New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q2 2015 Earnings Presentation
29 slides from New Mountain Finance's earnings presentation, Aug 6, 2015
Slide 1: Q2 2015 Earnings Presentation
Q2 2015 Earnings Presentation August 6, 2015
Slide 2: Important Notice and Safe Harbor Statement
Important Notice and Safe Harbor Statement This presentation contains forward looking statements that involve substantial risks and uncertainties. All forward-looking statements included in this presentation are made only as of the date hereof and are subject to change without notice. Actual outcome
Slide 3: Management Participants
Management Participants Steven B. Klinsky Chairman of the Board of Directors Robert A. Hamwee Chief Executive Officer, President and Director David M. Cordova Chief Financial Officer and Treasurer 3
Slide 4: Q2 2015 Highlights
Q2 2015 Highlights ▪ Q2 2015 Adjusted Net Investment Income (“NII”) of $0.35 per weighted average share, versus guidance of $0.33 to $0.35 – Q2 2015 regular dividend of $0.34 per share paid on June 30, 2015 ▪ June 30, 2015 book value of $13.90 per share, an increase of $0.01 per share from the March
Slide 5: Key Highlights
Key Highlights Financial Highlights Quarter Ended 6/30/2014 9/30/2014 12/31/2014 3/31/2015 6/30/2015 Adjusted NII Per Share(1) $0.36 $0.35 $0.34 $0.34 $0.35 NAV Per Share $14.65 $14.33 $13.83 $13.89 $13.90 Dividends Per Share(2) $0.34 $0.46 $0.34 $0.34 $0.34 Share Count - End of Period (mm) 52.1 52.
Slide 6: Review of NMFC
Review of NMFC Overview Strategy ▪ Founded in October 2008 to apply New Mountain Capital, ▪ NMFC’s mandate is to primarily target businesses in the L.L.C.’s (“NMC” or “New Mountain”) private equity middle market that, consistent with New Mountain’s private strengths to attractive risk-reward opportu
Slide 7: NMFC Relative Return Performance – Indexed Total Return
NMFC Relative Return Performance – Indexed Total Return May 19, 2011 (IPO) – August 4, 2015 Indexed Total Return 180.0 S&P Fin 70.7% 170.0 S&P 70.3% NMFC 64.2% 160.0 150.0 140.0 130.0 HY 27.7% 120.0 110.0 BDCs 9.3% 100.0 90.0 CAGR (IPO to 8/4/2015) NMFC 12.5% 80.0 S&P 500 Financials 13.5% S&P 500 13
Slide 8: NMFC Cumulative Total Return Performance Versus Peers
NMFC Cumulative Total Return Performance Versus Peers(1) May 19, 2011 (IPO) – August 4, 2015 64.2% 47.2% 44.8% 39.6% 36.3% 12.9% 6.1% 3.3% (1.0%) (5.3%) (22.0%) NMFC Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J Source: Capital IQ 1 Peers include publicly-traded, externally-m
Slide 9: NMFC Return Attribution
NMFC Return Attribution ($ per Share) $6.95 $0.92 $2.17 $0.61 $0.46 $1.80 $0.32 $0.37 $0.93 $0.12 $0.12 $5.60 $0.38 $0.75 $1.34 $1.36 $1.36 $0.07 $0.86 $0.68 ($0.18) ($0.48) ($0.55) Cumulative IPO to 12/31/2011(1) 2012 2013 2014 YTD 2015 (IPO to 6/30/2015)(1) Regular Dividends Special Dividend ∆ in
Slide 10: Credit Market Conditions
Credit Market Conditions ▪ Credit spreads have been broadly stable since our last call – Recent macroeconomic uncertainty – Offset by reduced asset supply ▪ With limited exceptions, smaller deals continue to be priced at a premium ▪ NMFC works to be well positioned to capitalize on volatile markets:
Slide 11: Credit Market Conditions – Interest Rates
Credit Market Conditions – Interest Rates Floating vs. Fixed Assets Liabilities (Aggregate par value of $1,303.6 million as of 6/30/2015)(1) ($567.9 million drawn as of 6/30/2015) Fixed Fixed(3) 19% 30% Floating – No Floor Floating – Floor(2) (1-Month Libor) 81% 70% Impact of Changing Rates(4) Estim
Slide 12: Credit Performance
Credit Performance ($ in millions) Cumulative Since Inception(1) As of 6/30/2015 (October 2008 – June 30, 2015) Cost / FMV Cost / # Portfolio Co’s Investments $1,342 / $1,339 $3,290 / 158 of which of which Internal Watch List (3 or 4 Rating)(2) $40 / $27 $141 / 7 of which of which Non-Accrual $2 / $
Slide 13: Credit Performance
Credit Performance Non-70% Advance Rate Assets 70% Advance Rate Assets (2) NMFC Leverage Ratio (2) NMFC Leverage Ratio Variance (1) Variance Portfolio Company At Purchase Current + / (-) (1) Portfolio Company At Purchase Current + / (-) Company A 4.9x 4.5x 0.4x Company B 6.6x 6.5x 0.1x Company AM 1.
