RAND - Earnings call transcript Q3 2017 | Rand Capital Corporation

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Operator

Greetings and welcome to the Rand Capital Corporation Third Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference in being recorded. conference Rand your Capital. the Investor Deborah turn for Relations now over host to Pawlowski, I'll Thank please you, begin.

Deborah Pawlowski

quarter conference Thank you, time third your We certainly financial operator, and good today afternoon, for call. everyone. appreciate XXXX results Rand's

On distributed and Chief Penberthy, Officer; our Pete were Executive the Officer. Financial in with this Pete the press Vice will and published President results be me reviewing line Executive are Grum, today our morning. Chief Dan release and the Dan that

available is discussions it our release, posted that have don't that our you www.randcapital.com. at accompany on slides today on The If website also the will website. are

So, Slide at X, look Harbor the to discuss will and our Safe turn if you we Statement. slide would deck,

today. presentation apply As session. and to the factors you're uncertainties could company likely future we be with to well uncertainties our Exchange make from documents other that at aware, subject actual on the as by These as or this also where These cause These as documents filed Commission. risks www.sec.gov. and in question-and-answer may to statements release website, factors some we and that are Securities in during events earnings and found results are during as risks well are other the statements provided differ forward-looking can other and

the summarize regarding that, let detail results quarter the and to Pete to into then going greater with So, will is me first over turn who Dan go it financials.

Pete Grum

tell what's Rand. afternoon, everyone. to with on Good been going opportunity happy this you We're have to

quarter, slight of over from highlights his following all share, go end results At our in at or on who to X And will of of net which last increase discussion. start a NAV value the are Dan per you stood going quarter. financial end I'm asset the $X.X those later the quarter. For the current along, third Slide

of investor our within enabled relationship with really Business The Administration included which on of have Centivo their do called the small experience. employees moment. technology save or quarter I'll protocol. money development to developing the fund, but pre-licensing employers better self-insured they interesting administration is small last new the also Small are tech SAB company, pitch idea self-insured to $XXX,XXX business note the the our and companies. filed company they year. funded administration. is leverage debenture the a convertible million our pollution SBIC this business application they're in To and services, This under That quarter's company house year, we've investment the the approval with receive SBA a We're investment in provide our unsecured through that this, helps status and and over a later from $XX intended last for our phased SBIC approval

to our program debentures in to strategy. funds use will growth approval through this extended that noted, $X we of recently want SBA. to XXXX. have with the million that addition these Also XX, be note to our board of share previously As currently current the October We repurchase intend further

the give what's sense companies on some under you plan turn portfolio our feature of are We program. is the for available at on some the level, to We're not of to are you cash approximately delivery This repurchase. excess that a shares within We them. this all repurchase insight SBIC corporate Slide our XXX,XXX dependent have funds for can the each to quarter do of within share really to going opportunity now our X. this take We available on portfolio. going our companies with better into to to an our receive portfolio give of

machine processes prices process. printing. onetime. XD hardware in two surface They've been XD rows a two of one that year, accomplishes the the Last our product They of finished as include It proprietary that printed as has of and the the are on automated required recently the instrument the fast-growing a chemistry. This printed and supports removes and PostProcess the in structural printing that's product. unique expanding solutions three market. efficient the They in last with software, note and one Buffalo They PostProcess. at is have required valued based with invented plans the them support are this employees company developed program, product and has XX. XD comprehensive only offering new now grown big it's after to year start a Let's or We announced which device market the they've for investment had convertible a growth to and first XXX,XXX. new rapidly

