Horizon Technology Finance Announces First Quarter 2022 Financial Results
Horizon Technology Finance Corporation (NASDAQ: HRZN) announced a 36% year-over-year growth in its investment portfolio, reaching $515 million. The company reported first quarter 2022 net investment income (NII) of $5.7 million, or $0.26 per share, down from $6.0 million a year ago. As of March 31, 2022, HRZN had a net asset value (NAV) of $280 million, or $11.68 per share. With a robust debt portfolio yield of 12.4% and a record committed backlog of $172 million, HRZN is well-positioned for future growth. Monthly distributions of $0.30 per share were declared for July, August, and September.
- Investment portfolio grew 36% year-over-year to $515 million.
- Record committed backlog of $172 million, including $151 million in HRZN commitments.
- Debt portfolio yield at 12.4%, showcasing strong income generation.
- Declared monthly distributions totaling $0.30 per share, indicating shareholder returns.
- Net investment income decreased to $5.7 million, or $0.26 per share, down from $6.0 million, or $0.31 per share in the previous year.
- Total expenses rose to $8.4 million, increasing pressure on profitability.
- Net unrealized depreciation on investments was $2.3 million, or $0.10 per share, compared to a gain of $5.2 million in the prior-year period.
- Grew Portfolio Year over Year by
- Horizon Platform Ends Quarter with Record Committed Backlog of
- First Quarter 2022 Net Investment Income per Share of
- Debt Portfolio Yield of
- Declares Regular Monthly Distributions Totaling
FARMINGTON, Conn., May 3, 2022 /PRNewswire/ -- Horizon Technology Finance Corporation (NASDAQ: HRZN) ("HRZN", "Horizon" or the "Company"), a leading specialty finance company that provides capital in the form of secured loans to venture capital backed companies in the technology, life science, healthcare information and services, and sustainability industries, today announced its financial results for the first quarter ended March 31, 2022.
First Quarter 2022 Highlights
- Net investment income ("NII") of
$5.7 million , or$0.26 per share, compared to$6.0 million , or$0.31 per share for the prior-year period - Total investment portfolio of
$515.0 million as of March 31, 2022 - Net asset value of
$280.0 million , or$11.68 per share, as of March 31, 2022 - Annualized portfolio yield on debt investments of
12.4% for the quarter - HRZN funded 16 loans totaling
$73.2 million - HRZN's investment adviser, Horizon Technology Finance Management LLC ("HTFM"), originated
$131.9 million through its lending platform ("Horizon Platform"), inclusive of the HRZN loans - Successfully raised
$34.3 million in net proceeds in common stock offering - Raised total net proceeds of approximately
$3.9 million with "at-the-market" ("ATM") offering program - Increased commitment of senior secured debt facility by
$100 million to enable its wholly-owned subsidiary to issue up to$200 million of secured notes - Experienced liquidity events from two portfolio companies
- Cash of
$14.5 million and credit facility capacity of$187.8 million as of March 31, 2022 - Held portfolio of warrant and equity positions in 84 companies as of March 31, 2022
- Undistributed spillover income of
$0.47 per share as of March 31, 2022 - Subsequent to quarter end, declared distributions of
$0.10 per share payable in July, August and September 2022
"We had a solid first quarter performance, particularly with respect to growing our investment portfolio as we surpassed the
"In addition, we finished the quarter maintaining HRZN's strong credit profile, with nearly
First Quarter 2022 Operating Results
Total investment income for the quarter ended March 31, 2022 grew
The Company's dollar-weighted annualized yield on average debt investments for the quarter ended March 31, 2022 and 2021 was
Total expenses for the quarter ended March 31, 2022 were
Net investment income for the quarter ended March 31, 2022 was
For the quarter ended March 31, 2022, there was a slight net realized gain on investments, compared to net realized loss on investments of
For the quarter ended March 31, 2022, net unrealized depreciation on investments was
Portfolio Summary and Investment Activity
As of March 31, 2022, the Company's debt portfolio consisted of 50 secured loans with an aggregate fair value of
($ in thousands) | For the Three Months Ended | |
2022 | 2021 | |
Beginning portfolio | $ 458,075 | $ 352,545 |
New debt investments | 94,485 | 51,375 |
Principal payments received on investments | (2,095) | (4,667) |
Early pay-offs | (12,050) | (19,465) |
Accretion of debt investment fees | 1,006 | 1,083 |
New debt investment fees | (925) | (480) |
Proceeds from sale of investments | (21,280) | (873) |
Net realized gain (loss) on investments | 30 | (4,719) |
Net unrealized (depreciation) appreciation on investments | (2,237) | 5,224 |
Ending portfolio | $ 515,009 | $ 380,023 |
Portfolio Asset Quality
The following table shows the classification of Horizon's loan portfolio at fair value by internal credit rating as of March 31, 2022 and December 31, 2021:
($ in thousands) | March 31, 2022 | December 31, 2021 | ||||||
Number of | Debt | Percentage | Number of | Debt | Percentage | |||
Credit | ||||||||
4 | 8 | $ 102,783 | 9 | $ 104,863 | ||||
3 | 39 | 369,196 | 34 | 322,084 | ||||
2 | 2 | 14,717 | 1 | 3,470 | ||||
1 | 1 | 5,498 | 1 | 6,900 | ||||
Total | 50 | $ 492,194 | 45 | $ 437,317 | ||||
As of March 31, 2022 and December 31, 2021, Horizon's loan portfolio had a weighted average credit rating of 3.2, with 4 being the highest credit quality rating and 3 being the rating for a standard level of risk. A rating of 2 represents an increased level of risk and, while no loss is currently anticipated for a 2-rated loan, there is potential for future loss of principal. A rating of 1 represents deteriorating credit quality and high degree of risk of loss of principal.
