Reports Net Investment Income of $0.39 per
share and stable Net Asset Value
Declares a Regular Third Quarter Distribution
of $0.32 per Share and a Supplemental Distribution of $0.04 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 June 30, 2023. The Company
reported second quarter net investment income ("NII") of $0.39 per
weighted average share, a 26% increase in year-over-year NII, and
net asset value (“NAV”) per share of $13.14, in line with prior
quarter NAV of $13.14. The Company also announced that its board of
directors declared a third quarter regular distribution of $0.32
per share and a supplemental distribution of $0.04, which will be
payable on September 29, 2023 to holders of record as of September
15, 2023.
Selected Financial Highlights
(in thousands, except per share
data)
June 30, 2023
Investment Portfolio1
$
3,195,965
Total Assets
$
3,296,981
Total Statutory Debt2
$
1,623,483
NAV3
$
1,326,101
NAV per Share
$
13.14
Net Investment Income per Weighted Average
Share
$
0.39
Regular Second Quarter Distribution Paid
per Share
$
0.32
Supplemental Distribution Paid per
Share
$
0.03
Statutory Debt/Equity
1.22x
Statutory Debt/Equity (net of available
cash)
1.19x
Management Comments on Second Quarter Performance
“New Mountain Finance Corporation delivered strong second
quarter operating results, highlighted by net investment income of
$0.39 per share and resilient credit performance,” 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.”
“We are pleased to report stable book value in Q2, which was
supported by our high-quality portfolio of loans to issuers in
defensive growth industries,” said John R. Kline, President and
Chief Executive Officer. “New Mountain is positioned to deliver
enhanced risk-adjusted returns and continue our track record of
returning capital to our fellow shareholders through our regular
and supplemental dividend programs.”
Portfolio and Investment Activity1
As of June 30, 2023, the Company’s NAV was $1,326.1 million and
its portfolio had a fair value of $3,196.0 million in 114 portfolio
companies, with a weighted average YTM at Cost4 of approximately
11.6%. For the three months ended June 30, 2023, the Company
generated $29.5 million of originations5, $119.9 million of asset
sales and cash repayments5 of $3.9 million.
Consolidated Results of Operations6
The Company’s total investment income for the three months ended
June 30, 2023 and 2022 was $95.2 million and $72.8 million,
respectively. The Company’s total net expenses, after income tax
expense, for the three months ended June 30, 2023 and 2022 were
$55.5 million and $41.4 million, respectively. The Company's NII
for the three months ended June 30, 2023 and 2022 was $39.7 million
and $31.4 million, respectively. The Company's NII per share for
the three months ended June 30, 2023 and 2022 was $0.39 and $0.31,
respectively, which represents a 26% increase year-over-year. For
the three months ended June 30, 2023 and 2022, the Company recorded
$4.8 million and $15.4 million, respectively, of net realized and
unrealized losses.
Liquidity and Capital Resources
As of June 30, 2023, the Company had cash and cash equivalents
of $45.9 million and total statutory debt outstanding of $1,623.5
million2. The Company's statutory debt to equity was 1.22x as of
June 30, 2023. Additionally, the Company had $300.0 million of
SBA-guaranteed debentures outstanding as of June 30, 2023.
Portfolio and Asset Quality1
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 Red, Orange, Yellow
and Green, with Red reflecting an investment performing materially
below expectations and Green reflecting an investment that is
in-line with or above expectations.
The following table shows the Risk Rating of the Company’s
portfolio companies as of June 30, 2023:
(in millions)
As of June 30, 2023
Risk Rating
Cost
Percent
Fair Value
Percent
Red
$
54.6
1.7
%
$
9.0
0.3
%
Orange
86.5
2.7
%
51.1
1.6
%
Yellow1
182.7
5.6
%
142.8
4.5
%
Green7
2,924.4
90.0
%
2,993.1
93.6
%
Total
$
3,248.2
100.0
%
$
3,196.0
100.0
%
As of June 30, 2023, all investments in the Company’s portfolio
had a Green Risk Rating, with the exception of nine portfolio
companies that had a Yellow Risk Rating, five 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 June 30, 2023:
(in thousands, except per share
data)
Investment Portfolio
Composition
June 30, 2023
Percent of Total
First Lien
1,703,788
53.4
%
Second Lien1
579,833
18.1
%
Subordinated
84,683
2.6
%
Preferred Equity
195,279
6.1
%
Investment Fund
252,400
7.9
%
Common Equity and Other7
379,982
11.9
%
Total
$
3,195,965
100.0
%
Recent Developments
On July 27, 2023, the Company’s board of directors declared a
regular third quarter 2023 distribution of $0.32 per share and a
supplemental distribution related to Q2 earnings of $0.04 per
share, each payable on September 29, 2023 to holders of record as
of September 15, 2023.
