WhiteHorse Finance, Inc.

Please stand by. Your program is about to begin. If you need audio assistance during today's program, please press star zero. Good afternoon. My name is Margo, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Whitehorse Finance First Quarter 2025 Earnings Conference Call. Our hosts for today's conference are Stuart Aronson, Chief Executive Officer, and Joycen Thomas, Chief Financial Officer. Today's call is being recorded, and I will be made available for replay beginning at 5 p.m. Eastern Time. The replay dial-in number is 402-220-0464. No passcode is 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 this time, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, press the pound key. It is now my pleasure to turn the floor over to Robert Brinberg of Rosen Company. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us today to discuss Whitehorse Finance's first quarter 2025 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 could 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 first quarter 2025 earnings presentation, which was posted to our website yesterday afternoon. With that, allow me to introduce Whitehorse Finance's CEO, Stuart Aronson. Stuart, you may begin.

Thank you, Rob. Good afternoon, and thank you, everyone, for joining us today. As you're aware, we issued our earnings yesterday after market close, and I hope you've had a chance to review our results. The period ended March 31st, 2025, which can also be found on our website. On today's call, I will begin by addressing our first quarter results and current market conditions. Joyston 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 first quarter of 2025 were disappointing as our investment portfolio declined this quarter due to net realized and unrealized losses which impacted our financial performance. Q1 GAAP net investment income and core NII was $6.8 million or $0.294 per share compared with a quarterly distribution of $0.385 per share and was below Q4 GAAP and core NII of $8 million or $0.343 per share. NAV per share at the end of Q1 was $12.11, representing an approximate 1.6% decrease from the prior quarter. NAV per share was impacted by net realized losses and net markdowns in our portfolio totaling $2.6 million. Turning to our portfolio activity in Q1, we had gross capital deployments of 45.5 million, which was partially offset by total repayments and sales of 19.4 million, resulting in net deployments of 26.1 million. Gross capital deployments consisted of seven new originations totaling 40.8 million, with the remaining 4.7 used to fund six add-ons to existing investments. In addition, there was 600,000 of net fundings made on revolver commitments. Of our seven new originations in Q1, one was non-sponsor and six were sponsor deals, with an average leverage of only approximately 4.0 times EBITDA. All of our Q1 deals were first lien loans, with an average spread of 535 basis points and an average all-in rate of 9.7%, compared with 9.8% in the fourth quarter of 2024. Total repayments and sales were 19.4 million, primarily driven by complete realizations in our positions in platform companies, and Eversana, and a partial sale of our position in ThermoDisc. At the end of Q1, 99.3% of our debt portfolio was first lien, senior secured, and our portfolio mix was approximately two-thirds sponsor and one-third non-sponsor. During the quarter, the BDC transferred three new deals and one existing investment to the STRSJV. At the end of Q1, the STRSJV portfolio had an aggregate fair value of $310.2 million and an average effective yield on the JV's portfolio of 10.8% compared to 11.1% in Q4. Leverage for the JV at the end of Q4 was 0.98 times compared with 0.88 times at the end of the prior quarter. We continue to successfully utilize the STRS-JV and believe Whitehorse equity investment in the JV continues to provide attractive returns for our shareholders. After net deployment, JV transfers, and net realized and unrealized losses, total investments increased by 8.8 million from the prior quarter to $651 million. This compares to our portfolio's fair value of 642.2 million at the end of Q4. The weighted average effective yield on our income producing debt investments decreased to 12.1% at the end of Q1 compared to 12.5% in the fourth quarter of 2024. The weighted average effective yield of our overall portfolio also decreased to 9.6% as of the end of Q1 compared to approximately 10.2% at the end of Q4. 