Horizon Technology Finance Corp Q3 FY2024 earnings call

• Portfolio grew in Q3 while improving credit profile. • Generated net investment income of $0.32 per share, $0.01 below declared distribution. • Aimed to deliver NII at or above declared distributions as portfolio grows. • Board declared regular monthly distributions of $0.11 per share through Mar 2025. • Portfolio yield on debt investments at or near top of BDC industry. • Enhanced investment capacity by raising equity from at-the-market program. • Portfolio grew 6% and increased committed and improved backlog. • Dan Devorsetz discussed portfolio growth, originations, prepayments, yields, and stressed investments. • Jerry Michaud talked about venture capital environment, exits, and pipeline. • Dan Trolio detailed balance sheet strength, operating results, NII, and NAV.

Net investment income was $0.32 per share, $0.01 below declared distribution level. Portfolio grew to $684 million in Q3. Onboarding debt investment yield was 13.2% in Q3. Debt portfolio yield was 15.9% in Q3. Fair value of warrant and equity positions in 103 portfolio companies was $33 million as of Sep 30. Committed and approved backlog ended Q3 at $190 million. 91% of debt portfolio fair value was 3 and 4 rated, 9% was 2 or 1 rated.

• Goal to deliver NII at or above declared distributions as portfolio grows. • Board declared regular monthly distributions of $0.11 per share through Mar 2025. • Expect portfolio to further grow during Q4. • Anticipate advisor will return to earning incentive fees in coming quarters. • Expect to continue generating NII that covers distribution over time.

• Forward-looking statements subject to uncertainties in predicting future results and conditions. • Factors could cause actual results to differ materially from forward-looking statements, detailed in SEC filings. • Prepayments are a factor, but remain on lower end of historical levels. • Nonaccrual loans have varying timelines for resolution, some may linger into first half of 2025.

Q: Update on non-accrual loans and timelines for resolutions.

A: Dan Devorsetz said some resolved in Q3, others in Q4 or first half of 2025 with different timelines and strategies.

Q: Details on resolved non-accruals in Q3.

A: Nexii assets sold to third-party buyer, Evelo life science company has assets being monetized with transactions underway.

Q: Pipeline and deal flow over coming months.

A: Dan Trolio said market improving, pipeline growing, some awards in Oct but not all closed yet, expect Q4 growth but hard to predict beyond.

Q: Balance sheet and NII covering dividend.

A: Dan Trolio said look at committed backlog, capital sources, cash on balance sheet, NII has been on good trend.

Q: Swift fair value mark improvement.

A: Jerry Michaud said Swift is strong product, working with high-quality investors to bring in capital for stabilization.

Q: ATM share sales pace.

A: Dan Trolio said dictates by balancing capital sources and funding in quarter.

Q: Plan to improve stock price.

A: Dan Trolio said focused on delivering performance, growing portfolio, generating NII.

Q: Off-balance sheet vehicles.

A: Dan Trolio said look at it but no plans currently.

Q: NII generation and incentive fee accrual.

A: Dan Trolio said forecast includes everything, expect to gradually earn back incentive fee towards end of next year.

Q: Spillover income.

A: Dan Trolio said not a target, manage through supplemental distributions.

Q: Yields on new investment.

A: Dan Trolio said yields maintained nicely, expect venture market to trade in traditional yields