Income (Loss), the most directly comparable GAAP measure, to Total Company Adjusted EBITDA for the three and six months ended June 30, 2026 and June 30, 2025. The following table provides the Adjusted EBITDA for each of the Company’s operating segments for the three and six months ended June 30, 2026 and June 30, 2025. Adjusted Net Income (Loss) and Adjusted Diluted EPS The following table provides a reconciliation of Net Income (Loss) attributable to Acacia Research Corporation, the most directly comparable GAAP measure, to Adjusted Net Income (Loss) and Adjusted Diluted EPS for the three and six months ended June 30, 2026 and June 30, 2025. Free Cash Flow4 The following table provides a reconciliation of Free Cash Flow ("FCF") for the three and six months ended June 30, 2026. Balance Sheet and Capital Structure Cash, cash equivalents, equity securities measured at fair value and loans receivable totaled $334.6 million at June 30, 2026 compared to $339.6 million at December 31, 2025, a decrease of $5.0 million. This change in cash was primarily due to an increase in cash generated from operating activities across all Operated Segments of $15.1 million and proceeds from the sale of an unoccupied portion of Deflecto’s manufacturing facility in the U.K. of $1.6 million. Cash was reduced by Parent Costs of $7.8 million and further by $12.5 million and $1.4 million of capital expenditures at Benchmark and Deflecto, respectively, as well as $1.8 million incurred by our Intellectual Property Operations for the purchase of additional interests in the Wi-Fi 7 portfolio. Cash used in financing activities reduced cash by $4.9 million, primarily from $1.8 million of debt repayment on the Deflecto facility and $3.1 million of taxes paid related to the net share settlement of share-based awards. Additionally, the change in the fair market value of equity securities increased cash, cash equivalents, equity securities at fair value and loans receivable by $3.4 million. Equity securities without readily determinable fair value totaled $5.8 million at June 30, 2026, unchanged from December 31, 2025. Investment securities representing equity method investments (net of noncontrolling interests) decreased to zero at June 30, 2026, compared to $19.9 million at December 31, 2025, as a result of the impairment of the Company’s investment in MalinJ1 during the second quarter of 2026. Loans receivable totaled $7.8 million at June 30, 2026, which represents the commercial loans collateralized by Bitcoin that Acacia has purchased through its partnership with Unchained Capital. The Parent company’s total indebtedness was zero at June 30, 2026. On a consolidated basis, Acacia’s total indebtedness was $90.4 million, consisting of $59.5 million in non-recourse debt at Benchmark and $30.9 million in non-recourse debt at Deflecto, net of debt discount and issuance costs, as of June 30, 2026. Book Value as of June 30, 2026 At June 30, 2026, Acacia’s book value (which includes noncontrolling interests) was $557.0 million and there were 97.6 million shares of common stock outstanding, for a book value per share of $5.71. This value is impacted by one-time expenses and other adjustments detailed in the above reconciliation from GAAP Net Income (Loss) to Adjusted Net Income (Loss). Investor Conference Call The Company will host a conference call today, August 5, 2026 at 8:00 a.m. Eastern Time (5:00 a.m. Pacific Time). To access the live call, please dial 888-506-0062 (U.S. and Canada) or 973-528-0011 (international) and if requested, reference the access code 963959. The conference call will also be simultaneously webcasted at https://www.webcaster5.com/Webcast/Page/2371/54301 and on the investor relations section of the Company’s website at www.acaciaresearch.com under 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. About the Company Acacia (Nasdaq: ACTG) is a value-oriented acquirer and operator of businesses across public and private markets and industries including the industrial, energy and technology sectors where it believes it can leverage its expertise, significant capital base, and deep industry relationships to drive value. Acacia evaluates opportunities based on the attractiveness of the underlying cash flows, without regard to a specific investment horizon. Acacia operates its businesses based on three key principles of people, process and performance and has built a management team with demonstrated expertise in research, transactions and execution, and operations and management. Additional information about Acacia and its subsidiaries is available at www.acaciaresearch.com. Safe Harbor Statement 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 the Company’s current expectations and speak only as of the date hereof. All statements other than statements of historical fact are forward-looking statements and include statements related to estimates and projections with respect to, among other things, the Company’s anticipated financial condition, operating performance, the value of the Company’s assets, general economic and market conditions and other future circumstances and events. This news release attempts to identify forward-looking statements by using words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "focus," "future," "guidance," "intend," "may," "outlook," "plan," "potential," "predict," "project," "seek," "should," "target" and "will," and similar words and expressions; however, the absence of these words does not mean that the statements are not forward-looking. While the Company believes its assumptions concerning future events are reasonable, a number of factors could cause actual results to differ materially and adversely from those expressed or implied in any forward-looking statements, including, but not limited to: the Company’s ability to successfully identify, diligence, complete, and integrate strategic acquisitions of businesses, divisions, and/or assets, the performance of the Company’s businesses, divisions, and/or assets, disruptions or uncertainty caused by an ability to retain or changes to the employees or management teams of the Company’s businesses, changes to the Company’s relationship and arrangements with Starboard Value LP, any inability of the Company’s operating businesses to execute on their business and, risks to the Company’s operating businesses related to acts of war or terrorist acts and the government or military response thereto, price and other fluctuations in the oil and gas market, inflationary pressures, supply chain disruptions or labor shortages, the impact of tariffs and trade policy, non-performance by third parties of contractual or legal obligations, changes in the Company’s credit ratings or the credit ratings of the Company’s businesses, security threats, including cybersecurity threats and disruptions to the Company’s business and operations from breaches of information technology systems, or breaches of information technology systems and, with respect to Benchmark, risks related to its hedging strategy, development plan, facilities and infrastructure of third parties with which the Company transacts business, oil or natural gas production becoming uneconomic, causing write downs or adversely affecting Benchmark’s ability to borrow, Benchmark’s ability to replace reserves and efficiently develop current reserves, risks, operational hazards, unforeseen interruptions and other difficulties involved in the production of oil and natural gas, the impact of any seismic events, environmental liability risk, regulatory changes related to the oil and gas industry, 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, the decrease in demand for Printronix' products, changes in safety, health, environmental, tax and other regulations, requirements or initiatives, hazards such as weather conditions, pandemics, general economic conditions, and the success of the Company’s investments. For further discussions of risks and uncertainties, you should refer to the Company’s filings with the Securities and Exchange Commission, including the "Risk Factors" section of the Company’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. In addition, actual results may differ materially as a result of additional risks and uncertainties of which the Company is currently unaware or which the Company does not currently view as material. Except as otherwise required by applicable law, the Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason. ACACIA RESEARCH CORPORATION - SUPPLEMENTAL INFORMATIONNON-GAAP FINANCIAL MEASURES This earnings release includes Adjusted EBITDA on a consolidated basis and for each of the Company’s segments. Total Company Adjusted EBITDA, Operated Segment Adjusted EBITDA, Adjusted EBITDA and Free Cash Flow (FCF) for each of the Company’s segments are supplemental non-GAAP financial measures used by management and external users of the Company’s consolidated financial statements. This earnings release also includes the Company’s Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share (EPS), which are non-GAAP financial measures. GAAP refers to generally accepted accounting principles in the United States. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flow that includes or excludes amounts that are excluded or included, respectively, in the most directly comparable measure calculated and presented in accordance with GAAP in the Company’s financial statements. Total Company Adjusted EBITDA is defined as net income / (loss) attributable to Acacia Research Corporation before net income / (loss) attributable to noncontrolling interests, income tax (benefit) / expense, interest expense, interest income, and other expense, net and loss / (gain) on foreign currency exchange, net realized and unrealized (gain) / loss on derivatives, net realized and unrealized loss / (gain) on investments, non-recurring legacy legal expenses, depreciation, depletion and amortization, stock-based compensation, transaction-related costs, severance costs, restructuring expense, impairment of equity method investment, and costs related to the legacy items, and includes realized hedge gain / (loss) and service provider settlement income. Operated Segment Adjusted EBITDA is the aggregate of Energy Operations Adjusted EBITDA, Manufacturing Operations Adjusted EBITDA, Industrial Operations Adjusted EBITDA, and Intellectual Property Operations Adjusted EBITDA. See below for the definition of each of those measures. The Company is providing Total Company Adjusted EBITDA and Operated Segment Adjusted EBITDA, non-GAAP financial measures, because management believes these metrics provide investors with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of core operating performance. These measures are not intended to replace the presentation of financial results in accordance with GAAP and may be different from or otherwise inconsistent with similar non-GAAP financial measures used by other companies. The presentation of these non-GAAP financial measures supplements other metrics the Company uses to internally evaluate its subsidiary businesses and facilitate the comparison of past and present operating performance. These measures should not be considered in isolation or as a substitute for measures calculated and presented in accordance with GAAP. Energy Operations Energy Operations Adjusted EBITDA is defined as operating income / (loss) for Acacia’s Energy Operations before depreciation, depletion and amortization expense and transaction-related costs, and including realized hedge gain / (loss). The Company is providing its Energy Operations Adjusted EBITDA, a non-GAAP financial measure, because the metric provides investors with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of core operating performance. Industrial Operations Industrial Operations Adjusted EBITDA is defined as operating income / (loss) for Acacia’s Industrial Operations before amortization of acquired intangibles, depreciation and amortization expense, transaction-related costs, and severance costs. The Company is providing its Industrial Operations Adjusted EBITDA, a non-GAAP financial measure, because the metric provides investors with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of core operating performance. Intellectual Property Operations Intellectual Property Operations Adjusted EBITDA is defined as operating income / (loss) for Acacia’s Intellectual Property Operations before patent amortization, depreciation expense and stock-based compensation, and including service provider settlement income. The Company is providing Intellectual Property Operations Adjusted EBITDA, a non-GAAP financial measure, because the metric provides investors with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of core operating performance. Manufacturing Operations Manufacturing Operations Adjusted EBITDA is defined as operating income / loss for Acacia’s Manufacturing Operations before amortization of acquired intangibles, depreciation and amortization expense, severance costs, restructuring expense, and transaction-related costs. The Company is providing its Manufacturing Operations Adjusted EBITDA, a non-GAAP financial measure, because the metric provides investors with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of core operating performance. Parent Costs are defined as operating income / (loss) attributable to Parent before depreciation and amortization expense, stock-based compensation, transaction-related costs, and costs related to certain legacy matters attributable to the Parent organization. The Company is providing Parent Costs, a non-GAAP financial measure, because it believes it gives investors a clear picture of normalized Parent-level expenses. Free Cash Flow is defined as net cash provided by (used in) operating activities, less net purchases of property and equipment, and patent acquisitions ("Capital Expenditures"). The Company is providing Free Cash Flow, a non-GAAP financial measure, because it believes free cash flow gives investors a good sense of how much cash flows are available to be used for de-levering, making acquisitions, repurchasing shares or similar uses of cash. Adjusted Net Income (Loss) Adjusted Net Income (Loss) is defined as GAAP Net Income (Loss) attributable to Acacia Research Corporation excluding costs related to certain legacy matters, stock-based compensation, transaction-related costs, amortization of acquired intangibles, severance costs, impairment of equity method investment (net of the portion attributable to noncontrolling interests), restructuring expense, any unrealized (gain) / loss on securities, any unrealized (gain) / loss on hedges, and any (gain) / loss on non-cash derivatives and taking into account the tax effect(s) of those adjustments. The Company is providing Adjusted Net Income (Loss), a non-GAAP financial measure, because the metric provides investors with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of core operating performance. Adjusted Diluted Earnings Per Share (EPS) Adjusted Diluted EPS is defined as Adjusted Net Income (Loss) divided by the Company’s weighted average diluted share count as of the relevant period end date. The Company is providing its Adjusted Diluted EPS, a non-GAAP financial measure, because the metric provides investors with useful supplemental information in comparing the operating results across reporting periods by excluding items that are not considered indicative of core operating performance. The following tables reconcile Operating Income (Loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA for each of the Company’s operating segments and for Parent Costs for the three and six months ended June 30, 2026 and June 30, 2025. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805535898/en/ Contacts Investor Contact: Gagnier [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by a diversified model where strong operating company results were bolstered by a significant Wi-Fi 6 licensing settlement. Management emphasizes compounding long-term intrinsic value per share through disciplined capital allocation rather than maximizing short-term earnings. Benchmark's record revenue was supported by the successful commencement of production from the Cherokee development, which performed in line with expectations. Deflecto is undergoing structural manufacturing optimization and restructuring to position the platform for profitable growth as demand improves. The Intellectual Property platform has been aggressively rationalized to align its cost structure with the episodic nature of licensing opportunities. Acacia maintains a debt-free parent company balance sheet, which management views as a critical competitive advantage for executing acquisitions during market dislocations. The acquisition pipeline remains active, with management focusing on bilateral discussions and acute situations rather than broad, competitive auction processes. Benchmark's strategy prioritizes maximizing long-term value over near-term production, with plans to evaluate additional drilling units using a disciplined underwriting framework. Deflecto is positioned for meaningful operating leverage as market demand recovers, supported by implemented structural cost improvements. Acacia is exploring a potential transaction to gain direct ownership in Mycovia Pharmaceuticals, aiming for greater participation in value creation following upcoming FDA milestones. The company continues to utilize its public securities portfolio as a 'toehold' strategy to deepen diligence on potential strategic acquisition targets. Recorded a $3.7 million non-recurring legal expense related to a legacy litigation matter, which management believes is substantially complete and potentially recoverable. Recognized a full write-down of the investment in MalinJ1 due to liquidity issues at Mycovia Pharmaceuticals following an extended FDA readout timeline. Licensing revenue of $60.6 million was subject to significant contractual splits with partners and contingency counsel, particularly as the TP-Link case proceeded late into the court system. Amortization of legacy intangible assets has declined significantly and is expected to remain at a lower run rate through next year. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed the Q2 results included a full quarter of production from the first wholly owned operated well. The team has advanced work on creating several units for future drilling, typically aiming for one producing well per unit to create offsetting value in proved undeveloped reserves (PUDs). Future wells are being underwritten to type curves similar to the performance of the initial Cherokee well. Management views strong earnings from Class A trucking firms as an attractive leading indicator, though Deflecto's numbers haven't reflected this yet due to existing OEM inventory levels. As existing inventory works through the system, Deflecto is expected to benefit from incremental manufacturing volumes. Deal flow is currently at its strongest level, driven by private equity assets reaching maturity and private credit lenders seeking exits from specific businesses. Acacia is avoiding broad auctions, focusing instead on bilateral discussions where they can leverage operational expertise and certainty of outcome. The $60.6 million licensing settlement was booked as accounts receivable at the end of Q2, with the cash actually received in Q3. Management noted that EBITDA is not a perfect proxy for cash in this segment due to the $3.7 million legacy legal expense and high contingency fees for cases that go deep into the litigation process.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by record energy revenue at Benchmark and stable sequential adjusted EBITDA across operating segments, excluding episodic intellectual property results. Benchmark's outperformance was attributed to a constructive oil price environment and the successful drilling of the first Cherokee well, which was self-funded via internal cash flow. Management is executing a 'buy, swap, and sell' strategy for acreage to maximize monetizable drilling units in the most attractive parts of the basin. Deflecto's operational turnaround is progressing through the consolidation of manufacturing facilities and overhead reduction, aimed at enhancing future earnings potential as volumes normalize. The Industrial segment, led by Printronix, continues to pivot toward a consumables-heavy model, providing a reliable cash flow yield of approximately 15% over the last 12 months. Strategic positioning remains focused on acquiring underappreciated businesses where operational excellence can create stable, long-term cash flow and scalability. The full financial impact of the new Cherokee well is expected to be realized in the second and third quarters of 2026, following record production levels in April. Management anticipates meaningful annualized cost savings of approximately $2 million from the Deflecto facility consolidation beginning in the second half of the year. The company is in advanced stages of evaluating additional high-return drilling projects in both Cherokee and Cleveland acreage, potentially involving capital or operating partnerships. Acquisition activity is expected to increase over the next few quarters as financing conditions improve and seller valuation expectations align more closely with market realities. Intellectual property monetization is expected to remain episodic, with near-term focus on enforcing the R2 Solutions portfolio within the big data analytics space. A $9.7 million non-cash unrealized loss was recorded due to mark-to-market impacts on energy hedges as WTI prices rose 77% in the quarter. The energy hedge book covers more than two years of future production at approximately $70 per barrel to reduce cash flow volatility. Deflecto faces ongoing macroeconomic headwinds in the Class 8 transportation market and tariff-related uncertainties affecting consumer product purchasing decisions. Parent-level G&A increased to $6.7 million due to transaction-related costs and timing adjustments compared to the prior year. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management is evaluating several locations after spending 6 to 9 months optimizing acreage units to ensure they are drillable. While specific well counts were not disclosed, the company is exploring partnerships to act as an operator for additional units. The Portland facility consolidation is estimated to yield $2 million in annualized savings and has removed excess capacity to enhance margins when volumes return. Management characterized the turnaround as a deliberate process to ensure long-term durability across three distinct business lines. The Cherokee well is expected to deliver a 2.5x undiscounted MOIC with a payback period of less than two years. High initial production volumes drive rapid early cash flows before the natural decline curve begins. Management deflected on specific buyback activity, stating they evaluate repurchases against other high-ROI opportunities like new wells and business rationalization. Capital in the quarter was prioritized for energy development, Deflecto's transformation, and IP portfolio investments.

Image source: The Motley Fool. Thursday, May 7, 2026 at 8 a.m. ET Chief Executive Officer — Martin J. McNulty Chief Financial Officer — Michael Zambito MJ McNulty, Acacia's Chief Executive Officer; and Michael Zambito, Acacia's Chief Financial Officer. Before MJ and Mike begin their prepared remarks, please be reminded that certain 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. These forward-looking statements generally relate to the company's plans, objectives and expectations for future operations and are based on current estimates and projections, future results and trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see the risk factors described in Acacia's most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC. Earlier this morning, Acacia issued a press release disclosing its first quarter 2026 financial results. The press release may be accessed on the company's website under the Press Releases section of the Investor Relations tab at acaciaresearch.com. The company also posted its Q1 2026 earnings presentation to its website, which can be found under the Quarterly Results section of the Investor Relations tab. On today's call, the team will discuss certain non-GAAP financial measures, including adjusted EBITDA for the company and each of its operating segments. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations can be found in the press release disclosing first quarter 2026 financial results available under the Press Releases section of the Investor Relations tab at acaciaresearch.com. I will now turn the call over to Acacia's Chief Executive Officer, MJ McNulty. Martin McNulty: Thank you, Lizzy, and thanks, everyone, for joining us this morning. Coming quickly off the back of our full year 2025 call. We're excited to share some updates with you as our business continues to progress. As we have been, we continue to work diligently on our execution strategies across our businesses. At Benchmark, we drilled our first meaningful well in the Cherokee play, which we brought online late in March. The drilling of that well and a constructive commodity price environment have opened additional attractive return opportunities in the Benchmark business. We're continuing to make progress at Deflecto and Printronix and we'll share some updates there. Further, in our intellectual property business, we're seeing some interesting monetization opportunities, both in our Atlas portfolio of Wi-Fi 6 assets and our R2 portfolio. I believe this quarter is another example of Acacia demonstrating the resilience of our evolving business despite persistent volatility in the market. Our strategy continues to remain the same, acquiring and building businesses where our operational