Hercules Capital Reports Second Quarter 2021 Financial Results
Hercules Capital (HTGC) reported strong financial results for Q2 2021, achieving 100% coverage of dividend distributions with net investment income (NII) of $37.0 million, or $0.32 per share. Total investments increased to $2.4 billion, with net debt portfolio growth of nearly $57 million. The company maintained strong liquidity with $610 million available. Notably, 26 portfolio companies had exit events, contributing to $160 million in undistributed earnings spillover. However, effective yields decreased to 12.7% and there were net realized losses of $14.3 million this quarter.
- NII of $37.0 million ($0.32 per share) indicates consistent profitability.
- Total investments reached $2.4 billion, showing strong growth.
- Portfolio companies had 26 exit events, generating over $160 million in earnings spillover.
- Strong liquidity position with $610 million available for investments.
- Effective yield declined to 12.7% from 13.2% in Q1 2021.
- Realized losses of $14.3 million due to investment write-offs.
Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or the “Company”), the largest and leading specialty financing provider to innovative venture, growth and established stage companies backed by some of the leading and top-tier venture capital and select private equity firms, today announced its financial results for the second quarter ended June 30, 2021.
“During Q2 2021, Hercules generated
Bluestein added, “With the public and private equity markets performing exceptionally well, our technology and life sciences portfolio companies are benefitting from multiple ways to raise new capital or achieve liquidity events. Our equity and warrant portfolio has continued to march in parallel with the public markets, with 26 of our portfolio companies announcing or completing exit events year-to-date, of which 10 have completed initial public offerings. This has generated record undistributed earnings spillover of over
Q2 2021 Review and Operating Results
Debt Investment Portfolio
Hercules delivered new debt and equity commitments totaling
During the second quarter, Hercules realized early loan repayments of
The new debt investment origination and funding activities lead to a net debt investment portfolio increase of
The Company’s total investment portfolio, (at cost and fair value) by category, quarter-over-quarter is highlighted below:
Total Investment Portfolio: Q2 2021 to Q1 2021
| Equity & Other | |||||||||||||||
| (in millions) | Debt | Investments | Warrants | Total Portfolio | |||||||||||
| Balances at Cost at 3/31/21 | $ |
2,182.0 |
|
$ |
196.5 |
|
$ |
25.3 |
|
$ |
2,403.8 |
|
|||
| New fundings(a) |
|
268.1 |
|
|
10.1 |
|
|
0.9 |
|
|
279.1 |
|
|||
| Fundings assigned to External Funds |
|
(30.3 |
) |
|
(1.3 |
) |
|
(0.1 |
) |
|
(31.7 |
) |
|||
| Principal payments received on investments |
|
(19.6 |
) |
|
— |
|
|
— |
|
|
(19.6 |
) |
|||
| Early payoffs |
|
(167.9 |
) |
|
— |
|
|
— |
|
|
(167.9 |
) |
|||
| Net changes attributed to conversions, liquidations, and fees |
|
6.5 |
|
|
(70.2 |
) |
|
(1.0 |
) |
|
(64.7 |
) |
|||
| Net activity during Q2 2021 |
|
56.8 |
|
|
(61.4 |
) |
|
(0.2 |
) |
|
(4.8 |
) |
|||
| Balances at Cost at 6/30/21 | $ |
2,238.8 |
|
$ |
135.1 |
|
$ |
25.1 |
|
$ |
2,399.0 |
|
|||
| Balances at Value at 3/31/21 | $ |
2,185.1 |
|
$ |
237.3 |
|
$ |
42.0 |
|
$ |
2,464.4 |
|
|||
| Net activity during Q2 2021 |
|
56.8 |
|
|
(61.4 |
) |
|
(0.2 |
) |
|
(4.8 |
) |
|||
| Net change in unrealized appreciation (depreciation) |
|
1.5 |
|
|
55.1 |
|
|
4.9 |
|
|
61.5 |
|
|||
| Total net activity during Q2 2021 |
|
58.3 |
|
|
(6.3 |
) |
|
4.7 |
|
|
56.7 |
|
|||
| Balances at Value at 6/30/21 | $ |
2,243.4 |
|
$ |
231.0 |
|
$ |
46.7 |
|
$ |
2,521.1 |
|
|||
| (a) New fundings amount includes |
|||||||||||||||
Debt Investment Portfolio Balances by Quarter
| (in millions) | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | |||||
| Ending Balance at Cost |
|
|
|
|
|
|||||
