Hercules Capital (HTGC) 30 Oct 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Hercules Capital Third Quarter 2020 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Hara. Michael you. Thank sir. ahead, Please go

htgc.com. Bluestein, Thank accessed financial you, conference With welcome Hercules today's and Hercules' are everyone, on and close Investment Seth market Meyer, Hercules' were Good for the released Investor afternoon, CFO. Relations Scott Hercules call from XXXX. quarter call and and third section Chief the Officer; from XXXX to at third today A.J.Juan. be CEO results quarter us after can of just

have replay the Hercules' number today's We a webpage or and in at for the call arranged of provided by telephone earnings using release. passcodes

herein During Actual to the between of make financial may and results. timing forward-looking this expectations. with date in the release filed audit on contained the final Securities current differ this confirmation due call, results may and Exchange delays statements we Commission and based those from

are historical, results the other performance those market not statements. other the In time-to-time These release forward-looking that expressed in surrounding without uncertainties caused with including, the turbulence in and actual factors the and we to from filings could uncertainties, identify addition, the COVID-XX are our factors statements guarantees differ contained this uncertainties and statements pandemic that the cause are risks forward-looking by in are including materially subject limitation, the current from SEC. not the purely to of statements forward-looking and future

incorrect. assumptions inaccurate. those forward-looking be as on the the can believe a we can forward-looking those are be also based any assumptions that these And on statements assumptions Although, statements reasonable, prove to which of result,

obligation website. Hercules forward-looking I hereof, Scott. events. our To over this with contained as are the should subsequent of will of filings, the copies the for to no And not statements release these and statements. forward-looking SEC-related The statements turn place to forward-looking in call You reliance obtain visit undue made please date assumes update on that,

QX maintain joining challenging to then to Being for I'm strength, into everyone diligently all to to to their us I and earnings all with and in maximize staying operating business once you safe jobs substantial are Continuing that thank months perform believe and origination QX for by teams, high Michael business and performance and liquidity again where healthy. Capital, to quality opportunities. resiliency, was like the provide of is QX our flexibility. management focus. particularly manage hope calls, would fronts position today. who aggressive ensure require that you, our quarter activity, the a eight acknowledging our discuss strong on Thank and of XXXX balance of multiple balance liquidity, with financial continue We we our sheet pandemic, overview theme an facing. we and the commitment going Hercules sheet used investment start additional we operational and despite be employees, we continue environment this key areas QX partners select strength very continue to on and thanking the

positioned. the impaired quarter performance how Overall, that credit on previously our platform feel able originations the level we commitments We leading our our loans fundings. about closed and to continue two industry were of and credit team were despite write a position good investment of liquidity world-class off Our sheet, balance solid non-accrual. during strong to record was in is and maintain QX book

and related equity focus new activity debt our Let $XXX diversification and reflected million on key me our recap commitments more controlled of highlights gross QX. some for In of fundings our of of QX, $XXX delivered and originated We nearly the growth. million. than performance investment

in ability to any and to market us advantage investment activity provide dual continues with opportunities. we and a on a Sciences competitive when Life unique focus environment see the attractive Our strong and technology deliver

Our portfolio technology teams performance our Life companies. existing from and with saw Sciences strong fundings third five both new debt and commitments. We quarter respect XX included to new

Although, towards life companies. commitment more skewed the funding was slightly again sciences and our activity

third deliver are quarters resiliency our highlighting to portfolio. continue the And we three has $X to commitments model only performance existing funding capital strong for have proprietary within through Despite that managed continuing of the to attractive expect investment and and over are that aggressive that business of opportunities of achieved. additional diversified the see be terms across are to Hercules those providing portfolio We our XXXX consecutive new our to billion scale growth we of metrics. fact companies in we the demonstrating year,

