HRZN - Earnings call transcript Q1 2019 | Horizon Technology Finance Corporation

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Operator

Good morning, ladies and gentlemen, and welcome to the Horizon Technology Finance’s First Quarter 2019 Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference call is being recorded. I would now like to turn the conference over to your host Ms. Bacon. Megan begin. may you Ma’am,

Megan Bacon

President; you. company’s the And quarter are Technology first Form available to Gerry the Pomeroy, Officer. are Chief I XX-Q would at earnings welcome conference call. press horizontechfinance.com. to like Michaud, Officer; XXXX Executive today out and Horizon Dan Representing Trolio, Chairman Financial website that Finance point Chief Thank the and QX the Rob and on company release

could certain as call forward-looking to similar material statements. to projected statements. conference During anticipates, inherent identify Horizon and predicting to forward-looking uncertainties cause with forward-looking of will make intends, basis used in to including Technology regard statements, these in this factors the the results Finance statements actual on company. differ believes, from are or forward-looking results These performance those a subject the future are Words future Certain statements expressions conditions. such expects,

factors the for the and December are the XX-K Exchange Form And Securities some XXXX. The company's XX, detailed Commission the discussion of risk in to obligation year company's with as in result these including or filings revise Rob to new the any update forward-looking a like events, time company statements otherwise. the information, factor whether future I this over call or of At would no turn undertakes to Pomeroy. ended

Rob Pomeroy

thank and all for morning you us. Good joining

those the success in total investments. on fourth million first we generated all and X, two on quarter the grew per million recorded quarter. XXXX venture first first below from income XX, of and portfolio facets loans We March Our one a interest rate business. portfolio that $XX including but the our an We quarter net share from our $X.XX no our overall consecutive with $XXX us build the to April and debt other we performance separate funded thus million during investment loans $XXX ended of note continue the should venture with $X.XX, of solid in income our in saw quarter distribution quarter for on

investments asset strong will full We overall account average interest continue We the our to quality improved finished which of for second We performance. XX.X% income well as and income quarter debt into events. another in had a scheduled with takes the maintain benefit from quarter quarter yield standards. investment first liquidity regularly and fee weighted of as see those

continues us We million enhancing quality, proceeds maintain offering strategy pricing rate above equity predictive enable portfolio. NAV common successfully completed to generating a liquidity to profile. and a Our yield $XX.X our further floating premium net in

by $XX.XX XXXX outlook offset raised XX, And capital per well Our as XXXX. partially our was our as are upon succeed of a issued new of license portfolio current and the for on declared improve shares on of and and we July, warrants our performance impacted agreement marks Overall, of NAV Board realize gains and distributions from remain with well by the beyond. and March markdown and to as warrants the and September share primarily our positioned based pleased for remainder August, monthly equity. $X.XX

from increased we activity, basis investment our new quarter totaling our to first million end $XX on the funded of million $XX six the by loans Turning in net and a portfolio XXXX.

of to of Dermatology. April approvals the end we $XX Xst at new and in $XX a the the and inclusive million on $XX on closed backlog million provided quarter Encore of which was million commitments loan maintained also We

were joint JV the Our the venture. well were York venture, demand funded JV the our pipeline the facility. there These made JV, two be as and to both high to to respect of New investments as the new investments Horizon our Life by credit at by remains we With continues joint robust, well-positioned accessing by grow are portfolio the in size QX.

as the believe will continue the we an be grow over that term. JV to for additional it long We Horizon value shareholders generator

remains the continue to asset with seventh no quality Importantly, rated and our we quarter for non-accruals new consecutive one loans. stable have portfolio's no

the two credits our X% is X us During comprise was a rated account proactive only rating upgraded a our management. portfolio. to portfolio quarter leaving our less one of This to than with which X testament X, of rated credits debt

growth and we ahead drive Looking set to NII. a remain portfolio additional sustainable

rose tech life end the of backlog remains demand and science from and XXXX and pipeline for Our investment robust.

