Executive Summary

Q4 2024 NII/Core NII were $8.0M ($0.34/sh) vs the $0.385/sh dividend; coverage dropped to 89% as total investment income fell to $21.0M and expenses to $13.0M amid lower base rates and higher nonaccruals . NAV/share declined to $12.31 (down 3.6% Q/Q), with roughly half of the decline tied to the $0.245 special dividend and the balance driven by realized/unrealized losses (American Crafts, Aspect/Alvaria) .
Portfolio yield compressed (income‑producing debt effective yield 12.5% from 13.1% in Q3) largely on base‑rate resets; nonaccruals increased vs Q3 and management placed additional tranches on nonaccrual in Q4 (Telestream path to return to accrual targeted by Q1–Q2) .
Strategy pivot continues: more non‑sponsor lending given better risk/return and less competition; management expects elevated repayments in 2025 and is prioritizing underwriting discipline as spreads remain tight in sponsor markets .
Dividend maintained at $0.385/sh (50th consecutive quarterly payout since IPO); spillover (UTI) was ~$28.4M post special dividend, supporting near‑term dividend stability while the Board monitors run‑rate earning power and nonaccrual resolutions .

What Went Well and What Went Wrong

What Went Well
- Dividend stability and return of capital: Board declared $0.385/sh for Q4 and paid a $0.245/sh special distribution in December, marking 50 consecutive quarterly payouts at or above $0.355/sh since 2012 .
- STRS JV accretion: JV total assets ~$309M; Company’s return on its STRS JV investment was 15.2% in Q4, contributing ~$4M of income, similar to Q3 .
- Improved funding terms: In January, the JPM revolver spread was cut 25 bps (to SOFR+2.25%) and maturities extended (reinvestment to Jan 2028, legal maturity to Jan 2030), enhancing liability cost/duration .
What Went Wrong
- Earnings softness vs dividend: Q4 NII/Core NII of $0.34/sh fell below the $0.385/sh dividend (coverage 89%) on lower base rates and higher nonaccruals .
- Credit charges: Net realized loss of $12.3M and net unrealized gain of $8.2M (net −$4.1M) driven by write‑offs/sale (Hollander, Sigue; partial Honors) and markdowns (American Crafts, Aspect/Alvaria) .
- Rising nonaccruals/credit risk: Nonaccruals reached 6.2% of debt FV in Q4 (company deck), while management cited 7.2% including additional tranches; Telestream and Aspect were key drivers .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total Investment Income ($MM)	$23.5	$22.9	$21.0
Total Expenses ($MM)	$14.2	$13.7	$13.0
Net Investment Income ($MM)	$9.3	$9.2	$8.0
NII per Share ($)	$0.40	$0.39	$0.34
Core NII per Share ($)	$0.40	$0.39	$0.34
Net Realized & Unrealized Gain/(Loss) ($MM)	$(1.5)	$(16.0)	$(4.1)
Earnings/(Losses) per Share ($)	$0.34	$(0.30)	$0.17
Dividends Declared ($/sh)	$0.385	$0.385	$0.385
Special Dividend ($/sh)	—	—	$0.245
Core NII Dividend Coverage (%)	104%	102%	89%

Balance Sheet & Portfolio KPIs	Q2 2024	Q3 2024	Q4 2024
NAV per Share ($)	$13.45	$12.77	$12.31
Investments at Fair Value ($MM)	$660.0	$654.3	$642.2
Eff. Yield on Income-Producing Debt (%)	13.8%	13.1%	12.5%
Nonaccruals (% of Debt FV)	3.6%	5.6%	6.2%
Gross Leverage (Debt/Equity, x)	1.16x	1.20x	1.24x

STRS JV Metrics	Q2 2024	Q3 2024	Q4 2024
STRS JV Investments at FV ($MM)	$324.8	$309.8	$295.0
Company’s ROE on STRS JV (%)	16.0%	16.0%	15.2%
Portfolio Companies (JV)	38	38	38

Comparison vs estimates: S&P Global consensus for Q4 2024 EPS and revenue was unavailable at time of analysis (API limit exceeded). No third‑party estimates are presented to avoid accuracy risk.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Base Dividend per Share	Q4 2024	$0.385/sh (Q3 level)	$0.385/sh declared	Maintained
Special Distribution	Q4 2024	None in Q3	$0.245/sh paid Dec 10, 2024	Introduced
Base Dividend per Share	Q1 2025 (post‑quarter)	$0.385/sh	$0.385/sh declared	Maintained
Revolver Terms	Post‑quarter	SOFR+2.50%, earlier maturities	SOFR+2.25%, reinvestment to Jan 2028; maturity Jan 2030	Improved

