Press Releases

View printer-friendly version
<< Back
July 27, 2021

Horizon Technology Finance Announces Second Quarter 2021 Financial Results

- Net Investment Income per Share of $0.31; NAV per Share of $11.20 -
- Debt Portfolio Yield of 14.7% -
- Declares Monthly Distributions of $0.10 per Share through December -
- Grew Portfolio Quarter-over-Quarter to $404 Million -

FARMINGTON, Conn., July 27, 2021 /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, 2021.

Second Quarter 2021 Highlights

  • Net investment income ("NII") of $6.1 million, or $0.31 per share, compared to $6.7 million, or $0.40 per share for the prior-year period
  • Total investment portfolio of $404.1 million as of June 30, 2021
  • Net asset value of $224.3 million, or $11.20 per share, as of June 30, 2021
  • Annualized portfolio yield on debt investments of 14.7% for the quarter
  • Horizon funded nine loans totaling $67.3 million for a total of $99.3 million of loans funded through Horizon's advisor's, Horizon Technology Finance Management's ("HTFM"), platform
  • Raised total net proceeds of approximately $5.8 million with "at-the-market" ("ATM") offering program
  • Experienced liquidity events from five portfolio companies
  • Cash of $39.8 million and credit facility capacity of $159.3 million as of June 30, 2021
  • Held portfolio of warrant and equity positions in 71 companies as of June 30, 2021
  • Undistributed spillover income of $0.34 per share as of June 30, 2021
  • Redeemed $37.4 million of 6.250% 2022 Notes
  • Subsequent to quarter end, declared distributions of $0.10 per share payable in October, November and December 2021

"We are pleased with our second quarter performance, as we passed the $400 million milestone in portfolio size and generated net investment income of $0.31 per share, which exceeded our second quarter distributions to shareholders," said Robert D. Pomeroy, Jr., Chairman and Chief Executive Officer of Horizon. "Bolstered by our strong brand and the ability to partner with the origination capacity from HTFM's new investment vehicle, the Company originated over $67 million of new venture loans, alongside $32 million in investments by HTFM's vehicle, leading to further portfolio growth and diversification for Horizon.  At the same time, Horizon completed five portfolio exits, helping to produce one of the industry's highest debt portfolio yields of nearly 15% - all a testament to HTFM's predictive pricing strategy."

"We also continued to maintain a solid portfolio credit profile, ending the quarter with no 1-rated loans and no loans on non-accrual," continued Mr. Pomeroy.  "Looking towards the second half of the year, we believe demand for venture debt will remain robust, and with Horizon's record committed backlog, deep pipeline and ample capacity, Horizon is well positioned to continue growing and deliver attractive returns to its shareholders." 

Second Quarter 2021 Operating Results

Total investment income for the quarter ended June 30, 2021 was $13.5 million, comparable with the quarter ended June 30, 2020, primarily due to growth in interest income on investments resulting from an increase in the average size of the debt investment portfolio and offset by lower fee income earned on prepayments.

The Company's dollar-weighted annualized yield on average debt investments for the quarter ended June 30, 2021 and 2020 was 14.7% and 16.9%, respectively.  The Company calculates the dollar-weighted annualized yield on average debt investments for any period measured as (1) total investment income (excluding dividend income) during the period divided by (2) the average of the fair value of debt investments outstanding on (a) the last day of the calendar month immediately preceding the first day of the period and (b) the last day of each calendar month during the period. The dollar-weighted annualized yield on average debt investments is higher than what investors will realize because it does not reflect expenses or any sales load paid by investors.

Total expenses for the quarter ended June 30, 2021 were $7.3 million, compared to $6.8 million for the quarter ended June 30, 2020.  The increase was primarily due to a $0.4 million increase in interest expense and a $0.2 million increase in the base management fee.

Net investment income for the quarter ended June 30, 2021 was $6.1 million, or $0.31 per share, compared to $6.7 million, or $0.40 per share, for the quarter ended June 30, 2020.

For the quarter ended June 30, 2021, net realized gain on investments was $1.5 million, or $0.08 per share, compared to a net realized loss on investments of $0.7 million, or $0.04 per share, for the quarter ended June 30, 2020. For the quarter ended June 30, 2021, net realized loss on extinguishment of debt was $0.4 million, or $0.02 per share.

