Reports Net Investment Income of $0.36 per
Share
Declares a Regular Second Quarter Distribution
of $0.32 per Share and a Supplemental Distribution of $0.02 per
Share
New Mountain Finance Corporation (NASDAQ: NMFC) (“New Mountain,”
“New Mountain Finance” or the “Company”) today announced its
financial results for the quarter ended March 31, 2024.
First Quarter Highlights1
- Net investment income of $37.3 million, or $0.36 per weighted
average share
- Net asset value of $12.77 per share compared to $12.87 per
share as of December 31, 2023. The 0.8% decline is driven by stable
core credit performance, offset by a decrease in value in one of
the Company's equity positions
- Internal risk rating improved with 96.5% of the portfolio rated
green as of March 31, 2024, compared to 94.5% as of December 31,
2023
- Generated $191.8 million of originations2, partially offset by
cash repayments2 of $144.9 million
- De-levered from 1.14x3 as of December 31, 2023 to 1.08x3 as of
March 31, 2024
- Declared a regular second quarter 2024 distribution of $0.32
per share and a supplemental distribution related to first quarter
earnings of $0.02 per share, which will be payable on June 28, 2024
to holders of record as of June 14, 2024
($ in millions, except per share
data)
Q1 2024
Q1 2023
Net Investment Income per Weighted Average
Share
$
0.36
$
0.38
Dividends per Share4
$
0.34
$
0.35
Annualized Dividend Yield5
10.7
%
12.1
%
March 31, 2024
December 31, 2023
Investment Portfolio6
$
3,086.5
$
3,027.8
NAV per Share
$
12.77
$
12.87
Statutory Debt/Equity3
1.08x
1.14x
Statutory Debt/Equity (Net of Available
Cash)3
1.03x
1.10x
Management Comments on First Quarter Performance
“Our first quarter results reflect another successful quarter
for NMFC,” said Steven B. Klinsky, NMFC Chairman. “New Mountain
continues to benefit from our disciplined, defensive growth
strategy that is focused on end markets that perform well in all
economic cycles.”
John R. Kline, CEO, commented: “NMFC’s portfolio continues to be
well-positioned as a result of our defensive growth investment
strategy. New Mountain delivered stable earnings and strong credit
performance during the first quarter with over 96% of the portfolio
rated green on our risk rating scale. We believe this is a direct
result of our continued effort to invest in high-quality companies
and deliver constant yield to our shareholders.”
Portfolio and Investment Activity6
As of March 31, 2024, the Company’s NAV1 was $1,356.9 million
and its portfolio had a fair value of $3,086.5 million in 115
portfolio companies, with a weighted average YTM at Cost7 of
approximately 11.1%. For the three months ended March 31, 2024, the
Company generated $191.8 million of originations2 and cash
repayments2 of $144.9 million.
Portfolio and Asset Quality
NMFC’s mandate is to primarily target businesses in the middle
market that, consistent with New Mountain’s private equity
platform, are high quality, defensive growth companies in
industries that are well-researched by New Mountain. The Company’s
focus is on defensive growth businesses that generally exhibit the
following characteristics: (i) acyclicality, (ii) sustainable
secular growth drivers, (iii) niche market dominance and high
barriers to competitive entry, (iv) recurring revenue and strong
free cash flow, (v) flexible cost structures and (vi) seasoned
management teams.
Industry Composition of the Company's Portfolio based on Fair
Value10
Software
Business Services
ERP
9.1 %
Engineering & Consulting Services
5.4 %
IT Infrastructure & Security
7.0 %
Real Estate Services
4.5 %
Human Capital Management
4.8 %
Misc Services
3.5 %
Ecommerce & Logistics
4.1 %
Insurance & Benefits Services
3.1 %
Finance & Accounting
3.4 %
Digital Transformation
2.3 %
Governance, Risk & Compliance
2.0 %
Utility Services
1.7 %
Integrated Payments
1.5 %
Data & Information Services
0.2 %
Total Software
31.9 %
Total Business Services
20.7 %
Healthcare
Other Industries
Healthcare Services
10.9 %
Education
7.3 %
Healthcare Software
4.3 %
Consumer Services
6.5 %
Pharma Services
1.1 %
Distribution & Logistics
4.3 %
Tech-Enabled Healthcare
1.0 %
Financial Services
4.0 %
Healthcare Products
0.2 %
Packaging
2.3 %
Other
5.5 %
Total Healthcare
17.5 %
Total Other Industries
29.9 %
The Company monitors the performance and financial trends of its
portfolio companies on at least a quarterly basis. The Company
attempts to identify any developments within the portfolio company,
the industry, or the macroeconomic environment that may alter any
material element of the Company’s original investment strategy. As
described more fully in the Company's Quarterly Report on Form 10-Q
filed with the U.S. Securities and Exchange Commission, the
portfolio monitoring procedures are designed to provide a simple,
yet comprehensive analysis of the Company’s portfolio companies
based on their operating performance and underlying business
characteristics, which in turn forms the basis of its Risk Rating.
