New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q1 2012 Earnings Presentation
23 slides from New Mountain Finance's earnings presentation, May 9, 2012
Slide 1: Q1 2012 Earnings Presentation
Q1 2012 Earnings Presentation May 9, 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 and Treasurer 3
Slide 4: Q1 2012 Highlights
Q1 2012 Highlights ▪ Q1 Adjusted Net Investment Income and dividend of $0 $0.32 32 per share – Paid on March 30, 2012 to holders of record as of March 15, 2012 ▪ March 31, 2012 book value of $14.05 per share, an increase of $0.45 per share ▪ Q2 2012 regular dividend of $0.34 per share announced – Pa
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, LLC, which is an affiliate of New Mountain Capital, L.L.C. (“New Mountain” or “NMC”), a leading private equity firm with approximately $9 billion of assets under management(1), over 90 sta
Slide 6: NMFC Relative Trading Performance – Indexed Total Return
NMFC Relative Trading Performance – Indexed Total Return Ma 19, May 19 2011 (IPO) – May Ma 4, 4 2012 Indexed Total Return 112.0 108 0 108.0 NMFC 6.5% HY 6.3% 104.0 S&P 4.0% 100.0 Cs (0 BDCs (0.5%) 5%) 96.0 S&P Fin (3.7%) 92.0 88.0 84.0 80.0 76.0 72.0 6/1/11 7/1/11 8/1/11 9/1/11 10/1/11 11/1/11 12/1/
Slide 7: Credit Market Conditions
Credit Market Conditions ▪ Credit markets continue to strengthen despite: – Rekindling of European risk – Modestly weakening U.S. economic data – Subdued equity markets ▪ Supply / demand dynamics – Private equity M&A continues to drive supply – Fund-flows into high yield funds continue to be very st
Slide 8: Credit Performance
Credit Performance ($ in millions, unaudited) Cumulative Since As of 3/31/2012 Inception(1) Cost / FMV Cost Investments $741.8 / $758.2 $1,272.3 On Internal Watch List $4.3 / $0.4 $4.3 (3 or 4 Rating)(2) Non-Accrual $4.3 / $0.4 $4.3 Default Loss $0 / $0 $0 1 Since inception of predecessor entity in
Slide 9: Credit Performance – Operating Company (“OpCo”) Portfolio
Credit Performance – Operating Company (“OpCo”) Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company A 4.7x 4.4x 0.3x Company B 2.5x 1.9x 0.6x Company C 3.7x 3.7x - Company D 4 6x 4.6x 4 7x 4.7x (0 0x) (0.0x) Company E 5.0x 4.6x 0.4x Comp
Slide 10: Credit Performance – Senior Loan Funding (“SLF”) Portfolio
Credit Performance – Senior Loan Funding (“SLF”) Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company AC 3.5x 3.5x - Company AD 1.6x 1.8x (0.1x) Company AE 3.4x 3.1x 0.3x Company AF 3.8x 3.7x 0.1x Company AG 3.6x 3.8x (0.2x) Company AH 4.
