Nov 07, 2019 6:00 AM
On
"This dividend demonstrates our commitment to return value to our shareholders. And, we remain committed to continuing to reward our shareholders by maximizing the overall value of our partner company holdings and by returning that value to our shareholders as quickly and tax efficiently as possible," said
The Company also announced corporate governance changes. Effective immediately,
Highlights
OUTLOOK
The Company currently believes that, for
The ultimate tax treatment of the dividend will be based on Safeguard's current and accumulated earnings and profits for Safeguard's year ending
The return of capital dividend as reported on Form 8937 will be available on Safeguard's website. The Form 8937 will be updated following the determination of Safeguard's financial results for the year ended
The information set forth above is provided only for general use, and does not constitute a complete description of all of the
AGGREGATE PARTNER COMPANY REVENUE
Aggregate partner company revenue for Safeguard's 15 remaining partner companies is projected to be between $355 million and
PARTNER COMPANY HOLDINGS AT
Partner Company Revenue Stages | ||||
Initial Revenue Stage · Up to | Expansion Stage · | Traction Stage · | High Traction Stage · $10M+ in revenue |
Partner Companies | Stage | Category | Acquisition | Primary | Carrying (in millions) | Cost (in millions) | |
High Traction | Healthcare | 2016 | 17.9% | $ 4.7 | $ 11.7 | ||
High Traction | Digital Media | 2013 | 41.2% | 6.0 | 16.6 | ||
High Traction | Digital Media | 2018 | 10.1% | 11.0 | 19.2 | ||
Traction | Healthcare | 2014 | 25.2% | - | 22.0 | ||
Traction | Financial Services | 2012 | 43.6% | 1.3 | 6.3 | ||
High Traction | Digital Media | 2009 | 13.4% | - | 15.5 | ||
meQuilibrium | Traction | Healthcare | 2015 | 32.7% | 4.4 | 13.0 | |
Expansion | Healthcare | 2016 | 32.4% | 3.4 | 5.8 | ||
High Traction | Healthcare | 2011 | 28.7% | 5.2 | 12.6 | ||
Traction | Digital Media | 2015 | 24.2% | 5.1 | 13.3 | ||
Traction | Digital Media | 2015 | 21.6% | 8.0 | 13.4 | ||
High Traction | Healthcare | 2014 | 20.1% | 3.2 | 20.6 | ||
Expansion | Healthcare | 2014 | 16.7% | 2.4 | 10.2 | ||
Traction | Digital Media | 2014 | 38.5% | 4.7 | 15.9 | ||
Expansion | Healthcare | 2015 | 37.7% | 3.4 | 10.0 | ||
TOTAL: | $ 62.8 | ||||||
+ Partner company progressed into higher revenue stage |
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: 7078285
Speakers: President and Chief Executive Officer, Brian J. Sisko; and Senior Vice President and Chief Financial Officer, Mark A. Herndon
Format: Discussion of third quarter 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 intention to pay a special cash dividend, the amount and timing of the special cash dividend. 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 partner companies 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 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 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 partner companies 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 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, if any, 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
Safeguard Investor Relations
(610) 975-4952
jshave@safeguard.com
| |||
Assets Cash, cash equivalents, restricted cash and marketable securities |
$ 45,564 |
$ 46,158 | |
Other current assets | 2,764 | 2,669 | |
Total current assets | 48,328 | 48,827 | |
Ownership interests in and advances to partner companies | 79,645 | 95,585 | |
Other assets | 2,876 | 1,325 | |
Total Assets | $ 130,849 | $ 145,737 | |
Liabilities and Equity Other current liabilities |
$ 3,708 |
$ 5,780 | |
Credit facility - current | — | 22,100 | |
Credit facility repayment feature | — | 5,060 | |
Total current liabilities | 3,708 | 32,940 | |
Credit facility - non-current | — | 43,014 | |
Lease liability - non-current | 2,476 | — | |
Other long-term liabilities | 1,728 | 2,804 | |
Total equity | 122,937 | 66,979 | |
Total Liabilities and Equity | $ 130,849 | $ 145,737 |
| |||||||
Three Months Ended | Nine Months Ended | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Operating expenses |
$ 2,262 |
$ 3,516 |
$ 7,922 |
$ 14,253 | |||
Operating loss | (2,262) | (3,516) | (7,922) | (14,253) | |||
Other income (loss), net | 8,777 | (1,078) | 10,010 | (4,965) | |||
Interest, net | (5,572) | (2,592) | (12,153) | (7,240) | |||
Equity income (loss), net | (3,440) | 39,246 | 65,324 | 27,452 | |||
Net income (loss) before income taxes | (2,497) | 32,060 | 55,259 | 994 | |||
Income tax benefit (expense) | — | — | — | — | |||
Net income (loss) | $ (2,497) | $ 32,060 | $ 55,259 | $ 994 | |||
Net income (loss) per share: | |||||||
Basic | $ (0.12) | $ 1.56 | $ 2.68 | $ 0.05 | |||
Diluted | $ (0.12) | $ 1.56 | $ 2.68 | $ 0.05 | |||
Weighted average shares used in computing income (loss) | |||||||
Basic | 20,657 | 20,561 | 20,623 | 20,535 | |||
Diluted | 20,657 | 20,561 | 20,623 | 20,535 |
Partner Company Financial Data
(in thousands)
Additional Financial Information
To assist investors in understanding Safeguard and our 15 remaining partner companies as of
| |||
Carrying | Cost | ||
Safeguard Carrying Value and Cost | |||
Equity method partner companies | $ 51,759 | $ 171,322 | |
Other partner companies | 10,956 | 34,703 | |
Other holdings | 16,930 | 23,942 | |
$ 79,645 |
Three Months Ended | Nine Months Ended | |||||||
2019 | 2018 | 2019 | 2018 | |||||
Corporate costs | $ 1,923 | $ 2,205 | $ 5,964 | $ 7,960 | ||||
Depreciation | — | 51 | 808 | 207 | ||||
Stock based compensation | 248 | 243 | 934 | 853 | ||||
Severance and retirement costs | 91 | 1,017 | 216 | 3,816 | ||||
Non-recurring items, principally professional fees | — | — | — | 1,417 | ||||
General and administrative costs | $ 2,262 | $ 3,516 | $ 7,922 | $ 14,253 |
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 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.
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