New Mountain Finance (US:NMFC)2024-05-02 19:42Financial Data and Key Metrics Changes - Adjusted net investment income for the quarter was $0.36 per share, exceeding the regular dividend of $0.32 per share [25][69] - Net asset value per share decreased slightly to $12.77, a decline of $0.10 compared to the previous quarter [25][66] - Total investment income was $90.3 million, a 2% decrease from the prior year [67] Business Line Data and Key Metrics Changes - The portfolio had approximately $3.1 billion in investments at fair value, with total assets of $3.3 billion and total liabilities of $1.9 billion [66] - The interest coverage ratio for the portfolio increased to 1.7x, indicating improved financial health among portfolio companies [55] Market Data and Key Metrics Changes - The average yield on the portfolio increased from 10.9% in Q4 to 11.1% in Q1, primarily due to a higher base rate environment [63] - Portfolio company leverage has decreased slightly, with an average loan-to-value of 43% [55] Company Strategy and Development Direction - The company focuses on defensive growth sectors such as software, business services, and healthcare, which are expected to perform well regardless of economic conditions [28][43] - The strategy emphasizes high conviction underwriting decisions based on extensive industry knowledge [47] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the medium and long-term outlook for M&A activity, driven by significant private equity dry powder and favorable financing markets [51] - The outlook for the remainder of 2024 in the sponsor-backed direct lending market is positive, with deal flow picking up but still below historical levels [33] Other Important Information - The company has a Dividend Protection Program in place to support the regular dividend if net investment income dips below $0.32 [7][42] - The company plans to issue a $300 million five-year investment grade bond to improve its capital structure [74] Q&A Session Summary Question: Can you elaborate on the potential incentive fee waivers? - The incentive fee waiver program is set to expire at the end of the year, but management plans to discuss extending it with the Board [78][79] Question: What is the outlook for Edmentum and its market performance? - Edmentum has experienced a slowdown post-COVID, but management is optimistic about its future performance as the market stabilizes [30][96] Question: How does the company view the current interest coverage ratio? - The increase in the interest coverage ratio is attributed to good performance from underlying portfolio companies and a positive mix from new deals [55][102]