NEW YORK, May 8, 2019 /PRNewswire/ -- WhiteHorse Finance, Inc. ("WhiteHorse Finance" or the "Company") (NASDAQ: WHF) today announced its financial results for the quarter ended March 31, 2019.

First Quarter 2019 Summary Highlights

• Net Asset Value of $315.0 million, or $15.33 per share
• New investments of $32.3 million
• Net investment income of $7.6 million, or $0.370 per share
• Core net investment income of $7.5 million, or $0.365 per share⁽¹⁾
• First quarter distribution of $0.355 per share

Stuart Aronson, WhiteHorse Finance's Chief Executive Officer commented, "Our transaction activity during the seasonally slow first quarter validates the competitive advantage of our three-tiered sourcing architecture, allowing us to remain disciplined in our sourcing and capital deployment while preserving our pipeline and keeping NAV stable. During the quarter we increased our allocation to first-lien senior-secured loans to comprise 80 percent of our portfolio, and we'll continue pursuing opportunities in less competitive areas of the lower middle market at our traditional leverage levels, which we believe drives our ultimate goal of enhancing shareholder value."

Portfolio and Investment Activity

As of March 31, 2019, the fair value of WhiteHorse Finance's investment portfolio was $468.4 million, compared with $469.6 million as of December 31, 2018. The portfolio at March 31, 2019 consisted of 56 positions across 41 companies with an average debt investment size of $9.5 million and a weighted average effective yield of 11.7% on debt investments. 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 stable interest rate environment.

During the three months ended March 31, 2019, WhiteHorse Finance made investments in four new portfolio companies totaling $32.3 million. Also, the Company added $2.9 million to an existing portfolio company, exclusive of refinancing. Gross proceeds from sales and repayments totaled approximately $38.5 million for the quarter, driven by the full repayment of Caelus Energy Alaska O3, LLC of $17.3 million and the sale of the Company's remaining position in Outcome Health for $5.5 million. In addition, WhiteHorse Finance refinanced its $17.1 million first lien investment to JVMC Holdings Corp., increasing its position by adding a net $0.1 million. The Company remained highly selective in deploying new investments.

Results of Operations

For the three months ended March 31, 2019, net investment income was approximately $7.6 million, compared with approximately $8.6 million for the same period in the prior year, representing a decrease of approximately 11.6%. The decrease in net investment income for the year-over-year period was primarily attributable to an increase in interest expense and a decrease in fee income. The decrease in fee income was attributable to a significantly higher amount of non-recurring fee income earned in the three months ended March 31, 2018 from prepayments on several of the Company's investments.

For the three months ended March 31, 2019, WhiteHorse Finance reported a net realized and unrealized losses on investments of $0.6 million. This is comprised of net realized losses of $2.0 million and net unrealized gains on investments of $1.4 million. This compares with net realized and unrealized gains on investments of $5.3 million for the three months ended March 31, 2018. The decrease in net realized and unrealized gains on investments for the year-over-year period was primarily attributable to a realized loss of approximately $2.1 million generated on the sale of Outcome Health in current quarter and the prior year mark-up of the Company's equity investment in Aretec Group, Inc. (which was sold in the fourth quarter of 2018).

WhiteHorse Finance reported a net increase in net assets resulting from operations of approximately $7.0 million for the three months ended March 31, 2019, which compares with a net increase of $13.9 million for the three months ended March 31, 2018.

WhiteHorse Finance's NAV was $315.0 million, or $15.33 per share, as of March 31, 2019, as compared with $315.3 million, or $15.35 per share, as of December 31, 2018.

Liquidity and Capital Resources

As of March 31, 2019, WhiteHorse Finance had cash and cash equivalents of $36.9 million, as compared with $33.7 million as of December 31, 2018, inclusive of restricted cash.  As of March 31, 2019, the Company also had $85.0 million of undrawn capacity under its revolving credit facility.

Distributions

On March 15, 2019, the Company declared a distribution of $0.355 per share for the quarter ended March 31, 2019, consistent for the twenty-sixth consecutive quarter since the Company's IPO. The distribution was paid on April 3, 2019 to shareholders of record as of March 26, 2019.

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 first quarter results at 9:30 a.m. ET on Wednesday, May 8, 2019. 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 # 2548319. 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 May 15, 2019. The teleconference replay can be accessed by dialing 404-537-3406 (domestic and international) and entering ID # 2548319. 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 middle market 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 $30 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.

SCHEDULE 1

As a supplement to GAAP financial measures, the Company has provided information relating to core net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income determined in accordance with GAAP. The Company's non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income adjusted to exclude the net impact of costs associated with the refinancing of the Company's indebtedness, the accrual of the capital gains incentive fee attributable to net realized and unrealized gains and losses, and excise or other income taxes related to such net realized gains and losses (net of incentive fees). There were no excise and other income taxes related to net realized gains and losses for the quarter ended March 31, 2018. Additionally, the Company did not refinance any of its indebtedness nor did the Company recognize any capital gains incentive fees for the quarter ended March 31, 2018.

The following table provides a reconciliation of net investment income to core net investment income for the three months ended March 31, 2019 and March 31, 2018 (in thousands, except per share data):