Safeguard Scientifics, Inc. (NYSE:SFE) Q3 2023 Earnings Call Transcript

We’ve also talked about — I know the metric has been put out there about 50% of year-end cash after a couple of adjustments. But we still don’t know exactly how much cash we are going to have at the end of the year, right? And we don’t think it will be substantially different than where we are at, but we don’t know. Those are the parameters that I would sort of provide to you without actually telling you a number or a value of what the dividend could be. But we are discussing a range of options with the Board on that front.

Eric Salzman: Yes. And I’ll just add a couple of comments to it. So firstly, one of the design parameters and the reserving the cash or, let’s call it, the holdback cash is that it needs to be sufficient to cover the operations portfolio wind down, regardless of when the next exit occurs. So we are not coming up with a cash number that assumes in June of next year x million is going to come in to help cover it. So we want to — we are coming up with a quantum of cash that will cover a complete operation support, one down contingencies, et cetera. So that’s how we’re thinking about it from that standpoint.

Mark Herndon: In that context, that part of that question, and maybe I read it a little closer now, but assuming the distributions in the future have become — rather, monetization in the future would flow for the most part, down to distribution. And the math that we just outlined would say, yes, but there’s — it’s always — it’s hard when you’re looking at the future, some other contingency may arise that the Board at that time would need to consider. So I don’t want to pin the [indiscernible] on that, but if it’s going perfectly, then it should be in that ballpark.

Eric Salzman: That is the goal. Another question, I think — question #12. Can you speak a bit about the confidence level of the 2-year monetization time frame given there are now for Bucket 1 companies you don’t have a real time line. There was another question that related to that around front end weighted versus back end weighted proceeds based on our internal — based on our estimates. I think given the fact that we have one company going to market, we have no companies in the market now of our Bucket 1 company [indiscernible], and we have one going to market in January. And if you look over, call it, a 27, 28 month period by the time you start, 24-month period at June 1, I think you would just assume that those exits would be occurring at least in the second half of that period more than the first half, where we are sitting today.

Now things do change. As I indicated, we have been having some conversations with some secondary buyers around seeing if there’s a bid for any of our physicians. We’ve also been working with one of our companies and a potential recapitalization, the proceeds of which could be used to take us out. So we are working all possible angles to monetize the investments. But from a hiring a banker and going out, I would say it would be the second part over the coming 24 months.

Mark Herndon: And while Eric is looking at another question there, one of the next question, we’ve had another question coming about revenue rates about which companies are growing the fastest. And I’ll add more to what we said earlier. Similar to what we’ve seen last quarter — or the last few quarters, Moxe and meQuilibrium as well as Clutch, all three of them on a trailing 12-month basis have experienced growth and [indiscernible] good growth. But that — in that period ended June 30, and then I think I would refer to Eric’s comments, we’ve had sort of varied results. Since then, some of the September numbers are still kind of shaking out. We had — but each of those three have had over 20% growth.