Management Fees and Incentives - The base management fee rate was reduced from 2.00% to 1.75% effective January 1, 2024[87]. - Incentive fees for Year 1 were $8.0 million, representing 20% of cumulative pre-incentive fee net return of $40.0 million[84]. - For Year 2, incentive fees increased to $14.0 million, based on a cumulative pre-incentive fee net return of $150.0 million[84]. - Year 3 saw incentive fees of $7.0 million, with a cumulative pre-incentive fee net return of $145.0 million[84]. - In Year 4, incentive fees were $9.2 million, based on a cumulative pre-incentive fee net return of $151.0 million[84]. - The board of directors will review the investment advisory fee rates annually to ensure they remain reasonable[89]. - The Investment Adviser may have conflicts of interest due to its arrangements with H.I.G. Capital, which could affect investment returns[214]. - The incentive fee structure may lead the Investment Adviser to make riskier investments, as it benefits from higher consolidated gross assets and capital gains[218]. - The company may incur incentive compensation for the Investment Adviser even during net losses, with no recovery of previously paid fees in case of subsequent losses[227]. Investment Strategy and Compliance - The company may invest up to 100% of its assets in privately negotiated transactions, potentially classifying it as an "underwriter" under the Securities Act[97]. - The company must ensure that qualifying assets represent at least 70% of total assets to comply with the 1940 Act[100]. - Eligible portfolio companies must not have any class of securities listed on a national securities exchange with a market capitalization exceeding $250 million[101]. - The company intends to qualify as a RIC by distributing at least 90% of its investment company taxable income annually[125]. - A 4% nondeductible U.S. federal excise tax applies to undistributed income unless certain distribution requirements are met[127]. - The company must derive at least 90% of its gross income from specific sources, including dividends and interest, to qualify as a business development company under the 1940 Act[129]. - At the end of each quarter, at least 50% of the company's assets must consist of cash, U.S. government securities, and other specified securities, while no more than 25% can be invested in any single issuer[129]. - The company is authorized to borrow funds and sell assets to meet distribution requirements, but cannot make distributions while debt obligations are outstanding unless certain asset coverage tests are met[134]. - The company primarily invests in below investment grade securities, which may present special tax issues and affect the ability to distribute sufficient income to avoid tax liabilities[135]. - The company engages in hedging transactions to mitigate currency and interest rate risks, but these transactions expose it to counterparty default risks and may not fully eliminate potential losses[210]. Interest Rate and Economic Risks - Changes in interest rates may significantly impact the company's net investment income, cost of capital, and the value of its common stock[200]. - The Federal Reserve raised interest rates from March 2022 to July 2023, and maintained the same benchmark rate until September 2024, with future rate changes uncertain[204]. - Rising interest rates could increase the risk of payment defaults from portfolio companies, adversely affecting the company's financial condition and results of operations[203]. - Rising interest rates pose a risk to portfolio companies with floating rate securities, potentially leading to defaults if they cannot meet escalating interest payments[208]. - Inflation has negatively impacted portfolio companies, increasing costs of labor, energy, and raw materials, which may affect their ability to service loans[209]. - Economic downturns could lead to increased non-performing assets and decreased portfolio value, adversely affecting revenues and net income[281]. Portfolio Management and Valuation - The company’s portfolio consists of fixed and floating rate investments, with expectations to invest in debt generally having maturities of up to 10 years[206]. - The valuation process for non-publicly traded securities may create conflicts of interest, as the Investment Adviser determines fair value, impacting management fees[224]. - Portfolio investments are recorded at fair value, with significant management judgment required for valuation, particularly for non-publicly traded securities[233]. - The company’s investments are primarily in private companies, which are less liquid and may be difficult to sell quickly if needed[236]. - The company may lack control over portfolio companies, which could lead to decisions that negatively impact investment value[289]. Regulatory and Compliance Challenges - Changes in laws or regulations may require the company to alter its business strategy, potentially incurring significant compliance costs[242]. - The board of directors has the authority to modify operating policies without prior notice or stockholder approval, which could impact business operations[244]. - Regulatory changes regarding credit extension outside traditional banking may negatively affect the company's operations and financial condition[249]. - The company incurs significant expenditures to comply with Section 404 of the Sarbanes-Oxley Act, which may negatively impact financial performance and distributions[257]. Debt and Financing Risks - The company completed a $298.15 million term debt securitization transaction on June 10, 2025, involving the issuance of various classes of notes, including $164 million of AAA(sf) Class A Notes and $30 million of AA(sf) Class B Notes[326]. - The AAA(sf) Class A Notes and Class A-L Loans bear interest at three-month SOFR plus 1.70%, while the AA(sf) Class B Notes bear interest at three-month SOFR plus 2.15%[326]. - The Debt from the CLO transaction is scheduled to mature on May 25, 2037[326]. - The Company may face risks related to the performance of CLO assets, including potential insufficient distributions to cover required fees and expenses, which could adversely affect shareholder distributions[322]. - A decline in the credit quality of loans in a CLO may force the CLO to sell assets at a loss, impacting earnings and cash available for distribution[323]. - The indenture for the 4.000% 2026 Notes offers limited protections for holders, allowing the Company to incur additional debt without restrictions[327]. - The indenture for the 7.875% 2028 Notes similarly provides limited protections, permitting the Company to engage in various corporate transactions that could adversely impact investors[332]. - The Company intends to continue financing investments with borrowed money, potentially issuing additional debt with varying protections for holders[338]. - The ability to recapitalize and incur additional debt without restrictions may negatively affect the trading value of the 4.000% 2026 Notes and 7.875% 2028 Notes[330][337].

