HRZN - Earnings call transcript Q1 2018 | Horizon Technology Finance Corporation

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Operator

Good morning and welcome to Horizon Technology Finance’s first quarter 2017 conference call. Today’s call is being recorded. All lines have been placed on mute.

We will conduct a question and answer session after the opening remarks. Instructions will follow at that time. to for call of introductions Harbor like Bacon to the now statement. Horizon of and would turn over the Megan Safe I the reading ahead. go Please

Megan Bacon

XXXX Horizon Thank Rob are Dan and Gerry Finance you, Trolio, to Officer; Chairman Representing the Executive President, and first company welcome Pomeroy, quarter Michaud, conference Chief today Chief call. the Officer. Technology and Financial

website press to at release I begin, that out we on point the would available horizontechfinance.com. like company’s Form and QX Before XX-Q are earnings the

I Harbor Now the statement. Safe will following read

of statements, forward-looking At Pomeroy. and company statements The events future and call the the December this uncertainties Finance the similar XXXX. detailed to During ended Rob to could with in results company’s or conditions. regard will certain basis forward-looking the would identify forward-looking statements. forward-looking filings actual the of discussion revise over Securities time, These as of conference future cause from the such update a forward-looking these intends, like the result undertakes I are anticipates, expressions with Risk statements no on otherwise. predicting statements inherent those Certain or and in new year this whether a are make obligation believes, any factors call, Horizon Factor are to the expects, the results differ Words Commission, subject Form company. information, used XX-K as in Technology including XX, statements, company’s in to material or projected to to performance including future for these Exchange some turn to factors

Robert Pomeroy

and quarter morning Coming strongest us thank off had and morning younger we with stronger beautiful for origination joining history, New portfolio than England. has this in time. our XXXX Horizon larger, you some entered in a the Good on in all

continue to as discuss on aggressively looking we Today any earn maintain and will always, important our pipeline, high our our are manage portfolio, goals. underperforming continually goals build loans, yields. to forward, progress Our strong these

net per of earned driven we funded fourth is quarter, increased $X.XX quarter investment fourth the an million or our the $X.X in by quarter. This which income portfolio largely For late improvement from earnings our share.

portfolio the with consistent debt our XX.X% yield yields, the BDCs. of are quarter among for Our for highest was which historical

high the quarter During events to income portfolio portfolio, had received earnings success fee the portfolio our The income of and our company’s its accelerated we loan Notably, normal in payment fee income receipt highlight XXXX. upon and after from long a receipt debt addition portfolio. of of Horizon we interest, company our of the in yield success power our to accelerated success from fee the repaid sale. a earned its of

in companies. resulted a amortization For $XX to million in we million about in portfolio prepayments, million. loans $XX quarter, three This of the decrease and $XX totaling normal to our due funded refinances,

call, As pace quarter. we first March the prepayments in slowed on our mentioned of conference the

accelerated compared a saw portfolio income We events be The size supporting historic levels. expect for present prepayments levels than and in to power more XXXX. more will levels XXXX’s to from more a XXXX in at to we normalized stable earnings with opportunities continue higher liquidity while

first and impacted portfolio standards. our opportunities approving did pursuing our growth many the in selectivity new opportunities Our meet also during as not quarter

borrowers result approved did that meet commitments. the transaction information milestones one terminated following open as diligence because quarter, additional not the the the during new to Also, three the uncovered in been not we to of allow had them commitments established the quarter a access During and awarded process. due was

paying in entering into attracting consummating all their involves loans. dynamic to down the them borrowers sales in This the management. is during which Horizon’s new demonstrates portfolio capital or and quarter assist resulted of that of active our In addition, activity Horizon’s we worked collaborations, off businesses, companies and/or important paying with first

loans which non-accruals non-accrual did Corporation an we on Signal our no had been Digital non-accrual. with on no new and resolved for have quarter, ended loans increase several the We During loan their the quarters. quarter We quarter the due in such to in high during by a but a performance. two-rated concern, is two-rated refinancing percentage or Any in repayment stress full. of are resolved loans historically performance, loan improved

entire with these will, involved our We be managing accounts. actively as in portfolio,

spillover maintain over and investment this always in $X.XX our We our distributions further portfolio build at our continued time. the maintain practice been as through this to by we a a year. of year. level level throughout our distributions of per covered at level has have $X.XX support We month income can distribution be currently net September to set look It that the