Slide 14: Performance Since IPO
Performance Since IPO ($ in millions) IPO - 2015 (1) 12/31/2011 2012 2013 2014 3/31/2015 6/30/2015 Regular Dividend $26.6 $46.6 $59.8 $71.4 $19.7 $19.8 Cumulative Regular Dividend 26.6 73.2 133.0 204.3 224.0 243.8 (2) (2) Adj. NII 26.5 46.1 62.1 73.4 19.5 20.2 Cumulative Adj. NII 26.5 72.7 134.8 208
Slide 15: Q2 2015 Originations
Q2 2015 Originations Portfolio Originations(1) ($ in millions) YTM at Purchase(4) Amount Type of Advance Date(2) Name Industry ($’s Invested) Tranche Size Investment Rate(3) Unlevered Levered Business 5/7/15 TTM $7.7 $950 1st Lien 70% 8.0% 18.7% Products Consumer 67% 5/15/15 Vetcor $19.4 $220 1st Li
Slide 16: Origination Activity Since Quarter End (Through 8/4/2015)
Origination Activity Since Quarter End (Through 8/4/2015) ($ in millions) Portfolio Originations(1) YTM at Purchase(4) Amount Tranche Type of Advance Date(2) Name Industry ($’s Invested) Size Investment Rate(3) Unlevered Levered Healthcare 7/2/15 DCA $17.7 $170 1st Lien 70% 7.6% 12.5% Services Healt
Slide 17: SBIC Ramp
SBIC Ramp Every $25 million of SBIC-eligible investments funded through SBA-guaranteed debentures result in approximately $0.02 of incremental annual NII per share(1) Funded SBA-Guaranteed Debentures ($ in millions; balance at the end of each period) $103.8 $55.0 $37.5 $37.5 $0.0 Q3 2014 Q4 2014 Q1
Slide 18: Q2 2015 Originations and Repayments
Q2 2015 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Subordinated 70% Advance Rate Debt (2) First Lien Debt 70% Advance Rate 3% 8% Non-70% First Lien Debt (2) Advance Rate First Lien Debt 16% 41% 73% 59% Non-70% Advance Rate Second Lien Debt Second Lien Debt Firs
Slide 19: Q2 2015 Investment Activity Roll
Q2 2015 Investment Activity Roll YTM at Cost(1) / Purchase(2) 11.1% 10.8% 10.6% 10.8% 10.2% 3/31/2015 3/31/2015 Q2 Originations Q2 Sales / 6/30/2015 PF for Change Repayments in LIBOR Curve Cost ($mm)(3) $1,451.5 $1,451.5 $119.8 $221.9 $1,342.1 1 Assumes that investments are purchased at adjusted cos
Slide 20: Portfolio Mix (By Fair Value as of 6/30/2015)
Portfolio Mix (By Fair Value as of 6/30/2015) By Industry Other(1) Media 7% HC Services 4% 2% HC Products 3% Healthcare 5% Software Distribution & Logistics 25% 8% Energy 8% Services 23% Business Svcs 18% Federal Services Education 9% 11% Consumer Svcs Industrial Svcs 5% <1% By Type of Investment By
Slide 21: Portfolio Concentration (By Fair Value as of 6/30/2015)
Portfolio Concentration (By Fair Value as of 6/30/2015) Portfolio Names By Fair Value UniTek 3.5% TIBCO 3.3% Tenawa 3.3% Deltek 3.1% Ascend Learning 3.0% Top 15 portfolio Kronos 2.9% companies Tolt 2.7% represent $550.5 51 Other Crowley 2.7% million, or 41.1%, Portfolio Companies Hill Int’l 2.6% of
