New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q1 2015 Earnings Presentation
29 slides from New Mountain Finance's earnings presentation, May 6, 2015
Slide 1: Q1 2015 Earnings Presentation
Q1 2015 Earnings Presentation May 6, 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 David M. Cordova Chief Financial Officer and Treasurer 3
Slide 4: Q1 2015 Highlights
Q1 2015 Highlights ▪ Q1 2015 Adjusted Net Investment Income (“NII”) of $0.34 per weighted average share, versus guidance of $0.33 to $0.35 – Q1 2015 regular dividend of $0.34 per share paid on March 31, 2015 ▪ March 31, 2015 book value of $13.89 per share, an increase of $0.06 per share from the Dec
Slide 5: Key Highlights
Key Highlights Financial Highlights Quarter Ended 3/31/2014 6/30/2014 9/30/2014 12/31/2014 3/31/2015 (1) Pro Forma Adjusted NII Per Share $0.37 $0.36 $0.35 $0.34 $0.34 NAV Per Share $14.53 $14.65 $14.33 $13.83 $13.89 Dividends Per Share(2) $0.34 $0.34 $0.46 $0.34 $0.34 Share Count - End of Period (m
Slide 6: Review of NMFC
Review of NMFC Overview Strategy ▪ Founded in October 2008 to apply New Mountain Capital, ▪ NMFC’s mandate is to primarily target businesses in the L.L.C.’s (“NMC” or “New Mountain”) private equity middle market that, consistent with New Mountain’s private strengths to attractive risk-reward opportu
Slide 7: NMFC Relative Return Performance – Indexed Total Return
NMFC Relative Return Performance – Indexed Total Return May 19, 2011 (IPO) – May 1, 2015 Indexed Total Return 180.0 S&P 70.7% 170.0 S&P Fin 64.5% NMFC 63.5% 160.0 150.0 140.0 130.0 HY 30.3% 120.0 BDCs 18.8% 110.0 100.0 CAGR (IPO to 5/1/2015) 90.0 NMFC 13.2% 80.0 S&P 500 14.5% S&P 500 Financials 13.4
Slide 8: NMFC Cumulative Total Return Performance Versus Peers
NMFC Cumulative Total Return Performance Versus Peers(1) May 19, 2011 (IPO) – May 1, 2015 63.5% 52.7% 45.1% 44.9% 35.3% 19.3% 18.2% 18.0% 15.3% 7.8% (11.7%) NMFC Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J Source: Capital IQ 1 Peers include publicly-traded, externally-manag
Slide 9: NMFC Return Attribution
NMFC Return Attribution ($ per Share) $6.72 $1.04 $2.17 $0.61 $0.46 $1.80 $0.32 $0.37 $0.93 $0.12 $0.12 $0.38 $5.26 $1.34 $1.36 $1.36 $0.40 $0.86 $0.06 $0.34 ($0.19) ($0.48) ($0.55) Cumulative IPO to 12/31/2011(1) 2012 2013 2014 YTD 2015 (IPO to 3/31/2015)(1) Regular Dividends Special Dividend ∆ in
Slide 10: Credit Market Conditions
Credit Market Conditions ▪ Credit spreads have started to narrow since our last call – Primarily driven by reduced supply in the market – Stabilization in retail fund flows ▪ With limited exceptions, smaller deals continue to be priced at a premium ▪ NMFC works to be well positioned to capitalize on
Slide 11: Credit Market Conditions – Interest Rates
Credit Market Conditions – Interest Rates Floating vs. Fixed Assets Liabilities (Aggregate par value of $1,398.8 million as of 3/31/2015)(1) ($663.9 million drawn as of 3/31/2015) Fixed Fixed(3) 16% 23% Floating – No Floor Floating – Floor(2) (1-Month Libor) 84% 77% Impact of Changing Rates(4) Estim
Slide 12: Credit Performance
Credit Performance ($ in millions) Cumulative Since Inception(1) As of 3/31/2015 (October 2008 – March 31, 2015) Cost / FMV Cost / # Portfolio Co’s Investments $1,451 / $1,435 $3,166 / 155 of which of which Internal Watch List (3 or 4 Rating)(2) $78 / $49 $141 / 7 of which of which Non-Accrual $17 /
Slide 13: Credit Performance
Credit Performance Non-70% Advance Rate Assets 70% Advance Rate Assets (2) (2) NMFC Leverage Ratio NMFC Leverage Ratio Variance Variance Portfolio Company(1) At Purchase Current + / (–) Portfolio Company (1) At Purchase Current + / (–) Company A 4.9x 4.6x 0.3x Company AL 3.4x 3.0x 0.4x Company B 5.8
Slide 14: Edmentum Update
Edmentum Update ▪ As noted on our prior call, Edmentum, Inc. released a very weak FY2015 budget and indicated that financial covenants would be violated – NMFC owns $31.2 million of the second lien debt; position marked at 50 since December 31, 2014 ▪ On April 20, 2015, Edmentum announced a unanimou
Slide 15: Performance Since IPO
Performance Since IPO ($ in millions) IPO - 2015 (1) 12/31/2011 2012 2013 2014 3/31/2015 Regular Dividend $26.6 $46.6 $59.8 $71.4 $19.7 Cumulative Regular Dividend 26.6 73.2 133.0 204.3 224.0 Adj. NII 26.5 46.1 62.1 (2) 73.4 (2) 19.5 Cumulative Adj. NII 26.5 72.7 134.8 208.2 227.7 Dividend Coverage
