Horizon Technology Finance Corp Q1 FY2025 earnings call

• Rob Pomeroy noted guarded optimism dampened by macro environment, funded new investments, Board declared $0.11 per share monthly distributions through September 2025, advisor waived portion of incentive fees.
• Dan Devorsetz reported portfolio at $690 million, funded 9 debt and 2 equity investments totaling $102 million, experienced $68 million in prepayments, onboarding yield 13%, debt portfolio yield 15%, committed backlog $236 million, positive news from Emalex and Kodiak, negative events with InBrace and Standvast.
• Jerry Michaud discussed venture capital environment with $92B invested in Q1, exit markets closed, venture debt as option for companies, Q1 exit value $56B.
• Dan Trolio talked about strong liquidity and balance sheet, operating results with investment income $25M, expenses $13.4M, net investment income $0.27 per share, declared distributions through September 2025.

During the first quarter, Horizon generated net investment income of $0.27 per share. The debt portfolio grew by $20 million, with a portfolio yield on debt investments at or near the top of the BDC industry. The debt portfolio at the end of Q1 was $690 million, with debt investments in 53 companies (aggregate fair value $644 million) and warrant/equity in 110 companies (aggregate fair value $46 million). Committed and approved backlog was nearly $236 million. Net investment income per share was $0.27, NAV was $7.57 per share as of March 31.

• Board declared regular monthly distributions of $0.11 per share through September 2025.
• Expect portfolio growth over long term despite current macro challenges.
• Committed backlog and pipeline provide solid base for prudent portfolio growth.

• Macro environment volatility, including tariff-related uncertainty impacting recovery from stressed assets.
• Exit markets for VC-backed companies nearly shut, affecting portfolio value.
• Negative portfolio events like downgrades of investments due to lack of exit markets and macro volatility.

Q: Concern about covering dividend with spillover earnings and uncertain environment, how managing spillover?

A: Dan Trolio said they review quarterly, declared distributions through September, confident in covering over time.

Q: Quality of deals, higher bar for selecting transactions?

A: Jerry Michaud said pipeline wide at top, narrow at bottom, selecting strong companies with high-quality VCs.

Q: Leverage ratios, plan to raise?

A: Dan Trolio said target net of cash around 1.2-1.3 times, current net leverage 1.29.

Q: Base management fee, discussion of cutting?

A: Dan Trolio said blended rate close to comps.

Q: Timing issues affecting EPS?

A: Dan Trolio said timing always impacts, can't say specifically drove NII.

Q: Math of dividend vs debt yield?

A: Dan Trolio said reviewed each quarter.

Q: Onboarding yields, warrant returns?

A: Jerry Michaud and Rob Pomeroy explained onboarding yield vs portfolio yield, warrants not main focus for returns.

Q: Soli Organic blockage notice, reassessment?

A: Dan Trolio said will reassess fair value as details emerge.

Q: Consumer exposure, tariff impact?

A: Jerry Michaud said managed out of consumer, minimal tariff impact on portfolio.

Q: Wendel Monroe partnership impact?

A: Rob Pomeroy said ongoing help from Monroe, scale benefit over time.

Q: Soli default, nonaccrual?

A: Dan Trolio said will reassess mark as credit details emerge.