Reports Net Investment Income of $0.40 per
Share
Declares a First Quarter Regular Distribution
of $0.32 per Share and a Supplemental Distribution of $0.04 per
Share
New Mountain Finance Corporation (NASDAQ: NMFC) (“New Mountain,”
“NMFC,” “New Mountain Finance” or the “Company”) today announced
its financial results for the quarter and year ended December 31,
2023. In line with preliminary estimates reported on January 18,
2024, the Company reported fourth quarter net investment income
("NII") of $0.40 per weighted average share and net asset value
(“NAV”) per share of $12.87, compared to $13.06 on September 30,
2023, a decline of 0.7% excluding the impact of the $0.10 special
dividend paid on December 29, 2023. The Company also announced that
its Board of Directors declared a first quarter regular
distribution of $0.32 per share and a supplemental distribution of
$0.04, which will be payable on March 29, 2024 to holders of record
as of March 15, 2024.
Selected Financial Highlights
(in thousands, except per share
data)
December 31, 2023
Investment Portfolio1
$
3,027,822
Total Assets
$
3,159,214
Total Statutory Debt2
$
1,507,836
NAV3
$
1,319,951
NAV per Share
$
12.87
Net Investment Income per Weighted Average
Share
$
0.40
Regular Fourth Quarter Distribution Paid
per Share
$
0.32
Supplemental Fourth Quarter Distribution
Declared per Share
$
0.04
Statutory Debt/Equity
1.14x
Statutory Debt/Equity (net of available
cash)
1.10x
Management Comments on Fourth Quarter Performance
“Our fourth quarter results reflect another successful
quarter for 2023,” 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, “New Mountain closed out the
fourth quarter with year-over-year earnings growth, outpacing its
regular dividend for the fourth consecutive quarter. Additionally,
NMFC distributed a $0.10 special dividend at the end of 2023 as a
result of our team’s ability to monetize the Haven Midstream equity
investment. Our focus on defensive growth sectors of the economy
remains a competitive advantage, and we believe NMFC remains well
positioned to execute while continuing to deliver strong and stable
dividends to our shareholders.”
Portfolio and Investment Activity1
As of December 31, 2023, the Company’s NAV3 was $1,320.0 million
and its portfolio had a fair value of $3,027.8 million in 111
portfolio companies, with a weighted average YTM at Cost4 of
approximately 10.9%. For the three months ended December 31, 2023,
the Company generated $142.5 million of originations5, and had
$11.1 million of asset sales and cash repayments5 of $245.8
million.
Consolidated Results of Operations6
Quarterly Results
The Company’s total investment income for the three months ended
December 31, 2023 and 2022 was $92.8 million and $73.9 million,
respectively. The Company’s total net expenses, after income tax
expense, for the three months ended December 31, 2023 and 2022 were
$52.1 million and $48.9 million, respectively. The Company's NII
for the three months ended December 31, 2023 and 2022 was $40.7
million and $25.0 million, respectively. The Company's NII per
share for the three months ended December 31, 2023 and 2022 was
$0.40 and $0.258, respectively. For the three months ended December
31, 2023 and 2022, the Company recorded $13.5 million and $10.2
million, respectively, of net realized and unrealized losses.
Annual Results
The Company’s total investment income for the years ended
December 31, 2023 and 2022 was $373.8 million and $293.4 million,
respectively. The Company’s total net expenses, after income tax
expense, for the years ended December 31, 2023 and 2022 were $214.9
million and $174.9 million, respectively. For the years ended
December 31, 2023 and 2022, the Company recorded $23.6 million and
$43.8 million, respectively, of net realized and unrealized
losses.
Liquidity and Capital Resources
As of December 31, 2023, the Company had cash and cash
equivalents of $70.1 million and total statutory debt outstanding
of $1,507.8 million2. The Company's statutory debt to equity was
1.14x as of December 31, 2023. Additionally, the Company had $300.0
million of SBA-guaranteed debentures outstanding as of December 31,
2023. For the year ended December 31, 2023, the Company sold
1,621,833 shares of common stock under its equity distribution
agreement. For the same period, the Company received total
accumulated net proceeds of approximately $21.2 million, net of
offering expenses, from these sales.
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 Annual Report on Form 10-K
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 December 31, 2023:
(in millions)
December 31, 2023
Risk Rating
Cost
Percent
Fair Value
Percent
Red
$
39.7
1.3
%
$
4.6
0.2
%
Orange
73.1
2.4
%
42.5
1.4
%
Yellow1
157.6
5.1
%
118.5
3.9
%
Green7
2,797.8
91.2
%
2,862.2
94.5
%
Total
$
3,068.2
100.0
%
$
3,027.8
100.0
%
As of December 31, 2023, all investments in the Company’s
portfolio had a Green Risk Rating with the exception of six
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 December 31, 2023:
(in thousands)
Investment Portfolio
Composition
December 31, 2023
Percent of Total
First Lien
$
1,683,952
55.6
%
Second Lien1
441,013
14.6
%
Subordinated
90,948
3.0
%
Preferred Equity
208,459
6.9
%
Investment Fund
252,400
8.3
%
Common Equity and Other7
351,050
11.6
%
Total
$
3,027,822
100.0
%
Recent Developments
On January 25, 2024, the Company caused notices to be issued to
holders of the Company's 2019A Unsecured Notes regarding the
exercise of the Company's option to repay all of the Company's
$116.5 million in aggregate principal amount of issued and
outstanding 2019A Unsecured Notes, which was repaid on February 5,
2024.
On January 30, 2024, the Company’s Board of Directors declared a
regular first quarter 2024 distribution of $0.32 per share and a
supplemental distribution related to fourth quarter earnings of
$0.04 per share, each payable on March 29, 2024 to holders of
record as of March 15, 2024.
On February 1, 2024, the Company issued $300.0 million in
aggregate principal amount of its 6.875% notes due 2029 (the "2029
Unsecured Notes") for net proceeds of $293.9 million after
deducting underwriting commissions of $3.0 million. Offering costs
incurred were approximately $0.9 million. Interest on the 2029
Unsecured Notes will be paid semi-annually in arrears on February 1
and August 1 at a rate of 6.875% per year, beginning on August 1,
2024, to holders of record as of the close of business on January
15 or July 15 (whether or not a business day), as the case may be,
immediately preceding the relevant interest payment date. The 2029
Unsecured Notes may be redeemed in whole or in part at the
Company’s option at any time prior to January 1, 2029, at par plus
a “make-whole” premium, and thereafter at par, plus accrued
interest.
___________________________________________
(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 December
31, 2023 and 2022, $0.2 million and $0.2 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 $(0.2) million,
respectively, of realized and unrealized gains and (losses), is
excluded from net realized and unrealized gains and losses. For the
years ended December 31, 2023 and 2022, $1.0 million and $1.2
million, respectively, of dividend income is excluded from
investment income, $0.0 million and $0.1 million, respectively, of
net direct and indirect professional, administrative, other general
and administrative is excluded from net expenses, and $0.2 million
and $1.3 million, respectively, of realized and unrealized losses,
is excluded from net realized and unrealized gains and losses.
(7)
Includes investment held in
NMNLC.
(8)
Adjusted net investment income
per share for the three months ended December 31, 2022 was $0.35.
Adjusted net investment income for the three months ended December
31, 2022 included $10.4 million of non-recurring interest, other
income, other general and administrative expense and incentive fee
adjustment related to National HME, Inc. and NHME Holdings Corp.
and $0.1 million of accelerated deferred financing costs related to
the tender offer on the 2018 Convertible Notes.
Fourth Quarter 2023 Conference Call
New Mountain Finance Corporation will host an earnings
conference call and webcast at 10:00 am Eastern Time on Tuesday,
February 27, 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 May 27, 2024. The full
webcast replay will be available through February 27, 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: 4449111
For additional details related to the quarter and year ended
December 31, 2023, please refer to the New Mountain Finance
Corporation Form 10-K filed with the SEC and the supplemental
investor presentation which can be found on the Company's website
at http://www.newmountainfinance.com.
New Mountain Finance
Corporation
Consolidated Statements of
Assets and Liabilities
(in thousands, except shares and
per share data)
December 31, 2023
December 31, 2022
Assets
Investments at fair value
Non-controlled/non-affiliated investments
(cost of $2,283,490 and $2,523,522, respectively)
$
2,209,867
$
2,400,425
Non-controlled/affiliated investments
(cost of $107,895 and $85,971, respectively)
133,659
130,787
Controlled investments (cost of $646,823
and $650,474, respectively)
667,796
690,035
Total investments at fair value (cost of
$3,038,208 and $3,259,967, respectively)
3,011,322
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
70,090
71,190
Interest and dividend receivable
44,107
36,154
Deferred tax asset
594
—
Receivable from affiliates
82
—
Other assets
16,519
9,797
Total assets
$
3,159,214
$
3,354,927
Liabilities
Borrowings
Holdings Credit Facility
$
515,063
$
618,963
Unsecured Notes
506,500
531,500
SBA-guaranteed debentures
300,000
300,000
Convertible Notes
260,207
316,853
DB Credit Facility
186,400
186,400
NMFC Credit Facility
36,813
40,359
NMNLC Credit Facility II
2,853
3,785
Deferred financing costs (net of
accumulated amortization of $54,263 and $47,531, respectively)
(22,387
)
(17,199
)
Net borrowings
1,785,449
1,980,661
Management fee payable
10,116
10,524
Incentive fee payable
8,555
6,296
Interest payable
20,440
19,627
Payable to affiliates
—
78
Deferred tax liability
—
8,487
Other liabilities
2,931
3,063
Total liabilities
1,827,491
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 102,558,859 and 100,937,026
shares issued and outstanding, respectively
1,026
1,009
Paid in capital in excess of par
1,331,269
1,305,945
Accumulated undistributed earnings
(12,344
)
7,519
Total net assets of New Mountain
Finance Corporation
$
1,319,951
$
1,314,473
Non-controlling interest in New Mountain
Net Lease Corporation
11,772
11,718
Total net assets
$
1,331,723
$
1,326,191
Total liabilities and net
assets
$
3,159,214
$
3,354,927
Number of shares outstanding
102,558,859
100,937,026
Net asset value per share of New
Mountain Finance Corporation
$
12.87
$
13.02
New Mountain Finance
Corporation
Consolidated Statements of
Operations
(in thousands, except shares and
per share data)
Year ended December
31,
2023
2022
2021
Investment income
From non-controlled/non-affiliated
investments:
Interest income (excluding Payment-in-kind
("PIK") interest income)
$
249,851
$
184,367
$
159,189
PIK interest income
15,968
11,767
8,582
Dividend income
193
193
915
Non-cash dividend income
17,481
14,071
10,153
Other income
4,981
9,156
14,106
From non-controlled/affiliated
investments:
Interest income (excluding PIK interest
income)
1,951
1,062
1,579
PIK interest income
2,183
1,043
434
Dividend income
—
—
288
Non-cash dividend income
4,625
4,109
4,835
Other income
251
250
345
From controlled investments:
Interest income (excluding PIK interest
income)
5,386
9,438
5,470
PIK interest income
15,443
4,516
14,327
Dividend income
45,905
43,149
41,659
Non-cash dividend income
5,303
4,363
4,497
Other income
5,315
7,146
4,580
Total investment income
374,836
294,630
270,959
Expenses
Interest and other financing expenses
124,784
92,421
73,098
Management fee
45,610
46,617
52,960
Incentive fee
38,303
29,901
29,710
Administrative expenses
4,101
4,131
4,461
Professional fees
3,771
3,433
3,197
Other general and administrative
expenses
2,068
2,338
1,923
Total expenses
218,637
178,841
165,349
Less: management fee waived
(4,117
)
(4,402
)
(13,104
)
Less: expenses waived and reimbursed
—
(238
)
(244
)
Net expenses
214,520
174,201
152,001
Net investment income before income
taxes
160,316
120,429
118,958
Income tax expense
418
825
118
Net investment income
159,898
119,604
118,840
Net realized (losses) gains:
Non-controlled/non-affiliated
investments
(49,267
)
(737
)
(3,167
)
Non-controlled/affiliated investments
—
—
8,338
Controlled investments
16,413
53,440
(9,035
)
Foreign currency
13
827
15
Net change in unrealized appreciation
(depreciation):
Non-controlled/non-affiliated
investments
47,956
(81,197
)
(23,466
)
Non-controlled/affiliated investments
(19,052
)
(9,156
)
66,505
Controlled investments
(18,588
)
6,219
49,347
Securities purchased under collateralized
agreements to resell
(39
)
(4,883
)
—
Foreign currency
100
(1,115
)
(81
)
Provision for taxes
(1,344
)
(8,474
)
(114
)
Net realized and unrealized (losses)
gains
(23,808
)
(45,076
)
88,342
Net increase in net assets resulting from
operations
136,090
74,528
207,182
Less: Net (increase) decrease in net
assets resulting from operations related to non-controlling
interest in New Mountain Net Lease Corporation
(747
)
204
(5,783
)
Net increase in net assets resulting
from operations related to New Mountain Finance Corporation
$
135,343
$
74,732
$
201,399
Basic earnings per share
$
1.34
$
0.75
$
2.08
Weighted average shares of common stock
outstanding - basic
101,118,302
100,202,847
96,952,959
Diluted earnings per share
$
1.24
$
0.74
$
1.91
Weighted average shares of common stock
outstanding - diluted
123,488,882
115,426,198
110,210,545
Distributions declared and paid per
share
$
1.49
$
1.22
$
1.20
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 as of December 31, 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
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/20240226174936/en/
New Mountain Finance Corporation Investor Relations Laura C.
Holson, Authorized Representative NMFCIR@newmountaincapital.com
(212) 220-3505
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