Financial Performance - Q2 2025 adjusted net investment income ("NII") was $0.32 per share, covering the dividend of $0.32 per share[15] - June 30, 2025 net asset value ("NAV") was $12.21 per share, compared to $12.45 per share as of March 31, 2025[15] - The company repurchased approximately $16 million of NMFC shares year-to-date, including $10 million in Q2 at a weighted average purchase price of $10.42 per share[15] - Total dividends paid to shareholders is approximately $1.4 billion since IPO[27] Portfolio Composition and Risk - Approximately 95% of the portfolio is rated green on the company's heatmap, indicating strong credit quality[15] - Nearly 80% of the portfolio is senior in nature, including First Lien, SLPs, and Net Lease assets[15] - Realized Total Net Loss Rate for NMFC since IPO is 1bp[19] - Top 10 portfolio companies represent $759.4 million, or 25.2%, of consolidated investments[67] Investment Activity - Gross originations for Q2 2025 were $122.2 million, while repayments were $141.4 million and sales were $13.7 million, resulting in net less sales originations of $(32.9) million[17, 55] Leverage and Liquidity - Statutory leverage ratio is 1.13x debt to equity as of June 30, 2025[16] - The company has $1,789 million in outstanding debt with a weighted average interest rate of 6.04%[53, 82]

New Mountain Finance (NMFC) came out with quarterly earnings of $0.32 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $0.36 per share a year ago. These figures are adjusted for non-recurring items. Ahead of this earnings release, the estimate revisions trend for New Mountain was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements, including assets, operations, cash flows, and investment schedules, with comprehensive notes on accounting policies and disclosures [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Summarizes the company's financial position, detailing assets, liabilities, and net assets as of June 30, 2025, and December 31, 2024 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total investments at fair value | $3,000,696 | $3,091,024 | $(90,328) | | Cash and cash equivalents | $57,390 | $80,320 | $(22,930) | | Total assets | $3,159,712 | $3,246,701 | $(86,989) | | Net borrowings | $1,767,630 | $1,836,710 | $(69,080) | | Total liabilities | $1,847,876 | $1,887,410 | $(39,534) | | Total net assets | $1,311,836 | $1,359,291 | $(47,455) | | Net asset value per share | $12.21 | $12.55 | $(0.34) | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net increase in net assets from operations for the three and six months ended June 30, 2025 and 2024 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | | Total investment income | $83,490 | $94,588 | $(11,098) | | Net expenses | $48,897 | $55,915 | $(7,018) | | Net investment income | $34,585 | $38,439 | $(3,854) | | Net realized (losses) gains | $13,389 | $(31,166) | $44,555 | | Net change in unrealized appreciation (depreciation) | $(40,078) | $30,641 | $(70,719) | | Net increase in net assets from operations | $7,774 | $34,471 | $(26,697) | | Basic earnings per share | $0.07 | $0.32 | $(0.25) | | Diluted earnings per share | $0.07 | $0.31 | $(0.24) | | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | | Total investment income | $169,153 | $185,144 | $(15,991) | | Net expenses | $99,938 | $108,916 | $(8,978) | | Net investment income | $69,226 | $75,993 | $(6,767) | | Net realized (losses) gains | $51,214 | $(42,993) | $94,207 | | Net change in unrealized appreciation (depreciation) | $(89,005) | $33,635 | $(122,640) | | Net increase in net assets from operations | $31,187 | $61,879 | $(30,692) | | Basic earnings per share | $0.29 | $0.59 | $(0.30) | | Diluted earnings per share | $0.29 | $0.56 | $(0.27) | [Consolidated Statements of Changes in Net Assets](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Outlines the changes in the company's net assets, including investment income, realized and unrealized gains/losses, share repurchases, and distributions | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | | Net investment income | $69,226 | $75,993 | $(6,767) | | Net realized gains (losses) on investments and foreign currency | $51,214 | $(42,993) | $94,207 | | Net change in unrealized (depreciation) appreciation of investments | $(89,005) | $33,635 | $(122,640) | | Net increase in net assets from operations | $31,187 | $62,868 | $(31,681) | | Repurchase of shares under repurchase program | $(9,642) | $0 | $(9,642) | | Distributions declared to stockholders | $(69,011) | $(74,934) | $5,923 | | Total net (decrease) increase in net assets from capital transactions | $(78,667) | $(7,712) | $(70,955) | | Net (decrease) increase in net assets | $(47,480) | $54,167 | $(101,647) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Presents the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | | Net cash flows provided by (used in) operating activities | $144,253 | $(91,604) | $235,857 | | Net cash flows used in financing activities | $(167,395) | $140,941 | $(308,336) | | Net increase (decrease) in cash and cash equivalents | $(23,142) | $49,337 | $(72,479) | | Cash and cash equivalents at end of period | $57,390 | $119,607 | $(62,217) | [Consolidated Schedule of Investments as of June 30, 2025](index=9&type=section&id=Consolidated%20Schedule%20of%20Investments%20as%20of%20June%2030%2C%202025) Provides a detailed breakdown of the company's investment portfolio by type, industry, and interest rate as of June 30, 2025 | Investment Type | Percent of Total Investments at Fair Value | | :------------------------ | :--------------------------------------- | | First lien | 65.55 % | | Second lien | 5.64 % | | Subordinated | 3.60 % | | Structured Finance Obligations | 0.11 % | | Equity and other | 25.10 % | | **Total investments** | **100.00 %** | | Industry Type | Percent of Total Investments at Fair Value | | :---------------------------------------- | :--------------------------------------- | | Software | 26.99 % | | Business Services | 17.05 % | | Healthcare | 15.39 % | | Investment Funds (includes investments in joint ventures) | 9.19 % | | Consumer Services | 6.28 % | | Education | 5.81 % | | Financial Services | 4.44 % | | Distribution & Logistics | 3.96 % | | Net Lease | 3.81 % | | Packaging | 2.36 % | | Energy | 2.16 % | | Business Products | 1.02 % | | Food & Beverage | 0.71 % | | Consumer Products | 0.51 % | | Specialty Chemicals & Materials | 0.32 % | | **Total investments** | **100.00 %** | | Interest Rate Type | Percent of Total Investments at Fair Value | | :----------------- | :--------------------------------------- | | Floating rates | 85.69 % | | Fixed rates | 14.31 % | | **Total investments** | **100.00 %** | [Consolidated Schedule of Investments as of December 31, 2024](index=40&type=section&id=Consolidated%20Schedule%20of%20Investments%20as%20of%20December%2031%2C%202024) Provides a detailed breakdown of the company's investment portfolio by type, industry, and interest rate as of December 31, 2024 | Investment Type | Percent of Total Investments at Fair Value | | :------------------------ | :--------------------------------------- | | First lien | 63.31 % | | Second lien | 6.37 % | | Subordinated | 3.30 % | | Structured Finance Obligations | 0.10 % | | Equity and other | 26.92 % | | **Total investments** | **100.00 %** | | Industry Type | Percent of Total Investments at Fair Value | | :---------------------------------------- | :--------------------------------------- |

[Executive Summary & Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Highlights) The company reported Q2 2025 results showing stable dividends amidst market pressures and strategic portfolio adjustments [Second Quarter 2025 Performance Overview](index=1&type=section&id=1.1%20Second%20Quarter%202025%20Performance%20Overview) The company reported a Net Investment Income of $0.32 per share and declared a matching third-quarter dividend Key Financial Metrics (Q2 2025 vs Q2 2024 / March 31, 2025) | Metric | Q2 2025 | Q2 2024 | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | :--- | :--- | | Net Investment Income per Weighted Average Share | $0.32 | $0.36 | | | | Regular & Supplemental Dividends Paid per Share | $0.32 | $0.34 | | | | Annualized Dividend Yield | 12.3 % | 11.0 % | | | | Investment Portfolio | | | $3,014.2 | $3,047.7 | | NAV per Share | | | $12.21 | $12.45 | | Statutory Debt/Equity | | | 1.17 x | 1.15x | | Statutory Debt/Equity (Net of Available Cash) | | | 1.13 x | 1.09x | - New Mountain Finance Corporation announced financial results for the quarter ended June 30, 2025, reporting **Second Quarter Net Investment Income of $0.32 per Share** and declaring a **Third Quarter Distribution of $0.32 per Share**[1](index=1&type=chunk) [Management Commentary](index=1&type=section&id=1.2%20Management%20Commentary) Management emphasized credit discipline, a shift to senior assets, and share repurchases to deliver shareholder value - NMFC **delivered its dividend** despite tight credit spreads in the market, demonstrating commitment to credit discipline and shareholder service[4](index=4&type=chunk) - Strategic priorities include increasing the percentage of **senior-oriented assets to nearly 80%** and building more position diversification across the portfolio[4](index=4&type=chunk) - The company **repurchased $9.6 million worth of shares** in the quarter, signaling management's belief that the stock is undervalued[4](index=4&type=chunk) [Key Financial and Operational Highlights](index=1&type=section&id=1.3%20Key%20Financial%20and%20Operational%20Highlights) Key Q2 highlights include a $34.5 million net investment income, a NAV of $12.21 per share, and strategic share repurchases - Net investment income of **$34.5 million**, or **$0.32 per weighted average share**[5](index=5&type=chunk) - Net asset value of **$12.21 per share** compared to $12.45 per share as of March 31, 2025[5](index=5&type=chunk) - Approximately **95% of the portfolio is rated green** on the internal heatmap, indicating strong asset quality[5](index=5&type=chunk) - Increased **senior oriented asset mix to 78%**, compared to 75% as of June 30, 2024[5](index=5&type=chunk) - Received a **third license from the Small Business Administration** for the SBIC program in July 2025[5](index=5&type=chunk) - **Repurchased $9.6 million** of outstanding shares in the second quarter[5](index=5&type=chunk) - Declared a third quarter 2025 **distribution of $0.32 per share**, payable on September 30, 2025[5](index=5&type=chunk) [Portfolio and Investment Activity](index=1&type=section&id=2.