Second Quarter 2023 Conference Call
New Mountain Finance Corporation will host an earnings
conference call and webcast at 12:00 pm Eastern Time on Thursday,
August 3, 2023. 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 November 3, 2023. The full
webcast replay will be available through August 3, 2024. 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: 3039293
For additional details related to the quarter ended June 30,
2023, 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)
Includes collateral for
securities purchased under collateralized agreements to resell.
(2)
Excludes the Company’s United
States Small Business Administration (“SBA”) guaranteed
debentures.
(3)
Excludes non-controlling interest
in New Mountain Net Lease Corporation (“NMNLC”).
(4)
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 London Interbank Offered
Rate (“LIBOR”), 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.
(5)
Originations exclude
payment-in-kind (“PIK”); originations, repayments, and sales
excludes revolvers, unfunded commitments, bridges, return of
capital, and realized gains / losses.
(6)
Excludes net income related to
non-controlling interests in NMNLC. For the quarter ended June 30,
2023 and 2022, $0.2 million and $0.3 million, respectively, of
dividend income 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 $0.0 million and $(1.1) million,
respectively, of realized gains and unrealized losses is excluded
from net realized and unrealized losses.
(7)
Includes investment held in
NMNLC.
New Mountain Finance
Corporation
Consolidated Statements of
Assets and Liabilities
(in thousands, except shares and
per share data)
(unaudited)
June 30, 2023
December 31, 2022
Assets
Investments at fair value
Non-controlled/non-affiliated investments
(cost of $2,486,589 and $2,523,522, respectively)
$
2,364,179
$
2,400,425
Non-controlled/affiliated investments
(cost of $104,459 and $85,971, respectively)
149,260
130,787
Controlled investments (cost of $627,156
and $650,474, respectively)
666,026
690,035
Total investments at fair value (cost of
$3,218,204 and $3,259,967, respectively)
3,179,465
3,221,247
Securities purchased under collateralized
agreements to resell (cost of $30,000 and $30,000,
respectively)
16,500
16,539
Cash and cash equivalents
45,930
71,190
Interest and dividend receivable
40,528
36,154
Receivable from unsettled securities
sold
683
—
Other assets
13,875
9,797
Total assets
$
3,296,981
$
3,354,927
Liabilities
Borrowings
Holdings Credit Facility
$
574,263
$
618,963
Unsecured Notes
391,500
531,500
Convertible Notes
377,104
316,853
SBA-guaranteed debentures
300,000
300,000
DB Credit Facility
186,400
186,400
NMFC Credit Facility
91,290
40,359
NMNLC Credit Facility II
2,926
3,785
Deferred financing costs (net of
accumulated amortization of $50,855 and $47,531, respectively)
(15,183
)
(17,199
)
Net borrowings
1,908,300
1,980,661
Interest payable
18,797
19,627
Management fee payable
10,481
10,524
Incentive fee payable
9,982
6,296
Payable for unsettled securities
purchased
4,897
—
Deferred tax liability
3,080
8,487
Payable to affiliates
93
78
Other liabilities
3,389
3,063
Total liabilities
1,959,019
2,028,736
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 100,937,026 and 100,937,026
shares issued and outstanding, respectively
1,009
1,009
Paid in capital in excess of par
1,305,798
1,305,945
Accumulated undistributed earnings
19,294
7,519
Total net assets of New Mountain
Finance Corporation
$
1,326,101
$
1,314,473
Non-controlling interest in New Mountain
Net Lease Corporation
11,861
11,718
Total net assets
$
1,337,962
$
1,326,191
Total liabilities and net
assets
$
3,296,981
$
3,354,927
Number of shares outstanding