New GiveGab CabatIthaca, on stake XXXX X,XXX to year. volume day. have of a giving nonprofits Revenues break-out volume XXXX to approximately volunteers started money days expected be company. provide to XXX% proven is grow and in up which secure pace more driver currently Next year are raise is single registered that donation transaction of connects social were organization. friendly and to considerably. We call A value than is user than be is platform $XXX,XXX. they platform. York, significant days X% growth more They Kim ownership a is transaction encourage on with The revenue team nonprofit and this on investing a what of for the XXX% their XXXX nonprofit a in all organized this by dollars they designated

operating platforms, users for their or is reduces that our I'm company The experience and integrated provide user as Earlier, that the highly of optimize for portfolio of Knoa, SuccessFactors support to they the a Suite. new third and New company they launched about experience version system going Knoa's SAP a SAP management end resource create the provide such solutions City York planning talk risk user HCM of and to SAP. application cost in enterprise and ERP is an for SAP of efficiencies and use XXXX, environments, XXX,XXX. that's business under applications. Slide analytics stage. revenue in mobile by software. and system into by we currently We X first including configurations approximately effective of They devices, conversion to browser where X% of provide user segmented and visibility value also user just and providing at equity is interesting invest portfolio in Knoa look on range way projects our broader by about average behavior our a

right. within call We way we based on expansion have about. the other have the spoke just into then last traction ways quarter GiveGab from and were characterized Since stage. ACV OnCore you last initial few I all Auction, revenue to of moved on their startup our been startup the They that companies have stage in to revenue portfolio current to what level high the to

this of is featured. it's PostProcess category new that in Our investment Centivo quarter just the I start as

for Knoa we you revenue phase an Finally, between the that third featured with just $X million and expansion company is categorized $XX I million.

plants has the develop As right, start exit company. I to previously, made mentioned company our progressed they to from portfolio our

impossible to how these the X. Fortunately, on transactions Slide we market all Then slowly predict quickly to they're turn or transaction. take and dependent

Everyone a you real we all chance followed our to by industry a know are diverse our and industries with company, turn in you estate, to X. over If we strategy change exception with us, how almost category Slide services. dramatically gets portfolio of have Consistent doesn't the and diversified time. financial invest retail the breakdown

We equity basic choices. or capital is the have two dissected our debt portfolio in characteristics, the

on value. net our towards debt focused as appreciation strategy has more has heavily our portfolio Accordingly, opposed instrument. capital equity been always to to asset Our weighted grow

near-term However, we portfolio. within stream adjust the on the our may depending of mix investment our objective flow cash

flow on has mix past Over a cash best year been the that expenses. or so, focus so our our the on to balance cover income on we develop building

as that to I everyone top Slide Given the we've five nearing snapshot from X. pleased to turn we portfolio investments that quarter. based time, September are unchanged is to This on And our market of made five last is are the XX. we of relatively cash chance operating in over our top investments breakeven. give this a value report

portfolio September valued portfolio value value. the investment $XX our of active The can at the half includes of towards here, as companies. And they're comprised Our top XX healthcare our industries. five software of at in see weighted and and about you is end million

you. once them our on Given for their portfolio, significance I again summarize

$X on produce and a beginning Orlando, patented We and design, surgical to invented Our instrumentation. GENICON firm they This distribute them is value Florida is based top investment of net million. XXXX.

The second $X.X referrals. to images eHealth value Rochester and our York they is its clinical large platform Based New records investments support proprietary to a to aggregate medical million. electronic on in on portfolio provide and patient

tools people this investment at Outmatch food behind team in workplace company with research productive, investments use is They And the are as molecular five well is have XXXX. business to Dallas, We've closely been in providing million. X.X labs job. follows right analytics X.X We $X.X our and investing fully the million. Four Rounding to Texas, more Rheonix million. our New employee's up Our the applications. York that proven facilitate investing This XXXX. investment in them into predict Outmatch, companies SocialFlow helping from medical who with performance. on started with driven hiring for started for as assays assessments Ithaca, at provides which automated valued of with beverage initial Based is match in our both the develops candidate top are be in XXXX. for eHealth investment

XXXX. solutions for and publishers, online, started their handles Time also media Conde marketing them social major electronic products. including campaign. We including SocialFlow investing Twitter LinkedIn. customize Inc., publishers in give Bloomberg advertising and They driven Facebook, and Many data Nast National Geographic, provide also utilize for

our Now the to that, Penberthy, and I'd Executive financial Chief like to President to Officer over Dan Vice it turn Financial results. cover

