NMFC - Earnings call transcript Q2 2024 | New Mountain Finance Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the New Mountain Finance Corporation Second Quarter 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to John Kline, President and CEO of New Mountain Finance Corporation. Please go ahead.

John Kline

Thank you, and good morning, everyone. Welcome to New Mountain Finance Corporation's Second Quarter 2024 Earnings Call.

Corbett, me CEO are Laura of of and with of Klinsky, Holson, line of NMFC; and Treasurer NMFC New Kris the here Steve today Chairman COO NMFC. On and CFO Mountain Capital; Steve he I'd is make important like before call. today's to does, statements Kris going regarding some ask remarks. But make some to introductory to

Kris Corbett

Thanks, John. Good morning, everyone.

actual who be presentation. highlights that to X We at SEC that obtain to that property those webcast update our I of over of you refer to cause slide filings throughout everyone that Before materially New Steve? filings copies the To advise are NMFC's the or recorded. earnings Corporation www.newmountainfinance.com. At to we like release. I recent any and slide to the being some in get differ and July I'd beginning of our we'll the call, for and Klinsky, available strictly disclosures audio conference projections would unauthorized and like do our on any customary our into projections projections. not include like referencing our time, Information they press Please Mountain is ask turn webcast Finance release to statements broadcast please forward-looking important replay Steve statements note give X Page the regarding would undertake about the call that statements law. forward-looking to presentation the slide call safe could of our most and press SEC of on form and and from factors X may call and are the and Chairman, this prohibited. presentation, harbor the latest required that this this today's by is we with to XX to on Today's also results statements. to visit Pages unless presentation website attention call access will your forward-looking in call

Steven Klinsky

be as address to investment great per shareholder. covering more implied dividend that and It's quarter both Adjusted able was June with Kris. as all our today the on line $X.XX you and in for our Chairman $X.XX to XX. was income Thanks, than per share guidance share a major in net fellow paid NMFC's cash regular

credit value share flat per asset with or $XX.XX decline portfolio. our net roughly $X.XX Our stable only was performance of X.X%, demonstrating a across continued

variable per NMFC dividend excess be XX. as equal earnings of $X.XX. earnings share, this dividend supplemental paid our remainder for quarter, supplemental we the of of September our these earnings amount excess to and our share this variable of be pay payment. of quarter quarterly out in The our of of future. the half will may sixth XX of the record our which regular Given $X.XX will will holders to remain QX September is will on consecutive in on make distributions sheet per $X.XX dividend The balance

represents $X.XX current annualized at distribution XX%. of dividend Our an yield

dividend, $X.XX regular generate supplemental at $X.XX payable of we dividend per our a to addition least expect fourth in the QX, For XXXX. of in to quarter share variable

base variable dividend factors. payments rates, be look on of supplemental the direction the spreads As will ahead, dependent we continuation other of and financing

our would While to shareholder-friendly fee uncertainty like announce we variables, these some there to around structure. is changes

X.X%. base X.XX% management fee permanently we from to plan reduce First, our to

our are protection announcing the Second, program. we extension dividend of

regular per XXXX, years support the the XXXX to for dividend. and While needed, remainder we year, incentive will XX% to the help and the unchanged quarterly for share remain as current fee reduce calendar our $X.XX program commit if of to

needed these the higher to XXXX, per New believe NMFC achieve of we incentive of the and the and a percentage share, $X.XX earn yield is our strength of delivering would dividend. We changes $X.XX the We fee strategy below XX% during stable reduce if our team. reflect consistency Mountain of of we believe well-protected Specifically, NII commitment quality NII per our to driven share. and or and XXXX quarterly our to of by the