The Risk Rating is expressed in categories of Green, Yellow, Orange
and Red with Green reflecting an investment that is in-line with or
above expectations and Red reflecting an investment performing
materially below expectations.
The following table shows the Risk Rating of the Company’s
portfolio companies as of March 31, 2024:
(in millions)
As of March 31, 2024
Risk Rating
Cost
Percent
Fair Value
Percent
Weighted Average Mark
Green9
$
2,924.0
93.6
%
$
2,978.4
96.5
%
98.1
%
Yellow6
87.3
2.8
%
63.1
2.1
%
72.1
%
Orange
73.1
2.3
%
41.5
1.3
%
67.0
%
Red
39.8
1.3
%
3.5
0.1
%
8.0
%
Total
$
3,124.2
100.0
%
$
3,086.5
100.0
%
As of March 31, 2024, all investments in the Company’s portfolio
had a Green Risk Rating, with the exception of four portfolio
companies that had a Yellow Risk Rating, four portfolio companies
that had an Orange Risk Rating and three portfolio companies that
had a Red Risk Rating.
The following table shows the Company’s investment portfolio
composition as of March 31, 2024:
(in millions)
Investment Portfolio
Composition
March 31, 2024
Percent of Total
First Lien
$
1,757.0
56.9
%
Senior Loan Funds & NMNLC11
375.2
12.2
%
Second Lien6
431.5
14.0
%
Subordinated
95.2
3.1
%
Preferred Equity
215.8
7.0
%
Common Equity and Other
211.8
6.8
%
Total
$
3,086.5
100.0
%
Liquidity and Capital Resources
As of March 31, 2024, the Company had cash and cash equivalents
of $107.5 million and total statutory debt outstanding of $1,471.0
million3. The Company's statutory debt to equity was 1.08x as of
March 31, 2024. Additionally, the Company had $300.0 million of
SBA-guaranteed debentures outstanding as of March 31, 2024. As of
March 31, 2024, the Company had $687.3 million of available
capacity on its Holdings Credit Facility, DB Credit Facility and
NMFC Credit Facility.
For the three months ended March 31, 2024, the Company sold
3,730,434 shares of common stock under its equity distribution
agreement. For the same period, the Company received total
accumulated net proceeds of approximately $47.9 million, including
$0.0 million of offering expenses, from these sales.
Recent Developments
On April 18, 2024, the Company’s board of directors declared a
regular second quarter 2024 distribution of $0.32 per share and a
supplemental distribution related to first quarter earnings of
$0.02 per share, each payable on June 28, 2024 to holders of record
as of June 14, 2024.
First Quarter 2024 Conference Call
New Mountain Finance Corporation will host an earnings
conference call and webcast at 10:00 am Eastern Time on Thursday,
May 2, 2024. To participate in the live earning conference call,
please use the following dial-in numbers or visit the audio webcast
link. To avoid any delays, please join at least fifteen minutes
prior to the start of the call.
- United States: +1 (877) 443-9109
- International: +1 (412) 317-1082
- Live Audio Webcast
A replay of the conference call can be accessed one hour after
the end of the conference call through August 2, 2024. The full
webcast replay will be available through May 2, 2025. To access the
earnings webcast replay please visit the New Mountain Investor
Relations website.
- United States: +1 (877) 344-7529
- International: +1 (412) 317-0088
- Access Code: 7036283
For additional details related to the quarter ended March 31,
2024, please refer to the New Mountain Finance Corporation
Quarterly Report on Form 10-Q filed with the SEC and the
supplemental investor presentation which can be found on the
Company's website at http://www.newmountainfinance.com.
___________________________________________
(1)
Excludes non-controlling interest in New
Mountain Net Lease Corporation (“NMNLC”). For the quarter ended
March 31, 2024 and 2023, $0.2 million and $0.3 million,
respectively, is excluded from investment income, $0.0 million and
$0.0 million, respectively, of net direct and indirect
professional, administrative, other general and administrative is
excluded from net expenses and $0.2 million and $0.3 million,
respectively, is excluded from net investment income.