Dan Penberthy

good and everyone. afternoon, Pete, Thanks

start value Slide please If XX NAV. to asset you turn per with net share or I'll and could

with a we asset did finish at As the Pete share. mentioned, value per quarter $X.XX net

see the increased as we has income and penny per you growing trailing nearing NAV cash our are can been breakeven. quarter a share over investment As operating

since include peak favorable then December Additionally, on us of and XXXX, drive of as discuss our help for was the us. investments net a our on timing in a unrealized detail was portfolio been last quarter exit third The to on our NAV on These of value and both the quarterly we the which helps provider portfolio we I'll exit appreciation the which appreciation fully more recorded struggle flow slide. And have is are focused in our our succeed since market more generating basis cash more to cash helping value. was asset reduction which The XXXX strong natural the also next overtime. in a We the is progression markets. sizable flow realized Gemcor. monetize respective companies us rebuilding their end expenses that Gemcor XXXX cover assets. during gain

their predict Rand result in nor in Slide from experience investments timing. we potential, turn know full do to do Please crush exits can't we Additionally, realizing XX. but that exits

Here well period. our quarter performance of XXXX operating for XXXX, I've and the comparable year-to-date third summarized the as as

which As previously been mentioned, more instruments income see in can we've in you we've the increase and interest our the investing results. near-term, financial

Our last XX%. investment $X.XX third $XXX,XXX is XX% year up quarter over investment income million income and of year-to-date up our is of

last XX% compensation costs. are total Last $XXX,XXX expense, certain of year's included taxes transaction last related expenses than expenses QX XX% exit Additionally, year. lower below year. Gemcor incentive were Year-to-date expenses and

and this changes our in quarter. with our these valuation tax unrealized Athenex realized the net accordance investments, our Regarding $XX,XXX unrealized recorded gain policies. are in on of We in investment

The June As discount. trading market we depreciation reported. an and and but our had third public in result of go we did shares unrealized we these Athenex in quarter, shares from year, increased this restricted that value this are reported at valued been quarter, during last the a of

XX% shares September Our are of as restrictions a valued to due discount XX. now at the

intent year these do tax. fourth reflect our operating fluctuation amounting to have quarter However, this in company listed and quarter - third net we quarter some the position portfolio during unrealized of to XXXX. $XXX,XXX restrictions Last condition. fourth included during since of then losses These liquate

investments the portfolio of half we Looking year-to-date identified up The of unrealized finalization also at net value These per unrealized was Gemcor Slide and amount to had XX. XXXX line quarter bottom while for decrease. reflected impacted operations, to exit. factors third turn The during investment by primarily the some we year-to-date driven quarter increase, our also $XXX,XXX here. year-to-date are XXXX shown year's due $XXX,XXX, the gain asset results in year, losses a first The respective fluctuations. both Please realized a accounting recorded loss comparability. this XXXX on on share that unrealized our in net third net from

Our On $X.XX basis, remain balance per share investment a sheet the of end strong. continued have of we to cash, of portfolio September. at $X.X

which personally SBA have remaining funded we leverage and growth has due as been quarter. of portfolio end for the by the benefited the third Our our has of to past $X.XX from per share SBA

adds per back NAV liabilities. $X.XX have With turn our $X.X. that Pete. This other up and to net share asset I'll also or all to share of net of per value asset We it

Pete Grum

Dan. hope and to its you can Thanks, closing as am the hoping there's portfolio Rand companies. on I a see team with take We of next a hard management additional excitement So, me are company by In working lot that capital the that driving have going level to of our We we open line questions. this for put have let strategy. of that with to soon the to a up in variety wide growth our any to opportunities work SBA pipeline and

Operator

you. Thank

[Operator a conducting be we'll Now, question-and-answer session. Thank you. Instructions]

line the of Rebotsky Our Management. comes with Sam go first Asset question SER Please ahead. from

