Rand Capital Reports 18% Increase in Total Investment Income for Second Quarter 2024
-
Total investment income increased 18% to
$2.1 million for the quarter compared with the second quarter last year driven by strong growth in interest income from an expanded portfolio of debt investments -
Net asset value per share (“NAV”) was
$26.56 atJune 30, 2024 , up 11% fromMarch 31, 2024 and up 13% from year-end 2023 -
Capitalized on market conditions with the sale of certain BDC holdings that resulted in a realized gain of
$1.3 million -
Reduced debt balance
$2.0 million during the quarter and repaid an additional$2.3 million subsequent to quarter-end - Portfolio company SciAps expected to be acquired in 2024 after definitive purchase agreement signed
-
Announced a quarterly dividend of
$0.29 per share for third quarter 2024
“Looking ahead, our plan is to continue scaling our business through new investments and also reinvesting in high-potential existing portfolio companies. Our goal is to focus on new debt investments in smaller opportunities, replicating our past successes in helping these companies grow. We believe this will cultivate a robust and steady income stream, strengthening our ability to increase cash dividends over the long term.”
Second Quarter Highlights (compared with the prior-year period unless otherwise noted)
-
Total investment income grew
$321,000 , or 18%, to$2.1 million , which reflected a 35% increase in interest from portfolio companies, partially offset by lower dividend and fee income. -
Total expenses were
$2.7 million compared with$1.3 million in last year’s second quarter. The change largely reflects a$1.2 million increase in capital gains incentive fees to the Company’s external investment adviser. The increase in total expenses also reflects$393,000 in interest expense from the senior revolving credit facility compared with$259,000 for the second quarter of 2023. -
Adjusted expenses, which exclude capital gains incentive fees and is a non-GAAP financial measure, were
$1.0 million compared with$816,000 in the second quarter of 2023. See the attached description of this non-GAAP financial measure and reconciliation table for adjusted expenses. -
Net investment loss was
$517,000 , or$0.20 per share, compared with net investment income of$493,000 , or$0.19 per share, in the second quarter of 2023. Adjusted net investment income per share, a non-GAAP financial measure, which excludes the capital gains incentive fee accrual expense, was$0.44 per share, up 16% from$0.38 per share in last year’s second quarter. See the attached description of this non-GAAP financial measure and reconciliation table for adjusted net investment income per share.
Portfolio and Investment Activity
As of
Second quarter 2024:
-
Funded a follow-on equity investment of
$108,000 inFood Service Supply Holdco LLC (FSS). Rand’s total debt and equity investment in FSS had a fair value of$7.5 million at quarter-end. -
Sold shares in three publicly traded BDCs for total proceeds of
$3.3 million , which included a realized gain of$1.3 million . -
Received
$740,000 principal loan repayment fromPressure Pro, Inc. -
Realized a gain of
$397,000 from a partial asset sale of a Tilson affiliated company. -
At quarter-end, Rand’s total debt and equity investment in SciAps had a fair value of
$10.8 million . -
Exited remaining equity investment in
KNOA Software .
Liquidity and Capital Resources
Cash was
During the quarter, Rand reduced its outstanding borrowings by
The Company did not repurchase any outstanding common stock during the second quarter of 2024.