Core Viewpoint - WhiteHorse Finance's dividend yield is approaching its highest level due to ongoing weakness in its common shares and a significant discount to net asset value (NAV) [1] Group 1: Company Performance - WhiteHorse Finance's common shares are experiencing sustained weakness, contributing to a deep discount to NAV [1] - The current market conditions reflect a new trend where the company's dividend yield is notably high [1] Group 2: Market Context - The equity market is characterized by daily price fluctuations that can lead to substantial long-term wealth creation or destruction [1] - Pacifica Yield is focused on long-term wealth creation by targeting undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Group 1 - Business Development Companies (BDCs) are facing challenges due to elevated interest rates, impacting their ability to manage higher debt costs [1] - WhiteHorse Finance (WHF) has experienced a consistent downtrend, reflecting the broader struggles within the BDC sector [1] - The article highlights a strategy that combines classic dividend growth stocks with BDCs, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]

Core Insights - WhiteHorse Finance, Inc. (WHF) operates in the Zacks Financial - SBIC and Commercial Industry sector, focusing on strategic financial management and investment opportunities to provide shareholder value [1] Financial Performance - WHF reported an EPS of $0.28, exceeding the estimated $0.27, reflecting a positive earnings surprise of 7.41%, although it decreased from $0.34 in the same quarter last year [2][6] - Revenue for WHF was $17.24 million, surpassing the estimated $16.62 million, indicating a 4.85% beat over the Zacks Consensus Estimate, but down from $21.01 million reported in the previous year [3][6] Distribution Strategy - WHF declared a quarterly distribution of $0.25 per share and a supplemental distribution of $0.01 per share, payable on April 6, 2026, aligning with the company's goal to maintain its financial framework while ensuring consistent earnings [4] Financial Ratios - WHF has a P/E ratio of approximately 15.51, a price-to-sales ratio of about 2.97, and an enterprise value to sales ratio of around 8.38, reflecting its market valuation [5] - The company demonstrates a balanced financial leverage with a debt-to-equity ratio of approximately 1.22 and a current ratio of about 1.56, indicating good liquidity to cover short-term liabilities [5][6]

Financial Data and Key Metrics Changes - For Q4 2025, GAAP net investment income and core NII increased to $6.6 million or $0.287 per share, compared to $6.1 million or $0.263 per share in Q3 [4][23] - NAV per share rose to $11.68 at the end of Q4 from $11.41 at the end of Q3, marking an increase of approximately 2.4% [5] - The company declared a supplemental distribution of $0.01 per share for Q1 2026, in addition to the base distribution of $0.25 per share [6][28] Business Line Data and Key Metrics Changes - Gross capital deployments in Q4 totaled $77.1 million, with net deployments of $27.5 million after accounting for repayments and sales of $49.6 million [10] - The weighted average effective yield on income-producing debt investments decreased to 11% at the end of Q4 from 11.6% at the end of Q3 [11] - The weighted average effective yield on the overall portfolio also decreased to 9.1% at the end of Q4 from approximately 9.5% at the end of Q3 [12] Market Data and Key Metrics Changes - The market remains competitive, with capital availability exceeding new deal supply, particularly in the mid-market [18] - Pricing for sponsor-backed deals is generally in the SOFR plus 450-525 range, while lower mid-market deals are priced at SOFR plus 450-550 [18] - The company has modest exposure to internet or software companies, representing 10% of the portfolio at cost and 9% at fair value [17] Company Strategy and Development Direction - The company is focused on improving earnings power and narrowing the gap between share price and NAV through share repurchases and strategic portfolio management [7][9] - The board has approved an increase in the share repurchase program to $22.5 million, with approximately $15 million still available for future repurchases [27] - The company aims to enhance shareholder value through disciplined origination and portfolio repositioning [9][19] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about improved M&A activity in 2026, supported by lower interest rates and abundant capital [57] - The company is aware of the persistent discount to NAV and is actively exploring options to improve earnings and shareholder value [34][50] - Management noted that while the market is competitive, the non-sponsor market offers better risk-return profiles due to less competition [20] Other Important Information - The company reported a net increase in net assets resulting from operations of $8.4 million