Acacia Research (NASDAQ:ACTG) executives used the company’s fourth-quarter earnings call to emphasize progress in building a portfolio of cash-generating operating businesses while keeping parent-level costs in check. Chief Executive Officer MJ McNulty said the company is in a markedly different position than three years ago, when it held roughly $350 million of cash but had no meaningful operated segment cash flow and was “burning over $30 million annually” at the parent level.
McNulty said Acacia ended 2025 with record revenue of $285.2 million and operated segment adjusted EBITDA of $96.4 million, which includes intellectual property operations. He also pointed to $187 million extracted from the company’s IP portfolio and said Acacia has monetized most legacy assets while keeping parent expenses “relatively flat” as the organization has scaled. CFO Michael Zambito added that Acacia’s cash, cash equivalents, equity securities measured at fair value and loans receivable totaled $339.6 million at December 31, 2025, with zero parent-company indebtedness.
Fourth-quarter results and segment performance
Zambito said Acacia posted a GAAP operating loss of $13.1 million in the quarter, an improvement from a $15.8 million loss a year earlier. Acacia reported GAAP net income attributable to the company of $3.4 million, or $0.04 per share, compared to a net loss of $13.4 million, or a $0.14 loss per share, in the prior-year period. Adjusted net income attributable to Acacia was $3.1 million, or $0.03 per share. The quarter included $2.8 million in unrealized gains related to changes in fair value of equity securities, offset by a $3.5 million realized loss.
By segment in the fourth quarter:
- Energy (Benchmark): Revenue of $16.0 million versus $17.3 million a year earlier, reflecting “a softer oil price environment” year-over-year. Realized hedge gains not included in revenue were $1.7 million versus $1.0 million in the prior-year quarter. Adjusted EBITDA was $8.1 million, and free cash flow was $1.0 million after $4.6 million of CapEx largely tied to Cherokee development.
- Manufacturing (Deflecto): Revenue of $26.4 million and adjusted EBITDA of $1.1 million. The business recorded a $0.4 million GAAP operating loss, including non-cash depreciation and amortization and $0.4 million in non-recurring costs tied to severance and transaction-related items.
- Industrial (Printronix): Revenue of $7.3 million versus $8.2 million a year earlier. GAAP operating income was $0.5 million, adjusted EBITDA was $1.1 million, and free cash flow was essentially flat, with management citing tariff-related payments, working capital items, and FX headwinds.
- Intellectual property: Licensing and other revenue of $0.3 million and adjusted EBITDA of $12.1 million in the quarter. McNulty said fourth-quarter EBITDA benefited from a settlement where related costs had been incurred in prior periods, and later clarified during Q&A that it involved a settlement with a service provider dating back to 2017–2018.
Full-year 2025 highlights
For 2025, Acacia reported revenue of $285.2 million (up 133% year-over-year), total adjusted EBITDA of $77.9 million, and operating cash flow of $75.2 million, all higher than the prior year, according to McNulty. Zambito reported GAAP operating income of $6.4 million, compared with an operating loss of $32.9 million in 2024, and GAAP net income of $21.7 million, or $0.22 per diluted share, compared with a net loss of $36.1 million, or negative $0.36 per diluted share, last year. Adjusted net income attributable to Acacia was $29.2 million, or $0.30 per share.
Management also highlighted book value per share of $6.05 at December 31, 2025, up from $5.75 at year-end 2024.
Deflecto: plant consolidation, tariff pressure, and early-cycle “green shoots”
McNulty said Deflecto delivered what he characterized as a “good quarter” despite it being seasonally the weakest period, citing operational actions including consolidating its Portland facility into its Dover, Ohio facility, divesting a small segment of its office products business, and selling a portion of a UK facility that it did not occupy. He said the actions generated nearly $5 million in net proceeds, and management expects the plant consolidation to produce about $2 million in total annualized cost savings once complete.
McNulty said Deflecto has faced “meaningful macroeconomic headwinds,” including a depressed Class 8 trucking market, a weaker Canadian housing market, and tariff-related demand and cost pressures. He pointed to improving Class 8 order trends, stating that December through February orders were up 23%, 25%, and 156% year-over-year, respectively, after 11 straight months of declines, and said inventories have begun to fall and freight rates appear to be improving.
On tariffs, McNulty said Deflecto paid about $2.4 million in tariffs in 2025, with about $2.0 million impacting earnings. With a recent court ruling, he said Acacia expects a net benefit to earnings and “relief in 2026,” while noting the impact of new Section 122 tariffs. He cited changes in tariff rates on imports from China (from 20% to 10%) and from Canada (from 25% to 10%), adding that it was too early to quantify but directionally positive for Deflecto’s earnings power.
Benchmark: record production, new Cherokee well, and hedging strategy
In energy, McNulty said Benchmark delivered “solid operating production and cash flow” and recorded record production during the quarter, helped by several non-operated projects that came online. He described continued strong interest in the Anadarko Basin and said elevated valuations have led the company to be more discerning on acquisitions.
McNulty said Acacia completed drilling its first Cherokee well last week and expects it to begin producing “this week,” noting it was funded from the balance sheet to help create partnership opportunities for future wells. In response to analyst questions, he said it is difficult to directly compare returns from the new well to Benchmark’s legacy mid-life, low-decline wells acquired in prior transactions, but said the company had “high graded” the acreage and has several additional attractive locations it will evaluate conservatively.
Management reiterated its hedging posture, with McNulty stating Benchmark hedges about 60%–75% of operated oil and gas production with hedges currently in place through the beginning of 2028. In Q&A, he said the average hedge price is about $70 per barrel and that Benchmark is fully hedged for 2026, while planning to hedge volumes from the new well.
Capital allocation, debt reduction, and buyback questions
On the balance sheet, Zambito said Acacia ended 2025 with $92.1 million of consolidated indebtedness, comprised of $59.5 million of non-recourse debt at Benchmark and $32.6 million of non-recourse debt at Deflecto. He said Benchmark has paid down about $23 million of total debt since the Revolution acquisition closed in April 2024, and Deflecto has paid down about $16 million since Acacia acquired it in October 2024.
Several analysts asked about share repurchases. McNulty said management and the board evaluate capital allocation alternatives regularly but do not want to announce a buyback “without intending to use it.” He added that the company is monitoring constraints and working with tax advisors, and said Acacia expects to begin becoming “unencumbered” toward the end of the current quarter or the beginning of next quarter, with a roll-off period of “probably a couple quarters” before being completely unencumbered, and with limits during that period.
McNulty also discussed acquisition conditions, saying strong assets continue to attract “a very good bid,” while the B and C quartile assets the company tends to target are seeing a “freeze up” in deal activity and fewer buyers—an environment he called an opportunity for Acacia’s operating approach. In response to a question about offering stock as consideration, McNulty said, “We’ll pay you cash.”
About Acacia Research (NASDAQ:ACTG)
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.
