WhiteHorse Finance's Q2 2025: Navigating Tariff Pressures and Dividend Strategies Amid Contradictions

Tariff impact and consumer pricing, dividend and spillover income management, credit quality and tariff pressure mitigation, portfolio size and deployment expectations, changes in non-sponsor market strategy are the key contradictions discussed in WhiteHorse Finance's latest 2025Q2 earnings call.



Second Quarter 2025 Financial Performance:
- WhiteHorse Finance reported GAAP net investment income of $6.6 million or $0.282 per share for Q2, which was below their Q1 GAAP and core NII of $6.8 million or $0.294 per share and their quarterly distribution of $0.385 per share.
- The decline was primarily due to net realized and unrealized losses in their investment portfolio, impacting financial performance.

Portfolio Activity and Composition:
- The company had gross capital deployments of $39 million in Q2, partially offset by total repayments and sales of $36.2 million, resulting in net deployments of $2.8 million.
- The portfolio mix remained approximately 2/3 sponsor and 1/3 non-sponsor, with 99.3% of their debt portfolio consisting of first lien senior secured investments.

JV Performance and Transfer:
- WhiteHorse Finance transferred 3 new deals and 1 existing investment to the STRS JV, totaling $22.8 million in Q2.
- The JV's portfolio had an aggregate fair value of $330 million at an average effective yield of 10.6%, contributing to the company's earnings capacity.

CLO Term Debt Securitization:
- The company completed a CLO term debt securitization and issued $174 million of debt bearing interest at 3-month term SOFR plus 1.7%.
- This transaction optimized debt structure, reducing borrowing costs, and extending maturity, enhancing access to debt capital markets.

Market Conditions and Tariff Exposure:
- M&A activity remains subdued due to tariff uncertainty, reducing new financing deals in the market.
- Approximately less than 10% of WhiteHorse Finance's portfolio is either heavily or moderately exposed to tariffs, with companies actively mitigating tariff impacts through negotiations and sourcing adjustments.