New Mountain Finance (US:NMFC)2021-05-05 21:13Financial Performance - As of March 31, 2021, the company's net asset value was approximately $1,244.3 million, with a portfolio fair value of approximately $3,018.6 million across 102 portfolio companies [363]. - The weighted average yield to maturity at cost for income-producing investments was approximately 8.8%, while the yield for all investments was approximately 8.2% [363]. - A second quarter 2021 distribution of $0.30 per share was declared, payable on June 30, 2021 [368]. - The company plans to maintain quarterly distributions of at least $0.30 per share over the next seven quarters, subject to availability of legally distributable funds [369]. - The ongoing COVID-19 pandemic may negatively impact the company's operating results and portfolio companies, with potential for prolonged economic downturns affecting business operations [370]. - As of March 31, 2021, the company's net asset value has recovered compared to March 31, 2020, and is in compliance with asset coverage requirements under the 1940 Act [373]. - For the three months ended March 31, 2021, interest income was $1,966,000, down from $5,122,000 for the same period in 2020 [401]. - Total investment income for the three months ended March 31, 2021, was $1,977,000, compared to $5,161,000 in the prior year [401]. - The net increase in members' capital for the three months ended March 31, 2021, was $2,433,000, contrasting with a decrease of $36,150,000 in the same period of 2020 [401]. - Total investment income for the three months ended March 31, 2021, was approximately $67.7 million, a decrease of $6.4 million or 9% compared to the same period in 2020 [454]. - Total interest income decreased by approximately $14.6 million during the three months ended March 31, 2021, primarily due to lower LIBOR rates and smaller invested balances [454]. - Total dividend income increased to $15.7 million for the three months ended March 31, 2021, compared to $10.5 million in the same period in 2020, mainly due to the reversal of previously recorded PIK dividends [454]. Investment Portfolio - The company is focused on investing in defensive growth companies, with top industry concentrations in software, business services, healthcare services, education, and investment funds as of March 31, 2021 [362]. - The total investments as of March 31, 2021, amount to $3,018,612, with $1,576,600 in first lien, $696,209 in second lien, $37,295 in subordinated, and $708,508 in equity and other [385]. - The fair value of Level III investments as of March 31, 2021, is $2,640,571, with significant contributions from first lien ($1,499,850) and equity and other ($708,508) [385]. - The valuation of investments is influenced by the overall performance and financial stability of portfolio companies, including revenue and EBITDA growth trends [386]. - The company employs a multi-step valuation process for investments without readily available market quotations, involving internal reviews and potential engagement of independent valuation firms [381]. - The fair value measurement inputs are classified into three levels, with Level I including quoted prices in active markets, Level II including observable inputs, and Level III including unobservable inputs [381]. - The EBITDA multiple for first lien investments ranges from 5.0x to 35.0x, with a weighted average of 14.8x as of March 31, 2021 [389]. - The discount rate for first lien investments ranges from 4.8% to 18.4%, with a weighted average of 7.8% [389]. - The healthcare services sector represents a significant portion of the portfolio, with multiple investments including ADG, LLC and YI, LLC [409]. - The portfolio includes a mix of industries, with a focus on business services and healthcare services [409]. - As of March 31, 2021, total investments at fair value were $250,917, down from $271,149 as of December 31, 2020, reflecting a decrease of approximately 7.5% [415]. Debt and Financing - On April 20, 2021, the company amended its Holdings Credit Facility, extending the revolving period to April 20, 2024, with aggregate commitments of $730.0 million [364]. - The outstanding balance on the Holdings Credit Facility was $450.2 million as of March 31, 2021, with a maximum amount of revolving borrowings available of $745.0 million [466]. - Interest expense on the Holdings Credit Facility decreased to $2.7 million for the three months ended March 31, 2021, down from $5.4 million for the same period in 2020 [466]. - The NMFC Credit Facility had an outstanding balance of $107.0 million as of March 31, 2021, with a maximum amount of revolving borrowings available of $188.5 million [470]. - Interest expense on the NMFC Credit Facility decreased to $0.7 million for the three months ended March 31, 2021, compared to $1.9 million for the same period in 2020 [469]. - The DB Credit Facility had a maximum amount of revolving borrowings available of $280.0 million as of March 31, 2021 [472]. - The outstanding balance on the DB Credit Facility as of March 31, 2021, was $201.0 million, down from $244.0 million as of December 31, 2020, indicating a reduction of approximately 17.6% [475]. - The total amount of SBA-guaranteed debentures outstanding as of March 31, 2021, was $300.0 million, with an average interest rate of 2.7% [508]. - The company had outstanding commitments to fund investments totaling $100.3 million as of March 31, 2021, up from $73.1 million as of December 31, 2020 [509]. - The company’s total contractual obligations as of March 31, 2021, amounted to $1,770.9 million, with $953.4 million due within 1 to 3 years [512]. Management and Governance - The Investment Adviser agreed to waive a portion of the base management fee, capping it at 1.25% of gross assets through December 31, 2022 [367]. - The governance of SLP I changed with the Restated SLP I Agreement, which removed the previous managing member and established a board of members for investment decisions [391]. - The management evaluated the effectiveness of disclosure controls and procedures as of March 31, 2021, concluding they were effective [531]. - No changes in internal control over financial reporting were identified during the quarter ended March 31, 2021, that materially affected the internal control [532]. Distributions and Shareholder Returns - Distributions declared and paid to stockholders for the three months ended March 31, 2021 totaled approximately $29.0 million, with a per share amount of $0.30 [517]. - Total distributions for the years ended December 31, 2020 and December 31, 2019 were $120.1 million and $117.4 million, respectively, with ordinary income comprising approximately 84.58% and 72.01% of those distributions [517]. - The company intends to distribute approximately all of its net investment income on a quarterly basis and substantially all of its taxable income on an annual basis [518].