Record Available Liquidity of $510.9
Million
Record Total Debt Investments of $2.28 Billion,
at Cost
New Debt and Equity Commitments of $266.2
Million
Undistributed Earnings Spillover of $73.2
Million, or $0.64(1) per Ending Shares Outstanding
Surpassed $1.0 Billion in Cumulative
Shareholder Distributions since IPO in June 2005
Q2 2020 Financial Achievements and Highlights
- Net Investment Income “NII” of $35.7 million, or $0.32 per
share
- Provides 100% coverage of base distribution payout
- Total Investment Income of $68.0 million
- $510.9 million of available liquidity, subject to existing
terms and covenants
- New debt and equity commitments of $266.2 million
- Total gross fundings of $132.3 million
- Unscheduled early principal repayments or “early loan
repayments” of $85.4 million
- 12.7% Return on Average Equity “ROAE” (NII/Average Equity)
- 6.0% Return on Average Assets “ROAA” (NII/Average Assets)
- GAAP leverage of 110.0% and regulatory leverage of
100.5%(2)
- Net Asset Value “NAV” increased to $10.19 from $9.92, up 2.7%
from Q1 2020
- 12.2% GAAP Effective Yield and 11.5% Core Yield(3), a non-GAAP
measure
Year-to-date ending June 30, 2020 Financial
Highlights
- NII of $76.3 million, or $0.69 per share, an increase of 18.6%,
compared to $64.3 million for the six months ending June 30, 2019
- Total investment income of $141.6 million, an increase of
10.6%, compared to $128.1 million for the six months ending June
30, 2019
- New equity and debt commitments of $523.0 million
- Total fundings of $365.9 million
- Net debt investment portfolio growth of $108.8 million
- Unscheduled early loan repayments of $235.9 million
Footnotes:
(1) $0.66 per Weighted Average Shares Outstanding (2) Regulatory
leverage represents debt-to-equity ratio, excluding our Small
Business Administration “SBA” debenture (3) 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
second quarter ended June 30, 2020.
“During the second quarter, we originated total commitments of
$266.2 million which modestly grew our debt investment portfolio to
a record $2.28 billion at cost, and our net interest income fully
covered our base shareholder distribution,” stated Scott Bluestein,
chief executive officer and chief investment officer of Hercules.
“Further, core yields were within our targeted range of 11.0 to
12.0 percent, and fully reflected the Fed Funds cuts of 150 basis
points.”
Bluestein added, “Throughout the first half of the year, we have
been vigilantly monitoring our portfolio companies and their future
liquidity needs in the face of the economic uncertainty associated
with the ongoing global health pandemic. Furthermore, we
strategically tapped our equity ATM program to enhance our
liquidity position to $510.9 million and used the proceeds to
deleverage the balance sheet. By implementing steps such as these
we feel we are entering the second half of 2020 from a position of
strength.”
Q2 2020 Review and Operating Results
Debt Investment Portfolio
Hercules delivered new debt and equity commitments totaling
$266.2 million and gross fundings totaling $132.3 million.
During the second quarter, Hercules realized early loan
repayments of $85.4 million, which along with normal scheduled
amortization of $16.3 million, resulted in total debt repayments of
$101.7 million.
The new debt investment origination and funding activities lead
to net debt investment portfolio growth of $36.0 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: Q2 2020 to
Q1 2020
(in millions) Debt Equity Warrants
Total Portfolio Balances at Cost at 3/31/20
$
2,242.9
$
190.3
$
33.1
$
2,466.3
New fundings(a)
130.4
1.0
0.9
132.3
Warrants not related to Q2 2020 fundings
—
—
(0.3
)
(0.3
)
Early payoffs(b)
(85.4
)
—
—
(85.4
)
Principal payments received on investments
(16.3
)
—
—
(16.3
)
Net changes attributed to conversions, liquidations, and fees
7.3
0.4
(2.9
)
4.8
Net activity during Q2 2020
36.0
1.4
(2.3
)
35.1
Balances at Cost at 6/30/20
$
2,278.9
$
191.7
$
30.8
$
2,501.4
Balances at Value at 3/31/20
$
2,195.6
$
94.5
$
12.4
$
2,302.5
Net activity during Q2 2020
36.0
1.4
(2.3
)
35.1
Net change in unrealized appreciation (depreciation)
(15.3
)
29.8
11.4
25.9
Total net activity during Q2 2020
20.7
31.2
9.1
61.0
Balances at Value at 6/30/20
$
2,216.3
$
125.7
$
21.5
$
2,363.5
(a)New fundings amount includes $3.6 million of fundings
associated with revolver loans during Q2 2020. (b)Early payoffs
include $575k of paydowns on revolvers during Q2 2020.