For the quarter ended June 30, 2021, net unrealized depreciation on investments was $0.5 million, or $0.02 per share, compared to net unrealized appreciation on investments of $1.9 million, or $0.11 per share, for the prior-year period.

Portfolio Summary and Investment Activity

As of June 30, 2021, the Company's debt portfolio consisted of 39 secured loans with an aggregate fair value of $385.8 million. In addition, the Company's total warrant, equity and other investments in 73 portfolio companies had an aggregate fair value of $18.3 million.  Total portfolio investment activity for the three and six months ended June 30, 2021 and 2020 was as follows:

($ in thousands)

For the Three Months Ended June 30,

For the Six Months Ended June 30,


2021

2020

2021

2020

Beginning portfolio

$              380,023

$              334,506

$        352,545

$              319,551






New debt investments

67,285

54,908

118,660

105,554






Principal payments received on investments

(3,415)

(4,938)

(8,082)

(13,925)






Early pay-offs

(38,125)

(30,296)

(57,590)

(47,243)






Accretion of debt investment fees

1,087

1,222

2,170

2,287






New debt investment fees

(889)

(633)

(1,370)

(1,213)






Warrants received in settlement of fee income

978

978






Proceeds from sale of investments

(2,859)

(576)

(3,732)

(6,256)






Dividend income from controlled affiliate investment

(312)

118






Net realized gain (loss) on investments

1,492

(725)

(3,226)

2,766






Net unrealized (depreciation) appreciation on investments

(478)

1,944

4,746

(6,539)






Other

(198)

(198)






Ending portfolio

$              404,121

$              355,880

$       404,121

$              355,880

 

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, 2021, March 31, 2021 and December 31, 2020:

($ in thousands)

June 30, 2021


 

March 31, 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

3

$       44,286

11.5%


6

$       71,946

19.9%


6

$       77,950

23.4%

3

32

318,448

82.5%


29

283,989

78.5%


24

240,933

72.2%

2

4

23,080

6.0%


2

5,819

1.6%


3

12,875

3.9%

1

--

--

--


--

--

--


1

1,737

0.5%

Total

39

$     385,814

100.0%


37

$     361,754

100.0%


34

$     333,495

100.0%

As of June 30, 2021, Horizon's loan portfolio had a weighted average credit rating of 3.1, compared to 3.2 as of March 31, 2021 and 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 June 30, 2021 and March 31, 2021, there were no debt investments with an internal credit rating of 1.  As of December 31, 2020, there was one debt investment with an internal credit rating of 1, with a cost of $6.8 million and a fair value of $1.7 million

Liquidity and Capital Resources

As of June 30, 2021, the Company had $83.3 million in available liquidity, consisting of $39.8 million in cash and money market funds, and $43.5 million in funds available under existing credit facility commitments.

As of June 30, 2021, there was $15.0 million in outstanding principal balance under the $125.0 million revolving credit facility ("Key Facility").  The Key Facility allows for an increase in the total loan commitment up to an aggregate commitment of $150.0 million. There can be no assurance that any additional lenders will make any commitments under the Key Facility.

Additionally, as of June 30, 2021, there was $50.8 million in outstanding principal balance under the $100 million senior secured debt facility with a large U.S.-based insurance company at an interest rate of 4.60%.

Horizon Funding Trust 2019-1, a wholly-owned subsidiary of Horizon, previously issued $100.0 million of Asset-Backed Notes (the "Notes") rated A+(sf) by Morningstar Credit Ratings, LLC, and backed by $148.9 million of secured loans originated by Horizon.  The Notes bear interest at a fixed interest rate of 4.21% per annum and have a stated maturity date of September 15, 2027.   As of June 30, 2021, the Notes had an outstanding principal balance of $100.0 million.

During the three months ended June 30, 2021, the Company sold 361,308 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 $5.8 million, including $0.2 million of offering expenses, from these sales.

As of June 30, 2021, the Company's debt to equity leverage ratio was 100%, within the Company's 80-120% targeted leverage range.  The asset coverage ratio for borrowed amounts was 200%.

Liquidity Events

During the quarter ended June 30, 2021, Horizon experienced liquidity events from five 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, Kate Farms, Inc. prepaid its outstanding principal balance of $15.0 million on its venture loan, plus interest, end-of-term payment and prepayment fee. Horizon continues to hold warrants in the company.