%20Portfolio%20and%20Investment%20Activity) The report details the company's $3.0 billion investment portfolio, focusing on defensive middle-market businesses and asset quality [Portfolio Overview](index=1&type=section&id=2.1%20Portfolio%20Overview) The company's portfolio fair value stood at $3,014.2 million with a NAV of $1,305.9 million as of June 30, 2025 - As of June 30, 2025, the Company's **NAV was $1,305.9 million**[5](index=5&type=chunk) - The portfolio had a **fair value of $3,014.2 million** of investments in 124 portfolio companies[5](index=5&type=chunk) - Weighted average **YTM at Cost was approximately 10.6%**[5](index=5&type=chunk) Q2 2025 Investment Activity | Activity | Amount (millions) | | :--- | :--- | | Originations | $122.2 | | Repayments | $141.4 | | Asset Sales | $13.7 | [Portfolio and Asset Quality](index=2&type=section&id=2.2%20Portfolio%20and%20Asset%20Quality) The company maintains high asset quality by targeting defensive growth businesses and utilizing a rigorous internal risk rating system - NMFC's mandate is to primarily target **high quality, defensive growth companies** in the middle market[6](index=6&type=chunk) - The Company monitors the performance and financial trends of its portfolio companies on at least a **quarterly basis**[9](index=9&type=chunk) - Portfolio monitoring procedures are designed to provide a comprehensive analysis based on operating performance and underlying business characteristics, forming the basis of its **Risk Rating (Green, Yellow, Orange, Red)**[9](index=9&type=chunk) [Investment Mandate and Characteristics](index=2&type=section&id=2.2.1%20Investment%20Mandate%20and%20Characteristics) The investment mandate targets middle-market businesses with strong defensive growth characteristics for stable returns - Focus on defensive growth businesses that generally exhibit characteristics such as **acyclicality, sustainable secular growth drivers, niche market dominance, high barriers to competitive entry, recurring revenue, strong free cash flow, flexible cost structures, and seasoned management teams**[6](index=6&type=chunk) [Portfolio Industry Composition](index=2&type=section&id=2.2.2%20Portfolio%20Industry%20Composition) The portfolio is well-diversified, with significant concentrations in the Software, Business Services, and Healthcare sectors Portfolio Industry Composition (Fair Value as of June 30, 2025) | Industry Segment | Percent of Total | | :--- | :--- | | Software | 30.9 % | | Business Services | 20.2 % | | Healthcare | 17.6 % | | Other Industries | 31.3 % | [Portfolio Risk Rating](index=2&type=section&id=2.2.3%20Portfolio%20Risk%20Rating) The portfolio demonstrates strong credit quality, with 94.8% of investments by fair value rated as Green Portfolio Risk Rating (Fair Value as of June 30, 2025) | Risk Rating | Fair Value (millions) | Percent | | :--- | :--- | :--- | | Green | $2,858.0 | 94.8 % | | Yellow | $89.4 | 3.0 % | | Orange | $51.4 | 1.7 % | | Red | $15.4 | 0.5 % | | Total | $3,014.2 | 100.0 % | - Nearly all investments in the Company's portfolio had a **Green Risk Rating**, with the exception of six portfolio companies (Yellow), seven (Orange), and one (Red)[10](index=10&type=chunk) [Investment Portfolio Composition](index=4&type=section&id=2.3%20Investment%20Portfolio%20Composition) The portfolio is primarily composed of First Lien loans, representing 65.3% of total investments by fair value Investment Portfolio Composition (Fair Value as of June 30, 2025) | Investment Type | Fair Value (millions) | Percent of Total | | :--- | :--- | :--- | | First Lien | $1,967.3 | 65.3 % | | Senior Loan Funds (SLP III & SLP IV) & NMNLC | $386.6 | 12.8 % | | Second Lien | $182.6 | 6.1 % | | Subordinated | $108.0 | 3.6 % | | Preferred Equity | $229.8 | 7.6 % | | Common Equity and Other | $139.8 | 4.6 % | | Total | $3,014.2 | 100.0 % | [Liquidity and Capital Resources](index=4&type=section&id=3.%20Liquidity%20and%20Capital%20Resources) The company maintains a solid liquidity position with significant available credit capacity and a managed debt-to-equity ratio [Liquidity and Capital Resources Overview](index=4&type=section&id=3.1%20Liquidity%20and%20Capital%20Resources%20Overview) As of Q2 2025, the company reported $57.4 million in cash and a statutory debt-to-equity ratio of 1.17x - Cash and cash equivalents totaled **$57.4 million** as of June 30, 2025[14](index=14&type=chunk) - Total statutory debt outstanding was **$1,526.2 million**, with a statutory debt to equity ratio of **1.17x** (1.13x net of available cash)[14](index=14&type=chunk) - The company had **$262.5 million of SBA-guaranteed debentures** outstanding[14](index=14&type=chunk) - Available capacity on its Holdings Credit Facility, NMFC Credit Facility and Unsecured Management Company Revolver was **$1,079.7 million**[14](index=14&type=chunk) [Financial Statements](index=7&type=section&id=4.