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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.55 | 2.48% | 22.75 | 21.50 | 22.75 | 22.82 | 22.05 | 22.14 | 18,749 | 01:00:00 |
Rand Capital Corporation (Nasdaq: RAND) (“Rand” or the “Company”), a business development company providing alternative financing for lower middle market companies, announced its results for the third quarter ended September 30, 2024.
"Our third quarter results reflect the strength of our investment strategy, highlighted by a 27% increase in total investment income, driven by the growth in our debt portfolio,” commented Daniel P. Penberthy, President and Chief Executive Officer of Rand. “The sale of SciAps, which netted us $13.1 million in total proceeds, and the sale of our remaining BDC holdings, which generated a realized gain, not only delivered substantial returns but also allowed us to reduce debt and improve liquidity. With over $24 million in total liquidity, we are well-positioned to capitalize on future opportunities. Following the closing of the SciAps transaction, we have further transitioned the portfolio closer to a targeted debt-focused portfolio, and will continue to focus on mezzanine debt investments, which we believe will help in delivering strong returns and supporting consistent shareholder dividends.”
Third Quarter Highlights (compared with the prior-year period unless otherwise noted)
Portfolio and Investment Activity
As of September 30, 2024, Rand’s portfolio included investments with a fair value of $75.0 million across 22 portfolio businesses. This was a decrease of $2.1 million, or 3%, from December 31, 2023, and reflected new and follow-on investments and valuation adjustments in multiple portfolio companies, offset by the SciAps exit, stock sales and other portfolio company loan repayments. At September 30, 2024, Rand’s portfolio was comprised of approximately 74% in debt investments and 26% in equity investments in private companies. The annualized weighted average yield of debt investments, which includes PIK interest, was 13.8% at September 30, 2024, compared with 13.6% at the end of 2023.
Third quarter 2024:
Liquidity and Capital Resources
Cash was $3.4 million at September 30, 2024. During the quarter, Rand utilized the proceeds from the portfolio company sale and cash on hand to reduce its outstanding borrowings by $13.3 million, leaving a principal balance of $3.9 million on its existing $25.0 million senior secured revolving credit facility at September 30, 2024. The outstanding borrowings carried an interest rate of 8.46% at quarter-end.
The Company did not repurchase any outstanding common stock during the third quarter of 2024.
Dividends
On July 31, 2024, Rand declared its regular quarterly cash dividend distribution of $0.29 per share. The cash dividend was paid during the third quarter to shareholders of record as of August 30, 2024. Rand’s fourth quarter dividend announcement is expected in early December.
Webcast and Conference Call
Rand will host a conference call and webcast on Wednesday November 6, 2024, at 1:30 p.m. Eastern Time, to review its financial results. The review will be accompanied by a slide presentation, which will be available on Rand’s website at www.randcapital.com in the “Investor Relations” section. 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 “Investors” where the replay will also be available.
A telephonic replay will be available from 5:30 p.m. ET on the day of the call through Wednesday, November 20, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13749407. A transcript of the call will also be posted once available.