excellence can create stable long-term cash flow generation and scalability. Importantly, we've done this in a way that allows us to capitalize upon a diverse set of capital allocation and operational opportunities to create value for our shareholders. Through the combined strengths of each of our businesses, we aim to create meaningful enduring value. Our successful execution of this strategy, combined with our disciplined cost control, stable cash yields and targeted operational initiatives enable Acacia to achieve Q1 revenue of $54.2 million and operated segment adjusted EBITDA of $6.8 million. We look at these numbers before the impact -- if we look at these numbers before the impact of our intellectual property operations, operating segment adjusted EBITDA was stable sequentially at $10.3 million. I believe that our consistent execution across operating segments and the significant actions we've taken since our current team took over has created substantial intrinsic equity value in Acacia that is not yet reflected in our share price. We feel very strongly about our ability to continue to generate value for our shareholders as we move further into the year. We continue to be laser-focused on growing EBITDA and free cash flow in each of our operating businesses while continuing to strategically grow our pipeline of acquisition opportunities. Our strong balance sheet, $330 million in total cash, securities and loans receivable as of March 31 puts us in a strong position to pursue accretive organic and inorganic growth opportunities in each of our core verticals. I'd like to take a moment to give you more of an update on our operating segments. Starting with Benchmark, our energy operations performed ahead of our expectations for the first 3 months of the year. We achieved record quarterly revenue of $18.7 million and generated $7.7 million in adjusted EBITDA for the quarter. Over the last 12 months, the team at Benchmark has been working hard to assemble an attractive set of drilling units from the land package that we were blessed with from the original Revolution purchase. These actions consist of buying, selling and swapping acreage to maximize our monetizable units in what we felt were the most attractive parts of our basin. These efforts started to shine through in December when we spud our first well, which we are very excited about. The executive and land team at Benchmark continue to work hard to build our inventory of high-return projects, of which we now have many in the queue. Our production and revenue were up, our extraction costs were down on a per barrel equivalent basis and our G&A was in line. Notably, we've continued to generate attractive cash flow at this asset, which enabled Benchmark to self-fund the drilling of our first Cherokee well with the cash flow the business has generated. As we indicated on our last call, this new well started producing in late March. Initial results from this well are strong. Development costs of $11.5 million came in line with budget, and we are anticipating a greater than 2.5x MOIC or 60% plus IRR on the project. Investors should see the full impact of this project beginning in Q2 and Q3, and we're proud to say that we set a company record for production in April, selling over 63,000 barrels of oil in the month. We have many more of these high-return projects within our portfolio and are eager to monetize these in the medium term. We had strong production volumes in the quarter despite some severe winter weather. As I'm sure everyone has seen, we also had and continue to have a strong commodity price environment, specifically in oil. While crude prices didn't really begin their ascent until the early part of March, the elevated price environment has continued into the second quarter, which, of course, is a benefit to us. I will remind everyone that we are 75% to 80% hedged for existing production, so it's not a one-for-one relationship. That said, we've been hedging volumes from our new Cherokee well into a more constructive environment and the rise in prices increases the value of our asset overall. Based on the success we're seeing with our first drilled well, as well as with the current pricing environment, additional drilling, both in our Cherokee acreage as well as our Cleveland acreage has become more attractive, and we're in advanced stages of evaluating additional projects. As we've mentioned in the past, we approach drilling in a very deliberate way. The Cherokee well we just drilled was drilled with cash produced inside the company. We did not borrow money to drill the well. We're also actively evaluating capital and operating partnerships to drill additional wells that we believe could be attractive for our shareholders. Before I move on, there's one thing I'd like to note around our hedging strategy. Mike will get into this in more detail when he walks through the numbers for the quarter. But given the significant rise in oil prices in the quarter and our large hedge position, which covers more than 2 years of future production, we recorded an unrealized loss from the mark-to-market impact of the hedge book, which adversely impacted GAAP net income, EPS and book value. Importantly, this is a noncash line item. Because of the multiyear duration of the hedge book, the mark-to-market swings can have a disproportionate impact on a single quarter's results, particularly given the magnitude of changes in commodity prices in the last quarter. To put this into context, our oil hedges are struck at approximately $70 a barrel and the price of WTI at March 31 was $101 per barrel, up 77% from December 31. If oil prices were to stay flat at $101 per barrel through June 30, the unrealized gain or loss on the hedge book would be zero. The ultimate goal of our hedge book is to reduce the volatility of cash flows from the benchmark investment. The knock-on effect of this is in periods of price volatility, we may experience unrealized hedge gains or losses. Today, as we look forward, we're earning more on our unhedged volumes, earning the hedge rate on our hedge volumes, and we're putting on additional hedges at elevated prices as we bring on new production. Turning now to our Manufacturing segment. Deflecto delivered another solid quarter, increasing revenue 4.6% and adjusted EBITDA 1.3% sequentially. Since acquiring the business in the fourth quarter of 2024, we've made meaningful progress enhancing operational performance, reflecting the impact of several targeted initiatives, including price increases, the reshoring and consolidation of select manufacturing operations and a focus on reducing overhead and G&A expenses. These initiatives have greatly enhanced the future earnings potential of the business. While tariff pressures and macroeconomic headwinds persist, Deflecto has been navigating this environment effectively under the world-class leadership of our operating partner, Clay Kiefaber. We're blessed to have talent like Clay on our team, which speaks to the capacity of this team's ability to scale a much larger business. Specifically, during the quarter, Deflecto successfully completed the consolidation of our Portland, Oregon facility into our Dover, Ohio facility. While we did incur restructuring costs and CapEx associated with this move, we believe the payback should be quick as we anticipate meaningful annualized cost savings beginning in the second half of the year. While early days, we believe that the improved absorption and efficiency from these initiatives could result in even greater earnings uplift, particularly when volumes return to more normalized levels. Further, we completed the sale of a small unoccupied portion of our U.K. facility, the proceeds of which were used to pay down additional principal on our Deflecto term loan, which has a current balance today of $31.3 million. Deflecto's Transportation segment is primarily focused on selling essential nondiscretionary products such as mud flaps and emergency warning triangles that are mandated by key regulatory authorities. That said, since our initial acquisition, we've seen macroeconomic headwinds in the Class 8 market that have reduced overall demand for the product set. During the quarter, we started to see an inflection in Class 8 order volumes, which has translated into a modest increase in demand for our products with revenue for the vertical increasing 3.6% sequentially and 3.8% year-over-year. This gives us confidence that our product set has retained and perhaps gained share during the market downturn, and we're hopeful that the positive macroeconomic trends driving these results continue. Deflecto's