Horizon Technology Finance Corp (HRZN) 2023 Q3 法說會逐字稿

Greetings, and welcome to Horizon Technology Finance Corporation Third Quarter 2023 Earnings Call.

您好，歡迎參加地平線科技金融公司 2023 年第三季財報電話會議。

(Operator Instructions)

（操作員說明）

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Megan Bacon, Director, Investor Relations and Marketing.

提醒一下，本次會議正在錄製中。現在我很高興向您介紹主持人梅根·培根 (Megan Bacon)，她是投資者關係和行銷總監。

Thank you, Ms. Bacon. You may begin.

謝謝你，培根女士。你可以開始了。

Thank you, and welcome to Horizon Technology Finance Corporation's Third Quarter 2023 Conference Call. Representing the company today are Rob Pomeroy, Chairman and Chief Executive Officer; Jerry Michaud, President; and Dan Trolio, Chief Financial Officer.

謝謝，歡迎參加地平線科技金融公司 2023 年第三季電話會議。今天代表公司的是董事長兼執行長 Rob Pomeroy；傑瑞·米肖，總裁；和首席財務官 Dan Trolio。

I would like to point out that the Q3 earnings press release and Form 10-Q are available on the company's website at horizontechfinance.com.

我想指出的是，第三季收益新聞稿和 10-Q 表格可在公司網站 Horizo​​ntechfinance.com 上取得。

Before we begin our formal remarks, I remind everyone that during this conference call, the company will make certain forward-looking statements, including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends or similar expressions are used to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions.

在我們開始正式發言之前，我提醒大家，在本次電話會議中，公司將做出某些前瞻性陳述，包括有關公司未來業績的陳述。相信、期望、預期、打算或類似表達等詞語用於識別前瞻性陳述。這些前瞻性陳述受到預測未來結果和條件的固有不確定性的影響。

Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements, and some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31st, 2022. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

某些因素可能導致實際結果與這些前瞻性陳述中預測的結果有重大差異，其中一些因素在公司向美國證券交易委員會提交的文件（包括公司的10 號表格）中的風險因素討論中進行了詳細說明-K 截至 2022 年 12 月 31 日的年度。本公司不承擔更新或修改任何前瞻性陳述的義務，無論是由於新資訊、未來事件或其他原因。

At this time, I would like to turn the call over to Rob Pomeroy.

此時，我想將電話轉給 Rob Pomeroy。

Welcome, everyone, and thank you for your interest in Horizon. As we always do on our quarterly calls, I will update you on our performance and our current overall operating environment. Jerry will then discuss our business development efforts, our portfolio events and our markets. And Dan will detail our operating performance and financial condition. We will then take some questions.

歡迎大家，感謝您對 Horizo​​n 的興趣。正如我們在季度電話會議上一貫所做的那樣，我將向您介紹我們的業績和當前整體營運環境的最新情況。然後，傑瑞將討論我們的業務發展工作、我們的投資組合活動和我們的市場。丹將詳細介紹我們的經營業績和財務狀況。然後我們將回答一些問題。

We had a strong quarter from the standpoint of Net Investment Income, with NII significantly exceeding our quarterly distributions. However, our net asset value as of the end of the quarter was negatively impacted by adverse events in our portfolio, which resulted in markdowns in the fair values.

從淨投資收入的角度來看，我們的季度表現強勁，NII 大大超過了我們的季度分配。然而，截至本季末，我們的資產淨值受到投資組合中的不利事件的負面影響，導致公允價值下降。

Our adviser Horizon Technology Finance Management and its experience and expert team remain focused on our portfolio's credit quality. As we navigate through the stressed macro environment and maximize the value of our portfolio over the longer term.

我們的顧問 Horizo​​n Technology Finance Management 及其經驗和專家團隊仍然專注於我們投資組合的信用品質。當我們在充滿壓力的宏觀環境中航行並在長期內最大化我們的投資組合的價值。

Turning to our specific results for the quarter. We generated net investment income of $0.53 per share, well in excess of our declared distribution level, due largely to higher interest rates on our floating rate debt investment portfolio as well as lower incentive fees earned by our adviser. Dan will further discuss the impact of incentive fees on NII in his remarks.

轉向我們本季的具體業績。我們產生了每股 0.53 美元的淨投資收入，遠遠超過了我們宣布的分配水平，這主要是由於我們的浮動利率債務投資組合的利率較高以及我們顧問賺取的激勵費用較低。 Dan 將在發言中進一步討論激勵費用對 NII 的影響。

Based on our outlook in our undistributed spillover income of $1.23 per share as of September 30th, our Board declared regular monthly distributions of $0.11 per share through March of 2024, as well as an additional special distribution of $0.05 per share for the fourth consecutive year, payable in December.

根據我們對截至 9 月 30 日每股 1.23 美元的未分配溢出收入的展望，我們的董事會宣布截至 2024 年 3 月每月定期分配每股 0.11 美元，並連續第四年額外分配每股 0.05 美元， 12 月付款。

We achieved a portfolio yield of over 17% on our debt investments for the quarter, once again at or near the top of the BDC industry. We raised $14 million of equity from our at-the-market program at a premium to NAV, further enhancing our investment capacity. Our portfolio at quarter end stood at $729 million, growing modestly from June 30th. We finished the quarter with a committed and approved backlog of $202 million providing us with a solid base of opportunities to thoughtfully grow our portfolio. As a reminder, most of our funding commitments are subject to our portfolio companies meeting certain key milestones.

本季我們的債務投資實現了超過 17% 的投資組合收益率，再次達到或接近 BDC 行業的最高水準。我們從市場計劃中以高於資產淨值的溢價籌集了 1,400 萬美元的股本，進一步增強了我們的投資能力。截至季末，我們的投資組合為 7.29 億美元，自 6 月 30 日起小幅成長。本季結束時，我們已承諾並批准了 2.02 億美元的積壓訂單，這為我們深思熟慮地發展我們的投資組合提供了堅實的機會基礎。提醒一下，我們的大部分融資承諾都取決於我們的投資組合公司是否達到了某些關鍵里程碑。

Finally, we ended the quarter with a net asset value of $10.41 per share. The largest impact on our NAV was a result of our fair value markdown of our debt investment in Evelo Biosciences, which Jerry will provide more detail about. We continue to work closely with and support not only Evelo but all of our portfolio companies as we focus on improving our overall credit profile and maximizing recovery.

