RAND - Earnings call transcript Q4 2017 | Rand Capital Corporation

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Operator

Greetings and welcome to the Rand Capital Corporation Fourth Quarter and Full-Year 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'll now turn the conference over to your host Karen Howard. you. Thank

begin. may You

Karen Howard

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

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

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

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

the is who my the turn filed for Pete who and at found And It Pete. is factors from apply differ risks aware, regarding likely pleasure other going uncertainties or Dan the this to to also Exchange in question-and-answer other you're to as presentation let summarize and as As results and as and now our year by detail financials. that risks and where other statements the well we highlights the that future the documents factors to can documents the subject could are then actual be uncertainties with may and statements events today. Commission. are make on fourth quarter that, provided These as with release www.sec.gov. to and some it cause forward-looking website, to well during during earnings Company are over These will in me These more we introduce Securities session. add

Allen Grum

all for Good afternoon, thank us. everyone, and joining you

and on to to quarter have on with XXXX. this the reflection are begin you fourth update of happy We opportunity Rand's full-year activities

NAV activities, we and we partially the a grew I our more during either Jobs share as of along, per start asset net For share, over Cuts the per up fourth go At in $X.XX, value Slide was to detail. end quarter. highlights going from following $X.XX will to of at you by by who referred of the on grew end the X, $X.XX are which to the am to our presentation impact Tax those $X.XX that of Act. Dan but portfolio financial his that September. Due offset year,

During the about a few momentums. in Half was of $X.X the Technology. and in of shares quarter, fourth growing talk will preferred we invested this that a I in Tilson was form half more of company exciting million that loan.

access. realized of It about waiting as have as shares approximately we from of company market. position pretax in quarter, in you to generated the liquidated the we point sold I we public June. mentioned our of We open XXX,XXX with all Athenex. proceeds. want discussions entire for one We in our XXX,XXX our Small Recall our the Business lockup expiration update status far that had the Administration. During ongoing previous this gains. at After the conversation, went that period, on

this concluding and several in work work continue to next anticipate We with them months. the

our leverage goal to mutually and more get with continue Our SBA. relationship is the successful

million. to for had of highlights you, I'll listed We some a nine Let's now To year. here. totaling solid X, transactions turn Slide the investment summarize year we $X.X where the remind

in them income. building the equity. quarter. XX% was our was third the investment company of in Centivo XX% an amounts focus follow-ons the a portfolio and to and form XXXX one new instruments investment from quarter. our vary XXXX and Accordingly usual for on of As we quarter investment of Eight debt XXXX continued in were

at investment our $XX.X ended a compared up the year XX% XXXX. We to significant increase which valued with over drove is in investments portfolio Our income million. when

once we them. again If of you X, you could insight companies opportunity give our take to to to more feature the into portfolio some this all within turn Slide

been each may sense have doing you this give on company. recall, quarter of to inside we you going portfolio As better our what's of

Tilson throughout Tilson. Portland, the in with upstate start New York. has including presence Maine U.S., headquartered Let's

$X.X one mentioned a a a ago, million I follow was that round quarter XXXX. D initial investment the Series As moment our investment was This fourth we during part million ranked invested as and of in on $X financing. third since

firm. You They very is consulting for growing and deployment and and government cellular markets. broadband veteran for in professional two construction network and owned an may award-winning, Tilson fast primarily markets; utilities, governments; that IT, recall network IT services energy, institutional and operate carriers, and deployment

examples the include Some that projects of the following. are in the

[New York Tilson with intricacies projected for system the an state customer season as create or in an project, of companies the public application. able asked with during being each antenna that its in complete selected. the The important the Tilson NFL was understanding a issues service interruptions finally needed causing issues program, a Field] assist distributed program details universal AT&T were home and during the game. Buffalo financial the from [indiscernible] $XXX to Stadium, help the DAS season and commissioning network from reverse Tilson to about to through selection policy of Friday investment analyzes the that compliance deployment think chance coordinate downtime the a optimization. broadband particularly Federal they maximizing the practices the outlining a to facility-wide season. was you coordinated auction with Wireless in public and system to essence schedules, Era installation First, games example respond everything the without provided and development Tilson State tell software phased combined broadband guaranty with They deployment. requirements. utilizing that's application approach Verizon a million New to will extra Communication with the Tilson They NFL team to DAS a upgrade service. and during around next work Bell, an no impacting and development By

