Horizon Technology Finance Announces Second Quarter 2022 Financial Results
Horizon Technology Finance reported strong second quarter 2022 results with a net investment income (NII) of $8.6 million, or $0.35 per share, up from $6.1 million the previous year. The total investment portfolio rose by 43% to a record $577 million. The company declared regular monthly distributions of $0.30 per share and ended the quarter with a net asset value (NAV) of $290.6 million, or $11.69 per share. The debt portfolio yield was 14.2%. Despite a challenging macroeconomic environment, Horizon maintained a steady credit profile, with 96% of its loan portfolio rated 3 or better.
- Net investment income increased to $8.6 million, or $0.35 per share.
- Total investment portfolio grew by 43% year-over-year to $577 million.
- Declared regular monthly distributions totaling $0.30 per share.
- Record net asset value of $290.6 million, or $11.69 per share.
- Debt portfolio yield at a strong 14.2%.
- Total expenses increased to $9.9 million, up from $7.3 million, primarily due to rising interest and management fees.
- Net realized loss on investments was $0.9 million, compared to a gain of $1.5 million in the prior year.
- Net Investment Income per Share of
- Grew Portfolio Year over Year by
- Horizon Platform Ends Quarter with Record Committed Backlog of
- Debt Portfolio Yield of
- Declares Regular Monthly Distributions Totaling
FARMINGTON, Conn., Aug. 2, 2022 /PRNewswire/ -- Horizon Technology Finance Corporation (NASDAQ: 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 second quarter ended June 30, 2022.
Second Quarter 2022 Highlights
- Net investment income ("NII") of
$8.6 million , or$0.35 per share, compared to$6.1 million , or$0.31 per share for the prior-year period - Total investment portfolio of
$577.5 million as of June 30, 2022 - Net asset value of
$290.6 million , or$11.69 per share, as of June 30, 2022 - Annualized portfolio yield on debt investments of
14.2% for the quarter - HRZN funded 15 loans totaling
$137.2 million - HRZN's investment adviser, Horizon Technology Finance Management LLC ("HTFM"), originated
$192.4 million through its lending platform ("Horizon Platform"), inclusive of the HRZN loans - Raised total net proceeds of approximately
$10.3 million with "at-the-market" ("ATM") offering program - Experienced liquidity events from four portfolio companies
- Cash of
$76.3 million and credit facility capacity of$113.7 million as of June 30, 2022 - Held portfolio of warrant and equity positions in 90 companies as of June 30, 2022
- Undistributed spillover income of
$0.53 per share as of June 30, 2022 - Issued
$50.0 million of6.25% 2027 Notes - Subsequent to quarter end, declared distributions of
$0.10 per share payable in October, November and December 2022
"We had a strong second quarter in all facets of our operations, despite the challenging macroeconomic environment," said Robert D. Pomeroy, Jr., Chairman and Chief Executive Officer of Horizon. "For the quarter, we generated NII of
"With our growth, we remain focused on credit quality and are pleased to have maintained a steady credit profile, with
Second Quarter 2022 Operating Results
Total investment income for the quarter ended June 30, 2022 grew
The Company's dollar-weighted annualized yield on average debt investments for the quarter ended June 30, 2022 and 2021 was
Total expenses for the quarter ended June 30, 2022 were
Net investment income for the quarter ended June 30, 2022 was
For the quarter ended June 30, 2022, net realized loss on investments was
For the quarter ended June 30, 2022, net unrealized depreciation on investments was less than
Portfolio Summary and Investment Activity
As of June 30, 2022, the Company's debt portfolio consisted of 55 secured loans with an aggregate fair value of
($ in thousands) | For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||
2022 | 2021 | 2022 | 2021 | |
Beginning portfolio | $ 515,009 | $ 380,023 | $ 458,075 | $ 352,545 |
New debt investments | 159,235 | 67,285 | 253,720 | 118,660 |
Less refinanced debt balances | (25,000) | — | (25,000) | — |
Net new debt investments | 134,235 | 67,285 | 228,720 | 118,660 |
Principal payments received on investments | (4,861) | (3,415) | (6,956) | (8,082) |
