Earnings call transcript: WhiteHorse Finance Q1 2025 misses EPS forecast

WhiteHorse Finance reported its Q1 2025 earnings with an EPS of $0.29, falling short of the forecasted $0.34. Revenue also missed expectations, coming in at $18.8 million against a forecast of $20.17 million. Despite these challenges, the company maintains its position as a significant dividend payer with a notable 16.51% yield and a 14-year track record of consistent dividend payments. In response, the stock price decreased by 0.54% to close at $9.28 in after-hours trading. According to InvestingPro analysis, the company currently shows signs of being undervalued based on multiple metrics.

Key Takeaways
EPS and revenue both missed analyst forecasts.
Net Asset Value (NAV) per share decreased by 1.6% from the previous quarter.
The M&A market has slowed, impacting growth potential.
Nonaccrual investments remain a challenge, with 8.8% of the debt portfolio affected.

Company Performance
WhiteHorse Finance’s performance in Q1 2025 reflects a challenging economic environment. The company’s net investment income (NII) was $6.8 million, or $0.294 per share, down from $8 million, or $0.343 per share, in Q4 2024. The decrease in NAV per share to $12.11 indicates a reduction in asset value amidst a sluggish M&A market.

Financial Highlights
Revenue: $18.8 million, below the $20.17 million forecast.
Earnings per share: $0.29, below the $0.34 forecast.
Net Asset Value (NAV) per share: $12.11, a 1.6% decline from the previous quarter.
Total investments increased by $8.8 million to $651 million.

Earnings vs. Forecast
The actual EPS of $0.29 missed the forecasted $0.34 by approximately 14.7%. Revenue was also below expectations, coming in at $18.8 million compared to the anticipated $20.17 million. This marks a challenging quarter for WhiteHorse Finance, diverging from previous periods where the company had met or exceeded forecasts.

Market Reaction
Following the earnings announcement, WhiteHorse Finance’s stock price fell by 0.54%, closing at $9.28 in after-hours trading. With a beta of 0.91, the stock has shown lower volatility compared to the market, while trading significantly below its 52-week high of $13.44. This price movement reflects investor concerns over the company’s ability to meet financial targets, as well as broader market trends affecting the finance sector. Detailed technical analysis and Fair Value calculations are available through InvestingPro’s comprehensive research tools.

Outlook & Guidance
Looking forward, WhiteHorse Finance has a pipeline of 75 deals, slightly below its typical range, with limited balance sheet capacity for new assets. The company anticipates muted M&A activity over the next 60 to 90 days, potentially impacting future earnings.

Executive Commentary
CEO Stuart Aronson noted, "We are actively working on getting deals off the nonaccrual list," highlighting efforts to improve asset quality. CFO Joyson Thomas added, "We continue to monitor the debt capital markets," indicating a cautious approach to navigating current financial conditions.

Risks and Challenges
Nonaccrual investments: 8.8% of the debt portfolio, requiring active management.
Slowed M&A market: Potential to hinder growth and investment opportunities.
Tariff risks: Less than 10% of the portfolio exposed, but still a concern.
Market pricing: Increased spreads in the direct lending market may affect margins.

WhiteHorse Finance faces a challenging environment with missed earnings forecasts and a sluggish M&A market. However, with a focus on improving asset quality and navigating market conditions, the company aims to stabilize its financial performance in the coming quarters.

Earnings call transcript: WhiteHorse Finance Q1 2025 misses EPS forecast

WhiteHorse Finance reported Q1 2025 earnings that fell short of analyst forecasts, with EPS at $0.29 versus a forecast of $0.34 and revenue at $18.8 million versus a forecast of $20.17 million. The stock price declined 0.54% to $9.28, reflecting concerns over a sluggish M&A market, nonaccrual investments, and broader financial challenges. The company maintains a 16.51% dividend yield and a 14-year track record of consistent payouts.