WhiteHorse Finance, Inc.

Please stand by. Your program is about to begin. Good afternoon. My name is David, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Whitehorse Finance Fourth Quarter 2024 Earnings Conference Call. Our hosts for today's call are Stuart Aronson, Chief Executive Officer, Joyce and Thomas, Chief Financial Officer. Today's call is being recorded and will be made available for replay beginning at 4 p.m. Eastern Time. The replay dial-in number is 402-220-7204. No passcode will be required. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star and 1 on your telephone keypad. You may remove yourself from the question queue by pressing star and two. It is now my pleasure to turn the floor over to Robert Brinberg of Rosen Company. Please go ahead.

Thank you, David, and thank you, everyone, for joining us today to discuss Whitehorse Finance's fourth quarter 2024 earnings results. Before we begin, I'd like to remind everyone that certain statements, which are not based on historical facts made during this call, including any statements relating to financial guidance, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because these forward-looking statements involve known and unknown risks and uncertainties, These are important factors that can cause actual results to differ materially from those expressed or implied by these forward-looking statements. Whitehorse Finance assumes no obligation or responsibility to update any forward-looking statements. Today's speakers may refer to material from the Whitehorse Finance fourth quarter 2024 earnings presentation, which was posted on our website this morning. With that, allow me to introduce Whitehorse Finance's CEO, Stuart Aronson. Stuart, you may begin.