During the reduced and cap the by $XXX,XXX. fee fee first quarter, deferral incentive the mechanism

deferral of fees call, recoupment during As advisor’s any previously as fee the and waive deferred announced March on advisor look period, be balance of the these mechanism a back full year the conference the impactful upon the XXXX. for the incentive of agreed could XX-quarter to calendar cap the has of XXXX. result deferred waiver Based fees of

looking performance improve increased allowing returns The and ratio we increased provides asset to execution develop for extended and to recently to platform. future. our potential their continuing legislation our ways BDCs our Keybanc coverage and recently in to are and facility further the efficiency overall lower will our to shareholders. the We improve Finally, work passed be for

to reviewing and to will will the over Our now efforts this market the condition. and update by operating Dan our detail turn presented performance financial currently Gerry? you legislation. call opportunities who development who I will on business our Gerry, environment, is then board and

Gerald Michaud

morning Good everyone. Rob. Thanks

we new quarter, million million $XX loan closed floating originated new loans totaling and first $X.X three in the rate During commitments.

XXXX portfolio of to remain continued when maximize portfolio last inception, achieve We our what the an respect call, to of yields we prepayment yield ETPs for on-boarding for the returns with of of strong prepayment strategically new quarter significantly and with XX.X%. portfolios one as transactions and transactions funded has portfolio. and a ETPs. order structured with quarter’s on Since exit fees and added QX debt prepayment consistently yield the to priced in with XX.X% we QX replaced our potential and on-boarding fees ability in fees loan average our said all lower generated the industry Consistent as yields had This higher investments with loan we with the highest reflects had strong XXXX disciplined we ETPs of XX.X% consistently maintain pricing. Horizon yielding and and to companies investments portfolio BDC in loan aging that accretive

new investment a prepayment was potential as we have had an important loan entering down stream Included and Tote in a well enhanced originated and interest million, fee As loans transactions a their more in result, We pay with one portfolio $X portfolio relationship. upsized of we portfolio It the pleased ETP in in the held as of now their that performing a predictable income periods. our companies, in companies, XX end in conjunction to newly quarter, Software, warrant technology large million. we fair interest-only from high strategic $X.X our events insurance At quarter Titan totaling with into is Edge generation to million and million made of Le Pharmaceuticals liquidity technology an Digital it. health an we company of providing is and portfolio $XX.X from from investment during and value the were a one our healthcare portfolio experienced have $X.X products market. Health two the Signal, additional companies equity companies, next with positions to

transactions end We term and also of quarter. our Lantos backlog full of awarded a and Subsequent and committed prepayment payment. totaling with fees three the million Partial $XX.X and refinanced awarded million. and totaled transactions million $XX refinanced in our the million. the were $XX.X we to the $X.X end prepayment quarter, totaled of the end quarter, loan At reset new

a have million. awarded of backlog of and over to XX $XXX we today, more of $XX million a pipeline companies than opportunities of As and new committed

for money XXXX, VC with quarter. highest the capital a quarter billion up now to remain to than the substantially fourth venture in invested investment year was entire from decade in and investments The the according $XX Book. QX the strong Turning total first in the environment, Pitch more VC in invested

the over a at trend transactions, more being driven of XX% investment capital VC each into dollars. the companies, see fewer of going to valued total unicorn billion by continue deployed We into XX

due the was also and pace to three-year to seed exited continued year. deals early the funding and VC investment down after activity billion exit larger period We $X.X XXX quarter, VC matching back in quarter the year the $X larger stage late same was in in quarter, high signaling once market completed first exits in in into IPO There approximately the a funds. but stage signs first to again see IPO a stage seek trailing across as a both IPO corporations in tax from IPOs of fundraising launched stronger IPO activity for the science DocuSign is the of more successful There having QX, laws. acquisitions of a potential changes expected last cash interest are companies. heading a quarter, balance XXXX. and available filings Dropbox successful of increased IPO the SmartSheet recent and week. forward VC-backed number last impact their expansion QX ago. billion are funding life of for first opportunities trended to increase tech in going and VCs

