NASDAQ:RAND Rand Capital Q1 2024 Earnings Report $19.66 +0.23 (+1.16%) Closing price 04/25/2025 03:58 PM EasternExtended Trading$19.08 -0.58 (-2.93%) As of 04/25/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Rand Capital EPS ResultsActual EPS$0.37Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ARand Capital Revenue ResultsActual Revenue$2.07 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ARand Capital Announcement DetailsQuarterQ1 2024Date5/13/2024TimeN/AConference Call DateMonday, May 13, 2024Conference Call Time1:30PM ETUpcoming EarningsRand Capital's Q1 2025 earnings is scheduled for Monday, May 5, 2025, with a conference call scheduled at 1:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Rand Capital Q1 2024 Earnings Call TranscriptProvided by QuartrMay 13, 2024 ShareLink copied to clipboard.There are 4 speakers on the call. Operator00:00:00Greetings and welcome to Rand Capital Corporation's First Quarter Fiscal Year 20 24 Financial Results Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Craig Mychajluk. Operator00:00:25Thank you. You may begin. Speaker 100:00:30Thank you, and good afternoon, everyone. We appreciate your interest in Rand Capital and for joining us today for our Q1 2024 financial results conference call. On the line with me are Dan Penberthy, our President and Chief Executive Officer and Margaret Prechtel, 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 2, where I'd like to point out some important information. Speaker 100:00:59As 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 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 atsec.gov. During today's call, we'll also discuss some non GAAP financial measures. Speaker 100:01:29We 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? Speaker 200:01:54Thank you, Craig, and good afternoon, everyone. We kicked off the year with solid momentum fueled by the strategic deployment of capital, particularly into new and follow on debt investments. This approach has consistently delivered results over the past years and evidences our strong performance in the Q1 of 20 24. The initial 3 months were dynamic within our portfolio characterized by these new and follow on investments, certain equity sales and portfolio repayments. This activity does underscore the strength and agility of our investment approach. Speaker 200:02:31Moreover, seizing upon favorable market conditions, we realized $3,500,000 from the sale of our ACV auction stock. This strategic exit in conjunction with the prudent utilization of our credit facility has enabled us to deploy over $10,000,000 during the quarter, fortifying the potential yield and the future of our portfolio and the strengthening dividends. Noteworthy is the evolution of our debt portfolio, which now represents 70% of our total mix, up from 64% at the close of 2023 56% at the end of 2022. This strategic shift has driven the 12% growth in total investment income for the quarter. The strong performance translated into tangible benefits for our shareholders as evidenced on Slide 4. Speaker 200:03:25Year to date, we have declared total dividends of $0.54 per share. This includes a cash dividend of $0.25 per share for the Q1. And just last week on May 8, we increased our regularly quarterly cash dividend for the Q2 by $0.04 per share, marking a 16% increase and is now at $0.29 per share. This dividend increase reflects not only the strength and stability of our business operations and its portfolio, but our consistent and confident abilities to execute in the future trajectory of the company. We firmly believe that our deal flow and unique marketing position will continue to support future dividends. Speaker 200:04:11At quarter end, having put our capital to work and distributing 600 and $45,000 in cash dividends to the shareholders, we still had approximately $11,000,000 in total availability, including our cash on hand, line of credit availability and our highly liquid publicly traded securities. If you turn to Slide 5, you can see our portfolio mix between debt and equity and the changes during the recent quarter. Our portfolio consisted of investments with the fair value of $82,800,000 across 30 portfolio businesses. This was up $5,600,000 rather on net basis or 7% from the year end 2023 and reflected these new and follow on investments and valuation adjustments in multiple portfolio companies. These were partially offset by our sale of ACV Auctions stock and other portfolio company loan repayments. Speaker 200:05:15The portfolio comprised approximately 70% in debt investments as I priorly noted previously noted rather, which have an annualized weighted average yield of 13.7%, which includes PIK or payment in kind interest. The remaining mix was comprised 25% in equity investments in private companies and 5% in publicly traded securities consisting of our other BDC investments. During the Q1, we completed one follow on and 2 new investments. These transactions are highlighted on Slide 6. The larger investment was a debt investment totaling 5,500,000 into Madison Avenue Holdings. Speaker 200:05:58They had previously repaid their $1,900,000 loan to Rand also during the quarter. This debt instrument will carry a rate of 14% including PIK interest. Madison Avenue is based out of Texas and provides upscale salon