Dividends
On
On
Webcast and Conference Call
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ABOUT
Safe Harbor Statement
This press release 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 strategy of the Company and its outlook; statements regarding pending sale of portfolio company SciAps and the timing for the expected closing of such transaction; statements regarding the implementation of the Company’s strategy and the growth of its dividend; 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) evolving legal, regulatory and tax regimes; (2) changes in general economic and/or industry specific conditions; and (3) other risk factors as detailed from time to time in Rand’s reports filed with the
FINANCIAL TABLES FOLLOW
|
||||||||
Consolidated Statements of Financial Position |
||||||||
|
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Investments at fair value: |
|
|
|
|
|
|
||
Control investments (cost of |
|
$ |
4,598,046 |
|
|
$ |
4,148,960 |
|
Affiliate investments (cost of |
|
|
61,779,019 |
|
|
|
53,499,372 |
|
Non-Control/Non-Affiliate investments (cost of |
|
|
20,693,902 |
|
|
|
19,477,380 |
|
Total investments, at fair value (cost of |
|
|
87,070,967 |
|
|
|
77,125,712 |
|
Cash |
|
|
2,293,226 |
|
|
|
3,295,321 |
|
Interest receivable |
|
|
516,617 |
|
|
|
244,600 |
|
Prepaid income taxes |
|
|
149,863 |
|
|
|
127,869 |
|
Deferred tax asset, net |
|
|
174,053 |
|
|
|
39,179 |
|
Other assets |
|
|
584,343 |
|
|
|
189,301 |
|
Total assets |
|
$ |
90,789,069 |
|
|
$ |
81,021,982 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS) |
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
||
Due to investment adviser |
|
$ |
322,672 |
|
|
$ |
979,297 |
|
Accounts payable and accrued expenses |
|
|
108,358 |
|
|
|
145,516 |
|
Line of credit |
|
|
17,200,000 |
|
|
|
16,250,000 |
|
Capital gains incentive fees |
|
|
4,033,000 |
|
|
|
2,279,700 |
|
Deferred revenue |
|
|
566,423 |
|
|
|
552,256 |
|
Total liabilities |
|
|
22,230,453 |
|
|
|
20,206,769 |
|
Stockholders’ equity (net assets): |
|
|
|
|
|
|
||
Common stock, |
|
|
264,892 |
|
|
|
264,892 |
|
Capital in excess of par value |
|
|
55,801,170 |
|
|
|
55,801,170 |
|
|
|
|
(1,566,605 |
) |
|
|
(1,566,605 |
) |
Total distributable earnings |
|
|
14,059,159 |
|
|
|
6,315,756 |
|
Total stockholders’ equity (net assets) (per share – 6/30/24: |
|
|
68,558,616 |
|
|
|
60,815,213 |
|
Total liabilities and stockholders’ equity (net assets) |
|
$ |
90,789,069 |
|
|
$ |
81,021,982 |
|
|
||||||||||||||||
Consolidated Statements of Operations |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
Three
|
|
|
Three
|
|
|
Six months
|
|
|
Six months
|
|
||||
Investment income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest from portfolio companies: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Control investments |
|
$ |
198,885 |
|
|
$ |
179,922 |
|
|
$ |
386,368 |
|
|
$ |
330,838 |
|
Affiliate investments |
|
|
1,192,116 |
|
|
|
941,201 |
|
|
|
2,358,201 |
|
|
|
1,729,022 |
|
Non-Control/Non-Affiliate Investments |
|
|
604,226 |
|
|
|
352,417 |
|
|
|
1,064,306 |
|
|
|
710,583 |
|
Total interest from portfolio companies |
|
|
1,995,227 |
|
|
|
1,473,540 |
|
|
|
3,808,875 |
|
|
|
2,770,443 |
|
Interest from other investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-Control/Non-Affiliate Investments |
|
|
144 |
|
|
|
104 |
|
|
|
2,058 |
|
|
|
236 |
|
Total interest from other investments |
|
|
144 |
|
|
|
104 |
|
|
|
2,058 |
|
|
|
