Good morning, and welcome to the New Mountain Finance Corporation Second Quarter 2014 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation there will be an opportunity to ask questions. (Operator Instructions) Please also note this event is being recorded. I would now like to turn the conference over to Rob Hamwee, the Chief Executive Officer. Please go ahead.

Thank you and good morning everyone and welcome to New Mountain Finance Corporation’s Second Quarter Earnings call for 2014. I am here today with Dave Cordova, CFO of NMFC. Our Chairman Steve Klinsky is unable to join the call today but will re-join us future calls. I would like to ask Dave to begin and make some important statements regarding today's call.

Thank you, Rob. I would like to advice everyone that today's call and webcast are being recorded. Please note that they are the property of New Mountain Finance Corporation and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I would also like to call your attention to the customary Safe Harbor disclosure in our August 7, 2013, press release and on page two of the slide presentation regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from those statements and projections. We do not undertake to update our forward-looking statements or projections unless required by law. Any references to New Mountain Capital or New Mountain are referring to New Mountain Capital, LLC or its affiliates and may be referring to our investment advisor, New Mountain Finance Advisors BDC, L.L.C. where appropriate. To obtain copies of our latest SEC filings and to access the slide presentation that we will be referencing throughout this call, please visit our website at www.newmountainfinance.com or call us at 212-720-0300. At this time, I would like to turn the call back over to Rob Hamwee who will give some highlights beginning on page four of the slide presentation. Rob?

Thanks. David and I’ll go through the details in a moment, but let me start by presenting the highlights of another strong quarter for New Mountain Finance. New Mountain Finance’s pro forma adjusted net investment income for the quarter ended June 30 2014 was $0.36 per share above our guidance of $0.33 to $0.35 per share. This once again, more than covers our Q2 dividend of $0.34 per share. The company's book value on June 30th was $14.65 per share, which is up $0.12 from last quarter and represents another new high for the company. We're also able to announce our regular dividend for the current quarter ending September 30, 2014. The regular dividend will again be $0.34 per share, consistent with our previously communicated view that we have reached a fully ramped steady state dividend level. In addition, I am pleased to announce that we will be pay a $0.12 special dividend this quarter based on the gain from the sale of our equity position in Learning Care. The credit quality of the company's loan portfolio continues to be strong with once again no new loans placed on non-accrual this quarter. We have had only one issuer default since October 2008 when the debt effort began representing less than 0.3% of cumulative investments made to-date. The company invested $158 million in gross originations in Q2, and $136 million net repayments. In addition to the strong quarterly results in the core business, we executed on a number of important strategic initiatives that will create meaningful shareholder value in the coming quarters. We completed two new financings totaling $165 million established our first senior loan program that will generate management fees for the BDC and received the approval from the SBA for our first SBIC license. In summary, this has been…

Thank you, Rob. For more details on the financial results in today's commentary please refer to the Form 10-Q that was filed last evening with the SEC. Before we turn to Slide 25, I want to remind everyone that during Q2 2014, we completed our corporate structure collapse. Please refer to the Form 10-Q for more information. The updated corporate structure is provided as a reference in Appendix-B of the presentation. Now I would like to turn your attention to Slide 25. The portfolio had just over $1.3 billion in investments at fair value at June 30, 2014 and total assets of just under $1.4 billion. We had total liabilities of $595.6 million of which the total debt outstanding was $568.1 million. Net asset value of $762.6 million or $14.65 per share was up $0.12 from the previous quarter, largely due to net realized and unrealized gains of approximately $0.10 per share and adjusted net investment income for the quarter exceeding our dividend by $0.02 per share. As of June 30, our debt-to-equity ratio was 0.74 to 1, which is at the high end of our target range. The weighted average debt-to-equity ratio during the quarter was approximately 0.63 to 1. As a reminder, our Wells Fargo credit facilities covenants are generally tied to the operating performance of the underlying businesses that we lend to rather than the marked up of our investments in any given time. On Slide 26 we show the historical NAV per share and leverage ratios, which highlights the upward trend in NAV per share since inception and leverage ratios probably consistent with our target leverage of between 0.65 to 0.75 to 1. We also show the NAV adjusted for the cumulative impact of special dividends, which portrays a more accurate reflection of true economic value…