spaces for lease. The second was a new investment of $3,200,000 made with Mountain Regional Equipment Solutions or MRES. That consisted of a $3,000,000 term loan at 14 percent and a $205,000 equity investment. Speaker 200:06:33MRES is based out of Utah and supplies automated lubrication systems, active and passive safety systems and maintenance products designed for the mobile heavy equipment industry. The follow on investment during the quarter was $1,800,000 into Cybirt's Billiards Corporation, a billiard supply company based out of Michigan. With this investment, our total debt and equity investment in Cybert's increased to a fair value of $7,800,000 at quarter end. The bottom half of the slide highlights the notable exits and repayments from the quarter, including the sale of the stock of ACV Auctions. We have determined an appropriate time to make an exit within our investment portfolio and this is often just as critical as making the initial investment. Speaker 200:07:26The shares of ACV were sold at an average price of $18.02 per share and the sales of the 194,000 shares did result in a realized gain of $3,500,000 I should highlight that during the prior quarter, we had ACV stock valued or that is rather unrealized appreciation approximately $2,900,000 And with the sale, we have now monetized that prior appreciation. During the quarter, we also received $687,000 principal loan repayment from PressurePro, which left our total fair value of debt and equity investment at $2,400,000 into this portfolio company. The charts presented on Slide 7 offer a visual depiction of the diversity within our portfolio and the evolving landscape of industry allocation over the past quarter. Against the backdrop of recent investments as well as adjustments in fair value, our industry composition saw notable changes during the quarter. Sectors such as professional services, consumer products and distribution witnessed growth. Speaker 200:08:44On the other end, we observed declines in representation of the manufacturing and software industries. Overall, we continue to value this diversity of our industry mix. The diverse spectrum of sectors across our entire portfolio serves as a testament to our strategic approach, ensuring resilience and mitigating risk in our investment efforts. Slide 8 lists our top 5 portfolio companies at quarter end. Tilson continues to remain the largest fair value investment at well over $10,600,000 or 13% of our total portfolio. Speaker 200:09:22Syberts moved up to number 2 following our recent investment and Madison Avenue also moved to the 4th ranking following our investment. Overall, these top 5 represent 44% of our total portfolio at quarter end. With that, I'll turn it over to Margaret for further review of our financials. Speaker 300:09:44Thank you, Dan, and good afternoon, everybody. I will start on Slide 10, which provides an overview of our financial summary for the Q1 of 2024. Total investment income for the quarter was $2,100,000 up 12% over last year's Q1, driven by a 40% increase in interest income. Overall, the number of portfolio companies contributing to investment income during the Q1 of 2024 was 24 companies compared to 23 in the Q1 of 2023. Total expenses were approximately $1,200,000 during the Q1 compared with $1,000,000 in the prior year's Q1. Speaker 300:10:26The change reflects a $232,000 increase in interest expense on borrowings under our senior revolving credit facility, partially offset by a decrease in capital gain incentive fees to the company's external investment advisor. Adjusted expenses, which includes accrued capital gains incentive fees and is a non GAAP financial measure, were $1,100,000 compared with $757,000,000 in the Q1 of 2023. First quarter net investment income increased 17 percent to $840,000 or $0.33 per share compared with $715,000 or $0.28 per share in the prior year Q1. On an adjusted basis, which is a non GAAP financial measure and excludes the capital gains incentive fee accrual expense, net investment income was 0 point $3.7 per share compared with $0.39 per share in the Q1 of 2023. I'm going to move on to Slide 11, which provides a waterfall graph for the change in net asset value for the quarter. Speaker 300:11:33Net assets at March 31, 2024 were $61,600,000 up 1% from the end of 2023. The change reflects our net investment income and realized gains from the ACV auction sale, coupled with a $2,900,000 net change in unrealized depreciation and the $645,000 dividend distribution to shareholders during the quarter. As a result, the net asset value per share at March 31, 2024 increased to $23.85 compared with $23.56 per share at December 31, 2023. As highlighted on Slide 12, we continue to have a strong and flexible balance sheet that positions us well for future investments. Total assets grew 4 percent to $84,400,000 which included cash at quarter end of approximately 759,000 We also held approximately 4,500,000 in liquid BDC shares, which are available for future liquidity needs, as Dan will touch on in a moment. Speaker 300:12:44Based on our borrowing base formula, Rand has approximately $5,800,000 of availability on its existing $25,000,000 senior secured revolving credit facility at March 31, 2024. Our total outstanding borrowings of $19,200,000 carrying interest rate of approximately $8,800,000 at quarter end. We did not repurchase any shares during the quarter. The Board of Directors did renew the share repurchase program, authorizing the purchase of up to $1,500,000 in additional Rand Capital stock. The new program expires on May 7, 2025. Speaker 300:13:24Our portfolio transformation to include more income producing investments is expected to support an increased dividend level over time. In line with that expectation, as previously mentioned, Rand recently declared its regularly quarterly cash dividend distribution of $0.29 per share, which increased 16% from the Q1 of 2024 dividend of $0.25 per share. The cash dividend will be distributed on or about June 14, 2024 to shareholders of record as of May 31, 2024. With that, I will turn the discussion back to Dan. Speaker 200:14:01Thanks, Margaret. We do remain focused on our commitment to maximizing shareholder value through the sustained growth of dividends. We continue our strategic focus on bolstering our investment portfolio, particularly through prudent and strategic investments of income generating debt instruments. By capitalizing on these targeted opportunities, our aim is to cultivate a consistent and robust stream of income, thus fortifying our ability to not only maintain, but targeting an increase in dividends over the long term. We are confident in our ability to execute this strategy, which is supported by a blend of existing capital resources and the potential influx of funds from the portfolio divestments and future investment yields as well as future portfolio equity churn. Speaker 200:14:57Moreover, in alignment with our strategic vision, we recently opted to liquidate approximately $3,000,000 worth of our BDC stocks subsequent to the end of the quarter. This decision is driven by our commitment to safeguarding accrued gains and proactively managing our financial leverage. Looking forward, we are poised to replicate our historical achievements and we are hopeful to deliver compelling returns for our shareholders. Thank you for joining us today and for your continued interest in Rand Capital. We look forward to updating all of you on our Q2 2024 results, which will be reported in August. Speaker 200:15:37We hope you have a great day. Operator00:15:42This concludes today's conference. You mayRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallRand Capital Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Rand Capital Earnings HeadlinesRand Capital Announces First Quarter 2025 Financial Results Conference Call and WebcastApril 23 at 11:29 PM | finance.yahoo.comStocks With Rising Relative Strength: Victory Capital Cl AApril 9, 2025 | msn.comTrump’s tariffs just split the AI market in twoTrump’s tariff just split the AI market – among others – in two. One group of AI companies—the ones relying on cheap foreign hardware—just saw their costs shoot through the roof. For the other group of AI companies, they were just handed a massive competitive advantage. Make no mistake, AI as a whole is still a game-changer for the global economy. But within the AI sector, Trump’s tariffs have created a huge divergence.April 26, 2025 | Traders Agency (Ad)Rand Capital to Present Investor Slides in March 2025March 18, 2025 | tipranks.comEarnings call transcript: Rand Capital Q4 2024 sees 11% income riseMarch 12, 2025 | investing.comRand Capital (NASDAQ:RAND) Stock Quotes, Forecast and News SummaryMarch 12, 2025 | benzinga.comSee More Rand Capital Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Rand Capital? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Rand Capital and other key companies, straight to your email. Email Address About Rand CapitalRand Capital (NASDAQ:RAND) is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. 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There are 4 speakers on the call. Operator00:00:00Greetings and welcome to Rand Capital Corporation's First Quarter Fiscal Year 20 24 Financial Results Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Craig Mychajluk. Operator00:00:25Thank you. You may begin. Speaker 100:00:30Thank you, and good afternoon, everyone. We appreciate your interest in Rand Capital and for joining us today for our Q1 2024 financial results conference call. On the line with me are Dan Penberthy, our President and Chief Executive Officer and Margaret Prechtel, 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 2, where I'd like to point out some important information. Speaker 100:00:59As 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 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 atsec.gov. During today's call, we'll also discuss some non GAAP financial measures. Speaker 100:01:29We 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? Speaker 200:01:54Thank you, Craig, and good afternoon, everyone. We kicked off the year with solid momentum fueled by the strategic deployment of capital, particularly into new and follow on debt investments. This approach has consistently delivered results over the past years and evidences our strong performance in the Q1 of 20 24. The initial 3 months were dynamic within our portfolio characterized by these new and follow on investments, certain equity sales and portfolio repayments. This activity does underscore the strength and agility of our investment