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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 June 30, 2021.
Allen F. (“Pete”) Grum, President and Chief Executive Officer of Rand, commented, “We are executing on our strategy to position our portfolio to grow investment income. The portfolio continues to perform well supported by improving economic activity which is driving growth in total investment income. We believe our strong liquidity and pipeline of potential investments present further growth opportunities. We expect this to ultimately deliver sustained growth in net investment income and subsequently our quarterly cash distributions.”
Second Quarter Highlights
Portfolio and Investment Activity
As of June 30, 2021, Rand’s portfolio consisted of 35 companies. At that date, the dollar value of the portfolio was comprised of approximately 55% in equity investments, 36% in fixed-rate debt investments and 9% in dividend paying, publicly traded BDCs. The annualized weighted average yield of debt investments was 11.9%.
Liquidity and Capital Resources
Cash and cash equivalents at the end of the quarter was $12.9 million and represented 22.3% 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 SBIC debenture program. The earliest debenture maturity is in September 2022 when $3 million in borrowings are due.
Dividend Distributions
On July 29, 2021, the Board declared a regular quarterly cash dividend distribution of $0.10 per share to be paid on or about September 16, 2021, to shareholders of record as of September 2, 2021.
Webcast and Conference Call
Rand will host a conference call and live webcast today, August 9, 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, August 16, 2021. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13721240. 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, and execution on, Rand’s investment strategy, the success of increasing interest income with new investments, the capital return potential of Rand’s equity investments, the strength of the pipeline of potential 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
June 30, 2021 (Unaudited)
December 31, 2020
ASSETS
Investments at fair value:
Control investments (cost of $1,753,590 and $0, respectively)
$
602,569
$
-
Affiliate investments (cost of $21,817,833 and $14,835,885, respectively)
20,873,147
13,891,199
Non-Control/Non-Affiliate investments (cost of $23,525,430 and $25,884,428, respectively)
38,331,679
26,157,302
Total investments, at fair value (cost of $47,096,853 and $40,720,313, respectively)
59,807,395
40,048,501
Cash and cash equivalents
12,944,885
20,365,415
Interest receivable (net of allowance of $15,000)
287,702
258,186
Prepaid income taxes
215,883
220,740
Other assets
182,563
74,100
Total assets
$
73,438,428
$
60,966,942
LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Debentures guaranteed by the SBA (net of debt issuance costs)
$
10,843,425
$
10,824,587
Dividend payable
-
3,434,117
Accounts payable and accrued expenses
161,093
171,373
Due to investment adviser
212,907
156,999
Capital gains incentive fees
3,660,000
-
Deferred revenue
332,126
153,895
Deferred taxes
109,056
121,141
Total liabilities
15,318,607
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 6/30/21 and 12/31/20
(1,545,834
)
(1,545,834
)
Total distributable earnings
7,397,218
(4,617,773
)
Total stockholders’ equity (net assets) (per share – 6/30/21: $22.51, 12/31/20: $17.86)
58,119,821
46,104,830
Total liabilities and stockholders’ equity (net assets)
$
73,438,428
$
60,966,942
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three months ended June 30, 2021
Three months ended June 30, 2020
Six months ended June 30, 2021
Six months ended June 30, 2020
Investment income:
Interest from portfolio companies:
Control investment
$
2,867
$
-
$
2,867
$
-
Affiliate investments
295,085
170,262
614,501
309,108
Non-Control/Non-Affiliate investments
344,254
400,424
735,600
797,279
Total interest from portfolio companies
642,206
570,686
1,352,968
1,106,387
Interest from other investments:
Non-Control/Non-Affiliate investments
243
2,754
12,870
86,004
Total interest from other investments
243
2,754
12,870
86,004
Dividend and other investment income:
Affiliate investments
13,125
13,125
108,051
26,250
Non-Control/Non-Affiliate investments
123,922
81,313
275,665
81,313
Total dividend and other investment income
137,047
94,438
383,716
107,563
Fee income:
Affiliate investments
24,562
4,167
63,918
5,417
Non-Control/Non-Affiliate investments
6,979
2,500
13,957
5,000
Total fee income
31,541
6,667
77,875
10,417
Total investment income
811,037
674,545