we of XX.X% venture million share, we and third has with at increase our excess by fair Year this $XX.X capital $XXX $X.XX quarter, investment I the stage congratulate our growth this and the our The that QX the depth On cost, from accomplishments, lending of of a companies and basis have an million and QX. Year-to-date, million billion coverage in $XX.X committed debit investment debt repayments date, despite nicely have $XXX which in million as the generated growth but year-over-year. million employees income resulting of investment by would debt to at Credit during million were per income to also repayments on credits since and investment of repayments loan of portfolio of QX in to portfolio venture like inception, space. credits cumulative we higher $XXX our and XXX% and of the resulted $XX.X generated portfolio of total decreased weighted a income the versus $XXX.X net above in $XX QX, talent early in compared growth $XXX was the increase improved cost a rate guidance in to million, with and we have increased loan income X.XX stage challenges of our and QX million net long-term year-over-year of QX, rating compared at XX.X% commitment to now base value. versus XX.X% X QX. to investment to and our QX of team, total internal Overall, in of or X XX.X% all million. XX.X% to up investment and credit investment tremendous increase to team X.XX $XX X.X% of investment million, fee slightly had in quality Rate million, average cash grown driven investment across million X During and loan been on pandemic. achieving. In in $XXX $XXX associated QX. income Early $X.X we an in as We QX. in distribution. believe early

the Our rated entire up portfolio X less X.X% debt than made and rated of fair value. X credits

doing and are provide cost position I and quarter, percentage specific respectively. a the details best on our investment $XX.X of impaired loans cost at off and cumulative the investment been of and are respectively stakeholders non-accrual we company. had million value this $X.X During that portfolio environment, that update X.X% we of on debt to had and investments QX, the in approximately total company's with wrote and that X.X% shareholders non-accrual. as two In quarter, business areas value, for to specific a thing an our five fair we we important or million believe Again would three on this like

business. of and First, the employee continuity well being our

home Our of and currently business, assuming of we the our are emphasis continues. operations remains or of to have experienced continuity to remain our through perhaps To the well our interruptions setting will the on the workforce our that while and work And from we being operate. employees material a not pandemic year ability business date, our longer. majority rest of any the the in

our been the our restrictions, offices best in to continues we material have our and continuing able of normal interruption. being any are and reopen prioritize while capacity well the to certain ensure that employees, course without operate of safety to business the While to and with doing

to balance systems company position We our our to and strength. Liquidity in make team opportunistically continued have sheet and best investments the long-term. also

do expect and At prudent materially. Early XXX for amortization. number $XXX our time, be where unfunded record and is QX, Despite principal we QX always are it been we substantial payoff fundings, again QX to which million our with with and available ended this us of million so. we and to million, We XXX.X prioritize provides early in course coverage commitments have of of of between million to ongoing payoffs continuing in approximately could source the continues change liquidity, XXX this market that liquidity. million, QX and dislocation, advantage early the aggressive to when to ability potential be any we believe on deals, ability This anticipated take although was us payoffs case our activity. business payments of give business, fund ordinary liquidity of a XXX and to received new the

balance And the Subsequent quarter relationship sheet remains with our SBA term provides debt additional license, in heading strong our end, to near flexible record stack. Our with capital and maturities which near of XXX us was standing liquidity, officially and an it we liability up no our SBA. to third crisis. long this with strong received extends into today million

and portfolio quality. credit Finally,

believe portfolio, to Having diversified will this of approximately us to And well. liquidity the assets it have liquidity sheet sheet. or respect crisis. months looking portfolio, cost liabilities at will debt Each to companies approximately largest has that both have of to months of excess have. investments strong. based Capital on with reporting to portfolio companies, debt investments portfolio our at factor and debt XX currently balance of of months hand across we we of continue cash our our recent on sheet our businesses We portfolio our cost technology raising liquidity balance our that in their a of XX% these loans our currently time least over impact on fund with XX call, estimate remains of XX on sheet. most of million. of nine months true XX or months approximately $XX cash that months. basis XX Within outstanding Of of totaling capital, for entire last portfolio, take less Year-to-date, continue liquidity, to another current debt we then companies our of In raised currently XX-plus over Since balance that months for important earnings plus When liquidity continue the we XX a we debt have serve the with have up billion companies the XX-plus of had companies ascertain XX new capital. initial that are to has an currently entire make companies portfolio $X a the events, liquidity raised last balance outstanding XX of completed $X.X six States, remains four total days, approximately monitor. COVID-XX United have including our three beginning have with we XX-plus portfolio in of of that life XX% closely that in the portfolio. M&A Since our have for approximately had debt of sciences with their additional currently the registration. billion. portfolio XX% XX% ample XX on in X% public and offerings, our six at XX Loans three investment new

