New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q2 2011 Earnings Presentation
20 slides from New Mountain Finance's earnings presentation, Aug 12, 2011
Slide 1: Q2 2011 Earnings Presentation
Q2 2011 Earnings Presentation August 12, 2011
Slide 2: Important Notice and Safe Harbor Statement
Important Notice and Safe Harbor Statement This presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. All forward-looking statements included in this presentation are made
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 2
Slide 4: Q2 2011 Highlights
Q2 2011 Highlights ▪ IPO O priced on 5/19/2011, / / total gross proceeds off ~$130 $ million – Management purchased 2.2 million shares for $30 million in a concurrent private placement – A New Mountain private equity fund owns rights to 20.2 million shares through the contribution of the initial por
Slide 5: Review of NMFC and NMFC Strategy
Review of NMFC and NMFC Strategy ▪ NMFC’s NMFC’ portfolio tf li is i externally t ll managed dbby New N M Mountain t i Fi Finance Advisers Ad i BDC, BDC LLC, LLC which hi h iis an affiliate ffili t of New Mountain Capital LLC (“New Mountain” or “NMC”), a leading private equity firm with over $9 bill
Slide 6: Credit Market Conditions
Credit Market Conditions ▪ Buyer friendly as credit spreads have been widening since early Q2 ▪ Worsening economic outlook ▪ Europe / U.S. fiscal problems ▪ Supply / demand dynamics – Private equity M&A driving supply – Reduced fund-flows and market volatility reducing demand ▪ While markets have de
Slide 7: Credit Performance
Credit Performance ($ in millions) Cumulative Since As of 6/30/2011 Inception(1) Investments (Cost) $524.0 $909.4 On Internal Watch List $0 $0 (3 or 4 Rating)(2) Non-Accrual $0 $0 Default Loss $0 $0 1 Since inception of predecessor entity in October 2008 through June 30, 2011 2 Determined on a quart
Slide 8: Credit Performance – Operating Company (OpCo) Portfolio
Credit Performance – Operating Company (“OpCo”) Portfolio (2) NMFC Leverage Ratio (1) Portfolio Company At Purchase Current Change Company A 3.7x 3.3x 0.4x Company B 5.0x 3.1x 1.8x Company C 4.4x 3.8x 0.6x Company D 4.5x 5.2x (0.7x) Company E 6.7x 6.3x 0.4x Company F 5.2x 3.7x 1.5x Company G 3 2x 3.
Slide 9: Credit Performance – SLF Portfolio
Credit Performance – SLF Portfolio (2) NMFC Leverage Ratio (1) Portfolio Company At Purchase Current Change Company T 1.8x 1.8x - Compan U Company 42 4.2x 36 3.6x 06 0.6x Company V 5.0x 3.8x 1.2x Company W 4.1x 4.1x (0.0x) Company X 3.1x 2.1x 1.0x Company Y 3.7x 3.7x - Company Z 3.3x 3.2x 0.1x Compa
Slide 10: Q2 Originations and Repayments
Q2 Originations and Repayments ($ in millions) Portfolio Originations(1) Amount Type of YTM at Date Name Industry ($’s Invested) Tranche Size Investment OpCo / SLF Purchase(2) UniTek Global Business 1st Lien 4/15/11 $19.4 $100 OpCo 11.5% Services Services Unitranche Sotera Defense Federal 4/21/11 $1
Slide 11: Q2 Originations and Repayments
Q2 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Subordinated D bt Debt Subordinated Debt 3% 15% Second Lien Debt Second 0% Lien Debt 30% OpCo First Lien Debt 17% 52% SLF First Lien Debt 68% SLF First Lien Debt 15% OpCo First Lien Debt 1 By $s invested / $s receiv
Slide 12: Investment Activity Since Quarter End
Investment Activity Since Quarter End ($ in millions) Portfolio Originations(1) Amount Type of YTM at Date Name Industry ($’s Invested) Tranche Size Investment OpCo / SLF Purchase(2) Federal 7/13/11 SRA $14.3 $875 1st Lien SLF 18.7% Services $9.9 / $125 / 1st Lien / SLF / 18.6% / 7/29/11 Meritas Edu
Slide 13: Investment Portfolio Review – As of June 30, 2011
Investment Portfolio Review – As of June 30, 2011 Fair Value $544 million Unadjusted / Adjusted YTM(1) 10.4% / 12.7% Number of Portfolio Companies 47 80% of Portfolio Companies < $100m of EBITDA(2); Middle Market Focus (As of 6/30/11) 85% of Facilities < $300 million Fair Value as of June 30, 2011 B
Slide 14: Investment Portfolio Review – Portfolio Names By Fair Value
Investment Portfolio Review – As of June 30, 2011 Portfolio Names By Fair Value Managed Health Care Associates Decision 6.5% Resources 5.9% Novell 32 Other Portfolio 5.0% Lawson Top 15 portfolio C Companies 44% i Software 4.2% companiesi Learning Care represent $306.4 3.7% U.S. Healthworks million,
Slide 15: Structure Chart
Structure Chart Concurrent Public Private Shareholders Placement Common Stock Common Stock New Mountain Finance New Mountain Finance AIV Corporation Holdings Corporation (“PubCo”) (“AIV Holdings”) Common Membership Units (34.6%) New Mountain Finance Holdings, L.L.C. (“OpCo”) Investments New Mountain
Slide 16: Net Asset Value – As of 6/30/2011
Net Asset Value – As of 6/30/2011 ($ in millions) Net Asset Value (1) Unconsolidated Consolidated OpCo Portfolio $322.5 Portfolio $544.3 SLF Equity 94.9 Cash & Equivalents 77.9 C h&E Cash Equivalents i l t 77 9 77.9 Other Assets (2) 84 8.4 (2) 8.4 Other Assets Total Assets 503.7 Total Assets 630.6 L
Slide 17: OpCo Adjusted Consolidated Income Statement (Full Quarter)
OpCo Adjusted Consolidated Income Statement (Full Quarter) ($ in millions)(1) Adjusted Three months ended Three months ended June 30, 2011 Adjustments June 30, 2011 Investment income Interest income $12.8 ($1.1) $11.7 Other income 03 0.3 03 0.3 Total investment income 13.1 12.0 Expenses Interest and
Slide 18: Dividend – Q3 2011
Dividend – Q3 2011 ($ in millions) NAV at 6/30/2011 $440.6 Hurdle Rate - 2.0% (8% Annualized) $8.8 Anywhere in this range yields $8.8 Catch-up - 0.5% (2% Annualized) 2.2 million of Adjusted NII $11.0 due to catch-up Adjusted NII - Q3 Estimate $8.8 # of Shares 30.9 Dividend p per Share $0.29 We belie
Slide 19: New Mountain Finance Corporation
NIM|E NEw MOUNTAIN FINANCE CORPORATION
Slide 20: Appendix A: Adjusted Consolidated Income Statement (Partial Quarter)
Appendix A: Adjusted Consolidated Income Statement (Partial Quarter) ($ in millions)(1) O C OpCo PubCo C Adjusted Period from 5/19/11 Period from 5/19/11 Period from 5/19/11 to 6/30/11 to 6/30/11 Adjustments to 6/30/11 Investment income I t Interest t income i $7 0 $7.0 $2 4 $2.4 ($0 2) ($0.2) $2 2