In April, xAD, Inc. prepaid its outstanding principal balance of $8.1 million on its venture loan, plus interest, end-of-term payment and prepayment fee. Horizon continues to hold warrants in the company.

In June, Horizon received proceeds of $1.2 million from the sale of its equity in Lightspeed POS Inc. (NYSE: LSPD).

In June, Keypath Education Holdings, Inc. prepaid its outstanding principal balance of $10.0 million on its venture loan, plus interest, end-of-term payment and prepayment fee.  Horizon also received proceeds totaling $1.6 million from the redemption of warrants it held in the company. 

In June, Celsion Corporation prepaid its outstanding principal balance of $5.0 million on its venture loan, plus interest, end-of-term payment and prepayment fee. Horizon continues to hold warrants in the company.

Net Asset Value

At June 30, 2021, the Company's net assets were $224.3 million, or $11.20 per share, compared to $201.2 million, or $11.64 per share, as of June 30, 2020, and $212.6 million, or $11.02 per share, as of December 31, 2020

For the quarter ended June 30, 2021, net increase in net assets resulting from operations was $6.7 million, or $0.34 per share, compared to $7.9 million, or $0.47 per share, for the quarter ended June 30, 2020.

Stock Repurchase Program

On April 23, 2021, the Company's board of directors extended the Company's previously authorized stock repurchase program until the earlier of June 30, 2022 or the repurchase of $5.0 million of the Company's common stock. During the quarter ended June 30, 2021, the Company did not repurchase any shares of its common stock. From the inception of the stock repurchase program through June 30, 2021, the Company has repurchased 167,465 shares of its common stock at an average price of $11.22 on the open market at a total cost of $1.9 million.

Recent Developments

On July 1, 2021, the Company funded a $2.5 million debt investment to a new portfolio company, Lyrical Foods, Inc., a leading creator of plant-based foods.

On July 1, 2021, the Company funded a $0.4 million debt investment to HESP LLC, its wholly-owned subsidiary.

On July 2, 2021, the Company funded a $5.0 million debt investment to a new portfolio company, Reputation Institute, Inc., a developer of an enterprise software platform to help businesses better understand, improve and protect their corporate reputation.

On July 23, 2021, Revinate, Inc. prepaid its outstanding principal balance of $10.0 million on its venture loan, plus interest, end-of-term payment and prepayment fee. The Company continues to hold warrants in Revinate, Inc.

Monthly Distributions Declared in Third Quarter 2021

On July 23, 2021, the Company's board of directors declared monthly distributions of $0.10 per share payable in each of October, November and December 2021.  The following table shows these monthly distributions, which total $0.30 per share:

Monthly Distributions

Ex-Dividend Date

Record Date

Payment Date

Amount per Share

September 16, 2021

September 17, 2021

October 15, 2021

$0.10

October 18, 2021

October 19, 2021

November 16, 2021

$0.10

November 17, 2021

November 18, 2021

December 15, 2021

$0.10



Total:

$0.30

After paying distributions of $0.30 per share and earning net investment income of $0.31 per share for the quarter, the Company's undistributed spillover income as of June 30, 2021 was $0.34 per share. Spillover income includes any ordinary income and net capital gains from the preceding tax years that were not distributed during such tax years.

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, July 28, 2021, 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 13720733.  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 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 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
(Dollars in thousands, except share and per share data)



June 30,


December 31,


2021


2020



(unaudited)




Assets





Non-affiliate investments at fair value (cost of $393,365 and $343,158, respectively)

$       399,935


$     343,498


Non-controlled affiliate investments at fair value (cost of $3,477 and $6,854, respectively)

2,686


7,547


Controlled affiliate investments at fair value (cost of $1,500)

1,500


1,500


Total investments at fair value (cost of $398,342 and $351,512, respectively)

404,121


352,545


Cash

26,737


19,502


Investments in money market funds

13,096


27,199


Restricted investments in money market funds

1,502


1,057


Interest receivable

6,099


4,946


Other assets

2,563


1,908


Total assets

$       454,118


$     407,157







Liabilities





Borrowings

$       220,202


$     185,819


Distributions payable

6,007


5,786


Base management fee payable

634


563


Incentive fee payable

1,528


975


Other accrued expenses

1,483


1,417


Total liabilities

229,854


194,560







Commitments and contingencies










Net assets





Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of June 30, 2021 and December 31, 2020