on XXX,XXX broadband York New valuation the under-served business our done make these date and their statement through of its of improved financial and cycle time have broadband as of want incremental fair that and aware or are to is of our program institution sure has financing also increase. nature each goal milestones XX December its and well total, transactions same been funded value life all. a on reflecting to increases in the had reaching And far dramatically which armed Tilson, we development. Typically I inherent to value the will $X.X invested service. company's amount. ultimate have stepped businesses you are companies way of for million new reach to receive the communities in So In improved

original with consistent this However, rules and our and example have as others of fair costs. an value is Tilson accounting well. we remained our

We Georgia. leading $XXX,XXX in also to during Let range. number value rate recent driven based including manufacturer most XX%, versatile invested EBITDA quality, and XXXX, has of are their models providing fiberglass annual in dealers me increase features They our than with has fourth over tell available. one Carolina greater the the Skiff XX states at functionality growth XX offer and the which XXXX. respectively. you footprint high outboard Skiff's outboard grown an financial us compound Their about in established They is size by more strong the Carolina the Skiff initially boats, Carolina within and international brand carrying Since X% performance revenue quarter. installation. than XX and has best

move. the significantly platform logistic. a of XX-men than arbitration vehicle Subsequent and acquisition. to dealers the you can auction management, end, then value our in plan Based year [indiscernible] Auction's $XX,XXX report buyers fair become purchase cost our stadium at had is for title ACV cover As good see auction mission greater condition to trusted is operations, million two source starts Buffalo, of vehicles. large here, companies $X.XX ACV floor to wholesale is The purchasing, a They and begun. facility including thorough wholesale with Auction portfolio

in was XXXX. investment initial Our

vehicles C but it ACV that on of we XXXX, ups advance in plans data time a funding. is an month, currently sell to also Rand operates share value Just the This believe $XX announced Auction per did a secure to Company Coast expanding a further experience, and for that located to customer month. technology participate historical growth. million round, analytics XX user-funding last markets continuing that by not throughout Company growing Series over our ACV venture to to warehouse The and and expand. while week including cars XXX and the exciting Coast. and rapidly selling capital dealers sign and of the X,XXX over East over XX $XX double brings a to end enable It's vehicle. presence enhancement growing continue around to end-to-end our with Auction currently ACV West total is and By markets the expected Midwest. ACV. the to funding have new new million Auction Company and consumption

Finally, me on tough York. the based GiveGab, which on Ithaca, is New let

engagement. not-for-profit many You in software another their XXXX. being online robust donor of of Giving Day X,XXXs software Giving Day's are supported days in through of for of XXXX, This GiveGab world. its In multimillion the also of GiveGab. not-for-profit and fund event, easy-to-use brings fiscal platform and raising, across through is relationships Giving XX,XXX event known in may with everyday inception. our provides acquisition and closer modern the GiveGab This not-for-profit its more over Kimbia. dollar raising to across best invested the sort recall Day's nationwide that the several Kimbia acquisition from January, their which long-term supporter of Day's initially cultivates and GiveGab the largest XX more, is combined We Giving the is Giving fund announced their in efforts for that giving GiveGab country having the Giving Day. exciting management first GiveGab between supporter country, has products chartable part launched its since

the to by which you of categories X, Slide of go will companies revenue the all see logos portfolio stage. our Let's

You've Initial you seen Revenue, Expansion and on up's this right. and a High included what before left, start of the most presentation, if call the Traction our on we then look we