ABOUT RAND CAPITAL
Rand Capital (Nasdaq: RAND) is an externally managed business development company (BDC). 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 primarily invests in businesses that have sustainable, differentiated and market-proven products, revenue of more than $10 million and EBITDA in excess of $1.5 million. 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: 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 strategy of the Company and its outlook; statements regarding the implementation of the Company’s strategy and the growth of its dividend and the timing for the Company’s fourth quarter dividend announcement; 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) evolving legal, regulatory and tax regimes; (2) changes in general economic and/or industry specific conditions; and (3) 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, 2023, quarterly reports on Form 10-Q, 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
September 30, 2024 (Unaudited)
December 31, 2023
ASSETS
Investments at fair value:
Control investments (cost of $6,043,779 and $5,272,770, respectively)
$
4,919,969
$
4,148,960
Affiliate investments (cost of $39,484,404 and $45,720,974,
respectively)
50,859,581
53,499,372
Non-Control/Non-Affiliate investments (cost of $21,524,089 and
$17,371,862, respectively)
19,256,017
19,477,380
Total investments, at fair value (cost of $67,052,272 and $68,365,606,
respectively)
75,035,567
77,125,712
Cash
3,352,734
3,295,321
Interest receivable
408,247
244,600
Prepaid income taxes
185,602
127,869
Deferred tax asset, net
367,765
39,179
Other assets
448,204
189,301
Total assets
$
79,798,119
$
81,021,982
LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Due to investment adviser
$
487,483
$
979,297
Accounts payable and accrued expenses
104,381
145,516
Line of credit
3,900,000
16,250,000
Capital gains incentive fees
4,346,000
2,279,700
Deferred revenue
513,619
552,256
Total liabilities
9,351,483
20,206,769
Stockholders’ equity (net assets):
Common stock, $0.10 par; shares authorized 100,000,000; shares
issued: 2,648,916; shares outstanding: 2,581,021 at 9/30/24 and 12/31/23
264,892
264,892
Capital in excess of par value
55,801,170
55,801,170
Treasury stock, at cost: 67,895 shares at 9/30/24 and 12/31/23
(1,566,605
)
(1,566,605
)
Total distributable earnings
15,947,179
6,315,756
Total stockholders’ equity (net assets) (per share – 9/30/24: $27.29; 12/31/23: $23.56)
70,446,636
60,815,213
Total liabilities and stockholders’ equity (net assets)
$
79,798,119
$
81,021,982
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three months endedSeptember 30, 2024 Three months endedSeptember 30, 2023 Nine months endedSeptember 30, 2024 Nine months endedSeptember 30, 2023 Investment income: Interest from portfolio companies: Control investments$
164,167
$
175,962
$
550,535
$
506,800
Affiliate investments
1,164,525
1,002,553
3,522,726
2,731,575
Non-Control/Non-Affiliate investments
616,903
357,162
1,681,209
1,067,745
Total interest from portfolio companies
1,945,595
1,535,677
5,754,470
4,306,120
Interest from other investments: Non-Control/Non-Affiliate investments
113
456
2,171
692
Total interest from other investments
113
456
2,171
692
Dividend and other investment income: Affiliate investments
13,125
13,126
39,375
419,951
Non-Control/Non-Affiliate investments
44,000
141,290
242,760
401,805
Total dividend and other investment income
57,125
154,416
282,135
821,756
Fee income: Control investments
4,515
4,515
13,547
12,726
Affiliate investments
202,834
40,072
331,369
246,816
Non-Control/Non-Affiliate investments
8,272
5,978
38,130
19,934
Total fee income
215,621
50,565
383,046
279,476
Total investment income
2,218,454
1,741,114
6,421,822
5,408,044
Expenses: Base management fee
309,265
268,609
934,532
769,869
Income based incentive fees
178,218
—
178,218
—
Capital gains incentive fees
313,000
(41,300
)
2,066,300
740,700
Interest expense
245,006
290,522
1,028,198
707,834
Professional fees
113,168
120,828
436,935
392,110
Stockholders and office operating
57,869
57,097
209,564
206,481
Directors' fees
66,550
66,550
196,950
197,791
Administrative fees
40,000
37,250
118,167
111,750
Insurance
10,467
10,380
33,891
33,720
Corporate development
387
—
10,813
4,267
Total expenses
1,333,930
809,936
5,213,568
3,164,522
Net investment income before income taxes:
884,524
931,178
1,208,254
2,243,522
Income tax (benefit) expense, including excise tax expense