approach. Speaker 200:02:31Moreover, seizing upon favorable market conditions, we realized $3,500,000 from the sale of our ACV auction stock. This strategic exit in conjunction with the prudent utilization of our credit facility has enabled us to deploy over $10,000,000 during the quarter, fortifying the potential yield and the future of our portfolio and the strengthening dividends. Noteworthy is the evolution of our debt portfolio, which now represents 70% of our total mix, up from 64% at the close of 2023 56% at the end of 2022. This strategic shift has driven the 12% growth in total investment income for the quarter. The strong performance translated into tangible benefits for our shareholders as evidenced on Slide 4. Speaker 200:03:25Year to date, we have declared total dividends of $0.54 per share. This includes a cash dividend of $0.25 per share for the Q1. And just last week on May 8, we increased our regularly quarterly cash dividend for the Q2 by $0.04 per share, marking a 16% increase and is now at $0.29 per share. This dividend increase reflects not only the strength and stability of our business operations and its portfolio, but our consistent and confident abilities to execute in the future trajectory of the company. We firmly believe that our deal flow and unique marketing position will continue to support future dividends. Speaker 200:04:11At quarter end, having put our capital to work and distributing 600 and $45,000 in cash dividends to the shareholders, we still had approximately $11,000,000 in total availability, including our cash on hand, line of credit availability and our highly liquid publicly traded securities. If you turn to Slide 5, you can see our portfolio mix between debt and equity and the changes during the recent quarter. Our portfolio consisted of investments with the fair value of $82,800,000 across 30 portfolio businesses. This was up $5,600,000 rather on net basis or 7% from the year end 2023 and reflected these new and follow on investments and valuation adjustments in multiple portfolio companies. These were partially offset by our sale of ACV Auctions stock and other portfolio company loan repayments. Speaker 200:05:15The portfolio comprised approximately 70% in debt investments as I priorly noted previously noted rather, which have an annualized weighted average yield of 13.7%, which includes PIK or payment in kind interest. The remaining mix was comprised 25% in equity investments in private companies and 5% in publicly traded securities consisting of our other BDC investments. During the Q1, we completed one follow on and 2 new investments. These transactions are highlighted on Slide 6. The larger investment was a debt investment totaling 5,500,000 into Madison Avenue Holdings. Speaker 200:05:58They had previously repaid their $1,900,000 loan to Rand also during the quarter. This debt instrument will carry a rate of 14% including PIK interest. Madison Avenue is based out of Texas and provides upscale salon spaces for lease. The second was a new investment of $3,200,000 made with Mountain Regional Equipment Solutions or MRES. That consisted of a $3,000,000 term loan at 14 percent and a $205,000 equity investment. Speaker 200:06:33MRES is based out of Utah and supplies automated lubrication systems, active and passive safety systems and maintenance products designed for the mobile heavy equipment industry. The follow on investment during the quarter was $1,800,000 into Cybirt's Billiards Corporation, a billiard supply company based out of Michigan. With this investment, our total debt and equity investment in Cybert's increased to a fair value of $7,800,000 at quarter end. The bottom half of the slide highlights the notable exits and repayments from the quarter, including the sale of the stock of ACV Auctions. We have determined an appropriate time to make an exit within our investment portfolio and this is often just as critical as making the initial investment. Speaker 200:07:26The shares of ACV were sold at an average price of $18.02 per share and the sales of the 194,000 shares did result in a realized gain of $3,500,000 I should highlight that during the prior quarter, we had ACV stock valued or that is rather unrealized appreciation approximately $2,900,000 And with the sale, we have now monetized that prior appreciation. During the quarter, we also received $687,000 principal loan repayment from PressurePro, which left our total fair value of debt and equity investment at $2,400,000 into this portfolio company. The charts presented on Slide 7 offer a visual depiction of the diversity within our portfolio and the evolving landscape of industry allocation over the past quarter. Against the backdrop of recent investments as well as adjustments in fair value, our industry composition saw notable changes during the quarter. Sectors such as professional services, consumer products and distribution witnessed growth. Speaker 200:08:44On the other end, we observed declines in representation of the manufacturing and software industries. Overall, we continue to value this diversity of our industry mix. The diverse spectrum of sectors across our entire portfolio serves as a testament to our strategic approach, ensuring resilience and mitigating risk in our investment efforts. Slide 8 lists our top 5 portfolio