ACACIA RESEARCH CORP Q1 FY2026 earnings call

· Benchmark drilled first meaningful well in Cherokee Plague in late March, with initial results strong, development costs in line with budget, and anticipating over 2.5 times MOIC or 60% plus IRR. · Deflecto delivered solid quarter, with progress in operational performance through initiatives like price increases, reshoring/consolidation, and cost reduction. Completed consolidation of Portland, Oregon facility into Dover, Ohio facility, with cost savings expected. · Printronics continues to deliver consistent results, evolving into dual hardware and consumables model. · IP segment has monetization opportunities in Atlas and R2 portfolios, with R2 Solutions active in big data analytics space. · Company has strong balance sheet with $330 million in total cash, securities, and loans receivable as of March 31st, positioned for growth opportunities.

Benchmark: Q1 achieved record quarterly revenue of 18.7 million and generated 7.7 million in adjusted EBITDA. Deflecto: Revenue increased 4.6% and adjusted EBITDA 1.3% sequentially. Printronics: Generated approximately $4.8 million of cash flow in the past 12 months, representing a 15% cash flow yield relative to the price paid to acquire the business. Intellectual property: Recorded total revenue of $700,000 and a negative $3.5 million in adjusted EBITDA for the quarter.

· Continue to be laser-focused on growing EBITDA and free cash flow at operating businesses and strategically grow acquisition pipeline. · Cherokee first well's full impact to be seen in Q2 and Q3, and evaluating additional drilling in Cherokee and Cleveland acreage. · Deflecto's consolidation of Portland facility expected to bring annualized cost savings beginning in second half of year. · Strong balance sheet allows pursuit of accretive, organic, and inorganic growth opportunities.

· Commodity price volatility impacting hedge book, causing unrealized losses that affect net income, EPS, and book value. · Macro-economic and geopolitical headwinds affecting various segments, such as tariff pressures on Deflecto and demand issues in Class 8 market. · Unpredictable settlement revenue in IP segment, leading to potential mismatches with operational costs. · Temporary pullback in Deflecto's building products business due to housing market conditions.

Q: Anthony Stoss asked about number of new wells contemplated at Benchmark and timing.

A: MJ said they are evaluating several locations, have units ready, and considering partnerships for more drilling.

Q: Anthony Stoss then asked about Deflecto's cost savings after closing Portland facility.

A: MJ said initial estimate is $2 million annualized cost savings from consolidation, with continued cost rationalization at G&A level.

Q: Brett Reese asked about MOIC of Cherokee well.

A: MJ said two and a half times is undiscounted, expecting inside two-year payback.

Q: Brett Reese asked about AI use at Benchmark.

A: MJ said evaluating early-stage AI tools in different parts of business to enhance productivity.

Q: Brett Reese asked about share buybacks.

A: MJ said evaluate buyback in context of other capital allocation opportunities like investing in wells and Deflecto rationalization