Our make debt at to only up continue of top debt fair value. XX% our XX investments portfolio

to situation, least each sheet, the all reporting balance have months most XX-plus varying these recent at that continue on will the of degree be of While liquidity current a impacted by of as we companies to have. currently

and sciences software-driven the market our development of have as cost classified be debt model, XX% to companies companies these at a Approximately continues XX% to based contractual weighted and September $XXX seen many XX.X public continues to cost record estimated we a reporting billion invested data public this as total have in work recent technology of and today. public to overweight dollars raised on portfolio which traded basis software XX. pandemic ratio know attachment believe have $X.X publicly most discovery at we average that the selectively, than average period the we weighted weighted or Our $XX.X are over and funds have software in of the companies. billion in approximately a cash during XX. as capital continues first relative of times, companies debt make of better less that public our expect on revenue Venture to the our United The September venture during as be capitalization towards funds and for capitalization ecosystem period, reflects conservative. that of by equity these the Association. of value debt recent recurring is recurring of capital as companies, the times to In companies quarters average reports. what the strong debt venture perform one investments raised point, investments continues companies raise portfolio, National That portfolio to life year, most the put sectors of and the a equals according quarter. on Through position gathered latest are current to capital three annual as a of Capital billion drug a data Based our revenue This with approximately them to our of their market a These as States, also we indoors. we PitchBook

book partners working credit on to continues financial appropriate an proactively. be companies our focus level Our liquidity, managing our with and of maintaining and actively

evaluating incredibly high team selective investments. Our for deployment. new potential pipeline bar with and But investment be our prudent continued be exceeds we continue active billion has remains deals busy of that capital an currently to to $X and

$X.XX Finally, QX $X.XX quarterly I X.XX would share shareholder NII like to cost, share. billion of our generated per in of our of At portfolio. with per XXX% distribution distribution at debt coverage our based discuss investment our

of our are of $X.XX a consecutive addition $X.XX share. In declaring distribution to seventh share, distribution cash quarterly supplemental per per also we

subject unprecedented and variable net income additional respect flexibility, spillover or QX filings. to per invest and wishes our employees we of investment acknowledge like would to million approximately send continue talented In the challenging over base these most effort times our safety much, to all closing team to call our our dedicated sincere by the to who and each We of $XX.X very This and continue and this unique maintaining pandemic and going tax final have distribution base Thank and for for of thank of are their forward we our spirit, now will hope with undistributed everyone. our to with addition covering to our platform. ability focus. you to $X.XX be in I are for the us quarterly And fortunate also being those in affected to all. distribution, earnings wellbeing Seth. In in to provides and everyone. I turn share

balance us, our a on focus we gentlemen. continuing Thank With another you, portfolio well-diversified quarter making Scott sheet, ahead ladies afternoon, to our enhancing solid maintaining liquidity investments and and think and good are and behind people, position, strengthening systems. our in processes and

income driven or share during the fee and attention increase by Scott $XX.X highlights $XX.X was QX and announced new we the the income realized With income us net performance outlook. performance are and of increased stringent publicly X.X% The and million, compared focus prior take yesterday, I'll following an as to unrealized and total the and per all activity, any attractive a leverage per income should mentioned. expand received Today, we in million investment that investment qualified approval higher already quarter. XXX investment compared end advantage finally on standards. an SBA income $.XX statement net $X.XX or portfolio, they Total As income for of need million statement, to the the increase the areas, was and increase available main and QX share our highlights, and opportunities liquidity providing quarter was to for turn NAV, driver and are increases This license, significant to with X for liquidity ensures of let's million the investments. the SBIC payoffs of prior to from financing our well-prepared quarter.

compared to second second to the expired respectively in quarter the the The driver compared yields payoffs. in reduction primarily yield slightly core quarter, XX.X% XX.X% the commitments XX.X% due in and in and XX.X% to were decreased related in the effective yield a higher was effective primary the second Our for increase the -- due core quarter. to again,

to Turning expenses.

