New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q2 2017 Earnings Presentation
29 slides from New Mountain Finance's earnings presentation, Aug 9, 2017
Slide 1: Q2 2017 Earnings Presentation
Q2 2017 Earnings Presentation August 9, 2017
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 and Director John R. Kline President and Chief Operating Officer Shiraz Y. Kajee Chief Financial Officer and Treasurer 3
Slide 4: Q2 2017 Highlights
Q2 2017 Highlights ▪ Q2 2017 Net Investment Income (“NII”) and Adjusted NII of $0.34 per weighted average share, versus guidance of $0.33 to $0.35 – Q2 2017 regular dividend of $0.34 per share paid on June 30, 2017 ▪ June 30, 2017 net asset value (“NAV”) of $13.63 per share, an increase of $0.07 per
Slide 5: Key Highlights
Key Highlights Financial Highlights Quarter Ended 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017 (1) Adjusted NII Per Share $0.34 $0.34 $0.34 $0.34 $0.34 NAV Per Share $13.23 $13.28 $13.46 $13.56 $13.63 Dividends Per Share $0.34 $0.34 $0.34 $0.34 $0.34 Share Count - End of Period (mm) 63.8 63.9
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, 2017 Indexed Total Return 230.0 220.0 S&P Fin 121.4% 210.0 S&P 110.4% 200.0 NMFC 97.1% 190.0 180.0 170.0 160.0 150.0 HY 49.1% BDCs 45.3% 140.0 130.0 120.0 110.0 CAGR (IPO to 8/4/2017) 100.0 NMFC 11.5% 90.0 S&P 500
Slide 8: NMFC Cumulative Total Return Performance Versus Peers
NMFC Cumulative Total Return Performance Versus Peers(1) May 19, 2011 (IPO) – August 4, 2017 100.3% 97.1% 75.0% 55.9% 54.1% 45.5% 45.1% 29.6% 12.2% 9.5% (16.3%) Peer A NMFC 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 $9.73 ($ per Share) $1.25 $2.17 $0.61 $0.46 $1.80 $1.74 $0.32 $0.37 $0.93 $0.38 $0.12 $0.12 $0.61 $8.32 $0.38 $0.85 $0.17 $1.34 $1.36 $1.36 $1.36 $1.36 $0.86 $0.68 ($0.45) ($0.48) ($0.55) ($0.75) Cumulative IPO to 2012 2013 2014 2015 2016 YTD 2017 (IPO to 6/30/2017)(1) 12/31/
Slide 10: Credit Performance
Credit Performance ($ in millions) Cumulative Since Inception(1) As of 6/30/2017 (October 2008 – June 30, 2017) Cost / FMV / # Portfolio Co’s Cost / # Portfolio Co’s Investments $1,867 / $1,883 / 81 $4,882 / 205 of which of which Internal Watch List (3 or 4 Rating)(2) $64 / $43 / 3 $236 / 10 of whic
Slide 11: Credit Performance
Credit Performance (2) (2) NMFC Leverage Ratio NMFC Leverage Ratio Variance Variance (1) (1) Portfolio Company At Purchase Current + / (-) Portfolio Company At Purchase Current + / (-) Company A 7.2x 4.9x 2.3x Company AI 5.8x 5.8x - Company B 6.6x 5.0x 1.6x Company AJ 6.4x 6.4x - Company C 6.6x 5.1x
Slide 12: Performance Since IPO
Performance Since IPO(1) ($ in millions) IPO - (2) 12/31/2011 2012 2013 2014 2015 2016 2017 YTD Regular Dividend $26.6 $46.6 $59.8 $71.4 $81.1 $88.8 $49.4 Cumulative Regular Dividend 26.6 73.2 133.0 204.3 285.4 374.2 423.6 Adj. NII 26.5 46.1 62.1 73.4 82.8 88.0 49.2 Cumulative Adj. NII 26.5 72.7 134
Slide 13: Credit Market Conditions
Credit Market Conditions ▪ Credit markets stronger than at any point since NMFC’s IPO – Tightening spreads across all of leveraged credit – CLO market financing spreads continue to decline – Spreads between middle-market loans and the syndicated market have narrowed – Most sponsor-backed companies h
Slide 14: Credit Market Conditions – Interest Rates
Credit Market Conditions – Interest Rates Floating vs. Fixed Assets Liabilities (Aggregate par value of $1,714 million as of 6/30/2017)(1) ($878 million drawn as of 6/30/2017) Fixed 14% Floating – No Floor Fixed(2) 49% (1-Month Libor) Floating – Floor 51% 86% Impact of Changing Rates(3) Estimated %
Slide 15: Q2 2017 Originations
Q2 2017 Originations Portfolio Originations(1) ($ in millions) Amount Tranche Type of YTM at Purchase(4) Date(2) Name Industry ($’s Invested) Size Investment Advance Rate(3) Unlevered Levered 4/12/17 Vertafore Software $12.5 $500 2nd Lien 25% 10.7% 12.8% 4/18/17 KeyPoint Federal Services $19.9 $215
Slide 16: Origination Activity Since Quarter End
Origination Activity Since Quarter End (Through 8/4/2017) ($ in millions) Portfolio Originations(1) YTM at Purchase(4) Amount Type of Advance Date(2) Name Industry ($’s Invested) Tranche Size Investment Rate(3) Unlevered Levered 7/31/17 Xactly Software $11.5 $175 1st Lien 66.7% (SBIC) 9.7% 22.9% Dis