As of March 31, 2022, there was one debt investment with an internal credit rating of 1, with a cost of
Liquidity and Capital Resources
As of March 31, 2022, the Company had
As of March 31, 2022, there was
Additionally, as of March 31, 2022, there was
Horizon Funding Trust 2019-1, a wholly-owned subsidiary of HRZN, previously issued
During the three months ended March 31, 2022, the Company sold 250,171 shares of common stock under its ATM offering program with Goldman Sachs & Co. LLC and B. Riley FBR, Inc. For the same period, the Company received total accumulated net proceeds of approximately
As of March 31, 2022, the Company's debt to equity leverage ratio was
Liquidity Events
During the quarter ended March 31, 2022, Horizon experienced liquidity events from two portfolio companies. Liquidity events for Horizon may consist of the sale of warrants or equity in portfolio companies, loan prepayments, sale of owned assets or receipt of success fees.
In February, LiquiGlide, Inc. prepaid its outstanding principal balance of
In February, Quip NYC, Inc. prepaid its outstanding principal balance of
Net Asset Value
At March 31, 2022, the Company's net assets were
For the quarter ended March 31, 2022, net increase in net assets resulting from operations was
Stock Repurchase Program
On April 29, 2022, the Company's board of directors extended the Company's previously authorized stock repurchase program until the earlier of June 30, 2023 or the repurchase of
Recent Developments
On April 4, 2022, the Company funded a
On April 11, 2022, the Company funded a
On April 12, 2022, the Company funded a
On April 18, 2022, the Company funded a
On April 19, 2022, the Company funded a
On April 19, 2022, the Company funded a
On April 26, 2022, the Company funded a
On April 29, 2022, the Company funded a
On April 29, 2022, the Company made a new debt investment of
Monthly Distributions Declared in Second Quarter 2022
On April 29, 2022, the Company's board of directors declared monthly distributions of
Monthly Distributions
Ex-Dividend Date | Record Date | Payment Date | Amount per Share |
June 16, 2022 | June 17, 2022 | July 15, 2022 | |
July 18, 2022 | July 19, 2022 | August 16, 2022 | |
August 17, 2022 | August 18, 2022 | September 15, 2022 | |
Total: |
After paying distributions of
When declaring distributions, the Horizon board of directors reviews estimates of taxable income available for distribution, which may differ from consolidated net income under generally accepted accounting principles due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of spillover income carried over from a given year for distribution in the following year. The final determination of taxable income for each tax year, as well as the tax attributes for distributions in such tax year, will be made after the close of the tax year.
Conference Call
The Company will host a conference call on Wednesday, May 4, 2022, at 9:00 a.m. ET to discuss its latest corporate developments and financial results. To participate in the call, please dial (877) 407-9716 (domestic) or (201) 493-6779 (international). The access code for all callers is 13728693. The Company recommends joining the call at least 10 minutes in advance. In addition, a live webcast will be available on the Company's website at www.horizontechfinance.com.
A webcast replay will be available on the Company's website for 30 days following the call.
About Horizon Technology Finance
Horizon Technology Finance Corporation (NASDAQ: HRZN) is a leading specialty finance company that provides capital in the form of secured loans to venture capital backed companies in the technology, life science, healthcare information and services, and sustainability industries. The investment objective of HRZN is to maximize its investment portfolio's return by generating current income from the debt investments it makes and capital appreciation from the warrants it receives when making such debt investments. Horizon Technology Finance Management LLC is headquartered in Farmington, Connecticut, with a regional office in Pleasanton, California, and investment professionals located in Portland, Maine, Austin, Texas, and Reston, Virginia. To learn more, please visit www.horizontechfinance.com.