Slide 11: Special Dividend – Lawson / Infor
Special Dividend – Lawson / Infor ($ in millions, unaudited) S mmar Summary ▪ NMFC invested into the bank debt and bonds of Lawson Software, a large enterprise software business well known to us, in the summer of last year when credit markets were stressed ▪ We subsequently purchased subordinated de
Slide 12: Q1 Originations and Repayments
Q1 Originations and Repayments ($ in millions, unaudited) Portfolio Originations(1) Amount ($’s Tranche Type of Advance YTM at Purchase(3) Date(2) Name Industry Invested) Size Investment Rate Unlevered Levered Healthcare 1/19/12 TriplePoint $9.3 $209 1st Lien 45% 12.3% 20.8% Services 1/25/12 Renaiss
Slide 13: Q1 Originations and Repayments
Q1 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Second Subordinated Lien Debt Li D b Debt OpCo First 11% 17% Lien Debt 4% SLF First 32% Lien Debt Second 16% Lien Debt 85% 35% SLF First OpCo First Lien Debt Lien Debt 13 1 By $s invested / $s received at time of or
Slide 14: Investment Activity Since Quarter End
Investment Activity Since Quarter End ($ in millions, unaudited) Portfolio Originations(1) Amount YTM at Purchase(3) ($’s Tranche Type of Advance Date(2) Name Industry Invested) Size Investment Rate Unlevered Levered (5) 5/3/12 Yellow Pages Media $10 0 $10.0 $291 2nd Lien 45% 16 8% 16.8% 27 4% 27.4%
Slide 15: Q1 Investment Activity Roll
Q1 Investment Activity Roll ($ 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) TriplePoint $9.3 12.3% LANDesk $14.1 7.7% Renaissance Le $12.3 9.9% Attachmate $9.9 7.1% $17.3 / 11.4% / RocketLe Po
Slide 16: Investment Portfolio Review
Investment Portfolio Review (unaudited) As of 3/31/2012 As of 12/31/2011 As of 9/30/2011 As of 6/30/2011 Fair Value $758 million $704 million $604 million $544 million Unadjusted / 10.6% / 12.8% 10.7% / 13.1% 10.9% / 14.0% 10.4% / 12.7% Adjusted YTM(1) YTM at Cost((2)) 10 7% 10.7% 10 3% 10.3% 10 1%
Slide 17: Investment Portfolio Review – As of 3/31/2012
Investment Portfolio Review – As of 3/31/2012 Portfolio Names By Fair Value Decision Global Knowledge - 4.1% Resources 4.2% Meritas - 3.9% Managed Health Care 3.7% Top 15 portfolio Lawson 3.3% companies IInsight i ht Pharma Ph 3.2% represent $345 $345.9 9 42 Other Attachmate million, or 45.6%, Portf
Slide 18: Net Asset Value – As of 3/31/2012
Net Asset Value – As of 3/31/2012 ($ in millions, unaudited) Net Asset Value(1) Consolidated NAV Memo: NAV / Share Portfolio $758.2 Cash & Equivalents 13.6 12/31/11 $13.60 (2) 16.8 9/30/11 $13.32 Other Assets (4) Total Assets 788.6 6/30/11 $13.98 At IPO $13.94 Less: Total Debt (326.9) ((3)) (27 4) (
Slide 19: OpCo Adjusted Consolidated Income Statement
OpCo Adjusted Consolidated Income Statement ($ in millions, unaudited)(1) Three Months Ended 3/31/2012 Adj. Three Months Ended (2) Unadjusted Adjustments Adjusted 12/31/2011 9/30/2011 6/30/2011 Investment income Interest income $18.6 ($1.0) $17.6 $16.7 $13.7 $11.7 Other income 0.4 0.4 0.2 0.2 0.3 To
Slide 20: Dividend – Q2 2012
Dividend – Q2 2012 ($ in millions, unaudited) Est. 6/30/12 & Fully Ramped 6/30/2011 9/30/2011 12/31/2011 3/31/2012 Qtly Run Run-Rate Rate Net Asset Value $440.6 $411.9 $420.5 $434.3 NAV / Share (1) $13.98 $13.32 $13.60 $14.05 Hurdle Rate $8.6 $8.8 $8.2 $8.4 $8.7 Catch-up 2.2 2.2 2.1 2.1 2.2 Total 10
Slide 21: New Mountain Finance Corporation
NIM|E NEw MOUNTAIN FINANCE CORPORATION
Slide 22: Appendix A: Structure Chart
Appendix A: Structure Chart Concurrent Public Private Shareholders Placement Common Stock Common Stock New Mountain Finance New Mountain Finance AIV Corporation Holdings Corporation (“PubCo”) (“AIV Holdings”) Common Membership Units (34.6%) New Mountain Finance Holdings, L.L.C. (“OpCo”) Investments
Slide 23: Appendix B: Adjusted Consolidated Income Statement
Appendix B: Adjusted Consolidated Income Statement ($ in millions, unaudited)(1) Adjusted Three Months Ended Three Months Ended Three Months Ended 3/31/2012 3/31/2012 Adjustments (2) 3/31/2012 Investment income Interest income $18.6 $6.4 ($0.4) $6.1 Other income 0.4 0.1 0.1 Total investment income 1