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WhiteHorse Finance, Inc. Announces Fourth Quarter and Full Year 2016 Earnings Results

NEW YORK, March 2, 2017 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (NASDAQ: WHF) today announced its financial results for the quarter and year ended December 31, 2016.

Fourth Quarter 2016 Summary Highlights

  • New investments of $20.1 million and $63.9 million for the fourth quarter and year, respectively
  • Net investment income of $6.6 million, or $0.358 per share, for the fourth quarter
  • Annual net investment income of $27.0 million, or $1.48 per share
  • Annual distribution of $1.42 per share

Stuart Aronson, WhiteHorse Finance's Chief Executive Officer commented, "This was a solid quarter for WhiteHorse, with strong net interest income and modest gains in our NAV. The leadership of our firm remains committed to conservative investing in senior secured assets with a goal of earning our dividend each year and protecting NAV. The pipeline for the first quarter is strong."

Portfolio and Investment Activity

As of December 31, 2016, the fair value of WhiteHorse Finance's investment portfolio was $411.7 million, compared with $415.3 million as of December 31, 2015. The portfolio at December 31, 2016 consisted of 37 positions across 29 companies with an average investment size of $11.1 million based on fair value, a weighted average effective yield of 11.8%, and an estimated weighted average leverage multiple of 3.4x.  The majority of the portfolio comprised senior secured loans and approximately 99.8% of these loans were variable-rate investments (primarily indexed to LIBOR), which should continue to position the portfolio well in a rising interest rate environment.

For the three months ended December 31, 2016, WhiteHorse Finance invested $20.1 million across two new portfolio companies. Gross proceeds from sales and repayments totaled $2.5 million for the quarter.  In addition, WhiteHorse Finance refinanced its $36.8 million loan to Future Payment Technologies into a new $23.3 million first lien loan; reducing its net position by $13.5 million.

For the year ended December 31, 2016, WhiteHorse Finance invested $63.9 million across seven new portfolio companies.  Also, the Company invested $3.2 million in existing portfolio companies. Gross proceeds from sales and repayments totaled $71.3 million for the year. In addition, WhiteHorse Finance refinanced two investments resulting in a net decrease in these investments of $2.9 million.

Results of Operations

For the three months and year ended December 31, 2016, net investment income was approximately $6.6 million and $27.0 million, compared with approximately $3.9 million and $20.8 million for the same periods in the prior year. The increase in net investment income was primarily attributable to (i) an increase in the balance of average earning investments over the same periods in the prior year, (ii) higher amortization of original issue discount related to repayments and (iii) the 2015 write off of deferred financing costs related to a credit line refinancing. In the past 24 months, cumulative core net investment income, a non-GAAP financial measure, exceeded distributions to stockholders.(1)

For the three months and year ended December 31, 2016, WhiteHorse Finance reported realized and unrealized gain on investments of $2.5 million and $4.3 million, respectively. This compares with realized and unrealized losses on investments of $18.7 million and $23.6 million for the three months and year ended December 31, 2015, respectively. The increase in realized and unrealized gains on investments was primarily attributable to the recognition of unrealized loss in the Company's investment in RCS Capital Corporation during the fourth quarter of 2015.

For the three months and year ended December 31, 2016, WhiteHorse Finance reported net increases in net assets of $9.1 million and $31.3 million, respectively, which compares to net decreases in net assets of $14.8 million and $2.8 million for the three months and year ended December 31, 2015. 

WhiteHorse Finance's NAV was $249.4 million, or $13.63 per share, as of December 31, 2016, as compared with $246.8 million, or $13.48 per share, as of September 30, 2016. As of December 31, 2015, WhiteHorse Finance's NAV was $244.0 million, or $13.33 per share.

Liquidity and Capital Resources

As of December 31, 2016, WhiteHorse Finance had cash and cash equivalents of $28.9 million, as compared with cash and cash equivalents of $23.7 million as of September 30, 2016, inclusive of restricted cash.  As of December 31, 2016, the Company had approximately $40 million of undrawn capacity under its revolving credit facility.

Distributions

On December 19, 2016, the Company declared a distribution of $0.355 per share for the quarter ended December 31, 2016, consistent for the seventeenth consecutive quarter since the Company's IPO. The distribution was paid on January 3, 2017 to shareholders of record as of December 20, 2016.

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 fourth quarter and fiscal year-end results at 10:00 am ET on Thursday, March 2, 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 #70205251. 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 March 7, 2017. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID #70205251. 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 small-cap companies across a broad range of industries.  The Company's investment activities are managed by WhiteHorse Advisers, an affiliate of 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)








December 31,
2016


December 31,
2015

Assets









Investments, at fair value









Non-controlled/non-affiliate company investments


$

392,721



$

395,143


Non-controlled affiliate company investments



18,993




20,200


Total investments, at fair value (amortized cost $427,684 and $436,109, respectively)



411,714




415,343


Cash and cash equivalents



17,036




22,769


Restricted cash and cash equivalents



11,858





Interest receivable



3,891




3,407


Receivable for unsettled transactions



881





Prepaid expenses and other receivables



854




192


Total assets


$

446,234



$

441,711


Liabilities









Debt


$

182,338



$

183,482


Distributions payable



6,498




6,498


Management fees payable



5,476




3,813


Payables for investments purchased



995




2,865


Interest payable



480





Accounts payable and accrued expenses



1,058




1,001


Total liabilities



196,845




197,659


Commitments and contingencies (See Note 7)









Net assets









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



18




18


Paid-in capital in excess of par



271,679




271,679


Accumulated over distributed net investment income



(6,400)




(7,419)


Accumulated realized gains on investments



698




1,176


Accumulated unrealized depreciation on investments



(16,606)




(21,402)


Total net assets



249,389




244,052


Total liabilities and total net assets


$

446,234



$

441,711


Number of shares outstanding



18,303,890




18,303,890


Net asset value per share


$

13.63



$

13.33


 

 


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










Years ended December 31,



2016


2015


2014

Investment income













Interest income


$

48,649



$

42,380



$

35,148


Fee income



2,290




1,894




1,604


Dividend income



2,910




2,800




794


Total investment income



53,849




47,074




37,546


Expenses













Interest expense



8,188




9,970




5,818


Base management fees



8,990




8,560




7,557


Performance-based incentive fees



6,755




4,323




3,387


Administrative service fees



684




1,140




1,510


General and administrative expenses



2,221




2,326




2,720


Total expenses, before fees waived



26,838




26,319




20,992


Base management fees waived









(447)


Total expenses, net of fees waived



26,838




26,319




20,545


Net investment income



27,011




20,755




17,001


Realized and unrealized gains (losses) on investments













Net realized losses













     Non-controlled/non-affiliate company investments



(478)




(379)




(64)


          Net realized losses



(478)




(379)




(64)


Net change in unrealized appreciation (depreciation)













     Non-controlled/non-affiliate company investments



6,003




(23,404)




2,607


     Non-controlled/affiliate company investments



(1,207)




200





          Net change in unrealized appreciation (depreciation)



4,796




(23,204)




2,607


Net realized and unrealized gains (losses) on investments



4,318




(23,583)




2,543


Net increase (decrease) in net assets resulting from operations


$

31,329



$

(2,828)



$

19,544


Per Common Share Data













Basic and diluted earnings (loss) per common share


$

1.71



$

(0.18)



$

1.30


Dividends and distributions declared per common share


$

1.42



$

1.42



$

1.42


Basic and diluted weighted average common shares outstanding



18,303,890




15,319,510




14,982,825


 

 


WhiteHorse Finance, Inc.
 
Consolidated Schedule of Investments
December 31, 2016
(in thousands)
















Investment Type(1)


Spread Above
Index(2)


Interest
Rate(3)


Maturity
Date


Principal
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%
(1.00% Floor)




7.50%




12/22/21



$

18,500



$

16,652



$

16,872




6.77

%

Fluent Acquisition II, LLC





























First Lien Secured Term Loan



L+11.50%
(0.69% Floor)




12.19%
(1.00% PIK)




12/8/20




26,885




26,466




26,745




10.72


Intersection Acquisition, LLC





























First Lien Secured Term Loan



L+10.00%
(1.00% Floor)




11.00%




9/15/20




16,149




16,029




15,597




6.25

















61,534




59,147




59,214




23.74


Auto Parts & Equipment





























Crowne Group, LLC





























First Lien Secured Term Loan



L+9.25%
(1.00% Floor)




10.25%




5/26/21




12,406




12,027




12,282




4.92


Broadcasting





























Multicultural Radio Broadcasting, Inc.





























First Lien Secured Term Loan



L+10.50%
(1.00% Floor)




11.50%




6/27/19




14,850




14,850




14,776




5.92


Consumer Finance





























Golden Pear Funding III, LLC(5)





























Second Lien Secured Term Loan



L+10.25%
(1.00% Floor)




11.25%




6/25/20




25,000




24,797




24,732




9.92


Second Lien Secured Revolving Loan



L+10.25%
(1.00% Floor)




11.25%




6/25/20




5,000




4,959




4,947




1.98


Oasis Legal Finance, LLC(5)





























Second Lien Secured Term Loan



L+10.75%

(1.00% Floor)




11.75%




3/1/22




20,000




19,623




19,650




7.88


Sigue Corporation(4)





























Second Lien Secured Term Loan



L+11.00%
(1.00% Floor)




12.00%




12/27/18




25,000




24,801




24,200




9.70

















75,000




74,180




73,529




29.48


 

 

WhiteHorse Finance, Inc.
 
Consolidated Schedule of Investments – (continued)
December 31, 2016
(in thousands)
















Investment Type(1)


Spread Above
Index(2)


Interest
Rate(3)


Maturity
Date


Principal
Amount


Amortized
Cost


Fair
Value


Fair Value
As A
Percentage
Of Net
Assets

Data Processing & Outsourced Services





























Future Payment Technologies, L.P.





























     First Lien Secured Term Loan



L+8.25%
(1.00% Floor)




9.25%




12/23/21




$23,750




$23,329




$23,370




9.37

%

Department Stores





























Mills Fleet Farm Group, LLC





























     Second Lien Secured Term Loan



L+9.75%
(1.00% Floor)




10.75%




2/26/23




7,146




7,017




7,146




2.87


Distributors





























360 Holdings III Corp.





























     First Lien Secured Term Loan



L+9.00%
(1.00% Floor)




10.00%




10/1/21




9,875




9,549




9,875




3.96































Diversified Support Services





























Sitel Worldwide Corporation





























Second Lien Secured Term Loan



L+9.50%
(1.00% Floor)




10.50%




9/18/22




8,670




8,528




8,462




3.39


Electronic Equipment & Instruments





























AP Gaming I, LLC (4)





























First Lien Secured Term Loan



L+8.25%
(1.00% Floor)




9.25%




12/20/20




9,700




9,533




9,523




3.82


Food Retail





























AG Kings Holdings, Inc.





























First Lien Secured Term Loan



L+9.95%
(1.00% Floor)




10.95%




8/10/21




13,930




13,375




13,610




5.46


Crews of California, Inc.





























First Lien Secured Term Loan



L+11.00%
(1.00% Floor)




12.00%
(1.00% PIK)




11/20/19




17,538




17,343




17,461




7.00


First Lien Secured Revolving Loan



L+11.00%
(1.00% Floor)




12.00%
(1.00% PIK)




11/20/19




5,068




4,992




5,046




2.02


First Lien Secured Delayed Draw Term Loan



L+11.00%
(1.00% Floor)




12.00%
(1.00% PIK)




11/20/19




5,083




5,012




5,061




2.03

















41,619




40,722




41,178




16.51


Health Care Facilities





























Coastal Sober Living, LLC





























First Lien Secured Term Loan



L+10.25%
(1.00% Floor)




11.25%




6/30/19




23,183




22,964




23,183




9.30


 

 


WhiteHorse Finance, Inc.
 
Consolidated Schedule of Investments – (continued)
December 31, 2016
(in thousands)
















Investment

Type(1)


Spread Above
Index(2)


Interest
Rate(3)


Maturity
Date


Principal
Amount


Amortized
Cost


Fair
Value


Fair Value
As A
Percentage
Of Net
Assets

Grupo HIMA San Pablo, Inc.





























     First Lien Secured Term Loan



L+9.00%
(1.50% Floor)




10.50%




1/31/18




$14,438




$14,375




$12,569




5.04

%

     Second Lien Secured Term Loan



N/A




15.75%




7/31/18




1,000




986




594




0.24

















38,621




38,325




36,346




14.58


Integrated Telecommunication Services





























Securus Technologies Holdings, Inc.





























Second Lien Secured Term Loan



L+7.75%
(1.25% Floor)




9.00%




4/30/21




$9,090




$9,067




$8,841




3.55


Internet Retail





























Clarus Commerce, LC





























First Lien Secured Term Loan



L+11.14%
(1.00% Floor)




12.14%




3/17/21




6,000




5,899




5,895




2.36


Office Service & Supplies





























Katun Corporation





























Second Lien Secured Term Loan



L+11.25%
(1.00% Floor)




12.25%




1/25/21




5,000




4,970




4,930




1.98


Oil & Gas Drilling





























ProPetro Services, Inc.(4)





























First Lien Secured Term Loan



L+6.25%
(1.00% Floor)




7.25%




9/30/19




8,284




8,246




7,189




2.88


Oil & Gas Exploration & Production





























Caelus Energy Alaska O3, LLC





























Second Lien Secured Term Loan



L+7.50%
(1.25% Floor)




8.75%




4/15/20




13,000




12,898




9,939




3.99


Other Diversified Financial Services





























The Pay-O-Matic Corp.





























First Lien Secured Term Loan



L+11.00%
(1.00% Floor)




12.00%




4/2/18




8,934




8,860




8,904




3.57


Research & Consulting Services





























Project Time & Cost, LLC(4)





























     First Lien Secured Term Loan



L+11.00%
(0.74% Floor)




12.74%




10/9/20




10,105




9,953




9,845




3.95


 

 


WhiteHorse Finance, Inc.
 
Consolidated Schedule of Investments – (continued)
December 31, 2016
(in thousands)
















Investment Type(1)


Spread Above
Index(2)


Interest
Rate(3)


Maturity
Date


Principal
Amount


Amortized
Cost


Fair
Value


Fair Value
As A
Percentage
Of Net
Assets

Specialized Consumer Services





























Pre-Paid Legal Services, Inc.(4)





























Second Lien Secured Term Loan



L+9.00%
(1.25% Floor)




10.25

%



7/1/20




$19,000




$18,882




$19,000




7.22%


Trucking





























Fox Rent A Car, Inc.





























Second Lien Secured Term Loan



L+12.00%

(0.62% Floor)




12.62

%



9/30/17




7,500




7,455




7,410




2.97


Sunteck/TSS Holdings, LLC





























Second Lien Secured Term Loan



L+9.00%

(1.00% Floor)




10.00

%



6/15/22




3,500




3,439




3,454




1.38

















11,000




10,894




10,864




4.35


Total Debt Investments















393,581




386,871




381,111




152.88


Equity Investments





























Advertising





























IDI, Inc. Warrants(4)



N/A




N/A




12/8/25














Food Retail





























Crews of California, Inc. Warrants(4)



N/A




N/A




12/31/24










2,426




0.97


Nicholas & Associates, LLC Warrants(4)



N/A




N/A




12/31/24










417




0.17


Pinnacle Management Group, LLC Warrants(4)



N/A




N/A




12/31/24










871




0.35


RC3 Enterprises, LLC Warrants(4)



N/A




N/A




12/31/24










232




0.09























3,946




1.58


Other Diversified Financial Services





























Artec Group, Inc. (5)(5)



N/A




N/A




N/A







20,693




7,505




3.01


Specialized Finance





























NMFC Senior Loan Program I LLC
Units(5)(6)



N/A




N/A




6/10/19







20,120




18,993




7.62


Trucking





























Fox Rent A Car, Inc. Warrants(4)



N/A




N/A




N/A










162




0.06


Total Equity Investments


















40,813




30,606




12.21


Total Investments 














$

393,581



$

427,684



$

411,714




165.09

%

 

 

(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") or the Prime Rate ("P"), 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 represent 83% of total assets.

(6)

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

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/whitehorse-finance-inc-announces-fourth-quarter-and-full-year-2016-earnings-results-300416644.html

SOURCE WhiteHorse Finance, Inc.

WhiteHorse Finance, Inc., Stuart Aronson, 212-506-0500, saronson@higwhitehorse.com; or WhiteHorse Finance, Inc., Edward J. Giordano, 305-379-2322, egiordano@higwhitehorse.com; or Prosek Partners, Sean Silva, 212-279-3115, ssilva@prosek.com