Record Q1 Gross New Debt and Equity Commitments
of $530.9 Million
Q1 2021 Net Asset Value “NAV” per Share
Increased 0.9% to $11.36 from Q4 2020
Strong Available Liquidity of $550.0
Million
Record Undistributed Earnings Spillover of
$109.1 Million, or $0.94(1) per Ending Shares Outstanding
Declared a $0.28 Supplemental Distribution for
Fiscal 2021 Payable over Four Quarters beginning with Q1 2021
Q1 2021 Financial Achievements and Highlights
- Net Investment Income “NII” of $34.6 million, or $0.30 per
share
- Total Investment Income of $68.8 million
- Total gross new debt and equity commitments of $530.9 million
- Net Hercules’ debt and equity commitments of $467.2
million(2)
- Total gross fundings of $355.3 million
- Net Hercules’ fundings of $307.1 million(2)
- Unscheduled early principal repayments or “early loan
repayments” of $191.5 million
- $550.0 million of available liquidity, subject to existing
terms and covenants
- 11.6% Return on Average Equity “ROAE” (NII/Average Equity)
- 5.6% Return on Average Assets “ROAA” (NII/Average Assets)
- GAAP leverage of 94.6% and regulatory leverage of 89.2%(3)
- Net Asset Value “NAV” increased to $11.36 from $11.26, up 0.9%
from Q4 2020
- 13.2% GAAP Effective Yield and 11.6% Core Yield(4), a non-GAAP
measure
Footnotes:
- $0.95 per Weighted Average Shares Outstanding
- Net Hercules’ commitments and fundings are net of what was
assigned to the private funds during the quarter
- Regulatory leverage represents debt-to-equity ratio, excluding
the Company’s Small Business Administration “SBA” debentures
- Core Yield excludes early loan repayments and one-time fees,
and includes income and fees from expired commitments
Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or the
“Company”), the largest and leading specialty financing provider to
innovative venture, growth and established stage companies backed
by some of the leading and top-tier venture capital and select
private equity firms, today announced its financial results for the
first quarter ended March 31, 2021.
“We are off to a terrific start to 2021 with record levels of
new commitments and fundings for the first quarter,” stated Scott
Bluestein, chief executive officer and chief investment officer of
Hercules. “Notably, we closed nearly $531 million in new debt and
equity commitments, while improving and maintaining strong credit
quality with the highest internal credit rating on our debt
investment portfolio in 10 years.”
Bluestein added, “In addition to our base shareholder
distribution this quarter, we are establishing a supplemental
distribution program for fiscal year 2021 of $0.28, which will be
distributed equally over four quarters beginning with the first
quarter distribution, which is payable in May 2021. Our equity and
warrant portfolio has continued to mirror the vibrancy in our
venture ecosystem and gives us the confidence to provide the
additional distributions to our shareholders.”
Bluestein concluded, “We are very pleased to have also raised
and closed our first institutional private credit fund during the
quarter. Having the fund in place gives us the opportunity to
expand and diversify our investment platform while enhancing our
level of service and capabilities we can provide to our current and
future venture and growth stage portfolio companies.”
Q1 2021 Review and Operating Results
Debt Investment Portfolio
Hercules delivered new debt and equity commitments totaling
$530.9 million and fundings totaling $355.3 million.
During the first quarter, Hercules realized early loan
repayments of $191.5 million, which along with normal scheduled
amortization of $18.3 million, resulted in total debt repayments of
$209.8 million.
The new debt investment origination and funding activities lead
to a net debt investment portfolio increase of $82.5 million during
the first quarter, on a cost basis.
The Company’s total investment portfolio, (at cost and fair
value) by category, quarter-over-quarter is highlighted
below:
Total Investment
Portfolio: Q1 2021 to Q4 2020
Equity & Inv.
