Horizon Technology Finance Announces Fourth Quarter and Full Year 2021 Financial Results
Horizon Technology Finance Corporation (NASDAQ: HRZN) announced its fourth-quarter and full-year 2021 financial results, reporting a net investment income of $8.1 million ($0.39/share) for Q4 and a total income of $28.2 million ($1.41/share) for the year, a 36% increase year-over-year. The total investment portfolio reached $458.1 million with a net asset value of $245.3 million ($11.56/share). The company funded 17 loans totaling $79.9 million in Q4 and experienced liquidity events from seven portfolio companies. Monthly distributions of $0.10/share were declared for April, May, and June 2022.
- Net investment income increased 36% YoY to $28.2 million for 2021.
- Fourth-quarter NII of $8.1 million outperformed the distribution level.
- Total investment portfolio grew to $458.1 million, highest ever.
- Annualized yield on debt investments was 16.2% in Q4, 15.7% for 2021.
- Successful funding of 49 loans totaling $297.1 million in 2021.
- Total expenses in Q4 rose to $8.7 million, up from $5.9 million YoY.
- Net realized losses on investments were $3.2 million for 2021, up from $14.7 million in 2020.
- Net unrealized depreciation on investments in Q4 was $4.9 million.
FARMINGTON, Conn., March 1, 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 fourth quarter and full year ended December 31, 2021.
Fourth Quarter 2021 Highlights
- Net investment income ("NII") of
$8.1 million , or$0.39 per share, compared to$3.9 million , or$0.21 per share for the prior-year period - Total investment portfolio of
$458.1 million as of December 31, 2021 - Net asset value of
$245.3 million , or$11.56 per share, as of December 31, 2021 - Annualized portfolio yield on debt investments of
16.2% for the quarter - HRZN funded 17 loans totaling
$79.9 million - HRZN's investment adviser, Horizon Technology Finance Management LLC ("HTFM"), originated
$118.2 million through its lending platform ("Horizon Platform"), inclusive of the HRZN loans - Raised total net proceeds of approximately
$12.8 million with "at-the-market" ("ATM") offering program - Experienced liquidity events from seven portfolio companies
- Cash of
$45.9 million and credit facility capacity of$92.8 million as of December 31, 2021 - Held portfolio of warrant and equity positions in 76 companies as of December 31, 2021
- Undistributed spillover income of
$0.51 per share as of December 31, 2021 - Subsequent to quarter end, declared distributions of
$0.10 per share payable in April, May and June 2022
Full Year 2021 Highlights
- Net investment income of
$28.2 million , or$1.41 per share for 2021, compared to$20.7 million , or$1.18 per share, for the prior year - Achieved portfolio yield on debt investments of
15.7% for 2021 - HRZN funded 49 loans totaling
$297.1 million ; experienced liquidity events from 20 portfolio companies
"The fourth quarter capped off a landmark year for Horizon and the Horizon Platform, including a record investment portfolio at year-end of over
"Along with HRZN's excellent growth, we finished the year with nearly
Fourth Quarter 2021 Operating Results
Total investment income for the quarter ended December 31, 2021 grew
The Company's dollar-weighted annualized yield on average debt investments for the quarter ended December 31, 2021 and 2020 was
Total expenses for the quarter ended December 31, 2021 were
Net investment income for the quarter ended December 31, 2021 was
For the quarter ended December 31, 2021, net realized loss on investments was
For the quarter ended December 31, 2021, net unrealized depreciation on investments was
Full Year 2021 Operating Results
Total investment income for the year ended December 31, 2021 was
Horizon's dollar-weighted annualized yield on average debt investments for the year ended December 31, 2021 and 2020 was
For the full year ended December 31, 2021, net investment income was
For the full year ended December 31, 2021, net realized loss on investments was
For the full year ended December 31, 2021, net unrealized appreciation on investments was
Portfolio Summary and Investment Activity
As of December 31, 2021, the Company's debt portfolio consisted of 45 secured loans with an aggregate fair value of
($ in thousands) | For the Three Months Ended | For the Full Year Ended | ||
2021 | 2020 | 2021 | 2020 | |
Beginning portfolio | $ 452,346 | $ 311,750 | $ 352,545 | $ 319,551 |
New debt investments | 88,693 | 76,913 | 344,445 | 198,561 |
Principal payments received on investments | (2,171) | (4,485) | (13,474) | (24,829) |
