Rand Capital(RAND) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total investment income increased by almost 16% year-over-year, reaching $675,000 in Q2 2020, primarily due to an 81% increase in interest income [7][22] - Net income rose to $199,000 or $0.08 per share, compared to a loss of $0.20 per share in the same quarter last year [7] - Net asset value (NAV) decreased to $49.7 million, down more than $4 million, with NAV per share at $19.21, compared to $33.2 per share at the end of March 2020 [9][26] Business Line Data and Key Metrics Changes - The company invested approximately $1.5 million in SciAps and $750,000 in Tilson Technology during the quarter, with interest from portfolio companies increasing to 81% from 2019 [13][22] - The investment strategy focused on 58% equity and 42% debt, aiming to generate current income complemented by capital appreciation [12] Market Data and Key Metrics Changes - The company maintained a high level of cash at $22 million, representing 44% of net assets, with an additional $3 million available from the SBA loan program [11][27] - The portfolio value of public BDC securities increased by approximately $269,000 during the quarter [17] Company Strategy and Development Direction - The company continues to focus on yield investments, primarily in debt and loan instruments, while also evaluating equity investments for dividend income [12] - The management emphasized the importance of portfolio diversity to reduce market risk during challenging economic times [14] Management Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges posed by the COVID-19 pandemic but expressed confidence in the company's transformation strategy and financial performance [6][7] - The management is actively monitoring portfolio companies' liquidity and operational status, noting their resilience during the pandemic [16] Other Important Information - A special dividend of $23.7 million was distributed in May, impacting the net asset value [8] - The company executed a 1 for 9 reverse stock split and repurchased 1,300 shares under its share repurchase authorization [10] Q&A Session Summary Question: Dividend distribution based on earnings - Management confirmed that a minimum of 90% of net investment income will be distributed as dividends, with further guidance expected in Q3 [31] Question: Plans for raising additional funds - Management stated that there are currently no plans to raise additional funds, emphasizing the existing cash reserves of $22 million [37] Question: Investment opportunities with current cash reserves - Management indicated ongoing efforts to invest the cash, focusing on increasing investment income through debt instruments [38] Question: Impact of Eastman Kodak developments - Management clarified that they are not aware of any direct benefits from Eastman Kodak's recent developments [46]