(in millions) Debt Funds Warrants
Total Portfolio Balances at Cost at 12/31/20
$
2,099.5
$
190.2
$
25.7
$
2,315.4
New fundings(a)
348.7
6.1
1.1
355.9
Fundings assigned to External Funds
(47.4
)
(0.8
)
(0.2
)
(48.4
)
Principal payments received on investments
(18.3
)
—
—
(18.3
)
Early payoffs(b)
(191.5
)
—
—
(191.5
)
Net changes attributed to conversions, liquidations, and fees
(9.0
)
1.0
(1.3
)
(9.3
)
Net activity during Q1 2021
82.5
6.3
(0.4
)
88.4
Balances at Cost at 3/31/21
$
2,182.0
$
196.5
$
25.3
$
2,403.8
Balances at Value at 12/31/20
$
2,094.5
$
225.0
$
34.6
$
2,354.1
Net activity during Q1 2021
82.5
6.3
(0.4
)
88.4
Net change in unrealized appreciation (depreciation)
8.1
6.0
7.8
21.9
Total net activity during Q1 2021
90.6
12.3
7.4
110.3
Balances at Value at 3/31/21
$
2,185.1
$
237.3
$
42.0
$
2,464.4
(a)
New funding amount includes $1.7 million associated with revolver
loans during Q1 2021.
(b)
Early payoffs includes $1.2 million of paydowns on revolvers during
Q1 2021.
Debt Investment Portfolio Balances by
Quarter
(in millions)
Q1 2021 Q4 2020 Q3 2020
Q2 2020 Q1 2020 Ending Balance at Cost
$2,182.0
$2,099.5
$2,283.7
$2,278.9
$2,242.9
Weighted Average Balance
$2,119.0
$2,246.0
$2,217.0
$2,248.0
$2,178.0
Debt Investment Portfolio Composition
by Quarter
(% of debt investment portfolio)
Q1 2021 Q4
2020 Q3 2020 Q2 2020 Q1 2020
First Lien Senior Secured
82.7%
84.2%
85.5%
83.5%
83.0%
Floating Rate w/Floors
96.8%
96.9%
97.9%
97.9%
97.8%
Effective Portfolio Yield and Core Portfolio Yield (“Core
Yield”)
The effective yield on Hercules’ debt investment portfolio was
13.2% during Q1 2021, as compared to 13.3% for Q4 2020. The Company
realized $191.5 million of early loan repayments in Q1 2021
compared to $282.3 million in Q4 2020, or a decrease of 32.2%.
Effective yields generally include the effects of fees and income
accelerations attributed to early loan repayments, and other
one-time events. Effective yields are materially impacted by the
elevated or reduced levels of early loan repayments and derived by
dividing total investment income by the weighted average earning
investment portfolio assets outstanding during the quarter, which
excludes non-interest earning assets such as warrants and equity
investments.
Core yield, a non-GAAP measure, was 11.6% during Q1 2021, within
the Company’s expected range of 11.0% to 12.0%, and decreased
slightly compared to 11.8% in Q4 2020. Hercules defines core yield
as yields that generally exclude any benefit from income related to
early repayments attributed to the acceleration of unamortized
income and prepayment fees and includes income from expired
commitments.
Income Statement
Total investment income decreased to $68.8 million for Q1 2021,
compared to $73.6 million in Q1 2020. The decrease is primarily
attributable to a lower weighted average debt investment balance
and a decrease in total fee income between periods.
Non-interest and fee expenses were $17.6 million in Q1 2021
versus $16.7 million for Q1 2020. The increase was due to higher
employee compensation and tax expenses, offset by lower general and
administrative expenses.
Interest expense and fees were $17.6 million in Q1 2021,
compared to $16.3 million in Q1 2020. The increase was due to
higher weighted-average borrowings between periods.
The Company had a weighted average cost of borrowings comprised
of interest and fees, of 5.5% in Q1 2021, as compared to 5.2% for
Q1 2020.
