Horizon Finance (HRZN) Q2 2024 earnings summary

Executive summary

• Portfolio size decreased to $647 million in Q2 2024 due to prepayments, amortization, and fair value adjustments, with $11 million in new debt investments funded.

• Net investment income for Q2 2024 was $12.9 million ($0.36 per share), down from $16.1 million ($0.54 per share) year-over-year.

• Portfolio yield remained strong at 15.9%, among the highest in the BDC industry.

• Management remains disciplined, focusing on credit quality, prudent origination, and supporting existing portfolio companies, with optimism for portfolio growth in H2 2024.

• Leading provider of secured loans to venture-backed and private equity-backed growth-stage companies in technology, life sciences, healthcare technology, and sustainability sectors.

Financial highlights

• Total investment income for Q2 2024 was $25.7 million, down from $28.1 million year-over-year.

• Net asset value per share declined to $9.12 as of June 30, 2024, from $9.64 in Q1 and $11.07 in Q2 2023.

• Total expenses rose to $12.4 million from $11.9 million year-over-year, mainly due to higher interest expense.

• Net realized gain on investments was $2.5 million, compared to a net realized loss of $16.5 million in Q2 2023.

• Net unrealized depreciation for Q2 2024 was $24.5 million, reflecting portfolio valuation pressures.

Outlook and guidance

• Management expects portfolio growth to resume in H2 2024, supported by a robust pipeline and increased market activity.

• Monthly distributions of $0.11 per share declared for October, November, and December 2024.

• Anticipate continued strong onboarding yields and NII covering distributions.

• Prepayment activity expected to remain modest in the near term.

• Current cash, operations, and credit facilities are sufficient to meet commitments for at least the next 12 months.