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     203  0 Kommentare New Mountain Finance Corporation Announces Financial Results for the Quarter Ended September 30, 2019

    New Mountain Finance Corporation (NYSE: NMFC) (the "Company", "we", "us" or "our") today announced its financial results for the quarter ended September 30, 2019 and reported third quarter net investment income of $0.36 per weighted average share. At September 30, 2019, net asset value (“NAV”) per share was $13.35, compared to 13.41 at June 30, 2019. The Company also announced that its board of directors declared a fourth quarter distribution of $0.34 per share, which will be payable on December 27, 2019 to holders of record as of December 13, 2019.

    Selected Financial Highlights

    (in thousands, except per share data) September 30, 2019 Investment Portfolio(1)

    $

    3,020,356

    Total Assets

    $

    3,132,128

    Total Statutory Debt(2)

    $

    1,643,562

    NAV

    $

    1,169,279

      NAV per Share

    $

    13.35

    Statutory Debt/Equity(3)

    1.20x

      Investment Portfolio Composition September 30, 2019 Percent of Total First Lien

    $

    1,675,408

    55.5%

    Second Lien(1)

    772,917

    25.6%

    Subordinated

    71,608

    2.3%

    Preferred Equity

    135,078

    4.5%

    Investment Fund

    202,400

    6.7%

    Common Equity and Other(4)

    162,945

    5.4%

    Total

    $

    3,020,356

    100.0%

     

    _____________________________

    (1) Includes collateral for securities purchased under collateralized agreements to resell.
    (2) Excludes the Company’s United States (“U.S.”) Small Business Administration (“SBA”)-guaranteed debentures. Includes premium received on additional convertible notes issued in June 2019.
    (3) Statutory debt / equity ratio of 1.41x as of September 30, 2019; pro forma ratio of 1.20x reflects $125.1 million of net proceeds received from equity offering completed on October 25, 2019 and $95.6 million repayment of revolving credit facilities.
    (4) Includes investments held in New Mountain Net Lease Corporation (“NMNLC”).

    We believe that the strength of the Company’s unique investment strategy – which focuses on middle market defensive growth companies that are well researched by New Mountain Capital, L.L.C. (“New Mountain”), a leading alternative investment firm, is underscored by continued stable credit performance. The Company has had only eight portfolio companies, representing approximately $125 million of the cost of all investments made since inception in October 2008, or approximately 1.7% of $7.4 billion, go on non-accrual.

    Robert A. Hamwee, CEO, commented: "The third quarter represented another strong quarter of performance for NMFC. We originated $452 million of investments and once again had no new investments placed on non-accrual. Additionally, after our recent equity raise in October, we anticipate remaining fully levered in the fourth quarter.”

    “As managers and as significant stockholders personally, we are pleased with the completion of another successful quarter,” added Steven B. Klinsky, NMFC Chairman. “We believe New Mountain’s focus on acyclical “defensive growth” industries and on companies that we know well continues to be a successful strategy to preserve asset value.”

    Portfolio and Investment Activity1

    As of September 30, 2019, the Company’s NAV was approximately $1,169.3 million and its portfolio had a fair value of approximately $3,020.4 million in 113 portfolio companies, with a weighted average YTM at Cost2 of approximately 9.3%. For the three months ended September 30, 2019, the Company made approximately $452.1 million of originations and commitments3. The $452.1 million includes approximately $320.5 million of investments in fifteen new portfolio companies and approximately $131.6 million of follow-on investments in eighteen portfolio companies held as of June 30, 2019. For the three months ended September 30, 2019, the Company had $43.9 million of sales and cash repayments3 of approximately $67.3 million.

    Consolidated Results of Operations

    The Company’s total investment income for the three months ended September 30, 2019 and 2018 was approximately $72.6 million and $60.5 million, respectively.

    The Company’s total net expenses, after income tax expense, for the three months ended September 30, 2019 and 2018 were approximately $41.4 million and $33.4 million, respectively. Total net expenses, after income tax expense, for the three months ended September 30, 2019 and 2018 consisted of approximately $21.8 million and $14.8 million, respectively, of costs associated with the Company’s borrowings and approximately $17.3 million and $15.0 million, respectively, in net management and incentive fees. Since the Company’s initial public offering (“IPO”), the base management fee calculation has deducted the borrowings under the New Mountain Finance SPV Funding, L.L.C. credit facility (the “SLF Credit Facility”). The SLF Credit Facility had historically consisted of primarily lower yielding assets at higher advance rates. As part of an amendment to the Company’s existing credit facilities with Wells Fargo Bank, National Association, the SLF Credit Facility merged with and into the New Mountain Finance Holdings, L.L.C. credit facility (the “Holdings Credit Facility”) on December 18, 2014. Post credit facility merger and to be consistent with the methodology since the IPO, New Mountain Finance Advisers BDC, L.L.C. (the “Investment Adviser”) will continue to waive management fees on the leverage associated with those assets held under revolving credit facilities that share the same underlying yield characteristics with investments that were leveraged under the legacy SLF Credit Facility, which as of September 30, 2019 and 2018 totaled approximately $777.6 million and $446.6 million, respectively. For the three months ended September 30, 2019 and 2018 management fees waived were approximately $3.1 million and $1.8 million, respectively. The Investment Adviser cannot recoup management fees that the Investment Adviser has previously waived. The Company’s net direct and indirect professional, administrative, other general and administrative and income tax expenses for the three months ended September 30, 2019 and 2018 were approximately $2.3 million and $3.6 million, respectively.

    For the three months ended September 30, 2019 and 2018, the Company recorded approximately $7.8 million and $0.4 million, respectively, of net realized and unrealized losses.

    Liquidity and Capital Resources

    As of September 30, 2019, the Company had cash and cash equivalents of approximately $69.8 million and total statutory debt outstanding of approximately $1,643.6 million4, which consisted of approximately $637.6 million of the $800.0 million of total availability on the Holdings Credit Facility, $138.5 million of the $138.5 million of total availability on the Company’s senior secured revolving credit facility (the “NMFC Credit Facility”), $202.0 million of the $210.0 million of total availability on the Company’s secured revolving credit facility (the “DB Credit Facility”), $10.6 million of the $30.0 million of total availability on the senior secured revolving credit facility (the “NMNLC Credit Facility”), $201.6 million5 of convertible notes outstanding and $453.3 million of unsecured notes outstanding. Additionally, the Company had $184.0 million of SBA-guaranteed debentures outstanding as of September 30, 2019.

    Portfolio and Asset Quality

    The Company puts its largest emphasis on risk control and credit performance. On a quarterly basis, or more frequently if deemed necessary, the Company formally rates each portfolio investment on a scale of one to four. Each investment is assigned an initial rating of a “2” under the assumption that the investment is performing materially in-line with expectations. Any investment performing materially below our expectations, where the risk of loss has materially increased since the original investment, would be downgraded from the “2” rating to a “3” or a “4” rating, based on the deterioration of the investment. An investment rating of a “4” could be moved to non-accrual status and the final development could be an actual realization of a loss through a restructuring or impaired sale.

    As of September 30, 2019, three portfolio companies had an investment rating of “3” and one portfolio company had an investment rating of “4”. The Company’s investment in portfolio companies with an investment rating of “3” had an aggregate cost basis of approximately $52.0 million and an aggregate fair value of approximately $35.2 million. The Company’s investment in the portfolio company with an investment rating of “4” had an aggregate cost basis of approximately $1.4 million and an aggregate fair value of less than $0.1 million.

    Recent Developments

    The Company had approximately $121.9 million of originations and commitments3 since the end of the third quarter through November 1, 2019. This was offset by approximately $45.0 million of repayments3 and $44.0 million of sales3 during the same period.

    On October 8, 2019, the United States Securities and Exchange Commission (the “SEC”) issued an exemptive order (the "New Order") permitting us and certain of the Company’s affiliates to co-invest together in portfolio companies subject to certain conditions included therein. The New Order supersedes the Company’s existing co-investment exemptive order, which was granted by the SEC on December 18, 2017, and expands on the Company’s ability to co-invest with certain affiliates.

    On October 16, 2019, the Company entered into a Joinder Agreement pursuant to which Hitachi Capital America Corp. was added as a lender under the DB Credit Facility for an aggregate commitment of $20.0 million thereby increasing the aggregate commitments under the DB Credit Facility from $210.0 million to $230.0 million.

    On October 25, 2019, the Company completed a public offering of 9,200,000 shares of our common stock (including 1,200,000 shares of common stock that were issued pursuant to the full exercise of the option granted to the underwriters to purchase additional shares) at a public offering price of $13.25 per share. Certain of the Company’s officers and interested directors purchased an aggregate 400,000 shares in this offering at the public offering price. The Company’s Investment Adviser paid the underwriters' sales load of $0.41 per share (other than the 400,000 shares purchased by certain officers and interested directors for which no sales load was payable to the underwriters). In addition, the Company’s Investment Adviser paid the underwriters an additional supplemental payment of $0.35 per share, which reflects the difference between the actual public offering price of $13.25 per share and the net proceeds of $13.60 per share received by us in this offering. All payments made by the Investment Adviser are not subject to reimbursement by the Company. The Company received total net proceeds of approximately $125.1 million in connection with this offering.

    On November 4, 2019, the Company’s board of directors declared a fourth quarter 2019 distribution of $0.34 per share payable on December 27, 2019 to holders of record as of December 13, 2019.

    _________________________________

    1

    Includes collateral for securities purchased under collateralized agreements to resell.

    2

    References to “YTM at Cost” assume the accruing investments, including secured collateralized agreements, in our 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 LIBOR curves at each quarter’s respective end date. The actual yield to maturity may be higher or lower due to the future selection of LIBOR contracts by the individual companies in the Company’s portfolio or other factors.

    3

    Excludes revolving credit facilities, netbacks, payment-in-kind (“PIK”) interest, bridge loans, return of capital and realized gains / losses.

    4

    Excludes the Company’s United States (“U.S.”) Small Business Administration (“SBA”)-guaranteed debentures.

    5

    Includes premium received on additional convertible notes issued in June 2019.

    Conference Call

    New Mountain Finance Corporation will host a conference call at 10 a.m. Eastern Time on Thursday, November 7, 2019, to discuss its third quarter 2019 financial results. All interested parties may participate in the conference call by dialing +1 (877) 443-9109 approximately 15 minutes prior to the call. International callers should dial +1 (412) 317-1082. This conference call will also be broadcast live over the Internet and can be accessed by all interested parties through the Company's website, http://ir.newmountainfinance.com. To listen to the live call, please go to the Company's website at least 15 minutes prior to the start of the call to register and download any necessary audio software. Following the call, you may access a replay of the event via audio webcast on our website. We will be utilizing a presentation during the conference call and we have posted the presentation to the investor relations section of our website.

    New Mountain Finance Corporation
    Consolidated Statements of Assets and Liabilities
    (in thousands, except shares and per share data)
    (unaudited)
     
    September 30, 2019 December 31, 2018
    Assets
    Investments at fair value
    Non-controlled/non-affiliated investments (cost of $2,456,149 and $1,868,785, respectively)

    $

    2,452,793

     

    $

    1,861,323

     

    Non-controlled/affiliated investments (cost of $82,085 and $78,438, respectively)

    78,469

     

    77,493

     

    Controlled investments (cost of $442,414 and $382,503, respectively)

    466,918

     

    403,137

     

    Total investments at fair value (cost of $2,980,648 and $2,329,726, respectively)

