10-Q: WhiteHorse Finance Reports First Quarter 2024 Results, Net Asset Value Declines Slightly
Quarterly Report
WhiteHorse Finance's first quarter 2024 results show a slight decrease in net asset value per share, alongside a decrease in investment income and an increase in unrealized losses.
Summary
- WhiteHorse Finance reported a net increase in net assets resulting from operations of $6.0 million for the three months ended March 31, 2024, compared to $7.5 million for the same period in 2023.
- Net investment income after excise tax was $10.8 million for the first quarter of 2024, slightly up from $10.7 million in the first quarter of 2023.
- The company experienced a net realized loss of $5.6 million on investments and foreign currency transactions, compared to a net realized gain of $0.7 million in the same period last year.
- There was a net change in unrealized appreciation of $0.8 million, compared to a net unrealized depreciation of $3.9 million in the first quarter of 2023.
- The net asset value per share decreased from $13.63 at the end of 2023 to $13.50 as of March 31, 2024.
- The company declared distributions of $0.39 per share for the first quarter of 2024, compared to $0.43 per share for the same period in 2023.
Sentiment
Score: 4
Explanation: The document presents mixed results with a slight decrease in net asset value and a net realized loss, indicating a somewhat negative sentiment from an investment perspective.
Positives
- Net investment income after excise tax increased slightly compared to the same period last year.
- The company continues to generate income from its investment portfolio.
Negatives
- The company experienced a net realized loss on investments and foreign currency transactions.
- Net asset value per share decreased slightly during the quarter.
- Total investment income decreased compared to the same period last year.
Risks
- The company is subject to financial market risks, including changes in interest rates, which could negatively impact investment values and returns.
- The company is exposed to credit risk, which is the risk of default on its investments.
- The company's portfolio includes illiquid investments that are privately held, which may be difficult to value and may fluctuate over short periods of time.
- The company's performance is dependent on the performance of its portfolio companies and the broader economy.
Future Outlook
The company expects to fund a portion of its investments through future borrowings and may obtain borrowings under other credit facilities and from issuances of senior securities to the extent permitted by the 1940 Act.
Industry Context
The company operates in the business development company sector, which is subject to various regulations and market risks. The company's performance is influenced by the broader economic environment and the performance of its portfolio companies.
Comparison to Industry Standards
- The company's net asset value per share decreased slightly, which may be compared to other BDCs in the same sector.
- The company's investment income and expenses are comparable to other BDCs with similar investment strategies.
- The company's portfolio is primarily comprised of senior secured loans, which is a common strategy for BDCs.
- The company's use of leverage is subject to regulatory requirements and is comparable to other BDCs.
Related Party Transactions
- The company has entered into an investment advisory agreement with WhiteHorse Advisers, LLC.
- The company has entered into an administration agreement with H.I.G. WhiteHorse Administration, LLC.
- The company has a license agreement with an affiliate of H.I.G. Capital, L.L.C.
Stakeholder Impact
- Shareholders may experience a slight decrease in net asset value per share.
- Shareholders will receive distributions of $0.39 per share for the first quarter of 2024.
- The company's performance may impact the value of its common stock.
Next Steps
- The company will continue to monitor its portfolio and manage its investments.
- The company will continue to evaluate new investment opportunities.
- The company will continue to assess its capital structure and financing options.
Key Dates
| Date | Description |
|---|---|
| 2011-12-28 | WhiteHorse Finance, Inc. was formed. |
| 2012-01-01 | WhiteHorse Finance, Inc. commenced operations. |
| 2012-12-04 | WhiteHorse Finance, Inc. converted from a Delaware LLC into a Delaware corporation and priced its initial public offering. |
| 2015-12-23 | WhiteHorse Credit entered into a revolving credit and security agreement with JPMorgan. |
| 2018-07-13 | The Company entered into an agreement to sell in a private offering $30 million aggregate principal amount of senior unsecured notes. |
| 2019-01-14 | The Company entered into an agreement with State Teachers Retirement System of Ohio to create WHF STRS Ohio Senior Loan Fund, LLC. |
| 2020-10-20 | The Company entered into a Note Purchase Agreement governing the issuance of $40 million in aggregate principal amount of unsecured notes. |
| 2020-12-04 | The Company entered into a Note Purchase Agreement governing the issuance of $10 million in aggregate principal amount of unsecured notes. |
| 2021-11-24 | The Company completed a public offering of $75 million of aggregate principal amount of unsecured notes. |
| 2021-12-06 | The Company entered into a Note Purchase Agreement governing the issuance of $25 million in aggregate principal amount of unsecured notes. |
| 2023-03-31 | The Company launched an at-the-market offering by entering into an Equity Distribution Agreement with B. Riley Securities, Inc. |
| 2023-08-24 | The Company completed a public offering of 7.875% 2028 Notes in aggregate principal amount of $30 million. |
| 2024-03-31 | End of the reporting period for the quarterly report. |
Keywords
Business Development Company, Senior Secured Loans, Net Asset Value, Investment Income, Financial Results, Private Credit, Middle Market, Debt Investments, Credit Risk, Interest Rates
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