New provide Mountain over health science software, overall developed has such members, numbers defensive attractive and the infrastructure now information firm sectors a as growth cyclical technology, life specialties that is XXX supplies, in growth care we unique services allows to informed our and underwriting high-conviction expertise credit investing that experts industry our of engineering. When utilize group us make knowledge efforts, digital very pursuing extensive and decisions. to

team. Over overall expand of the the have quality year, to continued our last we

are private bankruptcy now firm XX Mountain's billion an interest only NMFC as of in experienced basis right attractive particularly has of realized points have a payment today while equity loans annualized never average its economic in times. had years and Similarly, manages well our over dividends. $XX a times the public out missed paying company think are we net of in $XX or all XX less per that losses overall New funds over believe share and We in assets. defensive industries cumulative certain growth positioned

John. management as management let own employees turn NMC's personally. With of XX% currently shares as shareholders continue senior around we me major of NMFC's that, other Finally, and NMFC. call the total I to

John Kline

drivers, streams, exposure industries map cash flow on of private Mountain strategy equity would knowledge highlight has predictable companies investments conversion. to seek made to make Page We sectors review firm's successful stability you, and the strongest. Starting I a where and These we a revenue free durable in margin Thank great is New noncyclical our list investments to long-term and offering the where by with track direct growth record. Steve. broader our of sectors. to defensive our X, diversified investment like lending begin

from riskier challenged virtually industries, given pie the higher to industry today's on rate Page you secularly can see in, cyclical, have could we to As exposure X, volatile invest be areas which environment. and chart no

has performance economic long-term track us allows confidence operate statistics company, any it Since our dividend IPO in of credit been return strategy annualized our consistent generating delivering losses and all XXXX, minimizing consistent, $X.X with key years a of program our XX an of a to to to by has in as approximately Our income to showing provides record our distributing enhanced returned yield X through NMFC over shareholders. XX%. billion shareholders our approximately public shareholders virtually and environment. Page excess

primarily significant that Our for sophisticated invests by risk paid and to is that we of current businesses portfolio in financial business. the dollar high-quality approximately last the purchase sponsors, We junior within make. are well who of performing XX% capital and owners with that owned industries companies our price where loans supportive lend are to the is

risk assets of XX% portfolio improved map quarter-over-quarter green last heat our portfolio we with using the compared highest rated in represents The XX.X% XX. Page This ratings level to rating internal system began green-rated since quarter. of the of the Turning to XXXX.

only fair most on updated Our our value, negligible a making of its map represent Page the heat portfolio. The NMFC's XX. challenged categories them part is names red X.X% orange entirety and within of in shown

Given quarter. develops. negative did software, NMFC's positioned our risk to business and we during rating defensive landscape towards the matter QX, services not perform the to believe care, health assets economic continue have we no how Similar like any sectors orientation to migrations are well

consistent and fact, bottom growth, majority top continue In the experience our of our both underwriting. with line investments to

of expect to many we which of partially non-green we green to at Additionally, prospects of and QX back repay one time the have optimistic many migrate the over which in remain par. about of names to ability our

compared core book Turning graphical a value provide the in a of $X.XX to Edmentum. supportive changes Overall, a was quarter resulting in in by $XX.XX, NAV performance, we Northstar the of credit Page decline a good quarter. market benefited the XX, to which offset very value of analysis environment, quarter, during from value declines and book last

for changed, in a Northstar's of timing resulted not have recovery expectations quarter. value delay a the in general our expected write-down this realization While

again stake we of the modestly equity Edmentum. value Additionally, our carrying reduced in

learning is from Edmentum a that benefited K-XX provider learning virtual of pandemic. reminder, a leading online to shift accelerated during the an As programs

the and last we the addresses market to that is the believe post-COVID, performance. reversed of remains continues previously quarter, we we value positioned stabilizing, some is and NMFC's with As recognized. nonaccrual have proposition products gains company's Consistent the unrealized quarter, strong. Page we well the therefore, of last Edmentum discussed normalize market XX