(2,511
)
132,595
(1,171
)
237,393
Net investment income
887,035
798,583
1,209,425
2,006,129
Net realized gain (loss) on sales and dispositions of investments: Affiliate investments
6,980,728
—
6,148,837
2,596,094
Non-Control/Non-Affiliate investments
249,354
(2,802,731
)
4,959,445
(1,527,190
)
Net realized gain (loss) on sales and dispositions of investments, before income taxes
7,230,082
(2,802,731
)
11,108,282
1,068,904
Income tax expense
—
—
—
338,158
Net realized gain (loss) on sales and dispositions of investments
7,230,082
(2,802,731
)
11,108,282
730,746
Net change in unrealized appreciation/depreciationon investments: Affiliate investments
(5,153,166
)
—
3,596,779
(886,698
)
Non-Control/Non-Affiliate investments
(512,375
)
2,599,652
(4,373,590
)
3,521,053
Change in unrealized appreciation/depreciation before income taxes
(5,665,541
)
2,599,652
(776,811
)
2,634,355
Deferred income tax benefit
(184,940
)
—
(232,774
)
(66,441
)
Net change in unrealized appreciation/depreciation on investments
(5,480,601
)
2,599,652
(544,037
)
2,700,796
Net realized and unrealized gain (loss) on investments
1,749,481
(203,079
)
10,564,245
3,431,542
Net increase in net assets from operations
$
2,636,516
$
595,504
$
11,773,670
$
5,437,671
Weighted average shares outstanding
2,581,021
2,581,021
2,581,021
2,581,021
Basic and diluted net increase in net assets from operations per share
$
1.02
$
0.23
$
4.56
$
2.11
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets
(Unaudited)
Three months ended September 30, 2024
Three months ended September 30, 2023
Nine months ended September 30, 2024
Nine months ended September 30, 2023
Net assets at beginning of period
$
68,558,616
$
61,402,028
$
60,815,213
$
57,721,320
Net investment income
887,035
798,583
1,209,425
2,006,129
Net realized gain (loss) on sales
and dispositions of investments
7,230,082
(2,802,731
)
11,108,282
730,746
Net change in unrealized
appreciation/depreciation on
investments
(5,480,601
)
2,599,652
(544,037
)
2,700,796
Net increase in net assets from
operations
2,636,516
595,504
11,773,670
5,437,671
Declaration of dividend
(748,496
)
(645,255
)
(2,142,247
)
(1,806,714
)
Net assets at end of period
$
70,446,636
$
61,352,277
$
70,446,636
$
61,352,277
Rand Capital Corporation and Subsidiaries Reconciliation of GAAP Total Expense to Non-GAAP Adjusted Expenses (Unaudited)
In addition to reporting total expenses, which is a U.S. generally accepted accounting principle (“GAAP”) financial measure, Rand presents adjusted expenses, which is a non-GAAP financial measure. Adjusted expenses is defined as GAAP total expenses removing the effect of any expenses/(credits) for capital gains incentive fees accrual. GAAP total expenses is the most directly comparable GAAP financial measure. Rand believes that adjusted 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 September 30, 2024
Three months ended September 30, 2023
Nine months ended September 30, 2024
Nine months ended September 30, 2023
Total expenses
$
1,333,930
$
809,936
$
5,213,568
$
3,164,522
Exclude expenses/(credits) for capital gains
incentive fees
313,000
(41,300
)
2,066,300
740,700
Adjusted total expenses
$
1,020,930
$
851,236
$
3,147,268
$
2,423,822
Reconciliation of GAAP Net Investment Income per Share to Adjusted Net Investment Income per Share (Unaudited)
In addition to reporting Net Investment Income per Share, which is a GAAP financial measure, the Company 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 Income per Share removing the effect of any expenses/(credits) for capital gains incentive fees. GAAP Net Investment 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 September 30, 2024
Three months ended September 30, 2023
Nine months ended September 30, 2024
Nine months ended September 30, 2023
Net investment income per share
$
0.34
$
0.31
$
0.47
$
0.78
Exclude expenses/(credits) for capital gains
incentive fees per share
0.12
(0.02
)
0.80
0.28
Adjusted net investment income per share
$
0.46
$
0.29
$
1.27
$
1.06
View source version on businesswire.com: https://www.businesswire.com/news/home/20241106507003/en/
Company: Daniel P. Penberthy President and CEO 716.853.0802 dpenberthy@randcapital.com
Investors: Deborah K. Pawlowski / Craig P. Mychajluk Alliance Advisors IR 716-843-3908 / 716-843-3832 dpawlowski@allianceadvisors.com cmychajluk@allianceadvisors.com
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