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. In general, in the portfolio, we continue to see relative softness from consumers, but relative stability in our non-consumer facing borrowers, but we are not seeing signs of a recession yet in our portfolio. We did an analysis of our portfolio before Liberation Day to assess the impact of tariffs on imports from Canada, Mexico, and China. That analysis indicated that less than 10% of our portfolio has either high or moderately high tariff risk, which is largely due to the fact that we are focused on the middle market and lower middle market, where companies are more inclined to be operating in the U.S. and have limited international risk. We also focus more on service companies that are generally not exposed to tariff risk. After new tariffs were announced, we began to expand our tariff risk analysis for all other countries that might have larger tariffs. But given that many of the tariffs were put on hold for at least 90 days and various tariff negotiations are currently ongoing, we continue to actively monitor the situation. During the quarter, we took write downs of $1 million, primarily driven by write downs in MSI information services Robert Hechtman, ABB Optical Group and American Crafts. I'm pleased to say the American Crafts situation has now been fully resolved, eliminating any further downside from that investment. MSI was placed on accrual in the quarter. We're actively working with the owner of that company to see if they will support the company with additional capital. If they do not, we will prepare to either sell or operate the company. Non-accrual investments totaled 8.8% of the debt portfolio compared with 7.2% of the debt portfolio at fair value in the prior quarter. Due to the non-accrual levels, the earnings power of the BDC is compromised compared to where it was a year ago. We are actively working on getting deals off the non-accrual list, leveraging the expertise of our first five-person dedicated restructuring team. It has taken longer than we anticipated to get Telestream off of non-accrual, but we do hope to get it off non-accrual this quarter. Our non-accrual investment in Telestream currently represents 3.5% and 3.3% of our portfolio based on the fair value and cost of debt portfolio respectively. Other deals on non-accrual other than MSI are likely to remain that way for some period of time. In terms of the lending market, Tariffs, along with the risk of recession, have impacted conditions. In particular, the M&A market has slowed down dramatically if sellers do not want to sell into a negative sentiment. The broadly syndicated market has also backed up significantly, but with recent improvements in the tariff situation may be opening up for some borrowers. As a result of the increased volatility in the markets, there was a 25 to 50 basis point increase in the price in the direct lending market, But over the last few weeks, most or all of that premium has gone away. We've seen middle market pricing is currently SOFR 475 to SOFR 525, and lower mid-market spreads are approximately SOFR 500 to SOFR 575. We are also seeing more discipline and credit behavior in the market, with lenders being particularly careful about companies with tariff risk and cyclicality. We do continue to focus significant resources on the non-sponsor market, where there are better risk returns in many cases and much less competition than what we're seeing in the on-the-run and off-the-run sponsor markets. We added a 13th coverage region in Q1 with new capabilities in Nashville, Tennessee, which will help with non-sponsor and off-the-run sponsor origination. Subsequent to quarter end, the BDC has closed one new investment of $15.1 million and has had repayments of approximately $16 million, including one full realization. There were two existing investments fully transferred to the JV totaling 11.1 million. Following that deployment activity in Q1 and pro forma for several transactions that have closed or that we expect to close in Q2 of 2025, the BDC balance sheet has very little capacity for new assets. That said, the JV has approximately 35 million of capacity supplementing the BDC's existing capacity. James Heiting. Our overall sourcing is at normal levels, despite the muted M&A activity, as we are seeing a significant amount of deal flow relating to restructuring of deals that were done in 2019, 2020, and 2021, James Heiting. where companies are over levered and bringing in pick junior debt or pick preferred equity to fix the capital structure. That said, as you can imagine, the quality of what we're seeing is lower than it was a year ago. So we do think fewer deals are going to convert to closure. However, in some cases, we are finding interesting opportunities. Our pipeline is about 175 deals, which is slightly below the typical range for this time of year. We currently have five new mandates and are working on three add-ons to existing deals. Our five mandates are three sponsored deals and two non-sponsored deals. While there can be no assurance that any of these deals will close, all of those credits would fit into the BDC if it has room, or our JV should be elected to transact. With that, I'll turn the call over to Joycen for additional performance details and a review of our portfolio composition.