New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q4 2012 Earnings Presentation
25 slides from New Mountain Finance's earnings presentation, Mar 7, 2013
Slide 1: Q4 2012 Earnings Presentation
Q4 2012 Earnings Presentation March 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: Q4 2012 and Annual Highlights
Q4 2012 and Annual Highlights ▪ Q4 Adjusted Net Investment Income (“NII”) ( NII ) of $0.36 $0 36 per weighted average share share, above our expected range of $0 $0.33 33 - $0.35 $0 35 – Q4 dividend of $0.34 per share paid on December 28, 2012 – Special dividend of $0.14 per share paid on January 31
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 $9 billion of assets under management(1), approxim
Slide 6: NMFC Relative Trading Performance – Indexed Total Return
NMFC Relative Trading Performance – Indexed Total Return Ma 19, May 19 2011 (IPO) – March 1, 1 2013 Indexed Total Return 135.0 NMFC 33.9% 130.0 125.0 120.0 BDCs 17.9% S&P 17.6% 115.0 HY 16.6% S&P Fi Fin 14.6% 14 6% 110.0 105.0 100.0 95.0 90.0 85.0 80.0 75.0 70.0 7/1/11 9/1/11 11/1/11 1/1/12 3/1/12 5
Slide 7: Credit Market Conditions
Credit Market Conditions ▪ Significant rally in credit since the beginning of the year – Dearth of supply from new issuers – Expectation of low base rates for an extended period – Strong demand particularly from rapidly expanding CLO new issues – Stabilization of global economic data – Continued equ
Slide 8: Credit Performance
Credit Performance ($ in millions, unaudited) Cumulative Since Inception(1) As of 12/31/2012 (October 2008 – December 31, 2012) Cost / FMV Cost Investments $976.2 / $989.8 $1,831.2 On Internal Watch List (3 or 4 Rating, excl. $14.6 / $10.3 $20.5 Non-Accrual)(2) Non-Accrual(3) $5.9 / $0.8 $5.9 Defaul
Slide 9: Credit Performance – Operating Company (“OpCo”) Portfolio
Credit Performance – Operating Company (“OpCo”) Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company A 6.0x 5.9x 0.1x Company B 5.7x 5.7x - Company C 4.8x 4.6x 0.2x Company D 3.1x 2.3x 0.8x Company E 4.3x 2.6x 1.7x Company F 6.3x 6.3x - C
Slide 10: Credit Performance – Senior Loan Funding (“SLF”) Portfolio
Credit Performance – Senior Loan Funding (“SLF”) Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company AH 4.2x 4.2x - Company AI 3.2x 6.3x (3.0x) Company AJ 4.1x 4.3x (0.1x) Company AK 2.4x 1.0x 1.5x Company AL 3.5x 3.2x 0.3x Company AM 1.
Slide 11: Share Ownership Migration
Share Ownership Migration (shares in millions) IPO - May-11 Primary Offering - Jul-12 Secondary Offering - Sep-12 Primary Offering - Dec-12 Issuances Issuances Cumulative Issuances Cumulative Issuances Cumulative (1)(2) Public Shares ("PubCo") 10.7 5.9 (1) 16.6 4.1(2) 20.7 3.6 24.3 % of Total 34.6%
Slide 12: Performance Since IPO
Performance Since IPO ($ in millions, unaudited)(1) (2) IPO 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 Regular Dividend $8.3 $9.0 $9.3 $9.9 $10.5 $12.6 $13.8 Cumulative Regular Dividend 8.3 17.3 26.6 36.5 47.0 59.5 73.3 Adj. NII 8.4 8.8 9.3 9.8 10.9 11.9 13.6 Cumulative
Slide 13: Q4 Originations and Repayments
Q4 Originations and Repayments ($ 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 10/2/12 Transtar Distribution $27.8 $140 2nd Lien 25% 10.8% 13.2% Business 10/11/12 FAPS $
Slide 14: Originations and Repayments (continued)
