New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q1 2013 Earnings Presentation
23 slides from New Mountain Finance's earnings presentation, May 7, 2013
Slide 1: Q1 2013 Earnings Presentation
Q1 2013 Earnings Presentation May 7, 2013
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 D id M. M Cordova C d Chief Financial Officer and Treasurer 3
Slide 4: Q1 2013 Highlights
Q1 2013 Highlights ▪ Q1 Adjusted Adj t d Net N t Investment I t t Income I (“NII”) off $0.34 $0 34 per weighted i ht d average share, h consistent i t t with ith our expected range of $0.33 - $0.35 – Special dividend of $0.14 per share paid on January 31, 2013 – Q1 dividend of $0.34 per share paid o
Slide 5: Review of NMFC and NMFC Strategy
Review of NMFC and NMFC Strategy ▪ NMFC’s portfolio is externally managed by New Mountain Finance Advisers BDC, L.L.C., which is an affiliate of New Mountain Capital, L.L.C. (“New Mountain” or “NMC”), a leading private equity firm with more than $9 billion of assets under management(1), approximatel
Slide 6: NMFC Relative Trading Performance – Indexed Total Return
NMFC Relative Trading Performance – Indexed Total Return Ma 19, May 19 2011 (IPO) – May Ma 3, 3 2013 Indexed Total Return 140.0 135.0 NMFC 36.3% 130.0 125.0 S&P 25.4% S&P Fin 22.9% 120.0 HY 20.6% BDCs 19.0% 115.0 110.0 105.0 100.0 95.0 90.0 85 0 85.0 80.0 75.0 70.0 7/1/11 10/1/11 1/1/12 4/1/12 7/1/1
Slide 7: Credit Market Conditions
Credit Market Conditions ▪ Significant rally in credit since the beginning of the year continues: – Dearth of supply from new issuers – Expectation of low base rates for an extended period – Strong demand particularly from rapidly expanding CLO new issues – Stabilization of global economic data – Co
Slide 8: Credit Performance
Credit Performance ($ in millions, unaudited) Cumulative Since Inception(1) As of 3/31/2013 (October 2008 – March 31, 2013) Cost / FMV Cost / # Portfolio Co’s Investments $1,005.4 / $1,030.9 $1,943.2 112 On Internal Watch List (3 or 4 Rating, excl. $13.6 / $9.6 $20.5 2 Non-Accrual)(2) Non-Accrual(3)
Slide 9: Credit Performance – Operating Company (“OpCo”) Assets
Credit Performance – Operating Company (“OpCo”) Assets Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company A 4.7x 3.7x 0.9x Company B 4.6x 4.8x (0.2x) Company C 4.8x 5.0x (0.1x) C Company D 51 5.1x 50 5.0x 02 0.2x Company E 5.3x 4.8x 0.4
Slide 10: Credit Performance – Senior Loan Funding (“SLF”) Eligible First Lien Portfolio
Credit Performance – Senior Loan Funding (“SLF”) Eligible First Lien Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company AC 3.1x 2.6x 0.5x Company AD 3.2x 3.0x 0.2x Company AE 1.6x 1.4x 0.3x Company AF 3.5x 3.2x 0.3x Company AG 4.1x 4.1x
Slide 11: Share Ownership Migration
Share Ownership Migration (shares in millions) Primary and Secondary IPO - May-11 2012 Offerings Offering - Mar-13 Issuances Issuances Cumulative Issuances Cumulative (1)(2) (1)(2) Public Shares ("PubCo") 10.7 13.6 24.3 7.0 31.3 % of Total 34.6% 60.0% 73.5% NMC Fund Shares ("AIV Holdings") 20.2 (4.0
Slide 12: Performance Since IPO
Performance Since IPO ($ in millions, unaudited)(1) IPO - (2) 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 3/31/2013 Regular Dividend $26.6 $9.9 $10.5 $12.5 $13.7 $13.8 C Cumulative l ti R Regular l DiDividend id d 26 6 26.6 36 5 36.5 47 0 47.0 59 5 59.5 73 2 73.2 87 0 87.0 Adj. NII 26.5 9.8
Slide 13: Q1 Originations and Repayments
