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- **Base Distribution Reset**: $0.25 per share (8.8% yield) to align with reduced market spreads and interest rates.
- **Fee Waiver**: 17.5% incentive fee for 2 quarters, freeing up $0.1 million in Q3 NII.
- **Share Buyback**: $15 million program to capitalize on 40% discount to NAV.
- **Portfolio Challenges**: $6.7 million markdowns in Q3, with 2.7% of debt on nonaccrual (vs. 4.9% in Q2).
- **Market Trends**: Mid-market sponsor spreads at SOFR +450-500bp, nonsponsor at SOFR +600bp+. Focus on lower-leverage nonsponsor deals.
- **JV Growth**: STRS JV yield 10.3%, fair value $341.5 million, supporting BDC's 1.07x net leverage.
- **Recovery Outlook**: Troubled assets expected to take 12-24 months to stabilize, with Sklar Brands on track for 2026 sale.
- **NAV Discount**: Trading at 40% discount, making buybacks accretive.


**【CEO Summary Section】**
- **Q3 2025 Results**: GAAP net investment income (NII) of $6.1 million ($0.263 per share), down from $6.6 million ($0.282 per share) in Q2. Base distribution reset to $0.25 per share (8.8% annualized yield) due to market spread compression and interest rate cuts.
- **Fee Waiver**: Incentive fee reduced to 17.5% from 20% for Q4 2025 and Q1 2026, with potential extension based on performance.
- **Share Buyback Program**: $15 million authorized to repurchase shares trading at a 40% discount to NAV.
- **Portfolio Activity**: Net repayments of $31.2 million, with 2 new originations and 2 add-ons. Marked down $6.7 million due to underperforming assets (e.g., Alvaria, Camarillo Fitness).
- **Market Outlook**: Mid-market sponsor spreads at SOFR +450-500bp, nonsponsor spreads at SOFR +600bp+. Focus on nonsponsor deals with lower leverage and higher risk-adjusted returns.

**【CFO Financial Commentary】**
- **Distribution Framework**: Supplemental distributions calculated as lesser of 50% of excess NII or $0.15 NAV decline over 2 quarters. Q3 base distribution of $0.25 payable in January 2026.
- **JV Performance**: STRS JV fair value $341.5 million (10.3% yield), generating $3.6 million in Q3 income. BDC's net effective debt-to-equity ratio 1.07x, below 1.22x in Q2.
- **Balance Sheet**: $45.9 million cash, $100 million undrawn credit facility. Asset coverage ratio 180.7%, above 150% regulatory minimum.
- **Special Distribution**: $0.035 per share for undistributed taxable income, payable December 2025.

**【Q&A Highlights】**
- **Dividend Sustainability**: CEO states $0.25 is a long-term base rate, aligned with interest rate projections and portfolio earnings power.
- **Asset Recovery**: Troubled assets (e.g., Alvaria, Camarillo) expected to remain nonaccrual for 12-24 months. Sklar Brands on track for 2026 sale.
- **Market Competition**: Mid-market sponsor deals priced aggressively due to large players entering lower mid-market. Nonsponsor deals less competitive, with 3-5x leverage.
- **Share Repurchases**: Management will prioritize buybacks at current discount, with $15 million allocation.


WhiteHorse Finance (WHF) Q3 2025 Earnings Call Transcript

- **Q2 Results Miss Expectations**: GAAP NII of $6.6 million (-3.7% YoY), driven by $4.3 million portfolio losses. NAV per share down 2.4%.
- **JV Growth Key Driver**: STRS JV portfolio yield 10.6%, contributing $3.4 million to BDC earnings. Post-quarter, $22.8 million in deals transferred to JV.
- **Tariff Risk Management**: 10% of portfolio exposed; companies absorbing 50% tariffs or relocating production.
- **Cost Savings from CLO**: $0.01-$0.015 per share quarterly savings from optimized debt structure.
- **Dividend Sustainability**: Consistent $0.385 per share; 2024 spillover $9.7 million to be distributed in 2025.

