Rand Capital Corporation

and welcome to Rand Capital Corporation third quarter fiscal year 2024 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Craig Mikuluk, Investor Relations. Thank you, Mr. Mikuluk. You may begin.

Thank you, and good afternoon, everyone. We appreciate your interest in Rand Capital for joining us today for our third 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 with 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 that 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, 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 gap 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. RAND delivered another strong quarter of performance driven by disciplined execution and strategic positioning in a complex market environment. We achieved robust growth in total investment income increasing 27% over the prior period to $2.2 million. This success was fueled by our commitment to building a well-diversified, income-generating portfolio, which included five new debt instruments over the year and enhanced fee income. Our net asset value per share rose 3% from the prior quarter and 16% year-to-date, reaching $27.29 at the end of the third quarter. This growth reflects our careful management of a $75 million portfolio, now concentrated 74% in debt investments with an overall yield of 13.8%. These results underscore our focus on creating value through a balanced mix of assets that can weather today's economic headwinds while driving attractive returns. Additionally, we successfully exited several key investments this quarter, including a notable sale of SIAPS, which provided us with $13.1 million in proceeds. We have also sold our final positions in two public BDCs, realizing proceeds of $1.3 million. This further strengthens our balance sheet and also increases our capacity for future investments. We initially allocated this capital to reducing our outstanding bank debt, lowering it by $13.3 million, leaving us with a balance of $3.9 million outstanding at quarter end. We have benefited from recent Fed rate reduction and our debt paydowns and are seeing lower interest expenses and improved profitability, a positive trend that supports our overall financial performance. With $24 million in total liquidity, we remain strategically positioned to capitalize on market dynamics as they unfold, making selective, high-return investments that will further drive growth and long-term value. Our success in achieving strategic objectives over the past few years has translated into real benefits for our shareholders, as highlighted on slide 4. Over this time, we have steadily increased our dividends, with payouts rising from $0.44 per share in 2021 to $0.83 in 2022 and $1.33 in 2023. This year, as of Q3 2024, we have paid total dividends of $0.83 per share. Our fourth quarter dividend announcement is expected in early December. Our commitment to a robust balance sheet, optimized portfolio, and strategic capital deployment gives us confidence in our ability to continue delivering meaningful returns for our shareholders well into the future. Turning to slide 5, you will see our portfolio's distribution between debt and equity, along with the recent changes. Our portfolio now stands at fair value of $75 million, spread across 22 businesses. The fair value was down approximately 14% sequentially, which reflects a successful exit from SIAPS, along with the stock sales and loan repayments from other portfolio companies. With the close of the SIAPS transaction, we have progressed towards our goal of a more debt-focused portfolio. And as we have already noted, 74% of our investments are in debt structures, while the remaining 26% is in equity investments in private companies. Slide 6 highlights our activities this past quarter, including a small follow-on debt investment. We did invest $125,000 as a follow-on to ITA, a Florida-based manufacturer of blinds and shades. With this additional investment, our total holdings in ITA, across both debt and equity, reached a fair value of $4.9 million at the quarter end. The bottom half of the slide showcases notable exits for the quarter, led by the successful sale of SCIFs. As noted, the exit generated 13.1 million in total proceeds, and this did include 2.1 million from a debt repayment, 165,000 in interest income and fees, and a 10.8 million in equity return. This transaction resulted in the realized gain of 7.7 million for RAND. Additionally, we received 1.3 million in proceeds from the sale of our remaining shares in two publicly traded BDCs, Barings and FSKKR. These realized, or rather provided realized gains of $249,000 combined. Lastly, we exited our investment in Mesmerize, realizing a loss on an asset previously valued at zero. Turning to slide seven, you will see the diversity of our portfolio and the shifts in our industry allocation since the second quarter. These changes reflect both the portfolio adjustments we discussed and the portfolio fair value updates. Notably, our professional services allocation increased from 43% to 50% of our portfolio, while manufacturing decreased from 25% to 16%. Additionally, with the sale of our BDC stocks, they are no longer represented in this industry mix. We view this industry diversity as a cornerstone of our strategic approach. By maintaining a wide range of sectors within a portfolio, we bolster resilience during economic challenges and better manage risk in our investment portfolio. At the end of the quarter, slide eight highlights our top five portfolio companies. Notably, Tilson remains our largest fair value investment with a total value of $12.3 million. which has remained consistent with the previous quarter. Its share of our total portfolio has increased sequentially, primarily due to a reduction in total assets resulting from the asset sales we previously mentioned. Additionally, following the sale of SIAPS, ITA has entered the top five rankings. Together, these five companies now represent 50% of our overall portfolio at quarter end. With that, I'll turn it over to Margaret. to further review our financials in a much greater depth.