New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q2 2012 Earnings Presentation
23 slides from New Mountain Finance's earnings presentation, Aug 9, 2012
Slide 1: Q2 2012 Earnings Presentation
Q2 2012 Earnings Presentation August 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, Treasurer and Director 3
Slide 4: Q2 2012 Highlights
Q2 2012 Highlights ▪ Q2 Adjusted Net Investment Income of $0 $0.35 35 per share – Q2 dividend of $0.34 per share paid on June 29, 2012 ▪ June 30, 2012 book value of $13.83 per share, an increase of $0.01 per share from the March 31, 2012 book value of $13.82 per share (pro forma for the special divi
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 $9 billion of assets under management(1), over 90 sta
Slide 6: NMFC Relative Trading Performance – Indexed Total Return
NMFC Relative Trading Performance – Indexed Total Return Ma 19, May 19 2011 (IPO) – August A g st 7 7, 2012 Indexed Total Return 124.0 120.0 NMFC 18.8% 18 8% 116.0 112.0 HY 8.8% 108.0 S&P 7.0% 7 0% BDCs 6.3% 104.0 100.0 96.0 S&P Fin ((4.1%)) 92.0 88.0 84.0 80.0 76.0 72.0 6/1/11 7/1/11 8/1/11 9/1/11
Slide 7: Credit Market Conditions
Credit Market Conditions ▪ Relative stability despite intra-quarter volatility – European headlines – Continued weakening global and U.S. economic data – Recent equity market strength ▪ Supply / demand dynamics consistent with last quarter – Private equity M&A continues to drive supply – Fund-flows
Slide 8: Credit Performance
Credit Performance ($ in millions, unaudited) Cumulative Since As of 6/30/2012 Inception(1) Cost / FMV Cost Investments $747.2 / $751.1 $1,392.5 On Internal Watch List $4.3 / $0.3 $4.3 (3 or 4 Rating)(2) Non-Accrual $4.3 / $0.3 $4.3 Default Loss $0 / $0 $0 1 Since inception of predecessor entity in
Slide 9: Credit Performance – Operating Company (“OpCo”) Portfolio
Credit Performance – Operating Company (“OpCo”) Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company A 3.1x 2.7x 0.4x Company B 4.9x 4.0x 0.9x Company C 4.6x 4.7x (0.1x) Company D 5.9x 5.9x - Company E 4.3x 2.6x 1.7x Company F 6.7x 6.2x 0
Slide 10: Credit Performance – Senior Loan Funding (“SLF”) Portfolio
Credit Performance – Senior Loan Funding (“SLF”) Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company AB 4.1x 3.9x 0.1x Company AC 4.1x 4.1x (0.0x) Company AD 2.2x 0.7x 1.6x Company AE 4.1x 4.1x - Company AF 3.8x 3.7x 0.1x Company AG 3.5x
Slide 11: Public Offering
Public Offering ▪ On July 11 11, 2012 2012, NMFC commenced a public offering of 5 5.25 25 million shares of its common stock and granted the underwriters an option to purchase up to an additional 787,500 shares of common stock – Proceeds to be used for new investments, the temporary repayment of ind
Slide 12: Q2 Originations and Repayments
Q2 Originations and Repayments ($ 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 5/3/12 Yellow Pages Media $10.0 $291 2nd Lien 25% 16.8% 21.1% $24.5 / $140 / 2nd Lien / 25
Slide 13: Q2 Originations and Repayments
Q2 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Subordinated Debt <1% Subordinated Debt 17% (2) SLF Eli Eligible ibl 39% First Lien Second 42% Debt Lien Debt (2) 53% SLF Eligible First Lien Debt Second 35% Lien Debt 4% 9% Non-SLF Eligible Non-SLF Eligible First L
Slide 14: Q2 Investment Activity Roll
Q2 Investment Activity Roll ($ 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) $17.8 / 7.1% / Yellow Pages $10.0 16.8% DRI $14.5 10.2% $24.5 / 12.5% / $15.1 / 14.2% / Plato Lawson $11.6 8.6% $10.
Slide 15: Investment Activity Since Quarter End
Investment Activity Since Quarter End ($ 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 7/24/12 ParadigmPages Software $29.4 $135 2nd Lien 25% 11.7% 14.4% (5) 8/1/12 Van W
Slide 16: Investment Portfolio Review
Investment Portfolio Review (unaudited) 6/30/12 3/31/12 12/31/11 9/30/11 6/30/11 Fair Value $751 million $758 million $704 million $604 million $544 million Unadjusted / 10.7% / 13.0% 10.6% / 12.8% 10.7% / 13.1% 10.9% / 14.0% 10.4% / 12.7% Adjusted YTM(1) YTM at Cost((2)) 10 5% 10.5% 10 6% 10.6% 10
Slide 17: Investment Portfolio Review – As of 6/30/2012
Investment Portfolio Review – As of 6/30/2012 Portfolio Names By Fair Value Plato Global Knowledge - 4.1% 4.9% Meritas - 3.8% Managed Health Care 3.7% Top 15 portfolio Novell 3.7% companies Insight Pharma represent $353 $353.1 1 41 Other 3.3% million, or 47.0%, Portfolio Companies UniTek 3.2% of con
Slide 18: Net Asset Value – As of 6/30/2012
Net Asset Value – As of 6/30/2012 ($ in millions, unaudited) Net Asset Value(1) Consolidated NAV Memo: NAV / Share Portfolio $751.1 3/31/12 (4) $13.82 Cash & Equivalents 9.5 12/31/11 $13.60 Other Assets ((2)) 13 1 13.1 9/30/11 $13 32 $13.32 Total Assets 773.7 6/30/11(5) $13.98 At IPO $13.94 Less: To
Slide 19: OpCo Adjusted Consolidated Income Statement
OpCo Adjusted Consolidated Income Statement ($ in millions, unaudited)(1) Th Three Months M th Ended E d d 6/30/2012 Adj Three Adj. Th Months M th Ended E d d (2) Unadjusted Adjustments Adjusted 3/31/2012 12/31/2011 9/30/2011 Investment income Interest income $20.1 ($0.8) $19.3 $17.6 $16.7 $13.7 Oth
Slide 20: Dividend – Q2 2012
Dividend – Q2 2012 ($ in millions, unaudited) Estimated 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 Net Asset Value $440.6 $411.9 $420.5 $434.3 $427.7 (1) (2) NAV / Share $13.98 $13.32 $13.60 $13.82 $13.83 Pre-Incentive Fee Adjusted NII $8.9 $9.5 $11.6 $12.3 $13.6 $14.1 - $15.4 Adju
Slide 21: New Mountain Finance Corporation
NIM|E NEw MOUNTAIN FINANCE CORPORATION
Slide 22: Appendix A: Structure Chart
Appendix A: Structure Chart Concurrent Public Private Shareholders Placement Common Stock Common Stock New Mountain Finance New Mountain Finance AIV Corporation Holdings Corporation (“PubCo”) (“AIV Holdings”) Common Membership Units (34.6%) New Mountain Finance Holdings, L.L.C. (“OpCo”) Investments
Slide 23: Appendix B: Adjusted Consolidated Income Statement
Appendix B: Adjusted Consolidated Income Statement ($ in millions, unaudited)(1) Adjusted Three Months Ended Three Months Ended Three Months Ended 6/30/2012 6/30/2012 Adjustments (2) 6/30/2012 Investment income Interest income $20.1 $7.0 ($0.3) $6.7 Other income 0.2 0.1 0.1 Total investment income 2