Rand Capital Corporation Q4 FY2025 earnings call

• 2025 was a year of disciplined execution and capital allocation, operating in a challenging market environment. Closed the year with more than $23 million of total liquidity and no debt outstanding.
• Delivered meaningful cash returns to shareholders in 2025, paying out total cash dividends of $1.72 per share, including a special dividend in the fourth quarter. Announced first quarter 2026 dividend of 29 cents per share.
• During the year, generated approximately $17.8 million from repayments and select realizations while deploying $6.6 million into new and follow-on investments. Committed $3.25 million to Bauer Sheet Metal and Fabricating in the fourth quarter.
• Portfolio mix shifted toward more income generation, with debt investments at 79%. Professional and business services was the largest allocation. Top five holdings represented $21.9 million in fair value, or approximately 45% of the total portfolio at year-end.

At year end, the portfolio had a fair value of $48.5 million across 20 companies. Debt investments represented 79% of the portfolio, up from 75% at year-end 2024. The annualized weighted average yield on debt investments was 11.3% at year end. Total investment income was $1.3 million in the fourth quarter, down 40% compared with the prior year period. For the full year, total investment income was $6.5 million compared with $8.6 million in 2024. Net investment income for the quarter was $600,000, or 20 cents per share, adjusted. Net investment income for the year was $5.3 million or $1.80 per share, a 35% increase over the prior year.

• If M&A momentum continues in 2026, could present more attractive deployment opportunities. Focus on prudent capital deployment, active portfolio oversight, disciplined underwriting in 2026 to pursue risk-adjusted returns.

• Market conditions with uneven M&A activity, senior lenders being selective and temperamental, sporadic new deal origination across the BDC sector. - Specific company risk with Tilson Technology filing for Chapter 11 bankruptcy protection and subsequent impact on portfolio valuation.