core our vTv remained that meet the activity. in azeliragon, Part therapy, first the see failed significant the companies, its and markets, deal of Alzheimer’s end two endpoints. primary its market IPO science portfolio active increased first to quarter as experienced well. one flow high trial public the science we Turning to and life quality X announced now of to to A continue Therapeutics, life an biotech Horizon’s activity Subsequent of quarter, for Part Horizon’s

result, a trial vTv it for announced its azeliragon. discontinue will As

evaluate diabetes of develop. vTv has Merit is II companies, partnership it with technology device other reminder, as as of a a portfolio medical that Phase ongoing subsequent strategic Medical trials to continuing the end one well quarter, announced the our to for As also Also and clinical Medical, Systems. platform NinePoint two

including of fee potential Medical. off Horizon As to transaction, the and to continues paid loan Horizon, a and a fee result success hold a prepayment ETP. NinePoint NinePoint a warrant its in

addiction. Another with life European to FDA-approved treat drug a into transaction companies, Titan used a one is opioid of which for company entered drug Probuphine, product, collaboration portfolio our Pharmaceuticals, Titan’s science

paid of the result the loan Horizon’s during $X.X to transaction, quarter. was Titan to a down As million

announced with Mylan In and a $XX milestone science company, another transaction life payment royalty additional and Horizon upfront collaboration included million which Revance addition, portfolio Therapeutics, Pharmaceuticals a payments.

digital reminder, still warrants a own our diseases. uses In Horizon’s of healthcare healthcare to in is growing but holds Revance. patients information VC recently awarded has great Revance data a behavioral that we a the market sector to portfolio, company been loan Healthcare space. million a deal a treat with transaction technology entering with Horizon repaid As capital for $X.X were big

Regarding the artificial active. overall sector companies by Internet broader investing with Money very was raised, during cyber security VC technology VC remains intelligence, billion Tree. and to This internet, market companies. sector, funding $X quarter represented the largest again the the robust according in led

opportunities are companies. VCs result technology for transactions investments We future is than for revenue rather equity seeing more later looking a technology which in of mature exits partially stage generating

venture our some see in landscape. all sciences, quality markets, debt competition attractive the first quarter. continue creating we There of in the the experienced to yields. investment we many was opportunities Now with on-boarding pressure, quarter life is with environment to consistent The entrenched but fourth particularly what pricing competitive in

some the as strength debt of for previously, saw the life our opportunities market well and noted exits. XXXX as creating for science As competition at XXXX, IPO into end

IPO very Based of debt to source companies. continued reliable or on not VC-backed the market QX, exits capital opportunities VC-backed it provide and to we While financing strong still has improvement, of signs VC in is investment a companies. this shown for expect

focus to pipeline Dan. through loan capitalize activity position on enhanced positions. will upside update, the attractive while With remain will maintaining investment quality With to turn warrant our of in strong through As year, I pricing we discipline we exposure and that call opportunities. equity progress achieve and on-boarding to now yields in venture order over to strong on a continue platform, we our the building

Daniel Trolio

larger income Thanks Gerry, increase million was quarter of I higher of will interest quarter. our on the investments results and first to good the The the compared ’XX. now Rise for quarter portfolio. first briefly morning to total million ’XX investment discuss $X.X income as size due first loan of in for of financial $X for the everyone. our given earned average

in performance. the on-boarding quarter consistent to XX.X% quarter, For we first yields achieved of compared with the XX.X% fourth our and historical

last first to first XX.X% year’s XX.X% quarter Our debt portfolio for the of for ’XX was compared quarter. yield

