- Fourth quarter investment income grew 7% to $1.1 million and
net investment income grew measurably to $0.7 million compared with
the fourth quarter of 2019
- Investment income for the year grew 14% to $3.1 million
compared with 2019; net investment income was measurably higher at
$1.8 million
- Net asset value was $17.86 per share at year end
- Made largest initial funding of $3.8 million in new
portfolio company in the fourth quarter
- Declared $1.33 per share for 2020 dividend; consisted of
$0.39 per share from net investment income and $0.94 per share from
capital gains
- 3,234 shares repurchased in the fourth quarter; 6,631 total
shares purchased in 2020
- Announced first regular dividend of $0.10 per share for
first quarter 2021
Rand Capital Corporation (Nasdaq: RAND) (“Rand” or the
“Company”), a business development company (“BDC”), announced its
results for the quarter and year ended December 31, 2020.
Allen F. (“Pete”) Grum, President and Chief Executive Officer of
Rand, commented, “We made measurable progress in 2020 with the
transformation of Rand Capital. We declared a special dividend of
$23.7 million, or $1.62 per share in March; executed a 1:9 reverse
stock split in May; declared the 2020 dividend of $1.33 per share
in December and continued to evolve our portfolio. Importantly, we
have now structured a path for regularly quarterly dividend
payments.”
He added, “The evolution of our portfolio to align with our
strategy to be a dividend paying BDC is apparent in the 14% growth
in investment income for the year. We focused on more
interest-yielding debt securities to increase our investment income
in support of our planned regular quarterly cash dividends. We also
purchased the securities of several other publicly traded BDCs.
This put capital to work earning dividends while providing for
ready liquidity as our lending pipeline builds. Through
liquidations or exits, we also reduced equity investments by seven
portfolio companies. Our equity holdings at the end of 2020
comprised 50% of our portfolio, down from 59% when we entered the
year, excluding the investments made in other BDCs. Importantly, we
believe most of the remaining portfolio equity investments have
strong capital return potential.”
Fourth Quarter Highlights
- Investment income in the quarter grew 7% as a result of the
shift in portfolio mix.
- Total expenses in the quarter were down 28%, or $200,000,
mostly due to the externalization of management and reduced
stockholders’ expenses.
- Net investment income grew to $738,000 compared with $100,000
in the prior-year period.
2020 Highlights
- Expenses in 2020 were $2.0 million, down from $2.8 million in
the prior year for similar reasons as in the fourth quarter.
- Net investment income per share was $0.77 for the year and
reflected the successful shift in strategy to become an income
producing, dividend paying BDC. Net investment income also
benefited from a $628,000 tax benefit related to the intent to
elect status as a regulated investment company for U.S. federal
income tax purposes.
- Net asset value (“NAV”) at December 31, 2020 was $46.1 million
compared with $53.6 million at the end of 2019 and compared with
$50.0 million at September 30, 2020. The change in net asset value
was primarily the result of $8.2 million in dividends.
- At December 31, 2020, portfolio fair value decreased $1.6
million to $40.0 million compared with September 30, 2020,
primarily due to valuation adjustments.
Portfolio and Investment Activity
As of December 31, 2020, Rand’s portfolio consisted of 36
companies. At that date, the portfolio was comprised of
approximately 50% in equity investments, 41% in fixed-rate debt
investments and 8% in dividend paying, publicly traded BDCs. The
annualized weighted average yield of debt investments was
12.7%.
Rand made $4.3 million in new and follow-on investment in the
quarter. These included:
- The Company made its largest initial investment in a new
portfolio company, Caitec Inc. Rand invested $3.8 million in total,
which was comprised of a $3.5 million, 14% subordinated secured
note and $300,000 in Class A Preferred stock.
- Rand participated in the $34 million Series B funding for
portfolio company, Centivo Corporation, by purchasing $500,000 in
preferred stock bringing Rand’s total investment in Centivo to
approximately $800,000. Centivo’s fair value was $1.4 million at
December 31, 2020.
Liquidity and Capital Resources
During the quarter, the Company repurchased 3,234 shares of
outstanding common stock for $39,000 under a $1.5 million share
repurchase authorization. The average purchase price was $11.98 per
share. For the year, Rand has repurchased 6,631 shares of
outstanding common stock for $77,000 at an average purchase price
of $11.57 per share. Total shares outstanding at year-end were
2,582,169.
Cash and cash equivalents at the end of the quarter was $20.4
million and represented 44% of net assets. Outstanding SBA leverage
was $11 million at the end of the quarter and there was $3 million
remaining available to draw on the SBA loan program. The earliest
debenture maturity is in 2022 when $3 million in borrowings are
due.
Webcast and Conference Call
Rand will host a conference call and live webcast today, March
8, 2021, at 1:30 p.m. Eastern Time to review its financial
condition and results as well as its strategy and outlook. The
review will be accompanied by a slide presentation, which will be
available on Rand’s website at www.randcapital.com under the
“Investor Relations” heading. A question-and-answer session will
follow the formal presentation.
Rand’s conference call can be accessed by calling (201)
689-8263. Alternatively, the webcast can be monitored on Rand’s
website at www.randcapital.com under “Investor Relations”.
A telephonic replay will be available from 4:30 p.m. ET on the
day of the call through Monday, March 15, 2021. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13715235. The webcast replay will be available in the Investors
section at www.randcapital.com, where a transcript will also be
posted once available.
ABOUT RAND CAPITAL
Rand Capital (Nasdaq: RAND) is an externally managed Business
Development Company (BDC) with a wholly owned subsidiary licensed
by the U.S. Small Business Administration (SBA) as a Small Business
Investment Company (SBIC). The Company’s investment objective is to
maximize total return to its shareholders with current income and
capital appreciation by focusing its debt and related equity
investments in privately-held, lower middle market companies with
committed and experienced managements in a broad variety of
industries. Rand invests in early to later stage businesses that
have sustainable, differentiated and market-proven products,
revenue of more than $2 million and a path to free cash flow or up
to $5 million in EBITDA. 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/.
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 effectiveness of Rand’s new
investment strategy, the success of increasing interest income with
new investments, the capital return potential of Rand’s equity
investments, the competitive ability and position of Rand; 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 and/or Rand SBIC may be unable to fulfill the
conditions required in order to elect to be treated as a RIC for
U.S. 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, 2020, quarterly reports on Form 10-Q,
the definitive proxy statement 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 release.
FINANCIAL TABLES FOLLOW.
Rand Capital Corporation and
Subsidiaries
Consolidated Statements of
Financial Position
(Audited)
December 31,
2020
2019
ASSETS
Investments at fair value:
Affiliate investments (cost of $14,835,885
and $19,035,446, respectively)
$
13,891,199
$
12,151,435
Non- Control/Non-Affiliate investments
(cost of $25,884,428 and $25,584,017, respectively)
26,157,302
24,869,357
Total investments, at fair value (cost of
$40,720,313 and $44,619,463, respectively)
40,048,501
37,020,792
Cash and cash equivalents
20,365,415
25,815,720
Interest receivable (net of allowance of
$15,000 and $166,413, respectively)
258,186
142,265
Deferred tax asset
-
1,204,198
Prepaid income taxes
220,740
343,096
Other assets
74,100
265,378
Total assets
$
60,966,942
$
64,791,449
LIABILITIES AND
STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Debentures guaranteed by the SBA (net of
debt issuance costs)
$
10,824,587
$
10,786,913
Dividend payable
3,434,117
-
Accounts payable and accrued expenses
171,373
207,873
Due to investment adviser
156,999
50,564
Deferred revenue
153,895
37,583
Deferred tax payable
121,141
-
Bonus payable
-
80,000
Total liabilities
14,862,112
11,162,933
Stockholders’ equity (net
assets):
Common stock, $0.10 par; shares authorized
100,000,000; shares issued: 2,648,916 at 12/31/20 and 1,688,485 at
12/31/19; shares outstanding: 2,582,169 at 12/31/20 and 1,628,369
at 12/31/19
2,384,547
1,519,637
Capital in excess of par value
49,883,890
34,142,455
Treasury stock, at cost: 66,747 shares at
12/31/20 and 60,116 shares at 12/31/19
(1,545,834
)
(1,469,105
)
Total distributable earnings
(4,617,773
)
19,435,529
Total stockholders’ equity (net assets)
(per share - 2020: $17.86, 2019: $32.93)
46,104,830
53,628,516
Total liabilities and stockholders’
equity (net assets)
$
60,966,942
$
64,791,449
Rand Capital Corporation and
Subsidiaries
Consolidated Statements of
Operations
(Unaudited) (Audited)
For the Quarter Ended December
31,
For the Year Ended December
31,
2020
2019
2020
2019
Investment income: Interest from
portfolio companies: Affiliate
investments
$
179,147
$
190,861
$
666,969
$
823,565
Non-Control/Non-Affiliate investments
$
541,535
280,122
1,794,974
696,975
Total interest from portfolio companies
720,682
470,983
2,461,943
1,520,540
Interest from other investments:
Non-Control/Non-Affiliate investments
623
58,410
87,784
166,556
Total interest from other investments
623
58,410
87,784
166,556
Dividend and other investment
income: Affiliate investments
79,355
13,125
118,730
320,806
Non-Control/Non-Affiliate investments
147,826
259,042
309,351
259,042
Total dividend and other investment income
227,181
272,167
428,081
579,848
Fee income:
Affiliate investments
5,000
16,179
15,417
27,639
Non-Control/Non-Affiliate investments
102,194
167,186
109,694
430,113
Total fee income
107,194
183,365
125,111
457,752
Total investment income
1,055,680
984,925
3,102,919
2,724,696
Expenses:
Base management fee
155,318
85,483
589,519
85,483
Interest on SBA obligations
104,190
104,190
416,760
408,039
Professional fees
185,062
141,182
568,857
548,041
Shareholders and office operating
40,400
91,003
258,266
557,546
Directors' fees
31,375
30,128
116,500
117,500
Insurance
7,767
7,232
33,868
38,302
Corporate development
2,066
15,814
14,546
67,441
Other operating
90
14,091
662
17,504
Salaries
-
76,790
-
621,290
Bonuses
-
115,000
-
115,000
Employee benefits
-
45,452
-
189,157
Bad debt (recovery) expense
-
-
(24,000
)
5,413
Total expenses
526,268
726,365
1,974,978
2,770,716
Net investment income (loss) before income taxes
529,412
258,560
1,127,941
(46,020
)
Income tax (benefit) expense
(209,086
)
158,175
(628,187
)
39,677
Net investment income (loss)
738,498
100,385
1,756,128
(85,697
)
Net realized (loss) gain on
sales and dispositions of investments:
Control investments
-
-
-
80,393
Affiliate investments
(7,984,468
)
-
(7,927,552
)
(472,632
)
Non-Control/Non-Affiliate investments
(410,857
)
1,510,000
1,944,273
1,510,000
Net realized (loss) gain on sales and dispositions, before income
taxes
(8,395,325
)
1,510,000
(5,983,279
)
1,117,761
Income tax expense
-
346,784
-
255,923
Net realized (loss) gain on sales and dispositions of investments
(8,395,325
)
1,163,216
(5,983,279
)
861,838
Net change in unrealized
depreciation on investments:
Affiliate investments
6,455,129
(2,793,687
)
5,939,325
(3,970,007
)
Non-Control/Non-Affiliate investments
1,011,763
3,017,636
987,534
(3,325
)
Change in unrealized depreciation before income taxes
7,466,892
223,949
6,926,859
(3,973,332
)
Deferred income tax expense (benefit)
182,530
6,198
1,955,942
(907,521
)
Net change in unrealized depreciation on investments
7,284,362
217,751
4,970,917
(3,065,811
)
Net realized and unrealized
(loss) gain on investments
(1,110,963
)
1,380,967
(1,012,362
)
(2,203,973
)
Net increase (decrease) in net assets from operations
$
(372,465
)
$
1,481,352
$
743,766
$
(2,289,670
)
Weighted average shares outstanding
2,583,622
1,241,719
2,268,356
836,893
Basic and diluted net increase (decrease) in net assets from
operations per share
$
(0.14
)
$
1.19
$
0.33
$
(2.74
)
Rand Capital Corporation and
Subsidiaries
Consolidated Statements of
Changes in Net Assets
2020
2019
Net assets at beginning of year
$
53,628,516
$
31,524,187
Net investment income (loss)
1,756,128
(85,697
)
Net realized (loss) gain on sales and
dispositions of investments
(5,983,279
)
861,838
Net change in unrealized depreciation on
investments
4,970,917
(3,065,811
)
Net increase (decrease) in net assets from
operations
743,766
(2,289,670
)
Declaration of dividends
(8,190,723
)
-
Issuance of capital stock, net
-
24,393,999
Purchase of treasury shares
(76,729
)
-
Net assets at end of year
$
46,104,830
$
53,628,516
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210308005200/en/
Company: Allen F. ("Pete") Grum President and CEO Phone:
716.853.0802 Email: pgrum@randcapital.com
Investors: Deborah K. Pawlowski Kei Advisors LLC Phone:
716.843.3908 Email: dpawlowski@keiadvisors.com
Rand Capital (NASDAQ:RAND)
Historical Stock Chart
From Feb 2024 to Mar 2024
Rand Capital (NASDAQ:RAND)
Historical Stock Chart
From Mar 2023 to Mar 2024