%20Financial%20Statements) This section presents the consolidated statements of assets, liabilities, and operations for the period ended June 30, 2025 [Consolidated Statements of Assets and Liabilities](index=7&type=section&id=4.1%20Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Total assets decreased to $3,159.7 million, with net assets declining to $1,305.9 million as of June 30, 2025 Consolidated Statements of Assets and Liabilities (Key Figures) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total assets | $3,159,712 | $3,246,701 | | Total investments at fair value | $3,000,696 | $3,091,024 | | Cash and cash equivalents | $57,390 | $80,320 | | Total liabilities | $1,847,876 | $1,887,410 | | Net assets of New Mountain Finance Corporation | $1,305,859 | $1,353,339 | | Net asset value per share | $12.21 | $12.55 | [Consolidated Statements of Operations](index=9&type=section&id=4.2%20Consolidated%20Statements%20of%20Operations) Net investment income for Q2 2025 was $34.6 million, a decrease from the prior year due to lower investment income Consolidated Statements of Operations (Three Months Ended June 30) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Total investment income | $83,490 | $94,588 | -11.74% | | Net expenses | $48,897 | $55,915 | -12.55% | | Net investment income | $34,585 | $38,439 | -10.03% | | Net realized and unrealized losses | $(26,710) | $(3,655) | +630.86% | | Net increase in net assets from operations (NMFC) | $7,774 | $34,471 | -77.44% | | Basic earnings per share | $0.07 | $0.32 | -78.13% | | Diluted earnings per share | $0.07 | $0.31 | -77.42% | | Distributions declared and paid per share | $0.32 | $0.34 | -5.88% | [Corporate Information](index=12&type=section&id=5.%20Corporate%20Information) This section provides background on New Mountain Finance Corporation, its manager, and important legal disclosures [About New Mountain Finance Corporation](index=12&type=section&id=5.1%20About%20New%20Mountain%20Finance%20Corporation) NMFC is a direct lending firm focused on U.S. upper middle-market companies in defensive growth industries - NMFC provides **direct lending solutions** to U.S. upper middle market companies backed by top private equity sponsors[30](index=30&type=chunk) - The investment objective is to generate **current income and capital appreciation** through senior secured loans and select junior capital positions[30](index=30&type=chunk) - Its differentiated investment approach leverages the **deep sector knowledge** and operating resources of New Mountain Capital[30](index=30&type=chunk) [About New Mountain Capital](index=12&type=section&id=5.2%20About%20New%20Mountain%20Capital) New Mountain Capital is an investment firm with over $55 billion in assets, emphasizing business building and growth - New Mountain Capital is a New York-based investment firm managing **over $55 billion in assets** across private equity, credit, and net lease investment strategies[31](index=31&type=chunk) - The firm emphasizes **business building and growth**, rather than debt, to pursue long-term capital appreciation[31](index=31&type=chunk) - New Mountain seeks **high-quality growth leaders** in carefully selected industry sectors and works intensively with management to build company value[31](index=31&type=chunk) [Forward-Looking Statements](index=12&type=section&id=5.3%20Forward-Looking%20Statements) The report includes forward-looking statements that are subject to risks and uncertainties and are not guarantees of future performance - Statements included in the report may contain **'forward-looking statements'** related to future operations, performance, or financial condition[32](index=32&type=chunk) - Forward-looking statements are **not guarantees of future performance** and involve risks and uncertainties, including changes in base interest rates and significant volatility[32](index=32&type=chunk) - New Mountain Finance Corporation undertakes **no obligation to publicly update** or revise any forward-looking statements, except as may be required by law[32](index=32&type=chunk) [Contact Information](index=12&type=section&id=5.4%20Contact%20Information) Contact details for investor relations inquiries are provided - For investor relations inquiries, contact Laura C. Holson at NMFCIR@newmountaincapital.com or (212) 220-3505[33](index=33&type=chunk) [Conference Call Information](index=4&type=section&id=6.%20Conference%20Call%20Information) Details for the upcoming Q2 2025 earnings conference call and webcast are provided for interested parties [Second Quarter 2025 Conference Call Details](index=4&type=section&id=6.1%20Second%20Quarter%202025%20Conference%20Call%20Details) The company will host its Q2 2025 earnings call on August 5, 2025, with dial-in and webcast information available - New Mountain Finance Corporation will host an earnings conference call and webcast at **10:00 am Eastern Time on Tuesday, August 5, 2025**[15](index=15&type=chunk) - Dial-in numbers for the live conference call are **+1 (877) 443-9109 (United States)** and **+1 (412) 317-1082 (International)**, with a live audio webcast also available[15](index=15&type=chunk)[22](index=22&type=chunk) - A replay of the conference call can be accessed one hour after the end of the call through **November 5, 2025**, and the full webcast replay will be available through **August 5, 2026**[16](index=16&type=chunk)