Slide 16: Q1 2015 Originations
Q1 2015 Originations Portfolio Originations(1) ($ in millions) YTM at Purchase(4) Amount Type of Advance Date(2) Name Industry ($’s Invested) Tranche Size Investment Rate(3) Unlevered Levered 1/30/2015 Software $29.3 $194 2nd Lien 25% 12.3% 15.1% Distribution & 2/10/2015 $10.0 $805 Subordinated 25%
Slide 17: Origination Activity Since Quarter End
Origination Activity Since Quarter End (Through 5/4/2015) ($ in millions) Portfolio Originations(1) YTM at Purchase(4) Amount Type of Advance Date(2) Name Industry ($’s Invested) Tranche Size Investment Rate(3) Unlevered Levered Consumer 5/4/15 Company X* $14.9 $220 1st lien 66.7% 8.2% 18.5% Service
Slide 18: Q1 2015 Originations and Repayments
Q1 2015 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Common Non-70% Equity Advance Rate 70% Advance Rate 2% Subordinated First Lien Debt (2) Debt First Lien Debt 8% 15% 17% Non-70% Advance Rate 1% First Lien Debt 75% 82% Second Lien Debt Second Lien Debt 1 By $s
Slide 19: Q1 2015 Investment Activity Roll
Q1 2015 Investment Activity Roll YTM at Cost(1) / Purchase(2) 11.9% 10.7% 10.5% 10.6% 10.6% 12/31/2014 12/31/2014 Q1 Originations Q1 Sales / 3/31/2015 PF for Change Repayments in LIBOR Curve Cost ($mm)(3) $1,475.9 $1,475.9 $64.8 $76.7 $1,451.5 1 Assumes that investments are purchased at adjusted cos
Slide 20: Portfolio Mix (By Fair Value as of 3/31/2015)
Portfolio Mix (By Fair Value as of 3/31/2015) By Industry Other(1) Media 5% 4% Distribution & Logistics 7% Energy Software 7% 23% Federal Services 9% Services 22% HC IT - <1% Healthcare Business Svcs HC Products - 1% 9% 18% Education HC Services - 8% 14% Consumer Svcs Industrial Svcs 3% <1% By Type
Slide 21: Portfolio Concentration (By Fair Value as of 3/31/2015)
Portfolio Concentration (By Fair Value as of 3/31/2015) Portfolio Names By Fair Value UniTek 3.3% TIBCO 3.2% Tenawa 2.9% Deltek 2.9% Ascend Learning 2.8% Kronos 2.7% Top 15 portfolio McGraw-Hill companies Global 2.6% represent $569.1 Envision 2.5% 55 Other million, or 39.7%, Tolt 2.5% Portfolio Comp
Slide 22: Balance Sheet Highlights
Balance Sheet Highlights Quarter Ended ($ in millions, except per unit/share data) 3/31/2014 6/30/2014 9/30/2014 12/31/2014 3/31/2015 Assets Portfolio $1,180.2 $1,310.9 $1,353.7 $1,454.7 $1,434.8 (1) Cash & Equivalents 13.3 21.7 19.6 23.4 22.2 (2) Other Assets 25.9 25.5 24.8 36.8 30.6 Total Assets $
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 $14.33 $14.65 $14.40 $14.53 $14.06 $14.38 $14.31 $14.32 $14.32 $14.33 $13.89 $14.00 $13.83 $14.08 $14.10 $14.06 (2) $13.60 $13.98(1) $13.82 $13.83 NAV per Share
Slide 24: Income Statement Highlights
Income Statement Highlights Quarter Ended - Adjusted (1) ($ in millions, except per unit/share data) 3/31/2014 6/30/2014 9/30/2014 12/31/2014 3/31/2015 Investment Income Interest income $28.1 $31.6 $32.3 $34.0 $33.3 Dividend income 1.9 1.3 0.5 0.8 1.3 Other income 0.7 0.8 1.9 1.9 1.9 Total investmen
Slide 25: Investment Income Detail
Investment Income Detail Quarter Ended - Adjusted (1) ($ in millions) 3/31/2014 6/30/2014 9/30/2014 12/31/2014 3/31/2015 Investment Income Build Cash interest $26.3 $28.4 $29.1 $31.1 $31.6 Non-cash interest 0.8 0.6 1.6 1.6 0.7 Amortization of purchase discounts (premiums) and fees 0.7 0.6 0.6 0.6 0.
Slide 26: Dividend Summary and Coverage
Dividend Summary and Coverage We believe our Q2 2015 Adjusted NII will be in the $0.33 to $0.35 per share range. Our board of directors has declared a second quarter dividend of $0.34 per share. 0.8 114% 120% 108% 103% 103% 105% 101% 102% 0.7 100% 99% 99% 100% 100% 99% 98% 98% 95% 100% 0.6 $0.57 80%
Slide 27: Diversified Leverage Profile
Diversified Leverage Profile (As of 3/31/2015, $ in millions) Amount Outstanding / Facility Size Interest Rate Maturity New Holdings Credit Facility $443 / $495 Broadly syndicated 1st lien loans(1): L + 2.00% December 2019 (Wells Fargo) All other: L + 2.75% (No LIBOR floor) NMFC Credit Facility $69
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 Administration Officer Robert A. Hamwee and Director Adam B. Weinstein Robert A. Hamw
Slide 29: New Mountain Finance Corporation
NIM|F NEw MOUNTAIN FINANCE CORPORATION