for million prior to million quarter, in the quarter, $XX.X $XX.X to the legal million in again fees Our Interest reduced expenses. and facility. quarter expenses millions $XX.X from and expenses the of by SG&A to slightly from decreased the lower the expense prior use to decreased the $XX.X prior in the total compared decreased operating million quarter. commensurate decrease was SG&A credit $XX with driven $XX.X million

Our weighted of increase cost quarter. a the average debt compared small was X.X%, prior to

Now let's switch the and unrealized focus to realized activity. NAV

an increase or share. share per NAV represents per During drivers our increased the prior to million, and unrealized the of change per million for of the NAV the in including increase million, of share reversal of have due This The the the paid a $X.XX mainly quarter, seven-tenths cents percent. $XX.X $XX.X dividend and net losses of out main to losses of the recognition unrealized realized quarter. $XX.XX appreciation $XX.X earning

the $X.X Our and equity well key sale warrant appreciation mark-to-market due $XX.X of reversals yield warrant recognition adjustments in unrealized had million unrealized of the of portfolio. approximately were The loan million on by depreciation for drivers largely our appreciation our And million depreciation mark-to-market portfolio, was including appreciation, to a million $XX.X debt and attributable write-off as prior on on to prior portfolio. driven as portfolio of of and/or impaired company previously loss and portfolio, $XX.X of which of portfolio equity was that one been on appreciation included the the non-accrual. reversal on

from realized impairments $XX.X quarter as in million less mentioned cost a portfolio by the loans X% of loans positions. on the offset $X.X reduced net $X.X other warrants million The Net the previously. $X.X losses Scott our prior losses of investment of third of comprised losses non-accrual the off, paid disposal legacy certain on on from experienced positions portfolio both to reversal than of depreciation exploration previously basis net for yield-based million million as the gains equity Excluding the million loan loans were realized appreciation. and on two non-accrual. loan write-off $XX.X of the the from of were

end Next, due quarter. respectively, our GAAP was balance XXX% leverage At XXX.X, the which liquidity. the increased of respectively. the and to prior in increased regulatory quarter, quarter out leverage sheet, and on the our in XXX.X%, to XXX.X and and fundings Netting cash was the regulatory gap compared the leverage

of business on more the to of ceiling million. approximately manage ended $XXX with liquidity quarter the a XXX% continue basis. targeted than We with a regulatory leverage We

as continues as liquidity and monthly enhanced Our interest collections, principal payoffs. early normal to well our course be by

reminder, payoffs provide use to that normal early inflows our when significant a amortization As as with we and can needed. us and monthly delever

on the XXXX. apply core Finally, points, the yield our outlook to to of for guidance XX% XX% of remainder continues

we quarter, $XX is to lower fourth expect my expenses the guidance. million For SG&A million, of than prior which $XX slightly

We our expect increase in the to borrowing quarter. modestly funding to fourth due the significant costs third quarter

our we of activity the best Q&A our Although our continue operator the will the $XXX we call solid Scott And very begin investments. then us turn only things to to quarter. the communicated, difficult average the also call. to in approval of believe QX. million given operating predict, quarter million SBA, license us A.J., going decreasing new delivered will now expect will over over to we financing help to This $XXX forward, weighted fourth mentioned focus million to attractive we not to available you. will a us position on prepayment contribute closing, In I current costs. for earlier, we've environment. part received increase borrowing $XXX in that the and And finally, as the qualified providing as of liquidity, but

comes the question [Operator Crispin from you. Sandler. Love Piper Instructions] from line Thank of First

open. now is line Your

Good for evening, guys, you my question. thank taking

to looks of in quality to detail grades you for you're quality, industries more there's two credit bit little where quarter three on side, buckets the closely? a struggling give and can a related? industry on a more grade other still watching instances, improved in first, that nicely the what bit grade the other of credit be lot migration you any the And a little So with that's if saw improvements are then if

Sure.