Financial Data and Key Metrics Changes - Adjusted net investment income for the quarter was $0.32 per share, covering the $0.32 per share dividend paid on March 31 [6] - Net asset value per share declined by $0.10 to $12.45, indicating stable credit performance across the portfolio [6][18] - Total investment income for the quarter was $86 million, a 5% decrease compared to the prior year [29] - Total net expenses decreased by 4% to $51 million, including a fee waiver [29] Business Line Data and Key Metrics Changes - Over 96% of the portfolio is rated green, with no non-accruals reported [7][17] - The percentage of first lien assets is increasing while PIK income and second lien income are decreasing [7] - The average yield of the portfolio decreased to 10.7% due to lower yields on originations compared to repayments [25] Market Data and Key Metrics Changes - NMFC has only 2% exposure to sectors most at risk for tariffs, compared to 13% for peers [7][13] - The loan-to-value ratio stands at 43%, indicating a conservative lending approach [7][25] - The weighted average EBITDA of borrowers decreased to $170 million, reflecting the realization of larger companies during the quarter [25] Company Strategy and Development Direction - The company aims to continuously improve and has a strategic imperative to reduce non-yielding equity positions [10][24] - A stock repurchase program has been authorized to buy back up to $47 million of NMFC shares, indicating confidence in the stock's value [9] - The focus remains on defensive non-cyclical sectors, leveraging private equity expertise to enhance NMFC's performance [12][20] Management's Comments on Operating Environment and Future Outlook - Management noted a pause in M&A activity but sees direct lending as an attractive asset class with stable risk-adjusted returns [20] - The dividend protection program can provide up to $0.02 of extra support per quarter if necessary [8] - Management expressed optimism about refinancing opportunities and maintaining a strong balance sheet [32][68] Other Important Information - The company has raised a $15.4 billion private equity fund, one of the largest in the industry [9] - The current stock price reflects a 21% discount to book value, with a dividend yield of 13% [8] Q&A Session Summary Question: Inquiry about Unitech's complicated capital structure - Management acknowledged the complexity and provided details on cash invested and accrued PIK in Unitech, totaling a cost basis of $114 million [38][39] Question: Stability of income from Unitech going forward - Management confirmed that income is expected to remain stable, accruing primarily from the super senior preferred [42] Question: Market outlook on spreads and pricing - Management indicated that spreads have stabilized, with some incremental OID on new deals, driven by a lack of supply [50][51] Question: Sufficiency of dividend protection plan amid declining rate cycle - Management expressed confidence in having sufficient levers to cover dividends, including refinancing opportunities and strong portfolio activity [53][56] Question: PIK income expectations - Management indicated a target to reduce PIK income to the low teens, acknowledging current levels are higher than desired [66] Question: Duration of the dividend protection program - Management confirmed that the program is in place for the full years of 2025 and 2026 [69]

Financial Data and Key Metrics Changes - Adjusted net investment income for Q1 2025 was $0.32 per share, covering the $0.32 per share dividend paid on March 31 [5] - Net asset value per share declined to $12.45, a decrease of $0.10 or 80 basis points, indicating stable credit performance [5][18] - Total investment income for the quarter was $86 million, a 5% decrease compared to the prior year [29] Business Line Data and Key Metrics Changes - The percentage of first lien assets is increasing while PIK income and second lien income are decreasing [6] - PIK interest income represented only 8% of total investment income, down from 10% in the previous quarter [30] - The average yield of NMFC's portfolio decreased to 10.7% due to lower yields on originations compared to repayments [25] Market Data and Key Metrics Changes - NMFC has only 2% exposure to sectors most at risk for tariffs, compared to 13% for peers [6] - The loan-to-value ratio stands at 43%, indicating a conservative lending approach [6][25] - The weighted average EBITDA of borrowers decreased to $170 million, reflecting the realization of larger companies during the quarter [25] Company Strategy and Development Direction - NMFC aims to