Consumer Products segment focuses on essential everyday workplace and household items such as sign holders, wall pockets, storage and organization products, literature holders and desk accessories that are supported by reoccurring demand. Within this segment, ongoing tariff and global trade uncertainty have led some customers to delay purchasing decisions, creating some manageable near-term headwinds combined with significant channel disruption as certain partners have exited the space. We appear to be reaching a steady state within this segment as revenue increased sequentially by 2.2% during the quarter and was flat year-over-year. We are enthusiastic about the months to come and are excited about the new channel opportunities that are emerging within e-commerce. Lastly, in Deflecto's Building Products business, which includes products such as air ducts, dryer vents and vent deflectors, performance has been in line with the housing market and is going through a temporary pullback. While the segment was up 8.3% sequentially, we're still down 13.1% year-over-year. While still too early to call a recovery, we have full confidence in the essential and generally nondiscretionary nature of Deflecto's building products portfolio and retain our overall positive view on the long-term positive demand trends for housing in both the U.S. and Canada. Now turning to our Industrial segment. Printronix continues to deliver consistent results and serves as a reliable source of cash flow for Acacia, having generated approximately $4.8 million of cash flow in the past 12 months, representing a 15% cash flow yield relative to the price we paid to acquire the business. Our ongoing efforts to evolve Printronix into a dual hardware and consumables model, supported by a more streamlined operating structure have expanded the product mix while driving meaningful cost efficiencies across the business. These initiatives are driving tangible results and reflect our broader approach to value creation, where we implement operational improvements across our portfolio to strengthen performance and position each of our businesses for long-term success rather than optimizing them for a near-term exit. The business had a strong quarter in each of its products and geographies. As a reminder, the legacy Impact Pine business within Printronix is in structural decline, but we're excited about the pivot to a more consumables heavy model and new product growth. Lastly, to our Intellectual Property segment. We recorded total revenue and adjusted EBITDA of $700,000 and a negative $3.5 million, respectively, for the quarter. As I've noted previously, this segment is inherently episodic in terms of its revenue generation given the unpredictable timing of settlements. This unpredictability in receipt of settlements is more noticeable in quarters where we do not have revenue to offset the ongoing operational costs of our team who have done a great job extracting value from the IP portfolio. While the confidential nature of our settlements limits the level of detail I can provide on a potential future activity for the IP business, we continue to see meaningful value in our IP monetization platform, which has delivered attractive returns over the past 12 months. Of note, our R2 solutions portfolio, which was originally owned by Yahoo! -- and covers a broad array of innovative computing technologies in the database, Internet search, AI and big data analytics industries has been particularly active in recent months. R2 Solutions is currently enforcing the portfolio in the big data analytics space and anticipates further developments in the coming months. Before passing it over to Mike to discuss our results in more detail, I'd like to reiterate that while I'm pleased with the improvement in execution of our operating segments, we're equally focused on acquiring and building businesses with stable long-term cash flow generation and scalability that can create compounding value over the long term. As you know, we put together a highly talented team that we believe, together with the strength of Acacia's value-oriented business model positions us to deliver across market cycles. And while it may seem quiet on the M&A side of things, please trust that we continue to leverage our institutional approach to due diligence and valuation discipline to ensure that we're spending our time on acquisition opportunities that will deliver the most value to our platform and shareholders. I'm genuinely excited about the acquisition opportunity set emerging across our target universe over the next few fiscal quarters as financing conditions gradually improve, and sellers become more realistic around valuation. For well-capitalized buyers such as Acacia, I believe this will open a window to pursue opportunities where operational improvement and focused integration can drive meaningful value. To that end, our leadership team and Board remain focused on evaluating both internal and external strategic capital allocation opportunities where we believe our experience and approach can help augment underappreciated businesses, creating lasting value for our shareholders and sustaining Acacia's long-term growth trajectory. With that, I'd like to turn things over to Mike to walk through the quarter. Michael Zambito: Thank you, MJ. MJ outlined, we delivered solid results for the first quarter despite persistent and in some cases, escalating macroeconomic and geopolitical headwinds. A few key highlights before moving to the details. Total operated segment revenue, excluding IP, was $53.5 million, a sequential increase of $3.7 million or 7% over Q4 2025. Benchmark delivered record revenue in Q1 and successfully completed its first Cherokee well at the end of the quarter, well in line with budgeted expenditures and with an on-time completion. You should see this well start to impact results in Q2 and Q3. As MJ mentioned above at Deflecto, we completed the move and consolidation of our Portland manufacturing facility into our Dover facility effective at the end of April. We expect to see the benefits of this consolidation beginning at the end of Q2 and into the second half of the year. Additionally, our streamlining of the SG&A functions is well underway with benefits expected in the second half of the year. Lastly, we paid down $1.6 million of Deflecto debt in Q1 a net neutral cash event as we utilize proceeds from an unused portion of our U.K. building to make the payment. Our GAAP diluted EPS this quarter was impacted by the unprecedented run in oil prices, which resulted in a $9.7 million unrealized loss from the mark-to-market valuation of our energy hedge at Benchmark. The net impact attributable to Acacia's EPS was $0.10 per share. On a fully adjusted basis, excluding the unrealized hedge loss and other items, Acacia's adjusted diluted EPS loss was $0.07 per share. As discussed more fully below, Acacia's cash, equity securities and loans receivable decreased by $9.7 million during the quarter. Cash generated from operations at our operated segments, excluding IP, was strategically reinvested in high ROI opportunities, notably the Cherokee -- we discussed above, a small investment in our IP business and the transformation at Deflecto. We are excited about the near-term returns from these investments. Our book value this quarter was primarily impacted by three drivers: the $9.7 million unrealized loss from the mark-to-market valuation of our energy hedge benchmark, a $1.6 million unrealized loss on our equity portfolio and a quarter with no major IP settlements. As discussed by MJ, the IP business' settlement revenue is episodic and unpredictable. In the first quarter, we did not have revenue to offset the ongoing operational costs of our team. On to the numbers. Acacia recorded total revenue of $54.2 million during the first quarter. Our energy operations generated $18.7 million in revenue for the quarter, the strongest revenue quarter for Benchmark under our ownership compared to $18.3 million in the same quarter of last year. As mentioned, we hedged approximately 75% of our operated production at Benchmark. Realized hedge losses not included in revenue of $1 million in Q1 '26 versus a realized loss of $43,000 in Q1 '25. Manufacturing operations generated $27.7 million in revenue for the quarter compared to $28.5 million in the first quarter of 2025 primarily driven by lower revenue in our air distribution business, where we're seeing some weakness in the Canadian housing market. Our industrial operations generated $70.2 million in revenue during the quarter, a slight decrease compared to $7.7 million in the same