RAND - Earnings call transcript Q1 2021 | Rand Capital Corporation

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Operator

Welcome to the Rand Capital Corporation First Quarter 2021 Financial Results. 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. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Rand Capital. you. Thank

begin. may You

Deborah Pawlowski

good and We for for financial quarter and in our your Rand XXXX call. conference Capital joining results afternoon you appreciate everyone. interest first Thank us today

Penberthy, Pete line the Chief and President Officer. with Chief are our On Grum, Vice Executive me Executive our Officer; Financial and Dan

available well at of today. that slides will our conversation You copy that the the the should have website wires as crossed not, on they are If release www.randcapital.com. a this our morning as accompany

are to you the deck some If along following slide X, information. and on Slide to I would important point turn would like out

subject likely are risks well as other question-and-answer you during These where and this factors make and as cause actual today. are that aware, from As are some differ session. forward-looking future statements results to we may we to to statements uncertainties the during apply could presentation that events

of factors other release and Commission. find risks uncertainties or be a can These filed documents by other documents well summary as Securities the our company can and and You at website on with earnings Exchange these as the found in sec.gov. in

also call, We these our financial be non-GAAP During we believe evaluating discuss performance. useful measures. in today's will will some

of You prepared a substitute in in this should for accordance the not isolation consider presentation results information additional or as with GAAP.

X turn Slide measures tables that to the to in accompany over to I provided have GAAP the begin. With measures of Pete? reconciliation that release comparable We Pete will discussion please with non-GAAP today’s hand and

Pete Grum

to as we portfolio transform started on good We've strong the from income note Deb, investments. our and you, Thank to producing year afternoon equity investments everyone. continue a

prior IPO doubled attributable resulting in $X.XX up per contributing unrealized GAAP $X.XX gains at loss to increase income nearly of million Auctions, quarter which year of March. did per income fees, expenses share. capital XX% total to value share. which we BDC. report primarily to were investment attributed into to quarter, to is expense, per investment or the over their the was number our Net this million, at asset approximately ACV's completed a demonstrating to of during transformation share. ACV We This income of And investment appreciation. was value the growing net companies the adjusted Absent producing primarily was related of $X.XX accrued period, $X incentive $XX.XX net the the $X.X in success fair For because in paying end investment this XX.X% dividend investment non-cash an share in our income per the

As This $X.XX dividend was declared per turn end you XXXX. at year share. At know combination we Please announced $X.XX dividend first $X.XX quarterly quarter the share Slide $X.XX dividends, to April, X. second the regular the quarter. the during including per we per This that the have transformation began to of year. paying our at out our paid of also in our of we first announced in end per share share of last

of our now invested million. first evolution portfolio $XX.X strategy. fair XXX,XXX discuss in XX% ACV's value we investment The impact in our here the shown increase have XXXX, IPO. in can a over as made support progress we to ACV Now, We demonstrates regarding of fair and of the our value have

in portfolio approximately lot in At $X.X new included had activities shares in end, traded dividend a equity which quarter and $X.X compromised until portfolio companies. in debt investments are investments, We investment, XX% restricted Our We XXXX. paying XX% BDCs. our portfolio made of of new the million of in the now was for XX% publicly fixed-rate quarter. September XX, million

and We exits repayments. also from loan received $X.X million

has the during of in record see a Slide Supply warrants you wide largest X, million Seybert's Billiards quarter the XXXX. loan e-commerce one service. equipment platforms was term why $X.X quality, known billiard of category founded their developed $X.X we for invested billiard quarterly the to the Predator Billiard leading million. They premium carries of can from largest and variety cues investment Turning distributor with and are U.S. the in product The Seybert's for of the and have

capital and With investment the e-commerce with customer with in presence social planning formation partners of the Seybert's and capital grow is to participated its platforms. infusion, to provide its also other and service Florida and full-service name media and Rand the acquisition expand fire marketing growth connection Swanson facilities. fire a the Holdco. merged and offices Waldorf, products commercial suite protection Maryland offer of of BMP end-to-end for residential a and Jacksonville, platform The protection have in under companies services

subordinated consisted million of $X.X investment and debenture preferred equity. Our

of million. our Lastly, diversity million. quarter we publicly our capital traded that $X.X our $X.X investments change all in provide was put we which the BDCs, totaled liquid investments at mix X industry our opportunities and XXXX. them. continue investments value fair to since readily illustrates Slide access dividends other increased BDCs to for can end and portfolio instruments These find in as approximately the our work we that of The