an stock of incremental the in fair vintages suffered on the medium diluted nonaccrual. currently current equity exiting portfolio billion approximately The classes of side significant the $X.X investments UniTek names state These where have much of page, portfolio the a around the preferred the the written the and the investment have value, participation, page, an the that when with good during older at down box older dilution $XX excludes most of of came nonaccrual, show tranches. on portfolio we XXXX of the term. from show We On Of million chance million of preferred nonaccrual. we left materially bottom on have X.X% positions adjusted led or are certain meaningfully which Mountain left New which in $XX on nonaccrual pandemic. are capital preferred now the with been

equity We positions performance. the equity non-accruing misleading value offsets UniTek face equity is reflects nonaccrual that our showing the that value largely more offsetting and Today, current non-accruing of the without accurately original new this appreciation believe the of offsetting preferreds. appreciation with these this disclosure the overall

no preferred Transcendia The value brands while This negligible approximately made QX, Moving right only company relative cumulative quarter a position, realized our meaningful as change of which of NMFC of performance represents earnings an new upside of recapitalized charismatic recorded two average currently losses of fair of returns net compared securities the in rate out-of-the-money to to billion since side own the This meaningful new We restructuring of business. $XX sponsor last held points was we downside loss a IPO, QX. the million. approximately alongside warrants realized has our to IPO. rate to during page, now in fair led XX at common but tranches show past as levels. second a loss position received Charismatic credit almost has the of result the owner to value but increased investments by we equity to basis if restructuring. a is lien relating where losses of realizing the restructuring the and Transcendia. $XX no and since annualized

details increase present the NMFC new IPO, since net optimistic compelling showing over will operational trajectory We we and improvement of plans overall returns. value time. On nearly hopeful delivered XX, are Cumulatively, our securities of performance while Page NMFC's have net million current Operating economic Transcendia's on Chief has NMFC's our only and now earned Officer, income $XX that we billion of more consistent resulting $X.X current $X.X million net about $XX are turn and the investment discuss for generating billion over Holson, created realized performance. Laura of and unrealized to environment in quarterly losses shareholders. I'll value depreciation, of call only cumulative to the market provide to

Laura Holson

structures. as equity significant contributions Thanks, second capital remains John. on yields representing sponsor-backed in attractive below borrowers. majority M&A pockets the capital still LPs our markets dry pickup Deal loans activity powder verticals structure M&A magnitude of the capital continued below and levels. growth bullish We attach remain make question. staying selective. medium- sponsor pressure the the vast timing double-digit M&A to that to quarter to remain equity, private The but of in have compelling, as in opportunity and in financing where structures the for levels outlook a peak that the the activity we defensive There very with for up to for at while ongoing attractive given pick of are $X.XX long-term of normal remains well return the leverage

XXXX half and the feels we to sentiment than second related likely see rather increased open, of XXXX. Syndicated general are to However, the modest markets spread continue competition. compression more

to However, we more flow normalize the environment deal we soon see returns. supply/demand expect imbalance regular as a as

select generally certain open, creating market structure of around the lenders. bespoke market remains for the execution, the majority financing to the While ability the capital of flexibility direct choice still the solution the markets are recognize including more sponsors syndicated lending and hand as of more benefits a sponsors lending direct

loans seen opportunities an liabilities opportunistic increased loan well-performing over M&A. Page an to into base large rate our within companies In that floating ongoing existing new pursue interest are rate unique borrowers. to provides set activity, addition volume The an rates our opportunity of provides and portfolio to add-on the rate presents of XXX and XX This NMFC floating on XX% XX% fixed effective rate incremental refinancings as earnings. and seeking accretive analysis insight make we've XX% of NMFC's portfolio is to fixed quarter end. XX% while rate portfolio

fully we our QX, investment-grade to swapped reminder, a rate. fixed bond floating As during issuance from

would risk access As to we to the this sensitivity the in rates interest bottom interest highlight we the hedge our chart. market manner. We on in rate expect future, investment-grade

