WhiteHorse Finance, Inc. Announces First Quarter 2024 Earnings Results and Declares Quarterly Distribution of $0.385 Per Share
WhiteHorse Finance, Inc. announced its Q1 2024 financial results with total investment income of $25,475, net investment income per share of $0.465, and a total investment portfolio valued at $697.9 million as of March 31, 2024. The company declared a distribution of $0.385 per share for the quarter and reported a net increase in net assets resulting from operations of $5,969.
WhiteHorse Finance reported a strong quarter of core net investment income exceeding regular dividends.
The company maintained a balanced portfolio with opportunities to invest in credits with compelling risk-return characteristics.
The fair value of the investment portfolio increased slightly to $697.9 million compared to the previous quarter.
WhiteHorse Finance incurred realized losses and one markdown on an equity investment during the quarter.
The net asset value per share decreased slightly from $13.63 to $13.50 as of March 31, 2024.
Net realized losses amounted to $5,634, reflecting a negative impact on the company's financials.
Insights
WhiteHorse Finance's declaration of a consistent quarterly distribution of
However, the nuance lies in the composition of the distributions, which include a return of capital, impacting the long-term value of the investment. Investors should consider whether the distribution levels are sustainable in the absence of higher net investment income growth or if they are being supplemented by capital which could diminish the asset base over time.
The company's investment strategy leans on their sourcing model. It targets areas with lower competition, which could potentially lead to investments with higher yields, as indicated by their weighted average effective yield of
Despite the overall portfolio only slightly increasing in value, the stability of their investment income and a slight reduction in expenses suggest operational efficiency. The strategy employed by WhiteHorse Finance could serve as a defensive posture against market volatility and credit risks, which might be reassuring to conservative investors.
Stuart Aronson, WhiteHorse Finance's Chief Executive Officer, commented, "I am pleased to report that WhiteHorse delivered another strong quarter of core net investment income well in excess of our regular dividend. We are seeing balanced activity across our portfolio in terms of credit performance and stability after incurring realized losses and one markdown on an equity investment in which we had no cash basis during the quarter. As the broader lending market has become more aggressive, WhiteHorse continues to underwrite at conservative terms. Our pipeline level remains high, with opportunities to invest in credits with compelling risk-return characteristics, due in part to our sourcing model, which allows us to source deals in areas of the market where there is less competition. This has allowed us to continue to be conservative in our deal selection and efficiently redeploy capital as repayment activity increases."
Summary Information as of March 31, 2024 and December 31, 2023 (unaudited):
Three Months Ended | Three Months Ended | Change | |||||||||
($ in thousands except per share data) | March 31, 2024 | December 31, 2023 | $ | % | |||||||
Total investment income | $ | 25,475 | $ | 25,633 | (158.0) | (0.6) | |||||
Total expenses, including excise tax | 14,660 | 15,029 | (369) | (2.5) | |||||||
Net investment income and core net investment income(1) | 10,815 | 10,604 | 211 | 2.0 | |||||||
Net investment income and core net investment income(1) per share | 0.465 | 0.456 | 0.009 | 2.0 | |||||||
Distributions per share | 0.385 | 0.385 | - | - | |||||||
Net realized gains (losses) | (5,634) | 340 | (5,974) | NMF | |||||||
Net unrealized appreciation (depreciation) | 788 | (7,518) | 8,306 | (110.5) | |||||||
Net increase in net assets resulting from operations | 5,969 | 3,426 | 2,543 | 74.2 | |||||||
($ in thousands except per share data) | As of March 31, 2024 | As of December 31, 2023 | $ | % | |||||||
Total investments, at fair value(2) | $ | 697,869 | $ | 696,168 | 1,701 | 0.2 | |||||
STRS JV total investments, at fair value | 309,429 | 312,217 | (2,788) | (0.9) | |||||||
Net asset value per share | 13.50 | 13.63 | (0.13) | (1.0) | |||||||
Portfolio and Investment Activity
As of March 31, 2024, the fair value of WhiteHorse Finance's investment portfolio was
During the three months ended March 31, 2024, WhiteHorse Finance made investments in five new portfolio companies for a total of
In addition to the transactions discussed above, during the three months ended March 31, 2024, WhiteHorse Finance transferred assets comprised of one new and two existing portfolio companies, totaling
Distributions
The Company's board of directors has declared a distribution of
On February 29, 2024, the Company declared a distribution of
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 first quarter results for the period ended March 31, 2024 at 10:00 a.m. ET on Wednesday, May 8, 2024. To access the teleconference, please dial 800-445-7795 (domestic) or +1 785-424-1699 (international) approximately 10 minutes before the teleconference's scheduled start time and reference ID #WHFQ124. 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 May 15, 2024. The teleconference replay can be accessed by dialing 800-839-1246 or +1 402-220-0464 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
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
(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 March 31, 2024 and March 31, 2023.
The following table provides a reconciliation of net investment income to core net investment income for the three months ended March 31, 2024 and March 31, 2023 (in thousands, except per share data):
March 31, 2024 | March 31, 2023 | ||||||||||||||
Amount | Per Share | Amount | Per Share | ||||||||||||
Amounts | Amounts | ||||||||||||||
Net investment income | $ | 10,815 | $ | 0.465 | $ | 10,704 | $ | 0.461 | |||||||
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 | $ | 10,815 | $ | 0.465 | $ | 10,704 | $ | 0.461 | |||||||
Contacts
Stuart Aronson
WhiteHorse Finance, Inc.
212-506-0500
saronson@higwhitehorse.com
or
Joyson Thomas
WhiteHorse Finance, Inc.
305-379-2322
jthomas@higwhitehorse.com
or
Robert Brinberg
Rose & Company
212-257-5932
whitehorse@roseandco.com
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SOURCE WhiteHorse Finance, Inc.
FAQ
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