continuously improve its portfolio and has a strategic imperative to decrease non-yielding equity positions [10][24] - The company is focused on sectors with low exposure to tariffs and is actively refinancing lending lines at lower rates [6][12] - A stock repurchase program has been authorized to buy back up to $47 million of NMFC shares, indicating confidence in the company's valuation [9] Management's Comments on Operating Environment and Future Outlook - The management noted a pause in M&A activity but sees direct lending as an attractive asset class with stable risk-adjusted returns [20] - The dividend protection program can provide up to $0.02 of extra dividend support per quarter if necessary [7] - Management expressed optimism about the ability to optimize financing and refinance higher-cost debt in the future [60][70] Other Important Information - The company has successfully raised a $15.4 billion private equity fund, one of the largest in the industry [9] - NMFC's non-accruals remain low at $38 million, or 1.2% of the portfolio [19] - The company has a diversified portfolio across 119 companies, with the top 10 single name issuers accounting for 26% of total fair value [26] Q&A Session Summary Question: Inquiry about Unitech's complicated capital structure - Management explained the complexity of Unitech's capital structure and provided details on cash invested and accrued PIK [37][38] Question: Future expectations for Unitech's income - Management indicated that income from Unitech is expected to remain stable moving forward [43] Question: Market outlook on spreads and pricing - Management noted that spreads and pricing have stabilized, with some incremental changes observed [51] Question: Dividend protection plan's sufficiency - Management expressed confidence in having sufficient levers to cover dividends despite potential rate declines [54][60] Question: Duration of the dividend protection program - The dividend protection program is in place for the full year of 2025 and 2026 [72]

Financial Performance - Adjusted Net Investment Income (NII) for Q1 2025 was $0.32 per share, covering the dividend of $0.32 per share[14, 15] - Net Asset Value (NAV) as of March 31, 2025, was $12.45 per share, a decrease from $12.55 per share on December 31, 2024[14, 15] - The company permanently waived $1.5 million of incentive fees in connection with the dividend protection program[14] - The fair value of investments decreased to $3.0477 billion as of March 31, 2025, compared to $3.1045 billion as of December 31, 2024[16] Portfolio Composition and Risk - 96.5% of the portfolio is rated green on the company's heatmap, with no names rated red[14, 35] - The company's employees and senior advisors own approximately 13% of the company[14, 15] - Only <1% of the portfolio fair value is meaningfully exposed to global tariffs, compared to 13% on average amongst peers[25] - The company's portfolio consists of 93% first lien debt[65] Investment Activity - Gross originations for Q1 2025 were $120.8 million, while repayments totaled $160.4 million, resulting in net originations of -$39.5 million[16, 63] - The company repaid approximately $42 million, primarily from full redemption of UniTek's PIK 2nd Lien Term Loan and PIK Super Senior Preferred II[14] Leverage and Liquidity - Pro forma statutory debt to equity ratio is 1.09x as of March 31, 2025[15, 87]

分组1 - New Mountain Finance (NMFC) reported quarterly earnings of $0.32 per share, matching the Zacks Consensus Estimate, but down from $0.36 per share a year ago [1] - The company posted revenues of $85.66 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.32%, and down from $90.56 million year-over-year [2] - New Mountain shares have declined approximately 11.5% since the beginning of the year, compared to a 3.3% decline in the S&P 500 [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.32 on revenues of $86.51 million, and for the current fiscal year, it is $1.29 on revenues of $347.42 million [7] - The Financial - SBIC & Commercial Industry, to which New Mountain belongs, is currently ranked in the bottom 34% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including statements of assets and liabilities, operations, changes in net assets, cash flows, and detailed schedules of investments for New Mountain Finance Corporation, along with notes to these financial statements and the report from the independent registered public accounting firm [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) The consolidated statements of assets and liabilities show a slight decrease in total assets and total investments at fair value from December 31, 2024, to March 31, 2025, with net borrowings also decreasing, leading to a modest reduction in total net assets and net asset value per share Consolidated Statements of Assets and Liabilities | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $3,196,651 | $3,246,701 | | Total investments at fair value | $3,034,211 | $3,091,024 | | Net borrowings | $1,782,852 | $1,836,710 | | Total net assets | $1,348,178 | $1,359,291 | | Net asset value