Hercules Technology Growth Capital, Inc.
) third-quarter 2013 distributable net operating income (DNOI)
came in at 38 cents per share, outpacing the Zacks Consensus
Estimate of 29 cents. This also compares favorably with the
year-ago DNOI of 26 cents.
Better-than-expected results were mainly driven by growth in
total investment income, partly offset by higher expenses.
Overall, Hercules ended the quarter with an impressive
performance, comprising a higher level of liquidity.
DNOI grew 85.6% year over year to $23.2 million.
Performance in Detail
Hercules' total investment income was $41.0 million, up 71.6%
from $23.9 million in the prior-year quarter. The rise reflected
increase in interest income and fee income. This was ahead of the
Zacks Consensus Estimate of $35.0 million.
Total operating expenses (excluding interest expense and loan
fees) were $10.8 million, rising 66.9% from $6.5 million in the
year-ago period. This was due to higher employee compensation
costs, partially offset by a fall in general and administrative
On a year-over-year basis, interest expense and loan fees
increased 42.52% to $8.7 million.
As of Sep 30, 2013, the weighted average cost of debt comprising
interest and fees, was 6.0% versus 6.7% as of Sep 30, 2012.
Net investment income (before investment gains and losses) for
the quarter came in at $21.6 million, up 90.0% year over year.
The fair value of Hercules' total investment portfolio was $983.4
million as of Sep 30, 2013, down 5.5% from $1,041.1 million as of
Jun 30, 2013. In the quarter, the company provided approximately
$102.0 million in debt commitment to new and existing portfolio
As of Sep 30, 2013, Hercules' net asset value was $10.42 per
share compared with $9.42 as of Sep 30, 2012.
Along with the earning release, Hercules declared a quarterly
cash dividend of 31 cents. The dividend will be paid on Nov 25 to
shareholders of record as of Nov 18. The new payout marks a 10.7%
hike in the dividend from the previous amount.
Other Firms in the Same Industry
Ares Capital Corporation
) third-quarter core earnings beat the Zacks Consensus Estimate.
Better-than-expected results were primarily driven by an
improvement in total investment income, partially offset by
American Capital Ltd.
) operating income lagged the Zacks Consensus Estimate. A fall in
the top line was responsible for lower-than-expected results.
Capitala Finance Corp.
) will announce third-quarter results on Nov 13, 2013.
Given its solid liquidity position, Hercules is well poised to
expand its portfolio. The company's strong capital position is
expected to boost investors' confidence in the stock. However,
the uncertain economic environment might increase the cost of
funding as well as limit the company's growth going forward.
Currently, Hercules carries a Zacks Rank #4 (Sell).
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