Sam Rebotsky

Dan. and Yeah. Good afternoon, Pete

Dan Penberthy

you? are How Sam. Hi,

Sam Rebotsky

Good, good.

the the besides expect - do during end So, authentic? let be to of exit have year any current me we

Dan Penberthy

We regularity. with those of any predict can't degree

investment We our that's leave intend into in going I where do position talking liquidate I'll We to have Athenex. some guess that insider with And bankers. without it. are information

Sam Rebotsky

Okay. the now you've going happening? And quarter - you that that this get indicated the expect is XXX% that's loan, that a is end like of to before

Dan Penberthy

put they at of Puerto get we they who What will year and a No, so end they I or how big been we guy in our let other, me That's I Difficulty] hopefully effort great trying of and so, time the answer with that places some SBA But show weeks the know would Dan that's hit I'm to it all Rico and allow is the would part answer ago the process that we to one busy went growth is I couple of think think recovery [Technical sure strategy. them will trade then we in a by and big part got a commitment next SBA, a the kept hurricane. we've way we for were that of or to the borrow met make and are is and from by the positive the but get our into. people running clear. month describe what link, of we

Sam Rebotsky

okay. Okay,

the you've any there Now realizing the zero, of example, positives far about on, as your portfolio of down is losses your some investments Dining of to or your stocks Cards, of kind Teleservices what you these that add for City there, have you what spoke any to written that what of the value are is expectation expectations expectation?

Pete Grum

at with not in As valuation is the the time that reflected is may policy, time but our zero our of and at they them. point according that predicting back possibility of come that's value some this we're There all and expected valuation. any

Sam Rebotsky

with a them to there with sort buyer work you investments? way a value if is to try find find do to to of something Do a of or these some

Pete Grum

and setters company. in or Teleservices if in are working just the still we a companies our large and in are contact capital that point receive is are at into high We with now structure. That this the robust fairly time. believe was we we where any there time do, is without a and We specific, liquidation that that going them paid

our that can't at and point, zero, them as time over But every this evaluate if it's not grow Now continue are change that proceeds zero. companies grow expected or we quarter.

Sam Rebotsky

now. right question final One Okay.

things of be need may appear is for a valuation that? authorization with your you you giving though written market shares it with XX% find at buy respect What good own the trading you the do It even and stated stock to may very $X the even your are not think have? a possibly you With discount that investment though cash. cash, a the other and to sufficient a down would

Pete Grum

XXX% in that shares I've for are buy are parent been The only to able investment our to tend be on you it buy we companies fee where private the allowed. those of cash back. back shares have is and bank that and dependent this cash and is have for that cash At point, shares our first I list. agree we cash SBA do we with to have to subsidiary, my At for available academically I repurchase. this on buy cash from where would we point, tell share company back. to the We can don't perspective, you you have agree excess limited with you get and have I cash, Conceptually, cash XXX%. excess its

Sam Rebotsky

give stock at Then some the Okay. this I trades suggest XX% that at to the this long be in in And cash as to dividend hold the judgment some you would try point. a achieve could what that words to create shares my as other That way shareholders cash to improve. basically some on try of level investments, to open market would this buy at and use the back discount. subsidiary with

Pete Grum

sure clear in It's want make parent. only money that I is am to I subsidiary the purchase is the to back. available not at the shares

Sam Rebotsky

need What $X parent money in you you a other could parent, if at parent? some to the do then money you million to need have do buy the get the at shares. you could money What parent, do you you what at get the no words at need get

Pete Grum

back enough it's subsidiary and take we the I positive cash understand we the follow. network and saying, parent We that I do and an that. understand can this at and SBA protocol what money we you're have had from we that when regulation point, I at But don't. buying some wish shares

Sam Rebotsky

good right luck. Okay. All

Pete Grum

Sam. appreciate We your you, always support. Thank

Sam Rebotsky

Okay. you. Thank

Operator

Circle line Advisors proceed. question Instructions] [Operator of with next the [ph]. Our Please comes from Thank you. Bill and McClain

Unidentified Analyst

doing? you Hey gentlemen, how

Sam Rebotsky

Hi Bill.

