Jul 26, 2018 6:00 AM
"During the second quarter, and in the interim since the end of the quarter, the Company took some significant steps forward in executing its new strategy", said
2018 YTD Highlights
AGGREGATE PARTNER COMPANY REVENUE
For full-year 2018, aggregate partner company revenue is now projected to be between
CHANGE IN STRATEGY AND OPERATIONS
On
PARTNER COMPANY HIGHLIGHTS
This section summarizes significant accomplishments by Safeguard's partner companies during the second quarter of 2018.
~ Product Launches / Regulatory Approvals ~
Flashtalking introduced a personalized video advertising product that allows Tier 2 automotive companies to deliver customized videos to customers based on location and interests. The new offering connects to an auto advertiser's database, constantly checking for updates to stock and pricing, and then generates and delivers customized videos to consumers across all devices.
QuanticMind updated the user interface for its Search and Shopping platforms. The Search solution enables efficient campaign management, robust insights, and reporting, and granular bidding optimization. QuanticMind Shopping drives shopping performance via powerful campaign and feed management, reporting, and optimization functionality. By empowering marketers to eliminate wasted advertising spend and capitalize on missed opportunities, these granular gains drive macro-level performance improvements.
Sonobi has announced a privacy-by-design Consent Management Platform (CMP) providing publishers with a solution to ensure transparent consent, compliance and continuity in accordance with the General Data Protection Regulation (GDPR) legislation. Sonobi's JetStream platform is a turn-key GDPR compliance solution, providing publishers with explicit consent management for consumers, and a full compliance auditing platform, coupled with an ID solution enabling the continued delivery of all monetization channels regardless of the number of partners a publisher chooses to work with. The solution provides publishers the tools to manage GDPR compliance for all header based, waterfall tag based, and publisher direct ad server integrations -- all while bringing the capability of addressable advertising into the publisher's toolkit.
~ Major Customer Wins / Strategic Partnerships ~
Flashtalking said it has partnered with Proximity London to create dynamic creative online advertising for
Zipnosis recently introduced a Surgical Care module to allow patients to receive post-operative care from their homes. This module offers hospitals and surgical centers the ability to shift routine in-person, post-operative visits to an online access point, saving time for both the surgical team and patients. Surgical teams also have the option to add online visits between in-person visits as a means of ensuring post-operative care compliance to help improve patient recovery. Since most surgeries are reimbursed as a bundled payment, virtual visits are a cost-effective option for post-operative care.
~ Industry Awards / Certifications ~
Sonobi co-founder and CEO
~ Other Milestones ~
Propeller Health raised
QuanticMind expanded its executive team to support enterprise growth with the hiring of software sales and service veterans
PRO FORMA PARTNER COMPANY HOLDINGS AT
Revised to reflect monetizations in early
Partner Company Revenue Stages | |||
Development Stage |
Initial Revenue Stage |
Expansion Stage |
High Traction Stage |
|
|
|
|
Partner Companies |
Stage |
Category |
Acquisition |
Primary |
Carrying (in millions) |
Cost (in millions) |
|
Expansion |
Healthcare |
2016 |
25% |
|
$ 9.7 |
Brickwork |
Initial Revenue |
Digital Media |
2016 |
20% |
3.6 |
4.6 |
CloudMine |
Initial Revenue |
Healthcare |
2015 |
47% |
4.5 |
10.5 |
|
Expansion |
Digital Media |
2013 |
41% |
6.9 |
16.3 |
Flashtalking |
High Traction |
Digital Media |
2018 |
10% |
11.0 |
19.2 |
|
Initial Revenue |
Digital Media |
2011 |
26% |
- |
5.1 |
|
Initial Revenue |
Healthcare |
2014 |
40% |
0.1 |
21.3 |
Lumesis |
Expansion |
Financial Services |
2012 |
44% |
1.6 |
6.3 |
|
High Traction |
Digital Media |
2009 |
13% |
1.2 |
15.5 |
meQuilibrium |
Initial Revenue |
Healthcare |
2015 |
36% |
4.2 |
10.5 |
|
Initial Revenue |
Healthcare |
2016 |
32% |
3.2 |
4.5 |
|
High Traction |
Healthcare |
2011 |
32% |
2.2 |
26.2 |
|
Expansion |
Healthcare |
2011 |
29% |
8.1 |
12.6 |
|
Initial Revenue |
Healthcare |
2014 |
20% |
9.1 |
14.3 |
QuanticMind |
Expansion |
Digital Media |
2015 |
25% |
5.8 |
11.5 |
Sonobi |
Expansion |
Digital Media |
2015 |
22% |
7.5 |
10.9 |
|
Expansion |
Healthcare |
2014 |
20% |
5.2 |
15.6 |
|
Initial Revenue |
Financial Services |
2016 |
21% |
4.5 |
6.0 |
|
Expansion |
Financial Services |
2014 |
24% |
8.0 |
14.5 |
Trice Medical |
Initial Revenue |
Healthcare |
2014 |
25% |
1.7 |
10.2 |
|
Expansion |
Digital Media |
2014 |
38% |
6.9 |
14.7 |
Zipnosis |
Initial Revenue |
Healthcare |
2015 |
25% |
2.8 |
7.0 |
TOTAL: |
|
|
CONFERENCE CALL AND WEBCAST DETAILS
Please call 10-15 minutes prior to the call to register.
