Hercules Capital Reports Fourth Quarter and Full-Year 2023 Financial Results
Hercules Capital, Inc. (NYSE: HTGC) reported a strong financial performance for Q4 2023 and full-year 2023 with record total investment income, net investment income, and gross fundings. The company also announced a supplemental cash distribution for 2024 and had over $1.0 billion of available liquidity. With approximately $4.2 billion of assets under management, Hercules showed a significant increase year-over-year.
Positive
Record Q4 2023 Total Investment Income of $122.6 million, up by 22.4% YoY
Record Q4 2023 Net Investment Income of $86.0 million, or $0.56 per share, up by 38.5% YoY
Record Full-Year 2023 Total Investment Income of $460.7 million, up by 43.2% YoY
Record Full-Year 2023 Net Investment Income of $304.0 million, up by 61.7% YoY
Record Full-Year 2023 Total Gross Fundings of $1.6 billion, up by 9.1% YoY
Approximately $4.2 billion of assets under management, showing a 15.3% increase YoY
The reported increase in Total Investment Income and Net Investment Income (NII) for both Q4 and the full year indicates a robust financial performance by Hercules Capital. The year-over-year growth in these metrics, particularly the 61.7% increase in annual NII, suggests a strong yield from the company's investment portfolio. Additionally, the NII coverage of the base cash distribution exceeding 100% demonstrates the company's ability to generate sufficient earnings to support its dividend payments, which is a positive signal to investors and can influence the stock's attractiveness as an income-generating asset.
The announcement of a new supplemental cash distribution may be interpreted as management's confidence in the company's ongoing ability to generate excess earnings. However, investors should consider the sustainability of such distributions, especially in the context of the company's undistributed earnings spillover, which represents earnings that have not been paid out as dividends.
Lastly, the growth in assets under management (AUM) is a key indicator of the company's scale and its ability to attract capital. An increase in AUM typically correlates with higher management and performance fee income, which can positively impact future earnings.
The reported 9.1% increase in Total Gross Fundings suggests Hercules Capital's continued success in deploying capital to its venture, growth and established stage companies. This is a vital metric for assessing the company's market activity and its ability to capitalize on investment opportunities. The firm's positioning as a leading specialty financing provider to companies backed by top-tier venture capital and private equity firms may contribute to its ability to source quality deals, which can lead to higher investment income.
Furthermore, the reported liquidity of over $1.0 billion indicates a strong financial position that enables the company to respond to market opportunities and potential economic downturns. Liquidity is essential for investment firms, especially in volatile markets, as it allows for the continuation of operations and the ability to make strategic investments without the pressure of immediate cash needs.
The significant growth in Hercules Capital's financial metrics during a period of economic uncertainty reflects broader trends in the venture capital and private equity sectors. The increased demand for financing among innovative and growth-stage companies, particularly in the technology and life sciences sectors, may have contributed to Hercules' performance. However, it is important to contextualize this performance within the economic cycle, as shifts in interest rates, investor sentiment and market liquidity can have profound effects on the availability of capital and the valuation of portfolio companies.
Moreover, the potential impact of macroeconomic factors, such as inflation and regulatory changes, on Hercules' business model should be considered. These factors can influence both the cost of capital and the risk profile of the company's investments, which in turn could affect future earnings and the company's ability to sustain its growth trajectory.
02/15/2024 - 04:07 PM
Record Q4 2023 Total Investment Income of $122.6 Million 22.4% Year-over-Year
Record Q4 2023 Net Investment Income “NII” of $86.0 Million $0.56 38.5% Year-over-Year
Record Full-Year 2023 Total Investment Income of $460.7 Million 43.2% Year-over-Year
Record Full-Year 2023 Net Investment Income “NII” of $304.0 Million 61.7% Year-over-Year
Record Full-Year 2023 Total Gross Fundings of $1.6 billion 9.1% Year-over Year
Inclusive of the Adviser Funds Managed by Hercules Adviser LLC, its Wholly-owned Subsidiary, Hercules had over $1.0 Billion
Q4 2023 NII Provides 140% Coverage of the Base Cash Distribution
Announced a New Supplemental Cash Distribution for 2024 of $0.32
Undistributed Earnings Spillover of $125.6 Million $0.80 (1) per Ending Shares Outstanding
Approximately $4.2 Billion 15.3% Year-over-Year(2)
SAN MATEO, Calif. --(BUSINESS WIRE)--
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 fourth quarter and full-year ended December 31, 2023. The earnings release can be accessed at Hercules’ Investor Relations website at https://investor.htgc.com/financial-information/financial-results .
Footnotes:
(1)
$0.82
(2)
Assets under management includes assets managed by Hercules Capital and its Adviser Subsidiary
Conference Call
Hercules has scheduled its fourth quarter and full-year 2023 financial results conference call for February 15, 2024 at 2:00 p.m. PT (5:00 p.m. ET). To participate via telephone, please register here . Upon registration, all telephone participants will receive the dial-in number along with a unique PIN number that can be used to access the call. While not required, it is recommended you join 10 minutes prior to the event start. A live webcast of the fourth quarter and full-year 2023 financial results conference call will also be available on the investor relations section of the Company’s website at investor.htgc.com . An archived webcast replay will be available on the Company's website for at least 30 days following the conference call.
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 approximately $19 billion info@htgc.com , or call 650.289.3060.
Hercules, through its wholly owned subsidiary business, Hercules Adviser LLC (“Hercules Adviser”), also maintains an asset management business through which it manages investments for external parties (“Adviser Funds”). Hercules Adviser is registered as an investment adviser under the Investment Advisers Act of 1940.
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 6.25% Notes due 2033 (NYSE: HCXY).
Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We may use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and should not be relied upon in making any investment decision. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. While we cannot identify all such risks and uncertainties, we urge you to read the risks discussed in our Annual Report on Form 10-K and other materials that we publicly file with the Securities and Exchange Commission. Any forward-looking statements made in this press release are made only as of the date hereof. Hercules assumes no obligation to update any such statements in the future.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240215172753/en/
Michael Hara
mhara@htgc.com
Source: Hercules Capital, Inc.
What was Hercules Capital's total investment income in Q4 2023?
Hercules Capital reported a record total investment income of $122.6 million in Q4 2023, marking a 22.4% increase year-over-year.
What was the net investment income for Hercules Capital in Q4 2023?
Hercules Capital recorded a net investment income of $86.0 million, or $0.56 per share, in Q4 2023, reflecting a 38.5% increase year-over-year.
Did Hercules Capital announce any supplemental cash distribution for 2024?
Yes, Hercules Capital announced a new supplemental cash distribution for 2024 of $0.32 per share, payable over four quarters.
How much liquidity did Hercules Capital have as of year-end Q4 2023?
Hercules Capital had over $1.0 billion of available liquidity as of year-end Q4 2023.
What was the percentage increase in assets under management for Hercules Capital year-over-year?
Hercules Capital reported an increase of 15.3% year-over-year in assets under management, reaching approximately $4.2 billion.
