The following is a summary of the WhiteHorse Finance (WHF) Q2 2024 Earnings Call Transcript:
Financial Performance:
WhiteHorse Finance reported GAAP net investment income (NII) and core NII of $9.3 million, or $0.40 per share for Q2 2024, which was a decrease from Q1 2024 GAAP and core NII of $10.8 million, or $0.465 per share.
NAV per share ended at $13.45, a 0.4% decrease from the previous quarter, influenced by net markdowns in the portfolio totaling $1.5 million.
The weighted average effective yield on income-producing debt investments increased slightly to 13.8% at the end of Q2 2024.
Business Progress:
WhiteHorse Finance's investment activity included $55.8 million in gross capital deployments during Q2, primarily through seven new originations and nine add-ons, offset by high repayments and sales totaling $71.7 million.
The BDC transferred several new deals to the Ohio STRS JV, thus, maintaining active portfolio management.
Despite a softer quarter, WhiteHorse continues to focus on originating deals in the non-sponsor sector due to its relative attractiveness.
Opportunities:
WhiteHorse is focusing on non-sponsor deals in the current borrower-friendly market, which remains less aggressive compared to sponsor markets.
The company anticipates the Fed will begin to reduce interest rates in Q4 2024, potentially revitalizing economic activities and private equity transactions.
Risks:
Elevated repayment activities and a borrower-friendly credit environment allow borrowers to lever up and potentially refinance at aggressive conditions, which WhiteHorse might avoid due to risk concerns.
The broader economic softening impacts consumer and business demand, adding uncertainty to future portfolio performance.
More details: WhiteHorse Finance IR
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