per share | $12.45 | $12.55 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, total investment income decreased compared to the prior year, but net expenses also saw a reduction, with significant net realized gains largely offset by net unrealized depreciation, resulting in a lower net increase in net assets from operations Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total investment income | $85,663 | $90,556 | | Net expenses | $51,041 | $53,001 | | Net investment income | $34,641 | $37,554 | | Net realized gains (losses) | $37,825 | $(11,827) | | Net change in unrealized appreciation (depreciation) | $(48,927) | $2,994 | | Net increase in net assets from operations | $23,517 | $28,084 | | Basic earnings per share | $0.22 | $0.26 | | Distributions declared and paid per share | $0.32 | $0.36 | [Consolidated Statements of Changes in Net Assets](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) The company experienced a net decrease in net assets for the three months ended March 31, 2025, primarily due to distributions declared and a lack of new share sales, contrasting with a net increase in the prior year driven by capital transactions Consolidated Statements of Changes in Net Assets | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net investment income | $34,641 | $37,554 | | Net realized gains (losses) on investments | $37,825 | $(11,827) | | Net change in unrealized (depreciation) appreciation | $(48,927) | $2,994 | | Net increase in net assets from operations | $23,517 | $28,084 | | Net proceeds from shares sold | $— | $47,919 | | Distributions declared to stockholders | $(34,512) | $(38,265) | | Net (decrease) increase in net assets | $(11,127) | $36,981 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows from operating activities significantly increased for the three months ended March 31, 2025, compared to the prior year, though net cash used in financing activities also increased substantially, leading to a smaller overall net increase in cash and cash equivalents Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :---------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash flows provided by operating activities | $103,916 | $68,279 | | Net cash flows used in financing activities | $(98,598) | $(30,803) | | Net increase in cash and cash equivalents | $5,318 | $37,476 | | Cash and cash equivalents at end of period | $85,496 | $107,467 | [Consolidated Schedule of Investments as of March 31, 2025](index=7&type=section&id=Consolidated%20Schedule%20of%20Investments%20as%20of%20March%2031%2C%202025) As of March 31, 2025, the investment portfolio primarily consists of first lien debt, with significant concentrations in the software, healthcare, and business services industries, and the majority of investments bear floating interest rates Investment Type (Percent of Total Investments at Fair Value) | Investment Type | Percent of Total Investments at Fair Value | | :-------------------------- | :--------------------------------------- | | First lien | 64.56 % | | Second lien | 5.72 % | | Subordinated | 3.46 % | | Structured Finance Obligations | 0.11 % | | Equity and other | 26.15 % | Industry Type (Percent of Total Investments at Fair Value) | Industry Type | Percent of Total Investments at Fair Value | | :------------------------ | :--------------------------------------- | | Software | 27.51 % | | Healthcare | 17.45 % | | Business Services | 14.69 % | | Investment Funds | 9.08 % | | Consumer Services | 6.21 % | Interest Rate Type (Percent of Total Investments at Fair Value) | Interest Rate Type | Percent of Total Investments at Fair Value | | :----------------- | :--------------------------------------- | | Floating rates | 86.50 % | | Fixed rates | 13.50 % | [Consolidated Schedule of Investments as of December 31, 2024](index=37&type=section&id=Consolidated%20Schedule%20of%20Investments%20as%20of%20December%2031%2C%202024) The investment portfolio as of December 31, 2024, shows a similar composition to the subsequent quarter, with first lien debt dominating and a strong focus on software, healthcare, and business services, and floating rate investments continued to be the predominant interest rate type Investment Type (Percent of Total Investments at Fair Value) | Investment Type | Percent of Total Investments at Fair Value | | :-------------------------- | :--------------------------------------- | | First lien | 63.31 % | | Second lien | 6.37 % | | Subordinated | 3.30 % | | Structured Finance Obligations | 0.10 % | | Equity and other | 26.92 % | Industry Type (Percent of Total Investments at Fair Value) | Industry Type | Percent of Total Investments at Fair Value | | :------------------------ | :--------------------------------------- | | Software | 27.44 % | | Healthcare | 16.24 % | | Business Services | 16.11 % | | Investment Funds | 8.92 % | | Consumer Services | 6.22 % | Interest Rate Type (Percent of Total Investments at Fair Value) | Interest Rate Type | Percent of Total Investments at Fair Value | | :----------------- | :--------------------------------------- | | Floating rates | 86.62 % | | Fixed rates | 13.38 % | [Notes to the Consolidated Financial Statements](index=66&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes provide comprehensive details on the company's accounting policies, investment specifics, fair value methodologies, agreements with related parties, borrowing structures, regulatory compliance, and other financial disclosures, offering essential context to the financial statements [Note 1. Formation and Business Purpose](index=68&type=section&id=Note%201.