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 third quarter ended September 30, 2021.
“Hercules’ leadership position, scale and brand reputation as the largest nonbank provider of venture and growth stage debt solutions, combined with a healthy capital markets environment, has created unprecedented deal opportunities in our core verticals with both new and existing portfolio companies,” stated Scott Bluestein, chief executive officer and chief investment officer of Hercules. “Our robust origination performance continued through Q3 2021 enabling Hercules to set new annual commitments and funding records of $1.69 billion and $1.07 billion year-to-date, respectively, with a quarter to go in the year.”
Bluestein added, “With our debt investment portfolio at $2.3 billion, at cost, combined with the size of our pipeline and record earnings spillover of nearly $182 million, or $1.57 per share, the Board has made the decision to increase our quarterly base distribution to $0.33 per share and has also declared a supplemental distribution of $0.07 per share for the third quarter. Furthermore, our most recent offering of 2.625% Notes exemplifies our active balance sheet management as we continue to lower our average cost of debt capital over the coming year. Our strong origination activity throughout 2021 has given us the opportunity to fund growth in both our public portfolio as well as our private funds. Given these factors and the overall continued strength of the VC ecosystem, we believe Hercules is exceptionally well positioned heading into Q4 and allowing us to remain focused on delivering strong total shareholder returns.”
Q3 2021 Review and Operating Results
Debt Investment Portfolio
Hercules delivered total gross new debt and equity commitments totaling $719.6 million and gross new fundings totaling $431.1 million.
During the third quarter, Hercules realized early loan repayments of $318.9 million, which along with normal scheduled amortization of $24.2 million, resulted in total debt repayments of $343.1 million.
The new debt investment origination and funding activities lead to a net debt investment portfolio increase of $23.9 million during the third 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: Q3 2021 to Q2 2021
Equity & Other | |||||||||||||||
(in millions) | Debt | Investments | Warrants | Total Portfolio | |||||||||||
Balances at Cost at 6/30/21 | $ |
2,238.8 |
|
$ |
135.1 |
|
$ |
25.1 |
|
$ |
2,399.0 |
|
|||
New fundings(a) |
|
424.9 |
|
|
4.3 |
|
|
1.9 |
|
|
431.1 |
|
|||
Fundings assigned to or directly funded by Adviser Funds |
|
(59.1 |
) |
|
— |
|
|
(0.5 |
) |
|
(59.6 |
) |
|||
Principal payments received on investments |
|
(24.2 |
) |
|
— |
|
|
— |
|
|
(24.2 |
) |
|||
Early payoffs(b) |
|
(318.9 |
) |
|
— |
|
|
— |
|
|
(318.9 |
) |
|||
Net changes attributed to conversions, liquidations, and fees |
|
1.2 |
|
|
(2.6 |
) |
|
(0.6 |
) |
|
(2.0 |
) |
|||
Net activity during Q3 2021 |
|
23.9 |
|
|
1.7 |
|
|
0.8 |
|
|
26.4 |
|
|||
Balances at Cost at 9/30/21 | $ |
2,262.7 |
|
$ |
136.8 |
|
$ |
25.9 |
|
$ |
2,425.4 |
|
|||
Balances at Value at 6/30/21 | $ |
2,243.4 |
|
$ |
231.0 |
|
$ |
46.7 |
|
$ |
2,521.1 |
|
|||
Net activity during Q3 2021 |
|
23.9 |
|
|
1.7 |
|
|
0.8 |
|
|
26.4 |
|
|||
Net change in unrealized appreciation (depreciation) |
|
(3.7 |
) |
|
(27.3 |
) |
|
(4.6 |
) |
|
(35.6 |
) |
|||
Total net activity during Q3 2021 |
|
20.2 |
|
|
(25.6 |
) |
|
(3.8 |
) |
|
(9.2 |
) |
|||
Balances at Value at 9/30/21 | $ |
2,263.6 |
|
$ |
205.4 |
|
$ |
42.9 |
|
$ |
2,511.9 |
|
|||
(a) New fundings amount includes $283K associated with revolver loans during Q3 2021. | |||||||||||||||
(b) Early payoffs include $2.7M paydown on revolvers during Q3 2021. |
Debt Investment Portfolio Balances by Quarter
(in millions) | Q3 2021 |
|
Q2 2021 |
|