Tilson Company's right, you five we is can see which Traction the four category. revenue on Carolina and Skiff the the far the just Regarding are featured, High

revenue quarters that were in quarter, from move and initial two expansion startups an the this Just to Auctions phase. ACV

just gaining Clear to are revenues a progress I the by startup plans and growing are quarters add they traction Grainful, revenue their few phase quarter. out ago. from the marketplace. they rapidly. others have PostProcess during in want and moved They So as initial that Social business to point to is fourth few View the in phase initial GiveGab driven

previously they as We are transaction take to to all plans our from turn they will on to Slide of now mentioned right, X. market [Indiscernible] I excess the Company's depended may condition. develop start progress As the portfolio.

industry by are retail over breakdown doesn't the and is our with change real Consistent with industries services. portfolio our strategy, dramatically We category diversified we all financial diverse invest how know company. exempt likely estate, You time. almost in and to

don't Let's to turn Slide X, if you mind. now

was I our Here characteristic into expected debt the or equity two portfolio are basic choices. primarily capital

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

and our depending with streams However, investment we objectives flow mix have on continued adjusted the portfolio. our of cash

As over we expense. to past focused income the on about flow building, we to year, cash cover generate before have our investment talked

our these at of value. Let's and at our go end five to portfolio top and fair Slide the in investments year look the based are X,

into last can top at portfolio and quarter consistently about half million active Compared recent five to towards top see is Our five, are healthcare. value investment they waiting the portfolio valid you driven of value as The is moved our included $XX Tilson by compromise here our has XX investment. of company.

our I like significance Given for in this them portfolio, summarize you. to would

million. beginning Orlando, them investment invented and top Our We of to they $X Genicon is design, distribute Based patented value XXXX. Florida and surgical a instrumentation. produce on with

the aggregate on another left, which clinical Rochester, electronic referrals. York, one and is support they value on platform called million. there we to records images the patient Second provide to New at medical Based proprietary $X.X eHealth, a

in Texas, a diagnostic for team investment our assays is for Ithaca, Our research press well Company food automated people may based we in of this fifth Outmatch which who Dallas, have and Outmatch seen job. [indiscernible]. for XXXX. $X.X with developing as Dan the Recently XXXX. their are molecular labs workplace and is for into investment Based proven provides hiring in We just to finished with the use there investing match this providing New employee's you Fourth eHealth analytics, by have We've candidate investment predict tools as This started beverage develops medical those the on application. fully Company Rheonix test million. $X.X helping investing our the from is Tilson, which million. performance. rapid right be discussing They started facilitate release, in initial and more assessments, in are on companies, productive, driven of also out to in follows been business York XXXX. with

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

Daniel Penberthy

Thanks Pete, and good everyone. afternoon,

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

As per and share. very year the Pete also report, finished $X.XX net mentioned, asset am to pleased I with value we at

As two per down separate trailing pieces. quarter. $X.XX share I'll increased you this into see can the NAV over break

new adopting partially tax Basically had by $X.XX results a that the operational share $X.XX tax Cuts offset and assets Our the Act. our Jobs but of increase, the drove lower to over at rates. was per new revalue federal we for deferred per impact Tax one-time share

Rand's this federal forward, we to XX. will from benefit taxed will for rate when Slide Please purposes. XX% slower at turn Going be U.S.

I've well performance full-year as fourth Here comparable the summarized as XXXX our quarter periods. XXXX operating and for

As over past instruments which financial the previously mentioned, interest in has income. been so, our or increased more we've investing we've year

see You the results here. can

over fourth million $X.XXX last of quarter investment up XX% of $XXX,XXX is Our income XX%. investment XXXX and full-year up our is income year

our or expenses exit XXXX, XXXX resulted from include the XX%. expense federal certain and $XXX,XXX quarter Last than This related one-time expenses our of X% assets incentive fourth approximately expenses recorded tax costs. to do rate transaction approximately $XXX,XXX last expenses include process. our Tax we did deferred $XXX,XXX from XX% compensation this application Gemcor tax In of taxes last Cuts XXXX and year's quarter implement year. fourth year. Full-year of tax Act the expenses, XXXX rather were on related to Our lower lowering XX% below reform. total The SBIC to Jobs

