New Mountain Finance Corporation Announces Second Quarter Financial Results
Reports Net Investment Income of
Declares a Regular Third Quarter Distribution of
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
“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
Consolidated Results of Operations6
The Company’s total investment income for the three months ended June 30, 2023 and 2022 was
Liquidity and Capital Resources
As of June 30, 2023, the Company had cash and cash equivalents of
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
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
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, |
||
(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 |
$ |
2,364,179 |
|
|
$ |
2,400,425 |
|
Non-controlled/affiliated investments (cost of |
|
149,260 |
|
|
|
130,787 |
|
Controlled investments (cost of |
|
666,026 |
|
|
|
690,035 |
|
Total investments at fair value (cost of |
|
3,179,465 |
|
|
|
3,221,247 |
|
Securities purchased under collateralized agreements to resell (cost of |
|
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 |
|
(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 |
|
— |
|
|
|
— |
|
Common stock, par value |
|
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
ABOUT NEW MOUNTAIN CAPITAL
New Mountain Capital is a
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
Source: New Mountain Finance Corporation