Q1 Originations and Repayments ($ in millions, unaudited) Portfolio Originations(1) YTM at Purchase(3) Amount Tranche Type of Advance Date(2) Name Industry ($’s Invested) Size Investment Rate Unlevered Levered 2/1/13 Energy $24.8 $200 1st Lien 45% 10.6% 16.4% Federal 2/21/13 $9.7 $715 1st Lien 70% 7
Slide 14: Q1 Originations and Repayments
Q1 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Subordinated, Second Equity and Other Second Lien i Debt D b 1% Lien Debt Non-SLF Eligible 6% First Lien Debt 4% 14% Non-SLF Eligible First 40% 53% SLF Eligible (2) Lien Debt First Lien Debt 82% SLF Eligible First L
Slide 15: Q1 Investment Activity Roll
Q1 Investment Activity Roll ($ in millions, unaudited) Originations(1) Sales / Repayments(2) Amount Amount Name ($’s Invested) YTM at Purchase(3) Name ($’s Sold/Repaid) YTM at Cost(4) $14.0 7.6% $24.8 10.6% $11.9 9.1% $9.7 7.7% $11.4 10.1% $10.1 10.0% $19 8 $19.8 8 0% 8.0% $5.4 6.8% $24.2 / 10.3% /
Slide 16: Investment Activity Since Quarter End (Through 5/3/13)
Investment Activity Since Quarter End (Through 5/3/13) ($ in millions, unaudited) Portfolio Originations(1) YTM at Purchase(3) Amount Tranche Type of Advance Date(2) Name Industry ($’s Invested) Size Investment Rate Unlevered Levered Preferred 5/3/13 Energy $20 0 $20.0 $96 N/A 18 1% 18.1% 18 1% 18.1
Slide 17: Investment Portfolio Review
Investment Portfolio Review (unaudited) 3/31/13 12/31/12 9/30/12 6/30/12 IPO - 6/30/11((5)) Fair Value $1,031 million $990 million $859 million $751 million $544 million YTM(1) 9.8% 10.1% 9.9% 10.7% 10.4% YTM at Cost(2) 10.4% 10.3% 10.2% 10.5% 9.6% # Portfolio Companies 61 63 58 56 47 Middle Market
Slide 18: Investment Portfolio Review – As of 3/31/2013
Investment Portfolio Review – As of 3/31/2013 Portfolio Names By Fair Value McGraw-Hill 3.8% Edmentum 3.5% SRA 3.4% PRA 3.3% Global Knowledge 3.2% Top 15 portfolio Attachmate 3.1% companies Rocket represent $463 $463.8 8 46 Other Software 3.0% million, or 45.0%, Portfolio Companies Paradigm (aka Pin
Slide 19: Net Asset Value – As of 3/31/2013
Net Asset Value – As of 3/31/2013 ($ in millions, unaudited) Net Asset Value(1) Consolidated NAV Memo: NAV / Share Portfolio $1,030.9 12/31/12 $14.06 Cash & Equivalents 15.9 9/30/12 $14.10 (2) Other Assets 16.6 6/30/12 $13.83 (4) Total Assets 1 063 4 1,063.4 3/31/12 $13 82 $13.82 12/31/11 $13.60 Les
Slide 20: OpCo Adjusted Consolidated Income Statement by Quarter
OpCo Adjusted Consolidated Income Statement by Quarter ($ in millions, unaudited)(1) Three Months Ended 3/31/2013 Adj. Three Months Ended (2) Unadjusted Adjustments Adjusted 12/31/2012 9/30/2012 6/30/2012 Investment income Interest income $25.0 ($0.5) $24.5 $22.7 $20.6 $19.3 Dividend and other incom
Slide 21: Dividend – Q1 2013
Dividend – Q1 2013 ($ in millions, unaudited) (1) IPO Estimated 6/30/2011 6/30/2012 9/30/2012 12/31/2012 3/31/2013 6/30/2013 Net Asset Value $440.6 $427.7 $520.4 $569.9 $610.5 (2) NAV / Share $13.98 $13.83 $14.10 $14.06 $14.31 Pre-Incentive Fee Adjusted NII $8.9 $13.6 $14.9 $17.0 $17.4 $17.3 - $18.9
Slide 22: New Mountain Finance Corporation
NIM|E NEw MOUNTAIN FINANCE CORPORATION
Slide 23: Appendix A: Structure Chart
Appendix A: Structure Chart Concurrent Public Private Shareholders Placement Common Stock Common Stock New Mountain Finance New Mountain Finance AIV Corporation Holdings Corporation (“PubCo”) (“AIV Holdings”) Common Membership Units (73.5%) New Mountain Finance Holdings, L.L.C. (“OpCo”) Investments