NII – Net Investment Income
NII for Q1 2021 was $34.6 million, or $0.30 per share, based on
114.3 million basic weighted average shares outstanding, compared
to $40.6 million, or $0.37 per share, based on 109.0 million basic
weighted average shares outstanding in Q1 2020. The decrease is
primarily attributable to a lower weighted average debt investment
balance, the impact of the federal funds target rate cut in March
2020, a decrease in total fee income between periods and an
increase in total net operating expenses between periods.
Continued Credit Discipline and Strong Credit
Performance
Hercules’ net cumulative realized gain/(loss) position, since
its first origination activities in October 2004 through March 31,
2021, (including net loan, warrant and equity activity) on
investments, totaled ($71.9) million, on a GAAP basis, spanning
over 16 years of investment activities.
When compared to total new debt investment commitments during
the same period of over $11.6 billion, the total realized
gain/(loss) since inception of ($71.9) million represents
approximately 62 basis points “bps,” or 0.62%, of cumulative debt
commitments, or an effective annualized loss rate of 3.8 bps, or
0.04%.
Realized Gains/(Losses)
During Q1 2021, Hercules had net realized gains of $7.8 million
primarily from gross realized gains of $9.5 million due to the sale
of equity and warrant investments. These gross realized gains were
offset by gross realized losses due to the write-off or termination
of equity, warrant and loan investments of ($1.7) million.
Unrealized Appreciation/(Depreciation)
During Q1 2021, Hercules recorded $21.9 million of net
unrealized appreciation, all of which was net unrealized
appreciation from our debt, equity and warrant investments.
Portfolio Asset Quality
As of March 31, 2021, the weighted average grade of the debt
investment portfolio, at fair value, improved to 2.01, compared to
2.16 as of December 31, 2020, based on a scale of 1 to 5, with 1
being the highest quality. Hercules’ policy is to generally adjust
the credit grading down on its portfolio companies as they approach
their expected need for additional growth equity capital to fund
their respective operations for the next 9-14 months. Various
companies in the Company’s portfolio will require additional rounds
of funding from time to time to maintain their operations.
Additionally, Hercules may selectively downgrade portfolio
companies, from time to time, if they are not meeting the Company’s
financing criteria, or underperforming relative to their respective
business plans.
As of March 31, 2021, grading of the debt investment portfolio
at fair value, excluding warrants and equity investments, was as
follows:
Credit Grading at Fair Value, Q1 2021 - Q1 2020 ($ in
millions)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Grade 1 - High
$
497.5
22.8
%
$
411.0
19.6
%
$
406.5
17.9
%
$
443.6
20.1
%
$
390.4
17.7
%
Grade 2
$
1,240.7
56.8
%
$
1,027.9
49.1
%
$
1,053.1
46.5
%
$
877.9
39.6
%
$
818.1
37.3
%
Grade 3
$
426.2
19.5
%
$
621.3
29.7
%
$
772.3
34.1
%
$
849.7
38.3
%
$
917.2
41.8
%
Grade 4
$
20.4
0.9
%
$
25.3
1.2
%
$
26.7
1.2
%
$
25.0
1.1
%
$
54.3
2.5
%
Grade 5 - Low
$
0.2
0.0
%
$
8.9
0.4
%
$
5.9
0.3
%
$
20.1
0.9
%
$
15.5
0.7
%
Weighted Avg.
2.01
2.16
2.22
2.30
2.34
Non-Accruals
Non-accruals decreased as a percentage of the overall investment
portfolio in the first quarter of 2021. As of March 31, 2021, the
Company had four (4) debt investments on non-accrual with an
investment cost and fair value of approximately $24.1 million and
$8.0 million, respectively, or 1.0% and 0.3% as a percentage of the
Company’s total investment portfolio at cost and value,
respectively.
Compared to December 31, 2020, the Company had seven (7) debt
investments on non-accrual with an investment cost and fair value
of approximately $31.0 million and $11.9 million, respectively, or
1.3% and 0.5% as a percentage of the total investment portfolio at
cost and value, respectively.
Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1
2020 Total Investments at Cost
$2,403.8
$2,315.4
$2,505.8
$2,501.4
$2,466.3
Loans on non-accrual as a % of Total
Investments at Value
0.3%
0.5%
0.3%
0.5%
0.0%
Loans on non-accrual as a % of Total
1.0%
1.3%
0.9%
2.4%
0.8%
Investments at Cost
Liquidity and Capital Resources
In November 2020, the Company announced a private offering
totaling $100.0 million in aggregate principal amount of $50.0
million 4.50% Notes due March 2026 (the “March 2026 A Notes”) and
$50.0 million 4.55% Notes due March 2026 (the “March 2026 B
Notes”). The issuance of $50.0 million of the March 2026 A Notes
occurred on November 4, 2020 and the issuance of $50.0 million of
the March 2026 B Notes occurred on March 4, 2021.
The Company ended Q1 2021 with $550.0 million in available
liquidity, including $75.0 million in unrestricted cash and cash
equivalents, and $475.0 million in available credit facilities,
subject to existing terms and advance rates and regulatory and
covenant requirements.
Bank Facilities
As of March 31, 2021, there were no outstanding borrowings under
the Hercules’ $400.0 million committed credit facility with Union
Bank as Agent and no outstanding borrowings under the Hercules’
$75.0 million committed credit facility with Wells Fargo Capital
Finance.
Leverage
As of March 31, 2021, Hercules’ GAAP leverage ratio, including
its Small Business Administration “SBA” debentures, was 94.6%.
Hercules’ regulatory leverage, or debt-to-equity ratio, excluding
its SBA debentures, was 89.2% and net regulatory leverage, a
non-GAAP measure (excluding cash of approximately $75.0 million),
was 83.5%. Hercules’ net leverage ratio, including its SBA
debentures, was 88.9%.
Available Unfunded Commitments – Representing 10.0% of Total
Assets
The Company’s unfunded commitments and contingencies consist
primarily of unused commitments to extend credit in the form of
loans to select portfolio companies. A portion of these unfunded
contractual commitments are dependent upon the portfolio company
reaching certain milestones in order to gain access to additional
funding. Furthermore, the Company’s credit agreements contain
customary lending provisions that allow us relief from funding
obligations for previously made commitments. In addition, since a
portion of these commitments may also expire without being drawn,
unfunded contractual commitments do not necessarily represent
future cash requirements.
As of March 31, 2021, the Company had $257.9 million of
available unfunded commitments at the request of the portfolio
company and unencumbered by any milestones, including undrawn
revolving facilities, representing 10.0% of Hercules’ total assets.
This increased from the previous quarter of $179.8 million of
available unfunded commitments or 6.9% of Hercules’ total
assets.
Existing Pipeline and Signed Term Sheets
After closing $530.9 million in new debt and equity commitments
in Q1 2021, Hercules has pending commitments of $152.9 million in
signed non-binding term sheets outstanding as of April 27, 2021.
Since the close of Q1 2021 and as of April 27, 2021, Hercules has
closed new debt and equity commitments of $135.0 million and funded
$25.0 million.
Signed non-binding term sheets are subject to satisfactory
completion of Hercules’ due diligence and final investment
committee approval process as well as negotiations of definitive
documentation with the prospective portfolio companies. These
non-binding term sheets generally convert to contractual
commitments in approximately 90 days from signing. It is important
to note that not all signed non-binding term sheets are expected to
close and do not necessarily represent future cash requirements or
investments.
Net Asset Value
As of March 31, 2021, the Company’s net assets were $1.32
billion, compared to $1.29 billion at the end of Q4 2020. NAV per
share increased 0.9% to $11.36 on 115.8 million outstanding shares
of common stock as of March 31, 2021, compared to $11.26 on 114.7
million outstanding shares of common stock as of December 31, 2020.
The increase in NAV per share was primarily attributed to the net
change in unrealized appreciation and a decrease in liabilities
between periods.
