GlobeNewswire Inc | May 6, 2021 04:00PM EDT

May 06, 2021

Board Authorizes $6 Million Share Repurchase Program

Conference call and webcast on May 6, 2021 at 5 p.m. ET

RADNOR, Pa., May 06, 2021 (GLOBE NEWSWIRE) -- Safeguard Scientifics, Inc. (NYSE:SFE) (Safeguard or the Company) today announced financial results for the three months ended March 31, 2021.

HIGHLIGHTS

-- Safeguards Board of Directors has authorized a new $6 million share repurchase program using existing funds in accordance with the requirements of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended. These repurchases will be made in open market or privately negotiated transactions and are expected to be completed within the 2021 calendar year. -- Exits & DeploymentsSafeguard exited Zipnosis and received $3.3 million of initial cash proceeds and a preferred equity interest valued using our internal valuation methodology at $15.3 million in Bright Health Group (Bright Health), a national integrated healthcare company. As a result of this transaction, Safeguard reported a gain of $17.0 million. Additional cash proceeds may be received from the final determinations of net working capital and the resolution of various escrow contingencies.Safeguard exited WebLinc and T-REX Group in separate transactions for an aggregate of $6.2 million of gross proceeds and, in the case of WebLinc, additional performance based payments could be received over the next 24 months.Safeguard funded a $1.0 million convertible loan to Trice Medical as part of a financing in which other existing Trice stockholders also participated.Subsequent to the quarter-end, Safeguard exited Velano Vascular resulting in cash proceeds of $3.4 million. -- Safeguard Company Performance The aggregate trailing twelve-month revenues ending December 31, 2020 for Safeguards remaining eleven companies, which excludes Other Ownership Interests, was $321 million, down 8% as compared to the comparable 2019 period.Trice Medical acquired Tenex Health, a leader in minimally invasive ultrasonic technology for the treatment of chronic pain in soft tissue and bone.InfoBionic closed a $9 million loan facility to fund their continued growth.Moxe entered into a strategic relationship with 3M Health Information Systems to offer Moxes data platform to 3Ms customer base of hospitals, physician groups, and health systems.As previously disclosed, Syapse raised $68 million in growth capital from two venture capital funds. This transaction brings Safeguards ownership percentage to approximately 11% and resulted in a $7.3 million non-cash dilution gain.

-- Financial Results Cash, cash equivalents and restricted cash totaled $21.8 million at March 31, 2021.The carrying value of the Companys ownership interests at year end totaled $62.6 million, with a total cost of $175.2 million.Net income for the three months ended March 31, 2021 was $17.6 million, or $0.84 per share, as compared with a net loss of $16.0 million, or $0.77 per share, for the same period in 2020.The prior year quarterly results included non-cash impairment charges of $11.3 million, while the current period included gains resulting from the sales of Zipnosis and T-REX totaling $17.7 million. -- Operating CostsSafeguard continued to reduce its operating costs in 2021. General and administrative expenses totaled $2.5 million for the quarter as compared to $3.5 million for the 2020 quarter.Safeguard also continued to lower its corporate expenses,1 which totaled $1.2 million for the first quarter of 2021, as compared to $1.5 million for the comparable period of 2020, an 18% decline. -- OutlookSafeguard remains committed to returning value to shareholders when we exceed our targeted liquidity threshold, subject to then prevailing market conditions and expected liquidity needs. Based on our evaluation of future liquidity needs, Safeguard has lowered its targeted liquidity threshold from $20 million to $18 million.We will continue to consider additional share repurchases, modifications to the program announced today and/or dividends in the event of subsequent exit transactions during 2021.

We are encouraged to see an increasing pace of activity in our portfolio over the past few months, including monetizations of WebLinc, T-Rex, Velano and the successful sale of Zipnosis to Bright Health. said Eric C. Salzman, Chief Executive Officer. We expect further positive developments during 2021 and, with the stock buy back plan that we announced today, we will continue to work to maximize value and return cash to our shareholders.

OWNERSHIP INTERESTS AT MARCH 31, 2021

CarryingCompanies Category Acquisition Primary Value Cost Year Ownership% (in (in millions) millions) Initial Revenue Stage: Up to $1 million None Revenue of $1 million to $5 millionMoxe Health Healthcare 2016 27.6 % $ $ Corporation 4.8 7.5Revenue of $5 million to $10 million Trice Healthcare 2014 16.6 % 1.9 11.8Medical, Inc.Lumesis, Inc. Financial 2012 43.4 % 0.9 5.6 ServicesClutch DigitalHoldings, Media 2013 42.3 % 4.7 16.9Inc.Revenue of $10 million to $20 million InfoBionic, Healthcare 2014 25.2 % - 22.0Inc.meQuilibrium Healthcare 2015 32.0 % 3.0 14.0+Syapse, Healthcare 2014 11.1 % 8.3 25.0Inc.++Revenue of $20 million to $50 million Aktana, Inc. Healthcare 2016 15.0 % 1.7 14.2Prognos Healthcare 2011 28.5 % 3.8 12.6Health, Inc.Greater than $50 million in revenue Flashtalking Digital 2018 13.2 % 12.5 19.2 MediaMediaMath, Digital 2009 13.3 % - 15.5Inc. MediaOther Ownership Interests Bright Health Healthcare 2021 15.3 -GroupVelano Healthcare 2013 2.0 1.7Vascular *All others Various 3.7 9.2 TOTAL: $ 62.6 $ 175.2

+ Company progressed into higher revenue stage this quarter.++ Company dropped into a lower revenue stage this quarter.* Company was exited during the second quarter of 2021.

