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WhiteHorse Finance, Inc. Announces Second Quarter 2017 Earnings Results

  (August 08, 2017)

NEW YORK, Aug. 8, 2017 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (NASDAQ: WHF) today announced its financial results for the quarter ended June 30, 2017.

Second Quarter 2017 Summary Highlights

  • New investments of $36.1 million
  • Net investment income of $6.9 million
  • Second quarter net investment income of $0.378 per share
  • Second quarter distribution of $0.355 per share
  • Public offering of 2,200,000 shares at $13.97 per share results in net proceeds of approximately $30.3 million

Stuart Aronson, WhiteHorse Finance's Chief Executive Officer commented, "This was a solid quarter for WhiteHorse Finance, with strong net interest income and modest gains in our NAV. We remain committed to conservative investing in senior secured assets with a goal of earning our dividend each year and protecting NAV. The pipeline for the third quarter is strong, with the majority of the pipeline comprised of directly originated sponsor and non-sponsor deals with low leverage and expected double digit returns."


Portfolio and Investment Activity

As of June 30, 2017, the fair value of WhiteHorse Finance's investment portfolio was $437.9 million, compared with $431.7 million as of March 31, 2017. The portfolio at June 30, 2017 consisted of 39 positions across 30 companies with an average investment size of $11.2 million and a weighted average effective yield of 11.9%, 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 potential rising interest rate environment.

During the three months ended June 30, 2017, WhiteHorse Finance made investments in two new portfolio companies totaling $36.1 million. Gross proceeds from sales and repayments totaled $35.5 million for the quarter. The Company continued to be highly selective in deploying new investments.

Results of Operations

For the three months ended June 30, 2017, net investment income was approximately $6.9 million, compared with approximately $6.4 million for the same period in the prior year, representing an increase of 7.9%. The increase in net investment income was primarily attributable to an increase of investment income due to higher interest and non-recurring fee income partially offset by an increase in interest expense resulting from higher interest rates and higher borrowing balances on the Company's line of credit facility as compared to the same period in the prior year. Over the past 10 quarters, cumulative core net investment income, a non-GAAP financial measure, exceeded distributions to stockholders.(1)

For the three months ended June 30, 2017, WhiteHorse Finance reported realized and unrealized gains on investments of $0.3 million. This compares with realized and unrealized gains on investments of $1.7 million for the three months ended June 30, 2016. The decrease in realized and unrealized gains on investments was primarily attributable to a smaller net amount of fair value adjustments.

WhiteHorse Finance reported a net increase in net assets resulting from operations of approximately $7.3 million for the three months ended June 30, 2017, which compares with a net increase of $8.1 million for the three months ended June 30, 2016.

WhiteHorse Finance's NAV was $283.8 million, or $13.83 per share, as of June 30, 2017, as compared with $252.5 million, or $13.80 per share, reported as of March 31, 2017.

Public Offering

In June 2017, we issued 2,200,000 shares of our common stock in a follow-on public offering at an offering price of $13.97 per share (the "Offering").  H.I.G. WhiteHorse Advisers, LLC (the "Investment Adviser") agreed to pay a portion of the underwriting discounts and commissions in connection with the Offering such that the issuance of shares was at or above the NAV per share at the time of the Offering.  All payments by the Investment Adviser in connection with the Offering are not subject to reimbursement by us.  We received net proceeds from this Offering of approximately $30.3 million.

Liquidity and Capital Resources

As of June 30, 2017, WhiteHorse Finance had cash and cash equivalents of $43.7 million, as compared with $20.1 million as of March 31, 2017, inclusive of restricted cash.  As of June 30, 2017, the Company also had $37.7 million of undrawn capacity under its revolving credit facility.

Distributions

On June 2, 2017, the Company declared a distribution of $0.355 per share for the quarter ended June 30, 2017, consistent for the nineteenth consecutive quarter since the Company's IPO. The distribution was paid on July 6, 2017 to shareholders of record as of June 19, 2017.

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 11:00 am ET on Tuesday, August 8, 2017. 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 #55184882. 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, 2017. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID #55184882. 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 mid-cap 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 $21 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.

(1) Net investment income and core net investment income during the three months ended December 31, 2015 were $0.237 per share and $0.352 per share, respectively. Net investment income was equal to core net investment income for every other quarter since the Company's initial public offering. 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 the net impact of costs associated with the refinancing of the Company's revolving credit facility. 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.

(2) Based on total capital commitments managed by H.I.G. Capital and affiliates.

