Whitehorse Finance, Inc. · NASDAQ:WHF
Whitehorse Finance — Q3 2020 Earnings Presentation
25 slides from Whitehorse Finance's earnings presentation, Nov 9, 2020
Slide 1: WhiteHorse Finance, Inc. Earnings Presentation
WhiteHorse Finance, Inc. Earnings Presentation Quarter Ended September 30, 2020 NASDAQ: WHF (Common Stock) NASDAQ: WHFBZ (6.50% Notes due 2025)
Slide 2: Important Information and Forward Looking Statements
Important Information and Forward Looking Statements References in this presentation to “WHF”, “we”, “us”, “our” and “the Company” refer to WhiteHorse Finance, Inc. This presentation and the information and views included herein do not constitute investment advice, or a recommendation or an offer to
Slide 3: WhiteHorse Finance Snapshot
WhiteHorse Finance Snapshot Company: WhiteHorse Finance, Inc. (“WhiteHorse Finance” or the “Company”): Equity Ticker: NASDAQ: WHF Market Cap: $216.8MM(1) NAV / Share: $15.31 Portfolio Fair Value: $595.3MM Current Dividend Yield: 13.5%(1)(2); consistent quarterly dividends of $0.355 per share since 2
Slide 4: Overview of WhiteHorse Finance, Inc.
Overview of WhiteHorse Finance, Inc. WhiteHorse Finance, Inc. is a publicly listed Business Development Company (“BDC”) that completed its IPO in December 2012 WhiteHorse Finance’s investment activities are managed by H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, a leading glo
Slide 5: Overview of WhiteHorse Finance, Inc. (continued)
Overview of WhiteHorse Finance, Inc. (continued) Investment Strategy Summary Stats: Invested Capital since IPO: $1,714MM(1) Generate attractive risk-adjusted return in all market conditions by originating and investing in senior secured loans to performing lower middle market companies and leverag
Slide 6: Summary of Quarterly Results
Summary of Quarterly Results Total investments at fair value increased to $595.3 million in Q3 2020 as compared to $547.4 million in Q2 2020. The Company made investments in three new portfolio companies for gross deployments of $42.6 million as well as funded add-on investments totaling $15.7 m
Slide 7: Quarterly Operating Highlights
Quarterly Operating Highlights Unaudited Quarterly Financials Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 (USD in MM, expect per share data) Total Investment Income (1) $ 16.0 $ 17.8 $ 17.4 $ 14.5 $ 13.8 $ 16.5 Expenses Interest Expenses 3.2 3.5 3.7 3.7 3.2 2.8 Base Management Fees (2) 2.6 2.8 3.1 3.1 2.9 3
Slide 8: Quarterly Balance Sheet Highlights
Quarterly Balance Sheet Highlights Unaudited Quarterly Financials Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 (USD in MM, expect per share data) Assets Investments at Fair Value $ 534.8 $ 527.5 $ 589.7 $ 557.1 $ 547.4 $ 595.3 (1) Cash and Equivalents 50.4 22.2 27.5 28.1 20.9 22.9 Other Assets 7.9 16.3 14.0
Slide 9: Portfolio Highlights
Portfolio Highlights ($ in MM, except per share data) Portfolio Investm ent Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Total Fair Value of Investments $ 534.8 $ 527.5 $ 589.7 $ 557.1 $ 547.4 $ 595.3 Number of Portfolio Investments 67 65 66 65 68 73 Number of Portfolio Companies 47 48 51 52 53 5
Slide 10: Portfolio Trends
Portfolio Trends Historical Portfolio Trends % Floating and % Fixed (Based on Fair Value) % Instrument Type (Based on Fair Value) 3.9% 2.9% 0.2% 0.1% 0.4% 5% 5% 7% 3% 6% 100.0% 9% 3% 8% 11.6% 21% 11% 3% 5% 80.0% 48% 40% 43% 33% 39% 60.0% 96.1% 97.1% 99.8% 99.9% 100.0% 100.0% 88.4% 99.6% 77% 81% 83%
Slide 11: Borrower and Industry Diversity
Borrower and Industry Diversity Composition by Borrower (Based on Fair Value) Composition by Industry(1) (Based on Fair Value) Specialized Finance Internet & Direct Marketing Retail STRS JV Future Payment Technologies, L.P. Data Processing & Outsourced Services Research & Consulting Services AG King
Slide 12: Effective Yield & Dividend Coverage
Effective Yield & Dividend Coverage Debt Portfolio Effective Yield and Borrower Leverage(1) From IPO to September 30, 2020 15.5% 14.9% 13.1% 11.8% 11.8% 11.9% 11.9% 12.1% 11.8% 11.8% 11.9% 11.9% 11.9% 12.0% 12.0% 11.9% 11.9% 11.7% 11.4% 11.7% 11.6% 11.7% 11.1% 11.3% 11.3% 11.1% 10.7% 10.4% 9.9% 9.6%
