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WhiteHorse Finance, Inc. Announces Second Quarter 2018 Earnings Results
NEW YORK, NY, August 8, 2018 – WhiteHorse Finance, Inc. (“WhiteHorse Finance” or the “Company”) (NASDAQ: WHF) today announced its financial results for the quarter ended June 30, 2018.
Second Quarter 2018 Summary Highlights
|·||New investments of $71.2 million|
|·||Net investment income of $4.6 million, or $0.224 per share|
|·||Core net investment income of $6.8 million, or $0.331 per share(1)|
|·||Second quarter distribution of $0.355 per share|
(1) 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 because it reflects the Company's financial performance excluding (i) the net impact of costs associated with the refinancing of the Company’s indebtedness, (ii) the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and (iii) any excise or other income taxes related to such net realized gains and losses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Additional information on core net investment income and a reconciliation of core net investment income to its most directly comparable GAAP financial measure, net investment income, are set forth in Schedule 1 hereto.
Stuart Aronson, WhiteHorse Finance’s Chief Executive Officer commented, “Our second quarter results featured another strong increase in NAV, five originations, and a markup on our position in Aretec following news of its pending sale. Our last 15 originations have been first-lien, and our weighted-average effective yield has remained at or near 12 percent, exhibiting high credit quality and attractive returns. Our pipeline remains strong and our disciplined approach to sourcing remains a constant, as does our focus on earning our dividend on an annualized basis. Collectively these results reflect the differentiating impact of our three-tiered H.I.G. sourcing architecture.”
Portfolio and Investment Activity
As of June 30, 2018, the fair value of WhiteHorse Finance’s investment portfolio was $511.4 million, compared with $467.7 million as of March 31, 2018. The portfolio at June 30, 2018 consisted of 52 positions across 36 companies with an average investment size of $9.8 million and a weighted average effective yield on income-producing investments of 12.0%, remaining relatively flat as compared to last quarter. The majority of the portfolio was comprised of senior secured loans, and these loans were substantially all variable-rate investments (primarily indexed to LIBOR), which should continue to position the portfolio well for a rising interest rate environment.
During the three months ended June 30, 2018, WhiteHorse Finance invested $71.2 million across five new portfolio companies. Gross proceeds from sales and repayments totaled $42.5 million for the quarter primarily driven by full repayment on two positions. The Company remained highly selective in deploying new investments.
Results of Operations
For the three months ended June 30, 2018, net investment income was $4.6 million, compared with $6.9 million for the same period in the prior year, representing a decrease of approximately 33.3%. For the three months ended June 30, 2018, core net investment income, a non-GAAP financial measure that excludes capital gains incentive fee accruals, excise or other income taxes related to net realized gains and losses, and the associated costs of refinancing the Company’s indebtedness, was $6.8 million, compared with $6.9 million for the same period in the prior year, representing a decrease of approximately 1.4%. The decrease in net investment income compared to the same period in the prior year was primarily due to the $2.2 million accrual for capital gains incentive fee in the current period.
For the three months ended June 30, 2018, WhiteHorse Finance reported net realized and unrealized gains on investments of $14.4 million. This compares with realized and unrealized gains on investments of $0.3 million for the three months ended June 30, 2017. The increase in net realized and unrealized gains on investments was primarily attributable to the unrealized appreciation in the Company’s equity investment in Aretec Group, Inc. as well as other favorable fair value adjustments on an aggregate basis.
WhiteHorse Finance reported a net increase in net assets of $19.1 million for the three months ended June 30, 2018, which compares with a net increase of $7.3 million for the three months ended June 30, 2017.
The following information was filed by Whitehorse Finance, Inc. (WHF) on Wednesday, August 8, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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