**【CEO Summary Section】**
- **Q2 Financial Disappointment**: GAAP net investment income of $6.6 million ($0.282 per share), down from Q1's $6.8 million ($0.294 per share). NAV per share decreased 2.4% to $11.82 due to $4.3 million in realized/unrealized losses.
- **Portfolio Activity**: Gross deployments of $39 million (3 new deals, 2 sponsor, 1 non-sponsor) offset by $36.2 million repayments/sales. Weighted average effective yield on income-producing debt decreased to 11.9%.
- **JV Performance**: STRS JV portfolio grew to $330 million with 10.6% yield. BDC transferred $22.8 million in deals post-quarter end, leveraging JV's $20 million capacity.
- **Tariff Impact**: ~10% of portfolio exposed to tariffs; companies absorbing 50% of costs or shifting sourcing (e.g., toy company moving from China to Vietnam).
- **Market Conditions**: M&A subdued; mid-market pricing at SOFR 4.75%-5.25%, nonsponsor deals at SOFR 6.00%-7.00%. Pipeline has 6 mandates (3 sponsor, 3 nonsponsor), but BDC balance sheet near full deployment.

**【CFO Financial Commentary】**
- **Balance Sheet Health**: $33.3 million cash, $100 million undrawn revolver. Asset coverage ratio 174.6%, net debt-to-equity 1.22x.
- **CLO Optimization**: Issued $174 million debt at 3-month SOFR +1.7%, reducing borrowing costs by $0.01-$0.015 per share quarterly. Repaid revolver and reduced size to $100 million.
- **Dividend Consistency**: Q3 distribution of $0.385 per share (52nd consecutive). Undistributed 2024 taxable income $9.7 million; 2025 spillover will influence 2026 dividend decisions.
- **JV Earnings Contribution**: $3.4 million income from JV, mid-teens return on equity.

**【Q&A Key Highlights】**
- **American Crafts Exit**: Fully resolved with minimal proceeds, no further downside.
- **Tariff Mitigation**: Companies absorbing 50% tariffs or shifting sourcing; consumer price impact unclear until holiday sales.
- **JV Expansion**: No plans to increase STRS JV size; focused on maximizing current capacity.
- **Pipeline Dynamics**: 6 mandates (3 sponsor, 3 nonsponsor), but BDC deployment constrained; JV to absorb overflow.
- **Dividend Spillover**: 2024 spillover $9.7 million; 2025 distributions will reduce spillover, with potential special dividend for remaining balance.

WhiteHorse Finance (WHF)-7 Aug 25-2025 Q2 Earnings call transcript

- **Q1 Earnings Miss**: GAAP NII of $0.294 per share vs. $0.385 dividend, driven by $2.6M portfolio losses and 8.8% non-accruals.
- **JV Growth Offset by BDC Constraints**: STRS JV portfolio at $310M with 10.8% yield, but BDC lacks capacity for new assets.
- **Telestream Recovery Hope**: Potential $0.02-$0.03 per share accretion if restructuring completes by end of Q2.
- **Dividend Sustainability Risk**: $28.4M spillover income may limit ability to maintain $0.385 dividend beyond 2025.
- **Market Caution**: 175-deal pipeline but lower quality; M&A activity muted for next 60-90 days due to tariff uncertainty.

**【CEO Summary Section】**
- Q1 2025 GAAP net investment income (NII) was $6.8 million ($0.294 per share), down from $8 million ($0.343 per share) in Q4 2024 and below the quarterly distribution of $0.385 per share.
- NAV per share decreased 1.6% to $12.11 due to $2.6 million in net realized and unrealized losses.
- Gross capital deployments of $45.5 million (7 new originations) offset by $19.4 million in repayments/sales, resulting in net deployments of $26.1 million.
- Non-accrual investments rose to 8.8% of the debt portfolio (vs. 7.2% in Q4), driven by MSI Information Services and Telestream.
- 99.3% of the debt portfolio remains first lien, senior secured, with 2/3 sponsor-backed and 1/3 non-sponsor.
- The STRS JV portfolio grew to $310.2 million with a 10.8% effective yield, but BDC has limited capacity for new assets.
- The company expects Telestream to return to accrual status by end of Q2, but overall earnings power remains constrained.

**【CFO Financial Commentary】**
- Fee income of $0.5 million from a prepayment fee; 74.1% of portfolio positions carry risk ratings 1 or 2.
- JV contributed $3.7 million to BDC earnings, down from $4 million in Q4.
- Cash resources of $19.6 million (including $8.2 million restricted) and $165 million undrawn on revolving credit facility.
- Net debt-to-equity ratio rose to 1.23x (from 1.15x in Q4); asset coverage ratio at 177.2%.
- Board declared $0.385 per share dividend (consistent with prior quarter), but spillover income of $28.4 million may impact future decisions.