(2)
Originations exclude payment-in-kind
(“PIK”); originations, repayments, and sales excludes revolvers,
unfunded commitments, bridges, return of capital, and realized
gains / losses.
(3)
Excludes the Company’s United States Small
Business Administration (“SBA”) guaranteed debentures.
(4)
Includes the regular quarter distribution
and the supplemental distribution related to current quarter's
earnings, paid in the following quarter.
(5)
Dividend yield calculation uses the
closing stock price of $12.72 on April 29, 2024 and $11.61 on May
5, 2023 and includes regular and supplemental dividends.
(6)
Includes collateral for securities
purchased under collateralized agreements to resell.
(7)
References to “YTM at Cost” assume the
accruing investments, including secured collateralized agreements,
in the Company's portfolio as of a certain date, the ‘‘Portfolio
Date’’, are purchased at cost on that date and held until their
respective maturities with no prepayments or losses and are exited
at par at maturity. This calculation excludes the impact of
existing leverage. YTM at Cost uses the Sterling Overnight
Interbank Average Rate ("SONIA”), Euro Interbank Offered Rate
("EURIBOR") and Secured Overnight Financing Rate (“SOFR”) curves at
each quarter’s respective end date. The actual yield to maturity
may be higher or lower due to the future selection of SONIA,
EURIBOR and SOFR contracts by the individual companies in the
Company’s portfolio or other factors.
(8)
Includes investments in joint
ventures.
(9)
Includes investments held in NMNLC.
(10)
Excludes NMFC Senior Loan Program III LLC
("SLP III"), NMFC Senior Loan Program IV LLC ("SLP IV") and
NMNLC.
(11)
Senior Loan Funds includes SLP III and SLP
IV.
New Mountain Finance
Corporation
Consolidated Statements of
Assets and Liabilities
(in thousands, except shares and
per share data)
(unaudited)
March 31, 2024
December 31, 2023
Assets
Investments at fair value
Non-controlled/non-affiliated investments
(cost of $2,330,396 and $2,283,490, respectively)
$
2,279,598
$
2,209,867
Non-controlled/affiliated investments
(cost of $109,980 and $107,895, respectively)
113,281
133,659
Controlled investments (cost of $653,810
and $646,823, respectively)
677,103
667,796
Total investments at fair value (cost of
$3,094,186 and $3,038,208, respectively)
3,069,982
3,011,322
Securities purchased under collateralized
agreements to resell (cost of $30,000 and $30,000,
respectively)
16,500
16,500
Cash and cash equivalents
107,467
70,090
Interest and dividend receivable
43,171
44,107
Receivable from broker
960
—
Deferred tax asset
68
594
Receivable from affiliates
50
82
Other assets
17,409
16,519
Total assets
$
3,255,607
$
3,159,214
Liabilities
Borrowings
Unsecured Notes
$
686,663
$
506,500
SBA-guaranteed debentures
300,000
300,000
Holdings Credit Facility
291,563
515,063
Convertible Notes
260,178
260,207
DB Credit Facility
182,000
186,400
NMFC Credit Facility
47,618
36,813
NMNLC Credit Facility II
2,938
2,853
Deferred financing costs (net of
accumulated amortization of $56,248 and $54,263, respectively)
(24,370
)
(22,387
)
Net borrowings
1,746,590
1,785,449
Payable for unsettled securities
purchased
94,079
—
Interest payable
23,071
20,440
Management fee payable
10,096
10,116
Incentive fee payable
9,389
8,555
Other liabilities
3,199
2,931
Total liabilities
1,886,424
1,827,491
Commitments and contingencies
Net assets
Preferred stock, par value $0.01 per
share, 2,000,000 shares authorized, none issued
—
—
Common stock, par value $0.01 per share,
200,000,000 shares authorized, and 106,289,293 and 102,558,859
shares issued and outstanding, respectively
1,063
1,026
Paid in capital in excess of par
1,379,070
1,331,269
Accumulated undistributed earnings
(23,201
)
(12,344
)
Total net assets of New Mountain
Finance Corporation
$
1,356,932
$
1,319,951
Non-controlling interest in New Mountain
Net Lease Corporation
12,251
11,772
Total net assets
$
1,369,183
$
1,331,723
Total liabilities and net
assets
$
3,255,607
$
3,159,214
Number of shares outstanding
106,289,293
102,558,859
Net asset value per share of New
Mountain Finance Corporation
$
12.77
$
12.87
New Mountain Finance
Corporation
Consolidated Statements of
Operations
(in thousands, except shares and
per share data)
(unaudited)
Three Months Ended
March 31, 2024
March 31, 2023
Investment income
From non-controlled/non-affiliated
investments:
Interest income (excluding Payment-in-kind
("PIK") interest income)
$
56,237
$
60,758
PIK interest income
4,683
3,944
Dividend income
293
47
Non-cash dividend income
