Financial Data and Key Metrics Changes - The company generated net investment income (NII) of 0.01 below the declared distribution level [9] - The net investment income for Q3 2024 was 0.36 per share in Q2 2024 and 9.06 per share, down from 10.41 as of September 30, 2023 [45] - Total investment income for the third quarter was 29 million in the prior year period [38] Business Line Data and Key Metrics Changes - The portfolio grew to 93 million funded during the quarter [15] - The debt portfolio yield was 15.9% for the quarter, down from 17.1% in the same quarter last year [39] - The company closed 190 million, up from 38 billion was invested in VC-backed companies in Q3, indicating a stable investment pace compared to 2023 [26] - The total exit value for Q3 was 1 billion in debt opportunities, indicating strong potential for future growth [29] Company Strategy and Development Direction - The company aims to grow its portfolio while maintaining a strong credit profile and maximizing the value of stressed investments [11] - A strategic partnership with Monroe Capital and Wendel Group is expected to enhance capital and scale, benefiting the company's investment strategies [13][14] - The company remains committed to sourcing high-quality investments to generate sustainable NII and build long-term shareholder value [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the venture lending market, citing a growing demand for venture debt capital and a strong pipeline of opportunities [12] - The macroeconomic environment is beginning to improve, which is expected to positively impact repayment activities and investment opportunities [43] - Management noted that while the overall VC ecosystem has been challenging, conditions are showing signs of improvement, particularly in the life sciences sector [30] Other Important Information - The company experienced 4 loan prepayments totaling $38 million, indicating an improving venture market [18] - The onboarding debt investment yield was 13.2%, remaining high compared to historical levels [20] - The company has no borrowings outstanding under its KeyBanc credit facility, providing ample capacity for portfolio growth [36] Q&A Session Summary Question: Update on non-accrual loans and timelines for resolutions - Management is working on various strategies for non-accruals, with some expected to resolve in Q4 and others potentially extending into H1 2025 [47] Question: Details on resolved non-accruals - One non-accrual, Nexii, was sold to a high-quality buyer, and the company retains debt and equity in the new entity [49] Question: Outlook on the improving market and pipeline - The market is believed to be improving, with a strong pipeline of quality opportunities, although it is still early to predict consistency [55] Question: Balance sheet management and cash utilization - The company plans to utilize cash on the balance sheet efficiently, balancing committed backlog and funding expectations [58] Question: Improvement in fair value of non-accrual Swift - Swift is undergoing stabilization with new capital, and management is working on strategies to maximize asset value [60] Question: ATM share issuance pace - The pace of ATM share sales is dictated by capital sources and funding needs, with expectations of fluctuations based on market conditions [63] Question: Strategy for improving stock price - The focus remains on delivering performance and growing the portfolio, which is believed to positively impact stock price [65] Question: Consideration of off-balance sheet vehicles - The company consistently evaluates off-balance sheet vehicles but currently has no plans in place [66] Question: NII generation and distribution coverage - The company aims to cover distributions with NII, factoring in costs and expected growth in the balance sheet [68]
Horizon Technology Finance(HRZN) - 2024 Q3 - Earnings Call Transcript