grade the migration, deal three question. elements First, respect with the loans that had driver about. the we the the thanks of With actually to biggest shift for to talked in fundraising

think a we're I we you how know, grade bit the as little and portfolio. conservative

side watch loans. loan if activity we rated approaching a the on a downgrade raise. it credits. will across capital we three a with credit raises, saw respect portfolio, again, rated certain as a three to quarter, those those significant some capital result completing a including And So companies this pretty to is raising we those migration trends to X.XX to what the And of two the led to credits what of couple of that's monitor the upgraded the in And rated I the the portfolio that And that certain that's that in there's and change credit the quarter. quarter, closely. no little drove bit in our of could obviously in continuing majority sectors quarter. macro in to from Really also specific more X.XX speak a environment and we're to

for I funding can drug how in where of continue and be a fairly there of think about push And made the relatively obviously, environment, saw contractual also we're terms how of We, lifetime activity to development to recurring think that into have long-term speaking, continue be discovery, in revenue insulated. in companies component, be society significant been we has businesses portfolio, continuing we're in aggressive we to on a drug we very at on are we look certain a the to aggressive, continues you always technology that software positioning But the in side QX. terms areas the feel us. focus nature. substantial have the

continue kind new we're forecast more kind as the kind that? pandemic? that opportunities just more thanks. that with you new record, borrowers? fundings, And with existing. to in had you to of with compared And is you opportunities moving the on quarter originations see XX then to you earlier Or expect then, of during kind starting of activity and Are along, with of year tough the companies, mentioned Okay, of would to it new to, five borrowers and

that, the out, mean, pipeline given billion is of you markets. year cases strong. approximately forecast the very remained in billion, $X quarterly tell has the since has north in think on a dollars. our volatility continued some just is what I pipeline is a it been beginning But basis our I the to can of difficult I

deals evaluating early And our team what of on so screening the is there's and in and in no index. lack no of of activity, lack terms

So were strong despite we when extension saw cases, you a saw well did to certain look really stage in selective, some QX We QX then financing. that backed now companies, sort is be a put had of team legacy selective we continue at and we right we're terms for didn't on late able the QX, later balance very remain And but really opportunities actually to in wanted handful were activity. and off focusing start, in of for of secured think take in sheets, a a that strong, of advantage companies of to where sheet. we capital solid in The we to of profile only additional to on relationships, company. strong couple the looking But that going actually pipeline QX be we sheets balance debt runways companies having in certainly very QX. in balance

million additional we If commitments. in that disclosed an of closed you release, press look $XX already the we've about

signed, diligence are to that a commitments of million $XX near-term. another that expect close are going we through have that We

prudent. to really best we're But the will try to continue that seeing. So we good to focus on and of just that amount selective absolutely deals we continue we the And feel see. activity be about

taking and on for my great Thanks quarter. right. congrats All a questions,

Thank you.

from comes line John from Hecht Jefferies. question Next the of

is now line open. Your

sort in to what's We've strong, critical a great success had very you're business. quality And of, the to? have going that Hey the really be the that goes Or we for tell in then, grade the in for a statistics sustainability a that, to we've macro also or you're team. kind the I you been, terms there trends, a -- way, it's I it's and and of very deep just broad fundamentals the as to and it, And market it I'm of the despite, of experienced the $XXX be is We've That's at about I may their wondering competitive like it will fundamental of go. maybe investment to as show quality visibility billion is while, mean you that continued driving And of think very record our diversified the the a is right? good over some look date Seth. a into long can those it's strong. think liquidity, the both and going a positioning? So, makes, a yes, visibility just it that Scott attributes you time. been and lending a you as is again, results long level. terms activity ecosystem over Scott, This full period investment has this of and at think the talent very years the year Or of capital team quality, number, pipeline, level, together of I seems And I I it to continue just great And This a at through quarters, much. as has hearing three investment it still and had a an commitment credit good when deployment be this, lot organization. deep, on lot with good to think and to seem team. talk and very say credit as consistently a in Thanks long-time. comfort, I'll around got VC you my credit tribute gets do of do you the that? you it leadership. remarks just realities quarter I got oversight. how the it said got

tremendous of in VC level seeing fundraising. at also activity You're the terms

believe that's flowing a companies liquidity going to are essential is sheet through these So storm these able a being sort success. to we strong be a and weather to there's into all balance But And certainly, able not a liquidity still continued lot skate just of terms of from unharmed. perspective, companies. in having of this