Slide 13: Yield & Interest Rate Economic Analysis
Yield & Interest Rate Economic Analysis 14.0% 11.8% 11.9% 11.9% 11.9% 12.0% 12.0% 11.9% 11.9% 11.7% 12.0% 11.3% 11.1% 10.4% 11.4% 11.4% 11.5% 11.5% 11.5% 11.5% 11.4% 11.5% 11.4% 9.9% 9.9% 9.6% 10.0% 11.0% 10.7% 10.0% 7.9% 7.8% 9.5% 9.4% 8.0% 7.5% 7.5% 7.2% 9.1% 7.1% 6.8% 6.7% 6.2% 6.0% 5.7% 5.7% 5.5
Slide 14: Investment Performance Ratings
Investment Performance Ratings Investment Performance Ratings (% of Portfolio at Fair Value) Rating 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Q2 2020 Q3 2020 1 6.3% 2.3% 2.2% 2.3% 14.4% 2 100.0% 92.4% 100.0% 90.3% 87.0% 83.9% 80.1% 83.3% 65.3% 61.9% 62.1% 3 7.6% 7.9% 13.0% 16.1% 13.6% 13.1% 31
Slide 15: Net Asset Value Trends
Net Asset Value Trends Net Asset Value Per Share $16.00 $15.43 $15.51 $15.50 $15.30 $15.35 $15.31 $15.23 $15.00 $15.16 $15.04 $15.00 $14.50 $14.00 $13.98 $13.63 $13.50 $13.33 $13.00 IPO (Dec 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 9/30/2020 2012) Net A
Slide 16: NAV Per Share Bridge
NAV Per Share Bridge Dividend Coverage: $0.03 Net Realized and Unrealized Gain: $0.77 Note: Numbers may not foot due to rounding. Core net investment income is a non-GAAP financial measure. The Company believes that core net investment income provides useful information to investors and management b
Slide 17: Leverage Migration
Leverage Migration ($ in MM) 6/30/2020 QtQ Change 9/30/2020 Outstanding Debt: Outstanding Debt: $257.2 +$39.0 $296.1 Net borrowings to fund purchases NAV: NAV: $300.2 +$14.3 $314.6 Driven by market value recovery Leverage Ratio: Sources Uses Leverage Ratio: 0.86x Borrowings $59.7 Acquisition of Inve
Slide 18: Funding Profile
Funding Profile Current Debt Outstanding (as of September 30, 2020) Weighted Average ($ in MM) Commitment Outstanding(1) Maturity Additional Information Interest Rate $250.0 L+2.50% Revolving Credit Facility $231.1 2024 ($100 Accordion Feature) payable quarterly 6.00% Private Notes $30.0 $30.0 payab
Slide 19: Appendix
Appendix 18 WHITEHORSE FINANCE
Slide 20: COVID-19 Portfolio Exposure 3Q20
COVID-19 Portfolio Exposure 3Q20 ($ in MM) WhiteHorse Finance, Inc. STRS JV Low, 5.1% Low, 60.3% STRS JV, 8.5% High, 0.7% Low/Moderate, 1.8% High, 8.5% Moderate, 18.9% Moderate, 0.8% Low/Moderate, 3.9% Fair STRS JV Fair Value % of FV WHF Value % of FV High 14.3 8.8% High 50.4 8.5% Moderate 16.3 10.0
Slide 21: Regional Direct Origination Footprint
Regional Direct Origination Footprint Origination Footprint (September 30, 2020) Scope of H.I.G. WhiteHorse market coverage results in consistent investment activity levels regardless of market conditions Dedicated direct lending team of over 45 investment and origination professionals Regiona
Slide 22: STRS JV Key Terms and Funding Profile
STRS JV Key Terms and Funding Profile WHF and STRS Ohio have committed to provide up to $125 million in subordinated notes and equity to STRS JV, with STRS Ohio providing $50 million and WHF providing $75 million. WHF and STRS Ohio share voting control 50%/50%. Key Terms Equity ownership 60% W
Slide 23: STRS JV Borrower and Industry Diversity
STRS JV Borrower and Industry Diversity Composition by Borrower (Based on Fair Value) Composition by Industry(1) (Based on Fair Value) Packaged Foods & Meats Internet & Direct Marketing Retail Marlin DTC-LS Midco 2, LLC (Clarus) Akumin Corp. Health Care Services Human Resource & Employment Services
Slide 24: Origination Pipeline Funnel
Origination Pipeline Funnel(1) Three tier sourcing platform, generating meaningful investable opportunities for WhiteHorse Finance 25 person business development Over 45 WhiteHorse deal team seeks opportunities from Deals being sourced by more than professionals dedicated to sourcing H.I.G.’s propri
Slide 25: Corporate Data
Corporate Data Board of Directors Investment Committee Corporate Officers Research Coverage Corporate Counsel John Bolduc Sami Mnaymneh Stuart Aronson Tim Hayes Dechert LLP Chairman of the Board Founder and Co‐CEO of H.I.G. Capital Chief Executive Officer B. Riley FBR New York, NY Stuart Aronson Ant