最後，本季末我們的資產淨值為每股 10.41 美元。對我們的資產淨值影響最大的是我們對 Evelo Biosciences 債務投資的公允價值降價，傑瑞將提供更多詳細資訊。我們繼續與 Evelo 以及我們所有的投資組合公司密切合作並提供支持，專注於改善我們的整體信用狀況並最大限度地提高復甦。

We continue to seek high-quality new investments to grow our portfolio despite the challenging macro environment. As we close out 2023, we are hopeful that the volatility in the macro environment will ease and the negative credit cycle will improve. Our team remains focused on credit quality and executing on our investment strategy in order to create additional value for our shareholders over the long term.

儘管宏觀環境充滿挑戰，我們仍繼續尋求高品質的新投資來擴大我們的投資組合。 2023 年即將結束，我們希望宏觀環境的波動將會緩解，信貸負週期將會改善。我們的團隊仍然專注於信用品質和執行我們的投資策略，以便長期為我們的股東創造額外價值。

With that, I will now turn the call over to Jerry and Dan to give you more details and color on our performance. Jerry?

現在，我將把電話轉給傑里和丹，為您提供有關我們表演的更多細節和色彩。傑瑞？

Thanks, Rob, and good morning, everyone. Our portfolio grew slightly from the prior quarter to $729 million as of September 30th, as a result of our careful approach to new originations, in the face of ongoing macroeconomic and VC headwinds. Our portfolio size was impacted partially due to our portfolio markdowns.

謝謝羅布，大家早安。截至 9 月 30 日，我們的投資組合較上一季略有增長，達到 7.29 億美元，這是我們面對持續的宏觀經濟和風險投資逆風而對新產品採取謹慎態度的結果。我們的投資組合規模受到部分影響是由於我們的投資組合降價。

In the third quarter, we funded 8 debt investments totaling $88 million, including debt investments to 4 new portfolio companies and 4 existing portfolio companies. While we maintain a healthy pipeline, we expect to remain selective in originating debt investments during the remainder of 2023.

第三季度，我們資助了 8 筆債務投資，總額為 8,800 萬美元，其中包括對 4 家新投資組合公司和 4 家現有投資組合公司的債務投資。在我們保持健康的管道的同時，我們預計在 2023 年剩餘時間內將繼續選擇性地發起債務投資。

Our onboarding yield of 13.9% during the quarter remain near our historic highs, continuing to reflect the higher interest rate environment in our markets as well as our pipe -- our discipline in structuring and pricing transactions which we expect to produce strong net investment income.

本季我們13.9% 的初始收益率仍接近歷史高位，繼續反映了我們市場以及我們的管道（我們在交易結構和定價方面的紀律）較高的利率環境，我們預計這些交易將產生強勁的淨投資收入。

During the quarter, we experienced 1 loan prepayment, 2 refinanced loans, and 1 partial paydown totaling $38 million in prepaid principal. We expect prepayments to remain muted in the fourth quarter of 2023 compared to our historic levels given the weak IPO and M&A markets. Our debt portfolio yield of 17.1% continues to validate structuring our investments with floating interest rates and a rising interest rate environment. We again generated one of the highest debt portfolio yields in the BDC industry. As of September 30th, we held warrant equity positions in 99 portfolio companies with a fair value of $42 million.

本季度，我們經歷了 1 筆貸款提前還款、2 筆再融資貸款和 1 筆部分還款，預付本金總計 3,800 萬美元。鑑於 IPO 和併購市場疲軟，我們預計 2023 年第四季的預付款將低於歷史水準。我們 17.1% 的債務投資組合收益率繼續驗證了我們在浮動利率和利率上升環境下的投資結構。我們再次創造了 BDC 行業中最高的債務投資組合收益率之一。截至 9 月 30 日，我們持有 99 家投資組合公司的認股權證股權頭寸，公允價值為 4,200 萬美元。

As a reminder, structuring investments with warrants and equity rights is a key component of our venture debt strategy and a potential generator of shareholder value. In the third quarter, we closed $178 million in new loan commitments and approvals and ended the quarter with a committed and approved backlog of $202 million compared to $159 million at the end of the second quarter. We believe our committed backlog with most of our funding commitments subject to our portfolio companies, achieving certain key milestones provides a solid base as we seek to prudently grow our portfolio. We also continue to work closely with all of our current portfolio companies to navigate the choppy macro environment.

提醒一下，利用認股權證和股權進行結構性投資是我們風險債務策略的關鍵組成部分，也是股東價值的潛在創造者。第三季度，我們完成了 1.78 億美元的新貸款承諾和批准，本季末承諾和批准的積壓貸款為 2.02 億美元，而第二季末為 1.59 億美元。我們相信，我們的大部分資金承諾都受到我們投資組合公司的承諾積壓，實現某些關鍵里程碑為我們尋求謹慎成長我們的投資組合提供了堅實的基礎。我們也繼續與所有現有投資組合公司密切合作，以應對動盪的宏觀環境。

Unfortunately, our portfolio company, Double Biosciences had 2 unfavorable trial outcomes during 2023, including a failed Phase IIa trial for its psoriasis drug, 29 23 in October. As a result, in the third quarter, we recorded a significant unrealized loss on our Evelo debt investment. We creatively restructured our debt investment in the prior quarter and continue to diligently work towards achieving additional recoveries on our investment.

不幸的是，我們的投資組合公司 Double Biosciences 在 2023 年有 2 項不利的試驗結果，其中包括 10 月 29 23 日的牛皮癬藥物 IIa 期試驗失敗。因此，在第三季度，我們的 Evelo 債務投資出現了重大的未實現損失。我們在上一季創造性地重組了債務投資，並繼續努力實現更多投資回收。

Subsequent to the end of Q3, Horizon received an additional cash paydown of $11 million for Evelo, with the $5 million paydown Horizon received from Evelo early in the third quarter, Horizon has received a total of $16 million in principal repayments on its Evelo debt investments in 2023. In addition, we are working closely and collaboratively with the company as it seeks strategic alternatives to maximize the value of its core technology platform.

