Rand Capital Corporation

Q4 2022 Earnings Conference Call


spk_0: breathing welcome him to ran capital corporation fourth quarter twenty twenty two financial results as this time of all participants are illicit only mode if any was require operator to through the conference please press start zero on your telephone he bad please note this conferences be recorded i will doubt has a conference over to create a holiday invest relations think he may begin
spk_1: your bag you and good morning everyone we appreciate your true for ran capital of rejoinder for or fourth quarter four year twenty twenty two bananas result conference call on the line with me or game pemberton a president and chief executive officer the murder bracco or executive vice president and chief financial officer a copy the relief and fly to the company or conversation is available at ran capital dot com that are following along the flight deck please turn to fly to i'd like to point out from important information as you are likely aware we may make some forward looking statements during his presentation he statements supply the future events that are subject to return uncertainties was other factors that could cause actual results to differ from where we are today you can find a summary of these risks and uncertainties and other factors nearing it's really and other documents filed by the company with the securities and exchange commission he documents can be found on our website or and se si dot gov during to call also discuss i'm not get financial measures we believe this will be useful in evaluating our performance he should not consider the presentation of this additional information in isolation or as a substitute for results in accordance with generally accepted accounting principles we have provided reconciliations of non get measures with comparable get measures and the table that accompanied raise earnings release with that return flight three and i'll handle discussion over there there thank you break a good morning everyone the fourth quarter kept off a strong year for ring and as we continue to execute our strategy by focusing on pontius yield in order to achieve our income producing goal we advance or investment portfolio composition towards more debt instruments with the addition of for interest yielding investments over the past year in total or get portfolio now makes up more than half of our total portfolio mac sitting at fifty six percent compared with forty six percent at the end of twenty twenty one we deliver total investment growth of forty percent for the quarter and over forty one percent for the full year period which reflect you didn't reach an interesting come from portfolio companies and how your portfolio give them
spk_2: while we have made great strides building out our portfolio that it's delivery strong total investment income growth we are equally focus on food and expense management which was demonstrated in the measurable improvement over net investment income per share a forty eight some for the quarter of four times from last year fourth quarter
spk_1: for the full year net investment income per share was a dollar seventy two compelling the loss of a dollar one pushchair and twenty twenty one he's improved results enabled us to increase or returned to shareholders during twenty twenty two we paid our total the evidence of eighty three cents per share which represents an increase of nearly ninety percent over twenty twenty one distributions this included reading our quarterly dividend cash by thirty three percent or five cents per share bringing it to twenty cents per share for the fourth quarter of twenty twenty two and at the same time paying a supplemental dividends of eighteen cents per share during the year we invested over seven million across seven transactions which largely consisted of interest yielding assets
spk_2: i'll highlight our fourth quarter investments in a moment
spk_1: if you turn the slide for you could see your portfolio mix between get in equity and the changes during the past year fixed rate get that investments made up fifty six percent as we made progress and shifting our investment portfolio composition towards more debt instruments and we do expect that trying to continue as we further execute upon our strategy the rest of the portfolio from price of thirty four percent in equity investments and private companies and ten percent in different thing publicly traded btc and are a cb auction security the fair value of our investments sort of approximately sixty one point five million expanding three percent from sequential twenty twenty two third quarter we saw some contraction of the fair value when compared with twenty twenty one year end which was primarily due to the btc stock sales made during the year and lower valuations for a cb options and open exchange helping partially offset the decrease with our new and follow on investment as of december thirty first twenty twenty two or portfolio consisted of investment and twenty nine company down five since twenty twenty one
spk_2: we exited to btc investments along with social and empire mike recession in new monarch during the course of the year the one new edition with food service supply which was down during the fourth quarter and it's highlighted and five five
spk_1: we utilize existing cash and our senior security bobby credit facility to form these investments the three point one million investment and food service supply consisted of a two point five million of senior subordinated debt a twelve percent interest and six hundred thousand have preferred equity
spk_2: fss is out of utah and provide design distribution and installation services for commercial kitchens as well as renovations and new commercial build
spk_1: we also need a follow on that investment of five hundred and ninety thousand dollars and psi ops an instrument instrumentation company that is specializing in portable analytical instruments which have the ability to identify chemical compounds minerals and element we have been an investor and psi science for nearly ten years consisting of both debt and equity investments along the way our total fair value of the to determine what five point two million dollars at year end we've also made a hundred and ninety four thousand dollar follow on equity investment into seabirds billiards corporation rating the total fail value of this investment to five point nine million which was largely comprised of five point six in debt that does the true at fourteen percent that forty for a includes a twelve percent ponce and a two percent pick a cool fiber to the retail company that specializes in billiards equipment and accessories and it's fairly typical of the types of investments which were making these days we had one of the exit during the quarter that was impaired your helmet which repay the one point four million dollar loan the church on flagship illustrated diversity in our portfolio and the change in industry next year over year given the impact of investment fails and fair value changes we saw the largest changes in the software sector which decrease ten percent while professional services increase the thirty one percent and manufacturing also increase to twenty three percent we continue to value this diversity of our portfolio as we do feel that to mitigate the ultimate market risk impact five seven douglas without our top five for oil company that iran's which represents almost half of our total portfolio the last quarter via has moved into the top five ranking of the number three spot given our fourth quarter investment into the company
