Horizon Technology Finance Announces Second Quarter 2023 Financial Results
- Second Quarter 2023 Net Investment Income per Share of
- Debt Portfolio Yield of
- Grew Portfolio Year over Year by
- Horizon Platform Ends Quarter with Committed Backlog of
- Declares Regular Monthly Distributions Totaling
Second Quarter 2023 Highlights
- Net investment income ("NII") of
, or$16.1 million per share, compared to$0.54 , or$8.6 million per share for the prior-year period$0.35 - Total investment portfolio of
as of June 30, 2023$715.4 million - Net asset value of
, or$355.4 million per share, as of June 30, 2023$11.07 - Annualized portfolio yield on debt investments of
16.3% for the quarter - HRZN funded 11 loans totaling
$49.6 million - HRZN's investment adviser, Horizon Technology Finance Management LLC ("HTFM"), originated
through its lending platform ("Horizon Platform"), inclusive of the loans funded by Horizon$52.7 million - Successfully raised
of net proceeds in common stock offering$38.9 million - Raised total net proceeds of approximately
with "at-the-market" ("ATM") offering program$5.1 million - Increased commitment of senior secured debt facility by
to enable its wholly-owned subsidiary to issue up to$50 million of secured notes$250 million - Expanded aggregate commitments under revolving credit facility from
to$125 million $150 million - Experienced liquidity events from six portfolio companies
- Cash of
and credit facility capacity of$50.3 million as of June 30, 2023$223.2 million - Held portfolio of warrant and equity positions in 97 companies as of June 30, 2023
- Undistributed spillover income of
per share as of June 30, 2023$1.02 - Subsequent to quarter end, declared distributions of
per share payable in October, November and December 2023$0.11 - On June 30, 2023, HTFM was acquired by an affiliate of Monroe Capital LLC, a premier boutique middle market asset manager
"We generated net investment income in the second quarter that once again exceeded our distributions, driven by our debt portfolio yield of over
"In terms of credit, we continue to closely work with our portfolio companies to achieve the best outcomes and, as a result, are making progress in improving our portfolio's credit profile," continued Mr. Pomeroy. "Looking ahead, with a stronger balance sheet and our disciplined underwriting, we believe we can further prudently grow HRZN's portfolio of debt investments and deliver additional value to HRZN's shareholders."
Second Quarter 2023 Operating Results
Total investment income for the quarter ended June 30, 2023 grew
The Company's dollar-weighted annualized yield on average debt investments for the quarter ended June 30, 2023 and 2022 was
Total expenses for the quarter ended June 30, 2023 were
Net investment income for the quarter ended June 30, 2023 was
For the quarter ended June 30, 2023, net realized loss on investments was
For the quarter ended June 30, 2023, net unrealized appreciation on investments was
Portfolio Summary and Investment Activity
As of June 30, 2023, the Company's debt portfolio consisted of 54 secured loans with an aggregate fair value of
($ in thousands) | For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||
2023 | 2022 | 2023 | 2022 | |
Beginning portfolio | $ 715,312 | $ 515,009 | $ 720,026 | $ 458,075 |
New debt investments | 50,545 | 159,235 | 97,553 | 253,720 |
Less refinanced debt balances | (10,000) | (25,000) | (10,000) | (25,000) |
Net new debt investments | 40,545 | 134,235 | 87,553 | 228,720 |
Principal payments received on investments | (6,075) | (4,861) | (12,890) | (6,956) |
Payment-in-kind interest on investments | 950 | — | 2,154 | — |
Early pay-offs and principal paydowns | (18,665) | (43,467) | (51,606) | (55,517) |
Accretion of debt investment fees | 1,645 | 1,547 | 3,093 | 2,553 |
New debt investment fees | (502) | (1,860) | (802) | (2,785) |
Equity received in settlement of fee income | 89 | — | 89 | — |
Proceeds from sale of investments | (1,986) | (22,146) | (8,506) | (43,426) |