Turning was first management to expense increase our was due $X.X increase year compared primarily million in of million over quarter in year This change ’XX. compared in the an in expenses, $X.X the to million increased year-over-year average change $X.X This compared to with average total million to portfolio. expenses year million quarter with primarily fee due our for the period. borrowings. prior size $X were an to Interest million $X.X of prior to the first period. the Base $X in increased investment year

share prior share paying for per the the In $X.XX and Our $X.XX $XX.X was investment principal other exceeding To slight as and decrease income addition, first mechanism the first income of principal million, for our share income. $XX.XX was agreement. per and per incentive under fair was portfolio compared $XX.X equity million the $X.XX and debt in investments spillover an $X.X was a expense $XXX,XXX of XX companies expense in aggregate per of originations portfolio quarter compared for and with as cap distributions share $XX.XX first million, of quarter in fourth of with value $X.XX share year. of investment monthly which ended the fee our payments company’s new quarter totaled March quarter fair an of investment XX per quarter, by and in with fair Net per the quarter. This of for quarter, $X.X in scheduled aggregate XX $XX companies as first This to net the of net in investment to fee distributions of value with four the prepayments. value positions million resulted last in with NAV March includes share a After in decrease per and subject deferral value. summarize first was share management and reduced our offset activity for quarter earning $X.XX in undistributed additional the fair $XXX investment ’XX of We income portfolio $X.XX ’XX $XXX were which our earning an companies the due XX million, aggregate million, million. warrants an investments to of incentive

interest income we when amount are structured floating believe well of environment in discussed our rates and outstanding past, the coupons that, almost Considering we expand expanding debt As investments the net interest bear Horizon rise. with XXX% rates of that benefit margin. positioned principal is increase both from interest at and rate increasing to to a rising

funds liquidity, Looking under facility. credit and This available at our million $XX includes in quarter Horizon $XX in liquidity. million cash in with ended available existing $XX million our the

facility As of outstanding credit March we Keybanc. had million XX, under $XX our with

April date period extend XXXX. the X, April also the X facility XXXX the maturity, and extends to credit mentioned, draw capitalize us opportunities a strengthens and in support beneficial on with partners. forward allow and to compelling continuing manner. appreciate our high our Horizon We our to look relationship to income grow syndicate yield amended to aggregate Keybanc on revolving and Rob facility not to and the it our to $XXX net and maturity only million X, and amended portfolio ongoing April As will disciplined we Key’s the increase with period that commitments The in maintain confidence Key investment ability

XX, or $X.X our of approved extended size cost the prepayments, XX, to repurchase on authorized normal earlier common March plan our our of repurchased program amortization room June increase the total share a XXXX repurchase to our XXXX. was cash expect the share XXXX, the flow have of September of within $X ratio our board target Based portfolio XX, April of million repurchase still and leverage shares in over first to cash of the ratio we slightly the current at X.X Since portfolio of our until the As have company’s continue or position, stock. previously in On leverage and we of stock was maintain XXX,XXX we X. from million. common

conference remarks. to concludes happy during We’ll note take this questions to have of to our plan second XXXX week that Lastly, we XX. time. to at may be July I’d you report results hold like This the quarter opening next call our

Operator

[Operator Leslie comes instructions] of Our James. from first Vandegrift question Raymond

line open. Your is

Leslie Vandegrift

Thank my you good taking for morning. Hi, questions.

Just a What Digital exit was on quick question on the there? beginning. that Signal. I the missed numbers the in

Gerald Michaud

at the by of amount of acquisition Hang the time assets on the loan the loan one purchasing by was $X.X was The sec. about repaid million. The StereoVision.

Leslie Vandegrift

there but mediri, color on small, great. Okay, it’s be non-accrual, know little and then new of would a the just bit I

Daniel Trolio

not was mediri on non-accrual. Leslie,

Leslie Vandegrift

Oh, okay.

Daniel Trolio

new We non-accrual. ended non-accruals loans no the on with and no quarter

Leslie Vandegrift

right. just all that you any the the the the in board you with or earlier the changes facility rules, limiting mentioned early credit know that leverage that covenants I any April, at in in covenants leverage but reviewing re-did does opportunities call it? Okay, all new is have to

Daniel Trolio

it we basically Keybanc it period talking the was the to December, with back and and in not. extend started period. The No, does amendment, revolving maturity

Leslie Vandegrift

Okay.

