WhiteHorse Finance, Inc. Q1 FY2025 earnings call

• Q1 results were disappointing due to net realized and unrealized losses, impacting financial performance. NAV per share decreased by 1.6%.
• Portfolio activity: gross capital deployments of $45.5 million, net deployments of $26.1 million. Seven new originations totaling $40.8 million, with add-ons and revolver commitments.
• JV: Transferred three new deals and one existing investment, with a portfolio fair value of $310.2 million and average yield 10.8%.
• BDC portfolio: Non-accrual investments at 8.8%, with efforts to resolve, including Telestream. Tariff risk analysis showed less than 10% of portfolio at high or moderate risk.
• Lending market: M&A slowed, spreads increased then recovered, pipeline includes restructuring deals.

In the first quarter of 2025, WhiteHorse Finance's Q1 GAAP net investment income and core NII was $6.8 million or $0.294 per share, compared to $8 million or $0.343 per share in Q4. Gross capital deployments were $45.5 million, with net deployments of $26.1 million. The portfolio mix was approximately two-thirds sponsor and one-third non-sponsor. The STRS JV portfolio had an aggregate fair value of $310.2 million with an average effective yield of 10.8% at the end of Q1.

• BDC balance sheet has little capacity for new assets, JV has $35 million capacity.
• Pipeline is ~175 deals, slightly below typical range. Evaluating dividend based on core earnings power and other factors.
• Dividend declared at $0.385 per share, consistent with prior quarter, payable July 3, 2025.

• Net realized and unrealized losses impacted financial performance.
• Non-accrual investments at 8.8% compromised earnings power.
• Tariff and recession risks affecting lending market and M&A activity.

Q: Could you provide context on Telestream returning to accrual status?

A: We hope to complete restructuring by end of May, with part of debt returning to accrual and remaining converted to equity.

Q: Update on dividend spillover and review?

A: Spillover income was $28.4 million, Board evaluating dividend based on core earnings and other factors.

Q: Thoughts on market bid-ask spread?

A: Good companies without tariff/recession risk trade at high multiples; others face cautious buyers. M&A activity muted due to tariffs and economic uncertainty.

Q: Elevated repayment activity expectations?

A: Repayment activity slowed with market unsettlement, but expect refinancing in second half as prepayment penalties expire.