New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q4 2024 Earnings Presentation
38 slides from New Mountain Finance's earnings presentation, Feb 27, 2025
Slide 1: Earnings Presentation Q4 2024
Earnings Presentation Q4 2024 February 27, 2025 14
Slide 2: Important Notices and Safe Harbor Statement
Important Notices and Safe Harbor Statement This presentation contains forward looking statements, which are not guarantees of future performance, conditions or results, and involve substantial risks and uncertainties, including the current conflict between Russia and Ukraine, conflict in the Middle
Slide 3: Important Notices and Safe Harbor Statement (cont.)
Important Notices and Safe Harbor Statement (cont.) Yield to Maturity (“YTM”) at Cost assumes that the accruing investments in our portfolio as of each date are purchased at cost on that date and held until their respective maturities with no prepayments or losses and are exited at par at maturity.
Slide 4: Today's Presenters
Today’s Presenters Steven B. Klinsky John R. Kline Laura C. Holson Kris Corbett Founder & Chairman President & CEO COO CFO Years at 25 16 15 1 4
Slide 5: Chairman's Overview
Chairman’s Overview ▪ Q4 2024 adjusted net investment income (“NII”) of $0.32 covered our dividend of $0.32 per share ▪ December 31, 2024 net asset value (“NAV”) of $12.55 per share compared to $12.62 per share as of September 30, 2024 – Stable credit performance across the portfolio – ~97% of the p
Slide 6: Key Highlights
Key Highlights Financial Highlights Quarter Ended 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Adjusted NII Per Share $0.40 $0.36 $0.36 $0.34 $0.32 NAV Per Share $12.87 $12.77 $12.74 $12.62 $12.55 Dividends Per Share(1) $0.46 $0.34 $0.34 $0.33 $0.32 (2) Pro Forma Statutory Debt / Equity 1.10x
Slide 7: New Mountain Capital Overview
New Mountain Capital Overview New Mountain Capital (“NMC”) was founded in 1999 to focus on “defensive growth” business building and deep fundamental research $55bn+ ~270 ~160 0 12bps Employees & Senior Investment Private Equity Bankruptcies Average Net Realized Loss Rate Assets Under Management(1) A
Slide 8: Differentiated, Defensive Growth Approach to Lending
Differentiated, Defensive Growth Approach to Lending Why NMFC? ACYCLICAL SECTORS(4) “Defensive Growth” Strategy Where NMC has deep expertise • Focused on investing in strong businesses in acyclical sectors Other ERP • Achieving superior risk-adjusted returns despite Packaging 6% 7% IT Infrastructure
Slide 9: NMFC by the Numbers
NMFC by the Numbers New Mountain Finance Superior Credit Quality Attractive Return Profile $3.1bn ~97% 11% Green Annualized Div. Portfolio Size(1) Portfolio Risk Rating Yield(4) 16 Year Operating History 41% Avg. Loan to Value(2) ~10% Annual Return Since IPO(5) Baa3 / 12bps Stable Average realized l
Slide 10: NMFC Strategic Priorities
NMFC Strategic Priorities 75% ▪ Maintain or increase senior assets 68% – 75% senior assets as of Q4(1) % % Assets Senior Senior ▪ Diversify top positions – Target 1.5% - 2.0% maximum position Q4 2023 Q4 2024 ▪ Optimize cost of debt for NMFC and SLPs 41% 26% ▪ Increase floating rate % 74% 59% Liabili
Slide 11: Summary of Changes in Portfolio
Summary of Changes in Portfolio(1) Q3 2024 Risk Ratings Q4 2024 Risk Ratings (FMV as of 9/30/2024) (FMV as of 12/31/2024) 1.1% 1.2% 1.6% 2.3% No positions improved in Rating Positions representing $17m worsened in Rating 97.3% 96.5% Weighted Average Risk Rating Mark(2) Green 98% Yellow 65% Orange 65
Slide 12: NMFC Portfolio – Risk Ratings
NMFC Portfolio – Risk Ratings (FMV as of 12/31/2024) ($ in millions / company count) $37 / 3 $37 / 5 Business Services $20 / 2 Education $18 / 1 Business Characteristics(2) (A = Best; C = Worst) Software $17 / 1 Healthcare $14 / 2 C National HME $3 / 1 Sierra Hamilton $2 / 1 $172 / 4 $555 / 19 $33 /
