RAND CAPITAL CORPORATION THIRD QUARTER 2023 FINANCIAL RESULTS
November 6, 2023
Daniel P. Penberthy
President & CEO
Margaret W. Brechtel
EVP & CFO
© 2023 Rand Capital Corporation | Nasdaq: RAND |
FORWARD LOOKING STATEMENTS
This presentation 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 expectations of Rand Capital Corporation ("Rand" or the "Company") to continue to be taxed as a regulated investment company ("RIC") for U.S. federal income tax purposes; the effectiveness of, and execution on, Rand's investment strategy and 2023 objectives; the investment processes used by its external investment adviser, Rand Capital Management, LLC under the investment advisory and management agreement with Rand, the competitive ability and position of Rand, the amount of the Company's dividend per share in future periods, 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 may be unable to continue to fulfill the conditions required in order to be treated as a RIC for U.S. federal income 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, 2022, quarterly reports on Form 10-Q, the preliminary and definitive proxy statements 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 presentation.
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/.
All information contained herein is for informational purposes and should not be construed as investment advice. It does not constitute an offer, solicitation or recommendation to purchase any security. Past performance does not guarantee future results. Diversification does not guarantee a profit or protect against a loss.
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© 2023 Rand Capital Corporation | Nasdaq: RAND |
THIRD QUARTER 2023 EXECUTION
- Total investment income increased 12% to $1.7 million over the 2022 third quarter
- Driven by strong growth in interest income
- Net investment income per share was $0.31 compared with $0.39 in the prior-year period
- Net asset value per share was $23.771, up 6% from year-end 2022
- Completed two new investments for $7.8 million in the quarter
- Total liquidity of ~$22 million at quarter-end2
Delivering Cash Dividends:
- Paid $0.25 per share cash dividend for the third quarter in Sept 2023
- Net asset value per share amounts based on weighted average shares outstanding
- Consists of cash, value of publicly traded BDCs and ACV Auctions stock, and senior secured revolving credit facility availability
© 2023 Rand Capital Corporation
The Rand Building, Buffalo, NY
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Nasdaq: RAND
PORTFOLIO MIX
Fair Value Portfolio Mix
($ in millions)
$66.8 | $74.7 | ||||||
$7.2 | |||||||
$7.4 | |||||||
$20.2 | |||||||
$19.2 | |||||||
$40.2 | $47.2 | ||||||
Q2 2023 | Q3 2023 | ||||||
Portfolio Mix | |||||||
(# of Companies) | |||||||
29 | 30 | ||||||
6 | 6 | ||||||
8 | 7 | ||||||
15 | 17 | ||||||
Q2 2023 | Q3 2023 | ||||||
Debt | Equity | Publicly Traded Stock | |||||
© 2023 Rand Capital Corporation
Fair value increase reflects new investments and valuation adjustments on several portfolio companies
Mix at quarter-end, based on fair value:
63% Fixed-rate debt investments
27% Equity investments in private companies
10% Publicly traded equities (includes dividend paying BDCs and ACV Auctions stock)
Annualized weighted average yield of debt investments was 13.45%
Realized tax loss on an equity investment having a fair value at zero
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Nasdaq: RAND
Q3 2023 INVESTMENTS
Full-service staffing and executive search
firm, with a growing focus on the
healthcare industry
Funded $3.0 million of senior debt
at 12% (+4% PIK) and
$1.0 million preferred equity investment,
which will carry a 12% dividend
© 2023 Rand Capital Corporation
Commercial mulch installation
company that covers the north and
central Florida market
Funded $3.4 million subordinated note at 13% and $420,000 interest earning convertible note
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Nasdaq: RAND
DIVERSIFIED PORTFOLIO