Net loss on investments | (16,529) | (929) | (16,697) | (899) |
Net unrealized appreciation (depreciation) on investments | 608 | (36) | (6,929) | (2,273) |
Other | (1) | — | (94) | — |
Ending portfolio | $ 715,391 | $ 577,492 | $ 715,391 | $ 577,492 |
Portfolio Asset Quality
The following table shows the classification of Horizon's loan portfolio at fair value by internal credit rating as of June 30, 2023, March 31, 2023 and December 31, 2022:
($ in thousands) | June 30, 2023 |
March 31, 2023 |
December 31, 2022 | ||||||||
Number of | Debt Investments | Percentage | Number of | Debt Investments | Percentage | Number of | Debt Investments | Percentage of | |||
Credit | |||||||||||
4 | 11 | $ 151,399 | 22.2 % | 9 | $ 108,482 | 15.8 % | 8 | $ 93,832 | 13.7 % | ||
3 | 38 | 460,125 | 67.3 % | 38 | 483,615 | 70.6 % | 47 | 557,554 | 81.2 % | ||
2 | 4 | 61,985 | 9.1 % | 7 | 87,206 | 12.7 % | 2 | 26,822 | 3.9 % | ||
1 | 1 | 9,800 | 1.4 % | 3 | 5,251 | 0.9 % | 3 | 8,250 | 1.2 % | ||
Total | 54 | $ 683,309 | 100.0 % | 57 | $ 684,554 | 100.0 % | 60 | $ 686,458 | 100.0 % |
As of June 30, 2023, March 31, 2023 and December 31, 2022, Horizon's loan portfolio had a weighted average credit rating of 3.1, 3.0 and 3.1, 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 June 30, 2023, there was one debt investment with an internal credit rating of 1, with an aggregate cost of
Liquidity and Capital Resources
As of June 30, 2023, the Company had
As of June 30, 2023, there was no outstanding principal balance under the
Additionally, as of June 30, 2023, there was
Horizon Funding Trust 2019-1, a wholly-owned subsidiary of HRZN, previously issued
Horizon Funding Trust 2022-1, a wholly-owned subsidiary of Horizon, previously issued
During the three months ended June 30, 2023, the Company sold 448,175 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
On June 2, 2023, the Company completed a follow-on public offering of 3,250,000 shares of its common stock at a public offering price of
As of June 30, 2023, the Company's net debt to equity leverage ratio was
Liquidity Events
During the quarter ended June 30, 2023, Horizon experienced liquidity events from six 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 May, the Company received a payment of
In May, HRZN received
In May, with the proceeds of a new loan from the Horizon Platform, Supply Network Visibility Holdings LLC (d/b/a Everstream Analytics) prepaid its previously outstanding principal balance of
In June, Groundspeed Analytics, Inc. was acquired by Insurance Quantified and Groundspeed prepaid its outstanding principal balance of
In June, HRZN received a partial paydown of
In June, HRZN received
Net Asset Value
At June 30, 2023, the Company's net assets were
For the quarter ended June 30, 2023, net increase in net assets resulting from operations was
Stock Repurchase Program
On April 28, 2023, the Company's board of directors extended the Company's previously authorized stock repurchase program until the earlier of June 30, 2024 or the repurchase of
Recent Developments
On July 6, 2023, the Company funded a
On July 12, 2023, Evelo Biosciences, Inc. ("Evelo") paid down
On July 13, 2023, the Company funded a
On July 18, 2023, the Company funded a
On July 31, 2023, the Company funded a
Monthly Distributions Declared in Third Quarter 2023
On July 28, 2023, the Company's board of directors declared monthly distributions of
Monthly Distributions | |||
Ex-Dividend Date | Record Date | Payment Date | Amount per Share |
September 18, 2023 | September 19, 2023 | October 16, 2023 | |
October 17, 2023 | October 18, 2023 | November 15, 2023 | |
November 16, 2023 | November 17, 2023 | December 15, 2023 | |
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, August 2, 2023, 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 13739015. The Company recommends joining the call at least 5 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 Horizon 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 is headquartered in