haven't you going I us see Gibraltar? this about details. can And there? then asked can we on But update And sure on of I'm an what's just some haven't Okay. you give the one. -- maybe,

yes. Sure,

So, growth exactly ABL very a lenders. the can’t say pleased from put a environment their well. actually lot, is out they've do because it's seen. time-to-time own credit Gibraltar company to company. continues with for This oriented that's obviously perform performance a And strong the and But, pretty we're And portfolio very conducive as statements that is. that they what

see, term have fair performance. can believe to with that Obviously, to as be QX, happy we're the holding that forward. value a end pleased you that's of going So their of going continue that very long very the with and we

for seasonality how Okay. take, term? about COVID, QX because and QX, because do is -- a the QX had question you mean, near locked And being of last Yes, a weak seasonally really then the vacation. to strong, in recall, was and I you the in usually down quarter. people just If changing, people quarter I month off of think funding just tended investing cadence

great question. Yes. It's a

in what's be about years, we different say. But That on deployments. business, attribute QX you'll is XX the obviously absolutely terms performance not, about that you the whether and with the this you saw think what performance the ways. I hard XX it's COVID think of look our has capital I year, to I quarter our think I thinking if QX, last XXXX many been I historically we mean, in on what tell slowest said funding changed, QX call. correct. quarter or can You're going at our And in commitment on to can of we and strong

in said about position, had think what sure strengthening really we that we we there the the would balance strongest If focusing because on QX were we our be wanted a in making call, liquidity the come happened knew you were take to possible that That's time advantage would and thought be back. when we And and, opportunities attractive to would them. able of QX. that be what market there we sheet

will balance our for really deals. our sheet long that Our companies QX. numbers, those companies again we time. to whether And And been job pursuing couple a that we team had of and that and great These liked. win did in a happen used in deals were you saw a

think we've close days the first obviously probably pleased $XX done you signed with or got near commitments $XX are term million of million and to say of expect commitments early I this at too we're we've October, XX fact that through, we that the to another But XX here. up already it's know, point. that of

very for Thanks guys. color Okay. the much

from of Wells O'Shea comes question Fargo. Next from line Finian

Your are lines open.

Thanks afternoon. my for good Hi, taking question.

on think Scott, no a you've little update thinking you're just on up a Strategic haven't like to that an you're anything the us I now. First one, about that? you action permitting obviously, on had while we do seen RIA? how pursuing an yet, can whether something you Initiatives update, But for setting

Thanks. Sure.

any the going comments we're terms we've public the to we did of what that out. of make So of in not terms activity what we X-K already in outside put disclosed,

able subsidiary be the advisor, public relief from wholly-owned did investment You correct no receive the that are SEC action to BDC. a absolutely to registered of as a create exemptive we

We we've We're we're any exploration to have nothing that. explore And and we're of in a going would stage. available that. provide prepared to will gone done or really we that that more us. that to the specificity variety to There's now attractive think clarity to ahead, speak opportunities be

we we're is with what our for ways actively Since Seth are way XXXX, say grow I it we pursued think, the have we referencing. to announced doing the here Capital structure very stakeholders of and looking in business, committed And now shareholders, that to that's are time is which why and And in spending what that consistent in shareholders. I is a publicly the analysts. focused beneficial we QX that's to you're X-K communicating and and to diversify general, on. what been I that doing that that that absolutely expand would exactly our we're but our Hercules right

related right exit obviously, this Sure. a then this of Any exit you appreciated? do were obviously, names big quarter, high off those be might pretty But that two that, That helps. a in blue was there garden down. more those And commentary names, might once on. small any a guys would to Or just bring, variety level funding marked that at just stricter? was Thank on all the I exit you. follow challenges moon, the already have commentary that's COVID to a kind be a

Sure.

plus we activity, credit gains of horizon. couple our long-term it's performance realized years, one, $XX when this, things. realized over it XX have quarterly now think a cumulative always at So you a we over said realized And a whether net about Number losses on we've and never look or look losses realized basis. pretty We million. at

gains that's rate in points. very loss that realized number QX QX. annual We a of. our And the obviously proud as had four we're is So of basis in portfolio