Interest Rate Sensitivity
Hercules has an asset sensitive debt investment portfolio with
96.8% of its debt investment portfolio being priced at floating
interest rates as of March 31, 2021, with a Prime or LIBOR-based
interest rate floor, combined with 100% of its outstanding debt
borrowings bearing fixed interest rates, leading to higher net
investment income sensitivity.
Based on Hercules’ Consolidated Statement of Assets and
Liabilities as of March 31, 2021, the following table shows the
approximate annualized increase/(decrease) in components of net
income resulting from operations of hypothetical base rate changes
in interest rates, such as Prime Rate, assuming no changes in
Hercules’ debt investments and borrowings. These estimates are
subject to change due to the impact from active participation in
the Company’s equity ATM program and any future equity
offerings.
(in thousands) Interest Interest Net
EPS(2) Basis Point Change Income(1)
Expense Income
(75
)
$
(8
)
$
(28
)
$
20
$
-
(50
)
$
(8
)
$
(25
)
$
17
$
-
(25
)
$
(8
)
$
(18
)
$
10
$
-
25
$
2,941
$
18
$
2,923
$
0.03
50
$
5,883
$
35
$
5,848
$
0.05
75
$
8,824
$
53
$
8,771
$
0.08
100
$
11,884
$
70
$
11,814
$
0.10
200
$
25,719
$
140
$
25,579
$
0.22
(1)
Source: Hercules Capital Form 10-Q for Q1 2021
(2)
EPS calculated on basic weighted shares outstanding of 114,304.
Estimates are subject to change due to impact from active
participation in the Company's equity ATM program and any future
equity offerings.
Existing Equity and Warrant Portfolio
Equity Portfolio
Hercules held equity positions in 66 portfolio companies with a
fair value of $236.2 million and a cost basis of $195.3 million as
of March 31, 2021. On a fair value basis, 59.9% or $141.4 million
is related to existing public equity positions.
Warrant Portfolio
Hercules held warrant positions in 96 portfolio companies with a
fair value of $42.0 million and a cost basis of $25.3 million as of
March 31, 2021. On a fair value basis, 30.0% or $12.6 million is
related to existing public warrant positions.
Portfolio Company IPO and M&A Activity in Q1 2021 and YTD
2021
IPO Activity
As of April 26, 2021, Hercules held debt, warrant or equity
positions in two (2) portfolio companies that have registered for
their IPOs and five (5) companies that have entered into definitive
agreements to go public via a special purpose acquisition company
“SPAC,” including:
- In March 2021, Hercules’ portfolio company Sprinklr,
Inc., a developer of a social media management platform
designed to provide digital transformation for enterprise
businesses, announced it has confidentially filed with the U.S.
Securities and Exchange Commission for an initial public offering.
Hercules initially committed $3.7 million in venture debt financing
beginning in March 2017 and currently holds 700,000 shares of
common stock as of March 31, 2021.
- In April 2021, Hercules’ portfolio company Privia Health
Group, Inc., a technology-driven, national physician enablement
company that collaborates with medical groups, health plans and
health systems, announced it has filed a registration statement on
Form S-1 with the U.S. Securities and Exchange Commission for an
initial public offering. Privia intends to list its common stock on
the Nasdaq Global Select Market under the stock symbol “PRVA.”
Hercules initially committed $35.0 million in venture debt
financing beginning in August 2016.
- In January 2021, Hercules’ portfolio company Achronix
Semiconductor Corp., a semiconductor developer of FPGA and
eFPGA devices, announced it has entered into a definitive agreement
for a reverse merger initial public offering with ACE Convergence
Acquisition Corp. (NASDAQ: ACEV), a special purpose acquisition
company. Upon completion of the merger, Achronix will be listed on
the Nasdaq Global Market under the ticker symbol “ACHX.” Hercules
initially committed $38.0 million in venture debt financing
beginning in June 2011 and currently holds warrants for 360,000
shares of Preferred Series C stock and 750,000 shares of Preferred
Series D-2 stock as of March 31, 2021.
