WhiteHorse Finance(WHF) - 2025 Q2 - Quarterly Results

Executive Summary & Key Announcements WhiteHorse Finance, Inc. announced its Q2 2025 financial results, CEO insights on portfolio performance, and declared its quarterly distribution Second Quarter 2025 Earnings Announcement WhiteHorse Finance, Inc. announced its financial results for the second quarter ended June 30, 2025, and declared a quarterly distribution of $0.385 per share - WhiteHorse Finance, Inc. announced its financial results for the second quarter ended June 30, 2025[1] - The Company's board of directors declared a distribution of $0.385 per share for the quarter ended June 30, 2025[1] CEO Commentary CEO Stuart Aronson noted continued portfolio-specific challenges but expressed confidence in the broader portfolio's stability, highlighting efforts to resolve underperforming investments and a disciplined approach to new originations - Second-quarter results continued to reflect portfolio-specific challenges, though the Company remains confident in the underlying stability of the broader portfolio[2] - Steady progress is being made in resolving underperforming investments with the support of an experienced restructuring team[2] - Origination activity is in line with seasonal norms, favoring selectivity over volume, with a focus on credits with strong fundamentals to navigate the current environment and support long-term shareholder value[2] Quarterly Distribution Declaration The Company's board declared a distribution of $0.385 per share for Q2 2025, payable on October 3, 2025, marking the fifty-first consecutive quarter with distributions at or above $0.355 per share Q2 2025 Quarterly Distribution Details | Metric | Value | | :----- | :---- | | Per Share | $0.385 | | Payable Date | October 3, 2025 | | Record Date | September 19, 2025 | - Distributions declared at or above $0.355 for the fifty-first consecutive quarter since the Company's initial public offering[8] - Distributions are paid from taxable earnings and may include return of capital and/or capital gains, with specific tax characteristics reported on Form 1099-DIV[9] Financial Performance This section analyzes WhiteHorse Finance, Inc.'s Q2 2025 financial results, covering investment income, expenses, net investment income, and net asset value Summary Financial Results (QoQ) For Q2 2025, total investment income slightly increased by 0.2% QoQ to $18.838 million, while total expenses rose by 2.7% to $12.276 million, leading to a 4.1% decrease in net investment income to $6.562 million, or $0.282 per share Summary Financial Information (QoQ) | Metric ($ in thousands except per share data) | June 30, 2025 | March 31, 2025 | Change ($ in thousands) | Change (%) | | :------------------------------------------ | :------------ | :------------- | :---------------------- | :--------- | | Total investment income | 18,838 | 18,801 | 37 | 0.2 | | Total expenses, including excise tax | 12,276 | 11,958 | 318 | 2.7 | | Net investment income and core net investment income | 6,562 | 6,843 | (281) | (4.1) | | Net investment income and core net investment income per share | 0.282 | 0.294 | (0.012) | (4.1) | | Net realized gains (losses) | (22,045) | (402) | (21,643) | NM | | Net unrealized appreciation (depreciation) | 17,733 | (2,177) | 19,910 | NM | | Net increase (decrease) in net assets resulting from operations | 2,250 | 4,264 | (2,014) | (47.2) | | Total investments, at fair value | 629,264 | 650,999 | (21,735) | (3.3) | | STRS JV total investments, at fair value | 330,187 | 310,160 | 20,027 | 6.5 | | Net asset value per share | 11.82 | 12.11 | (0.29) | (2.4) | Net Investment Income (GAAP vs. Non-GAAP) Core net investment income, a non-GAAP measure, was $6.562 million ($0.282 per share) for Q2 2025, consistent with GAAP net investment income for the period, representing a decrease from $9.292 million ($0.400 per share) in Q2 2024 - Core net investment income is a non-GAAP financial measure that provides useful information by reflecting the Company's financial performance excluding specific costs associated with refinancing, capital gains incentive fees, and related excise/income taxes[14][17] Reconciliation of Net Investment Income to Core Net Investment Income | Metric ($ in thousands, except per share data) | June 30, 2025 Amount | June 30, 2025 Per Share | June 30, 2024 Amount | June 30, 2024 Per Share | | :------------------------------------------- | :------------------- | :---------------------- | :------------------- | :---------------------- | | Net investment income | $6,562 | 0.282 | $9,292 | 0.400 | | Net impact of costs associated with refinancing of indebtedness | - | - | - | - | | Accrual for capital gains incentive fee | - | - | - | - | | Net impact of excise tax expense related to net realized gains and losses | - | - | - | - | | Core net investment income | $6,562 | 0.282 | $9,292 | 0.400 | - There were no excise or other income taxes related to net realized gains and losses for the quarters ended June 30, 2025, and June 30, 2024[17] Portfolio and Investment Activity This section outlines WhiteHorse Finance, Inc.'s Q2 2025 investment