    2,998,180

     

    2,341,953

     

    Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively)

    22,176

     

    23,508

     

    Cash and cash equivalents

    69,815

     

    49,664

     

    Interest and dividend receivable

    37,330

     

    30,081

     

    Receivable from affiliates

    586

     

    288

     

    Other assets

    4,041

     

    3,172

     

    Total assets

    $

    3,132,128

     

    $

    2,448,666

     

     
    Liabilities
    Borrowings
    Holdings Credit Facility

    $

    637,563

     

    $

    512,563

     

    Unsecured Notes

    453,250

     

    336,750

     

    DB Credit Facility

    202,000

     

    57,000

     

    Convertible Notes

    201,649

     

    270,301

     

    SBA-guaranteed debentures

    184,000

     

    165,000

     

    NMFC Credit Facility

    138,500

     

    60,000

     

    NMNLC Credit Facility

    10,600

     

    Deferred financing costs (net of accumulated amortization of $26,933 and $22,234, respectively)

    (16,785

    )

    (17,515

    )

    Net borrowings

    1,810,777

     

    1,384,099

     

    Payable for unsettled securities purchased

    99,667

     

    20,147

     

    Management fee payable

    18,363

     

    8,392

     

    Incentive fee payable

    14,779

     

    6,864

     

    Interest payable

    11,972

     

    12,397

     

    Payable to affiliates

    1,210

     

    1,021

     

    Deferred tax liability

    885

     

    1,006

     

    Other liabilities

    5,196

     

    8,471

     

    Total liabilities

    1,962,849

     

    1,442,397

     

    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 and 100,000,000 shares
    authorized, respectively, and 87,568,695 and 76,106,372 shares issued and outstanding, respectively

    876

     

    761

     

    Paid in capital in excess of par

    1,191,881

     

    1,035,629

     

    Accumulated overdistributed earnings

    (23,478

    )

    (30,121

    )

    Total net assets

    $

    1,169,279

     

    $

    1,006,269

     

    Total liabilities and net assets

    $

    3,132,128

     

    $

    2,448,666

     

     
    Number of shares outstanding

    87,568,695

     

    76,106,372

     

    Net asset value per share

    $

    13.35

     

    $

    13.22

     

    New Mountain Finance Corporation
    Consolidated Statements of Operations
    (in thousands, except shares and per share data)
    (unaudited)
     
    Three Months Ended Nine Months Ended
    September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
    Investment income
    From non-controlled/non-affiliated investments:
    Interest income

    $

    51,452

     

    $

    38,332

     

    $

    143,927

     

    $

    112,278

     

    Dividend income

    486

     

    Non-cash dividend income

    2,239

     

    1,491

     

    6,282

     

    4,254

     

    Other income

    3,599

     

    4,669

     

    7,694

     

    8,550

     

    From non-controlled/affiliated investments:
    Interest income

    1,051

     

    817

     

    3,088

     

    1,129

     

    Dividend income

    788

     

    787

     

    2,326

     

    2,423

     

    Non-cash dividend income

    309

     

    4,024

     

    901

     

    12,050

     

    Other income

    342

     

    315

     

    934

     

    1,529

     

    From controlled investments:
    Interest income

    2,717

     

    1,771

     

    7,764

     

    4,342

     

    Dividend income

    7,661

     

    5,925

     

    23,383

     

    14,755

     

    Non-cash dividend income

    2,273

     

    1,721

     

    6,446

     

    4,683

     

    Other income

    163

     

    617

     

    505

     

    1,477

     

    Total investment income

    72,594

     

    60,469

     

    203,250

     

    167,956

     

    Expenses
    Incentive fee

    7,792

     

    6,780

     

    21,642

     

    19,644

     

    Management fee

    12,687

     

    10,018

     

    35,302

     

    28,011

     

    Interest and other financing expenses

    21,830

     

    14,759

     

    61,695

     

    38,873

     

    Administrative expenses

    930

     