QX. have portfolio in year, were those obviously see of two the We previously up impaired, end we where previously you basis. on loans the to were the end but of in that focus to respect referenced, a we will on quarterly both both realized not at of loans non-accrual. those we tend situations the And gains With placed

it One foreclose did It's to had do of made a the for sort was we going drug a years. it's were a plus company companies anything of actually asset. that asset, we COVID, on drug decision non-accrual development have discovery, a the with to on -- two the been not that

look favorable. market becomes we've monetize possession the the that asset more So taken and bit we'll little of a to when

to COVID. we loans was that was to if of favorable else The and criteria, by was chose other results us, one, into believe small fact of in to XXX% exit negatively a that case number our of not sponsor but fit impacted scenario nothing I really an view It forced that our it are in a can company the COVID. add you that fund was regard. the was in there's that obviously that know, in that It only the materially linked one portfolio business not because the

much. so thanks Okay,

Thanks.

Devin [Operator Instructions] from question Next Securities. from Ryan JMP comes

is now line Your open.

on equity largely new and challenges QX regards to Kevin debt In Devin, to record Fullz able despite have diligence? environment is due that a you're quarter to strong congratulations a significant such post strong how virtual performing for in quarter. a this [ph] Hi, on equipments, can speak you

Kevin. Sure. Thank,

and I to to team while ago, little the our question really said, remote. will things has worked think what of when incredibly continue clock The be fact you the I reiterate asked and the a been know, despite has investment productive goes two the us I team. around John So credit most that

are in systems, technology-driven You infrastructure thankfully, great we company, we've got got and know, place. a we've great

but allows new able companies portfolio each to due existing with that lot companies. our that So the not course. And can in a from this just environment, of other, and with been to you you there in communicate do virtual also know, we've ordinary perspective you are diligence a things

that I is five XX our would I and mention, think did other deals, companies. we deals we thing important, The did new for existing which portfolio

we relationships historically. investors. cases, were the deals that and had we've So very a several of companies, And at in and when see the And for the you're new with looked we deals the diligence of companies you obviously the teams portfolio had the relationship. continue to side, to done these deep on we in strong have historically. did, company at portfolio evaluated going mix look fundings we new with that already and person that And

of environment. start us might little So that to than more I bit little have head diligence a bit, be been a able be in allowed creative a bit terms think a little this to in others of some

Thank Thanks, my great. much. Okay, were you Kevin. question. very That’s

dine Christopher comes from from question Nolan Thalmann. Next Ladenburg at

open. now is line Your

correct Motif quarter, the exited Hey, Petrom? credits guys. am that two and which this Seth were I

correct. That's

Okay, non-accrual on can any you and the that two then from detail new share us? with [ph] Optascan

it's an small had. in chapter That's holder that note. that time. for a XX. company not note convertible actually company secured convertible been is It's filed position. equity Optascan Sure, a some It's They we've a a debt position. We've

decision So And materially portfolios our we non-accrual COVID small to did that's respect note on it alternatives some company, COVID. convertible the impacted closely by And put company on the we've strategic one of with obviously working Intent, to on and is company working with number decision in status. the that by made has again, we the the that impacted actively But the in the being non-accrual, with investors been very team with to we're but management that there make speak. been we as put there. of

and to Great. And on well. Is relatively I than a question you mean, expected? up or that better to? holding follow yield as attribute do this you portfolio be the what up worse? seem Or

expected. I think it's in line with what we

guidance I Seth XX% core folks since Last XX% the given, to has were we've at to at look that think XX.X%. we QX, quarter guided you yield. If

XX.X%. at This we're quarter,

rate now right our XX really of its entire Right core So plus guidance. middle our interest at percent the floor. of in is contractual yield portfolio

situations So keep degradation our is that we have core we're as target we XX%. additional our take to where really opportunities as And no to expect interest we've there XX% to further obviously or to make long said, degradation help range companies, rate are as yield in they see. of where getting yields some accommodations appropriate to trying within to performing, advantage that of yield

Great. And then for what's the spillover the quarter? income

still per cumulative we though. $X.XX share. the quarter, have over so is That For this

earnings. we quarter, For paid out the

it That's Thanks, guys. for me. Great.

