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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 14.10 | 5.68 | 22.56 | 0 | 09:09:51 |
Rand Capital Corporation (Nasdaq: RAND) (“Rand” or the “Company”), a business development company (“BDC”), announced its results for the quarter and year ended December 31, 2020.
Allen F. (“Pete”) Grum, President and Chief Executive Officer of Rand, commented, “We made measurable progress in 2020 with the transformation of Rand Capital. We declared a special dividend of $23.7 million, or $1.62 per share in March; executed a 1:9 reverse stock split in May; declared the 2020 dividend of $1.33 per share in December and continued to evolve our portfolio. Importantly, we have now structured a path for regularly quarterly dividend payments.”
He added, “The evolution of our portfolio to align with our strategy to be a dividend paying BDC is apparent in the 14% growth in investment income for the year. We focused on more interest-yielding debt securities to increase our investment income in support of our planned regular quarterly cash dividends. We also purchased the securities of several other publicly traded BDCs. This put capital to work earning dividends while providing for ready liquidity as our lending pipeline builds. Through liquidations or exits, we also reduced equity investments by seven portfolio companies. Our equity holdings at the end of 2020 comprised 50% of our portfolio, down from 59% when we entered the year, excluding the investments made in other BDCs. Importantly, we believe most of the remaining portfolio equity investments have strong capital return potential.”
Fourth Quarter Highlights
2020 Highlights
Portfolio and Investment Activity
As of December 31, 2020, Rand’s portfolio consisted of 36 companies. At that date, the portfolio was comprised of approximately 50% in equity investments, 41% in fixed-rate debt investments and 8% in dividend paying, publicly traded BDCs. The annualized weighted average yield of debt investments was 12.7%.
Rand made $4.3 million in new and follow-on investment in the quarter. These included:
Liquidity and Capital Resources
During the quarter, the Company repurchased 3,234 shares of outstanding common stock for $39,000 under a $1.5 million share repurchase authorization. The average purchase price was $11.98 per share. For the year, Rand has repurchased 6,631 shares of outstanding common stock for $77,000 at an average purchase price of $11.57 per share. Total shares outstanding at year-end were 2,582,169.
Cash and cash equivalents at the end of the quarter was $20.4 million and represented 44% 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.
Webcast and Conference Call
Rand will host a conference call and live webcast today, March 8, 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, March 15, 2021. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13715235. 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 new 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 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
(Audited)
December 31,
2020
2019
ASSETS
Investments at fair value:
Affiliate investments (cost of $14,835,885 and $19,035,446, respectively)
$
13,891,199
$
12,151,435
Non- Control/Non-Affiliate investments (cost of $25,884,428 and $25,584,017, respectively)
26,157,302
24,869,357
Total investments, at fair value (cost of $40,720,313 and $44,619,463, respectively)
40,048,501
37,020,792
Cash and cash equivalents
20,365,415
25,815,720
Interest receivable (net of allowance of $15,000 and $166,413, respectively)
258,186
142,265
Deferred tax asset
-
1,204,198
Prepaid income taxes
220,740
343,096
Other assets
74,100
265,378
Total assets
$
60,966,942
$
64,791,449
LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Debentures guaranteed by the SBA (net of debt issuance costs)
$
10,824,587
$
10,786,913
Dividend payable
3,434,117
-
Accounts payable and accrued expenses
171,373
207,873
Due to investment adviser
156,999
50,564
Deferred revenue
153,895
37,583
Deferred tax payable
121,141
-
Bonus payable
-
80,000
Total liabilities
14,862,112
11,162,933
Stockholders’ equity (net assets):
Common stock, $0.10 par; shares authorized 100,000,000; shares issued: 2,648,916 at 12/31/20 and 1,688,485 at 12/31/19; shares outstanding: 2,582,169 at 12/31/20 and 1,628,369 at 12/31/19
2,384,547
1,519,637
Capital in excess of par value
