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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Rand Capital Corporation | NASDAQ:RAND | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.2145 | -1.53% | 13.83 | 13.46 | 14.80 | 14.18 | 13.83 | 14.18 | 385 | 01:00:00 |
Rand Capital Corporation (Nasdaq: RAND) (“Rand” or the “Company”), a business development company (“BDC”), announced its results for the quarter ended March 31, 2021.
Allen F. (“Pete”) Grum, President and Chief Executive Officer of Rand, commented, “We had a very active quarter with our portfolio, making $6.7 million in investments and receiving $4.5 million in exits and loan repayments. We are executing well on our strategy to build a portfolio that contributes to growth in net investment income. Interest from portfolio companies was approximately 33% higher in the quarter compared with last year’s first quarter and the number of companies contributing to investment income nearly doubled. Net asset value also grew nearly 17% in the quarter. This growth was driven largely by the increase in fair value of our largest position, ACV Auctions Inc. (Nasdaq: ACVA) (“ACV”), resulting from ACV’s initial public offering (“IPO”). During the quarter, we recorded $2.6 million in non-cash expenses related to capital gains incentive fees, primarily attributed to ACV’s unrealized appreciation. This reflects fees that would be payable if our entire investment portfolio was liquidated at its current value. Absent this expense, adjusted net investment income was $0.16 per share, demonstrating the success of our transformation into an income producing, dividend paying BDC.”
He concluded, “We believe we have a strong income producing portfolio enhanced with equity investments that can provide potential capital gains. We also have excellent liquidity to continue to build our portfolio with almost $18 million available in cash and our outstanding SBA leverage commitment. We expect to use our liquidity to continue to transform our portfolio from equity investments to income producing investments.”
First Quarter Highlights
Portfolio and Investment Activity
As of March 31, 2021, Rand’s portfolio consisted of 35 companies. At that date, the dollar value of the portfolio was comprised of approximately 56% in equity investments, 34% in fixed-rate debt investments and 10% in dividend paying, publicly traded BDCs. The annualized weighted average yield of debt investments was 10.9%.
Liquidity and Capital Resources
Cash and cash equivalents at the end of the quarter was $14.9 million and represented 28% of net assets. Outstanding SBA leverage was $11 million at the end of the quarter and there was $3 million remaining available to draw on the SBA loan program. The earliest debenture maturity is in 2022 when $3 million in borrowings are due.
Board Renews Share Repurchase Authorization
Rand’s Board of Directors renewed the share repurchase program authorizing the purchase of up to $1.5 million in Rand common stock. The shares may be repurchased from time to time in the open market and in accordance with applicable regulations of the SEC. The stock repurchase program does not obligate the Company to purchase any shares, and the timing and exact amount of any repurchases will depend on various factors, including the performance of the Company’s stock price, general market and other conditions, applicable legal requirements and other factors. The renewed stock repurchase program expires on April 22, 2022 and may be suspended, terminated or amended by the Board at any time prior to the expiration date.
Webcast and Conference Call
Rand will host a conference call and live webcast today, May 10, 2021, at 1:30 p.m. Eastern Time to review its financial condition and results as well as its strategy and outlook. The review will be accompanied by a slide presentation, which will be available on Rand’s website at www.randcapital.com under the “Investor Relations” heading. A question-and-answer session will follow the formal presentation.
Rand’s conference call can be accessed by calling (201) 689-8263. Alternatively, the webcast can be monitored on Rand’s website at www.randcapital.com under “Investor Relations”.
A telephonic replay will be available from 4:30 p.m. ET on the day of the call through Monday, May 17, 2021. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13718353. The webcast replay will be available in the Investors section at www.randcapital.com, where a transcript will also be posted once available.