X This to With X ratio of to range diversify and was to us with the targeted X and XX. as capacity our our the reduced X.XX capital near X.X to March leverage us grow end provides of further to to places ample equity recent to portfolio. our of X.X debt raise low

management business financial strategy environment reminder, then driven a base gross portfolio remain to generate reduction grow efforts $XXX our are fee detail our Dan who shape NII on I our conclude, enhance X.X% to our update cash and portfolio take for to assets we exceed now underwriting over To shareholders. assets condition. who development As and fee reduces as pricing that how continues base million. value predictive and will will performance This confident and to the Gerry, our turn will additional to and will by to market our we pleased grow. our you with management on operating as continues will that in less call continue our

Gerry Michaud

Good Thanks Rob. everyone. morning

the momentum $XX began we loan. the million a adding year continued to million. funding Our venture new start transactions into first six standpoint saw quarter a funding $XX as the portfolio floating quarter rate quarter nicely us That second from our totaling

importantly investment. for quarter XX.X% portfolio levels disciplined and strong entering accelerated XX.X%. The quarter was the in maintaining our income $XX.X on-boarding million. resulted of during quarter into a loan yield portfolio yield the remain on-boarding prepayment our exits these Our before and We with loan underwriting two in first from experienced totaling the an events

investments totaling our two joint the by which was addition In million QX, in funded portions facility. debt York fully Life venture $X.X funded New of portfolio

generates warrants. ended $XX a position our We $XX of approvals add the BEC prepayment quarter ATPs, XXXX. We of higher in investments quarter a debt and industry, new portfolio $XX maintain the closed first backlog to and income new to new with at to committed end commitments yield opportunities the reflected continued while loan of compared premium which with a in continue a stream million the fourth and as backlog predictable of million we yielding leading million by

to an new million. of a and backlog Our as March nine awarded opportunities approved XX companies $XX.X over pipeline $XXX million with committees of of

sets up well execute while stream accelerated on and NII and pipeline Our portfolio and growing to income. enhancing our backlog us robust committed prepayment income with

with March more of XX, our $XXX,XXX a positions value in million. we of in in termination In QX warrants. approximately connection portfolio fair by XX of equity net company As companies of proceeds with our portfolio and Luxtera the received was $XX.X we held Cisco acquired

proceeds by just proceeds $X venture we investment Additionally, [indiscernible] was transferred totaling fully as to joint Life our $XX funded new the New to exited an our million equity be over million and facility. has one Subsequent $XXX,XXX of we which funded York of debt our in a April one $XXX,XXX. QX, investment proven received investment end additional also of very and receiving to exited active month

approved for QX. five April, portfolio provides to to momentum high continue date significant sits our at committed awarded representing transactions grow and million At the an historic amount Horizon million awarded totaling the been have we new for with to of a end our addition, in of backlog XXXX. and $XXX In us of balance $XX

$XX was very Turning levels right now quarter companies capital venture to in invested keeping of billion year's PitchBook last in on performance. with XXXX VC-backed under the strong to environment, the just pace first according funding

VC number billion still of VC back that XXXX, value the well $X.X fundraising the for remainder bit was XXXX. was by buoyed In year a in the since the quarter very to activity quarter last significantly for quarter IPO record bodes terms a largest the of the but pace raised exit of the in list off being set contributing first solid exit XXXX.

months the IPO of and quarter, saw life the healthcare believes couple sector science over the foreseeable XX past providing a over window sector, were future. seen strength which XX% generate very IPOs In venture-backed the to their opportunity the first Horizon remains As returns we've show in we with open much of clearly reinvest will capital. to VCs the continue

have We go that are companies filed public to two Act. Jobs portfolio under the

markets, Turning in life-science robust. core first now in to our healthcare financing for markets demand technology the the remain quarter

funded a funded agreement also $X.X a funding disease. disease publicly At healthcare potential pharma one treatment gene we the Boy the diseases. and quarter infant to known our of Mustang existing entered SCID bio Mustang venture fatal the company of Research $XX for had portfolio Bubble a April in loan million leading Bio therapy Bio licensing to phase develop During technology Mustang first and portfolio [Indiscernible] effects. little health that in treatment no new company. cures loan the a St. of enabled we had side solid Jude's cell tech care translating with into gene AI traded a company Children's quarter therapies in and trial Hospital companies Subsequent related all the potentially of with as stage Bio's eight end traded very X/X gene for Recently focused the trial the results tumors, its of infants announced demonstrated and SCID medical and for cured Mustang publicly which genetic QX rare million therapy a or into cancers, clinical on to breakthroughs company our clinical to

quarter we companies for represents dermatology While pharmaceutical of for venture by to the the events Encore one SCID we And science important Dermatology to disease. specialty Horizon end a were all funded first U.S. company on of the market. it monitors as life potential the cure focused subsequent our million extremely the the milestone trial $XX results gratified

with venture The science three in April April be rated new received our $XX remains active funding strong Demands product broader the to awards and past we've quarter. for the sector IPOs we several addition, technology companies In totaling continues totaling specifically In generally and very new few seen million. related first received growth-oriented life major new and in companies two in million. $XX technology weeks. for debt awards

positioned seek respect to generate from over to to technological ample opportunities is tech requests be selective to given seeing pipeline, attractive portfolio XXXX. and growth With are well to to and for deliver investment that to the where robust debt remains we're the we continue achieve win our to transactions advancements continue we years. term, there large for ability with priced next Dan. to use significant which long over and the strategy Overall, value With and call companies liquidity, for shareholders. borrower I we continue opportunities to exit three pricing of turn the our our will remainder our predictive adequate well-positioned identify our the investment opportunities now However,