Originations and Repayments (continued) ($ in millions, unaudited) Quarterly Portfolio Originations ($’s Invested) Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011(1) Total Originations $266.7 $173.4 $126.4 $106.7 $88.7 $159.9 $130.7 Repayments ($108 7) ($108.7) ($63 6) ($63.6) ($104 4) ($104
Slide 15: Q4 Originations and Repayments
Q4 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Equity and Other Subordinated 1% 1% SLF Eligible (2) First Lien Debt 29% Second (2) SLF Eligible Lien Debt 34% Fi t Lien First Li 37% Debt 71% Second Lien Debt 27% Non-SLF Eligible First Lien Debt 1 By $s invested /
Slide 16: Q4 Investment Activity Roll
Q4 Investment Activity Roll ($ 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) Transtar $27.8 10.8% Renaissance $21.6 8.7% FAPS $24.5 11.9% Ipreo $20.0 13.8% Landmark $19.7 10.5% KeyPoint $16.4 1
Slide 17: Investment Activity Since Quarter End (Through 3/1/13)
Investment Activity Since Quarter End (Through 3/1/13) ($ 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 2/1/13 Energy $24 8 $24.8 $200 1st Lien 45% 10 6% 10.6% 16 5% 16.5
Slide 18: Investment Portfolio Review
Investment Portfolio Review (unaudited) 12/31/12 9/30/12 6/30/12 3/31/12 IPO - 6/30/11((5)) Fair Value $990 million $859 million $751 million $758 million $544 million YTM(1) 10.1% 9.9% 10.7% 10.6% 10.4% YTM at Cost(2) 10.3% 10.2% 10.5% 10.5% 9.6% # Portfolio Companies 63 58 56 57 47 Middle Market F
Slide 19: Investment Portfolio Review – As of 12/31/2012
Investment Portfolio Review – As of 12/31/2012 Portfolio Names By Fair Value Plato Paradigm (aka Pinnacle) 3.4% 4.1% Global Knowledge 3.2% Attachmate 3.2% Rocket Software 3.1% Top 15 portfolio Pharma. Research companies Assoc. 3.1% UniTek represent $440 $440.3 3 48 Other 3.0% million, or 44.5%, Port
Slide 20: Net Asset Value – As of 12/31/2012
Net Asset Value – As of 12/31/2012 ($ in millions, unaudited) Net Asset Value(1) Consolidated NAV Memo: NAV / Share Portfolio $989.8 9/30/12 $14.10 Cash & Equivalents 12.8 6/30/12 $13.83 (2) (4) Other Assets 23.0 3/31/12 $13.82 Total Assets 1,025.6 12/31/11 $13.60 9/30/11 $13.32 (5) Less: Total Debt
Slide 21: OpCo Adjusted Consolidated Income Statement by Quarter
OpCo Adjusted Consolidated Income Statement by Quarter ($ in millions, unaudited)(1) Three Months Ended 12/31/2012 Adj. Three Months Ended (2) Unadjusted Adjustments Adjusted 9/30/2012 6/30/2012 3/31/2012 Investment income Interest income $23.6 ($0.8) $22.7 $20.6 $19.3 $17.6 Dividend and other incom
Slide 22: OpCo Adjusted Consolidated Income Statement for 2012
OpCo Adjusted Consolidated Income Statement for 2012 millions unaudited)(1) ($ in millions, Year ended December 31, 2012 (2) Unadjusted Adjustments Adjusted Investment income Interest income $83.6 ($3.5) $80.2 Dividend and other income 2.1 2.1 Total investment income 85.8 (3.5) 82.3 Expenses Incenti
Slide 23: Dividend – Q4 2012
Dividend – Q4 2012 ($ in millions, unaudited) (1) IPO Estimated E ti t d 6/30/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 3/31/2013 Net Asset Value $440.6 $434.3 $427.7 $520.4 $569.9 (2) (3) NAV / Share $13.98 $13.82 $13.83 $14.10 $14.06 Pre-Incentive Fee Adjusted NII $8.9 $12.3 $13.6 $14.9 $17.0
Slide 24: New Mountain Finance Corporation
NIM|E NEw MOUNTAIN FINANCE CORPORATION
Slide 25: 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 (60.0%) New Mountain Finance Holdings, L.L.C. (“OpCo”) Investments