ABOUT RAND CAPITAL
Rand Capital (Nasdaq: RAND) is an externally managed Business Development Company (BDC) with a wholly owned subsidiary licensed by the U.S. Small Business Administration (SBA) as a Small Business Investment Company (SBIC). The Company’s investment objective is to maximize total return to its shareholders with current income and capital appreciation by focusing its debt and related equity investments in privately-held, lower middle market companies with committed and experienced managements in a broad variety of industries. Rand invests in early to later stage businesses that have sustainable, differentiated and market-proven products, revenue of more than $2 million and a path to free cash flow or up to $5 million in EBITDA. The Company’s investment activities are managed by its external investment adviser, Rand Capital Management, LLC. Additional information can be found at the Company’s website where it regularly posts information: https://www.randcapital.com/.
Safe Harbor Statement
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than historical facts, including but not limited to statements regarding the effectiveness of Rand’s investment strategy, the success of increasing interest income with new investments, the capital return potential of Rand’s equity investments, the competitive ability and position of Rand, and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) the risk that Rand and/or Rand SBIC may be unable to fulfill the conditions required in order to elect to be treated as a regulated investment company (RIC) for U.S. tax purposes; (2) evolving legal, regulatory and tax regimes; (3) changes in general economic and/or industry specific conditions; and (4) other risk factors as detailed from time to time in Rand’s reports filed with the Securities and Exchange Commission (“SEC”), including Rand’s annual report on Form 10-K for the year ended December 31, 2020, quarterly reports on Form 10-Q, the definitive proxy statement and other documents filed with the SEC. Consequently, such forward-looking statements should be regarded as Rand’s current plans, estimates and beliefs. Except as required by applicable law, Rand assumes no obligation to update the forward-looking information contained in this release.
FINANCIAL TABLES FOLLOW.
Rand Capital Corporation and Subsidiaries Consolidated Statements of Financial Position
March 31, 2021 (Unaudited)
December 31, 2020
ASSETS
Investments at fair value:
Affiliate investments (cost of $17,883,764 and $14,835,885 respectively)
$16,939,078
$13,891,199
Non- Control/Non-Affiliate investments (cost of $25,209,001 and $25,884,428, respectively)
35,368,907
26,157,302
Total investments, at fair value (cost of $43,092,765 and $40,720,313, respectively)
52,307,985
40,048,501
Cash and cash equivalents
14,912,362
20,365,415
Interest receivable (net of allowance of $15,000)
314,036
258,186
Prepaid income taxes
225,101
220,740
Other assets
209,672
74,100
Total assets
$67,969,156
$60,966,942
LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Debentures guaranteed by the SBA (net of debt issuance costs)
$10,834,007
$10,824,587
Dividend payable
-
3,434,117
Accounts payable and accrued expenses
99,476
171,373
Due to investment adviser
175,609
156,999
Capital gains incentive fees payable
2,600,000
-
Deferred revenue
258,227
153,895
Deferred tax payable
124,633
121,141
Total liabilities
14,091,952
14,862,112
Stockholders’ equity (net assets):
Common stock, $0.10 par; shares authorized 100,000,000; shares issued: 2,648,916; shares outstanding: 2,582,169
264,892
264,892
Capital in excess of par value
52,003,545
52,003,545
Treasury stock, at cost: 66,747 shares at 3/31/21 and 12/31/20
(1,545,834)
(1,545,834)
Total distributable earnings
3,154,601
(4,617,773)
Total stockholders’ equity (net assets) (per share – 3/31/21: $20.87, 12/31/20: $17.86)
53,877,204
46,104,830
Total liabilities and stockholders’ equity (net assets)
$67,969,156
$60,966,942
Rand Capital Corporation and Subsidiaries Consolidated Statements of Operations (Unaudited)
Three months ended March 31, 2021
Three months ended March 31, 2020
Investment income:
Interest from portfolio companies:
Affiliate investments
$319,416
$138,846
Non-Control/Non-Affiliate investments
391,346
396,855
Total interest from portfolio companies