- In February 2021, Hercules’ portfolio company Wheels Up
Partners LLC, a provider of subscription club memberships for
private-jet flyers, announced it has entered into a definitive
agreement for a reverse merger initial public offering with
Aspirational Consumer Lifestyle Corp. (NYSE: ASPL), a special
purpose acquisition company. Upon completion of the merger, the
Wheels Up will be listed on the New York Stock Exchange under the
ticker symbol “UP.” Hercules initially committed $23.0 million in
venture debt financing beginning in December 2017.
- In January 2021, Hercules’ portfolio company Proterra, a
leading commercial electric vehicle technology and manufacturing
company, announced it has entered into a definitive agreement for a
reverse merger initial public offering with ArcLight Clean
Transition Corp. (NASDAQ: ACTC), a special purpose acquisition
company. Upon completion of the merger, the Proterra will be listed
on the Nasdaq Global Market under the ticker symbol “PTRA.”
Hercules initially committed $30.0 million in venture debt
financing beginning in May 2015 and currently holds warrants for
36,360 shares of common stock and 477,517 shares of Preferred
Series 4 stock and 99,280 shares of Preferred Series 5 stock as of
March 31, 2021.
- In February 2021, Nerdy, the parent company of Hercules’
portfolio company Varsity Tutors, a technology developer of
an online tutoring platform, announced it has entered into a
definitive agreement for a reverse merger initial public offering
with TPG Pace Tech Opportunities (NYSE: PACE), a special purpose
acquisition company. Upon completion of the merger, Nerdy will be
listed on the New York Stock Exchange under the ticker symbol
“NRDY.” Hercules initially committed $50.0 million in venture debt
financing beginning in August 2019.
- In February 2021, Hercules’ portfolio company 23andMe
Inc., a provider of consumer DNA-testing products, announced it
has entered into a definitive agreement for a reverse merger
initial public offering with VG Acquisition Corp. (NYSE: VGAC.U), a
special purpose acquisition company. Upon completion of the merger,
23andMe will be listed on the New York Stock Exchange under the
ticker symbol “ME.” Hercules currently holds 360,000 shares of
common stock as of March 31, 2021.
There can be no assurances that companies that have yet to
complete their IPOs will do so.
M&A Activity
- In February 2021, former Hercules’ portfolio company The
Wing, a female focused co-working startup, received a majority
stake interest from IWG Plc., a flexible office space pioneer which
operates under the Regus brand. Terms of the investment were not
disclosed. Hercules initially committed $30.0 million in venture
debt financing beginning in July 2019.
- In March 2021, former Hercules’ portfolio company
Convercent, a developer of a cloud-based ethics and
compliance software platform, announced that they entered into a
definitive acquisition agreement with OneTrust, a data privacy,
governance and compliance company. Hercules initially committed
$17.5 million in venture debt financing beginning in December
2018.
- In April 2021, Hercules’ portfolio company Velocity Clinical
Research, a leading integrated site organization for clinical
trials helping companies find the right patients for their studies,
announced that they entered into an agreement to be acquired by
Global Healthcare Opportunities, or GHO Capital, an European
healthcare specialist investor. Hercules initially committed $11.2
million in venture debt financing beginning in November 2019.
- In April 2021, Hercules’ portfolio company Ology
Bioservices, Inc., a company that specializes in biologic drug
substance manufacturing from early stage through commercial
products, announced that they were acquired by Resilience (National
Resilience, Inc.) an advanced biopharmaceutical manufacturing and
technology company. Terms of the acquisition were not disclosed.
Hercules initially committed $30.0 million in venture debt
financing beginning in May 2014 and currently holds warrants for
171,389 shares of common stock as of March 31, 2021.
Subsequent Events
- As of April 27, 2021, Hercules has:
- Funded $25.0 million to new and existing commitments since the
close of the first quarter 2021.
- Pending commitments (signed non-binding term sheets) of $152.9
million.