spk_2: hilton remains the largest fair value investment and both open exchange and ikea had moved out of the top five given evaluation changes during the quarter and also we had shifted dst to before spot and also move pay check into the top five portfolio mix
spk_1: yeah year end we still held nearly three hundred and twenty thousand shares of a tv and represents about four percent of a total portfolio fair value
spk_2: what's that it over the margaret for review of or financials and greater depth
spk_3: thanks dan and good afternoon everyone i will start in flight nine and ten which provide an overview of our financial family and operational highlights for the twenty twenty two fourth quarter and four year period total investment income for the quarter with over one point seven million at forty percent over last year driven by increased in the interest income from the for a new debt instruments originated over the last year and hired dividend income for the full year total investment income grew older forty one percent to five point eight million for similar reasons that the corridor the number of they are complete contributing to an investment income with twenty four year and total expenses are patently three hundred and seventy one thousand during the fourth quarter compared with nine hundred and twenty three thousand and the carrier quarter that decrease reflect lower interest expense and a of food capital gain antenna be given a decrease in unrelated depreciation on are publicly traded security and open exchange and ita valuation changes as a reminder a capital gain new channel see a cool under gas it calculated using the cumulative aggregate realized capital gains and losses and the aggregate that change and unrealized capital appreciation and depreciation the close to the period excluding the capital gains fantasy adjusted expansion a not get financial measure were approximately five hundred and thirty nine thousand down thirty six percent from the pay period due to continue to expand management and lower interest expense oh you're twenty twenty two total expenses decrease to one point one million six point seven million i actually do to an apartment five point three million dollars swing with in the capital gains son of be a cool specifically two thousand and twenty one included four point two million of capital gain and fan of be buried in twenty twenty two it included a reversal of one million of these fees the total expense decreased arteries like the elimination of interest expense payments or the as be an application which was paid and form in november twenty twenty one i'm lucky not an adjusted basis which is a man gap financial measure twenty two twenty twenty two expenses are down twelve percent year over year fourth quarter not investment income for the passionately one point two million or forty eight cents per share compared at approximately three hundred and twenty thousand or twelve can per share and a prior quarter added an adjusted basis which is a man gap financial measure not investment income more than doubled to forty one cents per share for the full year period not investment income per share with a dollar seventy two compared it not in basket flat out a dollar one per share and twenty twenty one excluding the capital gains cannot be a girl richer than been banned gaps financial measure adjusted net investment income per share with a dollar thirty one for twenty twenty two again more than doubled between twenty one results glide a lab and provide a waterfall grass or the change in that get value for the year a december thirty first twenty twenty two now the assets were fifty seven point seven million gallons five percent from year and twenty twenty one the change reflect the new and follow an investment i've checked by fair market value changes across a number of portfolio companies and the over two point one million and given him distributions to shareholders thirty here as a result the net asset value per share with twenty two dollars and thirty six then compared to twenty three dollars and fifty four cents per share a december thirty first twenty twenty one by twelve highlighter strong balance sheet cashier and routes practically one point four million compared with eight hundred and thirty four thousand at the end of twenty twenty one he still held approximately six point four million and liquid btc and the auction shares which can provide near term funding capital from back and as we have demonstrated and past periods also the reminder during the second quarter twenty twenty two be closed and a five year twenty five million dollars senior security that credit facility a year and we had outstanding balance of two point six million which was used to fund the investment that been highlighted earlier turn twenty twenty two ran paid a total of two point one million a cash dividends which includes the for regular quarterly dividend and a year and twenty twenty two supplemental at him our portfolio transmit transformation to include more income producing investment is expected to support an increase given libel overtime inline with that application we announced in the fourth quarter of twenty twenty two that we raised the regular casts quarterly cash dividend by thirty three percent to twenty cents per share on february twenty eight twenty twenty three ran declared it's regular quarterly cash get it and distribution of twenty cents per share their the first quarter of twenty twenty three the given and will be distributed on or about march twenty seven twenty twenty three to shareholders of record as march thirteenth twenty twenty three in april twenty twenty two the board of directors approved a new share repurchase plan which which authorizes the company to repurchase shares of iraq's family can start with an aggregate cost of up to one point five million during the past year we did not purchased and he shares with that i will turn the discussion back to damn
spk_2: both margaret
spk_1: we honor twenty twenty three with momentum on our side we believe we have a strong and flexible balance sheet that is supported by multiple sources of capital beyond our cash on hand or line of credit availability we also still have highly liquid publicly traded a cb and are btc stock
spk_2: potential proceeds from portfolio exits and of course our perspective investment income
spk_1: we are actively building a pipeline of investment opportunities in order to put this capital to work we are focused on investing and higher yielding debt instruments and related equity investments in the privately held lower middle market companies which have committed experience management team across a broad variety he of industries
spk_4: this may include
spk_1: follow on investment in existing portfolio companies as well that continue to demonstrate and perform an exhibit great an exceptional growth potential overall we are excited about our future and believe we can continue to execute our strategy to drive investment income growth in order to enable us to further grow are distributed of the brands overtime thank you for joining us today and for your continued interest in rand capital we look forward to appearing you on all of our first quarter twenty twenty two results which will be reported in may we hope you have a great day
spk_0: thank you this does include today's conference you may disconnect july at this time and thank you for your participation

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.