portfolio composition, yield, and transaction activities Portfolio Composition and Yield As of June 30, 2025, the investment portfolio's fair value was $629.3 million, a 3.3% decrease, predominantly comprising first lien secured loans (77.6%) with a weighted average effective yield of 11.9% Portfolio Snapshot (June 30, 2025) | Metric | Value | | :------------------------------------ | :-------------------- | | Fair Value of Investment Portfolio | $629.3 million | | Number of Positions | 132 | | Number of Companies | 71 | | Weighted Average Effective Yield (debt) | 11.9% | | Average Debt Investment Size | $5.0 million | Portfolio Composition by Asset Type (June 30, 2025) | Asset Type | Percentage of Portfolio | | :-------------------------- | :---------------------- | | First Lien Secured Loans | 77.6% | | Second Lien Secured Loans | 0.5% | | Unsecured Loans | 0.2% | | Equity | 4.8% | | Investments in STRS JV | 16.9% | - Almost all loans (98.7%) were variable rate investments (primarily indexed to SOFR) with fixed rate securities representing only 1.3% of loans at fair value, and nearly all performing floating rate investments have interest rate floors[4] Investment Transactions During Q2 2025, WhiteHorse Finance made $33.1 million in new investments and $5.9 million in additions, while proceeds from sales and repayments totaled $36.2 million, including full repayments from two companies Investment Activity (Three Months Ended June 30, 2025) | Activity | Amount ($ millions) | | :------------------------------------ | :------------------ | | Investments in new portfolio companies | 33.1 | | Additions to existing portfolio companies | 5.9 | | Net fundings to revolver loans | 0.3 | | Proceeds from sales and repayments | 36.2 | | Assets transferred to STRS JV | 22.8 | - Proceeds from sales and repayments were driven by full repayments from CleanChoice Energy, Inc. and FGI Acquisition Corp[5] - Assets comprising three new and one existing portfolio companies, totaling $22.8 million, were transferred to STRS JV in exchange for cash[6] Corporate Information This section provides WhiteHorse Finance, Inc.'s corporate overview, management details, conference call information, forward-looking statements, and contact details About WhiteHorse Finance, Inc. WhiteHorse Finance, Inc. is a business development company (BDC) that originates and invests in loans to privately held, lower middle market companies, managed by H.I.G. WhiteHorse Advisers, LLC - WhiteHorse Finance is a business development company that originates and invests in loans to privately held, lower middle market companies[12] - Investment activities are managed by H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, LLC[12] - H.I.G. Capital is a leading global alternative asset manager with $70 billion of capital under management[12] Conference Call Information WhiteHorse Finance will host a conference call on Thursday, August 7, 2025, at 2:00 p.m. ET to discuss its Q2 2025 results, with details for live access and replay options provided - A conference call to discuss Q2 2025 results will be held at 2:00 p.m. ET on Thursday, August 7, 2025[10] - Access to the live teleconference is available via domestic (800-267-6316) or international (+1 203-518-9783) dial-in, referencing ID WHFQ225, or through the investor relations website[10] - A replay will be available approximately two hours after the call's completion through August 7, 2025, via teleconference (800-934-7879 or +1 402-220-6986) and webcast on the Company's website[11] Forward-Looking Statements The press release contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially, with the Company undertaking no duty to update these statements - This press release may contain 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995[13] - Actual results may differ materially from forward-looking statements due to various factors, including those described in SEC filings[13] - The Company undertakes no duty to update any forward-looking statement made herein[13] Contacts Contact information for WhiteHorse Finance, Inc. (Stuart Aronson, Joyson Thomas) and investor relations (Robert Brinberg of Rose & Company) is provided for inquiries - Contact information is provided for Stuart Aronson (CEO), Joyson Thomas (WhiteHorse Finance, Inc.), and Robert Brinberg (Rose & Company) for investor inquiries[19] Non-GAAP Financial Measures Definition 'Core net investment income' is a non-GAAP financial measure that adjusts GAAP net investment income by excluding specific non-recurring costs, offering a clearer view of ongoing financial performance - 'Core net investment income' is a non-GAAP financial measure intended to provide useful information by reflecting financial performance excluding specific non-recurring or non-operational items[14][17] - Adjustments include the net impact of costs associated with refinancing indebtedness, the accrual of capital gains incentive fees, and excise or other income taxes related to net realized gains and losses (net of incentive fees)[14][17] - This non-GAAP measure is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP[14]