XXXX. lowered As I tax federal mentioned in beginning earlier, we rate will benefit from this

investments, realized on our realized we $XXX,XXX stock, quarter, a our Regarding with and discussed in last fourth the valuation accordance quarter. unrealized our are recorded Athenex of in policy. In these changes sale we which gain the

realized Skiff, quarter also while Please a shown a mentioned full-year both an on quarter Slide fourth XX. The Pete in periods turn our But also gain We recorded share and amounts net $XXX,XXX from in operations, the investment which earlier. reflected respective decrease. increase resulted Carolina here. fourth assets to on also in XXXX XXXX per are

of $X.XX Our $X.XX we balance continues sheet portfolio strong. remain investments On per a the to share basis, have year. of end of cash at the and

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

other NAV With I'll always assets our back liabilities, have this also $X.XX. net value to We that, per $X.XX turn of Pete. or net asset share share up of it of to per

Allen Grum

Thanks, Dan.

our the the that me I We Company to and want SBA for next up to put a excitement a With of to in to pipeline. capital wide strategy. help driving variety work the has portfolio say management take Rand has working have it let going questions. to lot of level that, to are soon we on hope our team growth hard opportunity its say just there for we open by We additional is Before you companies. with lines I open a questions, can

Operator

this Instructions] Thank question Rebotsky from time ahead. Asset question-and-answer SER you. session. Please At go a from [Operator Management. Sam conduct first is Our we will

Sam Rebotsky

we busy seems - Pete to seeking before much from would have afternoon, we and be a two we we SBA so that issue. receive invested much good of months and resolve How could and say pretty year. it far are the to how The the It you what you been Yes, expected Dan. what SBA?

Allen Grum

things the we're one of on. That's working

you new As he's a they leader some have call. know got and

for working what to are the We with end SBA. up Rand sure and both for make workable we

we're because it of any new invested leverage. not have We seeking

invested cash of We million. have $X.X

Daniel Penberthy

million made $X.X out been proceeds. of total has investments those of

Allen Grum

those proceeds. of Out

So answer. one $X.X is million

additional are leverage. them We negotiating with for

we've I on fairly for a wrap think working able year. up that well but to it we're soon, been going to be over

Sam Rebotsky

seeking be debt, example, For would did you you're doing ratio? you at X:X that than a it? that Are more more get way to a because initially look basically

Allen Grum

X:X, be are of for invest. we way we the that won't than with the more It some amount but negotiating proper

Sam Rebotsky

Okay.

So another do is there plan to the to extent I would you risk more be assume less debt. forward. going

Allen Grum

the would than and SBA them really never seen Well, that I more risky, get but to hope tends be that. certainly we're not X:X so thinking I've

Sam Rebotsky

Okay.

in XX, on you're Now the December that knowledge invested of any do ending have based year to we companies XXXX transactions significant your expect the in?

Allen Grum

a kind that's Sam. of Well, loaded question

Sam Rebotsky

Okay.

Allen Grum

some - now strategy. they all there they can't tell comes half an it have really happens have seeking that discussion. handful tell active we results but companies you is when, you there are an out either have customer them. competitors that a When or a unanticipated can't once solved We more I probably to comes exit or are I than historically get

but buy I'll And we want this Do so tell you do. they them, we to Sure access? which one, point. have expect not a And we portfolio. at

Sam Rebotsky

Okay.

stock responsive even I basically and XX% though at - them So a depreciation XXX to book market utilizable to below a has any there discussed of that of you're interest about less invest in? and out there it's based have stock. late stock loan of like against what we the And what of depreciation wiping do value - it got so we the you or you has buying and if board because some way there's below share way less breakeven, gains in appear dividend would not and are you valuation, trading the more about unrealized yet And assuming way of make get this have a we a is it been in doing. $X.XX the of some is or we're thought might attention of the about investors up Rand XXX, the that it's have more losses these type a is in size place, on get to

Allen Grum

are We our are BDC left certainly certainly we and equity pay don't to of the and they're only four, not and well. issues. an get a and has when and there you trading had that and under was think used that banker that morning based call You the pressure I been The with is size space this one a dividend board five investment correct.

pursuing. We are have discussing be that is shares to that be are used to That of investments. some we the ideas The buy with company dividend. loan to we used SBA for

We or used right at shares to have whether you and dividend be cash back we have If are the first answer, it. be flow, we know. for will looking free can it buy to the

Sam Rebotsky

right. All

are you the know Looking for today. LD Micro see and forward market an Conference having to I

Allen Grum

Yes. Friday afternoon.

