Horizon Technology Finance Corporation

Ladies and gentlemen, greetings and welcome to the Horizon Technology Finance Corporation fourth quarter 2022 earnings conference call. At this time, all participant lines are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to Megan Bacon, Director IR and Marketing. Please go ahead.

Thank you, and welcome to Horizon Technology Finance Corporation's fourth quarter 2022 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, the company will make certain forward-looking statements, including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends, or similar expressions are used to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. 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, 2022. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time, I would like to turn the call over to Rob Pomeroy.

Welcome, everyone, and thank you for your interest in Horizons. As we always do on our quarterly calls, I will update you on our performance in our current overall operating environment. Today, I will also provide an update on our advisors' exciting new strategic development. Jerry will then discuss our business development efforts, our portfolio events, and our markets, and Dan will detail our operating performance and financial condition. We will then take some questions. Horizon and our advisor, Horizon Technology Finance Management, performed well in the fourth quarter, capping off a strong 2022 in the face of a challenging macroeconomic environment. Our earnings exceeded our distributions for the quarter and year. We grew the size of our portfolio to over $700 million. We bolstered our balance sheet, and we maintained solid credit quality. We are very pleased with how we successfully navigated through 2022, and I'm proud of our advisors and its team's efforts throughout the year as they further validated the earnings power of our portfolio, our predictive pricing strategy, and our disciplined investment approach. Turning to our accomplishments in 2022, our portfolio at year-end stood at $720 million, an increase of 57% from the end of 2021. Our significant growth resulted from both our advisors' ability to originate high-quality venture debt investments and the increasing power of the Horizon brand in the venture debt community. We finished the year with a committed and approved backlog of $220 million, which provides us with a solid base of opportunities to grow our portfolio in 2023. We generated net investment income of $1.46 per share, well in excess of our distribution level for the year, due largely to higher interest rates on our floating rate investment portfolio and the growth in our portfolio. I would note that last quarter, based on our strong performance and the confidence in our outlook, we increased our declared monthly distributions by 10% to $0.11 per share, as well as paid a $0.05 per share special distribution for our third consecutive year. This quarter, based on our outlook and our undistributed spillover income of 68 cents per share as of year-end, we declared monthly distributions of 11 cents per share through June of 2023. We achieved a portfolio yield on our debt investments for the quarter of 14.5% and a full-year debt portfolio yield of 14.4% at or near the top of the BDC industry. We maintained a stable credit profile throughout the year in the face of the challenging macro environment, with 95% of our debt portfolio rated three or higher at the end of the year. As always, we are consistently and actively managing our portfolio of investments to maintain its credit quality. We ended the year with a net asset value of $11.47 per share, Finally, we continue to fortify our balance sheet during the year, raising approximately $50 million of equity in 2022 from our at-the-market program, all at a premium to NAV. Additionally, we raised nearly $90 million from our overnight equity offering in March and our notes offering in June. While we have adequate liquidity and capacity to fund our current backlog, we will opportunistically and strategically seek new debt and equity capital as our portfolio and backlog continue to grow. Entering 2023, with concerns about higher interest rates, inflation, and a possible global recession, we continue to closely manage our portfolio and will remain selective in originating new investments. We believe our portfolio and backlog is positioned to generate strong NII in 2023, which may exceed our distributions. On the strategic front, last week we were excited to announce that our advisor has agreed to be acquired by an affiliate of Monroe Capital, one of the premier boutique asset managers in the country, with over $16 billion in assets under management. Please note that the transaction is subject to certain closing conditions, including shareholder approval of a new investment management agreement due to the change of control in the advisor. The new investment management agreement is substantially similar to the existing agreement between our advisor and HRZN, and the Board of Directors is unanimously recommending approval of the new agreement, including all of our independent directors. We believe that Monroe's platform, culture, and values are well aligned with those of the advisor. making this a natural fit for the advisor. Most importantly, the entire team that currently staffs our advisor is expected to remain and continue to manage Horizon. To be clear, Monroe has agreed to acquire the advisor, not Horizon, the public company. We also believe that Monroe's purchase of the advisor will create more value over time for Horizon shareholders because the advisor's ability to access Monroe Capital's platform and infrastructure will lead to increased investment opportunities and greater portfolio diversity for Horizon, while potentially reducing expenses through economies of scale and access to more efficient capital. The Advisor and its existing management have strong incentives to grow and strengthen Horizon over time. We are confident that the Advisor, Monroe, Horizon, and Horizon's shareholders will all benefit from this transaction and are excited to be partnering with Monroe. In summary, the Verizon team continues to rely on its collective expertise and experience in all economic cycles to smartly execute its strategy and remains well-positioned to navigate through the current credit cycle while taking advantage of new opportunities to originate high-quality investments. With that, I will now turn the call over to Jerry and Dan to give you more details and color on our performance. Jerry?