| Weighted Average Balance |
|
|
|
|
|
|||||
Debt Investment Portfolio Composition by Quarter
| (% of debt investment portfolio) | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | |||||
| First Lien Senior Secured |
|
|
|
|
|
|||||
| Floating Rate w/Floors |
|
|
|
|
|
|||||
Effective Portfolio Yield and Core Portfolio Yield (“Core Yield”)
The effective yield on Hercules’ debt investment portfolio was
Core yield, a non-GAAP measure, was
Income Statement
Total investment income increased to
Non-interest and fee expenses were
Interest expense and fees were
The Company had a weighted average cost of borrowings comprised of interest and fees, of
NII – Net Investment Income
NII for Q2 2021 was
Continued Credit Discipline and Strong Credit Performance
Hercules’ net cumulative realized gain/(loss) position, since its first origination activities in October 2004 through June 30, 2021, (including net loan, warrant and equity activity) on investments, totaled (
When compared to total new debt investment commitments during the same period of over
Realized Gains/(Losses)
During Q2 2021, Hercules had net realized losses of (
Unrealized Appreciation/(Depreciation)
During Q2 2021, Hercules recorded
Portfolio Asset Quality
As of June 30, 2021, the weighted average grade of the debt investment portfolio, at fair value, improved to 1.93, compared to 2.01 as of March 31, 2021, based on a scale of 1 to 5, with 1 being the highest quality. Hercules’ policy is to generally adjust the credit grading down on its portfolio companies as they approach their expected need for additional growth equity capital to fund their respective operations for the next 9-14 months. Various companies in the Company’s portfolio will require additional rounds of funding from time to time to maintain their operations.
Additionally, Hercules may selectively downgrade portfolio companies, from time to time, if they are not meeting the Company’s financing criteria, or underperforming relative to their respective business plans.
As of June 30, 2021, grading of the debt investment portfolio at fair value, excluding warrants and equity investments, was as follows:
| Credit Grading at Fair Value, Q2 2021 - Q2 2020 ($ in millions) | |||||||||||||||||||||||||||||
Q2 |
2021 |
|
|
Q1 |
2021 |
|
|
Q4 |
2020 |
|
|
Q3 |
2020 |
|
|
Q2 |
2020 |
|
|||||||||||
| Grade 1 - High | $ |
637.2 |
28.4 |
% |
$ |
497.5 |
22.8 |
% |
$ |
411.0 |
19.6 |
% |
$ |
406.5 |
17.9 |
% |
$ |
443.6 |
20.1 |
% |
|||||||||
| Grade 2 | $ |
1,192.7 |
53.1 |
% |
$ |
1,240.7 |
56.8 |
% |
$ |
1,027.9 |
49.1 |
% |
$ |
1,053.1 |
46.5 |
% |
$ |
877.9 |
39.6 |
% |
|||||||||
| Grade 3 | $ |
403.8 |
18.0 |
% |
$ |
426.2 |
19.5 |
% |
$ |
621.3 |
29.7 |
% |
$ |
772.3 |
34.1 |
% |
$ |
849.7 |
38.3 |
% |
|||||||||
| Grade 4 | $ |
8.4 |
0.4 |
% |
$ |
20.4 |
0.9 |
% |
$ |
25.3 |
1.2 |
% |
$ |
26.7 |
1.2 |
% |
$ |
25.0 |
1.1 |
% |
|||||||||
| Grade 5 - Low | $ |
1.3 |
0.1 |
% |
$ |
0.2 |
0.0 |
% |
$ |
8.9 |
0.4 |
% |
$ |
5.9 |
0.3 |
% |
$ |
20.1 |
0.9 |
% |
|||||||||
| Weighted Avg. |
|
1.93 |
|
2.01 |
|
2.16 |
|
2.22 |
|
2.30 |
|||||||||||||||||||
Non-Accruals
Non-accruals decreased slightly as a percentage of the overall investment portfolio in the second quarter of 2021. As of June 30, 2021, the Company had three (3) debt investments on non-accrual with an investment cost and fair value of approximately
Compared to March 31, 2021, the Company had four (4) debt investments on non-accrual with an investment cost and fair value of approximately
| Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | |||||
| Total Investments at Cost |
|
|
|
|
|
||||
| Loans on non-accrual as a % of Total | |||||||||
| Investments at Value |
|
|
|
|
|
||||
| Loans on non-accrual as a % of Total |
|
|
|
|
|
||||
| Investments at Cost |
Liquidity and Capital Resources
The Company ended Q2 2021 with
Bank Facilities
As of June 30, 2021, there were
Leverage
As of June 30, 2021, Hercules’ GAAP leverage ratio, including its Small Business Administration “SBA” debentures, was
