WhiteHorse Finance (WHF) Q4 2024 earnings summary

Executive summary

• Q4 2024 results were impacted by portfolio markdowns and increased non-accruals, with net investment income at $8 million ($0.34/share), down from $9.2 million ($0.394/share) in Q3, and NAV per share declining 3.6% to $12.31.

• Portfolio comprised 127 positions in 71 companies, with a fair value of $642.2 million and a weighted average effective yield of 12.5% on income-producing debt at quarter-end.

• Board declared a $0.385/share quarterly distribution and a $0.245/share special dividend in Q4 2024, payable April 4, 2025.

• Portfolio activity included $35.4 million in gross deployments, $46.2 million in repayments/sales, and $13.7 million in assets transferred to the STRS JV.

• Focus remains on non-sponsored lending for better risk-adjusted returns and less competition.

Financial highlights

• Total investment income for Q4 2024 was $21.0 million, with net realized and unrealized losses totaling $4.9 million, mainly from markdowns in American Crafts, Aspect Software, and Alvaria Holdco.

• Net investment income per share was $0.343, below the $0.385/share distribution.

• Weighted average effective yield on income-producing debt investments was 12.5%, down from 13.1% in Q3.

• Non-accrual investments rose to 7.2% of the debt portfolio at fair value and 11.0% by cost at year-end.

• Asset coverage ratio was 180.4% at December 31, 2024, with net effective debt to equity ratio at 1.15x.

Outlook and guidance

• Management expects continued focus on non-sponsored lending and rigorous underwriting to optimize outcomes for challenged credits.

• Repayment activity is anticipated to remain high in 2025, with a solid pipeline of 170 deals.

• Board declared a Q1 2025 distribution of $0.385/share, consistent with prior quarters.

• Dividend policy will be evaluated quarterly based on core earnings and other factors.