you competition concentrated lot were heavier been etc. somewhere, space, it has the seeing so in there major from? drivers points up than same Where year, but the life was period. is little in doing basis coming up are over other basis you LIBOR bit this versus about on-boarding decline and XXX compression On that in a itself competition know venture little you but that quarter, the for the have over talked I but of of quarter, a has point XX.X%, gone where healthcare, the know last yield that? sciences money I yield a XXX Is

Gerald Michaud

of much lot a know, you the highly venture you exits because refinances a basis, is things upon prepayment a our portfolio, obviously our--or do do get in like actually debt quarter dependent through of yield that. in well churn quarter you the portfolio get--as so and and Yes, on activity of to portion

doing in, impacted I about focused think life in and That in investing deals sensitive. blended the price of the we bit year, parts and what higher we’ve we with think very think be bell and we’re this remind floating talked we overall, rate, that, been on-boarding on I technology are little strategic everything and I as and better we yield, portfolio, on alliance up venture I our the as on-boarding competitive I that still would spaces that curve going really a obviously do as said, them. yields does--those have existing so go we a actually looking haven’t just to much. with float have nice and the with up science more get become far is last rates investors, you bit interested think strategically those that are rates transactions more little on so fact more a been opportunities for for But can quality

Leslie Vandegrift

so rather mean release more On drivers in the predictable. Okay. least, you think that, is you steady, Does vintages, newer and more the think about the is flow? and that originations prepayment just to originations more $XX first at discussed going million the the talked since that that there, are predictable, income be portfolio or the quarter you press the

Gerald Michaud

prepayments Certainly will.

are debt, number to favorable. in of equity has timing. those before in that are term the so relying as issues can our to of terms happening, our have something do that so impact. we and at control say in a on and pipeline, that’s timing is which to we’re originations, awarded opportunities will financings not raises oftentimes equity looking Many our commitments quite subject even much get of sheets our are In put What I been those done lot with

to will opportunities quarter they're didn’t of kinds strategic of seeing that the the to so our we’re I second goal and of We’re to in, there because would the that, looking we into a guess, I some goal, first narrower the be strategic fit did mention incoming refinance. of--or opportunities we saw actually Rob in that. kicked finance plenty curb lot markets terms in of of they and that companies

be to on that. patient going We’re

focused we think for a good be we’re I X, be to pretty same right have X.X it the able at the to is kind to about finding in liquidity, last of leverage to are portfolio. quarter, the transactions very was we but continue on to position invest, so Our going

Leslie Vandegrift

if did materially leverage? Would up those parameters turn extra change end getting that you of

Gerald Michaud

allow a No, bit be competitive actually quality on that I more just to us do deals and higher think that little pricing. would

Leslie Vandegrift

non-accrual the it sorry, mediri Is but was quarter. is note, in then? then and just of through marked small Q that it’s is - the my Okay, that. I last first as term flip two as question just Again, did that. loans, on source error, the marked an That

Daniel Trolio

an Yes, that error. must be

Leslie Vandegrift

my right. questions Thank this morning. all you Okay, answering for

Operator

Wells Our comes Bock Jonathan from next of question Fargo Securities.

is Your line open.

Jonathan Bock

up were--let’s greatly well. X leverage issuance? just for see that appreciate if much to good question. you of you morning, happy questions. grow X, also any do base without brings the to the Rob, consideration Dan, capacity analysis portfolio the have constraint approach into Hi, the of exist. and additional say This borrowing to thank forget one-to-one and doesn’t amendments my taking you’re ballpark. to the equity it Gentlemen, and your as to Just just you current current Gerry, putting a let’s a How up imagine

Gerald Michaud

$XX to million Yes, could about portfolio grow million net. $XX the we

Jonathan Bock

basis? further you’ll what or types you mentioned if an there’s any additional--number turn does to we’ll actually that to that covenants it. to intention, same do separate assets change? a niches stay it. strategy focus the to know do Do of additional the X, Rob, of bunch then bonds the Getting choose relate X have etc., statutory as the and X questions investment what to ratings the it, you can in an of that how have diversify, a you leverage, right? so I risks reviewing to or it different different tied it few leverage with a to as on Okay, go-forward than you and your to board X for agencies, were approval the you is continue Rob, on much getting Is relate do one, absolve that using is feel