Debt Investment Portfolio Balances by Quarter
(in millions)
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Q2 2019
Ending Balance at Cost
$2,278.9
$2,242.9
$2,170.1
$2,101.3
$2,077.2
Weighted Average Balance
$2,248.0
$2,178.0
$2,164.0
$2,061.0
$1,939.0
Debt Investment Portfolio Composition by Quarter
(% of debt investment portfolio)
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Q2 2019
First Lien Senior Secured
83.5%
83.0%
84.0%
84.8%
81.8%
Floating Rate w/Floors
97.9%
97.8%
97.4%
97.6%
97.7%
Effective Portfolio Yield and Core Portfolio Yield (“Core
Yield”)
The effective yield on Hercules’ debt investment portfolio was
12.2% during Q2 2020, as compared to 13.6% for Q1 2020. The Company
realized $85.4 million of early loan repayments in Q2 2020 compared
to $150.5 million in Q1 2020, or a decrease of 43.3%. 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 11.5% during Q2 2020, within
the Company’s expected range of 11.0% to 12.0%, and decreased
compared to 11.8% in Q1 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 $68.0 million for Q2 2020,
compared to $69.3 million in Q2 2019, a decrease of 1.9%
year-over-year. The decrease is primarily attributable to lower
core yields due to the impact of the Fed Funds cut in March 2020
and a decrease in early loan repayments between periods.
Non-interest and fee expenses were $15.6 million in Q2 2020
versus $18.8 million for Q2 2019. The decrease was due to lower
compensation and benefits and a decrease in stock-based
compensation expenses.
Interest expense and fees were $16.7 million in Q2 2020,
compared to $15.2 million in Q2 2019. 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 5.0% in Q2 2020, as compared to 5.2% for
Q2 2019.
NII – Net Investment Income
NII for Q2 2020 was $35.7 million, or $0.32 per share, based on
111.6 million basic weighted average shares outstanding, compared
to $35.3 million, or $0.36 per share, based on 98.2 million basic
weighted average shares outstanding in Q2 2019, an increase of 1.2%
year-over-year. The increase is attributable to a higher average
debt investment balance between periods and a decrease in
compensation and benefits and stock-based compensation expenses
offset by lower core yields and a decrease in early loan
repayments.
Continued Credit Discipline and Strong Credit
Performance
Hercules’ net cumulative realized gain/(loss) position, since
its first origination activities in October 2004 through June 30,
2020, (including net loan, warrant and equity activity) on
investments, totaled ($16.5) million, on a GAAP basis, spanning
over 15 years of investment activities.
When compared to total new debt investment commitments during
the same period of over $10.5 billion, the total realized
gain/(loss) since inception of ($16.5) million represents
approximately 16 basis points “bps,” or 0.16%, of cumulative debt
commitments, or an effective annualized loss rate of 1.0 bps, or
0.01%.
Realized Gains/(Losses)
During Q2 2020, Hercules had net realized gains/(losses) of
$141,000 primarily from gross realized gains of $2.5 million from
the sale of our public equity holdings, partially offset by the
gross realized losses of ($2.4) million primarily from the
liquidation or write-off of certain of our equity and warrant
positions during the quarter.
Unrealized Appreciation/(Depreciation)
During Q2 2020, Hercules recorded $25.9 million of net
unrealized appreciation primarily related to the mark-to-market
recovery of our public equity and warrant investments, as well as
our private equity investments and debt investments.
Portfolio Asset Quality
As of June 30, 2020, the weighted average grade of the debt
investment portfolio, at fair value, improved to 2.30, compared to
2.34 as of March 31, 2020, based on a scale of 1 to 5, with 1 being
the highest quality. Hercules’ policy is to generally adjust the
credit grading down on its portfolio companies as they approach
their expected need for additional growth equity capital to fund
their respective operations for the next 9-14 months. Various
companies in the Company’s portfolio will require additional rounds
of funding from time to time to maintain their operations.
Additionally, Hercules may selectively downgrade portfolio
companies, from time to time, if they are not meeting the Company’s
financing criteria, or underperforming relative to their respective
business plans.
As of June 30, 2020, grading of the debt investment portfolio at
fair value, excluding warrants and equity investments, was as
follows:
Credit Grading at Fair Value, Q2 2020 - Q2 2019 ($ in
millions)
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Q2 2019
Grade 1 - High
$
443.6
20.1
%
$
390.4
17.7
%
$
387.3
18.0
%
$
237.9
11.4
%
$
256.2
12.4
%
Grade 2
$
877.9
39.6
%
$
818.1
37.3
%
$
1,180.5
55.0
%
$
1,331.2
64.0
%
$
1,317.7
63.9
%
Grade 3
$
849.7
38.3
%
$
917.2
41.8
%
$
509.9
23.7
%
$
479.0
23.1
%
$
413.0
20.1
%
Grade 4
$
25.0
1.1
%
$
54.3
2.5
%
$
69.0
3.2
%
$
29.7
1.4
%
$
67.8
3.3
%
Grade 5 - Low
$
20.1
0.9
%
$
15.5
0.7
%
$
1.8
0.1
%
$
2.1
0.1
%
$
6.9
0.3
%
Weighted Avg.
2.30
2.34
2.15
2.17
2.18
Non-Accruals
Non-accruals increased as a percentage of the overall investment
portfolio in the second quarter of 2020. As of June 30, 2020, the
Company had five (5) debt investments on non-accrual with an
investment cost and fair value of approximately $61.1 million and
$11.5 million, respectively, or 2.4% and 0.5% as a percentage of
the Company’s total investment portfolio at cost and value,
respectively.
Compared to March 31, 2020, the Company had four (4) debt
investments on non-accrual with an investment cost and fair value
of approximately $20.4 million and $0.4 million, respectively, or
0.8% and 0.0% as a percentage of the total investment portfolio at
cost and value, respectively.
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Q2 2019
Total Investments at Cost
$2,501.4
$2,466.3
$2,402.0
$2,336.3
$2,315.7
Loans on non-accrual as a % of Total
Investments at Value
0.5%
0.0%
0.0%
0.1%
0.2%
Loans on non-accrual as a % of Total
2.4%
0.8%
0.4%
0.4%
0.4%
Investments at Cost
Liquidity and Capital Resources
In February 2020, the Company announced a private offering
totaling $120.0 million in aggregate principal amount of $50.0
million 4.28% Notes due February 2025 (the “February Notes”) and
$70.0 million 4.31% Notes due June 2025 (the “June Notes”). The
issuance of $50.0 million of the February Notes occurred on
February 5, 2020 and the issuance of $70.0 million of the June
Notes occurred on June 3, 2020.
The Company ended Q2 2020 with $510.9 million in available
liquidity, including $35.9 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.
During the three months ending June 30, 2020, the Company sold
3.6 million shares of common stock under the equity ATM program,
for total accumulated net proceeds of approximately $38.7 million,
including $352,000 of offering expenses, all accretive to net asset
value. During the six months ending June 30, 2020, the Company sold
approximately 5.97 million shares of common stock, which were
issued under the equity ATM program, for total accumulated net
proceeds of approximately $73.9 million, including $714,000 of
offering expenses, all accretive to net asset value. As of July 29,
2020, approximately 16.5 million shares remain available for
issuance and sale under the Equity Distribution Agreement.
Bank Facilities
As of June 30, 2020, 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 June 30, 2020, Hercules’ GAAP leverage ratio, including
its Small Business Administration “SBA” debentures, was 110.0%.
Hercules’ regulatory leverage, or debt-to-equity ratio, excluding
its SBA debentures, was 100.5% and net regulatory leverage, a
non-GAAP measure (excluding cash of approximately $35.9 million),
was 97.4%. Hercules’ net leverage ratio, including its SBA
debentures, was 106.9%.
Available Unfunded Commitments – Representing 6.7% 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, our 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 June 30, 2020, the Company had $165.1 million of available
unfunded commitments at the request of the portfolio company and
unencumbered by any milestones, including undrawn revolving
facilities, representing 6.7% of Hercules’ total assets. This
increased from the previous quarter of $134.7 million of available
unfunded commitments or 5.6% of Hercules’ total assets.
Existing Pipeline and Signed Term Sheets
After closing $266.2 million in new debt and equity commitments
in Q2 2020, Hercules has pending commitments of $150.3 million in
signed non-binding term sheets outstanding as of July 28, 2020.
Since the close of Q2 2020 and as of July 28, 2020, Hercules has
closed new debt and equity commitments of $10.0 million and funded
$15.0 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 June 30, 2020, the Company’s net assets were $1.16
billion, compared to $1.10 billion at the end of Q1 2020. NAV per
share increased 2.7% to $10.19 on 114.2 million outstanding shares
of common stock as of June 30, 2020, compared to $9.92 on 110.6
million outstanding shares of common stock as of March 31, 2020.
The increase in NAV per share was primarily attributed to the
unrealized appreciation due to the mark-to-market recovery on our
public equity and warrant investments, as well as our private
equity, warrant and debt investments, plus net accretion of $0.04
per share to NAV on ATM offering and stock-based compensation.
Interest Rate Sensitivity
Hercules has an asset sensitive debt investment portfolio with
97.9% of our debt investment portfolio being priced at floating
interest rates as of June 30, 2020, with a Prime or LIBOR-based
interest rate floor, combined with 100% of our 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 June 30, 2020, 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)
$
(650
)
$
(180
)
$
(470
)
$
-
(50)
$
(492
)
$
(120
)
$
(372
)
$
-
(25)
$
(307
)
$
(60
)
$
(247
)
$
-
25
$
1,663
$
60
$
1,603
$
0.01
50
$
3,363
$
120
$
3,243
$
0.03
75
$
5,062
$
180
$
4,882
$
0.04
100
$
6,888
$
240
$
6,648
$
0.06
200
$
17,051
$
479
$
16,572
$
0.15
(1)
Source: Hercules Capital Form 10-Q for Q2 2020
(2)
EPS calculated on basic weighted shares outstanding of 111,588.
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 53 portfolio companies with a
fair value of $125.7 million and a cost basis of $191.6 million as
of June 30, 2020. On a fair value basis, 19.1% or $23.9 million is
related to existing public equity positions.
Warrant Portfolio
Hercules held warrant positions in 103 portfolio companies with
a fair value of $21.5 million and a cost basis of $30.8 million as
of June 30, 2020. On a fair value basis, 32.6% or $7.0 million is
related to existing public warrant positions.
Portfolio Company IPO and M&A Activity in Q2 2020
IPO Activity
As of July 27, 2020, Hercules held debt, warrant or equity
positions in five (5) portfolio companies that had filed
Registration Statements in contemplation of a potential IPO,
including:
- Four (4) portfolio companies filed confidentially under the
JOBS Act.
- In July 2020, Hercules portfolio company Oak Street Health,
Inc., a fast-growing network of value-based, primary care
centers for adults on Medicare, filed a registration statement on
Form S-1 with the U.S. Securities and Exchange Commission for a
proposed initial public offering of shares of its common stock and
intends to list its common stock on the New York Stock Exchange
under the symbol “OSH.” Oak Street Health had previously filed
confidentially under the JOBS Act.
There can be no assurances that companies that have yet to
complete their IPOs will do so.
M&A Activity
- In May 2020, Hercules’ portfolio company Machine Zone, a
game developer best known as the developer of top-grossing mobile
games including Game of War: Fire Age, Mobile Strike and Final
Fantasy XV: A New Empire, announced that it has entered into a
definitive agreement to be acquired by AppLovin, a mobile games
company that fuels many of the world's most popular mobile games
through its game studios and marketing technology. Terms of the
acquisition were not disclosed. Hercules initially committed $100.0
million in venture debt financing in April 2015.
- In May 2020, Hercules’ portfolio company Metuchen
Pharmaceuticals, LLC, a privately held biopharmaceutical
company focused on identifying, developing, acquiring, and
commercializing innovative therapeutics for men’s health
conditions, announced that they have entered into a definitive
merger agreement with Neurotrope Bioscience, Inc. (NASDAQ: NTRP), a
clinical-stage biopharmaceutical company that has historically
worked to develop novel therapies for neurodegenerative diseases,
to form a new holding company to be renamed Petros Pharmaceuticals,
Inc. Petros is expected to become a Nasdaq traded company focused
solely on men’s health conditions. The transaction has been
approved by the boards of directors of both companies. The merger
is expected to close during the third quarter of 2020, subject to
customary closing conditions, including the approval of the merger
agreement by the shareholders of Neurotrope. Hercules initially
committed $45.6 million in venture debt financing in September
2016.
- In June 2020, Hercules’ portfolio company Lastline Inc.,
the leader in AI-powered network detection and response, was
acquired by VMware, Inc. (NYSE: VMW), a leading innovator in
enterprise software. Terms of the acquisition were not disclosed.
Hercules initially committed $6.0 million in venture debt financing
in June 2019.
- In July 2020, Hercules’ portfolio company Postmates
Inc., a leader in on-demand food delivery, announced that they
have reached a definitive agreement to be acquired by Uber
Technologies, Inc. (NYSE: UBER), a ride-hailing company offering
services that include peer-to-peer ridesharing, ride service
hailing, and food delivery, for approximately $2.65 billion in an
all-stock transaction. Hercules initially committed $20.0 million
in venture debt financing in July 2018 and currently holds warrants
for 189,865 shares of common stock as of June 30, 2020.
Subsequent Events
- As of July 28, 2020, Hercules has:
- Funded $15.0 million to new and existing commitments since the
close of the second quarter 2020.
- Pending commitments (signed non-binding term sheets) of $150.3
million.
The table below summarizes our year-to-date closed and pending
commitments as follows:
Closed Commitments and Pending
Commitments (in millions)
January 1 – June 30, 2020 Closed
Commitments(a)
$523.0
Q3 2020 Closed Commitments (as of July 28,
2020)(a)
$10.0
Year-to-Date 2020 Closed
Commitments
$533.0
Q3 2020 Pending Commitments (as of July
28, 2020)(b)
$150.3
Year-to-Date 2020 Closed and Pending
Commitments
$683.3
Notes:
- Closed Commitments may include renewals of existing credit
facilities. 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 second quarter 2020 financial results
conference call for July 30, 2020 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: 1268909 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 1268909.
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 $10.5
billion to over 500 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).
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) June 30, 2020 December 31, 2019
Assets Investments: Non-control/Non-affiliate investments
(cost of $2,347,547 and $2,248,524, respectively)
$
2,297,180
$
2,232,972
Control investments (cost of $65,227 and $65,333, respectively)
54,431
59,746
Affiliate investments (cost of $88,584 and $88,175, respectively)
11,910
21,808
Total investments in securities, at value (cost of $2,501,357 and
$2,402,032, respectively)
2,363,521
2,314,526
Cash and cash equivalents
35,884
64,393
Restricted cash
33,599
50,603
Interest receivable
19,458
20,207
Right of use asset
10,492
11,659
Other assets
5,547
580
Total assets
$
2,468,501
$
2,461,968
Liabilities Accounts payable and accrued liabilities
$
29,162
$
30,306
Operating lease liability
10,178
11,538
SBA Debentures, net (principal of $110,250 and $149,000,
respectively)(1)
109,808
148,165
2022 Notes, net (principal of $150,000 and $150,000,
respectively)(1)
148,776
148,514
July 2024 Notes, net (principal of $105,000 and $105,000,
respectively)(1)
103,795
103,685
February 2025 Notes, net (principal of $50,000 and $0,
respectively)(1)
49,465
—
2025 Notes, net (principal of $75,000 and $75,000, respectively)(1)
73,161
72,970
June 2025 Notes, net (principal of $70,000 and $0, respectively)(1)
69,217
—
2033 Notes, net (principal of $40,000 and $40,000, respectively)(1)
38,555
38,501
2027 Asset-Backed Notes, net (principal of $200,000 and $200,000
respectively)(1)
197,448
197,312
2028 Asset-Backed Notes, net (principal of $250,000 and $250,000,
respectively)(1)
247,511
247,395
2022 Convertible Notes, net (principal of $230,000 and $230,000,
respectively)(1)
227,395
226,614
Credit Facilities
—
103,919
Total liabilities
$
1,304,471
$
1,328,919
Net assets consist of: Common stock, par value
115
108
Capital in excess of par value
1,223,263
1,145,106
Total distributable earnings (loss)
(59,348
)
(12,165
)
Total net assets
$
1,164,030
$
1,133,049
Total liabilities and net assets
$
2,468,501
$
2,461,968
Shares of common stock outstanding ($0.001 par value,
200,000,000 authorized)
114,230
107,364
Net asset value per share
$
10.19
$
10.55
(1) The Company’s SBA Debentures, February 2025 Notes, June
2025 Notes, 2033 Notes, 2025 Notes, 2022 Notes, 2027 Asset-Backed
Notes, 2028 Asset-Backed Notes, 2022 Convertible Notes,and July
2024 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 June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Investment income: Interest income Non-control/Non-affiliate
investments
$
62,667
$
59,932
$
128,005
$
113,872
Control investments
731
1,040
1,377
2,064
Affiliate investments
157
738
377
1,247
Total interest income
63,555
61,710
129,759
117,183
Fee income Commitment, facility and loan fee income
Non-control/Non-affiliate investments
3,511
5,028
7,707
7,478
Control investments
5
4
10
8
Affiliate investments
—
72
—
160
Total commitment, facility and loan fee income
3,516
5,104
7,717
7,646
One-time fee income Non-control/Non-affiliate investments
897
2,450
4,111
3,230
Total one-time fee income
897
2,450
4,111
3,230
Total fee income
4,413
7,554
11,828
10,876
Total investment income
67,968
69,264
141,587
128,059
Operating expenses: Interest
15,076
13,515
29,608
26,070
Loan fees
1,650
1,646
3,444
4,655
General and administrative Legal expenses
991
1,963
1,860
2,626
Tax expenses
899
593
2,034
891
Other expenses
3,973
3,239
7,998
6,431
Total general and administrative
5,863
5,795
11,922
9,948
Employee compensation Compensation and benefits
7,180
9,190
15,394
15,813
Stock-based compensation
2,515
3,851
4,955
7,273
Total employee compensation
9,695
13,041
20,349
23,086
Total operating expenses
32,284
33,997
65,323
63,759
Net investment income
35,684
35,267
76,264
64,300
Net realized gain (loss) on investments
Non-control/Non-affiliate investments
141
4,271
7,108
8,826
Total net realized gain (loss) on investments
141
4,271
7,108
8,826
Net change in unrealized appreciation (depreciation) on
investments Non-control/Non-affiliate investments
23,613
9,794
34,816
41,884
Control investments
2,642
808
(5,209
)
(2,068
)
Affiliate investments
(315
)
(2,009
)
10,305
(3,226
)
Total net unrealized appreciation (depreciation) on investments
25,940
8,593
(50,330
)
36,590
Total net realized and unrealized gain(loss)
26,081
12,864
(43,222
)
45,416
Net increase(decrease) in net assets resulting from
operations
$
61,765
$
48,131
$
33,042
$
109,716
Net investment income before investment gains and losses per common
share: Basic
$
0.32
$
0.36
$
0.69
$
0.66
Change in net assets resulting from operations per common share:
Basic
$
0.55
$
0.49
$
0.29
$
1.13
Diluted
$
0.55
$
0.49
$
0.29
$
1.12
Weighted average shares outstanding: Basic
111,558
98,223
110,256
97,226
Diluted
111,729
98,737
110,504
97,630
Distributions paid per common share: Basic
$
0.32
$
0.33
$
0.72
$
0.64
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200730005780/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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