Feb 27, 2020 6:00 AM
Highlights
"We are pleased with what we accomplished in 2019. The most significant milestone we accomplished in 2019 was the
For the year ended
OUTLOOK
"Now that all of our debt has been repaid, and given our current liquidity position, virtually all proceeds from monetization events will be available for return of value to our shareholders" said
AGGREGATE COMPANY REVENUE
Aggregate annual revenue for 2019 for Safeguard's 15 remaining ownership interests, which were formerly referred to as partner companies, was
OWNERSHIP INTERESTS AT
Companies | Category | Acquisition | Primary | Carrying (in millions) | Cost (in millions) | ||||
Initial Revenue Stage: Up to | |||||||||
None | |||||||||
Expansion Stage: | |||||||||
Healthcare | 2016 | 29.9% | $ 5.4 | $ 7.5 | |||||
Traction Stage: | |||||||||
Healthcare | 2014 | 25.2% | - | 22.0 | |||||
meQuilibrium * | Healthcare | 2015 | 32.7% | 3.8 | 13.0 | ||||
Trice Medical, Inc.+ * | Healthcare | 2014 | 16.6% | 2.0 | 10.2 | ||||
Zipnosis, Inc.+ * | Healthcare | 2015 | 37.7% | 3.1 | 10.0 | ||||
Digital Media | 2015 | 21.6% | 8.0 | 13.4 | |||||
Digital Media | 2015 | 24.2% | 5.1 | 13.5 | |||||
Digital Media | 2014 | 38.5% | 5.9 | 16.1 | |||||
Financial Services | 2012 | 43.5% | 0.6 | 6.3 | |||||
High Traction Stage: | |||||||||
Digital Media | 2013 | 41.2% | 5.5 | 16.6 | |||||
Healthcare | 2011 | 28.7% | 4.8 | 12.6 | |||||
Greater than | |||||||||
Healthcare | 2016 | 17.8% | 3.5 | 11.7 | |||||
Healthcare | 2014 | 20.0% | 1.6 | 20.6 | |||||
Digital Media | 2018 | 10.1% | 11.0 | 19.2 | |||||
Digital Media | 2009 | 13.3% | - | 15.5 | |||||
Other Ownership Interests | |||||||||
Financial Services | 2016 | 6.0 | 6.0 | ||||||
Velano Vascular | Healthcare | 2013 | 3.1 | 1.7 | |||||
All others | Various | 7.7 | 14.3 | ||||||
TOTAL: | $ 77.1 |
+ Company progressed into higher revenue stage this quarter.
* Company progressed into higher revenue stage this year.
CONFERENCE CALL AND WEBCAST DETAILS
Please call 10-15 minutes prior to the call to register.
Date:
Time:
Webcast: www.safeguard.com/events
Live Number: 833-236-5756 // (International) 647-689-4184
Replay Number: 800-585-8367 // (International) 416-621-4642
Access Code: 1495918
Speakers: President and Chief Executive Officer, Brian J. Sisko; and Senior Vice President and Chief Financial Officer, Mark A. Herndon
Format: Discussion of fourth quarter and full-year 2019 financial results followed by Q&A
Replay will be available through
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 Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. Forward-looking statements include, but are not limited to, statements regarding Safeguard's initiatives 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 ownership interests may vary from period to period, challenges to achieving liquidity from our ownership interests, fluctuations in the market prices of any 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 Safeguard's ownership interests operate, and other uncertainties described in our filings with the
SAFEGUARD CONTACT:
John E. Shave III, IRC
Safeguard Investor Relations
(610) 975-4952
jshave@safeguard.com
Condensed Consolidated Balance Sheets | |||||||||
(in thousands) | |||||||||
Assets | |||||||||
Cash, cash equivalents, restricted cash and marketable securities | $ | 25,053 | $ | 46,158 | |||||
Other current assets | 1,297 | 577 | |||||||
Total current assets | 26,350 | 46,735 | |||||||
Ownership interests in and advances | 77,129 | 95,585 | |||||||
Other assets | 4,098 | 3,417 | |||||||
Total Assets | $ | 107,577 | $ | 145,737 | |||||
Liabilities and Equity | |||||||||
Other current liabilities | $ | 2,429 | 5,780 | ||||||
Credit facility - current | — | 22,100 | |||||||
Credit facility repayment feature | — | 5,060 | |||||||
Total current liabilities | 2,429 | 32,940 | |||||||
Credit facility - non-current | — | 43,014 | |||||||
Lease liability - non-current | 2,380 | — | |||||||
Other long-term liabilities | 1,027 | 2,804 | |||||||
Total equity | 101,741 | 66,979 | |||||||
Total Liabilities and Equity | $ | 107,577 | $ | 145,737 |
Condensed Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Operating expenses | $ | 2,060 | $ | 2,618 | $ | 9,982 | $ | 16,871 | ||||||||
Operating loss | (2,060) | (2,618) | (9,982) | (16,871) | ||||||||||||
Other income (loss), net | 2,245 | (193) | 12,255 | (5,158) | ||||||||||||
Interest, net | 174 | (6,021) | (11,979) | (13,261) | ||||||||||||
Equity income (loss), net | (1,057) | (7,791) | 64,267 | 19,661 | ||||||||||||
Net income (loss) before income taxes | (698) | (16,623) | 54,561 | (15,629) | ||||||||||||
Income tax benefit (expense) | — | — | — | — | ||||||||||||
Net income (loss) | $ | (698) | $ | (16,623) | $ | 54,561 | $ | (15,629) | ||||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | (0.03) | $ | (0.81) | $ | 2.64 | $ | (0.76) | ||||||||
Diluted | $ | (0.03) | $ | (0.81) | $ | 2.64 | $ | (0.76) | ||||||||
Weighted average shares used in computing income (loss) per share: | ||||||||||||||||
Basic | 20,674 | 20,568 | 20,636 | 20,544 | ||||||||||||
Diluted | 20,674 | 20,568 | 20,636 | 20,544 |
Partner Company Financial Data | |||||||||||
(in thousands) | |||||||||||
Additional Financial Information | |||||||||||
Non-GAAP Measures | |||||||||||
In discussing financial results and guidance, the Company refers to the measure "corporate costs" 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 Depreciation, Stock based compensation, severance and retirement costs, and non-recurring items and other. Non-recurring items and other in 2019 includes accruals related to the Company's LTIP plan that will not be paid until reaching a specified threshold within that plan and dividend payments treated as compensation related to unvested restricted shares pursuant to the terms of those arrangements. Non-recurring items and other in 2018 include certain professional fees related to shareholder activist matters. 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 | Twelve Months Ended | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||
Corporate expenses | $ | 1,404 | $ | 1,894 | $ | 7,118 | $ | 9,854 | |||||||||||
Depreciation | — | 485 | 808 | 692 | |||||||||||||||
Stock based compensation | 303 | 113 | 1,237 | 966 | |||||||||||||||
Severance and retirement costs | 32 | 126 | 248 | 3,942 | |||||||||||||||
Non-recurring items and other | 321 | — | 571 | 1,417 | |||||||||||||||
General and administrative costs | $ | 2,060 | $ | 2,618 | $ | 9,982 | $ | 16,871 |
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