Rand Capital Corporation

results. At this time, all participants are on a listen-only mode. If anyone should require operator assistance during the conference, please press StarZ on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Craig Maholick, Investor Relations. Thank you. You may begin.

Thank you, and good afternoon, everyone. We appreciate your interest in Rand Capital and for joining us today for our second quarter 2024 financial results conference call. On the line with me are Dan Pemberthy, our president and chief executive officer, and Margaret Brechtel, our executive vice president and chief financial officer. A copy of the release and slides that accompany our conversation is available at randcapital.com. If you're following along in the slide deck, please turn to slide two where I'd like to point out some important information. As you are likely aware, we may make some forward-looking statements during this presentation. These statements apply to future events that are subject to risks and uncertainties, as well as 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 in the earnings release and other documents filed by the company with the Securities and Exchange Commission. These documents can be found on our website or at sec.gov. During today's call, we'll also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. You 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-GAAP measures with comparable GAAP measures in the tables that accompany today's earnings release. With that, please turn to slide three, and I'll hand the discussion over to Dan. Dan?

Thank you, Craig, and good afternoon, everyone. We continue to execute our strategy, achieving significant growth in total investment income as a result of our growing portfolio and our capital deployment into debt instruments. This past quarter, our portfolio optimization efforts did include selective asset sales which generated capital we used to enhance our balance sheet, which will position us rather favorably for future growth opportunities. I'm very excited to highlight and remind you all that last month we announced the acquisition of one of our portfolio investments, SIAPS, which is one of our larger legacy equity and debt holdings, by a UK-based Spectris PLC. The transaction, which is expected to be completed later this year, is valued at up to $260 million. This does include a deferred component of $60 million earnouts. RAND holds approximately 6% of SIAPS equity, with our total investment costing $5.2 million and does include a secured note from 2021. As of June 30th, we have valued this total investment into SIAPS at $10.8 million. We are carefully evaluating the best options for the anticipated capital infusion from this acquisition. We recognize that we need to strategically redeploy these funds to the extent possible through new investments as well as reinvesting in existing portfolio companies which show high potential. This approach aims to drive further value for our shareholders and may also include additional returns in the form of dividends down the road. The achievement of our strategic objectives over the last few years has translated into tangible benefits for our shareholders. This is highlighted on slide four. Year to date, we have declared total dividends of 83 cents per share. This includes a cash dividend of 29 cents per share, rather, for the second quarter. More recently, on July 31st, we announced that our third quarter 2024 dividend will continue to be held at 29 cents per share. At quarter end, After deploying capital and distributing $748,000 in cash dividends to shareholders, we've maintained total available liquidity of over $11 million. This liquidity includes our line of credit availability, cash on hand, and our remaining highly liquid publicly traded BDC securities. If you turn to slide five, you will see our portfolio mix between debt and equity and the changes during the recent quarter. Our portfolio had a fair value of 87.1 million across 26 businesses. This is up 13% from year-end 2023 and 5% sequentially. The increases reflect investments and valuation adjustments in multiple companies, including SIAPS, partially offset by stock sales and portfolio loan repayments. Our portfolio is comprised of approximately 66 percent debt investments with an annualized weighted average yield of 13.8 percent, including PIK interest. The remaining mix includes 32 percent equity investments in private companies and does primarily consist of SIAPS and Tilson, as well as 2 percent in publicly traded BDC investments. During the quarter, We completed a follow-on equity investment, which is highlighted on slide six. We invested $108,000 in Food Service Supply, or FSS, who is a commercial kitchen supply and services company based in Utah. Following this investment, our total debt and equity holdings in FSS reflect a fair value of $7.5 million at quarter end. The bottom half of the slide highlights notable exits and repayments for the quarter. We received $3.3 million in total proceeds from liquidating our shareholdings in three BDC investments. This resulted in realized gains of $598,000 from Carlyle, $485,000 from Penn and Park, and $177,000 from Aries. Additionally, we recognized a realized gain of $397,000 from a partial asset sale of a Tilson-affiliated entity called SQF. We also received $740,000 principal loan repayment from our PressurePro debt investment. Lastly, we exited our equity investment in NOAA, which had been previously valued at zero. Slide 7, if you kindly turn to that, visually illustrates the diversity within our portfolio and the changes in our industry allocation over the second quarter. Recent investments and adjustments in fair value led to changes in our industry composition. Manufacturing increased from 20% to 25% of our portfolio, while the BDC stocks following their sales decreased from 5% to 2%. We place a high value on the diversity of our industry mix. The broad spectrum of sectors across the portfolio reflects our strategic approach, ensuring resilience in a difficult economy and mitigating risk in our investment efforts. Slide 8 lists our top five portfolio companies at quarter end. And consistent with my prior comments regarding our larger legacy equity holdings, Tilson remains our largest fair value investment at $12.3 million, marking a 17% increase from the prior quarter, and representing 14% of our total portfolio. SIAPS moved up to the second position with its value more than doubling to $10.8 million following the announced definitive purchase agreement. Overall, the top five companies represent 50% of our total portfolio at quarter end. With that, I'll turn it over to Margaret to review our financials in greater depth.