Slide 1: Q3 2012 Earnings Presentation
Q3 2012 Earnings Presentation November 7, 2012
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 Adam B. Ad B WWeinstein i t i Chief Financial Officer, Treasurer and Director 3
Slide 4: Q3 2012 Highlights
Q3 2012 Highlights ▪ Q3 Adjusted Net Investment Income of $0.32 $0 32 per share, share consistent with guidance and a function of the July primary equity raise – Q3 dividend of $0.34 per share paid on September 28, 2012 ▪ September S t b 30 30, 2012 b book k value l off $14 $14.10 10 per share, h an
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 approximately $9 billion of assets under management(1), over 90
Slide 6: NMFC Relative Trading Performance – Indexed Total Return
NMFC Relative Trading Performance – Indexed Total Return Ma 19, May 19 2011 (IPO) – November No ember 5, 5 2012 Indexed Total Return 132.0 128.0 NMFC 26.6% 26 6% 124.0 120.0 116.0 112 0 112.0 HY 12 12.1% 1% BDCs 11.1% 108.0 S&P 8.8% 104.0 S&P Fin 3.0% 100.0 96.0 92.0 88.0 84.0 80.0 76.0 72.0 7/1/11
Slide 7: Credit Market Conditions
Credit Market Conditions ▪ Significant rally in credit since last quarter’s earnings call – Promise of low base rates for extended period – Stabilization of global economic data – Ongoing equity market strength ▪ Supply / demand dynamics consistent with last quarter – Private equity M&A and recapita
Slide 8: Credit Performance
Credit Performance ($ in millions, unaudited) Cumulative Since As of 9/30/2012 Inception(1) Cost / FMV Cost Investments $844.5 / $858.9 $1,551.0 On Internal Watch List (3 or 4 Rating, excl. $14.6 / $13.3 $20.5 Non-Accrual)(2) Non-Accrual(3) $5.9 / $1.5 $5.9 Default Loss $0 / $0 $0 1 Since inception
Slide 9: Credit Performance – Operating Company (OpCo) Portfolio
Credit Performance – Operating Company (“OpCo”) Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company A 5.8x 5.8x - Company B 4.5x 4.1x 0.5x Company C 6.7x 6.2x 0.5x Company D 3.1x 2.7x 0.4x Company E 3.4x 3.0x 0.4x Company F 2.8x 2.7x 0.2
Slide 10: Credit Performance – Senior Loan Funding (SLF) Portfolio
Credit Performance – Senior Loan Funding (“SLF”) Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company AE 2.4x 1.3x 1.1x Company AF 3.5x 2.7x 0.8x Company AG 2.7x 2.7x - Company AH 4.1x 4.1x (0.0x) Company AI 3.8x 3.8x (0.0x) Company AJ 2.
Slide 11: Share Ownership Migration
Share Ownership Migration (shares in millions) IPO - May-11 Primary Offering - Jul-12 Secondary Offering - Sep-12 Pro Forma Adj. Pro Forma Adj. Pro Forma (1) (2) Public Shares ("PubCo") 10.7 5.9 16.6 4.1 20.7 % of Total 34.6% 45.1% 56.1% NMC Fund Shares ("AIV") 20.2 - 20.2 (4.0) 16.2 % of Total 65.4
Slide 12: Performance Since IPO
Performance Since IPO ($ in millions, unaudited)(1) IPO (2) 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 Regular Dividend $8.3 $9.0 $9.3 $9.9 $10.5 $12.6 Cumulative Regular Dividend 8.3 17.3 26.6 36.5 47.0 59.5 Adj. NII 8.4 8.8 9.3 9.8 10.9 11.9 Cumulative Adj. NII 8.4 17.2 26.5 36.3
Slide 13: Q3 Originations and Repayments
Q3 Originations and Repayments ($ in millions, unaudited) Portfolio Originations(1) Amount Tranche Type of Advance YTM at Purchase(3) Date(2) Name Industry ($’s Invested) Size Investment Rate Unlevered Levered 7/17/12 Rocket Software Software $13.4 $105 2nd Lien 45% 10.7% 16.7% 7/24/12 / $29.4 / $13