Available Unfunded Commitments – Representing
The Company’s unfunded commitments and contingencies consist primarily of unused commitments to extend credit in the form of loans to select portfolio companies. A portion of these unfunded contractual commitments are dependent upon the portfolio company reaching certain milestones in order to gain access to additional funding. Furthermore, the Company’s credit agreements contain customary lending provisions that allow us relief from funding obligations for previously made commitments. In addition, since a portion of these commitments may also expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements.
As of June 30, 2021, the Company had
Existing Pipeline and Signed Term Sheets
After closing
Signed non-binding term sheets are subject to satisfactory completion of Hercules’ due diligence and final investment committee approval process as well as negotiations of definitive documentation with the prospective portfolio companies. These non-binding term sheets generally convert to contractual commitments in approximately 90 days from signing and some portion may be assigned or allocated to private funds managed by Hercules Adviser prior to or after closing. It is important to note that not all signed non-binding term sheets are expected to close and do not necessarily represent future cash requirements or investments.
Net Asset Value
As of June 30, 2021, the Company’s net assets were
Interest Rate Sensitivity
Hercules has an asset sensitive debt investment portfolio with
Based on Hercules’ Consolidated Statement of Assets and Liabilities as of June 30, 2021, the following table shows the approximate annualized increase/(decrease) in components of net income resulting from operations of hypothetical base rate changes in interest rates, such as Prime Rate, assuming no changes in Hercules’ debt investments and borrowings. These estimates are subject to change due to the impact from active participation in the Company’s equity ATM program and any future equity offerings.
| (in thousands) | Interest | Interest | Net | EPS(2) | ||||||||
| Basis Point Change | Income(1) | Expense | Income | |||||||||
(75) |
$ |
(3) |
$ |
(21) |
$ |
18 |
$ |
- |
||||
(50) |
$ |
(3) |
$ |
(14) |
$ |
11 |
$ |
- |
||||
(25) |
$ |
(3) |
$ |
(7) |
$ |
4 |
$ |
- |
||||
25 |
$ |
3,425 |
$ |
7 |
$ |
3,418 |
$ |
0.03 |
||||
50 |
$ |
6,893 |
$ |
14 |
$ |
6,879 |
$ |
0.06 |
||||
75 |
$ |
10,339 |
$ |
21 |
$ |
10,318 |
$ |
0.09 |
||||
100 |
$ |
13,862 |
$ |
28 |
$ |
13,834 |
$ |
0.12 |
||||
200 |
$ |
29,236 |
$ |
56 |
$ |
29,180 |
$ |
0.25 |
||||
| (1) Source: Hercules Capital Form 10-Q for Q2 2021 | ||||||||||||
| (2) EPS calculated on basic weighted shares outstanding of 114,654. Estimates are subject to change due to impact from active | ||||||||||||
| participation in the Company's equity ATM program and any future equity offerings. | ||||||||||||
Existing Equity and Warrant Portfolio
Equity Portfolio
Hercules held equity positions in 67 portfolio companies with a fair value of
Warrant Portfolio
Hercules held warrant positions in 93 portfolio companies with a fair value of
Portfolio Company IPO and M&A Activity in Q2 2021 and YTD Q3 2021
IPO Activity
As of July 26, 2021, Hercules held debt, warrant or equity positions in 10 portfolio companies that have completed their IPOs and eight (8) companies that have registered for their IPOs or have entered into definitive agreements to go public via a merger or special purpose acquisition company “SPAC,” including:
Completed:
-
In July 2021, Hercules’ portfolio company Couchbase, Inc. (NASDAQ: BASE), a provider of a leading modern database for enterprise applications, completed its initial public offering of 8.3 million shares of common stock at an initial offering price of
$24.00 per share on the Nasdaq Global Select Market. Hercules initially committed$70.0 million in venture debt financing beginning in August 2018 and currently holds warrants for 105,530 shares of common stock as of June 30, 2021.