Common stock, par value $0.001 per share, 100,000,000 shares authorized, 20,191,706 and 19,453,821 shares issued and 20,024,241 and 19,286,356 shares outstanding as of June 30, 2021 and December 31, 2020, respectively

20


19


Paid-in capital in excess of par

282,136


271,287


Distributable earnings

(57,892)


(58,709)


Total net assets

224,264


212,597


Total liabilities and net assets

$       454,118


$    407,157


Net asset value per common share

$           11.20


$        11.02








 

 

Horizon Technology Finance Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
 (Dollars in thousands, except share and per share data)



For the Three Months Ended


For the Six Months Ended



June 30,


June 30,



2021


2020


2021


2020


Investment income









Interest income on investments









Interest income on non-affiliate investments

$        12,420


$       11,918


$         24,909


$        21,312


Interest income on affiliate investments

62


176


235


357


Total interest income on investments

12,482


12,094


25,144


21,669


Fee income









Prepayment fee income on non-affiliate investments

913


711


1,256


756


Amendment fee income on non-affiliate investments

43


1,028


236


1,064


Fee income on non-affiliate investments

51



56


24


Fee income on affiliate investments


3


12


7


Total fee income

1,007


1,742


1,560


1,851


Dividend (expense) income









Dividend (expense) income on controlled affiliate investments


(312)



118


Total dividend (expense) income


(312)



118


Total investment income

13,489


13,524


26,704


23,638


Expenses









Interest expense

2,954


2,561


5,669


4,723


Base management fee

1,829


1,668


3,598


3,249


Performance based incentive fee

1,528


1,676


3,029


2,747


Administrative fee

289


254


578


507


Professional fees

280


346


789


848


General and administrative

442


313


808


575


Total expenses

7,322


6,818


14,471


12,649


Net investment income before excise tax

6,167


6,706


12,233


10,989


Provision for excise tax

56



118



Net investment income

6,111


6,706


12,115


10,989


Net realized and unrealized (loss) gain









Net realized gain (loss) on non-affiliate investments

1,492


(701)


(3,716)


2,778


Net realized loss on controlled affiliate investments


(24)



(12)


Net realized gain (loss) on investments

1,492


(725)


(3,716)


2,766


Net realized loss on extinguishment of debt

(395)



(395)



Net realized and unrealized gain (loss)

1,097


(725)


(4,111)


2,766


Net unrealized (depreciation) appreciation on non-affiliate investments

122


2,985


6,385


(4,806)


Net unrealized depreciation on non-controlled affiliate investments

(600)


(932)


(1,639)


(1,475)


Net unrealized depreciation on controlled affiliate investments


(109)



(258)


Net unrealized (depreciation) appreciation on investments

(478)


1,944


4,746


(6,539)


Net realized and unrealized (loss) gain

619


1,219


635


(3,773)


Net increase in net assets resulting from operations

$            6,730


$             7,925


$         12,750


$          7,216


Net investment income per common share

$              0.31


$               0.40


$             0.62


$            0.65


Net increase in net assets per common share

$              0.34


$               0.47


$             0.65


$            0.43


Distributions declared per share

$              0.30


$               0.30


$             0.60


$            0.65


Weighted average shares outstanding

19,834,050


16,943,155


19,601,607


16,829,821


 

 

 

Cision View original content:https://www.prnewswire.com/news-releases/horizon-technology-finance-announces-second-quarter-2021-financial-results-301342469.html

SOURCE Horizon Technology Finance Corporation

Horizon Technology Finance
312 Farmington Avenue
Farmington, CT
06032

Jerry Michaud
(703) 956-3504
jerry@horizontechfinance.com

Horizon Technology Finance
349 Main Street
Suite 203
Pleasanton, CA
94566

Kevin May
(925) 935-2924
kevin@horizontechfinance.com

Horizon Technology Finance
1818 Library Street
Suite 500
Reston, VA
20190

Todd McDonald
(703) 282-3718
todd@horizontechfinance.com
Nasdaq SBIA Crossroads Venture Group NYSE
HORIZON TECHNOLOGY FINANCE
A Life Sciences & Technology Venture Lending Partner

Connecticut / California / Virginia | info@horizontechfinance.com | Privacy Policy | Site Map

Loans made or arranged in California pursuant to a California Financing Law license.

Copyright © 2021 Horizon Technology Finance Management LLC. All rights reserved.

website by DIANA STUTZ DESIGN