Robert Pomeroy

answer the on the only so margin. slightly Yes, is

Gerry think is answer I previous the question, better the of more transactions. higher said do his it we looking be would quality, that to to in

this the a to that facility no so to As in is XXXX, go a somewhere not intention with X company strategy--there entered where world credit currently reminder, leverage a X we as was we’re competing. public

We’re low to to participations leads. a middle not very going rate go in buying market

Jonathan Bock

makes Sure, were risk, focus it I is, yield question everything, that perhaps sense. more see that could what just to see all, would The style in know of on-boarding to you you within senior you be Gerry, because the lower put on today’s so--and able you stack your the extent the venture environment? going in that would loans on kind be wheelhouse,

Gerald Michaud

that. company, to that, Yes, willing it help for and looking of but X things the a--not leverage. it’s at of discussing to companies relative to articulate really quality leverage, a amount but have you look kind like a, the take things with you where exactly right they transactions Obviously the market you if to the our warrants that’s types of whether go also that can point, to Jonathan, good we of kind to pay that provide financings your are space, we of in honestly the there at life and advantage I question, are we so to greater X those now in just a strategy and leverage, having to we we science opportunity related really X that significant can terms board, of is can a our think in X

which greater also but from leverage, So higher somewhat can yes, higher--the you may up potential coverage. for get recover yield give you you the warrant some

one give we-- When me example. you Let

Jonathan Bock

And pushing this one an all get it. understanding I this appreciate to conceptual, is trying may-- of No road, what is Gerry, so down you just

Gerald Michaud

really a question of it’s timely. very course it’s and good Jonathan,

a with a before public. we in commitment. we was It So XXXX million did went deal $XX back PharmaSet

on lower have; leverage extremely up company were out in okay, to great interest Now, things today, ended given have million on been bit a we a I’m sheet up getting that, not what transaction sold the Horizon’s little put valuable. the and on else $XX being ended but rate and deals balance that commitment transaction. going the turned our being but tech than the a billion The for we be $XX warrant marketplace like may

So in opportunity to the have capable we those. in those of that where transactions of and done we we past look find that know are that would investors know things them, we kinds know an will them, us at are that to doing, invest we give the

Jonathan Bock

then at be So would of we that what hypothetical. just X mean Gerry, would that and another maybe X? looking would and be LX instead LX

Gerald Michaud

no. No,

Jonathan Bock

No, so or--? a higher, little

Gerald Michaud

matter not relative look kind go is competition of extent, kind expect risk. is this that. has venture pricing time, period leverage of I impact mean, doing. that it that is the that additional of wouldn’t to great, of market, and over sustained to to it how got, Yes, but think--in in, and I - be reality wouldn’t pricing perception least we’d still. There any coming The my at I no the I’ve don’t Jonathan, competitive lending both XX years, never seen the

Robert Pomeroy

book. on Not our

Gerald Michaud

Yes.

Jonathan Bock

Got it.

and investors, a is, fees tangible result fee if paid, So no to your an fee costs. that ability by leverage the current genesis. and to ensure have not our Gerry, to no, transactions, fall can interest you if occurs here’s base, grow something is we’ll gobbled point flow-through can senior is level bottom if Rob in, the some the you to me, like available, equity and telling in yielding, from line and there to it you utilize through you’re to quote-unquote, you spreads is the we at the the and/or and more what is over ROE left spread the lower or question are up so the of incremental assets in where world, adjusting incremental and/or there perhaps fee that yes, yes moving are that middle of down definitely that shareholders that NIM will shareholder to after a so there’s you’re--what incremental flows is of increase tight market stack? Jon, consider the spread In so a--that all point leverage, on as sounds invest or say a

