Rand Capital (NASDAQ:RAND) released fourth-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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View the webcast at https://viavid.webcasts.com/starthere.jsp?ei=1749517&tp_key=4f2dc82d14
Full Transcript
OPERATOR
Greetings. Welcome to Rand Capital Corporation’s fourth quarter fiscal year 2025 financial results conference call. At this time, all participants are in a listen only mode. Please note this conference is being recorded. I will now turn the conference over to Craig Michalik, Investor Relations for rand. Thank you. You may begin.
Craig Michalik
Thank you and good afternoon everyone. We appreciate your interest in Rand Capital and for joining us today for our fourth quarter and full year 2025 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@Rand Capitalcapital.com if you’re following along with the slide deck, please turn to Slide 2 where I’d like to point out some important information. As you are likely aware, we may make 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 3 and I’ll hand the discussion over to Dan.
Dan Pemberthy
Thank you, Craig and good afternoon everyone. Before getting into specific numbers, I want to step back and frame 2025 at a high level. This was a year of disciplined execution and capital allocation. We operated in a market where M and A activity was uneven, senior lenders remained selective and at times temperamental, and New Deal origination across the BDC sector was sporadic. In that environment, we needed to prioritize balance sheet strength, liquidity and risk management over growth for growth’s sake. The result is that we closed the year with more than 23 million of total liquidity and no debt outstanding. That gives us significant flexibility and allows us to move decisively as market conditions improve and compelling opportunities present themselves. During the year, we generated approximately $17.8 million from repayments and select realizations while deploying $6.6 million into new and follow-on investments. That capital recycling is core to our model. It strengthens the balance sheet in periods of muted origination which we have experienced recently while positioning us to redeploy into attractive income producing assets as conditions normalize. Net asset value per share at year end was $17.57. While valuation adjustments during the year did impact NAV, particularly related to Tilson earlier in the year, we believe we have taken a transparent and conservative approach to these valuations. Most importantly, we continue to deliver meaningful income to shareholders during 2025. So as we move into 2026, our posture is one of strength and patience. We are positioned to scale the portfolio prudently and pursue attractive risk adjusted returns as the MA environment continues to evolve. With that overview, let’s turn to shareholder returns on Slide 4. Delivering meaningful cash returns to shareholders remains central to our strategy and 2025 was a strong example of that commitment. During the year we paid out total cash dividends of $1.72 per share. That includes our quarterly dividends which were consistent in 2025 as well as the special dividend declared in the fourth quarter. Specifically, our fourth quarter dividend totaled $0.85 per share comprised of the regular dividend of $0.29 plus a special dividend of $0.56 per share. This special dividend reflects the success of our capital recycling efforts during the year. As we monetize investments and strengthen the balance sheet, we evaluated the appropriate balance between retaining capital for deployment or redeployment, i.e. and returning excess capital to shareholders. And building on our consistency, last week we also announced our first quarter 2026 dividend of $0.29 per share. That declaration reflects our belief in the underlying earnings power of the portfolio, anticipated deal origination in 2026 and the durability of our income stream as we enter this new year amidst a still challenging yet seemingly improving credit cycle. What I think is important here is the broader message. Even in a year where repayments outpaced originations and where the market environments required patience, we were able to maintain our 2025 regular dividend, deliver a meaningful special dividend and enter 2026 with strong liquidity and no leverage. Thus, our near term actions are focusing on replacing our repaid debt instruments from 2025 with new portfolio debt investments. Across the BDC sector, investors are increasingly focused on dividend sustainability and the balance sheet flexibility. We believe our actions demonstrate that our model is designed to support both of these. Please turn to Slide 5 for …
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