Thanks, Dave. Well, once again, we do not plan to give explicit forward guidance. It continues to remain our intention to consistently pay the $0.34 per share on a quarterly basis for future quarters, so long as the adjusted NII covers the dividend in line with our current expectations. In closing, I would just like to say that we continue to be extremely pleased with our performance to-date. Most importantly, from a credit perspective, our portfolio continues to be very healthy. Once again, we like to thank you for your support and interest and at this point turn things back to the operator to begin Q&A. Operator?

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Greg Nelson of Wells Fargo Securities. Please go ahead. Greg Nelson – Wells Fargo Securities: Hey guys, congrats on a great quarter and thanks for taking my questions. Just quickly on the senior loan program, when we are thinking about that, and you guys obviously controlled what goes in it and we have a minority equity position how are you able to do that and maintain it still as an off balance sheet investment?

So, it really revolves around the 24.9%, really sub 25% ownership as well as something called a kick out which as a technical matter allows the majority equity folks to kick that out no fault before and you see that in a lot of situations. So, that’s really what drives the non-consolidation of those factors. Greg Nelson – Wells Fargo Securities: Perfect and then just thinking about that a little bit more broadly and you kind of left the door open as far as doing more in the future, when you guys think of the trade-off this regarding resources allocated to putting these funds together, stuff like that for a 12% ROE plus 50 BPS on equity. How do you kind of view that in the context of broader portfolio and how many more do you think you would do?

Remember what we are doing with this is we are – and really what the genesis of this was is that we were seeing a lot of – what we thought were interesting risk credits opportunities in deals where we fully underwritten them for private equity or where we done the credit underwritings and/or done the credit writing for the BDC from a second lien perspective. So, the incremental work – we are not out there like looking for brand new things that we had at the start from Square one on, either things that there is flow, that we can harvest pretty efficiently and the question really was, so the assets where they are, the question was what was the right vehicle and this is kind of what we came up with as the right vehicle that the safest vehicle the most efficient vehicle, a vehicle that allows for an attractive rate of return to our institutional equity partners and that also generates meaningful sustainable multi-year fee income for the BDC that allows us to enhance the ROE. So, I guess, the short answer to the question is, it’s not a ton of extra work. But that being said we are bringing the relevant resources to bear and as our market cap and asset base continues to increase, we’ll continue to reinvest in the business and make sure that we have the necessary resources to continue to optimize outcomes for the shareholders. Greg Nelson – Wells Fargo Securities: Okay, great. And then, congrats on getting the SBIC license. And, I thin in past you guys have mentioned that about 50% of your investments fit, was that kind of still what you guys are thinking?

Yes, yes. I mean, the – frankly the ability to ramp the SBIC will not be a function of deal flows, it will be a function of the various gates that won’t go through the SBA as you know, there is, the first license entitles you to $150 million of capital, but even to get there after the first $75 million is deployed that’s sort of – again the SBA does a comprehensive audit of the portfolio before getting you the second $75 million. And then obviously after the first $50 million to get to the full $225 million once you need to go through a whole licensing procedure. So that will be – that is – we expect that to be the constraint driving that 18 to 24 month timeline versus the flow that we have to support the qualifying asset if you will. Greg Nelson – Wells Fargo Securities: All right, great. That’s all from me. Thanks guys.

All right, great. Thank you.

Our next question is from Chris Kotowski of Oppenheimer. Please go ahead.

Hey, Chris. Chris Kotowski – Oppenheimer: Hi, I want to get a bit more color on the senior loan fund and the – I guess, first question is, the $1.7 million annually, is that your share or is that the whole management fee or through the other 75.1% owners not have a right to any interest in the fee?

No, we get a 100% of the fee. Chris Kotowski – Oppenheimer: You get a 100% of the fee. Okay.

Because we are doing a 100% of the work, so, it’s a vehicle that we are managing and like any other asset management entity it pays a market-driven fee. We happen to be instead of running that fee to our management company; we are running it through the BDC for the benefit of the shareholders. Chris Kotowski – Oppenheimer: Okay. And so, and the way you calculated the 12% anticipated yield that would be if you have an investment in the $23 million of equity, the 1.7 would be 7% of that and so then you are anticipating a yield of 5% on ….

No, no, no, no – good question, to be super clear, the 12% is what you get before the fee. So, the $2.3 million of yielding approximately 12% both for us and for institutional investors. Separate and apart from that, we are getting the fee. So, if you wanted, I stick it together you can say, well, another 1.7 on 23 is what is that 7% or so, 8%. That would to get to 20% including the fee. But we – obviously they are different streams, right, there is one that’s a return on capital where you are taking risk on your capital, the other just like fee for performing work where you are not utilizing capital and obviously, over time to the extent we can get more of that flowing through the BDC that’s very – I think it’s somewhat unique and it’s very meaningful from an ROE perspective because its revenues that doesn’t require any capital. Chris Kotowski – Oppenheimer: Okay. And you indicated that – okay, you could expand this in the future would expansion mean adding additional vehicles like it or just expanding this vehicle?

No, the respectively stacking vehicle for this is an entity that gets ramped up over – call it four plus or minus months and then these are loans that turn the way regular loans, they are five to seven year loans, they probably have three to four year average life. So, once you are fully ramped, you are monitoring it but you are not having to – you are replenishing maybe a quarter of the assets every year. So, you, at that point have room to create a similar vehicle that you would ramp up the same way and again these things can sort of stack so you can envision doing a couple of these a year in winding up with three, four of them over time. And these are five year investment partnerships. So, they have a pretty good life to that. Chris Kotowski – Oppenheimer: Oh, they have a life but it’s finite?

Yes. It’s a finite life. Chris Kotowski – Oppenheimer: Okay, all right. That’s it for me. Thank you.

You are welcome.

(Operator Instructions) And our next question is from Troy Ward of KBW, please go ahead.

Hey, Troy. Troy Ward – KBW: Hey, good morning. Very nice results on the quarter, some important strategic initiatives here. Just couple other quick ones on the SLP, so, it’s a five year life, is it re-investable through five years? Or is that the end maturity is – how long is the reinvestment period?

Three year investment period, option for one year, extension to go to four years. Five year final life with options to extend beyond that. Troy Ward – KBW: Okay, great. And then, as you talked about in your returns stacking additional ones on what is a gating factor for getting SLP 2 or whatever? Is it equity participation? Is it the ability to get leverage? Is it the asset side? What do you see is the kind of the gating factor to doing additional?

Probably, the equity is always the trickiest thing to raise, but that being said, we’ve got a pretty I think powerful network of relationships in the institutional community and I think people think we are doing a good job. So I think, we have reasonable confidence that we can raise the equity and we can raise the debt and that the assets if the spreads compress to a level at some point if it comes uneconomic. But right now, even though spreads have compressed a fair bit, we can still make this work. I mean, if you think about it, we are competitive with CLO is right our cost of debt for three quarters of the capital structure is pretty competitive plus 155 is not far off from where triple A pricing is happening. And, what we are able to do, is to really because we don’t have the constraints of a CLO around diversity and around ratings, we are able to be pretty nimble focused on the sectors and concentrating areas that we know and like have a more, what was still diversified not 100 names right it’s going to be 25 or 30 names all in areas in the companies that we know. And we are able frankly to arbitrage a little bit around the things that CLOs don’t like. Moody’s and S&Ps are great, but they are not perfect. In sometimes they may, in our judgment, improperly raise something at the B3 or as a low recovery factor or whatever else that maybe and while that vast majority of the loan market really cares about that, we don’t. So, that’s kind of how we are view that, Troy. Troy Ward – KBW: Can you speak to how you can protect the return in this – in the phase of rising rates? Obviously, with the leverage here to multiple of the equity with no flow or the LIBOR 165 with no floor, the assets most likely will be sitting on floors in a lot of cases. Is there is some way you can mitigate or protect your 12% residual income return on the equity?