第三季末後，Horizo​​​​n 收到了Evelo 1,100 萬美元的額外現金付款，加上第三季初從Evelo 收到的500 萬美元付款，Horizo​​​​n 已收到總計1,600 萬美元的Evelo 債務投資本金償還2023 年。此外，我們正在與該公司密切合作，尋求策略替代方案，以最大限度地發揮其核心技術平台的價值。

Overall, we are closely monitoring all of our portfolio companies and are working with their management teams, investors and other stakeholders to assist them in the challenging macro and venture capital environment. As of September 30th, 87% of our debt portfolio consisted of three 4-rated debt investments compared to 90% as of June 30. Our five 2-rated debt investments at September 30th are slightly higher than the four 2-rated debt investments in Q2. We also have two 1-rated debt investments at the end of Q3, which represent 2.3% of our total debt portfolio.

總體而言，我們正在密切關注所有投資組合公司，並與他們的管理團隊、投資者和其他利害關係人合作，幫助他們應對充滿挑戰的宏觀和創投環境。截至9 月30 日，我們的債務投資組合中有87% 由三項4 級債務投資組成，而截至6 月30 日，這一比例為90%。我們截至9 月30 日的五項2 級債務投資略高於9 月30 日的四項2 級債務投資。Q2。截至第三季末，我們還有兩項 1 級債務投資，占我們總債務投資組合的 2.3%。

Turning now to the venture capital environment. According to PitchBook, approximately $37 billion was invested in VC-backed companies in the third quarter of 2023 and compared to $46 billion in Q3 of 2022 and $87 billion in the third quarter of 2021. VC activity levels remain under considerable stress as VC investments in new portfolio companies made in 2021 and the first half of 2022 are significantly overvalued in the current economic market. As a result, the ability of VC-backed companies to raise new capital is challenging, combined with a virtually closed ideal market in our muted M&A market, VC-backed technology and life science companies are finding it increasingly difficult to raise much needed capital to fund operations and growth.

現在轉向創投環境。根據PitchBook 的數據，2023 年第三季向創投支持的公司投資了約370 億美元，而2022 年第三季為460 億美元，2021 年第三季為870 億美元。創投活動水準仍面臨相當大的壓力，因為創投在2021 年和 2022 年上半年新成立的投資組合公司在當前經濟市場中被嚴重高估。因此，由風險投資支持的公司籌集新資本的能力面臨挑戰，再加上併購市場幾乎封閉的理想市場，風險投資支持的技術和生命科學公司發現籌集急需的資金變得越來越困難。基金運營和增長。

On a positive note, judging from our healthy pipeline, we believe there is significant number of opportunities to invest in quality companies seeking capital, particularly debt capital to fill their ongoing needs. We believe venture lenders, especially public BDCs remain best positioned to fill this need, but the opportunity is tempered by the existing overall market conditions. In terms of VC fundraising, only $9 billion was raised in the third quarter, and the market is now on pace to record a 9-year low, while the avenue to public exits is still largely closed. VC's committed capital from their LPs remains elevated to the amounts raised during the good times and the reluctance to invest in the current market.

從正面的方面來看，從我們健康的管道來看，我們相信有大量機會投資於尋求資本（特別是債務資本）的優質公司，以滿足其持續的需求。我們認為，風險貸款機構，尤其是公共 BDC 仍然最有能力滿足這一需求，但這一機會受到現有整體市場狀況的影響。在創投融資方面，第三季僅籌集了 90 億美元，市場目前正在創下 9 年來的新低，而公開退出的途徑仍然基本關閉。創投公司從其有限合夥人那裡獲得的承諾資本仍然高於景氣時期籌集的資金，並且不願投資於當前市場。

While we expect this to continue in the near term, the amount of sideline capital does provide VCs with the ability to support their well-performing portfolio companies until improved exit markets emerge. VC-backed exit activity improved in the third quarter as total exit value for the quarter was $36 billion, driven primarily by the [Extacart] and [Klaviyo] IPOs. However, their stock prices have underperformed post IPO, and their IPOs have not provided the momentum that the market sought for new IPO issuances.

雖然我們預計這種情況將在短期內持續下去，但副業資本的數量確實使創投公司有能力支持其業績良好的投資組合公司，直到退出市場出現改善。創投支持的退出活動在第三季度有所改善，該季度的總退出價值為 360 億美元，這主要是由 [Extacart] 和 [Klaviyo] IPO 推動的。然而，它們的股價在IPO後表現不佳，而且它們的IPO並沒有提供市場尋求新IPO發行的動力。

The M&A market for venture-backed companies also remained at historical lows during Q3. There was a potential positive indicator for M&A in the life science market with big pharma companies sitting on historical high levels of cash and with blockbuster drugs coming off patent protection in the next 4 years. Big pharma needs to -- need for new drugs and potential blockbusters could lead to significant M&A activity with big pharma companies buying smaller development companies with drugs in the clinical pipeline in order to restock their own drug pipelines.

第三季創投公司的併購市場也維持在歷史低點。生命科學市場的併購有潛在的正面跡象，大型製藥公司的現金水準處於歷史高位，重磅藥物將在未來 4 年內失去專利保護。大型製藥公司需要—對新藥和潛在重磅藥物的需求可能會導致重大的併購活動，大型製藥公司收購擁有臨床管道藥物的小型開發公司，以補充自己的藥物管道。

In terms of market conditions for new venture loan investment, we expect a challenging environment to continue into at least the early portion of 2024. Accordingly, Horizon will maintain a pragmatic and cautious approach to new investment opportunities by focusing on preserving the value and quality of its current portfolio. When the global economic and investment environment stabilizes and the venture capital ecosystem improves, we believe Horizon's solid reputation and long-term market presence will allow us to reaccelerate its portfolio growth to the new high-quality venture debt loans.

就新風險貸款投資的市場狀況而言，我們預計至少到2024 年初，充滿挑戰的環境將持續。因此，Horizo​​n 將保持務實和謹慎的態度對待新的投資機會，重點關注保護風險貸款的價值和品質。目前的投資組合。當全球經濟和投資環境穩定、風險投資生態系統改善時，我們相信Horizo​​​​n的良好聲譽和長期市場地位將使我們能夠重新加速其新的高品質風險債務貸款的投資組合成長。

A key baseline for future prudent portfolio growth is our committed, approved and awarded backlog, which as of today stands at $227 million. And our advisers pipeline of new opportunities, which as of today stands at over $1 billion. To sum up, we continue to sharply focus on credit quality and providing our portfolio companies with support and alternative solutions when necessary to ensure optimal outcomes for our portfolio, where there are attractive high-quality companies looking for venture debt solutions we will look to thoughtfully add to our pipeline and backlog with an eye toward prudently growing our portfolio.

