NEW YORK, Aug. 7, 2019 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (NASDAQ: WHF) today announced its financial results for the quarter ended June 30, 2019.
Second Quarter 2019 Summary Highlights
- Net Asset Value of $315.9 million, or $15.38 per share
- New investments of $71.4 million
- Net investment income of $7.2 million, or $0.352 per share
- Core net investment income of $7.4 million, or $0.362 per share(1)
- Second quarter distribution of $0.355 per share
Stuart Aronson, WhiteHorse Finance's Chief Executive Officer commented, "During the second quarter we grew NAV by adding seven new first-lien originations and one add-on investment to our portfolio. First-lien senior-secured loans now account for 85% of our portfolio and our leverage ratio at the end of the second quarter was 79%, bringing us closer to our target leverage range of between 100 to 125%. Our strong origination activity helped partially offset the impact of underperformance in two of our credit positions as we enter an environment of slower economic growth. Following the close of the quarter, we activated our recently-launched joint venture, which we expect will contribute to future earnings. Going forward we will continue leveraging our differentiated three-tiered sourcing infrastructure backed by H.I.G. to prudently deploy capital into high credit quality opportunities which offer stable and attractive risk-adjusted returns and ultimately enhance shareholder value."
Portfolio and Investment Activity
As of June 30, 2019, the fair value of WhiteHorse Finance's investment portfolio was $534.8 million, compared with $468.4 million as of March 31, 2019. The portfolio at June 30, 2019 consisted of 67 positions across 47 companies with an average debt investment size of $8.8 million and a weighted average effective yield of 11.3% on income-producing investments. The majority of the portfolio was comprised of senior secured loans, and these loans were substantially all variable-rate investments (primarily indexed to LIBOR), with nearly all performing floating rate investments having interest rate floors.
During the three months ended June 30, 2019, WhiteHorse Finance made investments in seven new direct originations totaling $71.4 million. Also, the Company added $3.7 million to an existing portfolio company. Gross proceeds from repayments totaled approximately $12.3 million for the quarter, driven by partial paydowns of $3.8 million from StackPath, LLC & Highwinds Capital, Inc., $1.8 million from PMA Holdco, LLC, $1.3 million from Alpha Media, LLC as well as the full repayment of the Company's remaining investment in Account Control Technology Holdings, Inc. of $0.6 million. The Company remained highly selective in deploying new investments.
Results of Operations
For the three months ended June 30, 2019, net investment income was approximately $7.2 million, compared with approximately $4.6 million for the same period in the prior year, representing an increase of approximately 56.5%. The increase in net investment income for the year-over-year period was primarily attributable to an increase in non-recurring fee income and a decrease in the amount of capital gains incentive fee recorded.
For the three months ended June 30, 2019, WhiteHorse Finance reported net realized and unrealized gains on investments of approximately $1.0 million. This compares with net realized and unrealized gains on investments of $14.4 million for the three months ended June 30, 2018. The decrease in net realized and unrealized gains on investments for the year-over-year period was primarily attributable to the prior year mark-up of the Company's equity investment in Aretec Group, Inc. (which was sold in the fourth quarter of 2018).
WhiteHorse Finance reported a net increase in net assets resulting from operations of approximately $8.2 million for the three months ended June 30, 2019, which compares with a net increase of $19.1 million for the three months ended June 30, 2018.
WhiteHorse Finance's NAV was $315.9 million, or $15.38 per share, as of June 30, 2019, as compared with $315.0 million, or $15.33 per share, as of March 31, 2019.
Liquidity and Capital Resources
As of June 30, 2019, WhiteHorse Finance had cash and cash equivalents of $50.4 million, as compared with $36.9 million as of March 31, 2019, inclusive of restricted cash. As of June 30, 2019, the Company also had $15.6 million of undrawn capacity under its revolving credit facility.
Distributions
On June 10, 2019, the Company declared a distribution of $0.355 per share for the quarter ended June 30, 2019, consistent for the twenty-seventh consecutive quarter since the Company's IPO. The distribution was paid on July 3, 2019 to shareholders of record as of June 20, 2019.
Distributions are paid from taxable earnings and may include return of capital and/or capital gains. The specific tax characteristics of the distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year and in the Company's periodic reports filed with the Securities and Exchange Commission.
Conference Call
WhiteHorse Finance will host a conference call to discuss its second quarter results at 10:00 a.m. ET on Wednesday, August 7, 2019. To access the teleconference, please dial 706-758-9224 (domestic and international) approximately 10 minutes before the teleconference's scheduled start time and reference ID # 4389314. Investors may also access the call on the investor relations portion of the Company's website at www.whitehorsefinance.com.
If you are unable to access the live teleconference, a replay will be available beginning approximately two hours after the call's completion through August 15, 2019. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID # 4389314. A webcast replay will also be available on the investor relations portion of the Company's website at www.whitehorsefinance.com.
About WhiteHorse Finance, Inc.
WhiteHorse Finance is a business development company that originates and invests in loans to privately held, lower middle market companies across a broad range of industries. The Company's investment activities are managed by H.I.G. WhiteHorse Advisers, LLC, an affiliate of H.I.G. Capital, LLC, ("H.I.G. Capital"). H.I.G. Capital is a leading global alternative asset manager with $34 billion of capital under management(2) across a number of funds focused on the small and mid-cap markets. For more information about H.I.G. Capital, please visit http://www.higcapital.com. For more information about the Company, please visit http://www.whitehorsefinance.com.
Forward-Looking Statements
This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
(2) Based on total capital commitments managed by H.I.G. Capital and affiliates.
SCHEDULE 1
As a supplement to GAAP financial measures, the Company has provided information relating to core net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income determined in accordance with GAAP. The Company's non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income adjusted to exclude the net impact of costs associated with the refinancing of the Company's indebtedness, the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and excise or other income taxes related to such net realized gains and losses (net of incentive fees). There were no associated refinancing costs in connection with the Company's indebtedness and no excise or other income taxes related to net realized gains and losses for the quarters ended June 30, 2019 and June 30, 2018.
The following table provides a reconciliation of net investment income to core net investment income for the three months ended June 30, 2019 and June 30, 2018 (in thousands, except per share data):
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SOURCE WhiteHorse Finance, Inc.