-
In July 2021, Hercules’ portfolio company Wheels Up Partners LLC (NYSE: UP), a provider of subscription club memberships for private-jet flyers, completed its reverse merger initial public offering with Aspirational Consumer Lifestyle Corp. (NYSE: ASPL), a special purpose acquisition company. Hercules initially committed
$23.0 million in venture debt financing beginning in December 2017.
-
In July 2021, former Hercules’ portfolio company Rapid Micro Biosystems (NASDAQ: RPID), a provider of an automated microbial quality control device and platform, completed its initial public offering of 7.9 million shares of common stock at an initial offering price of
$20.00 per share on the Nasdaq Global Select Market. Hercules initially committed$18.0 million in venture debt financing beginning in March 2018.
-
In June 2021, Hercules’ portfolio company Century Therapeutics, Inc. (NASDAQ: IPSC), a preclinical biotech developing allogeneic stem cell treatments for multiple cancers, completed its initial public offering of 10.6 million shares of common stock at an initial offering price of
$20.00 per share on the Nasdaq Global Select Market. Hercules initially committed$20.0 million in venture debt financing beginning in September 2020 and currently holds warrants for 16,112 shares of common stock as of June 30, 2021.
-
In June 2021, Hercules’ portfolio company Sprinklr, Inc. (NYSE: CXM), a developer of a social media management platform designed to provide digital transformation for enterprise businesses, completed its initial public offering of 16.6 million shares of common stock at an initial offering price of
$16.00 per share on the New York Stock Exchange. Hercules currently holds 700,000 shares of common stock as of June 30, 2021.
-
In June 2021, Hercules’ portfolio company Zeta Global Holdings (NYSE: ZETA), a provider of a SaaS-based customer relationship management (CRM) platform and professional marketing services, completed its initial public offering of 14.8 million shares of common stock at an initial offering price of
$10.00 per share on the New York Stock Exchange. Hercules initially committed$15.0 million in venture debt financing beginning in November 2007 and currently holds 295,861 shares of common stock as of June 30, 2021.
-
In June 2021, Hercules’ portfolio company Xometry (NASDAQ: XMTR), a leading AI-enabled marketplace for on-demand manufacturing, completed its initial public offering of 6.9 million shares of common stock at an initial offering price of
$44.00 per share on the Nasdaq Global Select Market. Hercules initially committed$15.0 million in venture debt financing beginning in May 2018 and currently holds warrants for 87,784 shares of Preferred Series B stock as of June 30, 2021.
-
In June 2021, Hercules’ portfolio company Proterra Inc. (NASDAQ: PTRA), a leading commercial electric vehicle technology and manufacturing company, completed its reverse merger initial public offering with ArcLight Clean Transition Corp. (NASDAQ: ACTC), a special purpose acquisition company. Hercules initially committed
$30.0 million in venture debt financing beginning in May 2015 and currently holds 455,890 shares of common stock as of June 30, 2021.
