New Mountain Finance Corporation · NASDAQ:NMFC
New Mountain Finance — Q3 2013 Earnings Presentation
26 slides from New Mountain Finance's earnings presentation, Nov 12, 2013
Slide 1: Q3 2013 Earnings Presentation
Q3 2013 Earnings Presentation November 12, 2013
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 D id M. M Cordova C d Chief Financial Officer and Treasurer 3
Slide 4: Q3 2013 Highlights
Q3 2013 Highlights ▪ Q3 Pro-Forma P F Adjusted Adj t d NNett IInvestment t t Income I (“NII”) off $0.35 $0 35 per weighted i ht d average share h – Q3 special dividend of $0.12 per share paid on August 30, 2013 – Q3 regular dividend of $0 $0.34 34 per share paid on September 30 30, 2013 ▪ September
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, L.L.C., which is an affiliate of New Mountain Capital, L.L.C. (“New Mountain” or “NMC”), a leading private equity firm with more than $9 billion of assets under management(1), approximatel
Slide 6: NMFC Relative Trading Performance – Indexed Total Return
NMFC Relative Trading Performance – Indexed Total Return Ma 19, May 19 2011 (IPO) – November No ember 8, 8 2013 Indexed Total Return 140.0 S&P 39.1% S&P Fin 37.1% 135.0 NMFC 35.2% 130.0 125.0 HY 21.4% 120.0 BDCs 20.1% 115.0 110.0 105.0 100.0 95.0 90.0 85 0 85.0 80.0 75.0 70.0 7/1/11 10/1/11 1/1/12 4
Slide 7: Credit Market Conditions
Credit Market Conditions ▪ Last three months have generally been characterized by a tightening spread environment – Market has shaken off impact of Washington dysfunction – Long term rates have stabilized – Significant inflows into both loan and bond funds – Reduced volatility ▪ With lilimited it d
Slide 8: Credit Market Conditions – Interest Rates
Credit Market Conditions – Interest Rates (unaudited) Floating vs. vs Fixed Assets Liabilities (Aggregate par value of $1,033.0 million as of September 30, 2013)(1) ($374.1 million drawn as of September 30, 2013) Fixed 12% Floating – No Floor (1-Month Libor) 100% Floating – Floor(2) 88% Impact of Ch
Slide 9: Credit Performance
Credit Performance ($ in millions, unaudited) Cumulative Since Inception(1) As of 9/30/2013 (October 2008 – September 30, 2013) Cost / FMV Cost / # Portfolio Co’s Investments $1,025.3 / $1,041.4 $2,180.5 119 On Internal Watch List (3 or 4 Rating, excl. $13.5 / $8.8 $20.5 2 Non-Accrual)(2) Non-Accrua
Slide 10: Credit Performance – Operating Company ("OpCo") Assets Portfolio
Credit Performance – Operating Company (“OpCo”) Assets Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company A 4.5x 4.2x 0.3x Company B 4.8x 5.0x (0.2x) Company C 4.1x 4.1x - Company p yD 5.3x 5.3x 0.0x Company E 5.7x 5.8x (0.2x) Company F
Slide 11: Credit Performance – Senior Loan Funding ("SLF") Eligible First Lien Portfolio
Credit Performance – Senior Loan Funding (“SLF”) Eligible First Lien Portfolio (2) NMFC Leverage Ratio Variance (1) Portfolio Company At Purchase Current Positive / (Negative) Company AC 3.2x 3.9x (0.7x) Company AD 3.1x 3.1x 0.1x Company AE 4.3x 3.5x 0.8x Company AF 3.4x 2.7x 0.7x Company AG 3.3x 3.
Slide 12: Share Ownership Migration
Share Ownership Migration (shares in millions)(1) (4) IPO - May-11 2012 Offerings 2013 Offerings Issuances Issuances Cumulative Issuances Cumulative (2)(3) (2)(3) Public Shares ("PubCo") 10.7 13.6 24.3 20.8 45.2 % of Total 34.6% 60.0% 94.4% NMC Fund Shares ("AIV Holdings") 20.2 (4.0) 16.2 (13.6) 2.7
Slide 13: Performance Since IPO
Performance Since IPO ($ in millions, unaudited)(1) IPO - (2) 12/31/2011 2012 3/31/2013 6/30/2013 9/30/2013 Regular Dividend $26.6 $46.6 $13.8 $14.5 $15.2 Cumulative Regular Dividend 26.6 73.2 87.0 101.5 116.7 (3) (3) Adj. NII 26.5 46.1 13.8 16.5 15.6 Cumulative Adj. NII 26.5 72.7 86.5 102.9 118.5 D
Slide 14: Q3 Originations and Repayments
Q3 Originations and Repayments ($ in millions, unaudited) Portfolio Originations(1) YTM at Purchase(3) Amount Tranche Type of Advance Date(2) Name Industry ($’s Invested) Size Investment Rate Unlevered Levered Distribution $19.7 / $275 / 1st Lien / 70% / 8.4% / 20.2% / 7/9/13 g & Logistics $9.7 $110
Slide 15: Investment Activity Since Quarter End (Through 11/8/13)
Investment Activity Since Quarter End (Through 11/8/13) ($ in millions, unaudited) Portfolio Originations(1) YTM at Purchase(3) Amount Tranche Type of Advance Date(2) Name Industry ($’s Invested) Size Investment Rate Unlevered Levered Distribution Preferred 10/15/13 $35.0 $200 N/A 12.6% 12.6% & Logi
Slide 16: Q3 Originations and Repayments
Q3 Originations and Repayments Originations by Type(1) Sales / Repayments by Type(1) Second Lien Debt 31% S Secondd Lien Debt 38% 62% SLF Eligible (2) First Lien Debt 5% 64% SLF Eligible Non-SLF Eligible First Lien First Lien Debt Debt(2) 1 By $s invested / $s received at time of origination / sale
Slide 17: Q3 Investment Activity Roll
Q3 Investment Activity Roll ($ 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) $19.7 / 8.4% / $34.0 12.0% $9 7 $9.7 13.2% 13 2% $19.8 7.5% $14.3 9.0% $14.9 8.7% $19 6 $19.6 11 9% 11.9% $14 2 $14.