Slide 14: Q3 Originations and Repayments
Q3 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Subordinated Debt 8% Second Lien Debt (2) 52% SLF Eli Eligible ibl 37% First Lien (2) Second 45% SLF Eligible Debt Lien Debt 30% First Lien Debt 11% 17% Non-SLF Eligible Non-SLF Eligible First Lien Debt First Lien D
Slide 15: Q3 Investment Activity Roll
Q3 Investment Activity Roll ($ 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) Rocket Software $13.4 10.7% US Healthworks $20.0 11.3% $29.4 $29 4/ 11.7% 11 7% / Paradigm $14.9 7.1% PAE $14.1 8.2%
Slide 16: Investment Activity Since Quarter End
Investment Activity Since Quarter End ($ in millions, unaudited) Portfolio Originations(1) Amount Tranche Type of Advance YTM at Purchase(3) Date(2) Name Industry ($’s Invested) Size Investment Rate Unlevered Levered 10/2/12 Transtar Distribution $27.8 $140 2nd Lien 25% 10.8% 13.2% Business 10/11/12
Slide 17: Investment Activity Bridge
Investment Activity Bridge ($ in millions, unaudited)(1) Portfolio Bridge Cash & Debt Bridge Available Cash & Total Fundings (4) Equivalents Debt (Cash + Debt) June 30, 2012 Portfolio $751 June 30, 2012 ($17) $312 Plus: Q3 2012 Net Originations Less Sales 109 Plus: July 2012 Equity Raise 82 Less: Q3
Slide 18: Investment Portfolio Review
Investment Portfolio Review (unaudited) 9/30/12 6/30/12 3/31/12 12/31/11 IPO - 6/30/11((5)) Fair Value $859 million $751 million $758 million $704 million $544 million YTM(1) 9.9% 10.7% 10.6% 10.7% 10.4% YTM at Cost(2) 10.2% 10.5% 10.5% 10.1% 9.6% # Portfolio Companies 58 56 57 55 47 Middle Market F
Slide 19: Investment Portfolio Review – Top 15 Portfolio Companies
Investment Portfolio Review – As of 9/30/2012 Portfolio Names By Fair Value Paradigm Plato - 4.7% 5.3% Attachmate- 3.7% Global Knowledge 3.6% Top 15 portfolio Rocket Software 3.6% companies UniTek represent $417 $417.3 3 43 Other 3.5% million, or 48.6%, Portfolio Companies Managed Healthcare of cons
Slide 20: Net Asset Value – As of 9/30/2012
Net Asset Value – As of 9/30/2012 ($ in millions, unaudited) Net Asset Value(1) Consolidated NAV Memo: NAV / Share Portfolio $858.9 6/30/12 $13.83 (4) Cash & Equivalents 12.7 3/31/12 $13.82 (2) Other Assets 15.2 12/31/11 $13.60 Total Assets 886 8 886.8 9/30/11 $13 32 $13.32 (5) 6/30/11 $13.98 Less:
Slide 21: OpCo Adjusted Consolidated Income Statement
OpCo Adjusted Consolidated Income Statement ($ in millions, unaudited)(1) Three Months Ended 9/30/2012 Adj Three Months Ended Adj. (2) Unadjusted Adjustments Adjusted 6/30/2012 3/31/2012 12/31/2011 Investment income Interest income $21.4 ($0.8) $20.6 $19.3 $17.6 $16.7 Dividend and other income 0.4 0
Slide 22: Dividend – Q3 2012
Dividend – Q3 2012 ($ in millions, unaudited) (1) IPO Estimated 6/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 Net Asset Value $440.6 $420.5 $434.3 $427.7 $520.4 (2) (3) NAV / Share $13.98 $13.60 $13.82 $13.83 $14.10 Pre-Incentive Fee Adjusted NII $8.9 $11.6 $12.3 $13.6 $14.9 $15.0 -
Slide 23: New Mountain Finance Corporation
NIM|E NEw MOUNTAIN FINANCE CORPORATION
Slide 24: 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 (56.1%) New Mountain Finance Holdings, L.L.C. (“OpCo”) Investments