Investments by Industry Classification
September 30, 2023
Automotive
Public BDC 4%
Stocks 6%
Distribution
6%
Software 8% | Professional Services |
40% | |
Consumer Products | |
13% | |
Manufacturing | |
23% |
Based on total investments at fair value of $74.7 million
© 2023 Rand Capital Corporation
June 30, 2023
Public BDC | Automotive | |
5% | ||
Stocks 6% | ||
Distribution | ||
7% | Professional Services | |
Software 9% | 32% | |
Consumer | ||
Products | Manufacturing | |
15% | ||
26% |
Based on total investments at fair value of $66.8 million
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Nasdaq: RAND
TOP FIVE PORTFOLIO INVESTMENTS
($ in millions)
Company | Investments at | Year | Industry | % of Total | Investment Type |
Fair Value | Acquired | Portfolio | |||
Professional Services - Cellular | Equity - | ||||
Tilson | $10.6 | 2015 | info systems, construction, | 14% | |
paying dividend | |||||
mgmt. | |||||
Term note | |||||
Seybert's | $6.0 | 2021 | Consumer Product - Billiard | 8% | (12% plus 2% PIK) |
supplies | |||||
Warrant | |||||
Term note | |||||
SciAps, Inc. | $5.2 | 2013 | Manufacturing - | 7% | (12%) |
Portable analytical instruments | |||||
Equity | |||||
Food Service | Professional Services - | Term note | |||
$5.2 | 2022 | Services for commercial | 7% | (12%) | |
Supply | |||||
kitchens and new builds | Equity | ||||
Distribution - Stocking | Term note | ||||
INEA | $4.3 | 2023 | distributor of alloys and | 6% | (12% plus 2% PIK) |
electronic grade nickels | Equity | ||||
Total Top 5 | $31.3 | 42% |
All values as of September 30, 2023. Totals may not foot due to rounding.
$74.7 million portfolio fair value with 30 portfolio companies
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© 2023 Rand Capital Corporation | Nasdaq: RAND |
FINANCIAL REVIEW
© 2023 Rand Capital Corporation | Nasdaq: RAND |
THIRD QUARTER FINANCIAL SUMMARY
($ in thousands, except per share data)
Q3 2023 | Q3 2022 | |||
Total investment income | $ | 1,741 | $ | 1,554 |
Total expenses | 810 | 499 | ||
Net investment income¹ | 799 | 1,010 | ||
Net investment income per share² | $ | 0.31 | $ | 0.39 |
Adjusted net investment income per share³ | $ | 0.29 | $ | 0.40 |
Net realized and unrealized (loss) gain | $ | (203) | $ | 95 |
on investments | ||||
Net increase in net assets from operations | 596 | 1,105 | ||
Net increase in net assets from operations | $ | 0.23 | $ | 0.43 |
per share² | ||||
Total investment income grew 12%
- Driven by a 40% increase in interest from portfolio companies
Total expenses reflects increase in interest expense and base management fees, partially offset by a credit with respect to capital gains incentive fees
Excluding the capital gains incentive fees, adjusted expenses in Q3 23 were
$851,000 compared with $477,000 in Q3 22³
- Increase reflects higher interest expense given use of senior revolving credit facility
¹ Net of income tax expense
² Per share amounts based on weighted average shares outstanding of 2,581,021 in Q3 2023 and in Q3 2022.
- Adjusted Net Investment Income per share and Adjusted Expenses are non-GAAP financial measures. Please see supplemental slides for a description of these non-GAAP financial measures and reconciliation tables between GAAP and non-GAAP.
© 2023 Rand Capital Corporation
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Nasdaq: RAND
NET ASSET VALUE CHANGE: Q3 2023
($ in thousands)
$61,402 | $799 | ($2,803) | $2,600 | ($645) | $61,352 |
Net assets at | Net investment | Net realized loss on | Net change in | Cash dividend | Net assets at |
6/30/2023 | income | sales and dispositions | unrealized | 09/30/2023 | |
$61,402,028 | of investments | appreciation on | $61,352,277 | ||
investments |
Totals may not sum due to rounding
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© 2023 Rand Capital Corporation | Nasdaq: RAND |
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Rand Capital Corporation published this content on 06 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 November 2023 13:23:47 UTC.