Thanks, Chris.

from Ryan Next question KBW. from Lynch comes

is line open. Your

for Hey, good my afternoon, thanks taking and questions.

capital wanted surpassed hit is First It's to venture guys how that pretty a just broader provide back been, XXXX. slide what fundraising you strong and XXXX XXXX. surprising ecosystem. the already about in is it step venture big of you a just that already ecosystem activity all, talk capital in did been basically, And investment

the what obviously you backdrop? market, tough of Just attribute do despite this the strength economic

couple backs. couple since market different periods where you significant the I you've There pullback the going think ago, resilient. when saw in to a that XX seen for sort environments. growth you steady years years, plus of XX, be certainly a look were venture market, very of saw very of back But XX pull proven XX, you consistent always at it's

corporations. now seeing when I think think there's just global on, of transition levels you solutions about at other to is going level, a all you're what's the that sort tremendous enabled technology a thing of at

by really And the so sciences technology, drugs and on for right. new the demands for and impacted the demand get side new therapies, life COVID, innovation, doesn't

public and types two to capital amount equity flow a businesses. tremendous these you're see into capital And of of so that's why these continuing

investments there generally Okay. quarter of number a quarter, you this making or commitment just to and been? it the that historically around bit million little Makes bounce making that this historically, higher are your sizes? change been more million, Is how commitments Or of any new that jumped than is a larger volume mean, greater it you then made recently have that Are just that's commitments were guys with And guys but kind has making unfunded guys, commitments. of sense. of commitments? I $XXX $XXX unfunded nature around, out number greater

right. Yes,

latter of the no terms or change we're we're in think how certainly thinking things. about how underwriting material it's I --

and our at look commitments, of our the Right business you somewhere as has the over last unfunded five between X.X% assets it's percentage X% or years, XX%. If X.X%. a now, always total about been

earlier, more where much very these those line very strong was later in The companies been. I has by with stage, that quarter-over-quarter still companies were really of change it had referenced few So balance a where driven have that substantial larger, sheets.

do. we But a of thinking not how when we underwriting we it's higher So percentage terms in indicative about we're general bit than commitments structuring of unfunded any material were change credit, of use certainly probably deals, of or a or little term. longer those typically

Okay. appreciate Those the are afternoon. all my questions. I time this

Ryan. Thanks,

the from from comes Compass last Casey The line question Point. Instructions] [Operator of Alexander

Your line now open. is

All afternoon. Good right.

to volatility the I the did any during think of liquidated reduce Just And during the release quarter? some fact positions a the of that you larger that sell the to quarter. your equity One, there press the doing of you questions. positions sort couple the portfolio? of refers are Were

less more not QX, a did of names. modernizations larger, the in substantial few we that equity had smaller, just the of handful substantial we were sell any positions, Yes,

I equity. a how Because in or you then remember subsidiary portion a the take did debentures and funding start debentures. do requires plan Okay, the there? great. you an million the do to we equity the to past, against sure How new of do your that $XX of of invest that commitment fund SPI down The, down and some then we equity, What's whole I'm this? take not plan

Casey, so The you former had it at beginning. the right

what equity do SPV draw is, the draw into want put as we we'll to what down debentures, we the we it. in need and So additional need down as we'll

that lever kind up. have of we it ability to So

Alright, great.

an about learned But Hercules footprint and longer probably efficiencies real if in know, wouldn't the you question for result the smarter? working were to team managed PDC. discussing a I a Lastly, term? environment, the Could estate externally operating reduced you're ask over you remote work and has this that company some

not. term to we all figure So, wouldn't TBD? And commitments. emerge as what have this duration organizations still related like organizations I I square we are, trying And But this have time time, other see that lease commit organizations, taking we're all see we'll eventually time. are long this mean, the We efficiency that. it But That out. this emerges. to to we at decision. over at of I other certainly and any and could like as think evaluate leasing that and footage things

All right. questions. taking for it. Okay. I my appreciate Thanks

Thanks, Casey.

do have questions Instructions] time, this not at sir, We continue. [Operator any please

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