NEW YORK, Nov. 7, 2024 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (Nasdaq: WHF) today announced its financial results for the quarter ended September 30, 2024. In addition, the Company's board of directors has declared a distribution of $0.385 per share with respect to the quarter ended September 30, 2024. The distributions will be payable on January 3, 2025 to stockholders of record as of December 20, 2024.
WhiteHorse Finance, Inc. (PRNewsFoto/WhiteHorse Finance, Inc.)
Stuart Aronson, WhiteHorse Finance's Chief Executive Officer, commented, "I am pleased to report that WhiteHorse generated another quarter of core net investment income in excess of our regular dividend despite some company-specific challenges in our portfolio. We are working to optimize the outcomes for these specific credits, and the balance of our portfolio is generally stable and performing well. Although the broader lending market remains aggressive, we continue to see opportunities and source deals in areas of the market where there is less competition. Based on current market terms and conditions, we remain focused on certain segments of the lending market where we believe we have a competitive advantage and are selectively investing in credits with positive free cash flow, limited cyclicality, and strong owners. This is consistent with the rigorous underwriting standards that we adhere to regardless of market conditions."
Summary Information as of September 30, 2024 and June 30, 2024 (unaudited):
Three Months Ended
Three Months Ended
Change
($ in thousands except per share data)
September 30, 2024
June 30, 2024
$
%
Total investment income
$
22,851
$
23,482
(631)
(2.7)
Total expenses, including excise tax
13,697
14,190
(493)
(3.5)
Net investment income and core net investment income(1)
9,154
9,292
(138)
(1.5)
Net investment income and core net investment income(1) per share
0.394
0.400
(0.006)
(1.5)
Distributions per share
0.385
0.385
-
-
Net realized gains (losses)
39
(93)
132
(141.9)
Net unrealized appreciation (depreciation)
(16,051)
(1,360)
(14,691)
1,080.2
Net increase (decrease) in net assets resulting from operations
(6,858)
7,839
(14,697)
(187.5)
($ in thousands except per share data)
September 30, 2024
As of June 30, 2024
$
%
Total investments, at fair value(2)
$
654,338
$
660,005
(5,667)
(0.9)
STRS JV total investments, at fair value
309,797
324,844
(15,047)
(4.6)
Net asset value per share
12.77
13.45
(0.68)
(5.1)
Portfolio and Investment Activity
As of September 30, 2024, the fair value of WhiteHorse Finance's investment portfolio was $654.3 million, compared with $660.0 million as of June 30, 2024. The portfolio as of September 30, 2024 consisted of 129 positions across 73 companies with a weighted average effective yield of 10.6% on income-producing debt investments. The average debt investment size (excluding investments in STRS JV (as defined below)) was $5.6 million with the overall portfolio comprised of approximately 79.0% first lien secured loans, 0.8% second lien secured loans, 0.2% unsecured loans, 3.5% equity and 16.5% in investments in STRS JV. Almost all loans were variable rate investments (primarily indexed to the Secured Overnight Financing Rate) with fixed rate securities representing only 1.3% of loans at fair value. Nearly all performing floating rate investments have interest rate floors.
During the three months ended September 30, 2024, WhiteHorse Finance made investments in seven new portfolio companies for a total of $49.0 million, added a total of $2.0 million to existing portfolio companies and net fundings of $1.1 to revolver loans. Proceeds from sales and repayments totaled approximately $30.2 million for the three months ended September 30, 2024, driven by full repayments from US Methanol Midco LLC (d/b/a US Methanol LLC) and Branford Filtration, LLC (d/b/a Clean Solutions Group).
In addition to the transactions discussed above, during the three months ended September 30, 2024, WhiteHorse Finance transferred assets comprised of three new and one existing portfolio companies, totaling $15.1 million to STRS JV in exchange for cash proceeds.
Distributions
The Company's board of directors has declared a distribution of $0.385 per share with respect to the quarter ended September 30, 2024. The distribution will be payable on January 3, 2025 to stockholders of record as of December 20, 2024. In addition, previously on October 15, 2024, the Company declared a special distribution of $0.245 per share, which will be payable on December 10, 2024 to stockholders of record as of October 31, 2024.
On August 8, 2024, the Company declared a distribution of $0.385 per share for the second quarter ended June 30, 2024, with distributions declared at or above $0.355 for the forty-eighth consecutive quarter since the Company's initial public offering. The distribution was paid on October 2, 2024 to stockholders of record as of September 18, 2024.
Distributions are paid from taxable earnings and may include return of capital and/or capital gains. The specific tax characteristics of the distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year and in the Company's periodic reports filed with the Securities and Exchange Commission.
Conference Call
WhiteHorse Finance will host a conference call to discuss its third quarter results for the period ended September 30, 2024, at 11:30 a.m. ET on Thursday, November 7, 2024. To access the teleconference, please dial 800-343-4136 (domestic) or +1 203-518-9843 (international) approximately 10 minutes before the teleconference's scheduled start time and reference ID #WHFQ324. Investors may also access the call on the investor relations portion of the Company's website www.whitehorsefinance.com.
If you are unable to access the live teleconference, a replay will be available beginning approximately two hours after the call's completion through November 14, 2024. The teleconference replay can be accessed by dialing 800-839-9307 or +1 402-220-6085 for international callers. A webcast replay will also be available on the investor relations portion of the Company's website at www.whitehorsefinance.com.
About WhiteHorse Finance, Inc.
WhiteHorse Finance is a business development company that originates and invests in loans to privately held, lower middle market companies across a broad range of industries. The Company's investment activities are managed by H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, LLC, ("H.I.G. Capital"). H.I.G. Capital is a leading global alternative asset manager with $65 billion of capital under management(3) across a number of funds focused on the small and mid-cap markets. For more information about H.I.G. Capital, please visit http://www.higcapital.com. For more information about the Company, please visit http://www.whitehorsefinance.com.
Forward-Looking Statements
This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
(1) "Core net investment income" is a non-GAAP financial measure. The Company believes that core net investment income provides useful information to investors and management because it reflects the Company's financial performance excluding (i) the net impact of costs associated with the refinancing of the Company's indebtedness, (ii) the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and (iii) excise and other income taxes related to such net realized gains and losses (net of incentive fees). The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Additional information on core net investment income and a reconciliation of core net investment income to its most directly comparable GAAP financial measure, net investment income, are set forth in Schedule 1 hereto.
(2) Includes investments in WHF STRS Ohio Senior Loan Fund LLC ("STRS JV"), an unconsolidated joint venture, totaling $107.9 million, at fair value.
(3) Based on total capital raised by H.I.G. Capital and affiliates.
SCHEDULE 1
As a supplement to GAAP financial measures, the Company has provided information relating to core net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income determined in accordance with GAAP. The Company's non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income adjusted to exclude the net impact of costs associated with the refinancing of the Company's indebtedness, the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and excise or other income taxes related to such net realized gains and losses (net of incentive fees). There were no excise or other income taxes related to net realized gains and losses for the quarters ended September 30, 2024 and September 30, 2023.
The following table provides a reconciliation of net investment income to core net investment income for the three months ended September 30, 2024 and September 30, 2023 (in thousands, except per share data):
September 30, 2024
September 30, 2023
Amount
Per Share
Amount
Per Share
Amounts
Amounts
Net investment income
$
9,154
$
0.394
$
10,813
$
0.465
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