Early pay-offs | (66,579) | (30,644) | (174,536) | (121,429) |
Accretion of debt investment fees | 1,370 | 815 | 4,556 | 3,895 |
New debt investment fees | (930) | (938) | (3,261) | (2,353) |
Warrants received in settlement of fee income | — | — | — | 978 |
Proceeds from sale of investments | (9,169) | (134) | (52,954) | (8,335) |
Dividend income from controlled affiliate investment | — | — | — | 118 |
Net realized loss on investments | (568) | (17,672) | (2,451) | (13,727) |
Net unrealized (depreciation) appreciation on investments | (4,917) | 17,139 | 3,205 | 313 |
Other | — | (199) | — | (198) |
Ending portfolio | $ 458,075 | $ 352,545 | $ 458,075 | $ 352,545 |
Portfolio Asset Quality
The following table shows the classification of Horizon's loan portfolio at fair value by internal credit rating as of December 31, 2021, September 30, 2021 and December 31, 2020:
($ in thousands) | December 31, 2021 |
September 30, 2021 |
December 31, 2020 | ||||||||
Number of Investments | Debt Investments at Fair Value | Percentage of Debt Investments | Number of Investments | Debt Investments at Fair Value | Percentage of Debt Investments | Number of Investments | Debt Investments at Fair Value | Percentage of Debt Investments | |||
Credit Rating | |||||||||||
4 | 9 | $ 104,863 | 5 | $ 56,337 | 6 | $ 77,950 | |||||
3 | 34 | 322,084 | 35 | 359,658 | 24 | 240,933 | |||||
2 | 1 | 3,470 | 2 | 11,141 | 3 | 12,875 | |||||
1 | 1 | 6,900 | 1 | 2,800 | 1 | 1,737 | |||||
Total | 45 | $ 437,317 | 43 | $ 429,936 | 34 | $ 333,495 | |||||
As of December 31, 2021, Horizon's loan portfolio had a weighted average credit rating of 3.2, compared to 3.1 as of September 30, 2021 and 3.2 as of December 31, 2020, respectively, 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 December 31, 2021, there was one debt investment with an internal credit rating of 1, with a cost of
Liquidity and Capital Resources
As of December 31, 2021, the Company had
As of December 31, 2021, there was
Additionally, as of December 31, 2021, there was
Horizon Funding Trust 2019-1, a wholly-owned subsidiary of HRZN, previously issued
During the three months ended December 31, 2021, the Company sold 784,718 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 December 31, 2021, the Company's debt to equity leverage ratio was
Liquidity Events
During the quarter ended December 31, 2021, Horizon experienced liquidity events from seven 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 October, Getaround, Inc. prepaid its outstanding principal balance of
In October, Topia Mobility, Inc. prepaid its outstanding principal balance of
In October, HRZN received warrant proceeds of
In November, CVRx, Inc. prepaid its outstanding principal balance of
In November, MVI (ABC), LLC (assignee of Stereovision Inc.) paid its outstanding principal balance of
In December, HRZN received
In December, HRZN received cash proceeds of
Net Asset Value
At December 31, 2021, the Company's net assets were
For the quarter ended December 31, 2021, net increase in net assets resulting from operations was
Stock Repurchase Program
During the quarter ended December 31, 2021, the Company did not repurchase any shares of its common stock. From the inception of the stock repurchase program through December 31, 2021, the Company has repurchased 167,465 shares of its common stock at an average price of
Recent Developments
On January 7, 2022, the Company funded a
On January 21, 2022, the Company funded a
On January 26, 2022, the Company funded a
On January 28, 2022, the Company funded a
On February 1, 2022, the Company funded a
On February 7, 2022, the Company funded a
On February 10, 2022, the Company funded a
On February 11, 2022, Quip NYC Inc. prepaid its outstanding principal balance of
On February 23, 2022, the Company funded a
On February 24, 2022, LiquiGlide, Inc. prepaid its outstanding principal balance of
Monthly Distributions Declared in First Quarter 2022
On February 25, 2022, the Company's board of directors declared monthly distributions of
Monthly Distributions
Ex-Dividend Date | Record Date | Payment Date | Amount per Share |
March 17, 2022 | March 18, 2022 | April 14, 2022 | |
April 18, 2022 | April 19, 2022 | May 16, 2022 | |
May 17, 2022 | May 18, 2022 | June 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, March 2, 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 13726805. 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 | |||||
December 31, | December 31, | ||||
2021 | 2020 | ||||
Assets | |||||