236 |
|
Dividend and other investment income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Affiliate investments |
|
|
13,125 |
|
|
|
59,677 |
|
|
|
26,250 |
|
|
|
406,825 |
|
Non-Control/Non-Affiliate Investments |
|
|
60,050 |
|
|
|
132,920 |
|
|
|
198,760 |
|
|
|
260,515 |
|
Total dividend and other investment income |
|
|
73,175 |
|
|
|
192,597 |
|
|
|
225,010 |
|
|
|
667,340 |
|
Fee income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Control investments |
|
|
4,516 |
|
|
|
4,311 |
|
|
|
9,032 |
|
|
|
8,211 |
|
Affiliate investments |
|
|
54,815 |
|
|
|
138,902 |
|
|
|
128,535 |
|
|
|
206,744 |
|
Non-Control/Non-Affiliate Investments |
|
|
8,272 |
|
|
|
5,978 |
|
|
|
29,858 |
|
|
|
13,956 |
|
Total fee income |
|
|
67,603 |
|
|
|
149,191 |
|
|
|
167,425 |
|
|
|
228,911 |
|
Total investment income |
|
|
2,136,149 |
|
|
|
1,815,432 |
|
|
|
4,203,368 |
|
|
|
3,666,930 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Base management fee |
|
|
322,672 |
|
|
|
255,867 |
|
|
|
625,267 |
|
|
|
501,260 |
|
Capital gains incentive fees |
|
|
1,641,000 |
|
|
|
491,000 |
|
|
|
1,753,300 |
|
|
|
782,000 |
|
Interest expense |
|
|
393,172 |
|
|
|
258,912 |
|
|
|
783,192 |
|
|
|
417,312 |
|
Professional fees |
|
|
91,460 |
|
|
|
100,307 |
|
|
|
323,767 |
|
|
|
271,282 |
|
Stockholders and office operating |
|
|
82,667 |
|
|
|
85,080 |
|
|
|
151,695 |
|
|
|
149,384 |
|
Directors' fees |
|
|
66,550 |
|
|
|
67,391 |
|
|
|
130,400 |
|
|
|
131,241 |
|
Administrative fees |
|
|
40,000 |
|
|
|
37,250 |
|
|
|
78,167 |
|
|
|
74,500 |
|
Insurance |
|
|
10,380 |
|
|
|
10,380 |
|
|
|
23,424 |
|
|
|
23,340 |
|
Corporate development |
|
|
4,881 |
|
|
|
554 |
|
|
|
10,426 |
|
|
|
4,267 |
|
Total expenses |
|
|
2,652,782 |
|
|
|
1,306,741 |
|
|
|
3,879,638 |
|
|
|
2,354,586 |
|
Net investment (loss) income before income taxes: |
|
|
(516,633 |
) |
|
|
508,691 |
|
|
|
323,730 |
|
|
|
1,312,344 |
|
Income taxes, including excise tax expense |
|
|
562 |
|
|
|
16,061 |
|
|
|
1,340 |
|
|
|
104,798 |
|
Net investment (loss) income |
|
|
(517,195 |
) |
|
|
492,630 |
|
|
|
322,390 |
|
|
|
1,207,546 |
|
Net realized gain on sales and dispositions of investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Affiliate investments |
|
|
(831,891 |
) |
|
|
2,537,765 |
|
|
|
(831,891 |
) |
|
|
2,596,094 |
|
Non-Control/Non-Affiliate Investments |
|
|
1,259,999 |
|
|
|
1,280,482 |
|
|
|
4,710,091 |
|
|
|
1,275,541 |
|
Net realized gain on sales and dispositions of investments, before income taxes |
|
|
428,108 |
|
|
|
3,818,247 |
|
|
|
3,878,200 |
|
|
|
3,871,635 |
|
Income tax expense |
|
|
— |
|
|
|
338,158 |
|
|
|
— |
|
|
|
338,158 |
|
Net realized gain on sales and dispositions of investments |
|
|
428,108 |
|
|
|
3,480,089 |
|
|
|
3,878,200 |
|
|
|
3,533,477 |
|
Net change in unrealized appreciation/depreciation on investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Affiliate investments |
|
|
8,849,945 |
|
|
|
(886,698 |
) |
|
|
8,749,945 |
|
|
|
(886,698 |
) |
Non-Control/Non-Affiliate Investments |
|
|
(1,070,919 |
) |
|
|
(480,572 |
) |
|
|
(3,861,215 |
) |
|
|
921,401 |
|
Change in unrealized appreciation/depreciation before income taxes |
|
|
7,779,026 |
|
|
|
(1,367,270 |
) |
|
|
4,888,730 |
|
|
|
34,703 |
|
Deferred income tax benefit |
|
|
(47,834 |
) |
|
|
(66,441 |
) |
|
|
(47,834 |
) |
|
|
(66,441 |
) |
Net change in unrealized appreciation/depreciation on investments |
|
|
7,826,860 |
|
|
|
(1,300,829 |
) |
|
|
4,936,564 |
|
|
|
101,144 |
|
Net realized and unrealized gain on investments |
|
|
8,254,968 |
|
|
|
2,179,260 |
|
|
|
8,814,764 |
|
|
|
3,634,621 |
|
Net increase in net assets from operations |
|
$ |
7,737,773 |
|
|
$ |
2,671,890 |
|
|
$ |
9,137,154 |
|
|
$ |
4,842,167 |
|
Weighted average shares outstanding |
|
|
2,581,021 |
|
|
|
2,581,021 |
|
|
|
2,581,021 |
|
|
|
2,581,021 |
|
Basic and diluted net increase in net assets from operations per share |
|
$ |
3.00 |
|
|
$ |
1.04 |
|
|
$ |
3.54 |
|
|
$ |
1.88 |
|
|
||||||||||||||||
Consolidated Statements of Changes in Net Assets |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
Three
|
|
|
Three
|
|
|
Six months
|
|
|
Six months
|
|
||||
Net assets at beginning of period |
|
$ |
61,569,339 |
|
|
$ |
59,375,393 |
|
|
$ |
60,815,213 |
|
|
$ |
57,721,320 |
|
Net investment (loss) income |
|
|
(517,195 |
) |
|
|
492,630 |
|
|
|
322,390 |
|
|
|
1,207,546 |
|
Net realized gain on sales and dispositions of investments |
|
|
428,108 |
|
|
|
3,480,089 |
|
|
|
3,878,200 |
|
|
|
3,533,477 |
|
Net change in unrealized appreciation/depreciation on investments |
|
|
7,826,860 |
|
|
|
(1,300,829 |
) |
|
|
4,936,564 |
|
|
|
101,144 |
|
Net increase in net assets from operations |
|
|
7,737,773 |
|
|
|
2,671,890 |
|
|
|
9,137,154 |
|
|
|
4,842,167 |
|
Declaration of dividend |
|
|
(748,496 |
) |
|
|
(645,255 |
) |
|
|
(1,393,751 |
) |
|
|
(1,161,459 |
) |
Net assets at end of period |
|
$ |
68,558,616 |
|
|
$ |
61,402,028 |
|
|
$ |
68,558,616 |
|
|
$ |
61,402,028 |
|
Reconciliation of GAAP Total Expense to Non-GAAP Adjusted Expenses
(Unaudited)
In addition to reporting total expenses, which is a
|
Three
|
Three
|
Six months
|
Six months
|
||||
|
|
|
|
|
||||
Total expenses |
$ |
2,652,782 |
$ |
1,306,741 |
$ |
3,879,638 |
$ |
2,354,586 |
Exclude expenses for capital gains incentive fees |
|
1,641,000 |
|
491,000 |
|
1,753,300 |
|
782,000 |
Adjusted total expenses |
$ |
1,011,782 |
$ |
815,741 |
$ |
2,126,338 |
$ |
1,572,586 |
Reconciliation of GAAP Net Investment (Loss) Income per Share to
Adjusted Net Investment Income per Share
(Unaudited)
In addition to reporting Net Investment (Loss) Income per Share, which is a GAAP financial measure, the Company presents Adjusted Net Investment Income per Share, which is a non-GAAP financial measure. Adjusted Net Investment Income per Share is defined as GAAP Net Investment (Loss) Income per Share removing the effect of any expenses for capital gains incentive fees. GAAP Net Investment (Loss) Income per Share is the most directly comparable GAAP financial measure. Rand believes that Adjusted Net Investment Income per Share provides useful information to investors regarding financial performance because it is a method the Company uses to measure its financial and business trends related to its results of operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
|
Three months
|
Three months
|
Six months
|
Six months
|
||||
|
|
|
|
|
||||
Net investment (loss) income per share |
$ |
(0.20) |
$ |
0.19 |
$ |
0.12 |
$ |
0.47 |
Exclude expenses for capital gains incentive fees per share |
|
0.64 |
|
0.19 |
|
0.68 |
|
0.30 |
Adjusted net investment income per share |
$ |
0.44 |
$ |
0.38 |
$ |
0.80 |
$ |
0.77 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240806482417/en/
Company:
President and CEO
716.853.0802
dpenberthy@randcapital.com
Investors:
716-843-3908 / 716-843-3832
dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com
Source: