New Mountain Finance Corporation Announces Financial Results for the Quarter Ended September 30, 2024
Reports Adjusted Net Investment Income1 of
Declares a Regular Fourth Quarter Distribution of
Third Quarter Highlights2
-
Adjusted net investment income1 of
$36.7 million , or$0.34 per weighted average share -
Net asset value of
$12.62 per share compared to$12.74 per share as ofJune 30, 2024 -
Continued strong credit performance with approximately 97.3% of the portfolio rated green on our internal risk rating system, up from 97.0% at
June 30, 2024 -
Generated
$146.2 million of gross originations3, partially offset by$100.6 million of repayments3 and$1.5 million of asset sales -
Declared a regular fourth quarter 2024 distribution of
$0.32 per share and a supplemental distribution related to third quarter earnings of$0.01 per share, each payable onDecember 31, 2024 to holders of record as ofDecember 17, 2024
($ in millions, except per share data) |
|
Q3 2024 |
|
Q3 2023 |
||||
Net Investment Income per Weighted Average Share |
|
$ |
0.33 |
|
|
$ |
0.40 |
|
Non-recurring Adjustments1 |
|
|
0.01 |
|
|
|
— |
|
Net Adjusted Investment Income1 per Weighted Average Share |
|
$ |
0.34 |
|
|
$ |
0.40 |
|
Regular & Supplemental Dividends Paid per Share in Quarter |
|
$ |
0.34 |
|
|
$ |
0.36 |
|
Annualized Dividend Yield5 |
|
|
11.9 |
% |
|
|
11.7 |
% |
|
|
|
|
|
||
Investment Portfolio6 |
|
$ |
3,278.8 |
|
$ |
3,227.3 |
NAV per Share |
|
$ |
12.62 |
|
$ |
12.74 |
Statutory Debt/Equity4 |
|
1.26x |
|
1.21x |
||
Statutory Debt/Equity (Net of Available Cash)4 |
|
1.23x |
|
1.14x |
Management Comments on Third Quarter Performance
“Our third quarter results reflect another good quarter for NMFC,” said
Portfolio and Investment Activity 6
As of
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.
Portfolio Industry Composition based on Fair Value9
Software |
|
Business Services |
||||||
|
ERP |
8.1 % |
|
|
|
5.4 % |
||
|
IT Infrastructure & Security |
7.1 % |
|
|
Real Estate Services |
4.6 % |
||
|
|
5.3 % |
|
|
Insurance & Benefits Services |
3.6 % |
||
|
Ecommerce & Logistics |
4.0 % |
|
|
Misc Services |
3.5 % |
||
|
Governance, Risk & Compliance |
3.1 % |
|
|
Digital Transformation |
2.3 % |
||
|
Finance & Accounting |
3.0 % |
|
|
Utility Services |
0.9 % |
||
|
Integrated Payments |
1.6 % |
|
|
Data & Information Services |
0.2 % |
||
|
32.2 % |
|
Total Business Services |
20.5 % |
||||
|
|
|
|
|
|
|
|
|
Healthcare |
|
Other Industries |
|
|||||
|
Healthcare Services |
9.8 % |
|
|
Consumer Services |
6.9 % |
||
|
|
6.0 % |
|
|
Education |
6.5 % |
||
|
|
1.0 % |
|
|
Financial Services |
4.3 % |
||
|
Pharma Services |
0.7 % |
|
|
Distribution & Logistics |
4.0 % |
||
|
Healthcare Products |
0.2 % |
|
|
Packaging |
2.4 % |
||
|
|
|
|
|
Other |
5.5 % |
||
|
17.7 % |
|
|
29.6 % |
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
(in millions) |
As of |
||||||||||||||
Risk Rating |
|
Cost |
|
Percent |
|
Fair Value |
|
Percent |
|
Weighted Average Mark |
|||||
Green8 |
|
$ |
3,143.6 |
|
95.4 |
% |
|
$ |
3,189.0 |
|
97.3 |
% |
|
99.0 |
% |
Yellow6 |
|
|
80.3 |
|
2.4 |
% |
|
|
53.0 |
|
1.6 |
% |
|
65.9 |
% |
Orange |
|
|
72.4 |
|
2.2 |
% |
|
|
36.8 |
|
1.1 |
% |
|
64.4 |
% |
Red |
|
|
— |
|
— |
|
|
|
— |
|
— |
|
|
— |
|
Total |
|
$ |
3,296.3 |
|
100.0 |
% |
|
$ |
3,278.8 |
|
100.0 |
% |
|
|
As of
The following table shows the Company’s investment portfolio composition as of
(in millions) |
|
|
|
|
||
Investment Portfolio Composition |
|
|
|
Percent of Total |
||
First Lien |
|
$ |
2,072.5 |
|
63.2 |
% |
Senior Loan Funds (SLP III & SLP IV) & NMNLC |
|
|
397.3 |
|
12.1 |
% |
Second Lien6 |
|
|
264.4 |
|
8.1 |
% |
Subordinated |
|
|
109.8 |
|
3.3 |
% |
Preferred Equity |
|
|
235.1 |
|
7.2 |
% |
Common Equity and Other |
|
|
199.8 |
|
6.1 |
% |
Total |
|
$ |
3,278.8 |
|
100.0 |
% |
Liquidity and Capital Resources
As of
Third Quarter 2024 Conference 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
-
United States : +1 (877) 344-7529 - International: +1 (412) 317-0088
- Access Code: 7380144
For additional details related to the quarter ended
____________________________________________ | ||
(1) |
Adjusted net investment income for Q3 2024 includes |
|
(2) |
Excludes non-controlling interest in |
|
(3) |
Originations exclude payment-in-kind (“PIK”); originations, repayments, and sales excludes revolvers, unfunded commitments, bridges, return of capital, and realized gains / losses. |
|
(4) |
Excludes the Company’s |
|
(5) |
Dividend yield calculation uses the closing stock price of |
|
(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 held in NMNLC. |
|
(9) |
|
Consolidated Statements of Assets and Liabilities (in thousands, except shares and per share data) (unaudited) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Investments at fair value |
|
|
|
||||
Non-controlled/non-affiliated investments (cost of |
$ |
2,446,773 |
|
|
$ |
2,209,867 |
|
Non-controlled/affiliated investments (cost of |
|
113,017 |
|
|
|
133,659 |
|
Controlled investments (cost of |
|
705,481 |
|
|
|
667,796 |
|
Total investments at fair value (cost of |
|
3,265,271 |
|
|
|
3,011,322 |
|
Securities purchased under collateralized agreements to resell (cost of |
|
13,500 |
|
|
|
16,500 |
|
Cash and cash equivalents |
|
61,943 |
|
|
|
70,090 |
|
Interest and dividend receivable |
|
45,905 |
|
|
|
44,107 |
|
Derivative asset at fair value |
|
8,320 |
|
|
|
— |
|
Receivable from affiliates |
|
139 |
|
|
|
82 |
|
Deferred tax asset |
|
— |
|
|
|
594 |
|
Other assets |
|
19,178 |
|
|
|
16,519 |
|
Total assets |
$ |
3,414,256 |
|
|
$ |
3,159,214 |
|
Liabilities |
|
|
|
||||
Borrowings |
|
|
|
||||
Unsecured Notes |
$ |
993,577 |
|
|
$ |
506,500 |
|
Holdings Credit Facility |
|
407,563 |
|
|
|
515,063 |
|
SBA-guaranteed debentures |
|
300,000 |
|
|
|
300,000 |
|
Convertible Notes |
|
260,120 |
|
|
|
260,207 |
|
NMFC Credit Facility |
|
55,031 |
|
|
|
36,813 |
|
NMNLC Credit Facility II |
|
2,908 |
|
|
|
2,853 |
|
DB Credit Facility |
|
— |
|
|
|
186,400 |
|
Deferred financing costs (net of accumulated amortization of |
|
(26,229 |
) |
|
|
(22,387 |
) |
Net borrowings |
|
1,992,970 |
|
|
|
1,785,449 |
|
Interest payable |
|
18,485 |
|
|
|
20,440 |
|
Management fee payable |
|
10,730 |
|
|
|
10,116 |
|
Payable to broker |
|
10,370 |
|
|
|
— |
|
Incentive fee payable |
|
8,821 |
|
|
|
8,555 |
|
Deferred tax liability |
|
1,100 |
|
|
|
— |
|
Derivative liability at fair value |
|
781 |
|
|
|
— |
|
Other liabilities |
|
3,420 |
|
|
|
2,931 |
|
Total liabilities |
|
2,046,677 |
|
|
|
1,827,491 |
|
Commitments and contingencies |
|
|
|
||||
Net assets |
|
|
|
||||
Preferred stock, par value |
|
— |
|
|
|
— |
|
Common stock, par value |
|
1,079 |
|
|
|
1,026 |
|
Paid in capital in excess of par |
|
1,398,395 |
|
|
|
1,331,269 |
|
Accumulated undistributed earnings |
|
(38,178 |
) |
|
|
(12,344 |
) |
Total net assets of |
$ |
1,361,296 |
|
|
$ |
1,319,951 |
|
Non-controlling interest in |
|
6,283 |
|
|
|
11,772 |
|
Total net assets |
$ |
1,367,579 |
|
|
$ |
1,331,723 |
|
Total liabilities and net assets |
$ |
3,414,256 |
|
|
$ |
3,159,214 |
|
Number of shares outstanding |
|
107,851,415 |
|
|
|
102,558,859 |
|
Net asset value per share of |
$ |
12.62 |
|
|
$ |
12.87 |
|
Consolidated Statements of Operations (in thousands, except shares and per share data) (unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Investment income |
|
|
|
|
|
|
|
||||||||
From non-controlled/non-affiliated investments: |
|
|
|
|
|
|
|
||||||||
Interest income (excluding Payment-in-kind ("PIK") interest income) |
$ |
61,788 |
|
|
$ |
63,892 |
|
|
$ |
175,608 |
|
|
$ |
189,299 |
|
PIK interest income |
|
4,340 |
|
|
|
4,061 |
|
|
|
13,460 |
|
|
|
11,772 |
|
Dividend income |
|
185 |
|
|
|
49 |
|
|
|
2,762 |
|
|
|
143 |
|
Non-cash dividend income |
|
5,077 |
|
|
|
4,458 |
|
|
|
14,558 |
|
|
|
12,929 |
|
Other income |
|
1,454 |
|
|
|
791 |
|
|
|
6,345 |
|
|
|
3,395 |
|
From non-controlled/affiliated investments: |
|
|
|
|
|
|
|
||||||||
Interest income (excluding PIK interest income) |
|
349 |
|
|
|
884 |
|
|
|
1,093 |
|
|
|
1,576 |
|
PIK interest income |
|
971 |
|
|
|
265 |
|
|
|
2,680 |
|
|
|
1,370 |
|
Non-cash dividend income |
|
1,593 |
|
|
|
1,173 |
|
|
|
4,211 |
|
|
|
3,417 |
|
Other income |
|
63 |
|
|
|
63 |
|
|
|
188 |
|
|
|
189 |
|
From controlled investments: |
|
|
|
|
|
|
|
||||||||
Interest income (excluding PIK interest income) |
|
1,651 |
|
|
|
1,351 |
|
|
|
4,395 |
|
|
|
4,038 |
|
PIK interest income |
|
3,739 |
|
|
|
3,591 |
|
|
|
11,595 |
|
|
|
11,665 |
|
Dividend income |
|
11,789 |
|
|
|
11,041 |
|
|
|
36,812 |
|
|
|
34,179 |
|
Non-cash dividend income |
|
1,649 |
|
|
|
1,357 |
|
|
|
4,715 |
|
|
|
3,879 |
|
Other income |
|
679 |
|
|
|
1,373 |
|
|
|
2,049 |
|
|
|
3,943 |
|
Total investment income |
|
95,327 |
|
|
|
94,349 |
|
|
|
280,471 |
|
|
|
281,794 |
|
Expenses |
|
|
|
|
|
|
|
||||||||
Interest and other financing expenses |
|
37,661 |
|
|
|
31,425 |
|
|
|
101,790 |
|
|
|
93,921 |
|
Management fee |
|
11,700 |
|
|
|
11,334 |
|
|
|
34,048 |
|
|
|
34,549 |
|
Incentive fee |
|
8,821 |
|
|
|
10,169 |
|
|
|
27,760 |
|
|
|
29,748 |
|