Sam Rebotsky

Okay. into If nobody That's step back will were the I good. back. I And Good come queue. there luck. will else,

Allen Grum

call you us. always Sam, can

Sam Rebotsky

Thank you. Okay.

Operator

is Please And the Rebotsky ahead. question Sam from SER. next Instructions] go [Operator from

Sam Rebotsky

- a ever Okay. know think, or this we too it's with there put press know guess kind Is been seen you I had press website All Micro. release conference don't on that? I out to I release have is do that I late LD right. Look, it not late. of

Allen Grum

there on the out think and has been will believe it's one I I website. that that spin

Sam Rebotsky

on the website. Yes. that I saw

They've that inventor could the on investors your based - the one of expect banker, as hold willing appears as company's you long I potential they the know new some something hopefully be And - to Okay, discussed stock of with to less the as they're and the cheapness as the outside stock. them value would it the haven't spent profitable lot something and been very your have. to you've investments. under and as money you do a safeguard they - has spent to that's been you and of get pressure functioned well relative of but trying increasing

do the higher in should if is hopefully, better trade could and long as as something the known becomes stock valuation. story So you

hopefully So Good good outside to for the Micro, luck. and something with conference with bankers you. come up luck on LD the work could

Allen Grum

you, Thank Sam.

Operator

ahead. go Please [indiscernible]. from is question next Our

Unidentified Analyst

How Hey, you? good afternoon. are

Allen Grum

Bill. Hi,

Unidentified Analyst

considered I got pronouncements? SEC you - question. under stock stock a Are penny is a current Rand

Allen Grum

the don't answer, I know Bill.

Unidentified Analyst

my lately - where a and stocks in find sense And penny high stock that were All personal I've the acquired. fortunate trade get a many what your the you the one experiences government have terms to in under with right. there been the enough owning demand. [indiscernible] take it SEC's SEC, only customers to position then frankly in make penny produce have and $X anything now the when fake was SEC I had so that it's idea. people trades clearing the of appears I I build at less and believes disturbing because will to the of stock They've we And some in won't an a have on because thrown can when to every firms penny be custodian them. they've quality that them, the that go problematic in been registered what stocks says confirmation with the read transfers is a the SEC broker into lot no and of guess ongoing in according everybody the it just $X custodians forthwon't or penny back take down basket. their if that even stock cracking $X stock considered to told. are trend, you for Athenex The or penny, are But buy for considered allow that only I penny not experience, penny that is stock, even accounts stock, stocks

the into to can by broker any buy it stocks. difficult the you of there, because a say for no where are dealers of in buyers people custodian penny whole situation there sellers out from making are house, and let's So being even were customers who stocks see there time the dog the group is extremely put

that's why mini you're exploring to you look and but a But not maybe I they that of stock considered So if might then crusade I'm for trying later anyway out, where something a take call. not fix. a on how at, you know here penny it is, there kind terrific maybe are it's to this if figure probably to have

Allen Grum

that. Okay. I into look

Unidentified Analyst

On that We work. have it put make to unfold nice to Okay. out and somebody a display care. trigger just way

Allen Grum

your for Thanks you. Thank support.

Operator

concludes to any closing turn for This you. comments. over question-and-answer session. the the Thank floor management like I'd back to

Allen Grum

enjoyed today. We to you. talking you Thank Sure.

you call know look our about you first at you between to can business. we talk always May to our in going in time. us As quarters We're to with any on forward talking again with what's happy And quarter results.

Operator

This concludes today's your teleconference. for Thank you again participation.

lines may disconnect You your at this time.

Rand Capital (RAND) 8 Mar 182017 Q4 Earnings call transcript