 

WhiteHorse Finance, Inc.
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)










June 30, 2017



December 31, 2016




(Unaudited)





Assets









Investments, at fair value









Non-controlled/non-affiliate company investments


$

408,905



$

385,216


Non-controlled affiliate company investments



28,988




26,498


Total investments, at fair value (amortized cost $450,440 and $427,689,
     respectively)



437,893




411,714


Cash and cash equivalents



39,731




17,036


Restricted cash and cash equivalents



3,987




11,858


Receivables from investments sold



-




881


Interest receivable



4,822




3,891


Prepaid expenses and other receivables



840




854


Total assets


$

487,273



$

446,234











Liabilities









Debt


$

188,988



$

182,338


Distributions payable



6,503




6,498


Management fees payable



5,961




5,476


Payables for investments purchased



-




995


Accounts payable and accrued expenses



1,533




1,058


Interest payable



503




480


Total liabilities



203,488




196,845











Commitments and contingencies (See Note 7)


















Net assets









Common stock, 20,518,104 and 18,303,890 shares issued and outstanding,
par value $0.001 per share, respectively, and 100,000,000 authorized



20




18


Paid-in capital in excess of par



302,733




272,242


Accumulated overdistributed net investment income



(4,966)




(5,423)


Accumulated realized losses on investments



(819)




(842)


Accumulated unrealized depreciation on investments



(13,183)




(16,606)


Total net assets



283,785




249,389


Total liabilities and total net assets


$

487,273



$

446,234











Number of shares outstanding



20,518,104




18,303,890


Net asset value per share


$

13.83



$

13.63


 

 

 

WhiteHorse Finance, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)










Three months ended June 30,



Six months ended June 30,




2017



2016



2017



2016


Investment income

















From non-controlled/non-affiliate company
investments

















   Interest income


$

12,577



$

12,106



$

24,595



$

24,126


   Fee income



1,058




256




1,825




932


From non-controlled affiliate company investments

















   Dividend income



650




688




1,440




1,402


Total investment income



14,285




13,050




27,860




26,460



















Expenses

















Interest expense



2,559




1,951




5,003




3,867


Base management fees



2,390




2,248




4,652




4,500


Performance-based incentive fees



1,734




1,609




3,365




3,300


Administrative service fees



158




205




292




415


General and administrative expenses



508




611




1,090




1,190


Total expenses



7,349




6,624




14,402




13,272


Net investment income



6,936




6,426




13,458




13,188



















Realized and unrealized gains (losses) on investments

















Net realized gains (losses)

















   Non-controlled/non-affiliate company investments



-




(1,138)




23




(1,138)


         Net realized gains (losses)



-




(1,138)




23




(1,138)


Net change in unrealized appreciation (depreciation)

















   Non-controlled/non-affiliate company investments



(2,294)




2,439




933




2,209


   Non-controlled affiliate company investments



2,633




402




2,490




(598)


         Net change in unrealized appreciation



339




2,841




3,423




1,611


Net realized and unrealized gains on investments



339




1,703




3,446




473


Net increase in net assets resulting from
operations


$

7,275



$

8,129



$

16,904



$

13,661



















Per Common Share Data

















Basic and diluted earnings per common share


$

0.39



$

0.44



$

0.91



$

0.75


Dividends and distributions declared per common
share


$

0.36



$

0.36



$

0.71



$

0.71


Basic and diluted weighted average common shares
outstanding



18,341,967




18,303,890




18,323,034




18,303,890


 

 

 

WhiteHorse Finance, Inc.
Consolidated Schedule of Investments (Unaudited)
June 30, 2017
(in thousands) 




















Investment Type(1)


Spread

Above

Index(2)


Interest

Rate(3)


Maturity

Date


Principal/

Share

Amount



Amortized

Cost



Fair

Value



Fair Value

as a

Percentage

of Net

Assets


North America























Debt investments























Advertising























Outcome Health























     First Lien Secured Term Loan


L+ 6.50%


7.75%


12/22/21


$

18,038



$

16,415



$

17,858




6.29%




(1.00% Floor)





















Fluent, LLC (f/k/a Fluent Acquisition II, LLC)























     First Lien Secured Term Loan


L+ 11.50%


12.71%


12/08/20



26,292




25,935




26,095




9.20




(0.50% Floor)


(1.00% PIK)



















Intersection Acquisition, LLC























     First Lien Secured Term Loan


L+ 12.00%


13.30%


09/15/20



15,116




15,019




14,210




5.01




(1.00% Floor)


(2.00% PIK)




























59,446




57,369




58,163




20.50


Application Software























Intermedia Holdings, Inc.