Q1 2021 |
|
Q4 2020 |
|
Q3 2020 |
|
|
|
|
|
|
|
|
|
|
||
Ending Balance at Cost | $2,262.7 |
|
$2,238.8 |
|
$2,182.0 |
|
$2,099.5 |
|
$2,283.7 |
|
|
|
|
|
|
|
|
|
|
||
Weighted Average Balance | $2,193.0 |
|
$2,192.0 |
|
$2,119.0 |
|
$2,246.0 |
|
$2,217.0 |
|
Debt Investment Portfolio Composition by Quarter
(% of debt investment portfolio) | Q3 2021 |
|
Q2 2021 |
|
Q1 2021 |
|
Q4 2020 |
|
Q3 2020 |
|
|
|
|
|
|
|
|
|
|
||
First Lien Senior Secured | 80.8% |
|
82.1% |
|
82.7% |
|
84.2% |
|
85.5% |
|
|
|
|
|
|
|
|
|
|
||
Floating Rate w/Floors | 95.9% |
|
96.8% |
|
96.8% |
|
96.9% |
|
97.9% |
|
Effective Portfolio Yield and Core Portfolio Yield (“Core Yield”)
The effective yield on Hercules’ debt investment portfolio was 12.7% during Q3 2021, as compared to 12.7% for Q2 2021. The Company realized $318.9 million of early loan repayments in Q3 2021 compared to $167.9 million in Q2 2021, or an increase of 89.9%. 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 11.4% during Q3 2021, within the Company’s expected range of 11.0% to 12.0%, and decreased slightly compared to 11.5% in Q2 2021. 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 slightly to $70.2 million for Q3 2021, compared to $70.3 million in Q3 2020. The slight decrease is primarily attributable to an increase in total fee income offset by a decrease in interest income between periods.
Non-interest and fee expenses were $18.7 million in Q3 2021 versus $15.0 million for Q3 2020. The increase was due to higher variable compensation, stock-based compensation and general and administrative expenses, due primarily to an increase in excise tax expenses.
Interest expense and fees were $14.7 million in Q3 2021, compared to $16.6 million in Q3 2020. The decrease was due to a lower weighted-average borrowings between periods.
The Company had a weighted average cost of borrowings comprised of interest and fees, of 4.9% in Q3 2021, as compared to 5.1% for Q3 2020. The decrease is primarily due to lower average higher-cost borrowings between periods.
NII – Net Investment Income
NII for Q3 2021 was $38.1 million, or $0.33 per share, based on 114.8 million basic weighted average shares outstanding, compared to $38.7 million, or $0.34 per share, based on 113.5 million basic weighted average shares outstanding in Q3 2020. The decrease is primarily attributable to a slight decrease in total investment income and a slight increase in the total net operating costs 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 September 30, 2021, (including net loan, warrant and equity activity) on investments, totaled ($65.1) million, on a GAAP basis, spanning 17 years of investment activities.
When compared to total net new debt investment commitments during the same period of over $12.6 billion, the total realized gain/(loss) since inception of ($65.1) million represents approximately 52 basis points “bps,” or 0.52%, of cumulative debt commitments, or an effective annualized loss rate of 3.0 bps, or 0.03%.
Realized Gains/(Losses)
During Q3 2021, Hercules had net realized gains of $21.1 million comprised of gross realized gains of $25.0 million due to the sale of equity and warrant investments, offset by ($3.9) million of gross realized losses primarily due to the loss on debt extinguishment and the write-off of one debt investment.
Unrealized Appreciation/(Depreciation)
During Q3 2021, Hercules recorded ($35.6) million of net unrealized depreciation on our debt, equity and warrant investments, primarily attributable to ($23.6) million of unrealized depreciation due to the reversal of unrealized appreciation upon acquisition or liquidation of our equity and warrant investments, and ($8.3) million of net unrealized depreciation attributable to valuation movements on the equity, warrant portfolio, and investment fund portfolio.
