Horizon Finance (HRZN) Q3 2024 earnings summary

Executive summary

• Portfolio grew by 6% in Q3 2024, reaching $684 million, with nine new loans totaling $93.1 million funded and a committed backlog of $190 million.

• Net investment income for Q3 2024 was $11.8 million ($0.32 per share), down from $17.4 million ($0.53 per share) year-over-year.

• Net asset value per share was $9.06 at September 30, 2024, down from $10.41 a year ago and $9.71 at December 31, 2023.

• Regular monthly distributions of $0.11 per share declared through March 2025, supported by undistributed spillover income of $1.27 per share.

• Strategic partnership announced between Monroe Capital and Wendel Group, expected to provide additional capital and scale, closing in Q1 2025.

Financial highlights

• Total investment income for Q3 2024 was $24.6 million, down from $29.1 million year-over-year, mainly due to lower interest and fee income.

• Net realized losses on investments were $33.9 million for Q3 and $31.4 million for the nine months, primarily due to the settlement of one debt investment.

• Net unrealized appreciation for the nine months was $0.9 million, compared to $24.4 million in unrealized depreciation last year.

• Portfolio yield on debt investments was 15.9% for Q3, among the highest in the BDC industry.

• Net increase in net assets from operations was $7.3 million ($0.20 per share) in Q3, versus a decrease of $12.0 million ($-0.37 per share) year-over-year.

Outlook and guidance

• Expectation for continued portfolio growth in Q4 2024, with a robust pipeline and committed backlog.

• Anticipate NII to cover distributions over time, with prepayment activity expected to remain modest in the near term.

• Management expects to focus on secured debt investments in technology, life science, healthcare information and services, and sustainability sectors.

• Board declared monthly distributions of $0.11 per share for January, February, and March 2025.

• Advisor expected to gradually resume earning incentive fees, reaching full accrual by end of 2025.