**【Q&A Key Highlights】**
- **Telestream Update**: Restructuring expected to complete by end of May, with part of debt returning to accrual at a market rate (~SOFR + 975bps). Potential $0.02-$0.03 per share accretion if successful.
- **Dividend Risk**: Board evaluating core earnings power; spillover income may limit ability to maintain current dividend beyond 2025.
- **Market Activity**: M&A pipeline of 175 deals, but quality lower than prior years; 60-90 days of muted activity expected due to tariff uncertainty.
- **Repayment Outlook**: Light visible pipeline; refinancing activity may pick up in H2 as prepayment penalties expire.


WhiteHorse Finance (WHF) Q1 2025 Earnings Call Transcript

- **Q4 Results Underwhelming**: GAAP NII of $8M ($0.34/share) vs. $0.385 dividend, NAV down 3.6% to $12.31. Nonaccruals rise to 7.2% of portfolio.
- **Market Strategy Shift**: Focusing on nonsponsor deals (SOFR 575-800) with 3x-4.5x leverage, avoiding aggressive sponsor lending.
- **JV Growth**: STRS JV portfolio at $295M with 11.1% yield, contributing mid-teens ROE.
- **Repayment Risk**: Elevated 2025 repayments expected, but $40M BDC/JV capacity to offset.
- **Dividend Stability**: $0.385 dividend maintained with $1.20 spillover cushion, but Board will monitor earning power.


**【CEO Summary Section】**
- **Q4 Financial Performance**: GAAP net investment income of $8 million ($0.34 per share), below the quarterly distribution of $0.385 per share. NAV per share decreased 3.6% to $12.31, driven by $4.9 million in net realized and unrealized losses, primarily from American Crafts and Aspect Software.
- **Portfolio Activity**: Gross capital deployments of $35.4 million offset by $46.2 million in repayments/sales, resulting in net repayments of $10.8 million. 6 new originations (5 sponsor, 1 nonsponsor) with average leverage of 4.4x EBITDA and all-in rate of 9.8%.
- **Market Conditions**: Aggressive sponsor lending with compressed spreads (SOFR 450-525), while nonsponsor market offers better risk-adjusted returns (SOFR 575-800). Focused on nonsponsor and off-the-run sponsor deals to mitigate risk.
- **Challenges**: 7.2% of debt portfolio on nonaccrual (up from 6.5%), including $2.6M write-down on American Crafts and $2.2M on Aspect Software. Nonaccrual investments expected to improve with Telestream restructuring.
- **Pipeline and Capacity**: 170 deals in pipeline, $40M BDC capacity, and $40M JV capacity. Anticipate elevated repayments in 2025 due to lower market pricing.

**【CFO Financial Commentary】**
- **Financial Metrics**: Q4 GAAP net investment income of $8 million ($0.343 per share), down from Q3's $9.2 million ($0.394 per share). Fee income increased due to nonrecurring items. Risk ratings: 72.5% of portfolio in 1/2 ratings, 1.3% in 5 ratings (up from 0.5%).
- **JV Performance**: STRS JV portfolio fair value of $295 million with 11.1% effective yield. JV investments contribute mid-teens return on equity. $4 million income recognized in Q4, similar to Q3.
- **Balance Sheet**: $27.8 million cash, $173 million undrawn revolving credit. Asset coverage ratio of 180.4% (vs. 150% minimum). Net effective tax ratio of 1.15x.
- **Distribution**: $0.385 per share dividend declared for Q1, consistent with prior quarter. Undistributed taxable income of $28.4 million post-Q4 dividend.

**【Q&A Highlights】**
- **Market Spreads and Risk**: Stable spreads in Q4 and early 2025, no upward pressure despite economic uncertainty. Focused on nonsponsor deals with 3x-4.5x leverage and SOFR 575-800 spreads.
- **Credit Quality**: Nonaccruals at 7.2% due to American Crafts and Aspect Software. Mitigating risk by avoiding cyclicals, ensuring debt service coverage, and analyzing tariff exposure.
- **Base Rate Impact**: 51% of portfolio resets quarterly, 49% monthly. Effective yield decreased 60bps due to lower base rates. Q4 NII decline primarily from rate reductions.
- **Repayment Expectations**: Elevated repayments in 2025 due to lower pricing, but cautious optimism on originations to offset.
- **Dividend Sustainability**: Board evaluates payout based on BDC's earning power. Current dividend maintained at $0.385 per share with $1.20 spillover per share.


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