quarter of last year. Our intellectual property operations generated $0.7 million in licensing and other revenue during the quarter compared to $70 million in the same quarter last year. The year-over-year decrease in the IP revenue is primarily due to the Atlas portfolio settlement that took place in the first quarter of 2025 with no comparable settlement in 2026. Total consolidated G&A expense was $17.3 million during the first quarter compared to $17.3 million in the same quarter of last year. Deflecto reported G&A expense for the first quarter of 2026 was $4 million compared to $5.7 million in the prior quarter. Of the $4 million in Deflecto G&A expense, approximately $800,000 was related to depreciation of fixed assets and amortization of intangible assets and $800,000 was related to nonrecurring severance, restructuring and transaction-related costs. The decline year-over-year is due to realization of our efforts to streamline SG&A. Our energy operations reported G&A expense was $1.7 million for the first quarter of 2026 compared to $1.6 million for the prior year quarter in 2025. The intellectual property business reported G&A expense decreased by $0.3 million for the first quarter going from $3.5 million to $3.2 million. Printronix reported G&A expense decreased by $0.1 million in the first quarter from $1.7 million to $1.6 million. Reported G&A at the parent level for the first quarter increased by $1.9 million year-over-year from $4.8 million to $6.7 million. The increase was due to transaction-related costs in Q1 of 2026 that were not incurred in 2025 as well as certain timing-related adjustments impacting the comparability of Q1 in 2025. Parent G&A on an adjusted basis or our non-GAAP parent costs as shown in our adjusted EBITDA reconciliations increased to $5.2 million in the quarter ended March 31, 2026, versus $4.0 million in the prior year. The company recorded a first quarter GAAP operating loss of $8.4 million compared to GAAP operating income of $38.3 million in the same quarter last year. This decline was primarily due to the lapping of the Atlas portfolio settlement. Total company adjusted EBITDA for the quarter ended March 31, 2026, was $1.6 million. Given certain onetime and noncash charges, we believe adjusted EBITDA provides a clearer picture of our underlying performance. Energy operations contributed $5.3 million in GAAP operating income during the quarter, which included $3.4 million in noncash depreciation, depletion and amortization expense and does not reflect the realized hedge loss of $1 million we realized during the quarter, which is reported below operating profit. Adjusted EBITDA for our energy operations was $7.7 million and free cash flow for our energy operations was negative $1.9 million in the quarter. This free cash flow included approximately $8.5 million of CapEx, primarily related to the development and completion of Benchmark's first well in the Cherokee play. Excluding this growth capital, free cash flow at Benchmark would have been over $6 million. Manufacturing operations had a $0.5 million GAAP operating loss during the quarter, which included $800,000 in noncash depreciation and amortization expense and $800,000 in nonrecurring transaction-related expenses, restructuring costs and severance costs as part of our operational initiatives at Deflecto. As MJ mentioned above, while Deflecto continues to experience cyclical headwinds, our restructuring efforts are showing positive initial results. We are utilizing the cyclical lows in the safety business to transform our safety manufacturing operations, having successfully closed the Portland facility effective April 30 and consolidated the operations into our existing footprint in Dover. As part of this transformation, we are also implementing new processes and creating a leaner, more efficient environment. While these efforts will have a modest negative impact on free cash flow in the first and second quarters, the execution of these activities will drive cost savings in the second half of 2026 and position Deflecto well when volumes return to incrementally add to EBITDA and cash flow. Adjusted EBITDA for our manufacturing operations was $1.2 million and free cash flow was negative $0.2 million in the quarter, primarily due to the consolidation efforts just discussed. Industrial operations contributed $0.9 million in GAAP operating income during the quarter, which included $500,000 in noncash depreciation and amortization expense. Adjusted EBITDA for our industrial operations was $1.4 million and free cash flow was $3.1 million in the quarter, primarily due to working capital improvements. GAAP net loss attributable to Acacia Research Corporation in the fourth quarter was $15.7 million or negative $0.16 per share compared to net income of $24.3 million or $0.25 per share in the prior year period. Included in GAAP net loss for the first quarter was a $10.7 million loss on our derivative hedges from our energy operations. Of this amount, $1 million was realized and $9.7 million was unrealized, which significantly impacted our first quarter GAAP net loss. As noted previously, we hedged approximately 75% of our operating production at benchmark. The unrealized loss associated with our hedging program reflects mark-to-market accounting on derivative positions that extend over a multiyear horizon and does not correspond to realized economic outcomes within the quarter. The charge is driven by changes in future price expectations and does not impact current period cash flows. Additionally, included in GAAP net loss for the first quarter was $1.6 million in unrealized losses relating to changes in the fair value of equity securities and a realized loss of $600,000 on the sale of equity securities. Adjusted net loss attributable to Acacia in the first quarter of 2026 was negative $6.6 million or negative $0.07 per share. Among other items, our adjusted net loss attributable to Acacia excludes Acacia's portion of the unrealized loss on energy hedges discussed above. Further detail on these adjustments can be found in our press release. Moving on to our balance sheet. Cash, cash equivalents and equity securities measured at fair value and loans receivable totaled $329.9 million at March 31, 2026, compared to $339.6 million at December 31, 2025. Our core operating segments, Benchmark, Deflecto and Printronix generated $10.2 million in operating cash flows, which was reinvested in high ROI activities. Specifically, Benchmark used cash flows from operations and balance sheet cash to drill its first well during the quarter, while Deflecto invested its cash flow to complete the consolidation of its Portland facility into its Dover location. Remaining cash flow generation of Printronix plus interest income was offset by the acquisition of additional interest in the Wi-Fi 7 portfolio and cash flows to support parent level and IP operating costs. We continually assess capital allocation priorities across our existing businesses while actively evaluating new investment opportunities to drive long-term value creation for shareholders. Through disciplined decision-making and strategic investment, we remain focused on strengthening our portfolio and positioning the company for sustainable growth and shareholder returns. The parent company's total indebtedness was 0 at March 31, 2026. On a consolidated basis, Acacia's total gross indebtedness as of March 31, 2026, was $90.5 million, consisting of $59.5 million and $31 million in nonrecourse debt at Benchmark and Deflecto, respectively. Since closing the acquisition of the Revolution assets in April 2024, Benchmark has paid down approximately $23 million in total debt underscoring the strong free cash flow generation of the business. Additionally, since acquiring Deflecto in October 2024, the company has paid down approximately $17.3 million in total Deflecto debt. These capital allocation decisions have significantly reduced our consolidated debt and interest expense, providing further operational flexibility. For more information on Acacia's first quarter results, please see our press release issued this morning and our quarterly report on Form 10-Q, which we will file with the SEC later this week. I'll now turn the call back over to MJ. Martin McNulty: Thanks, Mike. As you've heard today, Acacia continues to execute well across our operating segments, delivering on our strategy despite the challenges presented by the current market environment. I'm really proud of our team's hard work and our productive start to 2026. I firmly believe that one of Acacia's greatest strengths is our talented team, and I'm thrilled