49,883,890
34,142,455
Treasury stock, at cost: 66,747 shares at 12/31/20 and 60,116 shares at 12/31/19
(1,545,834
)
(1,469,105
)
Total distributable earnings
(4,617,773
)
19,435,529
Total stockholders’ equity (net assets) (per share - 2020: $17.86, 2019: $32.93)
46,104,830
53,628,516
Total liabilities and stockholders’ equity (net assets)
$
60,966,942
$
64,791,449
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited) (Audited)For the Quarter Ended December 31,
For the Year Ended December 31,
2020
2019
2020
2019
Investment income: Interest from portfolio companies: Affiliate investments
$
179,147
$
190,861
$
666,969
$
823,565
Non-Control/Non-Affiliate investments
$
541,535
280,122
1,794,974
696,975
Total interest from portfolio companies
720,682
470,983
2,461,943
1,520,540
Interest from other investments: Non-Control/Non-Affiliate investments
623
58,410
87,784
166,556
Total interest from other investments
623
58,410
87,784
166,556
Dividend and other investment income: Affiliate investments
79,355
13,125
118,730
320,806
Non-Control/Non-Affiliate investments
147,826
259,042
309,351
259,042
Total dividend and other investment income
227,181
272,167
428,081
579,848
Fee income: Affiliate investments
5,000
16,179
15,417
27,639
Non-Control/Non-Affiliate investments
102,194
167,186
109,694
430,113
Total fee income
107,194
183,365
125,111
457,752
Total investment income
1,055,680
984,925
3,102,919
2,724,696
Expenses: Base management fee
155,318
85,483
589,519
85,483
Interest on SBA obligations
104,190
104,190
416,760
408,039
Professional fees
185,062
141,182
568,857
548,041
Shareholders and office operating
40,400
91,003
258,266
557,546
Directors' fees
31,375
30,128
116,500
117,500
Insurance
7,767
7,232
33,868
38,302
Corporate development
2,066
15,814
14,546
67,441
Other operating
90
14,091
662
17,504
Salaries
-
76,790
-
621,290
Bonuses
-
115,000
-
115,000
Employee benefits
-
45,452
-
189,157
Bad debt (recovery) expense
-
-
(24,000
)
5,413
Total expenses
526,268
726,365
1,974,978
2,770,716
Net investment income (loss) before income taxes
529,412
258,560
1,127,941
(46,020
)
Income tax (benefit) expense
(209,086
)
158,175
(628,187
)
39,677
Net investment income (loss)
738,498
100,385
1,756,128
(85,697
)
Net realized (loss) gain on sales and dispositions of investments: Control investments
-
-
-
80,393
Affiliate investments
(7,984,468
)
-
(7,927,552
)
(472,632
)
Non-Control/Non-Affiliate investments
(410,857
)
1,510,000
1,944,273
1,510,000
Net realized (loss) gain on sales and dispositions, before income taxes
(8,395,325
)
1,510,000
(5,983,279
)
1,117,761
Income tax expense
-
346,784
-
255,923
Net realized (loss) gain on sales and dispositions of investments
(8,395,325
)
1,163,216
(5,983,279
)
861,838
Net change in unrealized depreciation on investments: Affiliate investments
6,455,129
(2,793,687
)
5,939,325
(3,970,007
)
Non-Control/Non-Affiliate investments
1,011,763
3,017,636
987,534
(3,325
)
Change in unrealized depreciation before income taxes
7,466,892
223,949
6,926,859
(3,973,332
)
Deferred income tax expense (benefit)
182,530
6,198
1,955,942
(907,521
)
Net change in unrealized depreciation on investments
7,284,362
217,751
4,970,917
(3,065,811
)
Net realized and unrealized (loss) gain on investments
(1,110,963
)
1,380,967
(1,012,362
)
(2,203,973
)
Net increase (decrease) in net assets from operations$
(372,465
)
$
1,481,352
$
743,766
$
(2,289,670
)
Weighted average shares outstanding
2,583,622
1,241,719
2,268,356
836,893
Basic and diluted net increase (decrease) in net assets from operations per share
$
(0.14
)
$
1.19
$
0.33
$
(2.74
)
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets
2020
2019
Net assets at beginning of year
$
53,628,516
$
31,524,187
Net investment income (loss)
1,756,128
(85,697
)
Net realized (loss) gain on sales and dispositions of investments
(5,983,279
)
861,838
Net change in unrealized depreciation on investments
4,970,917
(3,065,811
)
Net increase (decrease) in net assets from operations
743,766
(2,289,670
)
Declaration of dividends
(8,190,723
)
-
Issuance of capital stock, net
-
24,393,999
Purchase of treasury shares
(76,729
)
-
Net assets at end of year
$
46,104,830
$
53,628,516
View source version on businesswire.com: https://www.businesswire.com/news/home/20210308005200/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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