Early pay-offs and principal paydowns | (43,467) | (38,125) | (55,517) | (57,590) |
Accretion of debt investment fees | 1,547 | 1,087 | 2,553 | 2,170 |
New debt investment fees | (1,860) | (889) | (2,785) | (1,370) |
Proceeds from sale of investments | (22,146) | (2,859) | (43,426) | (3,732) |
Net realized (loss) gain on investments | (929) | 1,492 | (899) | (3,226) |
Net unrealized (depreciation) appreciation on | (36) | (478) | (2,273) | 4,746 |
Ending portfolio | $ 577,492 | $ 404,121 | $ 577,492 | $ 404,121 |
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, 2022, March 31, 2022 and December 31, 2021:
($ in | June 30, 2022 | March 31, 2022 | December 31, 2021 | ||||||||
Number of | Debt Investments | Percentage | Number of | Debt Investments | Percentage | Number of | Debt Investments | Percentage of | |||
Credit | |||||||||||
4 | 8 | $ 107,618 | 19.5 % | 8 | $ 102,783 | 20.9 % | 9 | $ 104,863 | 24.0 % | ||
3 | 42 | 420,174 | 76.2 % | 39 | 369,196 | 75.0 % | 34 | 322,084 | 73.6 % | ||
2 | 3 | 18,918 | 3.4 % | 2 | 14,717 | 3.0 % | 1 | 3,470 | 0.8 % | ||
1 | 2 | 4,850 | 0.9 % | 1 | 5,498 | 1.1 % | 1 | 6,900 | 1.6 % | ||
Total | 55 | $ 551,560 | 100.0 % | 50 | $ 492,194 | 100.0 % | 45 | $ 437,317 | 100.0 % |
As of June 30, 2022, Horizon's loan portfolio had a weighted average credit rating of 3.1, compared to 3.2 as of March 31, 2022 and December 31, 2021, 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, 2022, there were two debt investments with an internal credit rating of 1, with an aggregate cost of
Liquidity and Capital Resources
As of June 30, 2022, the Company had
As of June 30, 2022, there was
Additionally, as of June 30, 2022, there was
Horizon Funding Trust 2019-1, a wholly-owned subsidiary of HRZN, previously issued
During the three months ended June 30, 2022, the Company sold 868,230 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 June 30, 2022, the Company's debt to equity leverage ratio was
Liquidity Events
During the quarter ended June 30, 2022, Horizon experienced liquidity events from four 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 April, with the proceeds of a new loan from the Horizon Platform, Castle Creek Biosciences, Inc. prepaid its previously outstanding principal balance of
In May, Updater, Inc. prepaid its outstanding principal balance of
In June, IDbyDNA, Inc. was acquired by Illumina, Inc. and prepaid its outstanding principal balance of
In June, HRZN earned a
Net Asset Value
At June 30, 2022, the Company's net assets were
For the quarter ended June 30, 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 July 1, 2022, the underwriters of the 2027 Notes exercised their option to purchase an additional
On July 7, 2022, the Company funded a
On July 15, 2022, the Company funded a
On July 22, 2022, the Company agreed to release its liens on the assets of MLogix (ABC), LLC, successor in interest to MacuLogix, Inc., in connection with the sale of the assets ("Acquisition") of MABC to LumiThera, Inc. (the "Acquirer"). In exchange for such release, the Company received cash, common stock of the acquirer, as well as the potential for future cash royalty payments from the sale of goods and services related to the sold assets, which the Company used to fair value its asset as of June 30, 2022 at
On July 27, 2022, the Company funded a
On July 29, 2022, the Company funded a
Monthly Distributions Declared in Third Quarter 2022
On July 29, 2022, the Company's board of directors declared monthly distributions of
Monthly Distributions
Ex-Dividend Date | Record Date | Payment Date | Amount per Share |
September 16, 2022 | September 19, 2022 | October 14, 2022 | |
October 17, 2022 | October 18, 2022 | November 15, 2022 | |
November 16, 2022 | November 17, 2022 | December 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, August 3, 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 13731060. 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 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 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 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 Consolidated Statements of Assets and Liabilities | |||||
June 30, | December 31, | ||||
2022 | 2021 | ||||
(unaudited) | |||||
Assets | |||||
Non-affiliate investments at fair value (cost of | $ 577,492 | $ 458,075 | |||