to work with this group as we continue to grow the business together. With an excellent portfolio of assets here at Acacia, we're a diverse exposure across multiple industries and the strength of each of our businesses in the portfolio positions us to generate significant value for our shareholders moving forward. Our approach to managing the business has been and will continue to be measured, taking care not to let volatility across the market impact our objectives for organic and inorganic growth within each of our core verticals. I'm confident that our value-oriented and diligent management team will enable us to continue driving positive momentum throughout the year and beyond. With that, I'll turn it back over to Jenny to open up for questions. Operator: [Operator Instructions] Our first question is coming from Anthony Stoss of Craig-Hallum. Anthony Stoss: MJ, maybe can you lay out how many new wells at Benchmark are contemplated? And I guess, expected timing and when you think you can get those wells up? And then I have a follow-up after that. Martin McNulty: Yes. Tony, great to talk. So we are evaluating several different locations. As I said, the team really spent the better part of the last 6 to 9 months, taking what we had and making it better. We bought, we swapped, we sold different acreages to put together units so that those units are then ready to be drillable. And we have several of those units that are at or close to that stage. I don't want to comment on the number of wells we're going to drill, but I am pretty excited about the units that we have and the opportunity set with some partnerships that we have as a potential operator of units to go ahead on some more drilling. Anthony Stoss: Okay. And shifting gears over to the Deflecto side. Now that you've closed the Portland facility, how much do you think you'll save or just remind us maybe over the next 12 months? And when will all the other actions be complete on Deflecto? It seems to be running about half of what you expected in terms of adjusted EBITDA. Yes. I mean, so when we look at the Portland facility, our team's initial estimates are kind of $2 million in annualized cost savings from the consolidation. And with the consolidation, we've actually taken out excess capacity as well. And so as we see an uptick in volumes associated with Class A, we move more volume through those plants, we should see an enhanced margin as well. There's continued cost rationalization at the G&A level. So we continue to work through that. And as you probably remember, Tony, this is a complex business in the sense that it's both small relative to a lot of other businesses, international and has three different sets of businesses inside it. And so I wouldn't say that it's going slower. I would characterize it as we're making sure that we understand all the interoperability of those businesses, the facilities and the people so that we do it the right way for a long-term positive outcome -- long-term durable positive outcome. Operator: Our next question is coming from Brett Reese of Janney Montgomery Scott. Brett Reiss: A couple from me. The MOIC of 2.5x on Cherokee, can you share with us the timing and cadence of that 2.5 return, 2.5x return on capital? Martin McNulty: Yes. So the way we -- I'll tell you how we think about it broadly. These wells, when they come on, come on at high volumes and over time, the volumes coming out of those wells decline as you would expect to see in any oil and gas well. And so cash flows from the well come out pretty quickly. And the 2.5x is an undiscounted number. So as you think about payback on the wells, we're kind of inside 2-year payback on the wells. So we think that's a pretty attractive return opportunity. Brett Reiss: Yes, I should say so. MJ, I listened the other day to the Devon Energy conference call, and they're a very good operator of oil properties. And they focused a lot on their ability to use AI to crunch data and improve returns on their properties. Are we doing some of that on our end? And if so, the high double-digit returns, could they be greater in the future because of greater efficiencies? Martin McNulty: So I love ChatGPT, and it's really helpful in my daily life. We, at Benchmark are evaluating different AI tools that can help us somebody like Devon is a significantly larger company with fields that are interconnected, not interconnected, is drilling wells all the time. I don't know exactly what they mean by using AI, but I would say that we're evaluating in the early stages, different tools that we can use, whether it's partnering with drilling partners as we drill wells that incorporate AI into their process of drilling the well, folks that frac the well, incorporating AI. We're using best-of-breed service providers. So we look for folks that are using the best technology, whether it's AI or not. to help enhance the performance and the cost profile and the time to depth. And so we're kind of evaluating all opportunities. And we don't have a broad AI-related initiative that we are in a position to announce to the market that we're drilling wells with AI, but we are using AI in different places in our business to enhance the productivity. Brett Reiss: Okay. And last one for me. Share buybacks. Did you buy back any stock this quarter? How much of a window do you have to buy back stock? And what's the existing authorization in place? I'll answer this question as I usually answer this question. We evaluate the buyback in the context of other capital allocation opportunities. As you heard Mike say, we invested capital in wells. We invest in capital in rationalization of Deflecto that we think we have a very attractive payback on. And we invested a little bit of capital in the IP business. And so that's where we invest capital in the quarter. Operator: [Operator Instructions] Okay. We don't appear to have any further questions in the queue. So I will now turn the call back over to MJ for any closing comments. Martin McNulty: Thanks, Jenny. Thanks for everyone joining us today. We look forward to talking to you after Q2. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation. Before you buy stock in Acacia Research, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Acacia Research wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $475,926!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,296,608!* Now, it’s worth noting Stock Advisor’s total average return is 981% — a market-crushing outperformance compared to 205% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. 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Interested in Acacia Research Corporation? Here are five stocks we like better. Benchmark energy: Delivered record quarterly revenue of $18.7 million and $7.7 million of adjusted EBITDA; the first Cherokee well came online (development cost $11.5M) with management targeting >2.5x MOIC/60%+ IRR and April production exceeded 63,000 barrels, though a $9.7M unrealized hedge mark‑to‑market loss lowered GAAP EPS by about $0.10. Deflecto consolidation and cost actions: Portland operations were consolidated into Dover (effective end of April) with expected annualized savings of roughly $2 million beginning end‑Q2/into H2, while the business showed modest sequential revenue and adjusted EBITDA gains and ongoing G&A rationalization. IP and balance‑sheet picture: The IP segment was weak and episodic (Q1 revenue $0.7M, negative adjusted EBITDA $3.5M), yet Acacia reported $54.2M in revenue and operated adjusted EBITDA of $6.8M ($10.3M ex‑IP), held $329.9M of cash/equities/loans, generated $10.2M operating cash flow from core segments, and the parent had no indebtedness. How to Screen for Cash Value Stocks in a Bear Market Acacia Research (NASDAQ:ACTG) executives highlighted improving operating performance at the company’s energy and industrial businesses and continued cost actions at its manufacturing unit, while also acknowledging the inherently “episodic” nature of intellectual property monetization during the company’s first-quarter 2026 earnings call. Chief Executive Officer MJ McNulty said Acacia remains focused on “acquiring and building businesses where our operational excellence can create stable, long-term cash flow generation and scalability,” while also driving EBITDA and free cash flow growth across its existing portfolio. The company reported first-quarter revenue of $54.2 million and operated segment adjusted EBITDA of $6.8 million. McNulty added that excluding intellectual property operations, operated segment adjusted EBITDA was “stable sequentially at $10.3 million.” → Berkshire Hathaway’s Record Cash