Slide 18: Investment Portfolio Review
Investment Portfolio Review (unaudited) 9/30/13 6/30/13 3/31/13 12/31/12 IPO - 6/30/11((5)) Fair Value $1,041 million $1,059 million $1,031 million $990 million $544 million YTM(1) 10.4% 10.3% 9.8% 10.1% 10.4% YTM at Cost(2) 10.8% 10.6% 10.6% 10.6% 9.7% # Portfolio Companies 57 59 61 63 47 Middle Ma
Slide 19: Investment Portfolio Review – Top 15 Portfolio Companies
Investment Portfolio Review – As of 9/30/2013 Portfolio Names By Fair Value McGraw-Hill 4.4% Unitek 3.6% Edmentum 3.5% SRA 3.3% Global Knowledge Top 15 portfolio 3.2% companies Rocket Software 3 0% 3.0% represent $476 $476.6 6 Paradigm (aka Pinnacle) 2.9% million, or 45.8%, 42 Other Portfolio Compan
Slide 20: Net Asset Value – As of 9/30/2013
Net Asset Value – As of 9/30/2013 ($ in millions, unaudited) Net Asset Value(1) Consolidated NAV Memo: NAV / Share Portfolio $1,041.4 6/30/13 $14.32 Cash & Equivalents 17.6 3/31/13 $14.31 (2) Other Assets 18.3 12/31/12 $14.06 Total Assets 1,077.3 9/30/12 $14.10 6/30/12 $13.83 (4) L Less: T Total t l
Slide 21: OpCo Q3 Pro-Forma Adjusted Net Investment Income Reconciliation
OpCo Q3 Pro-Forma Adjusted Net Investment Income Reconciliation ($ in millions except per unit data, unaudited) Three months ended Nine months ended September 30, 2013 September 30, 2013 Per Weighted Per Weighted Amount Average Unit Amount Average Unit GAAP net investment income ("NII") $12.7 $0.28
Slide 22: OpCo Adjusted Consolidated Income Statement by Quarter
OpCo Adjusted Consolidated Income Statement by Quarter Pro-Forma Adj. Pro-Forma Adj. ($ in millions, except per unit data, unaudited)(1) Three Months Three Months (2) (2) Ended Ended Adj. Three Months Ended 9/30/2013 6/30/2013 3/31/2013 12/31/2012 Investment income Interest income $27.1 $27.1 $24.5
Slide 23: Adjusted Investment Income Detail
Adjusted Investment Income Detail millions unaudited)(1) ($ in millions, Pro-Forma Adj. Pro-Forma Adj. Three Months Three Months Ended(2) Ended(2) Adj. Three Months Ended 9/30/2013 / / 6/30/2013 / / 3/31/2013 / / 12/31/2012 / / Cash interest $24.4 $23.4 $22.3 $20.5 Non-cash interest 0.8 0.9 0.6 0.6
Slide 24: Dividend Summary
Dividend Summary ($ in millions, except per share data, unaudited) IPO Estimated (1) (3) (3) 6/30/2011 12/31/2012 3/31/2013 6/30/2013 9/30/2013 12/31/2013 Net Asset Value $440.6 $569.9 $610.5 $640.3 $641.8 (2) NAV / Share $13.98 $14.06 $14.31 $14.32 $14.32 Pre-Incentive Fee Adjusted NII $8.9 $17.0 $
Slide 25: New Mountain Finance Corporation
NIM|E NEw MOUNTAIN FINANCE CORPORATION
Slide 26: Appendix A: Structure Chart
Appendix A: Structure Chart(1) 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 (94.4%) New Mountain Finance Holdings, L.L.C. (“OpCo”) Investmen