Non-affiliate investments at fair value (cost of | $ 458,075 | $ 343,498 | |||
Non-controlled affiliate investments at fair value (cost of | — | 7,547 | |||
Controlled affiliate investments at fair value (cost of | — | 1,500 | |||
Total investments at fair value (cost of | 458,075 | 352,545 | |||
Cash | 38,054 | 19,502 | |||
Investments in money market funds | 7,868 | 27,199 | |||
Restricted investments in money market funds | 1,359 | 1,057 | |||
Interest receivable | 6,154 | 4,946 | |||
Other assets | 2,450 | 1,908 | |||
Total assets | $ 513,960 | $ 407,157 | |||
Liabilities | |||||
Borrowings | $ 257,613 | $ 185,819 | |||
Distributions payable | 6,365 | 5,786 | |||
Base management fee payable | 706 | 563 | |||
Incentive fee payable | 2,015 | 975 | |||
Other accrued expenses | 1,926 | 1,417 | |||
Total liabilities | 268,625 | 194,560 | |||
Commitments and contingencies | |||||
Net assets | |||||
Preferred stock, par value | — | — | |||
Common stock, par value | 22 | 19 | |||
Paid-in capital in excess of par | 301,359 | 271,287 | |||
Distributable earnings | (56,046) | (58,709) | |||
Total net assets | 245,335 | 212,597 | |||
Total liabilities and net assets | $ 513,960 | $ 407,157 | |||
Net asset value per common share | $ 11.56 | $ 11.02 | |||
Horizon Technology Finance Corporation and Subsidiaries | ||||||||
For the Three Months Ended | For the Year Ended | |||||||
December 31, | December 31, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Investment income | ||||||||
Interest income on investments | ||||||||
Interest income on non-affiliate investments | $ 15,194 | $ 9,217 | $ 54,159 | $ 41,503 | ||||
Interest income on affiliate investments | 39 | 157 | 252 | 689 | ||||
Total interest income on investments | 15,233 | 9,374 | 54,411 | 42,192 | ||||
Fee income | ||||||||
Prepayment fee income on non-affiliate investments | 1,651 | 434 | 4,111 | 2,345 | ||||
Fee income on non-affiliate investments | 61 | 223 | 1,481 | 1,335 | ||||
Fee income on affiliate investments | — | 35 | 12 | 45 | ||||
Total fee income | 1,712 | 692 | 5,604 | 3,725 | ||||
Dividend income | ||||||||
Dividend income on controlled affiliate investments | — | — | — | 118 | ||||
Total dividend income | — | — | — | 118 | ||||
Total investment income | 16,945 | 10,066 | 60,015 | 46,035 | ||||
Expenses | ||||||||
Interest expense | 3,253 | 2,342 | 12,034 | 9,673 | ||||
Base management fee | 2,022 | 1,593 | 7,617 | 6,458 | ||||
Performance based incentive fee | 2,015 | 975 | 7,055 | 5,187 | ||||
Administrative fee | 456 | 276 | 1,285 | 1,016 | ||||
Professional fees | 544 | 445 | 1,892 | 1,540 | ||||
General and administrative | 369 | 312 | 1,511 | 1,190 | ||||
Total expenses | 8,659 | 5,943 | 31,394 | 25,064 | ||||
Net investment income before excise tax | 8,286 | 4,123 | 28,621 | 20,971 | ||||
Provision for excise tax | 227 | 222 | 401 | 222 | ||||
Net investment income | 8,059 | 3,901 | 28,220 | 20,749 | ||||
Net realized and unrealized loss on investments | ||||||||
Net realized loss on non-affiliate investments | (486) | (18,644) | (2,858) | (14,686) | ||||
Net realized loss on non-controlled affiliate investments | (390) | — | (390) | — | ||||
Net realized loss on controlled affiliate investments | — | — | — | (12) | ||||
Net realized loss on investments | (876) | (18,644) | (3,248) | (14,698) | ||||
Net realized loss on extinguishment of debt | — | — | (395) | — | ||||
Net realized loss | (876) | (18,644) | (3,643) | (14,698) | ||||
Net unrealized (depreciation) appreciation on non-affiliate investments | (4,811) | 17,020 | 5,503 | 1,585 | ||||
Net unrealized appreciation (depreciation) on non-controlled affiliate investments | 1,019 | 120 | (848) | (1,014) | ||||
Net unrealized depreciation on controlled affiliate investments | (1,125) | — | (1,450) | (258) | ||||
Net unrealized (depreciation) appreciation on investments | (4,917) | 17,140 | 3,205 | 313 | ||||
Net realized and unrealized loss | (5,793) | (1,504) | (438) | (14,385) | ||||
Net increase in net assets resulting from operations | $ 2,266 | $ 2,397 | $ 27,782 | $ 6,364 | ||||
Net investment income per common share | $ 0.39 | $ 0.21 | $ 1.41 | $ 1.18 | ||||
Net increase in net assets per common share | $ 0.11 | $ 0.13 | $ 1.39 | $ 0.36 | ||||
Distributions declared per share | $ 0.35 | $ 0.30 | $ 1.25 | $ 1.25 | ||||
Weighted average shares outstanding | 20,622,770 | 18,794,836 | 20,027,420 | 17,534,528 | ||||
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SOURCE Horizon Technology Finance Corporation
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