WhiteHorse Finance, Inc. Q4 FY2024 earnings call

• Fourth quarter results were impacted by investment portfolio decline with net realized and unrealized losses. NAV per share was affected by net realized losses and markdowns. - Portfolio activity in Q4 had gross deployments of $35.4M, offset by $46.2M in repayments/sales. - Lending market conditions: sponsor segments aggressive with relaxed underwriting, non-sponsor market more attractive. - Focus on non-sponsor and off-the-run sponsor markets. - Post-quarter-end, BDC closed five new investments and three add-ons totaling ~$27.8M, with ~$40M capacity for new assets in BDC and JV.

For the fourth quarter of 2024, GAAP net investment income and core NII was $8 million or $0.34 per share, compared to Q3's $9.2 million or $0.394 per share. NAV per share at the end of Q4 was $12.31, a ~3.6% decrease from the prior quarter. Gross capital deployments in Q4 were $35.4 million, offset by total repayments and sales of $46.2 million, resulting in net repayments of $10.8 million. Six new originations in Q4 included one non-sponsor and five sponsor deals with an average leverage of ~4.4 times EBITDA, first lien loans with an average spread of 540 basis points and average all-in rate of 9.8%.

• Expect high repayment activity in 2025. - Pipeline still solid at about 170 deals. - BDC balance sheet has ~$40M capacity for new assets, JV also has ~$40M capacity. - First-quarter volume will be solid, pipeline includes 7 new mandates and 3 add-ons to existing deals.

• Investment portfolio net realized and unrealized losses. - Uncertainty in lending market terms and economic factors. - Tariff policies creating uncertainty for borrowers. - Nonaccrual investments totaling 7.2% of debt portfolio, impact on financial performance.

Q: Mickey Schleien asked about scope for spreads to widen given market uncertainties.

A: Stuart Aronson said spreads were stable in Q4 to Q3 and so far in 2025, and increased volatility or better M&A flow needed for spread widening.

Q: Sean-Paul Adams inquired about strategy to mitigate higher nonaccruals.

A: Stuart Aronson mentioned focusing on non-sponsor market, careful with tariff risk, and avoiding cyclicals with reasonable debt service coverages.

Q: Melissa Wedel asked about Q4 NII decline cause and first quarter repricing.

A: Joyceann Thomas said it was largely due to lower base rates, and a good majority of portfolio resets quarterly with some monthly resets.

Q: Melissa Wedel asked about elevated repayments and deleveraging.

A: Stuart Aronson said goal is to operate at target leverage, hoping to keep BDC fully invested in 2025 but dependent on new deal flow.

Q: Melissa Wedel asked about dividend evaluation with spillover income.

A: Stuart Aronson said board actively evaluates payout based on earnings power and will update market on dividend decisions