We obviously have that. I think the short answer is no. I think we looked at that, I think that, obviously the scenario that hurts us is that, if the average floor is 100, right? And LIBOR 25, so as LIBOR goes from 25 to 100 it starts to hurt us, but not by a lot and then obviously as LIBOR rises above 100, we get the benefit of that. So, I think over the life, unless you think it’s going to LIBOR, it’s going to go to 75 or 100 and just sit there forever. We think it’s a balanced; there is much upside, downside there. And just to be clear, the 12% is inclusive of the forward LIBOR curve including the painful part where rates are rising on our liability but not on our assets. Troy Ward – KBW: So, that’s built into that assumption already to some degree?

That is correct, yes, assuming rates fall the exact trajectory of the forward LIBOR curve. They could be worst for us, or better for us, but it’s obviously the forward curve is the best approximation we can use. So, if we didn’t – if we run this, LIBOR never moves, we do a little bit better so the – including the forward curve has some marginal amount but that’s factored into that 12%. Troy Ward – KBW: Okay, great. That’s great color. And then on the SBIC on the Slide and I apologize if you’ve answered this already, but the slide said you’ve already funded $35 million. Can I assume that, should we assume that you are going for the full license, so you are going to fund $75 million of regulatory capital before you draw down on debentures?

We can do 37.5 and then we can draw on debentures and then we can do the next – so we don’t have to do the full 75. Troy Ward – KBW: Okay, I understand. So, when – did you say when you anticipate drawing on the debentures, fairly soon I would think?

Yes, it’s very soon. Troy Ward – KBW: Okay, great. All right, guys. That’s all for me. Thanks.

Great, thanks, Troy.

Our next question is from Robert Carp [ph]. Individual investor, please go ahead.

Yes, congratulations on some of the accomplishments this quarter, but if you could just help us understand currently you mention that spreads are – credit spreads are wider, based on volatility in the markets, which certainly in the high yield market they are. You are distributing out $0.12 additional cash rather than reinvesting that into opportunities right now and I counter that to – I guess about a quarter ago. When credit spreads were tight, and then you turned around stock offering that after expenses it was probably at a discount to book value, what’s the discounted book value after expenses? So how do we look at that? Why aren’t you keeping this cash now and reinvesting or alternatively should we assume that you have no further need to do stock order offerings in the immediate future?

So, there is a couple of things. So, let’s start with credit spreads, so to be clear, credit spreads compress from April through current date. The volatility we are referring to is – they were compressed even more but for the last two weeks, but just point-to-point if you go, April 30 to August 4, credit spreads are down. So, it’s not the case that it’s – that the credit spreads are wider today than they were in April. So if I imply that, I apologize.

But I am talking about opportunity set looking forward based upon the current environment you don’t…

Well, our opportunity set is partly driven by market spreads and it’s partly driven by our ability to find this author on or small and mid-cap opportunities are opportunities that flow to us because of our large network driven by the big organization that we were part of. So, we have opportunities then, we have opportunities now. Now, relative to the $0.12, that we have to pay that money now. That’s because, we have to pay out effectively a 100% of out taxable income and that’s taxable income. Whether we pay it out, August or December, it’s going to get paid out. So, our policy has always been, we don’t want to deploy that money and then have to sell something four months later to pay it out. So, we view that as shareholder money and while we would use it in the first instance to offset any taxable losses on – that would offset again, we don’t have that right now. So, we think the shareholder firmly think to do is to pay that out because we can’t hold on to it from a reinvestment perspective. So, whether or not, we raise equity in the future, as I said, many times and said on this call, it will be solely a function of the universe of attractive investment opportunities relative to our repayment. We fund our attractive opportunities first out of repayment and obviously, we’ve always maintained full leverage and it’s in the context of full leverage, the opportunity set is greater than the repayment flow, we’ll issue equity, if not we won’t.

Thank you.

You are welcome.

And this concludes our question-and-answer session. I would like to turn the conference back over to Rob Hamwee for any closing remarks.

Great, well, thanks everyone. We appreciate the time, that was a busy couple of days in the BDC land with earnings and look forward to talking to everyone again soon. So, thank you and this concludes the call.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.