Slide 22: Balance Sheet Highlights
Balance Sheet Highlights Quarter Ended ($ in millions, except per share data) 6/30/2014 9/30/2014 12/31/2014 3/31/2015 6/30/2015 Assets Portfolio $1,310.9 $1,353.7 $1,454.7 $1,434.8 $1,338.9 (1) Cash & Equivalents 21.7 19.6 23.4 22.2 24.2 (2) Other Assets 25.5 24.8 36.8 30.6 29.0 Total Assets $1,358
Slide 23: Historical NAV / Share and Leverage Trends
Historical NAV / Share and Leverage Trends NAV / Share $15.14 $15.20 $15.02 $14.94 $14.81 $14.87 $14.80 $14.68 $14.69 $14.43 $14.44 $14.50 $14.51 $14.33 $14.65 $14.40 $14.53 $14.06 $14.31 $14.32 $14.32 $14.38 $14.33 $13.83 $13.89 $13.90 $14.00 $14.08 $14.10 $14.06 (2) $13.60 $13.98(1) $13.82 $13.83
Slide 24: Income Statement Highlights
Income Statement Highlights Quarter Ended - Adjusted ($ in millions, except per share data) 6/30/2014 9/30/2014 12/31/2014 3/31/2015 6/30/2015 Investment Income Interest income $31.6 $32.3 $34.0 $33.3 $35.5 Dividend income 1.3 0.5 0.8 1.3 1.8 Other income 0.8 1.9 1.9 1.9 0.6 Total investment income
Slide 25: Investment Income Detail
Investment Income Detail Quarter Ended - Adjusted ($ in millions) 6/30/2014 9/30/2014 12/31/2014 3/31/2015 6/30/2015 Investment Income Build (2) Cash interest(1) $28.4 $29.6 $32.1 $32.4 $32.3 (2) Non-cash interest 0.6 1.6 1.6 1.1 1.1 Amortization of purchase discounts (premiums) and fees 0.6 0.6 0.6
Slide 26: Dividend Summary and Coverage
Dividend Summary and Coverage We believe our Q3 2015 Adjusted NII will be in the $0.33 to $0.35 per share range. Our board of directors has declared a third quarter dividend of $0.34 per share. 0.8 114% 120% 108% 103% 103% 105% 101% 102% 102% 0.7 100% 99% 99% 100% 100% 99% 98% 98% 95% 100% 0.6 $0.57
Slide 27: Diversified Leverage Profile
Diversified Leverage Profile (As of 6/30/2015, $ in millions) Amount Outstanding / Facility Size Interest Rate Maturity New Holdings Credit Facility $360 / $495 Broadly syndicated 1st lien loans(1): L + 2.00% December 2019 (Wells Fargo) All other: L + 2.75% (No LIBOR floor) NMFC Credit Facility $38
Slide 28: Corporate Information
Corporate Information Board of Directors Senior Management Fiscal Year End Inside Directors Steven B. Klinsky Adam B. Weinstein December 31 Steven B. Klinsky (Chairman) Chairman of the Board of Directors EVP, Chief Administration Officer Robert A. Hamwee and Director Adam B. Weinstein Robert A. Hamw
Slide 29: New Mountain Finance Corporation
NIM|F NEw MOUNTAIN FINANCE CORPORATION