Safeguard Scientifics Announces Fourth Quarter And Full-Year 2019 Financial Results

RADNOR, Pa., Feb. 27, 2020

Highlights

• Safeguard has returned over $187 million to our balance sheet since we began our new strategic direction in 2018 (including over $104 million in 2019) and we continue the pursuit of additional exits from our various company interests in an aggressive, but patient and rational manner.
• During 2019 the Company fully repaid its outstanding debt and paid a $1.00 per share return of capital dividend.
• At December 31, 2019, the Company's balance of cash, cash equivalents and restricted cash totaled $25.0 million.
• We committed to return value to our shareholders whenever we have in excess of a prudent minimum of liquidity.  Presently, our Board has determined that minimum to be $25 million.  When we exceed that level we intend to return value to shareholders in the form of either share repurchases and/or dividends.
• Safeguard continues to prudently manage follow-on deployments to its ownership interests.  Follow-on fundings totaled $2.2 million and $16.7 million for the three months and year ended December 31, 2019, respectively, in line with the expectations we established at the beginning of the year.
• General and administrative expenses continued to decrease, totaling $2.1 million for the three months ended December 31, 2019 as compared to $2.6 million for the comparable prior year quarter, and totaling $10.0 million for the year ended December 31, 2019 as compared to $16.9 million for 2018.
• Corporate expenses totaled $1.4 million and $7.1 million for the three months and year ended December 31, 2019, respectively, a substantial decline from $1.9 million and $9.9 million for the comparable prior year periods and well below the less than $8 million expectation established at the beginning of the year.  Corporate expenses are general and administrative expenses excluding depreciation, severance, stock based compensation and other non-recurring items.
• Our Board of Directors is now compensated solely with Safeguard equity and the size of the Board will be reduced to four from six directors at the Company's upcoming annual meeting.

"We are pleased with what we accomplished in 2019.  The most significant milestone we accomplished in 2019 was the $1.00 per share return of capital dividend we paid in December," said Brian J. Sisko, Safeguard's President and CEO.  "Most importantly, we continue to hold a valuable portfolio of ownership interests representing $230 million of deployed capital in 15 tech-enabled companies and all other ownership interests.  The companies continue to mature and we are well-positioned to capitalize on exit opportunities that will create value for our shareholders.  We remain on course with the timetable we outlined at the outset of our current strategy."

For the year ended December 31, 2019, the Company's net income was $54.6 million, or $2.64 per share, compared with a net loss of $15.6 million, or $0.76 per share, in 2018.  For the three months ended December 31, 2019, Safeguard's net loss was $0.7 million, or $0.03 per share, compared with a net loss of $16.6 million, or $0.81 per share, for the same period in 2018.

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 Mark A. Herndon, Safeguard's Senior Vice President and Chief Financial Officer.  "We will judiciously make deployments to protect our existing ownership interests as and where appropriate."  Corporate expenses for the year ended December 31, 2020 are forecasted to continue to decline and are expected to range from $6.4 to $6.8 million as compared to $7.1 million for the year ended December 31, 2019.  Follow-on funding requirements for the full year of 2020 are forecasted to be between $5 and $10 million.

AGGREGATE COMPANY REVENUE
Aggregate annual revenue for 2019 for Safeguard's 15 remaining ownership interests, which were formerly referred to as partner companies, was $357 million.  Aggregate revenue for the same companies was $330 million for 2018, representing revenue growth of 8% for the entire portfolio.  Excluding our digital media companies, the aggregate year-over-year revenue of Safeguard's remaining portfolio of ownership interests grew at 41%.  Note that revenue from "Other Ownership Interests" in the table below are excluded from this total.