Controlled affiliate investments at fair value (cost of | — | — | |||
Total investments at fair value (cost of | 577,492 | 458,075 | |||
Cash | 54,353 | 38,054 | |||
Investments in money market funds | 21,959 | 7,868 | |||
Restricted investments in money market funds | 1,583 | 1,359 | |||
Interest receivable | 9,084 | 6,154 | |||
Other assets | 3,445 | 2,450 | |||
Total assets | $ 667,916 | $ 513,960 | |||
Liabilities | |||||
Borrowings | $ 364,821 | $ 257,613 | |||
Distributions payable | 7,457 | 6,365 | |||
Base management fee payable | 871 | 706 | |||
Incentive fee payable | 2,145 | 2,015 | |||
Other accrued expenses | 2,017 | 1,926 | |||
Total liabilities | 377,311 | 268,625 | |||
Commitments and contingencies | |||||
Net assets | |||||
Preferred stock, par value shares issued and outstanding as of June 30, 2022 and December 31, 2021 | — | — | |||
Common stock, par value 25,024,569 and 21,384,925 shares issued and 24,857,104 and 21,217,460 shares outstanding as of June | 26 | 22 | |||
Paid-in capital in excess of par | 350,173 | 301,359 | |||
Distributable earnings | (59,594) | (56,046) | |||
Total net assets | 290,605 | 245,335 | |||
Total liabilities and net assets | $ 667,916 | $ 513,960 | |||
Net asset value per common share | $ 11.69 | $ 11.56 | |||
Horizon Technology Finance Corporation and Subsidiaries Consolidated Statements of Operations (Unaudited) | ||||||||
For the Three Months Ended | For the Six Months Ended | |||||||
June 30, | June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Investment income | ||||||||
Interest income on investments | ||||||||
Interest income on non-affiliate investments | $ 17,720 | $ 12,420 | $ 31,573 | $ 24,909 | ||||
Interest income on affiliate investments | — | 62 | — | 235 | ||||
Total interest income on investments | 17,720 | 12,482 | 31,573 | 25,144 | ||||
Fee income | ||||||||
Prepayment fee income on non-affiliate investments | 762 | 913 | 1,092 | 1,256 | ||||
Fee income on non-affiliate investments | 106 | 94 | 127 | 292 | ||||
Fee income on affiliate investments | — | — | — | 12 | ||||
Total fee income | 868 | 1,007 | 1,219 | 1,560 | ||||
Total investment income | 18,588 | 13,489 | 32,792 | 26,704 | ||||
Expenses | ||||||||
Interest expense | 4,225 | 2,954 | 7,649 | 5,669 | ||||
Base management fee | 2,523 | 1,829 | 4,767 | 3,598 | ||||
Performance based incentive fee | 2,145 | 1,528 | 3,570 | 3,029 | ||||
Administrative fee | 374 | 289 | 735 | 578 | ||||
Professional fees | 271 | 280 | 848 | 789 | ||||
General and administrative | 362 | 442 | 706 | 808 | ||||
Total expenses | 9,900 | 7,322 | 18,275 | 14,471 | ||||
Net investment income before excise tax | 8,688 | 6,167 | 14,517 | 12,233 | ||||
Provision for excise tax | 106 | 56 | 206 | 118 | ||||
Net investment income | 8,582 | 6,111 | 14,311 | 12,115 | ||||
Net realized and unrealized (loss) gain | ||||||||
Net realized gain (loss) on non-affiliate investments | 271 | 1,492 | 301 | (3,716) | ||||
Net realized loss on controlled affiliate investments | (1,200) | — | (1,200) | — | ||||
Net realized (loss) gain on investments | (929) | 1,492 | (899) | (3,716) | ||||
Net realized loss on extinguishment of debt | — | (395) | — | (395) | ||||
Net realized (loss) gain | (929) | 1,097 | (899) | (4,111) | ||||
Net unrealized (depreciation) appreciation on non-affiliate | (1,436) | 122 | (3,723) | 6,385 | ||||
Net unrealized depreciation on non-controlled affiliate investments | — | (600) | — | (1,639) | ||||
Net unrealized appreciation on controlled affiliate investments | 1,400 | — | 1,450 | — | ||||
Net unrealized (depreciation) appreciation on investments | (36) | (478) | (2,273) | 4,746 | ||||
Net realized and unrealized (loss) gain | (965) | 619 | (3,172) | 635 | ||||
Net increase in net assets resulting from operations | $ 7,617 | $ 6,730 | $ 11,139 | $ 12,750 | ||||
Net investment income per common share | $ 0.35 | $ 0.31 | $ 0.62 | $ 0.62 | ||||
Net increase in net assets per common share | $ 0.31 | $ 0.34 | $ 0.48 | $ 0.65 | ||||
Distributions declared per share | $ 0.30 | $ 0.30 | $ 0.60 | $ 0.60 | ||||
Weighted average shares outstanding | 24,301,762 | 19,834,050 | 23,109,584 | 19,601,607 |
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SOURCE Horizon Technology Finance Corporation
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