for the quarter [23] - The STRS JV portfolio had an aggregate fair value of $323.6 million at the end of Q4, with an average effective yield of 9.9% [12][25] - The company has approximately $29.7 million in cash resources at the end of Q4, including $22.7 million in restricted cash [26] Q&A Session Summary Question: How is the company balancing new deployment opportunities versus stock repurchases? - Management indicated that at current trading levels, the stock represents an attractive purchase, leading to increased buyback authorization [34] Question: What metrics does the board use to compare performance to peers? - The board evaluates return on share price, costs incurred, and trading levels relative to NAV compared to other BDCs [41][42] Question: Is the market discount related to the company's exposure to the JV senior loan funds? - Management stated that they have not received feedback indicating that the JV is a key reason for the share discount, emphasizing the quality of the JV portfolio [44][45] Question: What is the outlook for M&A activity and the pipeline for repayments and originations? - Management noted improved activity in Q1 2026 compared to Q1 2025, with expectations for better M&A activity driven by lower interest rates and abundant capital [55][57]

Financial Data and Key Metrics Changes - Q4 GAAP net investment income and core NII was $6.6 million or $0.287 per share, compared to Q3 GAAP and core NII of $6.1 million or $0.263 per share, reflecting an increase of approximately 8.2% in earnings per share [4][23] - NAV per share at the end of Q4 was $11.68, up from $11.41 at the end of Q3, marking an increase of approximately 2.4% [5] - The company declared a supplemental distribution of $0.01 per share for Q1 2026, in addition to the base distribution of $0.25 per share [6][28] Business Line Data and Key Metrics Changes - Gross capital deployments in Q4 totaled $77.1 million, offset by repayments and sales of $49.6 million, resulting in net deployments of $27.5 million [10] - The weighted average effective yield on income-producing debt investments decreased to 11% at the end of Q4 from 11.6% at the end of Q3, primarily due to lower spreads and base rates [11] - The weighted average effective yield on the overall portfolio decreased to 9.1% at the end of Q4 from approximately 9.5% at the end of Q3 [12] Market Data and Key Metrics Changes - The BDC's software exposure across six portfolio names represents 10% of the portfolio at cost and 9% at fair value, indicating a stable market condition [18] - In the mid-market, sponsor-backed deals are pricing in the SOFR plus 450-525 range, while lower mid-market deals are in the SOFR plus 450-550 range [18] - The non-sponsor market remains stable and less competitive than the sponsor market, with average leverage around 4x-4.5x [20] Company Strategy and Development Direction - The company is focused on improving earnings power and narrowing the discount to NAV through share repurchases and strategic portfolio management [7][9] - The board has approved an incremental authorization for share repurchases, bringing the total to $22.5 million, with approximately $15 million still available [9][27] - The company aims to enhance shareholder value through disciplined origination and portfolio repositioning, while also evaluating other potential avenues [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the market remains competitive, with capital availability exceeding new deal supply, but there is optimism for increased M&A activity in 2026 due to lower interest rates and abundant capital [19][57] - The company is actively managing underperforming credits and has seen both negative and positive developments in various portfolio companies [17] - Management emphasized the importance of maintaining a healthy level of undistributed taxable income for long-term stability [31] Other Important Information - The company recognized $11.3 million in net realized losses and approximately $13.1 million in net unrealized gains during Q4, resulting in a net gain of $1.9 million [13][14] - The STRS JV portfolio had an aggregate fair value of $323.6 million at the end of Q4, with an average effective yield of 9.9% [12][25] - The company continues to utilize the STRS JV effectively, generating attractive returns for shareholders [12] Q&A Session Summary Question: How is the company balancing new deployment opportunities versus stock attractiveness? - Management indicated that at current trading levels, the stock represents an attractive purchase, leading to increased buyback authorization [33][34] Question: What measures does the board use to compare performance to peers? - The board evaluates metrics such as return on share price, costs incurred, and trading levels relative to NAV compared to other BDCs [41][42] Question: Is the market discount related to the company's exposure to subordinate positions in the JV? - Management clarified that while there is leverage on the JV, it is against a pool of first lien assets, and they have not received feedback indicating this as a reason for the share discount [44][45] Question: What is the outlook for M&A activity and the pipeline for repayments and originations? - Management noted improved activity in Q1 2026 compared to the previous year, with optimism for M&A activity driven by lower interest rates and abundant capital [55][57]