- In June 2021, Hercules’ portfolio company 23andMe Inc. (NASDAQ: ME), a provider of consumer DNA-testing products, completed its reverse merger initial public offering with VG Acquisition Corp. (NYSE: VGAC.U), a special purpose acquisition company. Hercules currently holds 828,360 shares of common stock as of June 30, 2021.
-
In April 2021, Hercules’ portfolio company Privia Health Group, Inc. (NASDAQ: PRVA), a technology-driven, national physician enablement company that collaborates with medical groups, health plans and health systems, completed its initial public offering of 19.5 million shares of common stock at an initial offering price of
$23.00 per share on the Nasdaq Global Select Market. Hercules initially committed$35.0 million in venture debt financing beginning in August 2016.
In Registration or SPAC:
-
In July 2021, Hercules’ portfolio company Gelesis Inc., a biotherapeutics company advancing superabsorbent hydrogels to treat excess weight and metabolic disorders, announced it has entered into a definitive agreement for a reverse merger initial public offering with Capstar Special Purpose Acquisition Corp. (NYSE: CPSR), a special purpose acquisition company. Upon completion of the merger, the combined company will be listed on the New York Stock Exchange under the ticker symbol “GLS.” Hercules initially committed
$3.0 million in venture debt financing in August 2008 and currently holds 227,013 shares of common stock, 243,432 shares of Preferred Series A-1 stock and 191,626 shares of Preferred Series A-2 stock as of June 30, 2021.
- In July 2021, Hercules’ portfolio company Nextdoor, a provider of a social network that connects neighbors, announced it has entered into a definitive agreement for a reverse merger initial public offering with Khosla Ventures Acquisition Co. II (NASDAQ: KVSB), a special purpose acquisition company. Upon completion of the merger, the combined company will be listed on the Nasdaq Global Select Market under the ticker symbol “KIND.” Hercules currently holds 328,190 shares of common stock as of June 30, 2021.
-
In July 2021, Hercules’ portfolio company Planet Labs, an earth data and analytics company, announced it has entered into a definitive agreement for a reverse merger initial public offering with dMY Technology Group IV Inc. (NYSE: DMYQ), a special purpose acquisition company. Upon completion of the merger, the combined company will be listed on the New York Stock Exchange under the ticker symbol “PL.” Hercules initially committed
$25.0 million in venture debt financing beginning in June 2019 and currently holds warrants for 357,752 shares of common stock as of June 30, 2021.
-
In May 2021, Hercules’ portfolio company Valo Health LLC, a technology company using human-centric data and artificial intelligence powered computation to transform the drug discovery and development process, announced it has entered into a definitive agreement for a reverse merger initial public offering with Khosla Ventures Acquisition Co. (NASDAQ: KVAC), a special purpose acquisition company. Upon completion of the merger, the combined company will be listed on the Nasdaq Global Select Market under the ticker symbol “VH.” Hercules initially committed
$20.0 million in venture debt financing beginning in June 2020 and currently holds 510,308 shares of Preferred Series B stock and warrants for 102,216 shares of common stock as of June 30, 2021.
-
In March 2021, Hercules’ portfolio company Rocket Lab, a developer of launch and space systems, announced it has entered into a definitive agreement for a reverse merger initial public offering with Vector Acquisition Corp. (NASDAQ: VACQ), a special purpose acquisition company. Upon completion of the merger, Rocket Lab will be listed on the Nasdaq Global Select Market under the ticker symbol “RKLB.” Hercules initially committed
$100.0 million in venture debt financing beginning in June 2021.
-
In March 2021, Hercules’ portfolio company VELO3D, a developer of metal laser sintering printing machines intended to offer 3D printing, announced it has entered into a definitive agreement for a reverse merger initial public offering with Jaws Spitfire Acquisition Corp. (NYSE: SPFR), a special purpose acquisition company. Upon completion of the merger, VELO3D will be listed on the New York Stock Exchange under the ticker symbol “VLD.” Hercules initially committed
$12.5 million in venture debt financing beginning in May 2021.
