May 04, 2023 4:10 PM
FIRST QUARTER 2023 HIGHLIGHTS
“The business, capital raising, and M&A environment that we highlighted last quarter continues to impact many of Safeguard’s companies, particularly those with high debt levels. We are acting prudently with our capital in situations where we can create high conviction opportunities to drive value for Safeguard and where the companies have the liquidity and flexibility to operate in a challenging environment.
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1 Corporate expenses are general and administrative expenses excluding depreciation, severance, stock-based compensation and other non-recurring items. See full reconciliation in the financial section of this statement.
OWNERSHIP INTERESTS AT
| Companies | Category | Acquisition Year | Primary Ownership% | Fully Diluted Ownership% ** | Carrying Value (in millions) | Cost (in millions) | |||||||
| Revenue of | |||||||||||||
| Moxe | Healthcare | 2016 | 19.3 | % | 18.1 | % | 6.5 | 7.5 | |||||
| Revenue of | |||||||||||||
| Digital Media | 2013 | 41.7 | % | 33.3 | % | 2.0 | 18.3 | ||||||
| Healthcare | 2014 | 25.2 | % | 22.1 | % | - | 22.0 | ||||||
| Healthcare | 2015 | 31.3 | % | 21.0 | % | - | 14.5 | ||||||
| Healthcare | 2014 | 11.0 | % | 8.6 | % | 0.6 | 26.6 | ||||||
| Revenue of | |||||||||||||
| Healthcare | 2016 | 13.6 | % | 11.5 | % | - | 15.9 | ||||||
| Healthcare | 2011 | 28.4 | % | 24.6 | % | 1.5 | 14.6 | ||||||
| Healthcare | 2014 | 11.6 | % | 8.7 | % | - | 12.2 | ||||||
| Other Ownership Interests | |||||||||||||
| All others | Various | 1.4 | 19.7 | ||||||||||
| TOTAL: | $ | 12.0 | $ | 151.3 | |||||||||
* Subsequent to the quarter,
** Based on information provided by each respective company. Assumes the conversion or exercise of all currently outstanding securities including the issuance of all shares available under authorized employee equity programs. Does not reflect liquidation preferences, priority payments, proceeds from option and/or warrant exercises or other company-specific transaction-related obligations in a liquidation or exit transaction.
CONFERENCE CALL AND WEBCAST DETAILS
Please call 10-15 minutes prior to the call to register.
| Date: | |||
| Time: | |||
| Webcast: https://www.webcast-eqs.com/safeguardscientific050423 | |||
| Live Number: 877-407-0989 | |||
| Speakers: Chief Executive Officer, | |||
| Format: Discussion of the first quarter’s financial results followed by Q&A | |||
The replay will be available at Safeguard.com’s investor relations site under “Past events”. For more information please contact IR@safeguard.com.
About
Historically,
Forward-Looking Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the federal securities laws. Our forward-looking statements are subject to risks and uncertainties. Forward-looking statements include, but are not limited to, statements regarding Safeguard’s ability to maximize the value of monetization opportunities of its ownership interests and drive total shareholder returns, Safeguard’s initiatives, including, without limitation, taken or contemplated to enhance and unlock value for all of its shareholders, Safeguard’s efforts to execute on and implement its strategy to streamline its organizational structure, reduce its operating costs, pursue monetization opportunities for ownership interests and maximize the return of value to its shareholders, Safeguard’s ability to create, unlock, enhance and maximize shareholder value, the effect of Safeguard’s management succession plan on driving increased organizational effectiveness and efficiencies, the ability of the management team to execute Safeguard’s strategy, the availability of, the timing of, and the proceeds that may ultimately be derived from the monetization of ownership interests, Safeguard’s projections regarding the reduction in its ongoing operating expenses, Safeguard’s projections regarding annualized operating expenses and expected severance expenses, monetization opportunities for ownership interests, and the amount of net proceeds from the monetization of ownership interests that will enable the return of value to Safeguard shareholders after satisfying working capital needs and the timing of such return of value. Such forward-looking statements are not guarantees of future operational or financial performance and are based on current expectations that involve a number of uncertainties, risks and assumptions that are difficult to predict. Therefore, actual outcomes and/or results may differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause actual results to differ materially include, among others, our ability to make good decisions about the monetization of our ownership interests for maximum value or at all and the return of value to our shareholders, our ability to successfully execute on our strategy to streamline our organizational structure and align our cost structure to increase shareholder