未來投資組合審慎成長的關鍵基準是我們承諾、批准和授予的積壓訂單，截至目前為止已達 2.27 億美元。我們的顧問提供了一系列新機會，截至目前為止價值已超過 10 億美元。總而言之，我們繼續高度關注信貸質量，並在必要時為我們的投資組合公司提供支援和替代解決方案，以確保我們的投資組合取得最佳結果，如果有有吸引力的高品質公司正在尋求風險債務解決方案，我們將深思熟慮增加我們的管道和積壓訂單，並專注於謹慎地擴大我們的投資組合。

Based on current portfolio size and yield, we believe we remain well positioned to generate solid NII for our shareholders and additional long-term shareholder value. With that, I will now turn the call over to Dan.

根據目前的投資組合規模和收益率，我們相信我們仍處於有利地位，可以為股東創造堅實的NII並創造額外的長期股東價值。現在，我將把電話轉給丹。

Thanks, Jerry, and good morning, everyone. During the third quarter, the yield generated from our debt investments once again produced NII that more than covered our distribution. In addition, we continue to strengthen our balance sheet through our ATM program, successfully and accretively raising an additional $14 million of capital, providing us with capacity to prudently make new investments.

謝謝傑瑞，大家早安。第三季度，我們的債務投資所產生的收益再次超出了我們的分配範圍。此外，我們繼續透過 ATM 計劃加強我們的資產負債表，成功並累積籌集了 1400 萬美元的額外資本，使我們有能力審慎地進行新投資。

As of September 30th, we had $80 million in available liquidity and consisting of $47 million in cash and $33 million of funds available to be drawn under our existing credit facilities. Currently have $25 million outstanding under our $150 million KeyBank credit facility and $181 million outstanding on our $250 million New York Life credit facility, leaving us with ample capacity to grow the portfolio.

截至 9 月 30 日，我們擁有 8,000 萬美元的可用流動資金，其中包括 4,700 萬美元現金和 3,300 萬美元可根據現有信貸安排提取的資金。目前，我們的 1.5 億美元 KeyBank 信貸額度中有 2,500 萬美元未償還，紐約人壽 2.5 億美元信貸額度中有 1.81 億美元未償還，這使我們有足夠的能力來擴大投資組合。

Our debt-to-equity ratio stood at 1.27:1 as of September 30th and netting out cash on our balance sheet, our leverage was 1.12:1, which was below our target leverage of 1.2:1. Based on our cash position and our borrowing capacity on our credit facilities, our potential new investment capacity at September 30th was $241 million. For the third quarter, we earned total investment income of $29 million, an increase of 25% compared to the prior year period. Interest income on investments increased primarily as a result of the higher average size of our debt investment portfolio for the quarter and increases in the variable interest rates on our debt investment.

截至 9 月 30 日，我們的負債股本比率為 1.27:1，扣除資產負債表上的現金後，我們的槓桿率為 1.12:1，低於我們 1.2:1 的目標槓桿率。根據我們的現金狀況和信貸額度的借貸能力，截至 9 月 30 日，我們的潛在新投資能力為 2.41 億美元。第三季度，我們獲得總投資收益2,900萬美元，比去年同期成長25%。投資利息收入的成長主要是由於本季債務投資組合平均規模的增加以及債務投資可變利率的增加。

Our debt investment portfolio on a net-cost basis stood at $117 million as of September 30th, a 2% increase from June 30th, 2023. For the third quarter of '23, we achieved onboarding yields of 13.9% compared to 13.6% achieved in the second quarter. Our loan portfolio yield was 17.1% for the third quarter compared to 15.9% for last year's third quarter. Total expenses for the quarter were $11.6 million compared to $12 million in the third quarter of '22. Our interest expense increased to $7.1 million from $5.3 million in last year's third quarter due to an increase in average borrowings and higher interest rates on our borrowings.

截至9 月30 日，我們的債務投資組合以淨成本計算為1.17 億美元，較2023 年6 月30 日增長2%。2023 年第三季度，我們實現了13.9% 的初始收益率，而2023 年第三季的初始收益率為13.6%。第二季。第三季我們的貸款組合收益率為 17.1%，而去年第三季為 15.9%。該季度的總支出為 1,160 萬美元，而 2022 年第三季的總支出為 1,200 萬美元。由於平均借款增加和借款利率上升，我們的利息支出從去年第三季的 530 萬美元增加到 710 萬美元。

Our base management fee was $3.2 million, up from $2.8 million in last year's third quarter due to an increase in the average size of our portfolio. We had no performance-based incentive fee in the third quarter compared to an incentive fee of $2.8 million for last year's third quarter. This was due to the deferral of incentive fees otherwise earned by adviser in the quarter under our incentive fee cap and deferral mechanism. The deferral was driven by unrealized and realized losses on our portfolio.

由於我們投資組合平均規模的擴大，我們的基本管理費為 320 萬美元，高於去年第三季的 280 萬美元。與去年第三季 280 萬美元的激勵費相比，我們第三季沒有基於績效的激勵費。這是由於根據我們的激勵費用上限和遞延機制，顧問在本季賺取的激勵費用被推遲。延遲是由於我們投資組合的未實現和已實現損失所致。

Net investment income for the third quarter of '23 was $0.53 per share compared to $1 per share in the second quarter of 23 and $0.43 per share for the third quarter '22. The company's undistributed spillover income as of September 30th was $1.23 per share. We anticipate that the size of our portfolio, the increase in our portfolio's interest rates, along with our predictive pricing strategy will enable us to continue generating NII that covers our distributions.

23 年第三季的淨投資收益為每股 0.53 美元，而 23 年第二季的淨投資收益為每股 1 美元，22 年第三季的淨投資收益為每股 0.43 美元。截至 9 月 30 日，該公司未分配的溢出收入為每股 1.23 美元。我們預計，我們的投資組合規模、投資組合利率的增加以及我們的預測定價策略將使我們能夠繼續產生覆蓋我們分配的NII。

As we have said previously, while we expect to experience repayments through the end of the year, we still believe prepayments will be below our historical levels given the current environment.