The table below summarizes the Company’s year-to-date closed and
pending commitments as follows:
Closed Commitments and Pending
Commitments (in millions)
Q1 2021 Closed Commitments(a)
$530.9
Q2 2021 Closed Commitments (as of April
27, 2021)(b)
$135.0
Year-to-Date Closed Commitments
Q2 2021 Pending Commitments (as of April
27, 2021)(b)
$152.9
Year-to-Date 2021 Closed and Pending
Commitments
$818.8
Notes:
- Closed Commitments may include renewals of existing credit
facilities and equity commitments. Not all Closed Commitments
result in future cash requirements. Commitments generally fund over
the two succeeding quarters from close.
- Not all pending commitments (signed non-binding term sheets)
are expected to close and do not necessarily represent any future
cash requirements.
Conference Call
Hercules has scheduled its first quarter 2021 financial results
conference call for April 29, 2021 at 2:00 p.m. PT (5:00 p.m. ET).
To listen to the call, please dial (877) 304-8957 (or (408)
427-3709 internationally) and reference Conference ID: 9664357 if
asked, approximately 10 minutes prior to the start of the call. A
taped replay will be made available approximately three hours after
the conclusion of the call and will remain available for seven
days. To access the replay, please dial (855) 859-2056 or (404)
537-3406 and enter the passcode 9664357.
About Hercules Capital, Inc.
Hercules Capital, Inc. (NYSE: HTGC) is the leading and largest
specialty finance company focused on providing senior secured
venture growth loans to high-growth, innovative venture
capital-backed companies in a broad variety of technology, life
sciences and sustainable and renewable technology industries. Since
inception (December 2003), Hercules has committed more than $11.6
billion to over 530 companies and is the lender of choice for
entrepreneurs and venture capital firms seeking growth capital
financing. Companies interested in learning more about financing
opportunities should contact info@htgc.com, or call
650.289.3060.
Hercules’ common stock trades on the New York Stock Exchange
(NYSE) under ticker symbol HTGC. In addition, Hercules has two
retail bond issuances of 5.25% Notes due 2025 (NYSE: HCXZ) and
6.25% Notes due 2033 (NYSE: HCXY).
Category: Earnings
Forward-Looking Statements
This press release may contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. You should understand that under Section 27A(b)(2)(B) of
the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of
the Securities Exchange Act of 1934, as amended, or the Exchange
Act, the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995 do not apply to forward-looking
statements made in periodic reports we file under the Exchange
Act.
The information disclosed in this press release is made as of
the date hereof and reflects Hercules’ most current assessment of
its historical financial performance. Actual financial results
filed with the SEC may differ from those contained herein due to
timing delays between the date of this release and confirmation of
final audit results. These forward-looking statements are not
guarantees of future performance and are subject to uncertainties
and other factors that could cause actual results to differ
materially from those expressed in the forward-looking statements
including, without limitation, the risks, uncertainties, including
the uncertainties surrounding the current market volatility, and
other factors the Company identifies from time to time in its
filings with the SEC. Although Hercules believes that the
assumptions on which these forward-looking statements are based are
reasonable, any of those assumptions could prove to be inaccurate
and, as a result, the forward-looking statements based on those
assumptions also could be incorrect. You should not place undue
reliance on these forward-looking statements. The forward-looking
statements contained in this release are made as of the date
hereof, and Hercules assumes no obligation to update the
forward-looking statements for subsequent events.