Dan Trolio

and everyone. Gerry Thanks morning good

Let's of due turn on to was interest investment our for quarter earned of average prior first XX% to the financial of a period the given larger primarily income year XXXX. results of Horizon to our first million quarter increase size $X.X compared XXXX, $X.X the loan the in higher investments for million which income total portfolio.

of March XX, XXXX December from portfolio our to million, had investment As $XXX debt grown increase XXXX. XX, X% a

For XXXX, the the achieved XX.X% in we compared quarter of to yields XXXX. on-boarding quarter fourth of of XX.X% first

XXXX Our fourth loan last for of portfolio quarter compared XX.X% of XX.X% quarter for first quarter. the and in to was first XX.X% year's XXXX yield the

first to expenses expenses, $X were the compared of million our XXXX. quarter for to total the Turning first net million in quarter $X.X

compared Our the one year increase prior average expense to in $XXX,XXX LIBOR. and the month additional borrowings up the due period interest was to

amount. Our pre-incentive net due increased and higher net a income investment $XXX,XXX incentive deferred to lower fee incentive fee fee

$XXX,XXX share share fourth XX, outlook for XXXX. the first NII, quarter and share monthly management our $X.XX for our per distributions of $X.XX July, of of by in a $X.XX our was income quarter Based XXXX XXXX fee per $X.XX investment to declared driven the an the the first was size Net spillover XXXX. un-distributed compared XXXX. Board $X.XX and of $X.XX for of our base September While income per companies at average share for quarter rose of increase as portfolio. per end The August upon with March compared in

our maintained future share per to We quarters. spillover of $X.XX and that investment covered per remain over We by distributions our net with our are XX currently shareholders committed and undistributed time have now income of consecutive declared share support $X.XX an quarterly distributions providing for distributions.

the quarterly NAV on per March end a The as March XX, compared of due XXXX share for the and $XX.XX Our raised the NAV in December to of $XX.XX primarily as was $X.XX decline to basis capital was as XX, XX, $XX.XX completed of XXXX. from quarter. of

$XXX aggregate $XXX our with million, XX of an activities quarter, certain million, an positions companies of the an average million the interest shares which March investments position per value based equity and equity rather data and the and the than companies portfolio outstanding an calculated million. JV with value quarter. companies XX.X first aggregate share the new aggregate by XX, investment other with first payments value outstanding portfolio million which origination totaled $XX with of four fair shares for on XX investment We of value of ended $X in an $XX of including of and Summarize of loans consists $XX for $X we funded as a with million offset were in fair As portfolio fair weighted million JV warrant in million, our in quarter pre-payments. aggregate fair at debt million XXXX of $XX principal our principal an

nearly As principal in interest while in to as floating a the having outstanding are the rates that we've increase of debt of highlighted investments, rates at floor structured specific place. coupon rise amount our past, XXX% interest with fair

in credit million On funds our liquidity of facility. in to consisting Horizon existing of under million as XX, drawn million be March available had the and balance $XX.X available $X.X $XX.X sheet, cash

ample funded With respect venture, by we at position As quarter the both XXXX. March liquidity two our our bank have our the to XX, joint XXXX. million was under credit key $XX capacity at and during York XX, the New and was our leverage with X with at facility our Life facility our capacity facility additional $XX.X it ratio to $XXX continued portfolio JV in million March million our of key investments at potential company based to cash X.XX on accessing and the grow there to our and

over June April the on until repurchase program the Lastly our at you total approved share be for common of our plan the stock Board this share of first repurchase our million stock. We'll opening in have common $X early to of cost This XXX,XXX at of $X.X September of company's concludes repurchase questions it shares extended was XX, time. previously a the repurchased million. XXXX, authorized XXXX remarks. may our XX, a happy Since take

Operator

time. this at questions any showing not I'm

Chairman closing So Pomeroy, turn over the call I'll back now like Rob to for to and remarks. CEO

Rob Pomeroy

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

Operator

conclude will this program. gentlemen and Ladies the

have may You disconnect. day. great now Everyone a

Horizon Technology Finance (HRZN) 1 May 192019 Q1 Earnings call transcript