正如我們之前所說，雖然我們預計將在今年年底前還款，但鑑於當前環境，我們仍然認為預付款將低於歷史水平。

To summarize our portfolio activities for the third quarter, new originations totaled $88 million, which were offset by $9 million in scheduled principal payments and $38 million in principal prepayments, refinancing and partial paydowns. We ended the quarter with a total investment portfolio of $729 million. Given the macro environment, we expect to remain selective in the near term with respect to originations. At September 30th, the portfolio consisted of debt investments in 56 companies with an aggregate fair value of $680 million. And a portfolio of warrant, equity and other investments in 102 companies with an aggregate fair value of $49 million.

總結我們第三季的投資組合活動，新發放總額為 8,800 萬美元，被預定本金支付 900 萬美元和本金預付款、再融資和部分還款 3,800 萬美元所抵銷。本季結束時，我們的投資組合總額為 7.29 億美元。考慮到宏觀環境，我們預計短期內將在發起方面保持選擇性。截至 9 月 30 日，該投資組合包括 56 家公司的債務投資，總公允價值為 6.8 億美元。以及 102 家公司的認股權證、股權和其他投資的投資組合，總公允價值為 4,900 萬美元。

Based upon our portfolio outlook, our board declared monthly distributions of $0.11 per share for January, February and March 2024 and a special distribution of $0.05 per share payable in December of 2023. We remain committed to providing our shareholders with distributions that are covered by our net investment income over time. Our NAV as of September 30th was $10.41 per share compared to $11.07 as of June 30th, 2023, and $11.66 as of September 30th, 2022. The $0.66 reduction in NAV on a quarterly basis was primarily due to our paid distributions, realized losses and adjustments to fair value, partially offset by net investment income.

根據我們的投資組合展望，我們的董事會宣布2024 年1 月、2 月和3 月每月分配每股0.11 美元，並於2023 年12 月支付每股0.05 美元的特別分配。我們仍然致力於為股東提供我們的分配所涵蓋的分配。隨著時間的推移淨投資收益。截至9 月30 日，我們的資產淨值為每股10.41 美元，而截至2023 年6 月30 日為11.07 美元，截至2022 年9 月30 日為11.66 美元。資產淨值按季度減少0.66 美元主要是由於我們的已支付分配、已實現虧損和調整公允價值，部分由淨投資收益抵銷。

As we've consistently noted, 99% of the outstanding principal amount of our debt investments, their interest rate at floating rates with coupons that are structured to increase as interest rates rise with interest rate floors. As of today, 95% of our debt portfolio will benefit from additional increases in the prime rate.

正如我們一貫指出的，我們債務投資的未償還本金中有 99% 的利率為浮動利率，票面利率隨著利率下限的上升而增加。截至今天，我們 95% 的債務投資組合將受益於優惠利率的進一步提高。

This concludes our opening remarks. We'll be happy to take questions you may have at this time.

我們的開場白到此結束。我們很樂意回答您此時可能提出的問題。

Thank you. (Operator Instructions) The first question comes from the line of Bryce Rowe with B. Riley Securities.

謝謝。 （操作員說明）第一個問題來自 B. Riley Securities 的 Bryce Rowe。

Let's see, I wanted to start on just the level of spillover, obviously, it's growing. You've paid a special dividend here for several consecutive years. Any way to kind of think about kind of sizing that spillover up and how you're thinking about managing it given the increase in spillover.

讓我們看看，我想從溢出的水平開始，顯然，它正在增長。您已經連續幾年在這裡支付特別股息。任何一種方式都可以考慮如何衡量外溢效應，以及考慮到外溢效應的增加，你如何考慮管理它。

Good morning, Bryce. Just we look at the distribution every quarter with our Board members and taking consideration the activity in the portfolio and the income that it's generating and obviously, the spillover. At these levels, we'll continue to do that and look at it through the regulatory requirements of distributing that. So, nothing certain today.

早上好，布萊斯。我們只是與董事會成員一起查看每個季度的分配情況，並考慮投資組合中的活動及其產生的收入，顯然還有溢出效應。在這些層面上，我們將繼續這樣做，並透過分發的監管要求來審視它。所以，今天沒什麼確定的。

That's helpful. I guess you've got time to kind of figure that out, but I was just curious if there was an update there. Next question. Just wanted to ask about a couple of portfolio companies that I guess you've seen a change in some of the maturity date. One won the Nextcar, you've got a maturity date of -- actually, it was yesterday, and that was moved up. Any update you can provide there kind of given the size of that investment? And then also wanted to ask about Nexii Building. Any update on that particular investment?

這很有幫助。我想你有時間弄清楚這一點，但我只是好奇是否有更新。下一個問題。只是想詢問幾家投資組合公司，我猜您已經看到一些到期日發生了變化。一個人贏得了 Nextcar，你的到期日是——實際上，這是昨天，而且已經提前了。鑑於該投資的規模，您可以提供任何更新嗎？然後還想問Nexii大樓的狀況。有關該特定投資的任何更新嗎？

This is Jerry. So as it relates to Nextcar, that company does continue to raise capital in the marketplace. And there they would be in an interesting position if there were better exit markets. And that was their expectation along with a lot of other companies, VC-backed companies, with the exit markets just not there for them. So they continue to raise capital, continue to get inside support from investors and they're in a very dynamic market there in the car kind of subscription, rental business, and it is a growing platform. But until exit markets kind of open up, they're going to continue to be internally funded.

這是傑瑞。因此，就 Nextcar 而言，該公司確實繼續在市場上籌集資金。如果有更好的退出市場，他們將處於一個有趣的位置。這是他們和許多其他公司、創投支持的公司的期望，但退出市場並不適合他們。因此，他們繼續籌集資金，並繼續獲得投資者的內部支持，他們在汽車訂閱、租賃業務方面處於一個非常活躍的市場，這是一個不斷增長的平台。但在退出市場開放之前，它們將繼續獲得內部融資。

And we're going to continue to work with them to help them get to a better exit opportunity, and that's kind of where we are.

我們將繼續與他們合作，幫助他們獲得更好的退出機會，這就是我們現在的處境。

And then, Danny, if you could just touch on Nexii building as well.