Hoard: Why and What's Next? McNulty said Acacia’s Benchmark energy operations “performed ahead of our expectations” in the first three months of the year, delivering “record quarterly revenue of $18.7 million” and $7.7 million of adjusted EBITDA. He attributed the opportunity set to Benchmark’s efforts over the last year to optimize its land position through “buying, selling, and swapping acreage to maximize our monetizable units” in preferred parts of the basin. Benchmark brought its first meaningful well in the Cherokee play online late in March. McNulty said initial results were “strong,” with development costs “in line with budget” at $11.5 million. He said Acacia anticipates “a greater than 2.5x MOIC or 60% plus IRR on the project,” and that investors should see the full impact beginning in the second and third quarters. McNulty also noted Benchmark set a company production record in April, selling “over 63,000 barrels of oil in the month.” → A Prada Payday: Is AMC Back in Style? On the Q&A portion of the call, McNulty declined to provide a specific number of additional wells contemplated, saying the company is “evaluating several different locations” and has “several” units near drill-ready status. He also said Acacia is “actively evaluating capital and operating partnerships” for additional drilling, while reiterating the Cherokee well was self-funded with Benchmark cash flow and was not debt-financed. McNulty discussed the impact of commodity prices and hedging, noting that while oil prices rose sharply during the quarter, Benchmark is “75% to 80% hedged for existing production.” He emphasized the company recorded an unrealized mark-to-market loss on its hedge book that affected GAAP results but was “a non-cash line item.” He said the company’s oil hedges are “struck at approximately $70 a barrel,” while WTI was $101 per barrel at March 31, up 77% from Dec. 31. If oil prices were flat through June 30, he said the unrealized hedge gain or loss would be zero. → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% In Acacia’s manufacturing segment, McNulty said Deflecto delivered “another solid quarter,” with revenue up 4.6% sequentially and adjusted EBITDA up 1.3% sequentially. He said operational initiatives since the acquisition—including price increases, “reshoring and consolidation of select manufacturing operations,” and reducing overhead and G&A—have “greatly enhanced the future earnings potential of the business,” even as tariff pressure and macro headwinds persist. Deflecto completed the consolidation of its Portland, Oregon, facility into Dover, Ohio. McNulty said restructuring costs and CapEx were incurred, but Acacia expects “meaningful annualized cost savings beginning in the second half of the year.” CFO Michael Zambito said the consolidation was effective at the end of April and that benefits are expected “beginning the end of Q2 and into the second half of the year.” During Q&A, McNulty said initial estimates call for about “$2 million in annualized cost savings” from the Portland consolidation, adding that improved absorption could support margin gains as Class 8 volumes improve. He also said the company is continuing “cost rationalization at the G&A level,” while characterizing the work as deliberate due to Deflecto’s complexity across business lines and geographies. McNulty provided segment demand commentary: Transportation: Deflecto sells mandated, non-discretionary products such as mud flaps and emergency warning triangles. McNulty said Class 8 demand has faced headwinds since the acquisition, but order volumes showed an inflection during the quarter. Revenue in the vertical rose 3.6% sequentially and 3.8% year over year. Consumer products: Tariff and trade uncertainty led some customers to delay decisions, with additional disruption from certain channel partners exiting. Revenue rose 2.2% sequentially and was flat year over year, and McNulty said the business is seeing emerging e-commerce opportunities. Building products: Performance tracked housing conditions and is in a “temporary pullback.” Revenue increased 8.3% sequentially but was down 13.1% year over year, with McNulty citing weakness in housing demand while remaining positive on longer-term trends. McNulty said Printronix “continues to deliver consistent results and serves as a reliable source of cash flow,” generating approximately $4.8 million in cash flow over the past 12 months, which he described as a 15% cash flow yield relative to Acacia’s purchase price. He said Acacia is working to evolve the business into a “dual hardware and consumables model” with a streamlined structure. He also noted Printronix’s legacy impact printing business is in “structural decline,” while the company is emphasizing consumables and new product growth. Acacia’s intellectual property segment reported $700,000 of revenue and negative adjusted EBITDA of $3.5 million for the quarter. McNulty said the business is “inherently episodic” because of unpredictable settlement timing and said the lack of revenue in the quarter made ongoing operating costs more visible. Zambito said the year-over-year decline was primarily due to a settlement in the Atlas portfolio in the first quarter of 2025, with no comparable settlement in 2026. McNulty said Acacia continues to see monetization opportunities in its Atlas Wi‑Fi 6 assets and R2 portfolio, and noted that the R2 Solutions portfolio—originally owned by Yahoo and covering technologies including database, internet search, AI, and big data analytics—has been “particularly active in recent months” and is currently being enforced in the big data analytics space. Zambito said first-quarter GAAP diluted EPS was affected by a $9.7 million unrealized mark-to-market loss tied to Benchmark’s energy hedges, with a net EPS impact attributable to Acacia of $0.10 per share. On an adjusted basis, excluding the unrealized hedge loss and other items, Acacia reported an adjusted diluted EPS loss of $0.07 per share. Acacia posted a GAAP operating loss of $8.4 million, compared with operating income of $38.3 million in the prior-year quarter, which Zambito attributed primarily to the year-ago Atlas settlement. GAAP net loss attributable to Acacia was $15.7 million, or negative $0.16 per share, compared with net income of $24.3 million, or $0.25 per share, in the prior-year period. The quarter included a $10.7 million loss on derivative hedges (including $1.0 million realized and $9.7 million unrealized), as well as $1.6 million of unrealized losses on equity securities and a $600,000 realized loss on the sale of equity securities. On the balance sheet, Zambito said cash, equity securities measured at fair value, and loans receivable totaled $329.9 million at March 31, down from $339.6 million at Dec. 31. He said the company’s core operated segments generated $10.2 million in operating cash flow, which Acacia reinvested in “high ROI activities,” including the Cherokee well and Deflecto’s consolidation. The parent company had no indebtedness at quarter-end, while consolidated gross debt totaled $90.5 million, consisting of non-recourse debt at Benchmark and Deflecto. Zambito said Benchmark has paid down approximately $23 million in debt since the Revolution asset acquisition in April 2024, and Deflecto has paid down about $17.3 million since its October 2024 acquisition. Asked about share repurchases, McNulty said the company evaluates buybacks “in the context of other capital allocation opportunities,” noting capital deployed during the quarter toward drilling, Deflecto initiatives, and a small investment in the IP business. Looking ahead, McNulty said Acacia is seeing an improving acquisition opportunity set as financing conditions gradually improve and seller valuation expectations adjust, while reiterating the company’s focus on due diligence and valuation discipline. Acacia Research Corporation is a publicly traded patent licensing company based in New York City. The firm specializes in acquiring patented technologies through a network of wholly owned subsidiaries and seeking licensing agreements or settlements with companies that utilize those technologies. Since its founding in 1993, Acacia has built a business model centered on identifying innovative inventions and monetizing them through patent enforcement and strategic partnerships. The company's activities span a broad range of technology sectors, including life sciences, medical devices, software, telecommunications and consumer electronics. The article "Acacia Research Q1 Earnings Call Highlights" was originally published by MarketBeat. 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