Hercules Capital, Inc. (NYSE:HTGC) Q2 2018 Earnings Conference Call - Final Transcript

Aug 02, 2018 • 05:00 pm ET

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Hercules Capital, Inc. (NYSE:HTGC) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Hercules Capital Second Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Michael Hara, Senior Director of IR. Sir, you may begin.

Executive
Michael Hara

Thank you, Joelle.

Good afternoon, everyone, and welcome to Hercules' conference call for the second quarter of 2018. With us on the call today from Hercules are Manuel Henriquez, Founder, Chairman and CEO; David Lund, our Interim CFO; and Gerard Waldt, our Corporate Controller and Interim Chief Accounting Officer.

Hercules' second quarter 2018 financial results were released just after today's market close and can be accessed from Hercules' IR section at htgc.com. We've arranged for a replay of the call on Hercules' webpage or by using the telephone number and pass code provided in today's earnings release.

(Forward-Looking Cautionary Statements)

With that, I will turn the call over to Manuel Henriquez, Hercules' Chairman and CEO.

Executive
Manuel Henriquez

Thank you, Michael.

Good afternoon, everyone, and thank you for joining us on the call today. We have plenty of outstanding news to share with you today about our very strong and record-breaking start to the first half of 2018 and our continued optimism and strong outlook for the remainder of 2018, assuming, of course, the current market conditions remain as favorable as they are currently throughout the second half of 2018.

First, regarding our strong earnings performance in the second quarter of 2018. We achieved another strong quarterly performance with an adjusted net investment income of $0.29 per share after adding back the previously announced $0.03 of non-cash expense related to the retirement of our $100 million bonds of the 2024 notes, which, on a GAAP basis, would have equaled to about $0.26 in NII after taking into effect of the $0.03 impact of the retirement of those bonds.

In addition, given our strong loan portfolio growth and core yield growth during the quarter, we now expect to cover our dividend from net investment income beginning in Q3 2018, a quarter sooner than we had anticipated and even after including the impact of the higher share count from our previously issued equity offering, ensuring us to maintain our leverage levels below 1-to-1.

We also achieved another milestone during the quarter as a company thanks to our tremendous team of employees who made it possible and our growing brand within the venture capital industry as a venture lender of choice among many of the venture capital firms and their portfolio companies. I am proud to share with you today that because of our strong new origination activities in the second quarter, we now have surpassed a major milestone of $8 billion in total commitments since the start of Hercules in December 2013. We have financed more than 430 different innovative and disruptive venture capital and private equity-backed companies who have chosen Hercules Capital as one of their capital partners of choice.

This is an amazing achievement