Financial Data and Key Metrics Changes - Q4 GAAP net investment income and core NII was $6.6 million or $0.287 per share, an increase from Q3's $6.1 million or $0.263 per share [4][22] - NAV per share at the end of Q4 was $11.68, up approximately 2.4% from $11.41 at the end of Q3 [5] - The company declared a $0.01 per share supplemental distribution in addition to the base $0.25 dividend for Q1 2026 [6][28] Business Line Data and Key Metrics Changes - Gross capital deployments in Q4 totaled $77.1 million, with net deployments of $27.5 million after repayments and sales of $49.6 million [10] - The weighted average effective yield on income-producing debt investments decreased to 11% at the end of Q4 from 11.6% at the end of Q3 [11] - Total investments increased by $10.2 million to $578.6 million compared to $568.4 million at the end of Q3 [13] Market Data and Key Metrics Changes - The BDC's portfolio showed a balanced mix of sponsor and non-sponsor investments, with 99.7% of the debt portfolio being first lien [11] - Market conditions remain competitive, with capital availability exceeding new deal supply, particularly in the sponsor market [17] - The non-sponsor market is less competitive, with fewer active lenders, leading to better risk-return profiles [19] Company Strategy and Development Direction - The company is focused on improving earnings power and narrowing the discount to NAV through share repurchases and strategic portfolio management [6][9] - The board has approved an increase in the share repurchase program to $22.5 million, with approximately $15 million still available [27] - The company aims to enhance shareholder value through disciplined origination and portfolio repositioning [9][20] Management's Comments on Operating Environment and Future Outlook - Management noted that while the market is competitive, there is optimism for increased M&A activity in 2026 due to lower interest rates and abundant capital [18][56] - The company is aware of the persistent discount to NAV and is exploring options to improve earnings and shareholder value [34][49] - Management highlighted that the portfolio continues to perform well despite some negative developments in specific credits [16][19] Other Important Information - The company recognized $11.3 million in net realized losses and approximately $13.1 million in net unrealized gains in Q4, resulting in a net gain of $1.9 million [13][14] - The STRS JV portfolio had an aggregate fair value of $323.6 million at the end of Q4, with an average effective yield of 9.9% [12][25] - The company has a healthy level of undistributed taxable income, estimated at approximately $27.6 million at the end of Q4 [30] Q&A Session Summary Question: How is the company balancing new deployment opportunities versus stock attractiveness? - Management believes the stock represents an attractive purchase at current levels, leading to increased buyback authorization [32][33] Question: Will capital from net runoff in the portfolio be redeployed into repurchases? - The board will evaluate trading prices and market conditions to determine the best use of capital, focusing on share repurchases at significant discounts to NAV [35][36] Question: What metrics does the board use to compare performance to peers? - The board considers return on share price, costs incurred, and trading levels relative to NAV compared to other BDCs [41][42] Question: Is the company's position in the JV a concern for investors? - Management clarified that while they are subordinated to leverage in the JV, the portfolio is primarily composed of first lien assets, which is common in the market [43][44] Question: What is the outlook for M&A activity and the pipeline? - Management noted improved activity in Q1 2026 compared to the previous year, with optimism for M&A activity driven by lower interest rates and abundant capital [55][56]

WhiteHorse Finance, Inc. Earnings Presentation Quarter Ended December 31, 2025 NASDAQ: WHF (Common Stock) NASDAQ: WHFCL (7.875% Notes due 2028) Important Information and Forward Looking Statements References in this presentation to "WHF", "WhiteHorse Finance", "we", "us", "our" and "the Company" refer to WhiteHorse Finance, Inc. This presentation and the information and views included herein do not constitute investment advice, or a recommendation or an offer to enter into any transaction with the Company o ...

