RAND - Earnings call transcript Q2 2024 | Rand Capital Corporation

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Operator

Greetings, and welcome to Rand Capital Corporation Second Quarter Fiscal Year 2024 financial results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Craig Mychajluk, Investor Relations. Thank you.

begin. may You

Craig Mychajluk

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

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

available copy release slides and randcapital.com. A that accompany at of the our conversation is

information. in Slide point along following the important X, out I'd you're please to slide If turn to where like some deck,

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

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

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

You the accounting of information presentation principles. this generally for or accordance a isolation substitute in consider as results accepted should in additional not with

reconciliations accompany turn and measures comparable measures non-GAAP the tables the discussion that, in hand I'll Dan? that We with to Dan. provided today's have With of release. X, earnings GAAP please Slide to over

Daniel Penberthy

afternoon, Thank you, and everyone. good Craig,

our be to and the we rather position last and that achieving opportunities. I'm balance efforts capital strategy, remind portfolio past sheet, asset our as in growth of optimization you enhance our This total result growth debt portfolio completed announced selective our execute earnout. which will did include include our year highlight significant $XXX to to all excited U.K.-based continue We later total future by for from legacy a capital approximately generated to million. one does growing does our to of The X% quarter, sales, deployment is at This which instruments. investment and million Spectris equity our very million favorably a up transaction, acquisition income component us plc. SciAps, we a SciAps' costing of which and used include $X.X our one secured into investment note month, of which is Rand larger valued investments, XXXX. holds is $XX deferred debt with expected of of portfolio equity holdings this

June XX, of total into have at As we this $XX.X valued investment SciAps million.

as the in This reinvesting down the companies, also the to as show shareholders infusion aims road. redeploy evaluating carefully are form potential. best strategically acquisition. anticipated include that of additional which this for in We these drive portfolio further existing dividends We funds the extent from to our recognize to through for possible value the new capital we need high investments and may options well approach returns

share of achievement Year-to-date, The cash tangible our shareholders. total has quarter. for This declared over of our dividends of have X. few Slide we per share. objectives the This into translated dividend benefits rather highlighted strategic on the is $X.XX a years $X.XX includes last per for second

liquidity that end, quarter July cash share. per distributing to $XXX,XXX after $X.XX available deploying XXXX dividend and to XX, over in our held of we announced $XX at continue recently, shareholders, on More will we At total maintained third capital be quarter dividends million.

liquid cash BDC availability, on credit publicly remaining securities. and of line our includes highly traded hand our liquidity This

quarter. Slide and mix during see to X, you the recent and debt our equity turn you the If changes portfolio will between

in investments SciAps, portfolio of a fair in $XX.X repayments. million is companies, loan and XX% across This had value valuation including stock offset increases and sales XX up multiple adjustments by sequentially. The X% businesses. portfolio from partially XXXX reflect Our year-end

PIK including an as well is annualized XX% investments Tilson consist of approximately interest. The and XX% in SciAps publicly Our private as includes of with in primarily and investments debt companies of average mix thus comprised remaining X% portfolio XX.X%, traded weighted equity investments. yield BDC

on equity the we or We Slide who X. service During which highlighted in a food Utah. kitchen is supply and invested is company quarter, $XXX,XXX in completed FSS, follow-on supply a investment, commercial based services

bottom X resulted received from this Carlyle, million holdings realized highlights total We in our the million gains in our of Ares. investment, from BDC liquidating $X.X in proceeds repayments debt $XXX,XXX for exits PennantPark quarter Following This quarter. FSS total reflect the fair from $XXX,XXX from shareholdings end. slide $XXX,XXX $X.X equity investments. at and value notable and a in and of of The half

a realized we SQF. a a Additionally, called of sale affiliated recognized partial gain from of Tilson asset entity $XXX,XXX

from We also $XXX,XXX debt PressurePro loan our repayments principal investments. received

in Lastly, X. been which equity at had investment our previously we exited KNOA, valued