然後，丹尼，您能否也談談 Nexii 大樓。

Nexii kind of similar situation, very interesting product, good demand for their product, difficult markets in the kind of construction area right now. They do have overseas contracts that they are plugged into. And so again, I think in better exit markets, it would be opportunities for this company to do something a lot more exciting. But right now, they just continue to be internally funded. They actually did get an outside investment, I think, in the third quarter from institutional investors. So we continue to work closely with them. And again, hopefully, to get to a better market where they can be more opportunistic in how they're thinking about financing the business.

Nexii 類似的情況，非常有趣的產品，對其產品的良好需求，目前該建築領域的市場困難。他們確實有海外合約。因此，我認為在更好的退出市場中，這家公司將有機會做一些更令人興奮的事情。但現在，他們只是繼續獲得內部資助。我認為，他們實際上確實在第三季度從機構投資者那裡獲得了外部投資。因此，我們將繼續與他們密切合作。再一次，希望能夠進入一個更好的市場，在那裡他們可以更有機會主義地考慮如何為企業融資。

Excellent. Thank you for the commentary. I'll hop back in queue for some others to take a chance. Thanks.

出色的。謝謝您的評論。我會跳回隊列中，讓其他人來嘗試。謝謝。

Next question comes from the line of Christopher Nolan with Ladenburg Thalmann.

下一個問題來自克里斯多福諾蘭和拉登堡塔爾曼的台詞。

For Evelo, were there any incremental investments made in the fourth quarter?

對Evelo來說，第四季有增量投資嗎？

No, no.

不，不。

And on the call, you said there was $16 million of repayments in the third quarter.

在電話會議上，您說第三季還款額為 1600 萬美元。

So in the third quarter, the company completed a pipe transaction. They raised $25 million mostly from inside investors led by flagship who has about $140 million or had about -- I think it's more than that now invested in the company. And when that transaction closed, we received a $5 million paydown and we converted $5 million of our debt to equity which at the time gave us about an 11% ownership position in the public company. And the expectation or the hope was certainly that the clinical trial for psoriasis would have turned out better. We were very disappointed. Obviously, the company was very disappointed in the results of that. But once they announced that the results of that trial that didn't meet its endpoints, the company paid down an additional $11 million, which we actually just received last week. So we got $16 million in pay down since the third quarter, and combined with what we received here in the -- early in the fourth quarter.

於是在第三季度，公司完成了一筆管道交易。他們籌集了 2500 萬美元，主要來自旗艦公司領導的內部投資者，該投資者擁有約 1.4 億美元或大約 ​​- 我認為這比現在投資於該公司的資金還要多。當交易完成時，我們收到了 500 萬美元的付款，並將 500 萬美元的債務轉換為股權，當時我們在這家上市公司中擁有約 11% 的所有權。人們的期望或希望肯定是牛皮癬的臨床試驗會達到更好的結果。我們非常失望。顯然，該公司對此結果感到非常失望。但一旦他們宣布該試驗的結果未達到其終點，該公司就額外支付了 1,100 萬美元，而我們實際上上週才收到了這筆錢。因此，自第三季以來，加上我們在第四季初收到的款項，我們獲得了 1,600 萬美元的預付款。

And then I saw on the Q that for Evelo, you also marked down your equity positions. Do these pipe transactions, should we expect further write-downs in equity from your perspective? Or do you think insiders stepping up will stabilize your equity investment?

然後我在Q上看到，對於Evelo，你也減記了你的股權部位。從您的角度來看，這些管道交易是否應該預期股本會進一步減記？或者您認為內部人士的介入會穩定您的股權投資嗎？

Yes, I think we actually have a note in our Q that we filed a subsequent event that we believe that we will be marking down the equity in the fourth quarter as well.

是的，我認為我們實際上在問題中註意到，我們提交了一項後續事件，我們相信我們也將在第四季度減記股本。

And then I guess a follow question. Were there any new nonaccrual investments in the fourth quarter?

然後我猜想一個後續問題。第四季是否有新的非應計投資？

So from the third quarter, there were a couple of different names, and you can see them on the scheduled investments, the names that are on nonaccrual and they were new names. One name dropped off and a couple of names did get tagged as nonaccrual for the quarter, Evelo being one of them and Robin being another.

因此，從第三季開始，出現了幾個不同的名稱，您可以在預定投資中看到它們，這些名稱是非應計的，並且它們是新名稱。有一個名字被刪除，有幾個名字確實被標記為該季度的非應計費用，埃維洛是其中之一，羅賓是另一個。

Yes, I'm asking for the fourth quarter to date.

是的，我要的是迄今為止的第四季。

Fourth quarter to date, no.

迄今為止，第四季度，沒有。

(Operator Instructions). Next question comes from the line of Ryan Lynch with KBW.

（操作員說明）。下一個問題來自 Ryan Lynch 與 KBW 的對話。

Following up on Bryce's question on Nextcar and Nexii. I don't want to necessarily lump these investments together because there are 2 different situations. But I had kind of similar questions on both of those. Number one, I think you -- I believe you said they are both continue to be funded -- internally funded. I guess what does that mean? Because I would assume that both of these are still negative cash flowing businesses.

跟進 Bryce 關於 Nextcar 和 Nexii 的問題。我不想把這些投資混為一談，因為有兩種不同的情況。但我對這兩個問題都有類似的問題。第一，我認為你——我相信你說過他們都繼續得到資助——內部資助。我想這是什麼意思？因為我認為這兩家公司還是負現金流業務。

So I would just love to hear what exactly that means. And then also what drove the decline in fair values for these businesses? Because it sounds like the way you describe them, both -- and again, I know they're different companies, but kind of the way you describe it both, is that the fundamentals of the business seem to be doing fine or maybe as expected, but the exit opportunities have certainly deteriorated just given market dynamics. So was the weakness and the potential of kind of overall exit markets, the driver of the decline in valuation or was something else moving that lower this quarter?

所以我很想聽聽這到底代表什麼。那麼是什麼原因導致這些企業的公允價值下降呢？因為這聽起來像是你描述它們的方式，再說一遍，我知道它們是不同的公司，但你描述它們的方式是，業務的基本面似乎表現良好或可能符合預期，但鑑於市場動態，退出機會肯定已經惡化。那麼，整體退出市場的疲軟和潛力是估值下降的驅動因素，還是其他因素導致本季估值下跌？

Honestly, it is a little bit exit markets and opportunities to fund the growth that would otherwise might be available to them. So in other words, they are operating okay. They are -- again, the investors continue to support the companies to a degree, but really outside capital is needed in some form or shape, meaning public offering and M&A or a large venture capital or crossover fund, I think, in probably both of these cases.