Slide 17: Q2 2017 Originations and Repayments
Q2 2017 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Preferred Equity Preferred <1% Equity 8% 4% Second Lien Debt First Lien Debt 26% 41% 55% 74% Second Lien Debt First Lien Debt Total: $258.3 million Total: $195.6 million 1 By $s invested / $s received at time o
Slide 18: Q2 2017 Investment Activity Roll
Q2 2017 Investment Activity Roll YTM at Cost(1) / Purchase(2) 11.1% 11.0% 10.8% 10.4% 9.5% 3/31/2017 3/31/2017 Q2 Originations Q2 Sales / 6/30/2017 PF for change in Repayments LIBOR Curve Cost ($mm)(3) $1,827.1 $1,827.1 $258.3 $195.6 $1,867.3 1 Assumes that investments are purchased at cost and held
Slide 19: Portfolio Mix (By Fair Value as of 6/30/2017)
Portfolio Mix (By Fair Value as of 6/30/2017) By Industry(1) Net Lease SLP I Types of Services (2) Distribution 1% 1% Other Other & Logistics 2% Data & Services 5% Analytics 5% 7% Financial Federal Services Services 5% Marketing Services 23% 7% Education 5% Telecom Services Services 10% Energy 5% 38
Slide 20: Portfolio Concentration (By Fair Value as of 6/30/2017)
Portfolio Concentration (By Fair Value as of 6/30/2017) Portfolio Names By Fair Value HI Technology 5.6% SLP II 4.2% UniTek 3.4% AmWINS 3.1% Top 15 portfolio companies represent Assured Partners 2.7% $765.0 million, or Tenawa 2.5% 40.6%, of consolidated Alegeus 2.4% investments 66 Other Portfolio Ex
Slide 21: Balance Sheet Highlights
Balance Sheet Highlights Quarter Ended ($ in millions, except per share data) 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017 Assets Portfolio $1,527.7 $1,547.7 $1,588.0 $1,815.3 $1,883.4 Cash & Equivalents 34.5 49.8 45.9 37.7 36.3 (1) Other Assets 22.4 19.7 22.1 27.9 30.1 Total Assets $1,584.6 $
Slide 22: Historical NAV / Share and Leverage Trends
Historical NAV / Share and Leverage Trends NAV / Share $16.00 $15.02 $15.14 $14.94 $14.87 $15.00 $14.68 $14.69 $14.81 $14.33 $14.43 $14.44 $14.50 $14.51 $14.34 $14.24 $14.06 $14.07 $14.17 (2) $14.53 $14.65 $13.69 $13.89 $14.00 $13.82 $14.31 $14.32 $14.32 $14.38 $13.48 $13.84 $14.08 $14.10 $14.06 $14
Slide 23: Income Statement Highlights
Income Statement Highlights Quarter Ended ($ in millions, except per share data) 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017 Investment Income Interest income $38.3 $35.9 $35.4 $34.0 $37.6 Dividend income 1.8 3.0 4.8 6.7 9.7 Other income 1.4 2.9 3.6 2.6 2.7 Total investment income $41.5 $41.8
Slide 24: Investment Income Detail
Investment Income Detail Quarter Ended ($ in millions) 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017 Investment Income Build Cash Interest Income $33.3 $33.8 $32.2 $32.3 $33.6 (1) SLP and Net Lease Income 1.2 2.5 4.1 5.5 5.0 Recurring Cash Investment Income $34.5 $36.3 $36.3 $37.8 $38.6 Non-cas
Slide 25: Dividend Summary and Coverage
Dividend Summary and Coverage We believe our Q3 2017 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% 100% 105% 101% 103% 103% 102% 102% 103% 103% 0.7 98% 100% 99% 99% 100% 98% 99% 99% 100%
Slide 26: Diversified Leverage Profile
Diversified Leverage Profile (As of 6/30/2017, Amount Outstanding $ in millions) / Facility Size Interest Rate Maturity Wells Fargo Credit Facility $329 / $495 Broadly syndicated 1st lien loans(1): L + 1.75% December 2019 All other: L + 2.50% (No LIBOR floor) NMFC Credit Facility $123 / $123 L + 2.5
Slide 27: Corporate Information
Corporate Information Board of Directors Senior Management Fiscal Year End Inside Directors Steven B. Klinsky Adam B. Weinstein December 31 Steven B. Klinsky (Chairman) Chairman of the Board of Directors EVP, Chief Administrative Officer Robert A. Hamwee and Director Adam B. Weinstein Robert A. Hamw
Slide 28: Appendix A: NMFC Income Reconciliation
Appendix A: NMFC Income Reconciliation ($ in millions, except for per weighted average share data; Year Ended unaudited figures) IPO - 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 2017 YTD GAAP net investment income ("NII") $28.5 $45.2 $63.7 $80.3 $82.5 $88.1 $49.2 Non-cash adju
Slide 29: New Mountain Finance Corporation
NIM|E NEW MOUNTAIN FINANCE CORPORATION