besides we lists of now to value. market believe our and XX% portfolio diversity saw reflecting portfolio up increased With increase had their We the and the valuation software made IPO. Seybert's portfolio There recently our in notes total no represents this fair the recent impact XX% to investments our of healthcare of portfolio. X assets. changes Their to sizable our as replaced ranking BDCs the SMG increases access, manufacturing investment XX% that while reduces risk. five their net quarter ACV's companies at Slide and declined make of of our paid-off in changes measurable portfolio. given top within in exposure value the and $XX.X million top they were exited fair the end. the four,

was mentioned an acquiring in ACV, XXXX. Series I investor preferred in stock As Rand early in of August C-X

common capital and be as treated Any ACV shares it holds as any distribution. the such proceeds or dividend of for relates initial will our XXX,XXX above stock. Following gain RIC a to us now investment Rand

lock-up there Dan are we turn financials While With impossible to review Penberthy, I Dan? time greater to subject to agreement. XXX-day that, now to over will very in our changes and it depth. are

Dan Penberthy

is the income attributable tax The calculated gains prior It's good share loss million, a to as which share Regulated for up income Total GAAP while a compared as Company, Pete gains investment These original or a in gains using payable benefited unrealized Last fees more everyone. as aggregate incentive expense addition reflected investment depreciation. OID issue exit of due $X.X and operational realized resulted highlights. $X.X incentive capital and included quarter were as and Slide for due well the year large external accrued unrealized well a accrual related aggregate period. cumulative Total income quarter was $XXX,XXX is $XXX,XXX Net capital a during shift as from $X fee, $X.XX the highlight losses, we benefit to RIC, expenses received depreciation yielding $XXX,XXX dividend over of capital overview to the year’s explained. quarter the adjusting then net the the ACV’s income, the and million benefit appreciation discount, payment assets in of income record and $X.X per approximately our million, was actually were tax provides in an Investment X profile that XX% summary at to of an close last also conversion important interest from fee capital reflects the under of Pete federal afternoon, financial or liability to realized the a payoffs, from CARES A loan to with Thanks, annual quarter. $X.XX actual increase or our or no the an gains under quarter's portfolio or the manager portfolio to change primarily per which million, first GAAP period. Rand's in Act. capital the or received occurs. company. until approximate

the in of was the ACV’s reflected change. change increase per and Even the contributing in incentive to was unrealized assets was fair investments expenses, The the for Slide net quarter. increased income graph waterfall the was XXXX. gain of disposition accrued provides gains in for in impacted the depreciation XX Also by realized net the sales share with million change again, increase to Excluding in value capital from per change net of of a for $X.XX due in or million NAV adjusted first largely the $X.X which on fees, Rand's the $X.XX $X increase ACV, valuation quarter a share, investment investments. $XXX,XXX. operations on NAV net investment

highlights of $XXX,XXX cash We of also did pay our sheet. dividends. the XX strength out balance Slide approximately

SBA also as continue matures is new for million liquidity of in to million $X that million, XXXX, commitment the due. of comprised $XX which $X a $XX begins next $XX.X we and when transition which approximately over year The undrawn million invest cash to of multi-year owed SBA have We million portfolio. currently investments, our is period our to available is

liquidity we income. further we grow our drive and our believe to With the investment portfolio position, support of our continue execute strategy strong we can as

of the We in large per quarterly by of cash our that announced $X.XX of a first distribute form status. second we our This income as part and and to in dividends April. includes our the will RIC to required February continue dividends shareholders share

And is the may to the in $X.XX needed off our realized distributable purchase during our authorizing any gains renew income estimates close conservative of updated adjustments. plan net The next and for tax-based expires quarter, occur year, investment we tax at the our of program a up Our annualized of GAAP the we year This stock. repurchase the income, or year. share to Also, calculation did investment based other year. of then XXXX. losses dividend recognize net million April will determination final in rate consider addition net $X.X of the of also we'll income during

summarizes XX our overall Lastly position. Slide funds

As initiatives of we that have been continuation look we number our a as forward, strategic are focused the of items, many of transformation. action of part underway which have

a potential portfolio completes Pete, the and believe additional That for questions. that our dividend. adjust support prepared capital continue a prudently to open income remarks. mix producing drive returns for to provide strong to line we up While let's and investments our gains, equity growing will we we have portfolio

Operator

this session. at question-and-answer gentlemen, and will Instructions] be a ladies conducting [Operator we time, you, Thank

Operator

There Grum closing I back remarks. hand are queue. to the like the to call no questions in for Mr.

Pete Grum

We Thank and stay all in great Have of Capital. updating a in second our safe. joining day and your forward to interest on results today for quarter August. for you Rand us look you

Operator

for conclude teleconference. this Ladies your participation. you and gentlemen, does Thank today's

your at disconnect You day. wonderful have this a lines may time. And

Rand Capital (RAND) 10 May 212021 Q1 Earnings call transcript