New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q3 2015 Earnings Presentation
29 slides from New Mountain Finance's earnings presentation, Nov 5, 2015
Slide 1: Q3 2015 Earnings Presentation
Q3 2015 Earnings Presentation November 5, 2015
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. Weinstein Executive Vice President, Chief Administrative Officer and Director 3
Slide 4: Q3 2015 Highlights
Q3 2015 Highlights ▪ Q3 2015 Pro Forma Adjusted Net Investment Income (“NII”) of $0.35 per weighted average share, versus guidance of $0.33 to $0.35 – Q3 2015 regular dividend of $0.34 per share paid on September 30, 2015 ▪ September 30, 2015 book value of $13.73 per share, broadly consistent with o
Slide 5: Key Highlights
Key Highlights Financial Highlights Quarter Ended (1) 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015 Adjusted NII Per Share $0.35 $0.34 $0.34 $0.35 $0.35 NAV Per Share $14.33 $13.83 $13.89 $13.90 $13.73 (2) Dividends Per Share $0.46 $0.34 $0.34 $0.34 $0.34 Share Count - End of Period (mm) 52.2 5
Slide 6: Review of NMFC
Review of NMFC Overview Strategy ▪ Founded in October 2008 to apply New Mountain Capital, ▪ NMFC’s mandate is to primarily target businesses in the L.L.C.’s (“NMC” or “New Mountain”) private equity middle market that, consistent with New Mountain’s private strengths to attractive risk-reward opportu
Slide 7: NMFC Relative Return Performance – Indexed Total Return
NMFC Relative Return Performance – Indexed Total Return May 19, 2011 (IPO) – November 2, 2015 Indexed Total Return 180.0 S&P 72.1% 170.0 S&P Fin 66.9% 160.0 NMFC 61.5% 150.0 140.0 130.0 HY 25.5% 120.0 110.0 BDCs 9.0% 100.0 90.0 CAGR (IPO to 11/2/2015) NMFC 11.4% 80.0 S&P 500 12.9% S&P 500 Financials
Slide 8: NMFC Cumulative Total Return Performance Versus Peers
NMFC Cumulative Total Return Performance Versus Peers(1) May 19, 2011 (IPO) – November 2, 2015 61.5% 53.5% 50.6% 38.0% 33.8% 11.0% 7.0% 3.3% (4.8%) (21.3%) (24.4%) NMFC Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J Source: Capital IQ 1 Peers include publicly-traded, externall
Slide 9: NMFC Return Attribution
NMFC Return Attribution ($ per Share) $6.39 $0.19 $2.17 $0.61 $0.46 $1.80 $0.32 $0.37 $0.93 $0.12 $0.12 $0.92 $5.94 $0.38 $1.34 $1.36 $1.36 $1.02 $0.86 ($0.10) ($0.35) ($0.48) ($0.55) IPO to 12/31/2011(1) Cumulative 2012 2013 2014 YTD 2015 (IPO to 9/30/2015)(1) Regular Dividends Special Dividend ∆ i
Slide 10: Credit Market Conditions
Credit Market Conditions ▪ Credit spreads have increased meaningfully since our last call – Worries about slowing global economic growth – Interest rate uncertainty – Continued pullback of regulated entities from middle market credit ▪ With limited exceptions, smaller deals continue to be priced at
Slide 11: Credit Market Conditions – Interest Rates
Credit Market Conditions – Interest Rates Floating vs. Fixed Assets Liabilities (Aggregate par value of $1,482.5 million as of 9/30/2015)(1) ($671.8 million drawn as of 9/30/2015) Fixed Fixed(3) 17% 33% Floating – No Floor Floating – Floor(2) (1-Month Libor) 83% 67% Impact of Changing Rates(4) Estim
Slide 12: Credit Performance
Credit Performance ($ in millions) Cumulative Since Inception(1) As of 9/30/2015 (October 2008 – September 30, 2015) Cost / FMV Cost / # Portfolio Co’s Investments $1,521 / $1,508 $3,497 / 167 of which of which Internal Watch List (3 or 4 Rating)(2) $67 / $42 $168 / 8 of which of which Non-Accrual $
Slide 13: 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 5.4x 5.4x - Company AG 5.7x 5.3x 0.4x Company B 1.2x 1.5x (0.2x) Company AH 6.2x 6.2x - Company C 6.0x 6.