Unidentified Analyst

shares? Good. money have borrowing low a to ability how borrow There repurchase the are costs parent given company and is now

Dan Penberthy

BDC but it think SBA. part to it regulation Leverage the as on have amount, to I leverage about don't of thing. accounts go I maybe It the

out time figure at would to have just that borrow, we who spent looked money. those have We trying would lend who and now

Unidentified Analyst

so today's shares, Let's me But asset to seems greatly I had say you cost the the be to interest of money don't to use if roughly FNX discount as might borrow and exceeds know money to it be best repurchase given shareholders' I in would had value. could to net XX% and with you've free collateral it their just investing how much forth. success

just take at So, would that. suggest I a look to

Dan Penberthy

notes right now. Taking Okay.

that very there's with parent the And first a information level. that at as the assets are your that For in are SBA once the are on lien assets that. few subsidiary

Unidentified Analyst

I are I might mean find bit or was be there need opportunities closed extraordinary way XX% just discount, a addressed transaction. allocators, I smart it's are best of they know should investors the at put be through your to sense guys a size if little Anyway, at like it smart maybe folks I a are and make is end Well discount capital only you a guess or trading action. let's funds to which understand thought they that listen think some smart XX% could few with I with thing by this help one would you somebody lot a Great. you say something it. trade a most extraordinary that of peers out

Dan Penberthy

you. Thank Okay.

Unidentified Analyst

Sure

Operator

next Our from SER with proceed. Rebotsky Sam of question line the Management. Please comes Asset

Sam Rebotsky

cash automatically those to it is as that lines to go sold, extent that the these becomes long appendix SBA? Just as the does is and

Dan Penberthy

at we FNX and SBA those an a if a ago. and owned parent there few of done by gas and that SBA of other it, only that's for funds the Yeah, pipeline have XX, as were smaller are BX. our asset years investments XX is fee But is that's - first

Sam Rebotsky

in what down get other zero be assets money. to up the to I'm to hold use the So, liability? of percentage it to the words SBA, trying is your understand, million to against to balanced to have since that have able you X.X

Dan Penberthy

the Well, they owned by are all SBIC.

the have that. positive circumstances SBA of to of dictate certain we some there cash network that ability we part and where under regulation is that Now as are upstream enough have roles the

created cash to thought down then I SBIC investing up back money II. forum, we was is out positive the to we took But Our the SBIC parent out, having SBIC to II by jump the fund ability exits. because results created and

Sam Rebotsky

flexibility, - understand what the I out stock, stock to amount have to next you when not the to going has held going any you're money on - be decide buy trying to drawn before or I'm don't also one dollar didn't to you've buy be So, Gemcor for understand? from this you one. the flexibility That's had

Dan Penberthy

to and into was cash that parent primarily ability a of flow answer, it clear not at look I from a exit, had take just do a it the various but there And very out an proceeds but is come have money subsidiary parent from we we When cash of money tend taking formula, that things. have we wish we we had do at can parents. one out the those that, to

Sam Rebotsky

you want you work a also you think for with I have assets try with helpful. it Well funds. you think with money raising and limited out stocks your of out higher, I stock the plenty be more figure selling carve to have the amount all would it in traded think to objectivity this, some more coverage would discount, and and SBIC and And of flexibility the at these the I

could essence And cash. work you. So, your you abilities. the you're that anyhow it purpose utilization Hope any without thought it point Thank of out. this at my defeats that's bank of relative in

Operator

Thank you.

question over management floor would closing for to like further remarks. no back queue time. have in We I hand this at to the

Pete Grum

Thank about today talking you. with quarter. enjoyed We this you and talking

we of to quarters look but to quarter. forward you call between any those For at feel time next free to you us talking

Operator

you. Thank teleconference. This today's concludes

you this participation. lines thank may disconnect your You at for your time and

Rand Capital (RAND) 8 Nov 172017 Q3 Earnings call transcript