HERCULES CAPITAL, INC. CONSOLIDATED STATEMENTS OF ASSETS
AND LIABILITIES (dollars in thousands, except per share
data) March 31, 2021 December 31, 2020
Assets
Investments:
Non-control/Non-affiliate
investments (cost of $2,253,503 and $2,175,651, respectively)
$
2,385,998
$
2,288,338
Control investments (cost of
$74,849 and $65,257, respectively)
68,693
57,400
Affiliate investments (cost of
$75,450 and $74,450, respectively)
9,664
8,340
Total investments in securities,
at value (cost of $2,403,802 and $2,315,358, respectively)
2,464,355
2,354,078
Cash and cash equivalents
74,987
198,282
Restricted cash
11,829
39,340
Interest receivable
20,597
19,077
Right of use asset
8,666
9,278
Other assets
3,417
3,942
Total assets
$
2,583,851
$
2,632,997
Liabilities
Debt (net of debt issuance
costs)(1)
$
1,231,298
$
1,286,638
Accounts payable and accrued
liabilities
28,300
36,343
Operating lease liability
8,859
9,312
Total liabilities
$
1,268,457
$
1,332,293
Net assets consist of:
Common stock, par value
116
115
Capital in excess of par
value
1,160,519
1,158,198
Total distributable earnings
(loss)
154,759
133,391
Total net assets
$
1,315,394
$
1,291,704
Total liabilities and net
assets
$
2,583,851
$
2,623,997
Shares of common stock
outstanding ($0.001 par value, 200,000,000 authorized)
115,768
114,726
Net asset value per
share
$
11.36
$
11.26
(1) The Company’s SBA Debentures, February 2025 Notes, June
2025 Notes, 2033 Notes, April 2025 Notes, 2022 Notes, 2027
Asset-Backed Notes, 2028 Asset-Backed Notes, 2022 Convertible
Notes, July 2024 Notes, and March 2026 A and B Notes, as each term
is defined herein, are presented net of the associated debt
issuance costs for each instrument.
HERCULES CAPITAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands,
except per share data) Three Months Ended March 31,
2021
2020
Investment income: Interest and dividend income
Non-control/Non-affiliate investments
$
62,982
$
65,338
Control investments
799
646
Affiliate investments
1
220
Total interest income
63,782
66,204
Fee income Commitment, facility and loan fee income
Non-control/Non-affiliate investments
3,403
4,196
Control investments
8
5
Total commitment, facility and loan fee income
3,411
4,201
One-time fee income Non-control/Non-affiliate investments
1,566
3,214
Total one-time fee income
1,566
3,214
Total fee income
4,977
7,415
Total investment income
68,759
73,619
Operating expenses: Interest
14,750
14,532
Loan fees
2,800
1,794
General and administrative Legal expenses
428
899
Tax expenses
1,438
1,135
Other expenses
3,168
4,025
Total general and administrative
5,034
6,059
Employee compensation Compensation and benefits
9,804
8,214
Stock-based compensation
2,744
2,440
Total employee compensation
12,548
10,654
Total gross operating expenses
35,132
33,039
Expenses allocated to the Adviser Subsidiary
(933
)
—
Total net operating expenses
34,199
33,039
Net investment income
34,560
40,580
Net realized and change in unrealized appreciation
(depreciation) on investments: Net realized gain (loss) on
investments Non-control/Non-affiliate investments
7,770
6,967
Total net realized gain (loss) on investments
7,770
6,967
Net change in unrealized appreciation (depreciation) on investments
Non-control/Non-affiliate investments
18,022
(58,430
)
Control investments
1,702
(7,851
)
Affiliate investments
2,109
(9,989
)
Total net unrealized gain (loss) on investments
21,833
(76,270
)
Total net realized and change in unrealized appreciation
(depreciation) on investments:
29,603
(69,303
)
Net increase (decrease) in net assets resulting from
operations
$
64,163
$
(28,723
)
Net investment income before investment gains and losses per
common share: Basic
$
0.30
$
0.37
Change in net assets resulting from operations per common share:
Basic
$
0.56
$
(0.27
)
Diluted
$
0.55
$
(0.27
)
Weighted average shares outstanding: Basic
114,304
108,955
Diluted
114,803
108,955
Distributions paid per common share: Basic
$
0.37
$
0.40
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210429006008/en/
Michael Hara Investor Relations and Corporate Communications
Hercules Capital, Inc. 650-433-5578 mhara@htgc.com
Hercules Capital (NYSE:HTGC)
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