Administrative expenses |
|
1,059 |
|
|
|
995 |
|
|
|
3,135 |
|
|
|
2,996 |
|
Professional fees |
|
1,019 |
|
|
|
850 |
|
|
|
3,213 |
|
|
2,818 |
|
|
Other general and administrative expenses |
|
531 |
|
|
|
542 |
|
|
|
1,523 |
|
|
|
1,543 |
|
Total expenses |
|
60,791 |
|
|
|
55,315 |
|
|
|
171,469 |
|
|
|
165,575 |
|
Less: management fee waived |
|
(970 |
) |
|
|
(1,013 |
) |
|
|
(2,732 |
) |
|
|
(3,172 |
) |
Net expenses |
|
59,821 |
|
|
|
54,302 |
|
|
|
168,737 |
|
|
|
162,403 |
|
Net investment income before income taxes |
|
35,506 |
|
|
|
40,047 |
|
|
|
111,734 |
|
|
|
119,391 |
|
Income tax expense (benefit) |
|
118 |
|
|
|
(627 |
) |
|
|
353 |
|
|
|
401 |
|
Net investment income |
|
35,388 |
|
|
|
40,674 |
|
|
|
111,381 |
|
|
|
118,990 |
|
Net realized (losses) gains: |
|
|
|
|
|
|
|
||||||||
Non-controlled/non-affiliated investments |
|
(75 |
) |
|
|
113 |
|
|
|
(46,899 |
) |
|
|
(8,509 |
) |
Controlled investments |
|
(456 |
) |
|
|
4,560 |
|
|
|
3,375 |
|
|
|
16,413 |
|
Foreign currency |
|
(1,455 |
) |
|
|
— |
|
|
|
(1,455 |
) |
|
|
13 |
|
Net change in unrealized appreciation (depreciation): |
|
|
|
|
|
|
|
||||||||
Non-controlled/non-affiliated investments |
|
419 |
|
|
|
12,419 |
|
|
|
56,474 |
|
|
|
11,664 |
|
Non-controlled/affiliated investments |
|
(7,853 |
) |
|
|
(14,815 |
) |
|
|
(34,396 |
) |
|
|
(14,830 |
) |
Controlled investments |
|
(4,260 |
) |
|
|
(14,483 |
) |
|
|
(243 |
) |
|
|
(15,174 |
) |
Securities purchased under collateralized agreements to resell |
|
— |
|
|
|
— |
|
|
|
(3,000 |
) |
|
|
(39 |
) |
|
|
1,533 |
|
|
|
— |
|
|
|
1,533 |
|
|
|
— |
|
Foreign currency |
|
1,690 |
|
|
|
(60 |
) |
|
|
1,796 |
|
|
|
(5 |
) |
(Provision) benefit for taxes |
|
(1,037 |
) |
|
|
291 |
|
|
|
(1,804 |
) |
|
|
66 |
|
Net realized and unrealized losses |
|
(11,494 |
) |
|
|
(11,975 |
) |
|
|
(24,619 |
) |
|
|
(10,401 |
) |
Net increase in net assets resulting from operations |
|
23,894 |
|
|
|
28,699 |
|
|
|
86,762 |
|
|
|
108,589 |
|
Less: Net increase in net assets resulting from operations related to non-controlling interest in |
|
(5 |
) |
|
|
(3 |
) |
|
|
(994 |
) |
|
|
(490 |
) |
Net increase in net assets resulting from operations related to |
$ |
23,889 |
|
|
$ |
28,696 |
|
|
$ |
85,768 |
|
|
$ |
108,099 |
|
Basic earnings per share |
$ |
0.22 |
|
|
$ |
0.28 |
|
|
$ |
0.81 |
|
|
$ |
1.07 |
|
Weighted average shares of common stock outstanding - basic |
|
107,851,415 |
|
|
|
100,954,898 |
|
|
|
106,140,789 |
|
|
|
100,943,049 |
|
Diluted earnings per share |
$ |
0.22 |
|
|
$ |
0.27 |
|
|
$ |
0.78 |
|
|
$ |
0.98 |
|
Weighted average shares of common stock outstanding - diluted |
|
126,779,819 |
|
|
|
123,183,269 |
|
|
|
125,000,872 |
|
|
|
124,595,709 |
|
Distributions declared and paid per share |
$ |
0.34 |
|
|
$ |
0.36 |
|
|
$ |
1.04 |
|
|
$ |
1.03 |
|
ABOUT
ABOUT
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
View source version on businesswire.com: https://www.businesswire.com/news/home/20241030797709/en/
Investor Relations
NMFCIR@newmountaincapital.com
(212) 220-3505
Source: