Horizon Technology Finance Corporation

Greetings and welcome to Horizon Technology. At this time, all participants are on a listen-only mode. A question and answer session will follow the presentation. If any of you require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host. You may begin. Thank you.

Thank you, and welcome to the Horizon Technology Finance fourth quarter 2020 conference call. Representing the company today are Rob Pomeroy, Chairman and Chief Executive Officer, Jerry Michaud, President, and Dan Trollio, Chief Financial Officer. I would like to point out that the Q4 earnings press release and Form 10-K are available on the company's website at horizontechfinance.com. Before we begin our formal remarks, I need to remind everyone that during this conference call, Horizon Technology Finance will make certain forward-looking statements including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends, or similar expressions are used to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements And some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31, 2020. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time, I would like to turn the call over to Rob Pomeroy.

Good morning. Thank you for joining us and for your continued interest in Horizon. Today, I will provide an overall perspective on Horizon's performance and its current operating environment. Jerry will then discuss our business development efforts and our markets. Dan will detail our operating performance and financial condition, and then we will take some questions. 2020 was an incredibly challenging year, but with the progress of the vaccines, we are hopeful we will soon start to return to a more normal health and economic environment in 2021. Looking back at 2020, we want to highlight our important accomplishments. We grew our portfolio to $253 million, despite a record level of prepayments. We maintained our level of distributions through a challenging time, and our total net investment income has exceeded our total distributions for the past three years. After experiencing a low volume of originations in the third quarter, due in large part to the impact of COVID-19, we experienced a high volume of originations in the fourth quarter and enter 2021 with a record committed backlog of $107 million. We achieved an industry-leading portfolio yield on our debt investments of 14.6%. We added new key team members to Horizon in originations, underwriting, portfolio management, and accounting. We improved our forward outlook and credit profile as we resolved several underperforming loans, ending the year with our lowest level of underperforming loans since 2017. By resolving these non-earning assets, we returned cash to the balance sheet to invest in new earning assets. We've generated net investment income of $1.18 per share, which allowed us to maintain our monthly distribution level of 10 cents per share throughout the pandemic. And based on our outlook for 2021, we have declared these distributions through June, marking 54 consecutive months at this level. We are particularly proud of our ability to protect our distributions. We raised approximately $45 million of equity from our at-the-market program, all at a premium to NAV. We enhanced our ability to leverage our equity through our $100 million amended credit facility with New York Live and ended the year with strong available liquidity and $175 million of capacity to support our portfolio companies and make additional investments. In addition, we believe over 98% of our portfolio companies have adequate cash or access to cash to execute their business plans and over 70% has runway into late 2021 and beyond. Further, 22 of our portfolio companies raised a total of over $500 million in 2020, again showing the continued support of the investors and the health of the venture capital ecosystem. Looking forward into the balance of 2021, we believe we are well positioned to grow our portfolio and generate strong NII for the year. Demand for venture debt within our targeted industries remains robust. Today, we have expanded our record committed backlog to 137 million after already funding 25 million in the first quarter. And there are a wealth of opportunities in our pipeline for investment in the first half of this year and beyond. And we have ample capacity on our balance sheet to execute on our backlog, pipeline, and new opportunities we originate. Overall, 2020 was a true test of our ability to withstand an unprecedented crisis, and our team and our portfolio remained resilient. The portfolio we built together over the years held firm, and as a result, we are strongly positioned to grow and succeed into the future. Moving forward, we will remain proactive in managing our portfolio and look to opportunistically fund new investments to further expand and diversify our portfolio. and ultimately generate additional long-term value for our shareholders. We're very proud of and thankful for our entire team, and with that, I will now turn the call over to Jerry.