     Second Lien Secured Term Loan


L+ 9.50%


10.67%


02/03/25



18,000




17,657




17,759




6.26




(1.00% Floor)





















Auto Parts & Equipment























Crowne Group, LLC























     First Lien Secured Term Loan


L+ 9.25%


10.45%


05/26/21



12,219




11,887




12,215




4.30




(1.00% Floor)





















Broadcasting























Multicultural Radio Broadcasting, Inc.























     First Lien Secured Term Loan


L+ 10.50%


11.73%


06/27/19



14,850




14,850




14,776




5.21




(1.00% Floor)





















Consumer Finance























Golden Pear Funding III, LLC(5)























     Second Lien Secured Term Loan


L+ 10.25%


11.42%


06/25/20



25,000




24,826




24,898




8.77




(1.00% Floor)





















     Second Lien Secured Revolving Loan


L+ 10.25%


11.42%


06/25/20



5,000




4,965




4,979




1.75




(1.00% Floor)





















Oasis Legal Finance, LLC(5)























     Second Lien Secured Term Loan


L+ 10.75%


11.79%


03/09/22



20,000




19,659




20,000




7.05




(1.00% Floor)





















Sigue Corporation(4)























     Second Lien Secured Term Loan


L+ 11.50%


12.65%


12/27/18



25,000




24,851




24,400




8.60




(1.00% Floor)






























75,000




74,301




74,277




26.17


Data Processing & Outsourced Services























FPT Operating Company, LLC/























     TLabs Operating Company, LLC























     First Lien Secured Term Loan


L+ 8.25%


9.25%


12/23/21



23,602




23,225




23,484




8.28




(1.00% Floor)





















Department Stores























Mills Fleet Farm Group, LLC























     Second Lien Secured Term Loan


L+ 9.75%


10.98%


02/26/23



7,146




7,027




7,146




2.52




(1.00% Floor)





















Diversified Support Services























Account Control Technology Holdings, Inc.























     First Lien Secured Term Loan


L+ 8.50%


9.67%


04/28/22



18,384




17,872




17,876




6.30




(1.00% Floor)





















Climate Pros, Inc.























     First Lien Secured Revolving Loan


L+ 9.00%


10.20%


02/27/19



952




469




466




0.16




(1.00% Floor)





















     First Lien Secured Term Loan


L+ 9.00%


10.20%


02/28/22



3,990




3,916




3,939




1.39




(1.00% Floor)





















Sitel Worldwide Corporation























     Second Lien Secured Term Loan


L+ 9.50%


10.69%


09/18/22



8,670




8,540




8,504




3.00




(1.00% Floor)






























31,996




30,797




30,785




10.85


Food Retail























AG Kings Holdings, Inc.























     First Lien Secured Term Loan


L+ 9.95%


10.95%


08/10/21


$

13,790



$

13,300



$

13,653




4.81%




(1.00% Floor)





















Crews of California, Inc.























     First Lien Secured Term Loan


L+ 11.00%


12.16%


11/20/19



17,196




17,038




17,111




6.03




(1.00% Floor)


(1.00% PIK)



















     First Lien Secured Revolving Loan


L+ 11.00%


12.16%


11/20/19



5,093




5,031




5,068




1.79




(1.00% Floor)


(1.00% PIK)



















     First Lien Secured Delayed Draw Loan


L+ 11.00%


12.16%


11/20/19



4,984




4,926




4,959




1.75




(1.00% Floor)


(1.00% PIK)




























41,063




40,295




40,791




14.38


Heatlh Care Facilities























Grupo HIMA San Pablo, Inc.























     First Lien Secured Term Loan


L+ 9.00%


10.50%


01/31/18



14,350




14,316




11,585




4.08




(1.50% Floor)





















     Second Lien Secured Term Loan


N/A


15.75%


07/31/18



1,000




991




329




0.12


































15,350




15,307




11,914




4.20


Internet Retail























Clarus Commerce, LLC























     First Lien Secured Term Loan


L+ 10.10%


11.33%


03/17/21



6,000




5,911




6,000




2.11




(1.00% Floor)





















Internet Software & Services























StackPath, LLC & Highwinds Capital, Inc.























