February 22, 2018 FOURTH QUARTER 2017 INVESTOR PRESENTATION Financing the Growth of Tomorrow’s Companies Today TM
IMPORTANT NOTICE: FORWARD LOOKING STATEMENTS This presentation 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 presentation is made as of the date hereof and reflects Hercules’ current assessment of its financial performance for the period reported. Actual financial results filed with the Securities and Exchange Commission in the future may differ from those contained herein in the event of additional adjustments recorded prior to the filing of its financial statements. This presentation may contain “forward -looking statements. ” These forward-looking statements include comments with respect to our financial objectives, loan portfolio growth, strategies and results of our operations. However, by their nature, these forward-looking statements involve numerous assumptions, uncertainties and risks, both general and specific. The risk exists that these statements may not be fulfilled. We caution readers of this presentation not to place undue reliance on these forward-looking statements as a number of factors could cause future Company results to differ materially from these statements. Forward-looking statements may be influenced in particular by factors such as fluctuations in interest rates and stock indices, the effects of competition in the areas in which we operate, and changes in economic, political and regulatory conditions. We caution that the foregoing list is not exhaustive. When relying on forward-looking statements to make decisions, investors should carefully consider the aforementioned factors as well as other uncertainties and events. Historical results discussed in this presentation are not indicative of future results. This presentation should be read in conjunction with our recent SEC filings. 2
February 22, 2018 FOURTH QUARTER 2017 INVESTOR PRESENTATION Key Performance Highlights Company & Strategic Overview Financial Highlights Portfolio Highlights Venture Capital Market Opportunity Analyst Coverage Supplemental Information
KEY PERFORMANCE HIGHLIGHTS
Q4 2017 HIGHLIGHTS • Net Investment Income (“NII”) of $24.5M/Adj. NII of $26.9M (1) • Total Investment Income of $50.2M Robust Earnings • NII per share of $0.29/Adjusted NII of $0.32 (1) • 50 consecutive quarters of distributions since IPO • 1YR/5YR/7YR Total Shareholder Returns (5) : 1.8%/165.8%/222.8% • ROAE (2) : 12.0% Strong Shareholder Returns • ROAA (2) : 6.3% • Net Interest Margin (“NIM”): 10.4% • Total Debt Investments: $1.44B at cost High-Yield Portfolio of Earning Assets • Effective Yield: 14.2% • $7.3B in total debt commitments since inception • Cumulative Total Net Realized (Loss) since inception of ($29.0M) Industry-Leading Originations Platform • Total debt & equity commitments: $330.5M • Gross debt & equity fundings: $277.4M • $286.3M available liquidity Strong Liquidity and Balance Sheet • $228.3M additional leverage capacity • Regulatory leverage and net regulatory leverage: 72.9% and 62.0% (3) • Price-to-NAV: 1.24x (4) Strong Capital Raising Position • “ATM” Equity and Debt Distribution Agreements • Investment Grade Credit Ratings: S&P: BBB- | KBRA: BBB+ (1) Excludes one-time impact of $2.4M or $0.03 per share associated with the $75.0M 2024 Notes redemption plus the non-recurring interest overlap due to the 30-day notice redemption period (2) Based on NII, excludes realized and unrealized gains/losses (3) Net regulatory leverage is defined as regulatory leverage less cash balance at period end (4) As of February 20, 2018 (5) Source: S&P CapIQ as of 12/31/17 5
(b) TOTAL SHAREHOLDER RETURN % (TSR)vs. BDCs & INDEXES 240% 220% 200% 180% 160% 140% 120% 100% 80% 60% 40% 165.8% 222.8% 101.1% 125.9% 20% 62.4% 28.1% 96.3% 0.9% 1.8% 0.1% N/A N/A 0% 1- Year 5-Year 7-Year 10-Year (a) HTGC Peer Group WF BDCS (3/31/16) (a) Peer Group: AINV, ARCC, BKCC, OCSL, FSIC, GBDC, GSBD, KCAP, MAIN, MCC, NMFC, PNNT, PSEC, SLRC, TCAP, TCPC, TCRD, TICC,TSLX (b) TSR is defined as stock appreciation plus distributed dividend distributions Source: S&P Capital IQ as of December 31, 2017 6