Portfolio Asset Quality
As of September 30, 2021, the weighted average grade of the debt investment portfolio, at cost, improved to 1.92, compared to 1.93 as of June 30, 2021, based on a scale of 1 to 5, with 1 being the highest quality. Hercules’ policy is to generally adjust the credit grading down on its portfolio companies as they approach their expected need for additional growth equity capital to fund their respective operations for the next 9-14 months. Various companies in the Company’s portfolio will require additional rounds of funding from time to time to maintain their operations.
Additionally, Hercules may selectively downgrade portfolio companies, from time to time, if they are not meeting the Company’s financing criteria, or underperforming relative to their respective business plans.
As of September 30, 2021, grading of the debt investment portfolio at fair value, excluding warrants and equity investments, was as follows:
Credit Grading (at Fair Value), Q3 2021 - Q3 2020 ($ in millions) | ||||||||||||||||||||||||
Q3 2021 |
Q2 2021 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
||||||||||||||||||||
Grade 1 - High | $ |
692.1 |
30.6% |
$ |
637.2 |
28.4% |
$ |
497.5 |
22.8% |
$ |
411.0 |
19.6% |
$ |
406.5 |
17.9% |
|||||||||
Grade 2 | $ |
1,103.8 |
48.8% |
$ |
1,192.7 |
53.1% |
$ |
1,240.7 |
56.8% |
$ |
1,027.9 |
49.1% |
$ |
1,053.1 |
46.5% |
|||||||||
Grade 3 | $ |
458.2 |
20.2% |
$ |
403.8 |
18.0% |
$ |
426.2 |
19.5% |
$ |
621.3 |
29.7% |
$ |
772.3 |
34.1% |
|||||||||
Grade 4 | $ |
8.3 |
0.4% |
$ |
8.4 |
0.4% |
$ |
20.4 |
0.9% |
$ |
25.3 |
1.2% |
$ |
26.7 |
1.2% |
|||||||||
Grade 5 - Low | $ |
1.1 |
0.0% |
$ |
1.3 |
0.1% |
$ |
0.2 |
0.0% |
$ |
8.9 |
0.4% |
$ |
5.9 |
0.3% |
|||||||||
Weighted Avg. (at Cost) |
|
1.92 |
|
1.93 |
|
2.01 |
|
2.16 |
|
2.22 |
Non-Accruals
Non-accruals remained the same as a percentage of the overall investment portfolio in the third quarter of 2021. As of September 30, 2021, the Company had three (3) debt investments on non-accrual with an investment cost and fair value of approximately $23.9 million and $8.7 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 June 30, 2021, the Company had three (3) debt investments on non-accrual with an investment cost and fair value of approximately $23.0 million and $7.7 million, respectively, or 1.0% and 0.3% as a percentage of the total investment portfolio at cost and value, respectively.
Q3 2021 |
|
Q2 2021 |
|
Q1 2021 |
|
Q4 2020 |
|
Q3 2020 |
|
|
|
|
|
|
|
|
|
|
|
Total Investments at Cost | $2,425.4 |
|
$2,399.0 |
|
$2,403.8 |
|
$2,315.4 |
|
$2,505.8 |
|
|
|
|
|
|
|
|
|
|
Loans on non-accrual as a % of Total Investments at Value | 0.3% |
|
0.3% |
|
0.3% |
|
0.5% |
|
0.3% |
|
|
|
|
|
|
|
|
|
|
Loans on non-accrual as a % of Total Investments at Cost | 1.0% |
|
1.0% |
|
1.0% |
|
1.3% |
|
0.9% |
Liquidity and Capital Resources
The Company ended Q3 2021 with $818.4 million in available liquidity, including $235.9 million in unrestricted cash and cash equivalents, and $582.5 million in available credit facilities and SBA debentures, subject to existing terms and advance rates and regulatory and covenant requirements.