Forward-Looking Statements
Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in HRZN's filings with the Securities and Exchange Commission. HRZN undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
Contacts:
Investor Relations:
ICR
Garrett Edson
ir@horizontechfinance.com
(860) 284-6450
Media Relations:
ICR
Chris Gillick
HorizonPR@icrinc.com
(646) 677-1819
Horizon Technology Finance Corporation and Subsidiaries | |||||
Consolidated Statements of Assets and Liabilities | |||||
(Dollars in thousands, except share and per share data) | |||||
March 31, | December 31, | ||||
2022 | 2021 | ||||
(unaudited) | |||||
Assets | |||||
Non-affiliate investments at fair value (cost of | $ 515,009 | $ 458,075 | |||
Controlled affiliate investments at fair value (cost of | — | — | |||
Total investments at fair value (cost of | 515,009 | 458,075 | |||
Cash | 12,452 | 38,054 | |||
Investments in money market funds | 2,011 | 7,868 | |||
Restricted investments in money market funds | 1,515 | 1,359 | |||
Interest receivable | 8,305 | 6,154 | |||
Other assets | 2,252 | 2,450 | |||
Total assets | $ 541,544 | $ 513,960 | |||
Liabilities | |||||
Borrowings | $ 250,501 | $ 257,613 | |||
Distributions payable | 7,193 | 6,365 | |||
Base management fee payable | 785 | 706 | |||
Incentive fee payable | 1,424 | 2,015 | |||
Other accrued expenses | 1,652 | 1,926 | |||
Total liabilities | 261,555 | 268,625 | |||
Commitments and contingencies | |||||
Net assets | |||||
Preferred stock, par value shares issued and outstanding as of March 31, 2022 and December 31, 2021 | — | — | |||
Common stock, par value 24,144,602 and 21,384,925 shares issued and 23,977,137 and 21,217,460 shares outstanding as of | 25 | 22 | |||
Paid-in capital in excess of par | 339,688 | 301,359 | |||
Distributable earnings | (59,724) | (56,046) | |||
Total net assets | 279,989 | 245,335 | |||
Total liabilities and net assets | $ 541,544 | $ 513,960 | |||
Net asset value per common share | $ 11.68 | $ 11.56 | |||
Horizon Technology Finance Corporation and Subsidiaries | ||||
Consolidated Statements of Operations (Unaudited) | ||||
(Dollars in thousands, except share and per share data) | ||||
For the Three Months Ended | ||||
March 31, | ||||
2022 | 2021 | |||
Investment income | ||||
Interest income on investments | ||||
Interest income on non-affiliate investments | $ 13,853 | $ 12,490 | ||
Interest income on affiliate investments | — | 172 | ||
Total interest income on investments | 13,853 | 12,662 | ||
Fee income | ||||
Fee income on non-affiliate investments | 351 | 541 | ||
Fee income on affiliate investments | — | 12 | ||
Total fee income | 351 | 553 | ||
Total investment income | 14,204 | 13,215 | ||
Expenses | ||||
Interest expense | 3,424 | 2,715 | ||
Base management fee | 2,244 | 1,771 | ||
Performance based incentive fee | 1,424 | 1,501 | ||
Administrative fee | 362 | 289 | ||
Professional fees | 577 | 509 | ||
General and administrative | 344 | 365 | ||
Total expenses | 8,375 | 7,150 | ||
Net investment income before excise tax | 5,829 | 6,065 | ||
Provision for excise tax | 100 | 62 | ||
Net investment income | 5,729 | 6,003 | ||
Net realized and unrealized (loss) gain | ||||
Net realized gain (loss) on non-affiliate investments | 30 | (5,208) | ||
Net realized gain (loss) on investments | 30 | (5,208) | ||
Net unrealized (depreciation) appreciation on non-affiliate investments | (2,287) | 6,263 | ||
Net unrealized depreciation on non-controlled affiliate investments | — | (1,039) | ||
Net unrealized appreciation on controlled affiliate investments | 50 | — | ||
Net unrealized (depreciation) appreciation on investments | (2,237) | 5,224 | ||
Net realized and unrealized (loss) gain | (2,207) | 16 | ||
Net increase in net assets resulting from operations | $ 3,522 | $ 6,019 | ||
Net investment income per common share | $ 0.26 | $ 0.31 | ||
Net increase in net assets per common share | $ 0.16 | $ 0.31 | ||
Distributions declared per share | $ 0.30 | $ 0.30 | ||
Weighted average shares outstanding | 21,904,160 | 19,366,581 | ||
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SOURCE Horizon Technology Finance Corporation
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