New Mountain Finance (US:NMFC)2020-05-07 19:45Financial Data and Key Metrics Changes - Net investment income for Q1 2020 was $0.35 per share, exceeding the dividend of $0.34 per share and at the high end of guidance [13] - Net asset value (NAV) as of March 31, 2020, was $11.14 per share, a decrease of $2.12 from December 2019 NAV of $13.26 per share, primarily driven by interest rate movements and company valuations [14] - The regular dividend for Q2 2020 was set at $0.30 per share based on estimated net investment income of $0.27 to $0.31 per share [15] Business Line Data and Key Metrics Changes - Approximately 1% of the total loan portfolio is exposed to high-risk sectors such as restaurants and hospitality, while about 12% is impacted by COVID-19, primarily in dental and healthcare practices [11] - The majority of loans are in tech-enabled business services, which are expected to perform well even during downturns [12] Market Data and Key Metrics Changes - The leveraged lending market has experienced a virtual shutdown, with over 35% of the loan market currently quoted below $0.90 on the dollar [39] - Loans to mission-critical recurring technology-enabled businesses have performed better than the broader market [39] Company Strategy and Development Direction - The company emphasizes downside safety and risk control, focusing on defensive growth industries that can withstand market downturns [8] - The management is committed to maintaining a strong liquidity position, with approximately $130 million in cash and liquidity available [16] Management's Comments on Operating Environment and Future Outlook - The management acknowledges the COVID-19 crisis as potentially the worst financial crisis seen, but remains proud of the portfolio's resilience [19] - There is cautious optimism about the company's competitive advantages and future prospects, despite elevated risks [64] Other Important Information - The company has provided a $50 million unsecured revolving credit facility to itself and has deferred management and incentive fee payments for Q4 2019 and Q1 2020 [17] - The company has a strong liquidity position and is taking steps to return to its target leverage ratio of 1.2 to 1.3 [33] Q&A Session Summary Question: Dividend sustainability and potential permanent impacts - The management believes that current impacts on earnings are largely transitory, with more clarity expected in the coming quarters [70] Question: Flexibility of capital structure for loan modifications - The management is confident in the flexibility of the capital structure and the liquidity of impacted businesses [72] Question: Potential need for equity support - The management is aware of various tools for capital support but does not see an immediate need for equity raising [79] Question: Breakdown of liquidity position - The liquidity position includes cash and undrawn credit facilities, with expectations for growth in liquidity [92] Question: Supportive actions by the advisor regarding fees - The management has deferred incentive fees and is considering various supportive actions depending on the evolving economic situation [96]