On July 1, 2021, the Company fully redeemed the aggregate outstanding $75.0 million of principal and $0.6 million of accrued interest pursuant to the redemption terms of the April 2025 Notes Indenture. The Company recognized a realized loss of $1.5 million due to the extinguishment of the debt.
In September 2021, the Company closed an underwritten public offering of $325.0 million in aggregate principal amount of 2.625% notes due 2026 (the “Notes”). The Notes are unsecured and bear interest at a rate of 2.625% per year, payable semiannually and will mature on September 16, 2026, and may be redeemed in whole or in part at any time or from time to time at the Company’s option at par, plus a “make-whole” premium, if applicable. The proceeds from the offering were used to redeem the aggregate outstanding principal and accrued interest of the 2027 and 2028 Asset-Backed Notes.
Bank Facilities
As of September 30, 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 September 30, 2021, Hercules’ GAAP leverage ratio, including its SBA debentures, was 106.4%. Hercules’ regulatory leverage, or debt-to-equity ratio, excluding its SBA debentures, was 101.6% and net regulatory leverage, a non-GAAP measure (excluding cash of approximately $235.9 million), was 84.0%. Hercules’ net leverage ratio, including its SBA debentures, was 88.8%. The leverage ratios in Q3 2021 do not reflect the impact of the redemption of the 2027 and 2028 Asset-Backed Notes which occurred subsequent to quarter end.
Available Unfunded Commitments – Representing 11.1% 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 credit agreements the Company enters into with its portfolio companies 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 September 30, 2021, the Company had $309.9 million of available unfunded commitments at the request of the portfolio company and unencumbered by any milestones, including undrawn revolving facilities, representing 11.1% of Hercules’ total assets. This decreased from the previous quarter of $327.3 million of available unfunded commitments or 12.7% of Hercules’ total assets.
Existing Pipeline and Signed Term Sheets
After closing $719.6 million in new debt and equity commitments in Q3 2021, Hercules has pending commitments of $377.4 million in signed non-binding term sheets outstanding as of October 25, 2021. Since the close of Q3 2021 and as of October 25, 2021, Hercules has closed new gross debt and equity commitments of $125.0 million and funded $50.3 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 and some portion may be assigned or allocated to or directly originated by private funds managed by Hercules Adviser prior to or after closing. 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 September 30, 2021, the Company’s net assets were $1.34 billion, compared to $1.36 billion at the end of Q2 2021. NAV per share decreased 1.5% to $11.54 on 115.9 million outstanding shares of common stock as of September 30, 2021, compared to $11.71 on 115.9 million outstanding shares of common stock as of June 30, 2021. The decrease in NAV per share was primarily attributed to the net change in unrealized depreciation between periods.
Interest Rate Sensitivity
Hercules has an asset sensitive debt investment portfolio with 95.9% of its debt investment portfolio being priced at floating interest rates as of September 30, 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 September 30, 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) |
$ |
(49 |
) |
$ |
(11 |
) |
$ |
(38 |
) |
$ |
- |
||||
(50) |
$ |
(49 |
) |
$ |
(11 |
) |
$ |
(38 |
) |
$ |
- |
||||
(25) |
$ |
(38 |
) |
$ |
(11 |
) |
$ |
(27 |
) |
$ |
- |
||||
25 |
$ |
3,920 |
|
$ |
28 |
|
$ |
3,892 |
|
$ |
0.03 |
||||
50 |
$ |
7,840 |
|
$ |
56 |
|
$ |
7,784 |
|
$ |
0.07 |
||||
75 |
$ |
11,760 |
|
$ |
84 |
|
$ |
11,676 |
|
$ |
0.10 |
||||
100 |
$ |
15,730 |
|
$ |
111 |
|
$ |
15,619 |
|
$ |
0.14 |
||||
200 |
$ |
32,869 |
|
$ |
223 |
|
$ |
32,646 |
|
$ |
0.28 |
(1) |
Source: Hercules Capital Form 10-Q for Q3 2021 | |||||||||
(2) |
EPS calculated on basic weighted shares outstanding of 114,805. 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 71 portfolio companies with a fair value of $204.4 million and a cost basis of $135.6 million as of September 30, 2021. On a fair value basis, 52.9% or $108.6 million is related to existing public equity positions.