老實說，這是一些退出市場和為他們本來可能可以獲得的成長提供資金的機會。換句話說，他們運作良好。他們再次強調，投資者繼續在一定程度上支持這些公司，但實際上需要某種形式或形式的外部資本，這意味著公開發行和併購或大型風險投資或交叉基金，我認為，可能在這兩個方面這些案例。

And so they're working -- that's where they're spending a lot of their time right now. It's on trying to find that right exit opportunity in a market where exit opportunities are really difficult. And so they're getting funded because the investors see that there is value in the company. and the potential for a positive exit still certainly exists. But they -- I think this isn't just -- these 2 companies, I think, across the venture capital community most companies really are spending in an inordinate amount of time figuring out fundraising strategies.

所以他們正在工作——這就是他們現在花費大量時間的地方。這是在一個退出機會非常困難的市場中試圖找到正確的退出機會。他們之所以獲得資金，是因為投資者看到了公司的價值。積極退出的可能性仍然存在。但我認為這不僅僅是這兩家公司，我認為整個創投界的大多數公司確實花了大量的時間來制定融資策略。

I think we provided some data on venture capital fundraising in the third quarter. Again, it was down fairly significantly. Part of the issue is that many of the companies that were funded in 2020, 2021, certainly first half of 2022, the valuation of those companies is -- in this market, they are significantly overvalued. And so it's hard to bring in new investment or attract new investment in that kind of scenario. So where there may be operationally growth opportunities, it's difficult to take advantage of those when capital is so constrained.

我認為我們提供了一些第三季創投融資的數據。再次，其下降幅度相當大。部分問題在於，許多在 2020 年、2021 年、當然是 2022 年上半年獲得融資的公司，這些公司的估值在這個市場上被嚴重高估了。因此，在這種情況下很難引入新的投資或吸引新的投資。因此，即使存在營運成長機會，但在資本如此有限的情況下，很難利用這些機會。

And so to get -- maybe to get to the last part of your question. So not knowing when those markets are going to turn, we have to be, as we're looking at our debt investment, we have to be very sober about what happens if those markets continue to be as tight as they are, meaning exit markets and VC flows. We have to be very sober about how we value these assets.

因此，也許是為了解決你問題的最後一部分。因此，我們不知道這些市場何時會轉向，當我們審視我們的債務投資時，我們必須非常清醒地認識到，如果這些市場繼續緊張，會發生什麼，這意味著退出市場和 VC 流量。我們必須非常清醒地認識到如何評估這些資產。

So it's primarily related to the exit markets and just the ability for these companies in the specific industries that they're in to fund operations, but not necessarily anything going on specific with these businesses deterioration? Is that a kind of a simplified version of what we're talking about?

因此，這主要與退出市場以及這些公司在特定行業中為營運提供資金的能力有關，但不一定與這些業務惡化有關？這是我們正在談論的內容的簡化版本嗎？

Yes, very simple because the fact of the matter is when it is difficult to raise capital, it is difficult for companies to make operational decisions based on the need for additional capital that may not be there. So that does impact your ability to make -- which in a good market would be pretty straightforward operational decisions, it makes it more difficult to do that. And that -- again, that's just not just about these 2 companies. That's across the board.

是的，非常簡單，因為事實是，當很難籌集資金時，公司很難根據可能不存在的額外資本需求做出營運決策。因此，這確實會影響你做出決策的能力——在一個良好的市場中，這將是相當簡單的營運決策，但它使得做到這一點變得更加困難。再說一次，這不僅是這兩家公司的問題。這是全面的。

And then the other question I had was on Evelo, obviously, a disappointing outcome with that, thus far. I'm just curious, as you kind of look back on that investment, I understand it's still kind of an ongoing investment, but as a lot of the, a lot of the results have already taken place at this point. What lessons have you learned from that investment, specifically that will inform your decisions going forward on how you invest in? And then kind of a second part on that, that was an investment that was a pre-revenue position in the life sciences area that was reliant on these clinical trials, the approval as well as I know you guys had a big majority supporter in that investment. But what percentage would you say of your life sciences investments are pre revenues and reliant on clinical trials?

然後我的另一個問題是關於 Evelo 的，顯然，到目前為止，結果令人失望。我只是很好奇，當你回顧這項投資時，我知道這仍然是一項持續的投資，但此時此刻已經產生了許多結果。您從該投資中汲取了哪些經驗教訓，特別是這些經驗教訓將為您今後的投資決策提供基礎？第二部分是生命科學領域的一項投資，它是一項收入前的投資，它依賴這些臨床試驗、批准以及我知道你們在這方面擁有絕大多數支持者投資。但是，您認為您的生命科學投資中有多少比例是收入前且依賴臨床試驗的？

I don't have those exact numbers in front of me. But to get to the kind of core of your question, whenever we underwrite a life science company, it's a drug development company, obviously burn cash with ongoing clinical trials. What you look for is a broad-based technology platforms. You look for a pipeline that has not just one drug candidate addressing one indication. You look for multiple drug candidates addressing multiple indications. Those are all there when we underwrote the deal, and you also look for a strong investor base, which the company had. And I'm not -- I'm just -- I'm not trying to justify anything one way or the other. But historically, that's how we have always underwritten life science drug companies.