to While rates offset we dated, decrease, opportunities scenario by base liability expect some higher earnings and we cost would the some where debt. some to rate pressure shorter optimizing refinancing fixed believe in stack see that our we have potentially

our October rates. to of and callable XXXX, Specifically, represent baby XXXX hopefully converts X.X% refinance in mature are at which at November par opportunities X.XX% our in lower both of bonds

on Moving we XX. repayments. assets nearly of velocity. originated to portfolio Page had QX, We million strong In of saw $XXX and million $XXX

which in opportunistic Our participated new highlight the X core including defensive growth completed quarter business services. second software our the our where of and niches during lien. second of consisted of positions, repayments I'd first investments we alleys, originations refinancings in were enterprise X power lien that of

XX. Page Turning to

We approximately and of our XX% of first in from mix inclusive continue momentum rotating good in senior, lease nature, are XX% quarter. show up SLPs lien our asset to investments, where last senior more net

lien the quarter XX% X% the portfolio of to positions, which of is equity shown of Second of right just of largest QX positions are last XX% quarter. X% on decreased the comprised last Approximately the this year from and our page. side in

We are companies advance we these making resources continue of time believe at all business exits. in of which meaningful to medium-term progress to potential positive dedicate building and

other equity compared repayments, income highlights underlying even private operate credit and yields on and our Mountain scale Our by consistent like We credit Capital support investment Generally speaking, of any a that QX. the XX full portfolio attractive team to originations NMFC's XX differentiator. of capabilities operating leveraged borrowers. owned shows key at to our as lower ability target. Page XX.X% remain the tighter are New for of business. Page though and positions spreads our remained net on trends our and evidenced average yield own is businesses approach our yields the equity our

the can is This companies has million. we average to. growth as quarters see, you $XXX primarily to lend the As our attributable some borrowers companies well of the several over last EBITDA at of larger weighted increased originations as individual to

all growth on how an Mountain equal. else first internal borrowers defensive maps concentrate believe While to we safer, foremost we and opportunity marginally against and that criteria larger knowledge, our tend New be

activity. average on is that indication liquidity able sponsors of We've over have and investment this well weighted continued to evaluations. loan-to-value flat leverage has continue continue M&A leverage also XX%. portfolio. values stats quarters. coverage be companies show compelling, We and the Loan coverage as has company are several coverage current that X.Xx support expected last across and interest relevant quite seen the of company to to additional the portfolio the quarter. was at interest attract This great and ratios our and Portfolio proactively performing consists a portfolio to healthy in decreased the stabilized slightly the average an portfolio Interest are

portfolio our for illustrated The financial investments we total of represents value diversified net inclusive call have and over our SLP highest will approximately XX discuss on the our XX, now XXX to top as Corbett, portfolio to across turn lease a of Kris XX% Chief companies. results. conviction Officer, our and Financial account Page funds Finally, name. I fair

Kris Corbett

Laura. Thank you,

with was details, the on XX-Q more quarterly report SEC. Form yesterday to please that For filed refer our

outstanding was at At statutory to had of to [ As XX value billion, the billion. of billion with cash total ] available within the quarter. our asset shown total of statutory billion of was June $X.X prior and target debt-to-equity debt and slightly liabilities in X.XX:X portfolio $X.X total on continues Net balance of $X net Slide end, share fair approximately which investments X.X:X XX, down compared on $X.X which billion, assets range. value $XX.XX quarter sheet, per $X.X or the ratio was our be on

quarter leverage of quarterly was ended our show the Slide statement during at we average our middle results. our higher the XX, target income we While the end range, of our range. On in the quarter

prior we approximately current expenses of net income Total X% versus earned prior decrease year. total $XX.X the million, a over increased year. For quarter, million X% $XX.X of investment