710,762
535,701
Interest from other investments:
Non-Control/Non-Affiliate investments
12,627
83,250
Total interest from other investments
12,627
83,250
Dividend and other investment income:
Affiliate investments
94,926
13,125
Non-Control/Non-Affiliate investments
151,743
-
Total dividend and other investment income
246,669
13,125
Fee income:
Affiliate investments
39,356
1,250
Non-Control/Non-Affiliate investments
6,978
2,500
Total fee income
46,334
3,750
Total investment income
1,016,392
635,826
Expenses:
Base management fee
175,609
140,377
Capital gains incentive fees
2,600,000
-
Interest on SBA obligations
104,190
104,190
Professional fees
160,133
179,119
Stockholders and office operating
71,422
51,545
Directors' fees
36,500
28,375
Insurance
10,327
10,668
Corporate development
7,482
1,874
Other operating
-
358
Total expenses
3,165,663
516,506
Net investment (loss) income before income taxes
(2,149,271)
119,320
Income tax expense (benefit)
17,757
(419,101)
Net investment (loss) income
(2,167,028)
538,421
Rand Capital Corporation and Subsidiaries Consolidated Statements of Operations (continued, unaudited)
Three months ended March 31, 2021
Three months ended March 31, 2020
Net realized gain on sales and dispositions of investments:
Affiliate investments
135,430
-
Non-Control/Non-Affiliate investments
175,325
2,393,451
Net realized gain on sales and dispositions of investments
310,755
2,393,451
Net change in unrealized depreciation on investments:
Affiliate investments
-
(510,191)
Non-Control/Non-Affiliate investments
9,887,032
(218,132)
Change in unrealized depreciation before income taxes
9,887,032
(728,323)
Deferred income tax expense
-
1,773,412
Net change in unrealized appreciation (depreciation) on investments
9,887,032
(2,501,735)
Net realized and unrealized gain (loss) on investments
10,197,787
(108,284)
Net increase in net assets from operations
$8,030,759
$430,137
Weighted average shares outstanding
2,582,169
1,628,369
Basic and diluted net increase in net assets from operations per share
$3.11
$0.26
Rand Capital Corporation and Subsidiaries Consolidated Statements of Changes in Net Assets (unaudited)
Three months ended March 31, 2021
Three months ended March 31, 2020
Net assets at beginning of period
$46,104,830
$53,628,516
Net investment (loss) income
(2,167,028)
538,421
Net realized gain on sales and dispositions of investments
310,755
2,393,451
Net change in unrealized appreciation (depreciation) on investments
9,887,032
(2,501,735)
Net increase in net assets from operations
8,030,759
430,137
Declaration of dividends
(258,385)
-
Net assets at end of period
$53,877,204
$54,058,653
Rand Capital Corporation and Subsidiaries Reconciliation of Adjusted Net Investment Income per Share to GAAP Net Investment (Loss) Income per Share (unaudited)
In addition to reporting Net Investment (Loss) Income per Share, which is a U.S. generally accepted accounting principle (“GAAP”) measure, Rand presents Adjusted Net Investment Income per Share, which is a non-GAAP financial measure. Adjusted Net Investment Income per Share is defined as GAAP Net Investment (Loss) Income per Share less any capital gains incentive fees attributable to net change in unrealized appreciation (depreciation) on investments. GAAP Net Investment (Loss) Income per Share is the most directly comparable GAAP financial measure. Rand believes that Adjusted Net Investment Income per Share provides useful information to investors regarding financial performance because it is one method Rand uses to measure its financial condition and results of operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
Three months ended March 31, 2021
Three months ended March 31, 2020
Net Investment (Loss) Income per Share
$ (0.84)
$ 0.33
Capital gains incentive fees attributable to net change in unrealized appreciation (depreciation) on investments per share
1.00
-
Adjusted Net Investment Income per Share
$ 0.16
$ 0.33
View source version on businesswire.com: https://www.businesswire.com/news/home/20210510005260/en/
Company: Allen F. ("Pete") Grum President and CEO Phone: 716.853.0802 Email: pgrum@randcapital.com
Investors: Deborah K. Pawlowski Kei Advisors LLC Phone: 716.843.3908 Email: dpawlowski@keiadvisors.com
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