     Second Lien Secured Term Loan


L+ 9.50%


10.85%


02/02/24



18,000




17,576




17,667




6.23




(1.00% Floor)





















Investment Banking & Brokerage























JVMC Holdings Corp. (f/k/a RJO Holdings Corp)























     First Lien First Out Secured Term Loan


L+ 8.02%


9.25%


05/05/22



13,500




13,205




13,226




4.66




(1.00% Floor)





















     First Lien Last Out Secured Term Loan


L+ 12.00%


13.23%


05/05/22



5,000




4,891




4,899




1.73




(1.00% Floor)






























18,500




18,096




18,125




6.39


IT Consulting & Other Services























AST-Applications Software Technology LLC























     First Lien Secured Term Loan


L+ 9.00%


10.23%


01/10/23



4,910




4,803




4,517




1.59




(1.00% Floor)


(2.00% PIK)



















Office Services & Supplies























Katun Corporation























     Second Lien Secured Term Loan


L+ 11.25%


12.30%


01/25/21



4,422




4,399




4,391




1.55




(1.00% Floor)





















Oil & Gas Exploration & Production























Caelus Energy Alaska O3, LLC























     Second Lien Secured Term Loan


L+ 7.50%


8.75%


04/15/20



13,000




12,913




10,615




3.74




(1.25% Floor)





















Other Diversified Financial Services























The Pay-O-Matic Corp.























     First Lien Secured Term Loan


L+ 11.00%


12.08%


04/02/18



14,588




14,438




14,543




5.12




(1.00% Floor)





















Research & Consulting Services























Project Time & Cost, LLC























     First Lien Secured Term Loan


L+ 12.00%


13.21%


10/09/20



9,404




9,281




8,979




3.16




(0.50% Floor)





















Specialized Consumer Services























Pre-Paid Legal Services, Inc.























     Second Lien Secured Term Loan


L+ 9.00%


10.25%


07/01/20



19,000




18,894




19,144




6.75




(1.25% Floor)





















Trucking





















Fox Rent A Car, Inc.










































     First Lien Secured Term Loan


L+ 12.00%


13.05%


09/29/17


$

7,200



$

7,157



$

7,200


2.54%























Sunteck / TTS Holdings, LLC





















     Second Lien Secured Term Loan


L+ 9.00%


10.25%


06/15/22



3,500




3,444




3,456


1.22




(1.00% Floor)




























10,700




10,601




10,656


3.76























Total Debt Investments









417,196




409,627




405,947


143.07

























Equity Investments























Advertising























Cogint, Inc. (f/k/a IDI, Inc.) Warrants(4)


N/A


N/A


12/08/25



187




-




248




0.09

























Food Retail























Crews of California, Inc. Warrants (4)


N/A


N/A


12/31/24



-




-




1,573




0.55


Nicholas & Associates, LLC Warrants(4)


N/A


N/A


12/31/24



3




-




260




0.09


Pinnacle Management Group, LLC Warrants(4)


N/A


N/A


12/31/24



3




-




563




0.20


RC3 Enterprises, LLC Warrants(4)


N/A


N/A


12/31/24



3




-




144




0.05











9




-




2,540




0.89


Other Diversified Financial Services























Aretec Group, Inc. (4)(5)(6)


N/A


N/A


N/A



536




20,693




10,238




3.61

























Specialized Finance























NMCFC Senior Loan Program I LLC Unites (4)(5)(6)


N/A


N/A


06/13/20



20,000




20,120




18,750




6.61

























Trucking























Fox Rent A Car, Inc. Warrants(4)


N/A


N/A


N/A



-




-




170




0.06

























Total Equity Investments









20,732




40,813




31,946




11.26

























Total Investments








$

437,928



$

450,440



$

437,893




154.33%




(1)

Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the "1940 Act"), and provide collateral for the Company's credit facility.

 

(2)

The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate ("LIBOR" or "L"), which resets monthly, quarterly or semiannually.

 

(3)

The interest rate is the "all-in-rate" including the current index and spread, the fixed rate, and the payment-in-kind ("PIK") interest rate, as the case may be.

 

(4)

The investment or a portion of the investment does not provide collateral for the Company's credit facility.



(5)

Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represented 84% of total assets as of the date of the consolidated schedule of investments.

 

(6)

Investment is a non-controlled/affiliate investment as defined by the 1940 Act.

 

 

View original content:http://www.prnewswire.com/news-releases/whitehorse-finance-inc-announces-second-quarter-2017-earnings-results-300500990.html

SOURCE WhiteHorse Finance, Inc.

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