DELIVERING STRONG SHAREHOLDER RETURNS Return on Average Equity % (ROAE) Return on Average Assets % (ROAA) 14% 8% 12% 7% 12.9% 12.6% 12.0% 7.2% 11.7% 6.9% 6% 10% 11.0% 11.0% 6.5% 6.4% 10.8% 6.3% 6.1% 6.0% 10.1% 5% 5.7% 9.6% 8% 5.4% 5.2% 8.6% 4% 6% 3% 4% 2% 1% 2% 0% 0% 2013 2014 2015 2016 Q4 2017 2013 2014 2015 2016 Q4 2017 HTGC Peer Group (a) (a) HTGC Peer Group Source: S&P Capital IQ as of 9/30/17 for Peer Group and 12/31/17 for HTGC. Return on Average Assets Source: S&P Capital IQ as of 9/30/17 for Peer Group and 12/31/17 for HTGC. Return on Average Equity based excluding cash. NII divided by average of beginning of period total assets excluding cash and end of period on NII. NII divided by average of beginning of period equity and end of period equity. total assets excluding cash. (a) Peer Group: AINV, ARCC, BKCC, OCSL, FSIC, GBDC, GSBD, KCAP, MAIN, MCC, NMFC, PNNT, PSEC, SLRC, TCAP, TCPC, TCRD, TICC,TSLX $15 $14.02 per share or ~$702 million in Historical Cumulative Distributions Since June 2005 IPO 2018 YTD Distributions Paid: $0.31 Cumulative Distributions $10 (per Share) Declared $14.02 $13.71 $12.47 $11.23 $5 $9.99 $8.75 $7.64 $6.69 $5.81 $5.01 $3.75 $0.33 $2.43 $1.23 $0 (1, 2) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018 (1) Q1 09 distribution was paid in 10% cash and 90% stock; (2) Includes special $0.04 distribution paid in December 2009 (2) Note: The Yield Calculation may include a potential tax return of capital. Any portion of a distribution that is ultimately deemed to be a tax return of capital should not be considered. The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of its distributions for a full year. The tax attributes of its distributions for the years ended December 31, 2008 through December 31., 2017 were paid 100% from earnings and profits; however, there can be no certainty to shareholders that this determination is representative of what the tax attributes of its 2017 distributions to shareholders will actually be. 7
HERCULES CONSISTENTLY MAINTAINS A PREMIUM TO NAV CREATES A STRONG CAPITAL RAISING POSITION TO SUPPORT GROWTH 1.7 $16 1.56 1.46 1.5 1.43 $14 1.32 1.3 1.23 Price to NAV 1.14 1.1 $12 1.07 1.07 0.9 0.96 0.94 0.92 0.92 $10 0.7 $9.75 $10.51 $10.18 $9.94 $9.90 $9.96 $8 0.5 2012 2013 2014 2015 2016 Q4 2017 (a) Hercules NAV Hercules Price to NAV Peer Group Price to NAV (a) Peer Group: AINV, ARCC, BKCC, OCSL, FSIC, GBDC, GSBD, KCAP, MAIN, MCC, NMFC, PNNT, PSEC, SLRC, TCAP, TCPC, TCRD, TICC,TSL Note: Source S&P CapIQ as of September 30, 2017 for Peer Group and December 31, 2017 for HTGC. Stock price based on closing price on last trading day of each calendar year or relative quarter. 8
HERCULES KEY PERFORMANCE HIGHLIGHTS Net Investment Income “NII” Total Investment Income $200 ($ in millions) ($ in millions) $100 $180 $190.9 $100.3 $175.1 $96.4 $160 $157.1 $80 $140 $143.7 $139.7 $73.1 $73.5 $120 $71.8 $60 $100 $97.5 $80 $48.1 $40 $79.9 $60 $39.6 $40 $20 $20 $0 $0 (a) 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 $1,700 Total Investments at Cost $1,700 Total Assets $1,654.7 ($ in millions) ($ in millions) $1,619.8 $1,500 $1,500 $1,511.5 $1,464.2 $1,300 $1,300 $1,324.0 $1,299.2 $1,252.3 $1,221.7 $1,100 $1,100 $1,123.6 $1,035.3 $900 $900 $914.3 $906.3 $700 $700 $747.4 $500 $500 $587.4 $300 $300 $100 $100 -$100 -$100 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 (a) Amount includes the one-time benefit of a litigation settlement of $8.0 million 9
PORTFOLIO GROWTH WITH UNDERWRITING DISCIPLINE Cumulative Debt Commitment and Fundings, Since Inception 12/03 $8.0 $7.3 $7.0 $6.5 $5.6 $6.0 $5.7 $4.9 $4.9 $ in billions $5.0 $4.2 $4.0 $3.4 $4.0 $3.5 $2.9 $2.7 $3.0 $2.4 $2.1 $1.9 $1.5 $1.4 $1.5 $2.0 $1.2 $0.9 $1.1 $0.7 $0.5 $1.0 $0.4 $0.2 $0.2 $0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 HTGC Cumulative Commitments Cumulative Fundings IPO Cumulative Total Aggregate Net Realized Gains/(Losses), Since Inception 12/03 $30 $20 $20.1 $10 $5.1 $4.6 $14.9 $3.1 $10.9 $ in millions $0 ($6.9) ($2.3) ($12.0) -$10 ($6.9) ($12.0) -$20 ($29.0) ($32.1) -$30 ($47.0) ($32.1) ($39.9) -$40 ($50.1) Net Realized Gains -$50 ($47.0) Net Realized Loss Carry Forward ($50.1) ($50.1) -$60 Cumulative Net Realized Loss, Since Inception 12/03 2011 2012 2013 2014 2015 2016 2017 10
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