adviser reminder, its The the And fee a reduce needed, achieve year. go-forward fee reduce as on level it permanently the to XXXX of note that to support if this a XXXX. expect dividend percentage our It fee needed incentive NII adjusted committed support XXXX, adviser important to fully the the of investment investment end adviser as to is to recoup of the $X.XX reduce basis. to fee to calendar through share previously management dividend. higher and mentioned earlier, As for a regular to the we cannot quarterly pledges is has and to pledged X.XX% its per to $X.XX In of XXXX or an waived. fees investment XX% incentive regular the the

the Our for weighted adjusted was meaningfully share. our $X.XX QX which quarter share, income per $X.XX dividend net investment per regular exceeded of average

is our during As investment dividend the a We increased recurring and following equity Slide velocity income quarter one our QX. portfolio in positions. of higher to demonstrates, XX income of nonrecurring XX% performance onetime strong total saw due of the

and income and XX% believe see our over this recurring paid is in predictability We You shows regularly nature on consistency will XX% average, of in historically investment cash. quarterly income. that income our of over of the is our stability

green income XX% noncash over generated rated from Importantly, names. quarterly our is of our

the regular dividend. Slide shows Turning the to our red of line XX, coverage

regular net dividend by This $X.XX our quarter, QX per investment adjusted share. income exceeded

revolving various guaranteed of have [ financing regular limitations. declared million with as of diversified $X.XX our $X.XX highlight total capacity and share XX, share. On ] our a our of base account dividend XXXX, leverage subject Board QX sources $XXX For supplemental to per of per $X.X again has into profile. well dividend as Directors we available a billion borrowing on borrowing lines, we SBA debentures, Taking Slide

capacity SOFR highlight partially successfully execution market, nature. repricing a in the significant successful aforementioned and which mitigate reduced to quarter strong this seen The will repricing our borrowing we to our represents a on plus of Wells believe the to X.XX% negotiated Our strong spread are continues position. for plus from facility tightening X.XX%. end, this SOFR credit we very facility, spread Subsequent liquidity Fargo

to business under As the important market our credit we both Deutsche operating Wells covenants more which are of facilities given any we that a lend Fargo at tied generally underlying the is to volatile performance than Bank time reminder, marks think the investments and of during our during rather conditions. particularly

Finally, on maturity schedule. our leverage Slide XX, we show

to As our we've laddering year. including debt matures that, maturities investment-grade after diversified call our been through continue issuance, debt bond this of maturities liquidity. John. or market. With inaugural Notably, to over opportunity We've our issuance with would near-term to manage investment-grade access like in representing an to back turn to XX% at nearly the XXXX successful I bond our earlier the

John Kline

you, Thank Chris.

like things operator the in and and once on will to again to to forward now our the we track are performance you again returns thank all shareholders. look to the forward are quarterly of great Operator? believe speaking we We deliver turn back of of strong October. I to Q&A. call we support remainder begin would our the XXXX, NMFC's next stakeholders over continue our to and risk-adjusted As partnership to confident to ongoing portfolio for look continued in on

Operator

Fargo. from Wells first The with [Operator Finian comes question Instructions] O'Shea

Finian O'Shea

hit value First a trade [ book raising. It you have in question on little capital ] may only bit. like looks

if two, So again? NAV we capital expect of NAV? posture when should one, the reaches And sort raise ATM was any below stock there and what

John Kline

Yes. Sure.

make we So when that NAV. nets ATM on the shares our program, company we issue always sure

direct And company a to small paid were of, opportunity posture to there's growing new for the of any general. NAV We around ATM that grow I one think continue through is the there to shares. then lending NMFC. make franchise focus. subsidies on to us in ATM want netted the we think, grow So sure our do We huge

ideas know, stay more As long a capital. a all we're and you short of midsized bit and lender of little we

make. proceeds our So no have lending problem shares, into when those core we direct loans issue investing that ATM we we

the to utilize to continue stock the the So well, trades we'll program. extent ATM