1,827,429
1,310,371
Expenses:
Base management fee (see Note 8)
212,907
141,386
388,516
281,763
Capital gains incentive fees (see Note 8)
1,060,000
-
3,660,000
-
Interest on SBA obligations
104,190
104,190
208,380
208,380
Professional fees
123,991
77,917
284,124
257,036
Stockholders and office operating
69,661
116,299
141,083
167,844
Directors' fees
38,900
28,375
75,400
56,750
Insurance
9,380
7,400
19,707
18,068
Corporate development
821
132
8,303
2,006
Other operating
108
107
108
465
Total expenses
1,619,958
475,806
4,785,621
992,312
Net investment (loss) income before income taxes
(808,921
)
198,739
(2,958,192
)
318,059
Income tax expense (benefit)
1,966
-
19,723
(419,101
)
Net investment (loss) income
(810,887
)
198,739
(2,977,915
)
737,160
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Operations
(continued, unaudited)
Three months ended June 30, 2021
Three months ended June 30, 2020
Six months ended June 30, 2021
Six months ended June 30, 2020
Net realized gain on sales and dispositions of investments:
Control investments
-
-
-
-
Affiliate investments
-
-
135,430
-
Non-Control/Non-Affiliate investments
1,817,350
18,595
1,992,675
2,412,046
Income tax benefit
-
-
-
-
Net realized gain on sales and dispositions of investments
1,817,350
18,595
2,128,105
2,412,046
Net change in unrealized appreciation/ depreciation on investments:
Affiliate investments
-
(5,613
)
-
(515,804
)
Non-Control/Non-Affiliate investments
3,495,322
211,850
13,382,354
(6,282
)
Change in unrealized appreciation/ depreciation before income taxes
3,495,322
206,237
13,382,354
(522,086
)
Deferred income tax expense
951
-
951
1,773,412
Net change in unrealized appreciation/ depreciation on investments
3,494,371
206,237
13,381,403
(2,295,498
)
Net realized and unrealized gain on investments
5,311,721
224,832
15,509,508
116,548
Net increase in net assets from operations
$
4,500,834
$
423,571
$
12,531,593
$
853,708
Weighted average shares outstanding
2,582,169
2,103,093
2,582,169
1,950,058
Basic and diluted net increase in net assets from operations per share
$
1.74
$
0.20
$
4.85
$
0.44
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets
(unaudited)
Three months ended June 30, 2021
Three months ended June 30, 2020
Six months ended June 30, 2021
Six months ended June 30, 2020
Net assets at beginning of period
$
53,877,204
$
54,058,653
$
46,104,830
$
53,628,516
Net investment (loss) income
(810,887
)
198,739
(2,977,915
)
737,160
Net realized gain on sales and dispositions of investments
1,817,350
18,595
2,128,105
2,412,046
Net change in unrealized appreciation/ depreciation on investments
3,494,371
206,237
13,381,403
(2,295,498
)
Net increase in net assets from operations
4,500,834
423,571
12,531,593
853,708
Purchase of treasury shares
-
(14,304
)
-
(14,304
)
Declaration of dividend
(258,217
)
(4,756,606
)
(516,602
)
(4,756,606
)
Net assets at end of period
$
58,119,821
$
49,711,314
$
58,119,821
$
49,711,314
Rand Capital Corporation and Subsidiaries Reconciliation of Operating Expenses to GAAP Total Expense (unaudited)
In addition to reporting Total Expenses, which is a U.S. generally accepted accounting principle (“GAAP”) financial measure, Rand presents Operating Expenses, which is a non-GAAP financial measure. Operating expenses are defined as GAAP Total expenses less any expenses for capital gains incentive fees attributable to net change in unrealized appreciation (depreciation) on investments. GAAP Total expenses is the most directly comparable GAAP financial measure. Rand believes that Operating expenses provides useful information to investors regarding financial performance because it is a method the Company uses to measure its financial and business trends related to its 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 June 30, 2021
Three months ended June 30, 2020
Total expenses
$
1,619,958
$
475,806
Exclude capital gains incentive fees
1,060,000
-
Operating expenses
$
559,958
$
475,806
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”) financial 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 a method the Company uses to measure its financial and business trends related to its 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 June 30, 2021
Three months ended June 30, 2020
Net Investment (Loss) Income per Share
$
(0.31
)
$
0.08
Capital gains incentive fees per share
0.41
-
Adjusted Net Investment Income per Share
$
0.10
$
0.08
View source version on businesswire.com: https://www.businesswire.com/news/home/20210809005064/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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