Horizon Technology Finance Announces Fourth Quarter and Full Year 2020 Financial Results – PRNewswire

Posted: March 3, 2021 at 1:53 am

FARMINGTON, Conn., March 2, 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 fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Highlights

Full Year 2020 Highlights

"Despite one of the more challenging years, we managed our investment portfolio and capital through 2020 to position ourselves to generate strong results and continue expanding our portfolio as we enter 2021," said Robert D. Pomeroy, Jr., Chairman and Chief Executive Officer of Horizon. "Although our fourth quarter NII of $0.21 per share was impacted by low origination volume in the third quarter, as well as by lower income from prepayments, we did originate nearly $77 million of new loans during the fourth quarter which we expect to provide a strong foundation to generate additional NII in the first quarter of 2021. We are also pleased to maintain our regular monthly distributions of $0.10 per share through June for our shareholders, a testament to the strong earnings power of our growing portfolio and our proactive portfolio management strategy."

"In addition, during the quarter, we made significant progress in successfully exiting several underperforming loans. While this had an impact on realized losses, our portfolio at the end of the year reflects an enhanced credit profile as we enter 2021," continued Mr. Pomeroy. "With the liquidity on our balance sheet, a strong backlog and pipeline of attractive opportunities, and a high market demand for venture debt, we believe we are well situated to take advantage of compelling investment opportunities and to continue delivering attractive returns for our shareholders."

Fourth Quarter 2020 Operating Results

Total investment income for the quarter ended December 31, 2020 was $10.1 million, compared to $13.0 million for the quarter ended December 31, 2019. The year-over-year reduction in total investment income is primarily due to lower interest income on investments resulting from a lower debt investment portfolio due in part to the challenging economic and operating environment.

The Company's dollar-weighted annualized yield on average debt investments for the quarter ended December 31, 2020 and 2019 was 13.0% and 17.6%, 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.

Net expenses for the quarter ended December 31, 2020 were $5.9 million, compared to $6.3 million for the quarter ended December 31, 2019. The decrease was primarily due to a $0.6 million reduction in performance-based incentive fees.

Net investment income for the quarter ended December 31, 2020 was $3.9 million, or $0.21 per share, compared to $6.5 million, or $0.43 per share, for the quarter ended December 31, 2019.

For the quarter ended December 31, 2020, net realized loss on investments was $18.6 million, or $0.99 per share, compared to net realized loss on investments of $0.3 million, or $0.02 per share, for the quarter ended December 31, 2019.

For the quarter ended December 31, 2020, net unrealized appreciation on investments was $17.1 million, or $0.91 per share, compared to $0.6 million, or $0.04 per share, for the prior-year period.

Full Year 2020 Operating Results

Total investment income for the year ended December 31, 2020 was $46.0 million, an increase of 6.7% compared to $43.1 million for the year ended December 31, 2019.

Horizon's dollar-weighted annualized yield on average debt investments for the year ended December 31, 2020 and 2019 was 14.6% and 16.7%, respectively.

For the full year ended December 31, 2020, net investment income was $20.7 million, or $1.18 per share, compared to net investment income of $20.5 million, or $1.52 per share, in the prior year.

For the full year ended December 31, 2020, net realized loss on investments was $14.7 million, or $0.84 per share, compared to net realized loss on investments of $4.2 million, or $0.31 per share, for the full year ended December 31, 2019.

For the full year ended December 31, 2020, net unrealized appreciation on investments was $0.3 million, or $0.02 per share, compared to net unrealized appreciation on investments of $3.2 million, or $0.24 per share, for the full year ended December 31, 2019.

Portfolio Summary and Investment Activity

As of December 31, 2020, the Company's debt portfolio consisted of 34 secured loans with an aggregate fair value of $333.5 million. In addition, the Company's total warrant, equity and other investments in 70 portfolio companies had an aggregate fair value of $19.1 million. Total portfolio investment activity for the three months and full year ended December 31, 2020 and 2019 was as follows:

($ in thousands)

For the Three Months EndedDecember 31,

For the Full Year EndedDecember 31,

2020

2019

2020

2019

Beginning portfolio

$ 311,750

$ 281,519

$ 319,551

$ 248,441

New debt investments

76,913

65,548

198,561

200,832

Less refinanced debt investments

(17,500)

Net new debt investments

76,913

65,548

198,561

183,332

Investment in controlled affiliate investment

1,311

1,900

Principal payments received on investments

(4,485)

(4,300)

(24,829)

(17,369)

Early pay-offs

(30,644)

(23,773)

(121,429)

(94,321)

Accretion of debt investment fees

815

986

3,895

3,865

New debt investment fees

(938)

(905)

(2,353)

(2,669)

New equity

240

Warrants received in settlement of fee income

978

Proceeds from sale of investments

(134)

(2,137)

(8,335)

(4,548)

Dividend income from controlled affiliate investment

1,013

118

2,236

Distributions from controlled affiliate investment

(715)

Net realized loss on investments

(17,672)

(302)

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Horizon Technology Finance Announces Fourth Quarter and Full Year 2020 Financial Results - PRNewswire

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