Finian O'Shea

the very And helpful. you on a which second one are ratings color provided,

I queue changes and quarter think you says the [ on it is said ], there in Transcendia green. this are no

if are green or So on color that? case, the this like assuming the quarter the so was ratings with was adjusted it on was last why green something value last market comments, like Transcendia quarter? Or

Laura Holson

Yes.

mapping time kind map when from one So restructure, we of of reset kind portfolio of when heat color any the companies a the perspective.

on that. of our of might orange technically of a was kind it expectations. Transcendia new I But of the because underwriting an quarter. help kind post it therefore, post not on last was transaction restructuring, it's We're all last effectively believe have quarter. cases, restructuring. So been green resetting green that we now clarify? Does kind reset And

Operator

comes from with Rowe Next question Riley. B. Bryce

Bryce Rowe

might called maybe up other income the onetime I'll could little line like help it in kind start out dividend, was the with have then the an statement for that And a looked us. quarter. question. So size And of income you you elevated been maybe Kris, one hoping also,

to get trying recurring what isn't? feel for [ a Just ] and what's

Kris Corbett

Yes.

increased the dividend in And in due line. $X was that quarter the then uptick we million originations So during income, for velocity increase as the was the far with that that during again, the quarter. to as the other approximately received

in was item. that income bulk that of other think the the line I increase

John Kline

we know, a as we're saw we does bit. QX, lot our quite didn't Bryce, the little of -- have you that that a period change of just a really time, and in velocity, just and long for nature income portfolio change of

Bryce Rowe

even asset and ongoing to an to Did I expect different match do you perspective, seen liabilities kind you comment BDCs -- unsecured and maybe rate maybe into a I this that environment, be the an other some rate interest then from, assets of the get on read try in that ALM we've will of guys the in swapping And a made management the do liability fixed floating. some strategy guess, about perspective?

Laura Holson

fully we're mean, on bond I the as we that we going to the in. interest operate and that continue a this we I environment manner, earlier to we'll investment-grade in probably that's but basis. think was right. that said, same forward, think on did And expect did issuance to think based year, evaluate rate I do appropriate that swap we we would case-by-case Yes,

Bryce Rowe

a about the look from is half the the third Last certainly visibility perspective, net quarter? you're it in wise? maybe that back kind year What's we're be heard how a M&A into then of a month the thinking But or one to maybe kind for now. 'XX follow-up what's repayments? And you've and I here. your me, pipeline than into back about half second like activity just event that might continued the kind seeing of M&A around into of activity comments of activity activity more the a 'XX. curious origination the of circulating guess of the a noted that Has lien year

Laura Holson

Yes.

a somewhat in And perspective. the type when kind is what So of in that better in position bit environment, the M&A demonstrated we to lot than just that just active QX a We've been as thing. refis, think that and incumbency it of kind of of think that and a still about was we overall from very attribute portfolio an origination even lot portfolio activity, think I of of we've activity depressed incrementals, all little just granted about velocity we opportunistic I a have QX.

totally We're place of handful maybe despite year a M&A lot a XXXX. the of half seemingly back the continued then for and still seeing not activity new until I decent activity. of about what deals remains said unlocking taking pipeline portfolio the So

Unitranche the I'm QX, that the share the some not quarters. is over but there. And same be saw the seeing I just as it seeing So migration pace still pace maybe couple expect last the really has structures. would trend a capital sure lien But we repayments second from market quarter-to-date, the will you continue. least quite that to lien side, lien, velocity-wise, that we're saw not velocity of taken at first if that of on we're think I in at we that second know,

looking most first new tends of so more to activity what we're terms And of in at lien/unitranche. be deal

Operator

James. from Next with Raymond Dodd Robert question comes

Robert Dodd

your change and returns X/X the basically I you the the repaying quarter. keep lien the On [indiscernible] market quite? You fact kind do that that could historically generated pretty the What risk a of -- lien mean pretty decent. second they in have to has of the is shifted. attractive going credit go repaid back think back second in

So up what do Maybe need to needs not What the secret, to imbalance? to mix? single maybe think the appealing in the but market-wise you lien see you you appealing increase that second ] more a more to highs, the digits. end do to get [ and market back back

the that's you something just anymore. on So that's just not for cards

John Kline

that bit second would, I of is a debt. all, Well, out just say lien first of little of an of classification favor

liked that just and their sponsors I accepted unitranche folks are by think companies. because is widely and is really reason one think widely I financing

yielding not first cash-oriented obligation. extra there's lien our cash typically of a liens, And after lot Second securities. cash

instruments. typically, preferred or So out tranches of debt-like in favor pushed liens second are being noncash pay

poor. market. In market. now, just lien, want a to we a it's on the I liens and market, so second and and spread syndicated environment stretch if do pretty at that, the folks given basis, XXX in I And cases, in think structures more syndicated mid first which a in on to perhaps think competitive you unitranche cases, the first And just tight a second that it's extremely the that have is at I first pref that see unitranche when market, right that second beyond the lien. being where market, the a are many relative exist some even value unitranche look lien you larger And that lien when larger, compare priced think levels, companies relative low do more to value we

risk and don't lien second know. sort market you market lower reasons, look are never credit it in change investing lien, at we what second to value in be, market. we same be improving that back, to think there's whether extent market of it's those When the know I the lien second and great our the will things if for lien impetus could we we so open really And be way. So the that rates the always first positions evaluate comes could in pref base

Robert Dodd

kind will not, second underwrite, I Laura time might the question, takes this what's On that of? maybe year? guess might half ], more deals the can. to there's this know now The comment -- I you second frame XXXX a time the one, year. I liven might than mean, I cutoff an it it's the I mean given soon but rates thinking on it how of closing up obviously, move pipeline, for And if hitting Or I of mean, the the basically you market you're in September. are election. [ mean,

John Kline

mean could I busy. view be view think and can that -- back pretty half Laura 'XX I up good a But be really I No. the think her it's expressed I Deals quickly. very think that of 'XX, will pop busy.

interesting we and 'XX. team look that are private private would think we were the giving market. so of deals at equity is looking the other there to not back of when at, about equity in on deal sponsors plenty And I If our think we're an our data half point up be pipeline, that

but the just hard precision. fine, that just in know really we That 'XX. looking to demand view with have is 'XX hit is think said, do it So I great will the pent-up

Operator

Finian from next with of follow-up. The Fargo question O'Shea comes Wells a Instructions] [Operator

Finian O'Shea

private design the run you've then have on name that where when taken you the Is Just and work by out Edmentum a provide Or group and point of backdrop keys Just names. so could person that or the say, like platform side? you runs forth. curious have support business or and fully a you credit primarily on in your, equity then and for some UniTek for the it? any -- do color still origination these

John Kline

would equity. to it's turn I on the deal that is Sure. and really but would involved think big for the which equity said, mean And that be exactly have in debt ] as think [ what a positions Shepherd run I position we team. the restructured we getting great credit a driven deal, competitive private by outcomes really advantage you is is from equity

but it. positive change operating do the that and is business our really equity we the effectuation is by partners. driven the way private So in our still affecting of Credit decision-making, is the team involved, operating

Operator

Johnson question comes Paul KBW. The with next from

Paul Johnson

level high if much, accruing? this originations of origination how quarter, due those is of any, the just On activity to PIK

Laura Holson

think of activity have I deal some tends yield. So seeing small still in pretty to environment, new today's PIK a form but amount it decent flexibility, the percentage of of be overall we're