分组1 - WhiteHorse Finance (WHF) reported quarterly earnings of $0.29 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, but down from $0.34 per share a year ago, representing an earnings surprise of +7.41% [1] - The company posted revenues of $17.34 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 4.85%, but down from $21.01 million year-over-year [2] - Over the last four quarters, WhiteHorse has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] 分组2 - The stock has underperformed the market, losing about 9.4% since the beginning of the year, while the S&P 500 has gained 0.5% [3] - The current consensus EPS estimate for the coming quarter is $0.26 on revenues of $16.19 million, and for the current fiscal year, it is $1.04 on revenues of $65.23 million [7] - The Zacks Industry Rank for Financial - SBIC & Commercial Industry is currently in the bottom 32% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Investment Performance - Gross investment deployments for Q4 2025 totaled $77.1 million, including new originations of $64.0 million and $13.1 million for add-ons to existing investments[2]. - Net investment income for Q4 2025 was $6.6 million, or $0.287 per share, representing a decrease of approximately 17.5% year-over-year[10]. - Annual net investment income for 2025 was $26.1 million, or $1.127 per share, down from $37.2 million, or $1.602 per share, in 2024[11]. - Core net investment income for Q4 2025 was $6,604,000, down 17.2% from $7,976,000 in Q4 2024[28]. - Total investment income for the year 2025 was $72,672,000, a decrease of 21.7% compared to $92,817,000 in 2024[32]. - Interest income from non-controlled/non-affiliate company investments was $53,449,000 in 2025, down 19.5% from $66,402,000 in 2024[32]. Asset and Liability Overview - The fair value of the investment portfolio as of December 31, 2025, was $578.6 million, down from $642.2 million as of December 31, 2024[3]. - The net asset value as of December 31, 2025, was $259.8 million, or $11.68 per share, compared to $286.1 million, or $12.31 per share, as of December 31, 2024[14]. - Total assets decreased to $615,129,000 as of December 31, 2025, from $676,821,000 in 2024, representing a decline of 9.1%[30]. - Total liabilities decreased to $355,337,000 in 2025, down from $390,687,000 in 2024, a reduction of 9.0%[30]. Cash and Distributions - As of December 31, 2025, the Company had cash and cash equivalents of $29.7 million, down from $45.9 million as of September 30, 2025[15]. - The Company declared a distribution of $0.25 per share and a supplemental distribution of $0.01 per share for the quarter ending March 31, 2026[16]. - Dividends declared per common share decreased to $1.44 in 2025 from $1.79 in 2024, a decline of 19.6%[32]. Investment Portfolio Composition - The weighted average effective yield of the investment portfolio was 9.1% on income-producing debt investments[3]. - The overall investment portfolio reflects a diverse range of secured loans across various sectors, indicating a strategic focus on risk management and asset allocation[36]. - The overall investment portfolio includes various secured term loans with spreads ranging from 1.1% to 5.8%[38]. Restructuring and Joint Ventures - The Company entered into a joint venture with STRS Ohio to create WHF STRS Ohio Senior Loan Fund, LLC, focusing on senior secured loans[49]. - In January 2024, the Company restructured its investments in Arcstor Midco, converting loans into a new first lien secured delayed draw loan and common equity[49]. - The Company has engaged in multiple restructuring agreements, indicating a proactive approach to managing its investment portfolio[49]. - The restructuring agreements with various companies demonstrate the Company's adaptability in changing market conditions[49]. Investment Valuation - The fair value of total equity investments reached $75,288,000, with an amortized cost of $58,535,000, indicating a 22.5% increase in fair value[46]. - The investment in Goldman Sachs Financial Square Treasury Obligations Fund was valued at $8,829,000, contributing 3.4% to total assets[46]. - The investment in Invesco Treasury Portfolio was valued at $7,032,000, contributing 2.7% to total assets[46].