    846

     

    3,074

     

    2,607

     

    Professional fees

    834

     

    2,053

     

    2,486

     

    3,455

     

    Other general and administrative expenses

    492

     

    437

     

    1,302

     

    1,365

     

    Total expenses

    44,565

     

    34,893

     

    125,501

     

    93,955

     

    Less: management fees waived

    (3,141

    )

    (1,766

    )

    (8,497

    )

    (4,583

    )

    Less: expenses waived and reimbursed

    (335

    )

    (276

    )

    Net expenses

    41,424

     

    33,127

     

    116,669

     

    89,096

     

    Net investment income before income taxes

    31,170

     

    27,342

     

    86,581

     

    78,860

     

    Income tax expense

    225

     

    13

     

    286

     

    Net investment income

    31,170

     

    27,117

     

    86,568

     

    78,574

     

    Net realized gains (losses):
    Non-controlled/non-affiliated investments

    349

     

    3,254

     

    439

     

    (3,149

    )

    Controlled investments

    6

     

    14

     

    Net change in unrealized appreciation (depreciation):
    Non-controlled/non-affiliated investments

    (8,334

    )

    (4,048

    )

    4,106

     

    (22,069

    )

    Non-controlled/affiliated investments

    (143

    )

    829

     

    (2,671

    )

    10,908

     

    Controlled investments

    1,453

     

    (390

    )

    3,870

     

    10,471

     

    Securities purchased under collateralized agreements to resell

    (1,332

    )

    (1,332

    )

    (12

    )

    Benefit (provision) for taxes

    281

     

    (2

    )

    121

     

    (986

    )

    Net realized and unrealized gains (losses)

    (7,720

    )

    (357

    )

    4,547

     

    (4,837

    )

    Net increase in net assets resulting from operations

    $

    23,450

     

    $

    26,760

     

    $

    91,115

     

    $

    73,737

     

    Basic earnings per share

    $

    0.27

     

    $

    0.35

     

    $

    1.11

     

    $

    0.97

     

    Weighted average shares of common stock outstanding-basic

    86,987,841

     

    76,106,372

     

    82,020,549

     

    75,994,068

     

    Diluted earnings per share

    $

    0.26

     

    $

    0.32

     

    $

    1.01

     

    $

    0.91

     

    Weighted average shares of common stock outstanding-diluted

    100,245,426

     

    89,388,999

     

    97,948,225

     

    86,983,697

     

    Distributions declared and paid per share

    $

    0.34

     

    $

    0.34

     

    $

    1.02

     

    $

    1.02

     

    ABOUT NEW MOUNTAIN FINANCE CORPORATION

    New Mountain Finance Corporation is a closed-end, non-diversified and externally managed investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company’s investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. The Company’s first lien debt may include traditional first lien senior secured loans or unitranche loans. Unitranche loans combine characteristics of traditional first lien senior secured loans as well as second lien and subordinated loans. Unitranche loans will expose the Company to the risks associated with second lien and subordinated loans to the extent it invests in the “last out” tranche. In some cases, the investments may also include small equity interests. The Company’s investment activities are managed by its Investment Adviser, New Mountain Finance Advisers BDC, L.L.C., which is an investment adviser registered under the Investment Advisers Act of 1940, as amended. More information about New Mountain Finance Corporation can be found on the Company’s website at http://www.newmountainfinance.com.

    ABOUT NEW MOUNTAIN CAPITAL

    New Mountain Capital is a New York based investment firm focused on long-term business-building and growth investments. The firm currently manages private equity, public equity, and credit funds with over $20 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. 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.



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    New Mountain Finance Corporation Announces Financial Results for the Quarter Ended September 30, 2019 New Mountain Finance Corporation (NYSE: NMFC) (the "Company", "we", "us" or "our") today announced its financial results for the quarter ended September 30, 2019 and reported third quarter net investment income of $0.36 per weighted average share. …