Slide 14: Performance Since IPO
Performance Since IPO ($ in millions) IPO - 2015 (1) 12/31/2011 2012 2013 2014 3/31/2015 6/30/2015 9/30/2015 Regular Dividend $26.6 $46.6 $59.8 $71.4 $19.7 $19.8 $19.8 Cumulative Regular Dividend 26.6 73.2 133.0 204.3 224.0 243.8 263.6 (2) (2) (2) Adj. NII 26.5 46.1 62.1 73.4 19.5 20.2 20.4 Cumulati
Slide 15: Q3 2015 Originations (1/2)
Q3 2015 Originations (1/2) Portfolio Originations(1) ($ in millions) YTM at Purchase(4) Amount Type of Advance Date(2) Name Industry ($’s Invested) Tranche Size Investment Rate(3) Unlevered Levered Healthcare 7/2/15 $17.7 $170 1st Lien 70% 7.3% 12.2% Services Healthcare $13.8 / $14 / 2nd Lien / 67%
Slide 16: Q3 2015 Originations (2/2)
Q3 2015 Originations (2/2) Portfolio Originations(1) ($ in millions) YTM at Purchase(4) Amount Type of Advance Date(2) Name Industry ($’s Invested) Tranche Size Investment Rate(3) Unlevered Levered Distribution & Preferred 8/18/15 $15.0 $200 N/A 12.6% 12.6% Logistics Equity Federal 9/2/15 $9.0 $179
Slide 17: Origination Activity Since Quarter End (Through 11/2/2015)
Origination Activity Since Quarter End (Through 11/2/2015) ($ in millions) YTM at Purchase(4) Portfolio Originations(1) Amount Type of Advance Date(2) Name Industry ($’s Invested) Tranche Size Investment Rate(3) Unlevered Levered 66.7% 10/1/15 Software $10.8 $131 2nd Lien 11.2% 26.6% (SBIC)(6) Busin
Slide 18: Q3 2015 Originations and Repayments
Q3 2015 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Common Equity and Other Common Equity Preferred Subordinated <1% and Other Subordinated Equity Non-70% Advance Rate Debt <1% Debt First Lien Debt 3% <1% 8% 8% Second Lien Debt 21% Non-70% 8% 62% Advance Rate Fi
Slide 19: Q3 2015 Investment Activity Roll
Q3 2015 Investment Activity Roll YTM at Cost(1) / Purchase(2) 10.8% 10.5% 10.4% 9.4% 7.8% 6/30/2015 6/30/2015 Q3 Originations Q3 Sales / 9/30/2015 PF for Change Repayments in LIBOR Curve Cost ($mm)(3) $1,342.1 $1,342.1 $210.7 $29.0 $1,521.5 1 Assumes that investments are purchased at adjusted cost a
Slide 20: Portfolio Mix (By Fair Value as of 9/30/2015)
Portfolio Mix (By Fair Value as of 9/30/2015) By Industry Other(1) Media 5% HC Products 4% 2% HC Services 4% Healthcare Energy 6% Software 7% 26% Distribution & Logistics 8% Services 24% Business Svcs 20% Federal Services Education 9% 11% Consumer Svcs Industrial Svcs 4% <1% By Type of Investment By
Slide 21: Portfolio Concentration (By Fair Value as of 9/30/2015)
Portfolio Concentration (By Fair Value as of 9/30/2015) Portfolio Names By Fair Value Crowley 3.4% UniTek 3.0% TIBCO 3.0% Tenawa 3.0% Deltek 2.7% Top 15 portfolio Kronos 2.6% companies Tolt 2.5% represent $558.7 Hill Int’l 2.3% million, or 37.1%, 59 Other Portfolio CRGT 2.2% of consolidated Companie
Slide 22: Balance Sheet Highlights
Balance Sheet Highlights Quarter Ended ($ in millions, except per share data) 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015 Assets Portfolio $1,353.7 $1,454.7 $1,434.8 $1,338.9 $1,508.0 (1) Cash & Equivalents 19.6 23.4 22.2 24.2 24.6 (2) Other Assets 24.8 36.8 30.6 29.0 37.4 Total Assets $1,398
Slide 23: Historical NAV / Share and Leverage Trends
Historical NAV / Share and Leverage Trends NAV / Share $15.14 $15.20 $15.02 $14.94 $14.81 $14.87 $14.80 $14.68 $14.69 $14.43 $14.44 $14.50 $14.51 $14.33 $14.65 $14.34 $14.40 $14.53 $14.06 $14.31 $14.32 $14.32 $14.38 $14.33 $13.83 $13.89 $13.90 $14.00 $14.08 $14.10 $14.06 $13.73 $13.60 $13.98(1) $13.
Slide 24: Income Statement Highlights
Income Statement Highlights Quarter Ended ($ in millions, except per share data) 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015(1) Investment Income Interest income $32.3 $34.0 $33.3 $35.5 $33.6 Dividend income 0.5 0.8 1.3 1.8 1.6 Other income 1.9 1.9 1.9 0.6 2.7 Total investment income $34.7 $3
Slide 25: Investment Income Detail
Investment Income Detail Quarter Ended ($ in millions) (1) 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015 Investment Income Build (2) (3) Cash interest $29.6 $32.1 $32.4 $32.3 $33.4 (3) Non-cash interest 1.6 1.6 1.1 1.1 0.8 Amortization of purchase discounts (premiums) and fees 0.6 0.6 0.6 0.5 0
Slide 26: Dividend Summary and Coverage
Dividend Summary and Coverage We believe our Q4 2015 Adjusted NII will be in the $0.33 to $0.35 per share range. Our board of directors has declared a fourth quarter dividend of $0.34 per share. 0.8 114% 120% 108% 103% 103% 105% 103% 101% 102% 102% 0.7 100% 99% 99% 100% 100% 99% 98% 98% 95% 100% 0.6
Slide 27: Diversified Leverage Profile
Diversified Leverage Profile (As of 9/30/2015, $ in millions) Amount Outstanding / Facility Size Interest Rate Maturity Wells Fargo Credit Facility $385 / $495 Broadly syndicated 1st lien loans(1): L + 2.00% December 2019 All other: L + 2.75% (No LIBOR floor) NMFC Credit Facility $68 / $95 L + 2.50%
Slide 28: 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 29: New Mountain Finance Corporation
NIM|F NEw MOUNTAIN FINANCE CORPORATION