companies at quarter end. Tilson continues to remain the largest fair value investment at well over $10,600,000 or 13% of our total portfolio. Speaker 200:09:22Syberts moved up to number 2 following our recent investment and Madison Avenue also moved to the 4th ranking following our investment. Overall, these top 5 represent 44% of our total portfolio at quarter end. With that, I'll turn it over to Margaret for further review of our financials. Speaker 300:09:44Thank you, Dan, and good afternoon, everybody. I will start on Slide 10, which provides an overview of our financial summary for the Q1 of 2024. Total investment income for the quarter was $2,100,000 up 12% over last year's Q1, driven by a 40% increase in interest income. Overall, the number of portfolio companies contributing to investment income during the Q1 of 2024 was 24 companies compared to 23 in the Q1 of 2023. Total expenses were approximately $1,200,000 during the Q1 compared with $1,000,000 in the prior year's Q1. Speaker 300:10:26The change reflects a $232,000 increase in interest expense on borrowings under our senior revolving credit facility, partially offset by a decrease in capital gain incentive fees to the company's external investment advisor. Adjusted expenses, which includes accrued capital gains incentive fees and is a non GAAP financial measure, were $1,100,000 compared with $757,000,000 in the Q1 of 2023. First quarter net investment income increased 17 percent to $840,000 or $0.33 per share compared with $715,000 or $0.28 per share in the prior year Q1. On an adjusted basis, which is a non GAAP financial measure and excludes the capital gains incentive fee accrual expense, net investment income was 0 point $3.7 per share compared with $0.39 per share in the Q1 of 2023. I'm going to move on to Slide 11, which provides a waterfall graph for the change in net asset value for the quarter. Speaker 300:11:33Net assets at March 31, 2024 were $61,600,000 up 1% from the end of 2023. The change reflects our net investment income and realized gains from the ACV auction sale, coupled with a $2,900,000 net change in unrealized depreciation and the $645,000 dividend distribution to shareholders during the quarter. As a result, the net asset value per share at March 31, 2024 increased to $23.85 compared with $23.56 per share at December 31, 2023. As highlighted on Slide 12, we continue to have a strong and flexible balance sheet that positions us well for future investments. Total assets grew 4 percent to $84,400,000 which included cash at quarter end of approximately 759,000 We also held approximately 4,500,000 in liquid BDC shares, which are available for future liquidity needs, as Dan will touch on in a moment. Speaker 300:12:44Based on our borrowing base formula, Rand has approximately $5,800,000 of availability on its existing $25,000,000 senior secured revolving credit facility at March 31, 2024. Our total outstanding borrowings of $19,200,000 carrying interest rate of approximately $8,800,000 at quarter end. We did not repurchase any shares during the quarter. The Board of Directors did renew the share repurchase program, authorizing the purchase of up to $1,500,000 in additional Rand Capital stock. The new program expires on May 7, 2025. Speaker 300:13:24Our portfolio transformation to include more income producing investments is expected to support an increased dividend level over time. In line with that expectation, as previously mentioned, Rand recently declared its regularly quarterly cash dividend distribution of $0.29 per share, which increased 16% from the Q1 of 2024 dividend of $0.25 per share. The cash dividend will be distributed on or about June 14, 2024 to shareholders of record as of May 31, 2024. With that, I will turn the discussion back to Dan. Speaker 200:14:01Thanks, Margaret. We do remain focused on our commitment to maximizing shareholder value through the sustained growth of dividends. We continue our strategic focus on bolstering our investment portfolio, particularly through prudent and strategic investments of income generating debt instruments. By capitalizing on these targeted opportunities, our aim is to cultivate a consistent and robust stream of income, thus fortifying our ability to not only maintain, but targeting an increase in dividends over the long term. We are confident in our ability to execute this strategy, which is supported by a blend of existing capital resources and the potential influx of funds from the portfolio divestments and future investment yields as well as future portfolio equity churn. Speaker 200:14:57Moreover, in alignment with our strategic vision, we recently opted to liquidate approximately $3,000,000 worth of our BDC stocks subsequent to the end of the quarter. This decision is driven by our commitment to safeguarding accrued gains and proactively managing our financial leverage. Looking forward, we are poised to replicate our historical achievements and we are hopeful to deliver compelling returns for our shareholders. Thank you for joining us today and for your continued interest in Rand Capital. We look forward to updating all of you on our Q2 2024 results, which will be reported in August. Speaker 200:15:37We hope you have a great day. Operator00:15:42This concludes today's conference. You mayRead morePowered by