quarter value portfolio X comments position the remains investment up Tilson agreement. efforts. Slide Overall, value $XX.X definitive million Slide top of portfolio sales from million, sectors purchase diversity value our lists Manufacturing led broad composition. largest the a of XX% X, visually spectrum at XX% the of our our to over industry XX% portfolio approach, And to following in across while reflects the our representing BDC our end. larger second increase in with ensuring to allocation turn portfolio, prior marking difficult economy equity my and our portfolio. the stocks their companies X the on mitigating from We changes to value represent industry to in a to our XX% if kindly X% regarding quarter. the following place high top resilience of in portfolio X%. X SciAps' and at holdings, industry total our the at illustrates $XX.X The companies investment within fair with XX% our quarter investments increased Recent announced strategic end. decreased our that, of our doubling moved its mix. consistent adjustments a legacy risk and you more in changes prior fair diversity and than from second our quarter total the the

it I'll greater that, With review to turn our Margaret in financials to over depth.

Margaret Brechtel

that provides Thanks, summary for will everyone. quarter. $X.X quarter overview afternoon, XX, interest our Dan, for XX% increase the an was represents by income Slide a reflecting an increase XX% X new second past second income in driven of which the on This investment last Total investments over XXXX over was quarter. and financial year's year. and growth million, the good interest-yielding I start made

Due a were portfolio performance recognized higher The usage compared $XXX,XXX non-GAAP was fee to quarter contributed investment GAAP, were Overall, In in revolving gains, quarter accrual a must losses. million measure, adviser. to unrealized and of Total in incentive our facility. external a investment $X.X with million to XX our portfolio gains our largely fees This and credit realized due a quarter. Adjusted financial the we expenses, $X.X incentive gains year. accordance this and on gains interest included we given compared fee incentive same expenses expense, increase approximately with capital recent realized rise the increase million capital $X for accrued companies with second senior the is $X.X income. accrue last XXXX. which and all of in to exclude quarter gain million second capital the

year's net was and Second compared expense. a fee quarter That period. measure investment or a an $X.XX was or net $XXX,XXX per investment loss basis, the year's from non-GAAP $X.XX incentive XX% income income On share. Net period. excludes up of share investment per is financial in capital with accrual $XXX,XXX $X.XX per adjusted in $X.XX which gains per was last share, last share

assets see waterfall you'll $X.X reflects the XX, quarter. were Net change Slide On $XX.X value a asset for XXXX, investments graph million. in June unrealized on XX%. million, change up at net XX, for appreciation The the the of largely

asset $XX.XX result, XX, compared at share XXXX, $XX.XX per value the with March to net XX, June XXXX. a As at increased

that a As highlighted we grew which investments. to positions $X.X assets have continue flexible on and end us to for Total quarter XX, X% million, strong future million. included cash of approximately sheet well Slide at $XX.X balance

future had interest liquid of and an base its end. quarter $X.X available approximately needs. borrowings at million shares Based rate $XX June of carrying facility in X.X% held credit million which in $XX.X our XX, outstanding of on availability also secured $X.X We BDC borrowing at revolving are Rand million senior million formula, our for existing liquidity XXXX,

the XXXX. With We will I more our that, This to Recently, XX, transforming over levels $X.XX of XX, turn regular per dividend as dividend Dan. September back announced income-generating higher strategy the shareholders around sustain to to expect quarterly record of include be to time. paid of its discussion portfolio August us investments of that share. dividend will on or will Rand enable XXXX, cash

Daniel Penberthy

Margaret. Thanks,

potential. continue strategy our expand and in to business portfolio existing investments Moving will with new is by companies high forward, pursuing to reinvest we our

stream the smaller while help new in support which participate these debt these through to other instruments, our new of EBITDA steady growth to robust through transactions is objective in sharing co-investors Our equity opportunities holdings. income new M&A will with also

We will to future monetization for expect shareholders. that our lead this

that term. dividends believe also enhance long will this capacity We the our to over approach increase

our accompany more underscores businesses, of portfolio maintaining they financing debt within how SciAps all successful to focused currently minority is the Rand and investments expected on lower While investments. our market for new equity of middle our exit to commitment

returns will investments, investment, believe initial upon stakes can be We larger I a part however, these equity These exits. now strong future to as noted. of debt contribute future

look forward for and joining November. to your XXXX a you third on continued day. for great We interest quarter in Have you updating be Thank which Capital. today results, Rand us reported in will our

Operator

conference. today's concludes This

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

Rand Capital (RAND) 6 Aug 242024 Q2 Earnings call transcript