New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q3 2011 Earnings Presentation
21 slides from New Mountain Finance's earnings presentation, Nov 15, 2011
Slide 1: Q3 2011 Earnings Presentation
Q3 2011 Earnings Presentation November 15, 2011
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 and Treasurer 3
Slide 4: Q3 2011 Highlights
Q3 2011 Highlights ▪ Q3 Adjusted Net Investment Income and dividend of $0.29 $ per share – Paid on September 30, 2011 to holders of record as of September 15, 2011 ▪ September 30, 2011 book value of $13.32 per share ▪ Q4 dividend of $0.30 per share announced – Payable on December 30, 2011 to holders
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 $9 billion of assets under management(1), over 85 sta
Slide 6: Credit Market Conditions
Credit Market Conditions ▪ Increasingly buyer friendly as credit spreads widened throughout Q3; modest reversal in first half of Q4 ▪ Uncertain economic outlook ▪ Europe / U.S. fiscal problems ▪ Supply S l / demand d dddynamics i – Private equity M&A continues to drive supply, but at a slower pace t
Slide 7: Credit Performance
Credit Performance ($ in millions, unaudited) Cumulative Since As of September 30, 2011 Inception(1) Investments (Cost) $606.7 $1,018.8 On Internal Watch List $4.3 $4.3 (3 or 4 Rating)(2) Non-Accrual $0 $0 Default Loss $0 $0 1 Since inception of predecessor entity in October 2008 through September 3
Slide 8: Credit Performance – Operating Company (OpCo) Portfolio
Credit Performance – Operating Company (“OpCo”) Portfolio ((2)) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company A 1.8x 1.5x 0.4x Company B 2.5x 2 5x 2 1x 2.1x 0 4x 0.4x Company C 5.0x 3.6x 1.4x Company D 1.7x 1.0x 0.7x Company E 3.2x 3.1x 0.1x Com
Slide 9: Credit Performance – Senior Loan Funding (SLF) Portfolio
Credit Performance – Senior Loan Funding (“SLF”) Portfolio ((2)) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company W 4.1x 3.7x 0.4x Company X 3.1x 3.0x 0.1x Company Y 4.1x 3.9x 0.2x Company Z 4.3x 4.2x 0.1x Company AA 3.1x 2.2x 1.0x Company AB 1.8x
Slide 10: Q3 Originations and Repayments
Q3 Originations and Repayments ($ in millions) Portfolio Originations(1) Amount ($’s Tranche Type of Advance YTM at Purchase(3) Date(2) Name Industry Invested) Size Investment Rate Unlevered Levered Federal 7/13/11 SRA $14.3 $875 1st Lien 67% 8.9% 18.7% Services $9.9 / $125 / 1st Lien / 67% / 8.4% /
Slide 11: Q3 Originations and Repayments
Q3 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Subordinated Equity Debt 2% 7% OpCo First SLF First 35% 37% Lien Debt Lien Debt SLF First 65% Lien Debt Second 54% Lien Debt 11 1 By $s invested / $s received at time of origination / sale / repayment
Slide 12: Investment Activity Since Quarter End
Investment Activity Since Quarter End ($ in millions) Portfolio Originations(1) Amount ($’s Tranche Type of Advance YTM at Purchase(3) Date(2) Name Industry Invested) Size Investment Rate Unlevered Levered 10/18/11 TriplePoint Software $13.9 $165 1st Lien 67% 9.5% 23.6% 10/19/11 Renaissance Le Educa
Slide 13: Investment Activity Bridge
Investment Activity Bridge ($ in millions, unaudited)(1) Portfolio Bridge Cash & Debt Bridge Available Cash & Total Fundings (4) Equivalents Debt (Cash + Debt) June 30, 2011 Portfolio $544 June 30, 2011 $45 $161 Plus: Q3 2011 Net Originations Less Sales 130 Less: Q3 2011 Originations Not Funded in Q
Slide 14: Investment Portfolio Review
Investment Portfolio Review (unaudited) A off S As September t b 30 30, 2011 A off J As June 30 30, 2011 Fair Value $604 million $544 million Unadjusted / Adjusted YTM(1) 10.9% / 14.0% 10.4% / 12.7% # of Portfolio Companies 50 47 79% Portfolio Companies < $100m EBITDA(2); 80% Portfolio Companies < $
Slide 15: Investment Portfolio Review – Top 15 Portfolio Companies
Investment Portfolio Review – As of September 30, 2011 Portfolio Names By Fair Value Decision Resources 5.3% Meritas 4 8% 4.8% Lawson Software 4.7% Top 15 portfolio Managed Health Care companies 4 7% 4.7% represent $325 $325.5 5 million, or 53.9%, 35 Other Novell Portfolio 4.3% of consolidated Compa
Slide 16: Net Asset Value – As of September 30, 2011
Net Asset Value – As of September 30, 2011 ($ in millions, unaudited) Net Asset Value (1) Unconsolidated Consolidated OpCo Portfolio $352.9 Portfolio $604.3 SLF Equity 84.8 Cash & Equivalents 18.4 Cash & Equivalents 18.4 Other Assets (2) 18.9 Other Assets (2) 18.9 Total Assets 475 0 475.0 Total Asse
Slide 17: OpCo Adjusted Consolidated Income Statement
OpCo Adjusted Consolidated Income Statement ($ in millions, unaudited)(1) Adj t d Adjusted Adj t d Adjusted Three Months Ended Three Months Ended Three Months Ended September 30, 2011 Adjustments (2) September 30, 2011 June 30, 2011 Investment income Interest income $14.9 ($1.2) $13.7 $11.7 Other in
Slide 18: Dividend – Q4 2011
Dividend – Q4 2011 ($ in millions, unaudited) Estimated June 30, 2011 September 30, 2011 December 31, 2011 Net Asset Value $440.6 $411.9 NAV / Share (1) $13.98 $13.32 Hurdle Rate $8.6 $8.8 $8.2 C t h Catch-up 22 2.2 22 2.2 21 2.1 Total 10.8 11.0 10.3 Pre-Incentive Fee Adjusted NII $8.9 $9.5 $11.4 -
Slide 19: New Mountain Finance Corporation
NIM|E NEw MOUNTAIN FINANCE CORPORATION
Slide 20: Appendix A: Structure Chart
Appendix A: Structure Chart Concurrent Public Private Shareholders Placement Common Stock Common Stock New Mountain Finance New Mountain Finance AIV Corporation Holdings Corporation (“PubCo”) (“AIV Holdings”) Common Membership Units (34.6%) New Mountain Finance Holdings, L.L.C. (“OpCo”) Investments
Slide 21: Appendix B: Adjusted Consolidated Income Statement
Appendix B: Adjusted Consolidated Income Statement ($ in millions, unaudited)(1) OpCo PubCo Adjusted Three Months Ended Three Months Ended Three Months Ended September 30, 2011 September 30, 2011 Adjustments (2) September 30, 2011 Investment income Interest income $14.9 $5.1 ($0.4) $4.7 Other income