Slide 13: Q4 2024 NAV Update
Q4 2024 NAV Update Q4 2024 NAV declined $0.07 per share (or 0.6%) compared to the prior quarter $0.04 $12.62 ($0.11) $0.01 ($0.01) $12.55 Net $0.07 NAV Per Share Decrease Company $ / Share Lyons Magnus + $0.02 Office Ally + $0.01 RealPage + $0.01 HelpSystems – $0.06 Edmentum – $0.03 Permian – $0.01
Slide 14: Credit Performance Track Record
Credit Performance Track Record ▪ No new non-accruals in Q4 2024; non-accruals represent just 1.2% of total portfolio FMV(1) ▪ $10+ billion of cumulative investments since IPO have generated net realized losses of just $67 million ($ in millions) As of 12/31/2024 Cumulative Since IPO (13+ years)(2)
Slide 15: Total Value Generated for Shareholders
Cumulative Performance Since IPO(1) ($ in millions) Since IPO in 2011, NMFC has distributed ~$1.4 billion to shareholders while creating $1.2+ billion of total value $1,200 $1,246 NMFC has generated $1,362 million of Adj. NII, $67 million of net realized losses and $49 million of net unrealized loss
Slide 16: Credit Market Conditions
Credit Market Conditions General Investing Environment ▪ Direct lending market continues to be one of the most resilient asset classes – Private credit loans benefit from secured debt structures, floating base rates, and attractive spreads Direct Lending Opportunities ▪ Sponsor backed M&A was episod
Slide 17: Positively Exposed to Elevated Base Rates
Positively Exposed to Elevated Base Rates Asset Mix Liability Mix Pro Forma Liability Mix(2) (Aggregate par value of ($1,872 million drawn as of 12/31/2024) (See footnote disclosure) $2,544 million as of 12/31/2024)(1) Fixed 14% Fixed Floating Fixed Floating 26% 51% 49% 74% 86% Floating Impact of Ch
Slide 18: Q4 2024 Originations
Q4 2024 Originations Portfolio Originations(1) ($ in millions) Amount Type of Company Industry ($'s Invested) Investment Spread Veriforce Software - Governance, Risk & Compliance $15.2 First Lien SONIA + 5.00% Alegeus Healthcare - Tech-Enabled 8.4 First Lien S + 6.75% DDTL Draws & Other 9.5 Total Or
Slide 19: Portfolio Mix by Type
Portfolio Mix by Type (Fair Value as of 12/31/2024)(1) ~75% of the portfolio is senior in nature, up from ~68% in the prior year period Common Equity & Other Positions(3) Common Equity & Other Positions(3) Preferred 8% Subordinated 6% Company FMV 3% UniTek $85.2 Edmentum 60.0 2nd Lien 7%First Benevi
Slide 20: Q4 2024 Investment Activity Roll
Q4 2024 Investment Activity Roll YTM at Cost(1) / Purchase(2) 11.5% 11.1% 11.0% 10.5% 10.1% 9/30/2024 9/30/2024 Q4 Originations Q4 Sales / 12/31/2024 PF for 12/31/2024 Repayments Base Rate Changes(3) Cost ($m)(4) $3,296.3 $3,296.3 $33.1 $217.8 $3,131.9 1 Assumes that investments are purchased at cos
Slide 21: Portfolio Company EBITDA and Credit Statistics
Portfolio Company EBITDA and Credit Statistics (Dollars in millions) Portfolio Weighted Average EBITDA(1) $200 $189 $179 $180 $184 $180 $155 $160 $140 $120 $100 $80 $60 $40 $20 $0 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Portfolio Credit Statistics(2)(3) 10.0x 9.0x 8.0x 7.0x 6.5x 6.3x 6.3x 6.3x 6.2x 6.0x 5.0x
Slide 22: Diverse Portfolio
Diverse Portfolio (By Fair Value as of 12/31/2024)(1) Top 10 portfolio companies(2) represent $842.6 million, or 27.1%, of consolidated investments Benevis On a pro forma basis, UniTek 4.5% UniTek represents only 2.2% of consolidated investments 3.5% Edmentum 3.0% Kaseya 2.8% Alliance Animal Health
Slide 23: Balance Sheet Highlights
Balance Sheet Highlights Quarter Ended ($ in millions, except per share data) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Assets Portfolio $3,027.8 $3,086.5 $3,227.3 $3,278.8 $3,104.5 Cash & Equivalents 70.1 107.5 119.6 61.9 80.3 (1) Other Assets 61.3 61.6 76.7 73.6 61.9 Total Assets $3,159.
