WhiteHorse Finance, Inc. Q2 FY2025 earnings call

Q2 Results: Disappointing due to investment portfolio decline with net realized and unrealized losses. GAAP net investment income and core NII was $6.6 million or $0.282 per share. ### Portfolio Activity: Gross capital deployments $39 million, partially offset by repayments/sales of $36.2 million. Net deployments $2.8 million. 3 new originations totaling $33.1 million and 3 add-ons. ### Lending Market: M&A activity subdued due to tariff uncertainty, reduced new financing deals. Competition intense, with different pricing and leverage in sponsor vs non-sponsor markets. ### JV Activity: Transferred 3 new deals and 1 existing investment to STRS JV. JV portfolio fair value $330 million, yield 10.6%. ### Debt Optimization: Completed CLO term debt securitization, repaid revolving credit facility, reduced its size, reducing borrowing costs and extending maturity.

In the second quarter of 2025, WhiteHorse Finance recorded GAAP net investment income and core NII of $6.6 million or $0.282 per share, compared to $6.8 million or $0.294 per share in Q1. NAV per share at the end of Q2 was $11.82, a 2.4% decrease from the prior quarter. Gross capital deployments were $39 million, with total repayments and sales of $36.2 million, resulting in net deployments of $2.8 million. The portfolio mix was approximately 2/3 sponsor and 1/3 non-sponsor. Nonaccrual investments totaled 4.9% of the debt portfolio, an improvement from 8.8% in the prior quarter.

Dividend: Board declared Q3 distribution of $0.385 per share. ### Portfolio Deployment: BDC balance sheet expected to be fully deployed this quarter. JV has ~$20 million of additional capacity. ### Pipeline: Pipeline lower than normal, with 6 new mandates (3 sponsor, 3 non-sponsor) and 2 add-ons to existing deals.

Tariff Uncertainty: Impacting M&A activity and deal flow. ### Competition: Intense in lending market, affecting deal pricing and structure. ### Nonaccrual Credits: Uncertainty in resolving nonaccrual investments, though actively working with restructuring team.

Q: Is American Crafts an exit or restructuring?

A: It was a sale of the remaining piece with very little proceeds, resolved with no further downside.

Q: Thoughts on mandates and repayment activity?

A: Balance between repayment and new mandates. BDC balance sheet expected to be fully deployed, JV has ~$20 million capacity.

Q: Update on prior year spillover?

A: Undistributed spillover income related to 2024 is $9.7 million, factors into dividend distribution.

Q: Tariff impacts on consumers?

A: Companies raising prices, but consumer reaction to higher prices unknown until holiday season