Thank you, Rob. As you're aware, we issued our earnings this morning prior to market open, and I hope you've had a chance to review our results for the period ended December 31st, 2024, which could also be found on our website. On today's call, I will begin by addressing our fourth quarter results and current market conditions as well. Royston Thomas, our Chief Financial Officer, will then discuss our performance in greater detail, after which we will open the floor for questions. Our results for the fourth quarter of 2024 were disappointing, as our investment portfolio declined this quarter due to some net realized and unrealized losses, which impacted our financial performance. Q4 GAAP net investment income in core NII was $8 million, or $0.34 per share, compared with a quarterly distribution of $0.385 per share, and was slightly below the Q3 GAAP and core NII of $9.2 million, or 39.4% per share. NAV per share at the end of Q4 was $12.31, representing an approximate 3.6% decrease from the prior quarter, with approximately half of that decline attributable to our 24.5-cent special dividend. NAV per share was also impacted by net realized losses and net markdowns in our portfolio, totaling $4.9 million, the majority of which related to markdowns to American Crafts and to Aspect Software, which I'll discuss more shortly. Turning to our portfolio activity in Q4, we had gross capital deployments of 35.4 million, which was offset by total repayments and sales of 46.2 million, resulting in net repayments of 10.8 million. Gross capital deployments of 35.4 million consisted of six new originations, totaling $27.4 million, and the remaining $8 million used to fund various add-ons to existing investments. In addition to the BUB, there was $1.5 million in net fundings made on the revolver commitments. Of our six new originations in Q4, one was non-sponsored and five were sponsor deals, with the average leverage of approximately 4.4 times EBITDA. All of our Q4 deals were first lien loans with an average spread of 540 basis points and an average all-in rate of 9.8% compared to 10.7% in the third quarter of 2024. The decrease in the all-in rate was primarily due to a decline in the base rates of approximately 60 basis points. During the quarter, total repayments and sales were 46.2 million, primarily driven by full repayments in our positions and haircuttery, William Boschelli, Industrial Specialty Services and at SG, as well as sales of our remaining positions and draws love cup and hollander. William Boschelli, During the quarter the bbc transferred three new deals and two add ons to the strs jv at the end of to for the strs jv total portfolio at an aggregate fair value of 295 million. and an average effective yield on the JV's portfolio 11.1% compared to 11.7% in Q3. The decrease in the effective yield was primarily due to a decline in base rates of approximately 50 basis points. Leverage for the JV at the end of Q4 was 0.88 times compared to 0.97 times at the end of the prior quarter. We continue to utilize the STRS-JV successfully and believe that Whitehorse's equity investments in the JV continue to provide attractive returns for our shareholders. At the end of Q4, 98.4% of our debt portfolio was first lien, senior, and secured, and our portfolio mix was approximately two-thirds sponsor and one-third non-sponsor. After net realized and unrealized losses of 4.9 million, as well as one million of accretion, Total investments decreased 12.1 million from the prior quarter to 642.2 million. This compares to our portfolio's fair value of 654.3 million at the end of Q3. The weighted average effective yield on our income-producing debt investments decreased to 12.5% as of the end of Q4, compared to approximately 13.1% in the third quarter of 2024, and 13.7% in the fourth quarter of 2023. The weighted average effective yield on our overall portfolio also decreased to 10.2% as of the end of Q4 compared to approximately 10.6% at the end of Q3 and 12.4% in the fourth quarter of 2023. Most of this decrease was attributable to lower base rates. Transitioning to the BDC's portfolio, the challenges in this quarter generally do not relate to the overall economy, but rather are more company specific. We are working with experts within HIG to optimize the outcomes on the workout accounts. The balance of the portfolio is generally stable. During the quarter, we took a $2.6 million write down on American crafts, which was impacted by the second bankruptcy of Joanne's Fabric and Craft Stores. were in the process of liquidating the remaining pieces of that company. We also took a write-down of $2.2 million on Aspect Software and placed our third out and fourth out tranche investments in Aspect Software on non-accrual in the fourth quarter. As a result, non-accrual investments total 7.2% of the debt portfolio, compared with 6.5% of the debt portfolio at fair value in the third quarter. In regards to our non-accrual investments overall, We hope to have part of our investment in Telestream back on accrual status either by the end of Q1 or Q2. As a whole, our non-accrual investment in Telestream themselves represents 3.5% and 3.4% based on the fair value and the cost of the debt portfolio, prospectively. Turning to the lending market, additions across all of the sponsor segments remain very aggressive. Lenders have relaxed their underwriting standards in terms of fast-tracking the due diligence process and continue to accept EBITDA adjustments that we don't necessarily agree with based on our credit analysis. In terms of pricing, we've seen middle market price compress down to spreads of SOFR 450 to SOFR 525, and lower mid-market spreads move to approximately SOFR 475 to SOFR 600. Leverage multiples. and loan devalues have also continued to creep up. From our perspective, we believe there is excessive leverage on a lot of credits that have cyclicality, and we are not participating in those credits. There continues to be a more attractive backdrop in the non-sponsored market, where the market continues to support leverage of three to four and a half times, and pricing tends to be between SOPR 575 to SOPR 800. Diligent standards have also remained more consistent in this segment of the market in 2024 we did more non-sponsor lending than we have done in a typical year and we expect that to continue we are redoubling our efforts to focus on the non-sponsored market where there are better risk returns in many cases and much less competition than what we're seeing in the on-the-run sponsor market in the on-the-run sponsor market we see generally very aggressive terms and therefore we are focusing more in addition to the non-sponsor market on the off-the-run sponsor market, which are the smaller private equity firms. First quarter volume will be solid. That said, supply demand is generally out of balance with lenders stretching too far for both better and weaker credits. For example, on better credits, loans are being made where cash flow is not sufficient to service fixed charges due to the amount of leverage being employed and the level of adjustments to the EBITDA. More broadly, we think the economy is generally healthy, and some policies in the new administration seem to be favorable to middle market and lower mid-market American companies. That said, the lack of clarity about tariffs in regard to both levels and targets is creating uncertainty for borrowers who either source or sell products overseas. Given the potential for policies to be inflationary, We think the Federal Reserve is going to be cautious on the timing and extent of rate cuts. In general, we think economic performance across our portfolio will be stable with pressure on the economy coming from lower income consumers who have been compromised by inflation over the past several years. Subsequent to quarter end, the BDC has closed five new investments already this year and three add-ons to existing credits as well. totaling approximately $27.8 million, and we've had two repayments of approximately $13.8 million, including two full realizations. Two of the five new investments were transferred to the JV, and one new investment is expected to be transferred to the JV by quarter end. Following net repayment activity in Q4 and pro-forma for several transactions in early Q1 of 2025, The BDC balance sheet has approximately 40 million of capacity for new assets. The JV also has approximately 40 million of capacity, supplementing the BDC's existing capacity. Given the decline in market pricing, we continue to expect repayment activity to be high in 2025. While volume is wider than we'd like it to be in all market segments, our pipeline is still solid at about 170 deals. We currently have seven new mandates and are working on three add-ons to existing deals. While there can be no assurances that any of these deals will close, all of these credits would fit into the BDC or RJV should we elect to transact. With that, I'll turn the call over to Joycen for additional performance details and a review of our portfolio composition. Joycen?