我面前沒有這些確切的數字。但要觸及你問題的核心，每當我們承銷一家生命科學公司時，它都是一家藥物開發公司，顯然會因為正在進行的臨床試驗而燒錢。您尋找的是基礎廣泛的技術平台。您正在尋找的研發管線中不只有一種候選藥物來應對一種適應症。您正在尋找針對多種適應症的多種候選藥物。當我們承銷這筆交易時，這些都已經存在，而且您還需要尋找該公司擁有的強大的投資者基礎。我不是——我只是——我並不想以某種方式證明任何事情的合理性。但從歷史上看，這就是我們一直為生命科學製藥公司提供承保的方式。

And generally, what happens is as these drug candidates move through clinical trials, the companies are able to raise more money, especially the public ones in the public market. and continue moving other drugs through the clinic. So even if one of them fails, there is still a broad pipeline. There is still numerous potential value in the assets. And to simplify this and really I'm simplifying it. The acceleration of how quickly each one of these clinical trials came to fruition, I think that was probably one of the things that we would look at. It's not just do you have a great pipeline, but where are those drugs in the clinical trials, it's not that we didn't look at that, maybe that should have been a greater focus. And it certainly should have been a greater focus, given what happened in the overall life science market over the last 4 quarters, where funding is literally dried up. And that includes IPOs. It includes follow-on equity for public companies. It includes VC investment. And a lack of big pharma buying up these companies, which is usually a primary wave that they end up exiting the market.

一般來說，隨著這些候選藥物進入臨床試驗，公司能夠籌集更多資金，尤其是公開市場上的公開資金。並繼續在診所運送其他藥物。因此，即使其中一個失敗了，仍然有廣泛的管道。這些資產仍有大量潛在價值。為了簡化這個，我真的正在簡化它。我認為這可能是我們要關注的事情之一，加速每項臨床試驗的成果。不僅僅是你有一個很好的管道，而且這些藥物在臨床試驗中在哪裡，並不是我們沒有考慮到這一點，也許這應該是一個更大的焦點。考慮到過去 4 個季度整個生命科學市場的情況，資金實際上已經枯竭，這當然應該受到更大的關注。這包括首次公開募股。它包括上市公司的後續股權。其中包括風險投資。缺乏大型製藥公司收購這些公司，這通常是他們最終退出市場的主要浪潮。

So yes, there are some things we're certainly going to look at here. We do have other life science companies in our portfolio. They're in drug development stages. None of them, as I sit here today, they all seem to be fairly well funded going forward other than IMV, which we've already focused on. So that is something we'll look at. Right now, where -- I got to tell you where we are laser-focused on helping the company try to create as much value as they can with their underwriting platform technology going forward. And I think, hopefully, by the end of the fourth quarter, we may have something more to report on that. But right now, it's very early in that process. They just announced 10 days ago that the -- they had -- their 29 39 drug for psoriasis failed, and they were going to look for strategic alternatives. So we're really early in that process.

所以，是的，我們肯定會在這裡關註一些事情。我們的投資組合中確實還有其他生命科學公司。他們正處於藥物開發階段。當我今天坐在這裡時，除了我們已經關注的 IMV 之外，他們似乎都獲得了相當充足的資金。這就是我們要關注的問題。現在，我必須告訴你們，我們在哪裡專注於幫助公司透過其承保平台技術的發展創造盡可能多的價值。我認為，希望到第四季末，我們可能會對此有更多的報告。但現在，這個過程還處於早期階段。他們 10 天前剛剛宣布，他們的 29 39 種治療牛皮癬的藥物失敗了，他們將尋找戰略替代品。所以我們真的處於這個過程的早期。

One last one that I had. I think both in your prepared comments and your press release, you sort of talked about remaining selective in originating new investments in the remainder of 2023. I would assume that there's still really good deal opportunities out there, but I would assume that the -- kind of the comment on remaining selective is to reduce leverage levels at the BDC? Is that kind of what -- is that kind of the driver behind remaining selective is that you can kind of get leverage levels down to a lower level? And if that is the case, where would you like to see leverage levels ultimately end up at?

我擁有的最後一件。我認為，在您準備好的評論和新聞稿中，您都談到了在 2023 年剩餘時間內對新投資保持選擇性。我認為仍然存在很好的交易機會，但我認為——關於保持選擇性的評論是降低BDC 的槓桿水平嗎？保持選擇性背後的驅動因素是你可以將槓桿水平降低到較低水平嗎？如果是這樣的話，您希望看到槓桿水平最終達到什麼水平？

Well, let me just address it from the marketing side and then Dan may have some comments. From the marketing side, really, we have to -- you have to be really aware of where market conditions are right now, particularly relative to venture capital investment the kinds of companies that they venture capitalists are still investing in, they're still leaning forward on where are those companies, where are those markets. So you've got -- on the marketing side, you got that. And there are really good opportunities there because there are an exit -- really good exit markets for those kinds of companies. So companies that are performing really well, continuing to get -- attract capital -- that's fine. But we're -- anyone who comes into the market and says, we expect to be public next year, that's probably not -- if that's their goal, and that's their exit strategy, that's probably not something that in today's market, we would consider being interested in.

好吧，讓我從行銷方面談談這個問題，然後丹可能會發表一些評論。從行銷方面來說，我們確實必須——你必須真正了解現在的市場狀況，特別是相對於創投而言，他們的創投家仍在投資、仍在傾向的公司類型向前看那些公司在哪裡，那些市場在哪裡。所以，在行銷方面，你已經做到了。那裡確實有很好的機會，因為有退出——對於這類公司來說確實是很好的退出市場。因此，那些表現非常好的公司，能夠持續吸引資本，這很好。但我們——任何進入市場並說我們預計明年上市的人，這可能不是——如果這是他們的目標，這是他們的退出策略，那麼在今天的市場上，我們可能不會這麼做。考慮有興趣。

And I'll let Dan speak to the leverage side of this. But... .

我會讓丹談談這方面的槓桿作用。但... 。

As we mentioned, we are net of cash at 1.12. So that's below our target leverage. So we're comfortable where we are today. Being selective, I would agree with Jerry, it's more just on the market dynamics and the deals we're looking at.

正如我們所提到的，我們的現金淨值為 1.12。所以這低於我們的目標槓桿。所以我們對今天的處境感到很舒服。我同意傑瑞的觀點，要有選擇性，這更重要的是市場動態和我們正在考慮的交易。

There are no further questions at this time. I would like to turn the call back to Robert Pomeroy, Chairman and CEO, for closing comments.

目前沒有其他問題。我想將電話轉回給董事長兼執行長羅伯特·波默羅伊 (Robert Pomeroy)，請其發表最後評論。

Thank you all for joining us this morning. We appreciate your continued interest and support in Horizon. We look forward to speaking with you again soon. This will conclude our call.

感謝大家今天早上加入我們。我們感謝您對 Horizo​​​​n 的持續關注和支持。我們期待很快再次與您交談。我們的通話到此結束。

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。