Date:
Time:
Webcast: www.safeguard.com/results
Live Number: 866-393-4306 // (International) 734-385-2616
Replay Number: 855-859-2056 // (International) 404-537-3406
Conference ID: 8372809
Speakers: President and Chief Executive Officer
Format: Discussion of second quarter 2018 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 stockholders, Safeguard's efforts to execute on and implement its strategy to streamline its organizational structure, reduce its operating costs, pursue monetization opportunities for Partner Companies and maximize the net proceeds distributable to its shareholders, Safeguard's ability to create, unlock, enhance and maximize shareholder value, Safeguard's ability to have a smooth transition to a new management team, the timing of Safeguard's management succession plan and its effect on driving increased organizational effectiveness and efficiencies, the ability of the new 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 Partner Companies, 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 Partner Company Interests, and the amount of net proceeds from the monetization of Partner Company Interests that are ultimately distributable to Safeguard shareholders after satisfying Safeguard's debt obligations and working capital needs and the timing of such distributions. 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 Partner Companies for maximum value or at all and distributions 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 Partner Companies, the fact that our Partner Companies may vary from period to period, challenges to achieving liquidity from our partner company holdings, fluctuations in the market prices of our publicly traded partner company holdings, competition, our inability to obtain maximum value for our partner company holdings, our ability to attract and retain qualified employees, market valuations in sectors in which our Partner Companies operate, our inability to control our Partner Companies, 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 Partner Companies, including the fact that most of our Partner Companies 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 Partner Companies operate, and other uncertainties described in our filings with the
SAFEGUARD CONTACT:
John E. Shave III, IRC
Senior Vice President, Investor Relations and Corporate Communications
(610) 975-4952
jshave@safeguard.com
| |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(in thousands) | |||||||||
|
| ||||||||
Assets |
|||||||||
Cash, cash equivalents and marketable securities |
$ |
26,694 |
$ |
25,203 | |||||
Other current assets |
3,604 |
8,405 | |||||||
Total current assets |
30,298 |
33,608 | |||||||
Ownership interests in and advances to partner companies |
110,432 |
134,691 | |||||||
Long-term restricted cash equivalents |
— |
6,336 | |||||||
Other assets |
1,673 |
1,829 | |||||||
Total Assets |
$ |
142,403 |
$ |
176,464 | |||||
Liabilities and Equity |
|||||||||
Other current liabilities |
$ |
6,028 |
$ |
5,327 | |||||
Convertible senior debentures - current |
— |
40,485 | |||||||
Total current liabilities |
6,028 |
45,812 | |||||||
Credit facility |
78,978 |
45,321 | |||||||
Credit facility repayment feature liability |
2,979 |
— | |||||||
Other long-term liabilities |
3,197 |
3,535 | |||||||
Total equity |
51,221 |
81,796 | |||||||
Total Liabilities and Equity |
$ |
142,403 |
$ |
176,464 |
| ||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||
2018 |
2017 |
2018 |
2017 | |||||||||||||
Operating expenses |
$ |
5,148 |
$ |
4,486 |
$ |
10,738 |
$ |
9,433 | ||||||||
Operating loss |
(5,148) |
(4,486) |
(10,738) |
(9,433) | ||||||||||||
Other income (loss) |
(2,452) |
(89) |
(3,887) |
160 | ||||||||||||
Interest, net |
(2,756) |
(1,025) |
(4,647) |
(1,422) | ||||||||||||
Equity loss |
(14,540) |
(23,497) |
(11,794) |
(40,499) | ||||||||||||
Net loss before income taxes |
(24,896) |
(29,097) |
(31,066) |
(51,194) | ||||||||||||
Income tax benefit (expense) |
— |
— |
— |
— | ||||||||||||
Net loss |
$ |
(24,896) |
$ |
(29,097) |
$ |
(31,066) |
$ |
(51,194) | ||||||||
Net loss per share: |
||||||||||||||||
Basic |
$ |
(1.21) |
$ |
(1.43) |
$ |
(1.51) |
$ |
(2.51) | ||||||||
Diluted |
$ |
(1.21) |
$ |
(1.43) |
$ |
(1.51) |
$ |
(2.51) | ||||||||
Weighted average shares used in computing loss per share: |
||||||||||||||||
Basic |
20,539 |
20,411 |
20,523 |
20,395 | ||||||||||||
Diluted |
20,539 |
20,411 |
20,523 |
20,395 |
| |||||||
Partner Company Financial Data | |||||||
(in thousands) | |||||||
Additional Financial Information | |||||||
To assist investors in understanding Safeguard and our 23 partner companies as of | |||||||
|
|||||||
Carrying |
Cost | ||||||
Safeguard Carrying Value and Cost |
|||||||
Equity method partner companies |
$ |
94,839 |
$ |
274,209 | |||
Other partner company |
10,956 |
19,150 | |||||
Other holdings |
4,637 |
37,705 | |||||
$ |
110,432 |
$ |
331,064 |
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