Warrant Portfolio
Hercules held warrant positions in 94 portfolio companies with a fair value of $42.9 million and a cost basis of $25.9 million as of September 30, 2021. On a fair value basis, 33.4% or $14.3 million is related to existing public warrant positions.
Portfolio Company IPO and M&A Activity
As of October 25, 2021 year-to-date, Hercules has had 33 portfolio companies complete or announce an IPO or M&A event, which is comprised of: 13 IPOs, 13 M&A events and seven (7) portfolio companies that have registered for the IPOs, or have entered into definitive agreements to go public via a merger or special purpose acquisition company, or “SPAC.”
IPO Activity in Q3 2021 and YTD Q4 2021
As of October 25, 2021, Hercules held debt, warrant or equity positions in three (3) portfolio companies that have completed their IPOs and seven (7) companies that have registered for their IPOs or have entered into definitive agreements to go public via a merger or SPAC, including:
Completed:
In Registration or SPAC:
There can be no assurances that companies that have yet to complete their IPOs will do so or that pending merger announcements will close.
M&A Activity in Q3 2021 and YTD Q4 2021
Subsequent Events
1. As of October 25, 2021, Hercules has:
The table below summarizes the Company’s year-to-date closed and pending commitments as follows:
Closed Commitments and Pending Commitments (in millions) |
|
January 1 – September 30, 2021 Closed Commitments(a)(c) |
$1,691.4 |
Q4 2021 Closed Commitments (as of October 25, 2021)(a)(c) |
$125.0 |
Year-to-Date Closed Commitments |
$1,816.4 |
Q4 2021 Pending Commitments (as of October 25, 2021)(b) |
$377.4 |
Year-to-Date 2021 Closed and Pending Commitments(c) |
$2,193.8 |
Notes:
2. On October 20, 2021, the Company fully redeemed the aggregate outstanding $289.2 million of principal and $1.1 million of accrued interest and fees pursuant to the redemption terms of the 2027 Asset-Backed and 2028 Asset-Backed Notes Indentures. The Company accelerated recognition of $2.7 million of debt issuance costs associated with the extinguishment of the debt in the fourth quarter, which would represent a $0.02 per share realized loss impact using the Company’s weighted average shares for the most recent quarter.
Conference Call
Hercules has scheduled its third quarter 2021 financial results conference call for October 28, 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: 9145314 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 9145314.
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 $12.8 billion to over 540 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 [email protected], or call 650.289.3060.
Hercules Capital, through its wholly owned subsidiary, Hercules Adviser LLC (“Hercules Adviser”), also maintains an asset management business through which it manages investments for external parties (“Adviser Funds”). Hercules Adviser is registered as an investment adviser under the Investment Advisers Act of 1940.
