Horizon Finance (HRZN) Q3 2024 earnings summary

Executive summary

• Portfolio grew 6% in Q3 2024 to $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.

• Strategic partnership between Monroe Capital and Wendel Group announced, 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.

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

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

• Dollar-weighted annualized yield on debt investments was 15.8% for the nine months, and 15.9% for Q3.

• Undistributed spillover income stood at $1.27 per share at quarter end.

Outlook and guidance

• Management expects continued portfolio growth in Q4 2024, supported by a robust pipeline and committed backlog.

• Anticipates NII will cover distributions over time, with incentive fees expected to return to full accrual by end of 2025.

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

• Company believes current cash, operations, and credit facilities will be sufficient for at least the next 12 months.

• Focus remains on secured debt investments in technology, life science, healthcare information and services, and sustainability sectors.