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 Horizon's filings with the Securities and Exchange Commission. Horizon 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 | |||||
June 30, | December 31, | ||||
2023 | 2022 | ||||
(unaudited) | |||||
Assets | |||||
Non-affiliate investments at fair value (cost of | $ 714,485 | $ 720,026 | |||
Non-controlled affiliate investments at fair value (cost of | 906 | — | |||
Total investments at fair value (cost of | 715,391 | 720,026 | |||
Cash | 24,395 | 20,612 | |||
Investments in money market funds | 25,865 | 7,066 | |||
Restricted investments in money market funds | 2,904 | 2,788 | |||
Interest receivable | 14,893 | 13,573 | |||
Other assets | 3,960 | 2,761 | |||
Total assets | $ 787,408 | $ 766,826 | |||
Liabilities | |||||
Borrowings | $ 418,016 | $ 434,078 | |||
Distributions payable | 10,592 | 9,159 | |||
Base management fee payable | 1,063 | 1,065 | |||
Incentive fee payable | 118 | 1,392 | |||
Other accrued expenses | 2,200 | 2,684 | |||
Total liabilities | 431,989 | 448,378 | |||
Commitments and contingencies | |||||
Net assets | |||||
Preferred stock, par value shares issued and outstanding as of June 30, 2023 and December 31, 2022 | — | — | |||
Common stock, par value 32,263,724 and 27,920,838 shares issued and 32,096,259 and 27,753,373 shares outstanding as of June | 34 | 29 | |||
Paid-in capital in excess of par | 437,561 | 385,921 | |||
Distributable earnings | (82,176) | (67,502) | |||
Total net assets | 355,419 | 318,448 | |||
Total liabilities and net assets | $ 787,408 | $ 766,826 | |||
Net asset value per common share | $ 11.07 | $ 11.47 | |||
Horizon Technology Finance Corporation and Subsidiaries | ||||||||
For the Three Months Ended | For the Six Months Ended | |||||||
June 30, | June 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Investment income | ||||||||
Interest income on non-affiliate investments | $ 26,624 | $ 17,720 | $ 54,023 | $ 31,573 | ||||
Fee income on non-affiliate investments | 1,493 | 868 | 2,131 | 1,219 | ||||
Total investment income | 28,117 | 18,588 | 56,154 | 32,792 | ||||
Expenses | ||||||||
Interest expense | 7,179 | 4,225 | 14,299 | 7,649 | ||||
Base management fee | 3,207 | 2,523 | 6,408 | 4,767 | ||||
Performance based incentive fee | 118 | 2,145 | 3,094 | 3,570 | ||||
Administrative fee | 368 | 374 | 808 | 735 | ||||
Professional fees | 447 | 271 | 1,106 | 848 | ||||
General and administrative | 546 | 362 | 992 | 706 | ||||
Total expenses | 11,865 | 9,900 | 26,707 | 18,275 | ||||
Net investment income before excise tax | 16,252 | 8,688 | 29,447 | 14,517 | ||||
Provision for excise tax | 179 | 106 | 363 | 206 | ||||
Net investment income | 16,073 | 8,582 | 29,084 | 14,311 | ||||
Net realized and unrealized loss | ||||||||
Net realized (loss) gain on non-affiliate investments | (16,529) | 271 | (16,697) | 301 | ||||
Net realized loss on controlled affiliate investments | — | (1,200) | — | (1,200) | ||||
Net realized loss on investments | (16,529) | (929) | (16,697) | (899) | ||||
Net unrealized appreciation (depreciation) on non-affiliate investments | 548 | (1,436) | (7,835) | (3,723) | ||||
Net unrealized appreciation on non-controlled affiliate investments | 60 | — | 906 | — | ||||
Net unrealized appreciation on controlled affiliate investments | — | 1,400 | — | 1,450 | ||||
Net unrealized appreciation (depreciation) on investments | 608 | (36) | (6,929) | (2,273) | ||||
Net realized and unrealized loss | (15,921) | (965) | (23,626) | (3,172) | ||||
Net increase in net assets resulting from operations | $ 152 | $ 7,617 | $ 5,458 | $ 11,139 | ||||
Net investment income per common share | $ 0.54 | $ 0.35 | $ 1.00 | $ 0.62 | ||||
Net increase in net assets per common share | $ 0.01 | $ 0.31 | $ 0.19 | $ 0.48 | ||||
Distributions declared per share | $ 0.33 | $ 0.30 | $ 0.66 | $ 0.60 | ||||
Weighted average shares outstanding | 29,747,290 | 24,301,762 | 28,987,948 | 23,109,584 |
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SOURCE Horizon Technology Finance Corporation