4,684
4,166
Other income
1,600
1,918
From non-controlled/affiliated
investments:
Interest income (excluding PIK interest
income)
368
9
PIK interest income
836
691
Non-cash dividend income
1,244
1,105
Other income
63
63
From controlled investments:
Interest income (excluding PIK interest
income)
1,361
1,444
PIK interest income
4,135
4,388
Dividend income
12,683
10,995
Non-cash dividend income
1,496
1,230
Other income
873
1,195
Total investment income
90,556
91,953
Expenses
Interest and other financing expenses
31,016
30,796
Management fee
10,997
11,638
Incentive fee
9,389
9,597
Professional fees
1,067
965
Administrative expenses
968
1,048
Other general and administrative
expenses
465
488
Total expenses
53,902
54,532
Less: management fee waived
(901
)
(1,063
)
Net expenses
53,001
53,469
Net investment income before income
taxes
37,555
38,484
Income tax expense
1
96
Net investment income
37,554
38,388
Net realized (losses) gains:
Non-controlled/non-affiliated
investments
(11,858
)
(1,308
)
Controlled investments
31
1,973
Foreign currency
—
12
Net change in unrealized appreciation
(depreciation):
Non-controlled/non-affiliated
investments
23,160
(2,929
)
Non-controlled/affiliated investments
(22,463
)
(16
)
Controlled investments
2,320
8,797
Foreign currency
(23
)
26
Provision for taxes
(637
)
(131
)
Net realized and unrealized (losses)
gains
(9,470
)
6,424
Net increase in net assets resulting from
operations
28,084
44,812
Less: Net increase in net assets resulting
from operations related to non-controlling interest in New Mountain
Net Lease Corporation
(676
)
(239
)
Net increase in net assets resulting
from operations related to New Mountain Finance Corporation
$
27,408
$
44,573
Basic earnings per share
$
0.26
$
0.44
Weighted average shares of common stock
outstanding - basic
103,660,370
100,937,026
Diluted earnings per share
$
0.26
$
0.40
Weighted average shares of common stock
outstanding - diluted
122,443,478
123,591,432
Distributions declared and paid per
share
$
0.36
$
0.32
ABOUT NEW MOUNTAIN FINANCE CORPORATION
New Mountain Finance Corporation (NASDAQ: NMFC) is a leading
business development company (BDC) focused on providing direct
lending solutions to U.S. middle market companies backed by top
private equity sponsors. Our portfolio consists primarily of senior
secured loans, and select junior capital positions, to growing
businesses in defensive industries that offer attractive
risk-adjusted returns. Our differentiated investment approach
leverages the deep sector knowledge and operating resources of New
Mountain Capital, a global investment firm with approximately $50
billion of assets under management.
ABOUT NEW MOUNTAIN CAPITAL
New Mountain Capital is a New York-based investment firm that
emphasizes business building and growth, rather than debt, as it
pursues long-term capital appreciation. The firm currently manages
private equity, credit and net lease investment strategies with
approximately $50 billion in assets under management. New Mountain
seeks out what it believes to be the highest quality growth leaders
in carefully selected industry sectors and then works intensively
with management to build the value of these companies. For more
information on New Mountain Capital, please visit
http://www.newmountaincapital.com.
FORWARD-LOOKING STATEMENTS
Statements included herein may contain “forward-looking
statements”, which relate to our future operations, future
performance or our financial condition. Forward-looking statements
are not guarantees of future performance, condition or results and
involve a number of risks and uncertainties, including changes in
base interest rates and significant volatility on our business,
portfolio companies, our industry and the global economy. Actual
results and outcomes may differ materially from those anticipated
in the forward-looking statements as a result of a variety of
factors, including those described from time to time in our filings
with the Securities and Exchange Commission or factors that are
beyond our control. New Mountain Finance Corporation undertakes no
obligation to publicly update or revise any forward-looking
statements made herein, except as may be required by law. All
forward-looking statements speak only as of the time of this press
release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501907151/en/
New Mountain Finance Corporation Investor Relations Laura C.
Holson, Authorized Representative NMFCIR@newmountaincapital.com
(212) 220-3505
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