value, whether our strategy will better position us to focus our resources on the highest-return opportunities and deliver enhanced shareholder value, the ongoing support of our existing ownership interests, the fact that our companies may vary from period to period, challenges to achieving liquidity from our ownership interests, fluctuations in the market prices of our publicly traded holdings, if any, competition, our inability to obtain maximum value for our ownership interests, our ability to attract and retain qualified employees, market valuations in sectors in which our ownership interests operate, our inability to control our ownership interests, our need to manage our assets to avoid registration under the Investment Company Act of 1940, risks, disruption, costs and uncertainty caused by or related to the actions of activist shareholders, including that if individuals are elected to our Board with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create value for our shareholders and perceived uncertainties as to our future direction as a result of potential changes to the composition of our Board may lead to the perception of a change in the direction of our business, instability or a lack of continuity that may adversely affect our business, and risks associated with our ownership interests, including the fact that most of our ownership interests have a limited operating history and a history of operating losses, face intense competition and may never be profitable, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in our filings with the
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SAFEGUARD CONTACT:
Chief Financial Officer
(610) 975-4913
mherndon@safeguard.com
Condensed Consolidated Balance Sheets (in thousands) | ||||||||
| Assets | ||||||||
| Cash, cash equivalents, restricted cash and marketable securities | $ | 18,793 | $ | 19,312 | ||||
| Ownership interests | — | 860 | ||||||
| Other current assets | 1,345 | 1,251 | ||||||
| Total current assets | 20,138 | 21,423 | ||||||
| Ownership interests in and advances | 11,991 | 14,545 | ||||||
| Other assets | 1,598 | 1,724 | ||||||
| Total Assets | $ | 33,727 | $ | 37,692 | ||||
| Liabilities and Equity | ||||||||
| Other current liabilities | $ | 1,152 | $ | 1,817 | ||||
| Total current liabilities | 1,152 | 1,817 | ||||||
| Lease liability - non-current | 1,133 | 1,249 | ||||||
| Other long-term liabilities | 50 | 50 | ||||||
| Total equity | 31,392 | 34,576 | ||||||
| Total Liabilities and Equity | $ | 33,727 | $ | 37,692 | ||||
Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | ||||||||
| Three Months Ended | ||||||||
| 2023 | 2022 | |||||||
| Operating expenses | $ | 1,185 | $ | 1,234 | ||||
| Operating loss | (1,185 | ) | (1,234 | ) | ||||
| Other income (loss), net | (9 | ) | (1,997 | ) | ||||
| Interest, net | 274 | 101 | ||||||
| Equity income (loss), net | (2,564 | ) | (3,579 | ) | ||||
| Net income (loss) before income taxes | (3,484 | ) | (6,709 | ) | ||||
| Income tax benefit (expense) | — | — | ||||||
| Net income (loss) | $ | (3,484 | ) | $ | (6,709 | ) | ||
| Net income (loss) per share: | ||||||||
| Basic | $ | (0.22 | ) | $ | (0.40 | ) | ||
| Diluted | $ | (0.22 | ) | $ | (0.40 | ) | ||
| Weighted average shares used in computing income (loss) per share: | ||||||||
| Basic | 16,072 | 16,587 | ||||||
| Diluted | 16,072 | 16,587 | ||||||
Financial Data (in thousands) |
Additional Financial Information
Non-GAAP Measures
In discussing financial results and guidance, the Company refers to the measure "corporate expenses" which is not in accordance with Generally Accepted Accounting Principles (GAAP). We use this non-GAAP financial measure internally to make operating and strategic decisions, including evaluating our overall performance and as a factor in determining compensation for certain employees. We have defined corporate expenses as general and administrative costs excluding stock based compensation, severance costs, and non-recurring items and other. Non-recurring items and other includes accruals related to the Company's LTIP plan that will not be paid until reaching a specified threshold within that plan as well as costs incurred for exploring strategic alternatives. We believe presenting this non-GAAP financial measure provides additional information to facilitate comparison of our historical operating costs and their trends, and provides additional transparency on how we evaluate our cost structure. We also believe presenting this measure allows investors to view our performance using the same measure that we use in evaluating our performance and trends.
Corporate expenses reconciliation:
| Three Months Ended | ||||||||
| 2023 | 2022 | |||||||
| Corporate expenses | $ | 791 | $ | 845 | ||||
| Stock based compensation | 292 | 314 | ||||||
| Non-recurring items and other | 102 | 75 | ||||||
| General and administrative expenses | $ | 1,185 | $ | 1,234 | ||||
