Financial Data and Key Metrics Changes - The company's net investment income (NII) for Q1 2024 was 0.45 per share in Q4 2023 and 13.1 million, a decrease from 33 million in Q1 2024, all to existing portfolio companies [21] - The committed backlog at the end of the quarter was 218 million at the end of Q4 2023 [8] - The portfolio size grew slightly to 37 billion was invested in VC-backed companies in Q1 2024, maintaining the pace seen in much of the previous year [11] - VC investment in later-stage companies declined by 36% from the same period in 2023, indicating ongoing concerns about overvaluation [11] - The venture capital exit activity remained low at 18 billion in Q1, but successful IPOs of companies like Reddit and Astera Labs provided some optimism [3] Company Strategy and Development Direction - The company aims to continue sourcing and originating new venture loans to high-quality companies while navigating the challenging environment [9] - The focus remains on credit quality and supporting portfolio companies to ensure optimal outcomes [48] - The company is positioned to take advantage of the improving IPO market and lower interest rates in the second half of 2024 [25] Management's Comments on Operating Environment and Future Outlook - Management noted that while the venture lending environment is challenging, there are signs of recovery and opportunities for growth [18] - The company expects modest prepayments in Q2 2024, driven by IPOs and M&A activity, although these remain below normal levels [4] - The management team expressed confidence in their ability to generate solid NII and build long-term shareholder value despite current market conditions [48] Other Important Information - The company had 91 million in available liquidity as of March 31, 2024, consisting of 20 million in funds available to be drawn [36] - The debt-to-equity ratio stood at 1.37 to 1, with net leverage at 1.16 to 1, indicating a stable financial position [37] - The NAV as of March 31, 2024, was 9.71 as of December 31, 2023 [66] Q&A Session Summary Question: Can you discuss the net unrealized losses for the quarter, particularly regarding the Evelo investment? - Management indicated that the Evelo investment was marked down due to a failed clinical trial, but there are significant opportunities for value recovery as they work closely with the company [53][54] Question: What is the status of the non-accruals, particularly Mexie and Mexcar? - Management stated that they are working to maximize the value of both non-accruals and noted some interest in their assets, with a potential recovery expected in the coming quarters [57][58] Question: Can you clarify the mix of the backlog between existing and new companies? - The backlog consists entirely of committed amounts to existing borrowers, primarily milestone-based [61] Question: How is the company competing in the current venture debt market? - Management emphasized their ability to compete on price and noted that they are not seeing direct competition from other lenders, as they focus on quality investments [82][84]
Horizon Technology Finance(HRZN) - 2024 Q1 - Earnings Call Transcript