Robert Pomeroy

Absolutely that is exactly what is considering, our board says. as is Gerry

at looking market opportunity, pricing the the We’re return. the structure,

feel this do advantageous for it’s we will shareholders. our We if

Gerald Michaud

real we’re Jonathan, would not strategy or on the add mean, that, we interesting which because--you you is know, just anything just because feel minute we have model of very our quickly I That’s one that, ago, one that. asked are is change we saw a and of in to like those a question companies. I’d to reasons a exactly--I strong position your very

middle We fighting market lender half and a are an things point every that. yield interest on and rate fees like for not

it big might of capture a in a your and we and of different that. model, it we will because knowledge different of think difference understanding, higher in consistently--you to use be able [indiscernible]. capture actually I we result out for that market away the dynamics a kind think base give your is a and still have get We with that been different very we a when in came a that, requires obviously you We’re which will fair very model, little a willing the amount and to of some that we different historically makes same kind I of a strategy bit but know, that quality, yields used different

Jonathan Bock

some safer you element problem over there’s keeping and - Rob. shareholders, this there the shareholders, and industry the for returns left repeat that also this given the this but how is increasing, would large. incremental case, in incremental in yield, external case of disappointment for because leverage to manager, be you of upside, they and believe on is context set Gerry what go to, to group, spread that some PharmaSet if all I in public if loans, the else matter, favor is portfolios but argue which because the incremental is be would at the of also you no writ Leslie day, be a wouldn’t stands in understand what shared and love And a is phone would amazing, speaks We everybody diversified for would please that of be certain end there

You demonstrate helps it how them. have to actually

is for market, context you it. you but on to is appreciate we sounds clearly everybody no credit like in thinking and the right gave today. track greatly us different are you right answer, a about the So There and

Gerald Michaud

Thanks.

Robert Pomeroy

Jonathan. Thanks

Operator

next Christopher question from of National Our Testa Securities. comes

Your open. line is

Christopher Testa

questions. Hey, guys. Thanks my taking morning for good

You of guys that you just something again had risk forward. previously a done a source would securitization, retention dead, financing guys going for if just consider and is curious with this about

Daniel Trolio

sheet to that, stands. have we avenues we’re Yes will different currently people now leave talked and that makes I and it facility our to that our balance to looking that always the balance sheet, ways Keybanc and but with relating leverage as the we we Chris, right sense at have numerous availability have

Christopher Testa

Okay.

whether Just an to facility, coverage, done. detail just like touching the of everything you know a you guys your guys the on gave look exhaustive been this bit have on have with potential I’m on at I leverage facility, amount but on process the and what your reducing basis just asset banks for a receptive of credit S&P they’re the explored seemingly case-by-case the brush, had they increase, more potentially or broad a with are painting whether a curious discussions as

Daniel Trolio

our syndicate, and Key But and how everyone to as are that. our won’t When it else, and we facility, market like and they’re and they turns a time at in looking tell. basis, be our with like them, will leaders case-by-case like we relationship seeing they waiting spoke the

Christopher Testa

to very made them would in general a rates? Got for or major that you the that it, wouldn’t expect potential change you so and sector in terms that or you Dan, the increasing, guys say, receptive

Daniel Trolio

through and going their Yes, and our went appreciate they as it, through amended so due mentioned, they’ve been diligence, we review very a everything and them receptive, been we positive. has relationship relationship with just very the we and appreciate also,

Christopher Testa

have what them, taken stock. discussions shareholders? from How spoken holding it. you’ve just with to call the sure or you Got been to many curious that your away people whether you what you’ve discussions the highlights and for them your call with plans potential. I’m they the the of have I’m been discuss

Robert Pomeroy

retail, our largely not Remember, a most so of lot stock--we’re feedback. Chris, of

Christopher Testa

that’s not milestones few were quarter, open guys the were you fair. commitments a you terminated I mentioned of Okay, the met. had during that have the know

on case-by-case concentrated was this a these? wondering, just was this Just basis particular sector a idiosyncratic to or with

Gerald Michaud

our a relative we Absolutely see on anything historically case-by-case portfolio. that basis. to in Nothing abnormal

Christopher Testa

The companies increased How okay. loans it, $XX over have many quarter? the were guys that quarter. million you rated about quarter pretty two particular in companies - Got so significantly or and two which ranked during

Robert Pomeroy

clinical the we movement. the so his mentioned that vTv Gerry a part was to that we on news of downgraded major in loan, primary--one two, script, dollar amount The that mentioned, their Therapeutics based

Christopher Testa

Got it.