Slide 24: Income Statement Highlights (Quarterly)
Income Statement Highlights (Quarterly) Quarter Ended ($ in millions, except per share data) 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Investment Income Interest income $71.1 $67.6 $68.4 $72.9 $67.3 Dividend income 18.7 20.2 22.1 20.4 21.1 Other income 3.0 2.5 3.8 2.2 2.7 Total investment
Slide 25: Income Statement Highlights (Annual)
Income Statement Highlights (Annual) Year Ended ($ in millions, except per share data) 12/31/2022 12/31/2023 12/31/2024 Investment Income Interest income $222.3 $290.8 $276.2 Dividend income 64.8 72.5 83.8 Other income 18.1 10.5 11.2 Total investment income $305.2 $373.8 $371.2 Expenses (1) $42.2 $4
Slide 26: Investment Income Detail
Investment Income Detail ▪ Our investment income continues to be predominantly paid in cash and generated by stable and predictable sources ▪ 94%+ of Q4 2024 non-cash interest and dividend income is generated by positions with a Green risk rating – Over 75% is generated by positions that included PI
Slide 27: Dividend Summary and Coverage
Dividend Summary and Coverage ▪ Declared a Q1 dividend of $0.32 per share (payable in March 2025) ▪ Investment Adviser has pledged to reduce its incentive fee if and as needed through 2026 to support the $0.32 per share regular quarterly dividend(1) 123% 105% 108% 104% 103% 102% 100% 99% 99% 100% 99
Slide 28: NMFC Capital Structure Snapshot
NMFC Capital Structure Snapshot Focus on maintaining healthy unsecured debt mix, liquidity, and asset coverage 1.11x 79% 187% Statutory Leverage(1) Unsecured Debt(2) Asset Coverage Ratio(3) 2.0x 5.0x 208% Coverage of unfunded Asset Coverage for Fixed Charge Coverage(4) investments through Unsecured
Slide 29: Diversified Leverage Profile
Diversified Leverage Profile (As of 12/31/2024, Outstanding Percentage of $ in millions) / Facility Size Interest Rate(1) Maturity Outstanding NMFC Credit Facility(2) $28(3) / $639 Base Rate + 1.90%(4) September 2029(4) 1.5% Corporate Revolving Credit Facilities $28 / $639 Base Rate + 1.90%(4) 1.5%
Slide 30: Leverage Maturity Schedule
Leverage Maturity Schedule (As of 12/31/2024, $ in millions) Floating vs Fixed Debt Mix $875 Debt Type Outstanding Debt Max Facility Size $30 $846 $19 Fixed 51% 31% $115 Floating 49% 69% $300 $488 $13 $75 $364 $329 $100 $730 $104 $18 $527 $200 $300 $116 $260 $111 $116 2025 2026 2027 2028 2029 2030 a
Slide 31: Broad Industry Analyst Coverage
Broad Industry Analyst Coverage Bank of America Securities Janney Montgomery Scott J.P. Morgan – Fixed Income Keefe, Bruyette & Woods Derek Hewett John Rowan Kabir Caprihan Paul Johnson Raymond James Oppenheimer & Co. Wells Fargo Securities Robert Dodd Mitchel Penn Finian O’Shea 341
Slide 32: Appendix
NIM] NEw MOUNTAIN FINANCE CORPORATION Appendix
Slide 33: Appendix A: Risk Rating Migration from Prior Quarter
Appendix A: NMFC Portfolio – Risk Rating Migration from Prior Quarter (FMV as of 12/31/24) ($ in millions / company count) Software $17 / 1 Business Characteristics(2) (A = Best; C = Worst) C B A ** Excludes Green to Green Migration ** Tier 4 Tier 3 Tier 2 Tier 1 Operating Performance(1) (4 = Best;
Slide 34: Appendix B: Credit Performance
Appendix B: Credit Performance (2) (2) (2) NMFC Leverage Ratio NMFC Leverage Ratio NMFC Leverage Ratio Variance Variance Variance (1) (1) (1) Company / Asset Type (Vintage) Purchase Current + / (-) Company / Asset Type (Vintage) Purchase Current + / (-) Company / Asset Type (Vintage) Purchase Curren
Slide 35: Appendix C: NMFC Income Reconciliation
Appendix C: NMFC Income Reconciliation (in millions, except per share data) Year Ended (unaudited) IPO - 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 GAAP net investment income ("NII") $490.5 $106.0 $117.2 $117.3 $118.8 $119.6 $159.9 $146.0 Non-controlling interest in NMNL
Slide 36: Appendix D: Performance Since IPO Detail
Appendix D: Performance Since IPO Detail IPO - (1) ($ in millions) 12/31/2017 2018 2019 2020 2020 2022 2023 2024 Regular & Supplemental Dividend (2) $475.1 $103.4 $117.4 $120.1 $116.5 $122.4 $154.8 $147.2 Cumulative Regular & Supplemental Dividend 475.1 578.5 695.9 816.0 932.5 1,054.9 1,209.6 1,356.
Slide 37: Appendix E: Capital Structure Philosophy
Appendix E: Capital Structure Philosophy Committed to consistently accessing Unsecured Debt Markets Unsecured ▪ NMFC has issued multiple series of unsecured debt: $200 million in 2021, $275 million in 2022, $175 Issuances million in 2023 and $600 million in 2024 ▪ Two Public IG bonds issued in 2024,
Slide 38: INIMIF]
INIMIF] New MountTAIN FINANCE CORPORATION