Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: How are tariffs impacting Acacia Research Corp, particularly with Deflecto? A: Martin McNulty, CEO, explained that while tariffs are a concern, Acacia's position in the midcontinent allows flexibility in selling hydrocarbons to multiple markets, minimizing tariff impacts. For Deflecto, manufacturing operations in both Canada and the US provide options to mitigate tariff effects, and plans are in place to adjust as needed.
Q: Is Acacia targeting more wells for acquisition, and what is the potential upside in the Cherokee play and Cleveland formations? A: McNulty noted that Acacia is disciplined in acquiring asset packages, focusing on those that can be integrated with existing operations. The Cherokee play is gaining interest, and Acacia is evaluating how best to monetize these assets, seeing potential for future growth.
Q: Deflecto's gross margin was below the targeted 15%. Is this due to seasonal weakness or other factors? A: McNulty confirmed that the fourth quarter is seasonally weak for Deflecto. However, operational improvements are underway, and the 15% gross margin target remains.
Q: Can you provide examples of operational improvements at Deflecto? A: McNulty highlighted restructuring efforts, such as divisionalizing business units for better accountability and optimizing plant operations. These efforts aim to enhance cash flow management and operational efficiency.
Q: How has Acacia managed to maintain cash levels despite significant acquisitions and share buybacks? A: Kirsten Hoover, Interim CFO, explained that cash from the monetization of Erics and cash-generating acquisitions have helped maintain strong cash reserves, allowing Acacia to continue strategic investments.
Q: Are private equity firms more flexible on pricing due to market conditions? A: McNulty stated that while private equity seeks high valuations, Acacia focuses on B&C quartile assets that require operational improvements, which are less competitive and offer better value.
Q: What is the impact of oil price fluctuations on Benchmark's cash flow? A: McNulty mentioned that while they monitor oil price impacts, specific metrics are not publicly shared. Benchmark's hedging strategy protects against price volatility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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