Robert Pomeroy

of twos process normal closely, that were when watch stress to so downgrade the as that from funds, we those some process, watch all others will The course, threes of we our accounts. in happens in raising and them

Christopher Testa

right. taking That’s for for all all questions. Thanks my Okay, me.

Robert Pomeroy

Chris. Thanks

Operator

from comes Chris question Kotowski of next Oppenheimer. Our

line is open. Your

Chris Kotowski

morning. run but how a income Did mentioned the tell those recognized quarter, rate? and at Most accelerated much success is and that fees. mine quarter, of there were were you the us you this Good in asked, typical outset you

Daniel Trolio

No, the around of we ETPs the happen that in were a $XXX,XXX typically It’s can rate quarter. isn’t but on you model. the and run There did not the very mention how that prepayments much between in they normal the were, success they dependent ballpark fee.

Chris Kotowski

per year? how ballpark years on say, three you the much, within last Could average

Daniel Trolio

prepayments to quarter. activity would X.X would happens of it, quarter, prepayment it I a to about that prepayment be ballparking rate, and $XX about say to normal in X% a it’s the on $XX million quarterly related million the run

Chris Kotowski

for Okay. All right, Thank that’s it you. me.

Operator

Compass Our Point. of from Casey comes next question Alexander

Your line open. is

Casey Alexander

the a - a paid I from Yes, that was say did that a fee delayed fee, success understood I’m good came off was quarter that loan that earned was morning. you not in success that during was XXXX? sure there

Gerald Michaud

correct. That’s

Casey Alexander

that? was much How

Gerald Michaud

Ballpark, $XXX,XXX.

Casey Alexander

okay. - thousand hundred Two

to the relates portfolio, right? it secured, is that senior the XXX% of isn’t portfolio As

Gerald Michaud

That’s correct.

Casey Alexander

consider How much be to would that lien? first of you

Gerald Michaud

XXX% secured it’s that XX% that facility, around the senior in Included are secured and portfolio. of revolving some behind a loans are credit

Casey Alexander

said not would Okay, down were as turning in turn deals type to seems second was are deals higher you turning leverage. what Jon’s currently down, of you turn that there question, of access that quality the to you’re down? though you are that quality because higher it you What that able the event

Gerald Michaud

we’re Casey, or the them of the pricing not because able not to competition. we’re down, them control winning not We’re turning

them turning not down. We’re

Casey Alexander

Okay, thanks for my taking questions.

Operator

of Our Ryan next Lynch KBW. question from comes

line Your is open.

Ryan Lynch

one good comments outlook When question. portfolio quarter in markets Hey, and kind about and also guys of you I that morning which end at XXXX. I portfolio, the be me have are portfolio the I far end the look the XXXX prepayment prepayment term conducive higher to actual guys. of you potential fees now IPOs there as you the said in higher throughout the younger means as a some guys or which just of have of term said, prepayments, you prepaid fees, as or M&A, have in and think means loans could

had of a should fees increase basis we you end higher the fee income in XXXX, annualized from expect those versus term XXXX prepayments If to younger portfolio, to portfolio? considering and due younger an

Robert Pomeroy

like an It’s accreted. event, the end because do balanced term liquidity event or ones fees happen, the of superior a only, payments sort in have them, takes they described, but higher most interest are are a the not of of portfolio you’ve the when prepayment been position, to income the produce exit happen, Because they it younger, will Ryan. is loans so and

incidence the will be So lower, might from profit event each higher. the be but

Ryan Lynch

That’s makes question, my only thanks. that Okay, sense.

Operator

for back Chairman Thank you. remarks. and turn no closing further There to to Robert are Pomeroy, call the questions. CEO I’d like

Robert Pomeroy

us and We August. your and end continued call, support this This you will again speaking thank we Thank with interest you. in forward you Horizon, our all morning. look appreciate for to at joining

Operator

does and participating thank and program day. gentlemen, today’s Everyone conclude may a for the all disconnect. have you conference. Ladies This great you in

Horizon Technology Finance (HRZN) 2 May 182018 Q1 Earnings call transcript