] borrower or typical terms in for type a spread a might premium. what the see XX a of to X.XX XXX the points XX SOFR deal, of we or pick in and pricing point basis for [ or ability the XXX overall spread is the So XXX basis

right So I now. that's new typical the unitranche deal market would say for kind of

my decision reasons one still that why is to solution of use quarter-by-quarter doesn't direct whether market. And they kind And little is sponsors flexibility. And kind to like I to would a our but sponsors PIK all back because that say, deal have of importantly, the of I over good borrowers small again, originations, certainly, of So PIK the the rate of that to think a bit pretty think flexibility, using little the remains lending still have the why, kind of would reasons I a the new choose I them then probably that. of syndicated of It's environment, handful structured are yield. and that today's with the In make it's other flexibility. still flexibility the thing have overall of of of a comments a kind context of that one bit lending why mean is choice. note direct base about nice a market it just in

Paul Johnson

quarter, But $XXX accruent PIK of accrual I is originations within this mean, million the included there any in that all? at number --

Laura Holson

pure and not. No, just activity That's it's deal new

DDTL draws.

Paul Johnson

mean on just in rates did that kind quarter, quarter how lower this utilization And see trend the you what or did there? generally higher PIK I of

Laura Holson

haven't their as borrowers into that a they're have if kind seen uptick in of flexibility that. capital grow The Yes, bit way utilizing continue to all going of cash. maybe any I we slightly material been people material the probably of structures, little but PIK swapping their kind would no other that to do so, change. And anything, say

Paul Johnson

that kind it how ] point, guess, going mean I belabor factor today in, portfolio forward? probably you PIK new then how issue mean, origination. you paying I loan deals of on isn't expect the managing the income reasonable mean, income after soon new factor rate to higher But but new to that forward, PIK I to not And today? a that do activity, into fund [ I to in do is going going utilization origination so you the be just

John Kline

Sure.

really So a PIK standard term. lending can to we matter core this we as industries, if to credit term is best that. to in we the access direct And in to core that is invest lending within want find. of is The flexibility market our market see our the the our deals the fact strategy a try that best direct have accept industries is within we

very that can we may accept we're to feature PIK And are near refinancing that of coming we PIK the we we I borrowers. this creditworthy PIK couple when we exit XXX% on names future we XXX% with where preferred the So think the of have great that older PIK up some positions. the the quarters may overall think And think for of reduce they that think overall next to larger about four partial think some is really think portfolio, plan really way portfolio managing our be in over PIK, catalysts loans investments. in a the those going can of we

actually goal reduce PIK so year. over to be next would the to be And able the the

think the as I PIK in these and you're unitranche to, loans. the component Although is just headwind existence noting that is you're just on as alluding

Paul Johnson

for one they're that driven? are kind there And using by things the Or add-on me. was of of other opportunities then M&A lot mainly last those It type a driven the within add-on Did portfolio. those this deals, are sounded the activity of like quarter capital for?

Laura Holson

Yes.

I post the in company. portfolio and we've key as buy about of think or to sponsors an it's acquisition the lot additional largely I M&A-driven, initial talked past certainly strategy, thesis think, an of of a is, build kind for

I a all talked the the category has structure I mentioned, cases specific So an of other activity maybe as refi identified, where lien, of there that second would that first refinanced where related. John and lien or sponsor it for investments pref, then first was about. a capital lien handful M&A the first lien, of into been it kind could be that is sponsor There's think have the most

would related the in that the be kind of So of originations companies. portfolio nature those the to existing quarter

John Kline

We like making know loans and well we to performed have companies well that us. for

about, that So sticking activity those that of credit, that's good we is Laura companies. we're and we're see when and just a indicates talking sort we the picking sign healthy with think

Operator

concludes I would like turn for to conference session. over John any to Kline question-and-answer That our closing remarks. the back

John Kline

Great. Well, New thank for your Finance we the and very in to great Corporation. the you on Thank great questions for a soon. interest again forward you with Mountain Have today, call you look day. speaking

Operator

today's you Thank attending The for concluded. conference presentation. has now

disconnect. now may You

New Mountain Finance (NMFC) 1 Aug 242024 Q2 Earnings call transcript