Rand Capital(RAND) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total investment income for Q2 2024 was $2.1 million, an 18% increase compared to the same quarter last year, driven by a 35% increase in interest income from 7 new interest-yielding investments [11] - Total expenses for the quarter were approximately$ 2.7 million, up from $1.3 million in the same quarter last year, primarily due to a$ 1.2 million rise in capital gain incentive fees [11] - Net investment loss was $517,000 or$ 0.20 per share, compared to a net investment income of $493,000 or$ 0.19 per share in the prior year [12] - Net assets at June 30, 2024, were $68.6 million, reflecting an 11% increase, largely due to unrealized appreciation on investments of$ 7.8 million [12] Business Line Data and Key Metrics Changes - The portfolio had a fair value of $87.1 million across 26 businesses, up 13% from year-end 2023 and 5% sequentially [7] - The portfolio is comprised of approximately 66% debt investments with an annualized weighted average yield of 13.8% [7] - The largest fair value investment, Tilson, increased by 17% to$ 12.3 million, while SciAps' value more than doubled to $10.8 million following a purchase agreement [10] Market Data and Key Metrics Changes - Manufacturing increased from 20% to 25% of the portfolio, while BDC stocks decreased from 5% to 2% [9] - The company received$ 3.3 million in total proceeds from liquidating shareholdings in 3 BDC investments, resulting in realized gains [8] Company Strategy and Development Direction - The company aims to expand by pursuing new investments and reinvesting in existing portfolio companies with high potential [15] - The strategy includes participating in smaller M&A transactions to support a steady income stream through new debt instruments [15] - The focus remains on debt financing for lower to middle market businesses while maintaining minority equity investments [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy of transforming the portfolio to include more income-generating investments, which is expected to sustain higher dividend levels over time [13] - The anticipated capital infusion from the acquisition of SciAps will be strategically redeployed to drive further value for shareholders [5] Other Important Information - The company declared total dividends of $0.83 per share year-to-date, including a cash dividend of$ 0.29 per share for Q2 [6] - Total available liquidity at quarter end was over $11 million, including cash on hand and remaining highly liquid publicly traded BDC securities [6] Q&A Session Summary - The Q&A session concluded without specific questions or answers being documented in the provided content.