-
In March 2021, Hercules’ portfolio company Pineapple Energy, LLC, a U.S. operator and consolidator of residential solar, battery storage and grid services solutions, announced that it entered into a definitive merger agreement with Communications Systems, Inc. (NASDAQ: JCS), and IoT intelligent edge products and services company. Upon closing, CSI will commence doing business as Pineapple Energy, and expects shares of the combined company to continue to trade on the Nasdaq Global Select Market under the new ticker symbol “PEGY.” Hercules initially committed
$12.3 million in venture debt financing beginning in December 2010 and currently holds 17,647 shares of Class A Units as of June 30, 2021.
-
In February 2021, Nerdy, the parent company of Hercules’ portfolio company Varsity Tutors, a technology developer of an online tutoring platform, announced it has entered into a definitive agreement for a reverse merger initial public offering with TPG Pace Tech Opportunities (NYSE: PACE), a special purpose acquisition company. Upon completion of the merger, Nerdy will be listed on the New York Stock Exchange under the ticker symbol “NRDY.” Hercules initially committed
$50.0 million in venture debt financing beginning in August 2019.
There can be no assurances that companies that have yet to complete their IPOs will do so.
M&A Activity
-
In June 2021, Hercules’ portfolio company ExtraHop Networks Inc., a cloud-native network detection and response provider, announced that they entered into an agreement to be acquired by private equity firms Bain Capital and Crosspoint Capital for
$900.0 million . The acquisition was completed in July. Hercules initially committed$15.0 million in venture debt financing beginning in September 2020 and currently holds warrants for 154,784 shares of common stock as of June 30, 2021.
-
In May 2021, Hercules’ portfolio company Greenphire, a leader in global clinical trial financial process automation, announced that they have reached an agreement to be acquired by Thoma Bravo, a leading private equity investment firm focused on the software and technology-enabled services sector. Terms of the acquisition were not disclosed. Hercules initially committed
$6.0 million in venture debt (via Ares Capital venture portfolio acquisition) financing beginning in November 2017.
-
In May 2021, Hercules’ portfolio company Vela Trading Systems LLC, an independent provider of trading and market access technology for global multi-asset electronic trading, announced that they have merged with Exegy Inc., a provider of low-latency global market data solutions, predictive trading signals and hardware training platforms for the financial services industry. Terms of the acquisition were not disclosed. The merger was backed by Marlin Equity Partners, a global investment firm with over
$7.5 billion of capital commitments under management. Hercules initially committed$20.0 million in venture debt financing beginning in June 2017.
-
In April 2021, Hercules’ portfolio company Message Systems (a.k.a. SparkPost), a worldwide provider of message management solutions and services for email service providers, social networks and large enterprises, announced that they have reached an agreement to be acquired by MessageBird BV, a provider of cloud-based communications services, for approximately
$600.0 million . Hercules initially committed$25.0 million in venture debt financing beginning in January 2015.
Subsequent Events
1. As of July 26, 2021, Hercules has:
-
Funded
$23.4 million to new and existing commitments since the close of the second quarter 2021. -
Pending commitments (signed non-binding term sheets) of
$402.5 million .
The table below summarizes the Company’s year-to-date closed and pending commitments as follows:
Closed Commitments and Pending Commitments (in millions) |
|
January 1 – June 30, 2021 Closed Commitments(a) |
|
Q3 2021 Closed Commitments (as of July 26, 2021)(b) |
|
Year-to-Date Closed Commitments |
|
Q3 2021 Pending Commitments (as of July 26, 2021)(b) |
|
Year-to-Date 2021 Closed and Pending Commitments |
|
Notes:
- Closed Commitments may include renewals of existing credit facilities and equity commitments. Not all Closed Commitments result in future cash requirements. Commitments generally fund over the two succeeding quarters from close.
- Not all pending commitments (signed non-binding term sheets) are expected to close and do not necessarily represent any future cash requirements.
2. On July 1, 2021, the Company fully redeemed the aggregate outstanding
Conference Call
Hercules has scheduled its second quarter 2021 financial results conference call for July 29, 2021 at 2:00 p.m. PT (5:00 p.m. ET). To listen to the call, please dial (877) 304-8957 (or (408) 427-3709 internationally) and reference Conference ID: 1598912 if asked, approximately 10 minutes prior to the start of the call. A taped replay will be made available approximately three hours after the conclusion of the call and will remain available for seven days. To access the replay, please dial (855) 859-2056 or (404) 537-3406 and enter the passcode 1598912.
About Hercules Capital, Inc.
Hercules Capital, Inc. (NYSE: HTGC) is the leading and largest specialty finance company focused on providing senior secured venture growth loans to high-growth, innovative venture capital-backed companies in a broad variety of technology, life sciences and sustainable and renewable technology industries. Since inception (December 2003), Hercules has committed more than
Hercules’ common stock trades on the New York Stock Exchange (NYSE) under the ticker symbol “HTGC.” In addition, Hercules has one retail bond issuance of
Category: Earnings
Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act.
The information disclosed in this press release is made as of the date hereof and reflects Hercules’ most current assessment of its historical financial performance. Actual financial results filed with the SEC may differ from those contained herein due to timing delays between the date of this release and confirmation of final audit results. These forward-looking statements are not guarantees of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements including, without limitation, the risks, uncertainties, including the uncertainties surrounding the current market volatility, and other factors the Company identifies from time to time in its filings with the SEC. Although Hercules believes that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained in this release are made as of the date hereof, and Hercules assumes no obligation to update the forward-looking statements for subsequent events.
| HERCULES CAPITAL, INC. | ||||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||
| (dollars in thousands, except per share data) | ||||
| June 30, 2021 | December 31, 2020 | |||
| Assets | ||||
| Investments: | ||||
| Non-control/Non-affiliate investments (cost of |
|
|
||
| Control investments (cost of |
66,491 |
57,400 |
||
| Affiliate investments (cost of |
9,750 |
8,340 |
||
| Total investments in securities, at value (cost of |
2,521,090 |
2,354,078 |
||
| Cash and cash equivalents | 18,447 |
198,282 |
||
| Restricted cash | 5,766 |
39,340 |
||
| Interest receivable | 19,063 |
19,077 |
||
| Right of use asset | 8,039 |
9,278 |
||
| Other assets | 6,167 |
3,942 |
||
| Total assets |
|
|
||
| Liabilities | ||||
| Debt (net of debt issuance costs)(1) |
|
|
||
| Accounts payable and accrued liabilities | 36,886 |
36,343 |
||
| Operating lease liability | 7,813 |
9,312 |
||
| Total liabilities |
|
|
||
| Net assets consist of: | ||||
| Common stock, par value | 116 |
115 |
||
| Capital in excess of par value | 1,163,910 |
1,158,198 |
||
| Total distributable earnings | 192,332 |
133,391 |
||
| Total net assets |
|
|
||
| Total liabilities and net assets |
|
|
||
| Shares of common stock outstanding ( |
115,867 |
114,726 |
||
| Net asset value per share |
|
|
||
| (1) The Company’s SBA Debentures, February 2025 Notes, June 2025 Notes, 2033 Notes, April 2025 Notes, 2022 Notes, 2027 Asset-Backed Notes, 2028 Asset-Backed Notes, 2022 Convertible Notes, | ||||
| July 2024 Notes, and March 2026 A and B Notes, as each term is defined herein, are presented net of the associated debt issuance costs for each instrument. | ||||
| HERCULES CAPITAL, INC. | |||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
| (in thousands, except per share data) | |||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
2021 |
|
2020 |
|
2021 |
|
2020 |
|||
| Investment income: | |||||||||
| Interest and dividend income | |||||||||
| Non-control/Non-affiliate investments |
|
|
|
|
|||||
| Control investments | 1,029 |
731 |
1,828 |
1,377 |
|||||
| Affiliate investments | 1 |
157 |
2 |
377 |
|||||
| Total interest income | 61,306 |
63,555 |
125,088 |
129,759 |
|||||
| Fee income | |||||||||
| Commitment, facility and loan fee income | |||||||||
| Non-control/Non-affiliate investments | 5,263 |
3,511 |
8,666 |
7,707 |
|||||
| Control investments | 15 |
5 |
23 |
10 |
|||||
| Total commitment, facility and loan fee income | 5,278 |
3,516 |
8,689 |
7,717 |
|||||
| One-time fee income | |||||||||
| Non-control/Non-affiliate investments | 2,975 |
897 |
4,541 |
4,111 |
|||||
| Total one-time fee income | 2,975 |
897 |
4,541 |
4,111 |
|||||
| Total fee income | 8,253 |
4,413 |
13,230 |
11,828 |
|||||
| Total investment income | 69,559 |
67,968 |
138,318 |
141,587 |
|||||
| Operating expenses: | |||||||||
| Interest | 14,490 |
15,076 |
29,240 |
29,608 |
|||||
| Loan fees | 2,220 |
1,650 |
5,020 |
3,444 |
|||||
| General and administrative | |||||||||
| Legal expenses | 526 |
991 |
954 |
1,890 |
|||||
| Tax expenses | 1,746 |
899 |
3,184 |
2,034 |
|||||
| Other expenses | 3,542 |
3,973 |
6,710 |
7,998 |
|||||
| Total general and administrative | 5,814 |
5,863 |
10,848 |
11,922 |
|||||
| Employee compensation | |||||||||
| Compensation and benefits | 8,349 |
7,180 |
18,153 |
15,394 |
|||||
| Stock-based compensation | 2,926 |
2,515 |
5,670 |
4,955 |
|||||
| Total employee compensation | 11,275 |
9,695 |
23,823 |
20,349 |
|||||
| Total gross operating expenses | 33,799 |
32,284 |
68,931 |
65,323 |
|||||
| Expenses allocated to the Adviser Subsidiary | (1,204) |
— |
(2,137) |
— |
|||||
| Total net operating expenses | 32,595 |
32,284 |
66,794 |
65,323 |
|||||
| Net investment income | 36,964 |
35,684 |
71,524 |
76,264 |
|||||
| Net realized and change in unrealized appreciation (depreciation) on investments: | |||||||||
| Net realized gain (loss) on investments | |||||||||
| Non-control/Non-affiliate investments | 47,861 |
141 |
55,631 |
7,108 |
|||||
| Affiliate investments | (62,143) |
— |
(62,143) |
— |
|||||
| Total net realized gain (loss) on investments | (14,282) |
141 |
(6,512) |
7,108 |
|||||
| Net change in unrealized appreciation (depreciation) on investments | |||||||||
| Non-control/Non-affiliate investments | 3,075 |
23,613 |
21,097 |
(34,816) |
|||||
| Control investments | (5,255) |
2,642 |
(3,553) |
(5,209) |
|||||
| Affiliate investments | 62,229 |
(315) |
64,338 |
(10,305) |
|||||
| Total net change in unrealized appreciation (depreciation) on investments | 60,049 |
25,940 |
81,882 |
(50,330) |
|||||
| Total net realized and change in unrealized appreciation (depreciation) on investments: | 45,767 |
26,081 |
75,370 |
(43,222) |
|||||
| Net increase (decrease) in net assets resulting from operations |
|
|
|
|
|||||
| Net investment income before investment gains and losses per common share: | |||||||||
| Basic |
|
|
|
|
|||||
| Change in net assets resulting from operations per common share: | |||||||||
| Basic |
|
|
|
|
|||||
| Diluted |
|
|
|
|
|||||
| Weighted average shares outstanding: | |||||||||
| Basic | 114,654 |
111,558 |
114,480 |
110,256 |
|||||
| Diluted | 129,572 |
111,729 |
122,188 |
110,504 |
|||||
| Distributions paid per common share: | |||||||||
| Basic |
|
|
|
|
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005948/en/
FAQ
What were Hercules Capital's Q2 2021 earnings?
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