Note: No revenue/EPS quantitative guidance was issued; management expects elevated repayments in 2025 and is focusing originations toward non‑sponsor/off‑the‑run sponsor markets with tighter underwriting .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Credit quality/nonaccruals	Q2: Honors to nonaccrual; nonaccruals 3.6% FV . Q3: Telestream to nonaccrual; nonaccruals 5.6% FV .	Additional tranches (Aspect) to nonaccrual; deck: 6.2% FV; management cited 7.2%; working to return Telestream to accrual by Q1–Q2 .	Deteriorating but with active remediation.
Yield/base rates	Q2: Eff. yield 13.8% . Q3: 13.1% with 70 bps compression (mostly base rates) .	12.5% eff. yield; decline primarily base‑rate resets .	Downward pressure from rate resets.
Market spreads/competition	Q2: Sponsor pricing SOFR+500–550; non‑sponsor SOFR+600–800; avoiding aggressive terms . Q3: Sponsor spreads SOFR+475–525; redoubling non‑sponsor .	Spreads stable entering 2025; supply/demand still borrower‑friendly; focus shifts to non‑sponsor/off‑the‑run sponsor .	Competitive pressure persists; strategy consistent.
Tariffs/macro	Q2: Cautious on softening economy . Q3: Concern on inflation/reinvestment risks .	Tariff policy uncertainty (country/levels) cited as underwriting risk; cautious on Fed path .	Heightened uncertainty watch.
Repayments/leverage	Q2: Heavy repayments; delevered to 1.16x . Q3: Leverage 1.20x; aim to hold target leverage .	Elevated repayments expected in 2025; BDC + JV have ~$80M capacity to redeploy .	Net neutral if redeployment opportunities persist.
Dividend/UTI	Q2: 48th consecutive dividend; UTI ~ $32M (est.) . Q3: Special dividend declared; spillover ~ $26.8M .	Maintained $0.385; UTI ~ $28.4M post special; Board monitoring payout vs core earnings .	Supported near term; watch coverage.
STRS JV	Q2–Q3: Mid‑teens ROE; ~38 holdings .	15.2% ROE; ~38 holdings; assets ~$309M .	Continues to be accretive.

Management Commentary

“Our results for the fourth quarter of 2024 were disappointing... NAV per share... decrease... majority related to markdowns to American Crafts and to Aspect Software” (CEO) .
“We are redoubling our efforts to focus on the nonsponsored market, where there are better risk returns... and much less competition” (CEO) .
“The decrease in the effective yield was primarily due to a decline in base rates” (CFO) .
“Our Board declared a first quarter distribution of $0.385 per share... we will actively evaluate our payout level based on run‑rate earning power” (CFO; CEO) .

Q&A Highlights

Spreads and competition: Spreads stable into early 2025; tight sponsor terms limit underwriting appetite; WHF staying disciplined, focusing on non‑sponsor/off‑the‑run sponsor credits .
Credit risk mitigation: Emphasis on first‑lien positioning; active workouts (Telestream) expected to reduce nonaccruals as restructurings conclude; avoiding cyclicals and ensuring fixed‑charge coverage under higher‑for‑longer rate scenarios .
Dividend outlook: UTI (~$28.4M) provides cushion, but Board evaluating dividend vs core earning power amid nonaccrual and yield pressures; no change for now .
Base‑rate reset impact: Management attributes NII decline largely to base‑rate resets; portfolio roughly split 50/50 monthly vs quarterly rate resets .
Deleveraging risk: Aim to maintain target leverage by redeploying into suitable credits; early Q1 originations plus JV capacity support this plan .

Estimates Context

S&P Global consensus EPS and revenue estimates for Q4 2024 were unavailable due to an S&P API limit at time of request. As a result, no estimate comparison is included to avoid using potentially inaccurate third‑party sources.

Key Takeaways for Investors

Watch dividend coverage: Q4 coverage dipped to 89% on base‑rate/yield compression and higher nonaccruals; near‑term dividend supported by UTI but dependent on nonaccrual resolutions and redeployment .
Credit cleanup in focus: Telestream and Aspect/Alvaria are key near‑term swing factors; successful restructurings could lift accrual income and NII in 1H25 .
Mix shift to non‑sponsor: Expect higher share of non‑sponsor originations on BDC balance sheet given superior terms; sponsor deals likely continue in the JV under current spread environment .
Elevated repayment environment: Management expects 2025 repayments to remain high; redeployment pace and pricing will drive asset yields and leverage trajectory .
Liability side tailwind: Revolver spread cut and extended maturities provide modest cost‑of‑funds relief and liquidity runway .
Monitor nonaccrual trajectory: Nonaccruals rose vs Q3; a clear inflection is a potential catalyst for sentiment and NII stabilization .
Sensitivity to rates: Further base‑rate declines could pressure asset yields; call‑protection roll‑offs increase repricing risk, particularly in sponsor loans .

Appendix: Additional Data Points

Select Portfolio/Balance Sheet Items	Q4 2024
Portfolio composition (FV): ~78.2% 1st lien, 1.3% 2nd lien, 0.2% unsecured, 3.6% equity, 16.7% STRS JV
Floating rate exposure (debt FV): ~98.7% floating; most with floors
Portfolio diversity: 127 positions across 71 companies; avg debt investment size ~$5.5M
Asset coverage ratio: 180.4% (well above 150% minimum)
Gross leverage/net leverage: 1.24x / 1.15x

All data above are sourced from the company’s Q4 2024 8‑K, earnings presentation, and earnings call transcript, plus prior quarter materials as cited.

WhiteHorse Finance, Inc. (WHF)·Q4 2024 Earnings Summary