Hercules’ common stock trades on the New York Stock Exchange (NYSE) under the ticker symbol “HTGC.” In addition, Hercules has one retail bond issuance of 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) | ||||||
September 30, 2021 | December 31, 2020 | |||||
Assets | ||||||
Investments: | ||||||
Non-control/Non-affiliate investments (cost of $2,330,982 and $2,175,651, respectively) | $ |
2,436,307 |
$ |
2,288,338 |
||
Control investments (cost of $81,020 and $65,257, respectively) |
|
65,835 |
|
57,400 |
||
Affiliate investments (cost of $13,387 and $74,450, respectively) |
|
9,712 |
|
8,340 |
||
Total investments in securities, at value (cost of $2,425,389 and $2,315,358, respectively) |
|
2,511,854 |
|
2,354,078 |
||
Cash and cash equivalents |
|
235,851 |
|
198,282 |
||
Restricted cash |
|
13,509 |
|
39,340 |
||
Interest receivable |
|
17,859 |
|
19,077 |
||
Right of use asset |
|
7,373 |
|
9,278 |
||
Other assets |
|
4,762 |
|
3,942 |
||
Total assets | $ |
2,791,208 |
$ |
2,632,997 |
||
Liabilities | ||||||
Debt (net of debt issuance costs)(1) | $ |
1,408,701 |
$ |
1,286,638 |
||
Accounts payable and accrued liabilities |
|
37,098 |
|
36,343 |
||
Operating lease liability |
|
7,877 |
|
9,312 |
||
Total liabilities | $ |
1,453,676 |
$ |
1,332,293 |
||
Net assets consist of: | ||||||
Common stock, par value |
|
116 |
|
115 |
||
Capital in excess of par value |
|
1,166,725 |
|
1,158,198 |
||
Total distributable earnings |
|
170,691 |
|
133,391 |
||
Total net assets | $ |
1,337,532 |
$ |
1,291,704 |
||
Total liabilities and net assets | $ |
2,791,208 |
$ |
2,623,997 |
||
Shares of common stock outstanding ($0.001 par value, 200,000,000 authorized) |
|
115,925 |
|
114,726 |
||
Net asset value per share | $ |
11.54 |
$ |
11.26 |
||
(1) The Company’s SBA Debentures, February 2025 Notes, June 2025 Notes, 2033 Notes, 2022 Notes, 2027 Asset-Backed Notes, 2028 Asset-Backed Notes, 2022 Convertible Notes, July 2024 Notes, March 2026 A and B Notes, and September 2026 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 September 30, |
|
Nine Months Ended September 30, |
||||||||||||||
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||
Investment income: | ||||||||||||||||
Interest income | ||||||||||||||||
Non-control/Non-affiliate investments | $ |
62,239 |
|
$ |
64,403 |
|
$ |
185,497 |
|
$ |
192,408 |
|
||||
Control investments |
|
1,072 |
|
|
740 |
|
|
2,900 |
|
|
2,117 |
|
||||
Affiliate investments |
|
1 |
|
|
232 |
|
|
3 |
|
|
609 |
|
||||
Total interest income |
|
63,312 |
|
|
65,375 |
|
|
188,400 |
|
|
195,134 |
|
||||
Fee income | ||||||||||||||||
Commitment, facility and loan fee income | ||||||||||||||||
Non-control/Non-affiliate investments |
|
5,179 |
|
|
2,985 |
|
|
13,845 |
|
|
10,692 |
|
||||
Control investments |
|
20 |
|
|
5 |
|
|
43 |
|
|
15 |
|
||||
Total commitment, facility and loan fee income |
|
5,199 |
|
|
2,990 |
|
|
13,888 |
|
|
10,707 |
|
||||
One-time fee income | ||||||||||||||||
Non-control/Non-affiliate investments |
|
1,682 |
|
|
1,974 |
|
|
6,223 |
|
|
6,085 |
|
||||
Total one-time fee income |
|
1,682 |
|
|
1,974 |
|
|
6,223 |
|
|
6,085 |
|
||||
Total fee income |
|
6,881 |
|
|
4,964 |
|
|
20,111 |
|
|
16,792 |
|
||||
Total investment income |
|
70,193 |
|
|
70,339 |
|
|
208,511 |