100,937,026
100,937,026
Net asset value per share of New
Mountain Finance Corporation
$
13.14
$
13.02
New Mountain Finance
Corporation
Consolidated Statements of
Operations
(in thousands, except shares and
per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Investment income
From non-controlled/non-affiliated
investments:
Interest income (excluding Payment-in-kind
("PIK") interest income)
$
64,649
$
41,089
$
125,407
$
78,533
PIK interest income
3,767
2,934
7,711
6,236
Dividend income
47
87
94
135
Non-cash dividend income
4,305
3,189
8,471
6,274
Other income
686
4,287
2,604
5,918
From non-controlled/affiliated
investments:
Interest income (excluding PIK interest
income)
683
263
692
518
PIK interest income
414
258
1,105
509
Non-cash dividend income
1,139
1,012
2,244
1,994
Other income
63
62
126
125
From controlled investments:
Interest income (excluding PIK interest
income)
1,243
1,715
2,687
3,371
PIK interest income
3,686
4,085
8,074
9,055
Dividend income
12,143
10,671
23,138
22,316
Non-cash dividend income
1,292
1,063
2,522
2,075
Other income
1,375
2,395
2,570
5,014
Total investment income
95,492
73,110
187,445
142,073
Expenses
Interest and other financing expenses
31,700
20,672
62,496
39,309
Management fee
11,577
11,770
23,215
23,323
Incentive fee
9,982
7,926
19,579
15,403
Administrative expenses
953
932
2,001
2,141
Professional fees
1,003
817
1,968
1,754
Other general and administrative
expenses
513
518
1,001
995
Total expenses
55,728
42,635
110,260
82,925
Less: management fee waived
(1,096
)
(1,142
)
(2,159
)
(2,234
)
Less: expenses waived and reimbursed
—
—
—
(238
)
Net expenses
54,632
41,493
108,101
80,453
Net investment income before income
taxes
40,860
31,617
79,344
61,620
Income tax expense
932
(87
)
1,028
8
Net investment income
39,928
31,704
78,316
61,612
Net realized gains (losses):
Non-controlled/non-affiliated
investments
(7,314
)
(594
)
(8,622
)
(664
)
Controlled investments
9,880
17,112
11,853
36,354
Foreign currency
1
40
13
385
Net change in unrealized (depreciation)
appreciation :
Non-controlled/non-affiliated
investments
2,174
(20,507
)
(755
)
(25,031
)
Non-controlled/affiliated investments
1
2,999
(15
)
13,758
Controlled investments
(9,488
)
(15,266
)
(691
)
(31,434
)
Securities purchased under collateralized
agreements to resell
(39
)
—
(39
)
(2,021
)
Foreign currency
29
(193
)
55
(615
)
Provision for taxes
(94
)
(155
)
(225
)
(157
)
Net realized and unrealized (losses)
gains
(4,850
)
(16,564
)
1,574
(9,425
)
Net increase in net assets resulting from
operations
35,078
15,140
79,890
52,187
Less: Net (increase) decrease in net
assets resulting from operations related to non-controlling
interest in New Mountain Net Lease Corporation
(248
)
814
(487
)
(41
)
Net increase in net assets resulting
from operations related to New Mountain Finance Corporation
$
34,830
$
15,954
$
79,403
$
52,146
Basic earnings per share
$
0.35
$
0.16
$
0.79
$
0.52
Weighted average shares of common stock
outstanding - basic
100,937,026
100,596,188
100,937,026
99,510,862
Diluted earnings per share
$
0.32
$
0.16
$
0.71
$
0.50
Weighted average shares of common stock
outstanding - diluted
127,016,910
113,853,773
125,313,634
112,768,447
Distributions declared and paid per
share
$
0.35
$
0.30
$
0.67
$
0.60
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 over $40 billion of
assets under management as of June 30, 2023.
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
over $40 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/20230802367405/en/
New Mountain Finance Corporation Investor Relations Laura C.
Holson, Authorized Representative NMFCIR@newmountaincapital.com
(212) 220-3505
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