CONFERENCE CALL AND WEBCAST DETAILS

Please call 10-15 minutes prior to the call to register.

Date: May 6, 2021Time: 5 pm ETWebcast: http://www.safeguard.com/eventsLive Number: 844-200-6205Replay Number: 929-458-6194Access Code: 840410Speakers: Chief Executive Officer, Eric C. Salzman; and Senior Vice President and Chief Financial Officer,Mark A. HerndonFormat: Discussion of the quarters financial results followed by Q&A Replay will be available through June 7, 2021 at 11:59 pm ET. For more information please contact IR@safeguard.com.

About Safeguard Scientifics Historically, Safeguard Scientifics has provided capital and relevant expertise to fuel the growth of technology-driven businesses. Safeguard has a distinguished track record of fostering innovation and building market leaders that spans more than six decades. Safeguard is currently pursuing a focused strategy to value-maximize and monetize its ownership interests over a multi-year time frame to drive shareholder value. For more information, please visit www.safeguard.com.

Forward-looking StatementsExcept 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 Safeguards ability to maximize the value of monetization opportunities of its ownership interests and drive total shareholder returns. Safeguards initiatives taken or contemplated to enhance and unlock value for all of its shareholders, Safeguards 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, Safeguards ability to create, unlock, enhance and maximize shareholder value, the effect of Safeguards management succession plan on driving increased organizational effectiveness and efficiencies, the ability of the management team to execute Safeguards strategy, the availability of, the timing of, and the proceeds that may ultimately be derived from the monetization of ownership interests, Safeguards projections regarding the reduction in its ongoing operating expenses, Safeguards 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 companies may vary from period to period, challenges to achieving liquidity from our ownership interests, fluctuations in the market prices of our 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 Safeguards companies operate, and other uncertainties described in our filings with the Securities and Exchange Commission. Many of these factors are beyond the Companys ability to predict or control. As a result of these and other factors, the Companys past operational and financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.

SAFEGUARD CONTACT: Mark HerndonChief Financial Officer(610) 975-4913mherndon@safeguard.com

Safeguard Scientifics, Inc.Condensed Consolidated Balance Sheets(in thousands)

March 31, December 31, 2021 2020Assets Cash, cash equivalents and restricted $ 21,775 $ 15,601 cashOther current assets 588 462 Total current assets 22,363 16,063 Ownership interests in and advances 62,593 50,398 Other assets 2,028 2,574 Total Assets $ 86,984 $ 69,035 Liabilities and Equity Other current liabilities $ 3,978 $ 3,470 Total current liabilities 3,978 3,470 Lease liability - non-current 1,964 2,053 Other long-term liabilities 50 637 Total equity 80,992 62,875 Total Liabilities and Equity $ 86,984 $ 69,035

Safeguard Scientifics, Inc.Condensed Consolidated Statements of Operations(in thousands, except per share amounts)

Three Months Ended March 31, 2021 2020 Operating expenses $ 2,463 $ 3,532 Operating loss (2,463 ) (3,532 )Other income (loss), net 706 (3,567 )Interest, net 53 105 Equity income (loss), net 19,329 (9,014 )Net income (loss) before income taxes 17,625 (16,008 )Income tax benefit (expense) ? ? Net income (loss) $ 17,625 $ (16,008 )Net income (loss) per share: Basic $ 0.84 $ (0.77 )Diluted $ 0.84 $ (0.77 )Weighted average shares used in computing income (loss) per share:Basic 20,902 20,686 Diluted 20,930 20,686

Safeguard Scientifics, Inc.Financial Data(in thousands)

Additional Financial Information

Non-GAAP Measures

In discussing financial results and guidance, the Company refers to the measure "corporate expenses" 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 stock based compensation, severance costs, and non-recurring items and other. Non-recurring items and other includes accruals related to the Company's LTIP plan that will not be paid until reaching a specified threshold within that plan.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 expensesreconciliation:

Three Months Ended March 31, 2021 2020 Corporate expenses $ 1,197 $ 1,453 Stock based compensation 245 86 Severance costs 774 1,743 Non-recurring items and other 247 250 General and administrative expenses $ 2,463 $ 3,532

___________________________________1 Corporate expenses are general and administrative expenses excluding depreciation, severance, stock-based compensation and other non-recurring items. See full reconciliation in the financial section of this statement.