|
|
211,926 |
|
||||
Operating expenses: | ||||||||||||||||
Interest |
|
13,069 |
|
|
14,807 |
|
|
42,309 |
|
|
44,415 |
|
||||
Loan fees |
|
1,674 |
|
|
1,824 |
|
|
6,694 |
|
|
5,268 |
|
||||
General and administrative | ||||||||||||||||
Legal expenses |
|
314 |
|
|
673 |
|
|
1,268 |
|
|
2,563 |
|
||||
Tax expenses |
|
2,395 |
|
|
994 |
|
|
5,579 |
|
|
3,028 |
|
||||
Other expenses |
|
3,771 |
|
|
3,624 |
|
|
10,481 |
|
|
11,622 |
|
||||
Total general and administrative |
|
6,480 |
|
|
5,291 |
|
|
17,328 |
|
|
17,213 |
|
||||
Employee compensation | ||||||||||||||||
Compensation and benefits |
|
8,898 |
|
|
7,181 |
|
|
27,051 |
|
|
22,575 |
|
||||
Stock-based compensation |
|
3,320 |
|
|
2,522 |
|
|
8,990 |
|
|
7,477 |
|
||||
Total employee compensation |
|
12,218 |
|
|
9,703 |
|
|
36,041 |
|
|
30,052 |
|
||||
Total gross operating expenses |
|
33,441 |
|
|
31,625 |
|
|
102,372 |
|
|
96,948 |
|
||||
Expenses allocated to the Adviser Subsidiary |
|
(1,337 |
) |
|
— |
|
|
(3,474 |
) |
|
— |
|
||||
Total net operating expenses |
|
32,104 |
|
|
31,625 |
|
|
98,898 |
|
|
96,948 |
|
||||
Net investment income |
|
38,089 |
|
|
38,714 |
|
|
109,613 |
|
|
114,978 |
|
||||
Net realized gain (loss) and change in unrealized appreciation (depreciation): | ||||||||||||||||
Net realized gain (loss) | ||||||||||||||||
Non-control/Non-affiliate investments |
|
22,813 |
|
|
(48,501 |
) |
|
78,444 |
|
|
(41,393 |
) |
||||
Affiliate investments |
|
— |
|
|
— |
|
|
(62,143 |
) |
|
— |
|
||||
Loss on debt extinguishment |
|
(1,702 |
) |
|
— |
|
|
(1,702 |
) |
|
— |
|
||||
Total net realized gain (loss) |
|
21,111 |
|
|
(48,501 |
) |
|
14,599 |
|
|
(41,393 |
) |
||||
Net change in unrealized appreciation (depreciation) | ||||||||||||||||
Non-control/Non-affiliate investments |
|
(31,759 |
) |
|
54,299 |
|
|
(10,662 |
) |
|
19,483 |
|
||||
Control investments |
|
(3,774 |
) |
|
646 |
|
|
(7,327 |
) |
|
(4,563 |
) |
||||
Affiliate investments |
|
(118 |
) |
|
(2,111 |
) |
|
64,220 |
|
|
(12,416 |
) |
||||
Total net unrealized appreciation (depreciation) |
|
(35,651 |
) |
|
52,834 |
|
|
46,231 |
|
|
2,504 |
|
||||
Total net realized gain (loss) and change in unrealized appreciation (depreciation): |
|
(14,540 |
) |
|
4,333 |
|
|
60,830 |
|
|
(38,889 |
) |
||||
Net increase (decrease) in net assets resulting from operations | $ |
23,549 |
|
$ |
43,047 |
|
$ |
170,443 |
|
$ |
76,089 |
|
||||
Net investment income before investment gains and losses per common share: | ||||||||||||||||
Basic | $ |
0.33 |
|
$ |
0.34 |
|
$ |
0.95 |
|
$ |
1.03 |
|
||||
Change in net assets resulting from operations per common share: | ||||||||||||||||
Basic | $ |
0.20 |
|
$ |
0.38 |
|
$ |
1.47 |
|
$ |
0.68 |
|
||||
Diluted | $ |
0.20 |
|
$ |
0.38 |
|
$ |
1.46 |
|
$ |
0.67 |
|
||||
Weighted average shares outstanding: | ||||||||||||||||
Basic |
|
114,805 |
|
|
113,489 |
|
|
114,590 |
|
|
111,342 |
|
||||
Diluted |
|
116,239 |
|
|
113,744 |
|
|
115,550 |
|
|
111,590 |
|
||||
Distributions paid per common share: | ||||||||||||||||
Basic | $ |
0.39 |
|
$ |
0.32 |
|
$ |
1.15 |
|
$ |
1.04 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006057/en/
Michael Hara
Investor Relations and Corporate Communications
Hercules Capital, Inc.
650-433-5578
[email protected]