%20Formation%20and%20Business%20Purpose) New Mountain Finance Corporation is a Delaware BDC and RIC, focused on direct lending to U.S. upper middle market companies backed by private equity sponsors, aiming to generate current income and capital appreciation through senior secured loans and select junior capital positions in defensive growth industries, with top industry concentrations in software, healthcare, business services, investment funds, and consumer services - **New Mountain Finance Corporation** is a closed-end, non-diversified management investment company regulated as a Business Development Company (BDC) and intends to qualify as a Regulated Investment Company (RIC)[174](index=174&type=chunk) - The company's investment objective is to generate **current income and capital appreciation** through senior secured loans and select junior capital positions to growing businesses in defensive industries[177](index=177&type=chunk) - The company primarily invests in U.S. sponsor-backed middle market companies, defined as those with annual **EBITDA of $10 million to $200 million**, focusing on defensive growth businesses[180](index=180&type=chunk) - As of March 31, 2025, the top five industry concentrations were **software, healthcare, business services, investment funds, and consumer services**[181](index=181&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=69&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) The company's financial statements adhere to GAAP and ASC 946 for investment companies, consolidating wholly-owned and majority-owned subsidiaries, with investments recorded at fair value and revenue recognition policies covering interest, dividends (including PIK), and other income, while intending to qualify as a RIC to minimize federal income tax on distributed income - Consolidated financial statements are prepared in conformity with **GAAP and follow ASC 946** for investment companies[182](index=182&type=chunk) - Investments are reflected at **fair value**, with changes in unrealized gains and losses recognized in the Consolidated Statements of Operations[185](index=185&type=chunk) - **PIK interest and dividends** are accrued as income at contractual rates if deemed collectible and added to principal or share balances[201](index=201&type=chunk) - Investments are placed on **non-accrual status** when principal or interest payments are past due for 30 days or more and collectability is doubtful[203](index=203&type=chunk) - The company intends to qualify as a **RIC**, which generally exempts it from U.S. federal income tax on timely distributed taxable income and gains[207](index=207&type=chunk) [Note 3. Investments](index=75&type=section&id=Note%203.%20Investments) The company's investment portfolio as of March 31, 2025, totaled $3,034,211k at fair value, primarily in first lien debt across software, healthcare, and business services, with details on specific non-accrual investments and summarized financial information for its joint ventures, SLP III and SLP IV, which also focus on senior secured loans Investment Cost and Fair Value by Type (March 31, 2025) | Investment Type | Cost (in thousands) | Fair Value (in thousands) | | :-------------------------- | :------------------ | :------------------------ | | First lien | $1,975,174 | $1,959,038 | | Second lien | $186,274 | $173,598 | | Subordinated | $116,809 | $104,948 | | Structured Finance Obligations | $3,232 | $3,232 | | Equity and other | $811,454 | $793,395 | | Total investments | $3,092,943 | $3,034,211 | Investment Cost and Fair Value by Industry (March 31, 2025) | Industry Type | Cost (in thousands) | Fair Value (in thousands) | | :------------------------ | :------------------ | :------------------------ | | Software | $843,518 | $835,189 | | Healthcare | $535,646 | $529,371 | | Business Services | $500,719 | $445,593 | | Investment Funds | $275,632 | $275,632 | | Consumer Services | $188,708 | $188,503 | | Education | $197,890 | $176,319 | | Financial Services | $120,261 | $125,472 | | Distribution & Logistics | $119,441 | $119,128 | | Net Lease | $81,370 | $114,521 | | Packaging | $68,471 | $68,856 | | Energy | $69,458 | $63,520 | | Food & Beverage | $39,073 | $42,345 | | Business Products | $22,134 | $22,331 | | Consumer Products | $21,090 | $17,844 | | Specialty Chemicals & Materials | $9,532 | $9,587 | | Total investments | $3,092,943 | $3,034,211 | - As of March 31, 2025, the company had several investments on non-accrual status, including a second lien position in **National HME, Inc.** (cost **$7,872k**, fair value **$3,000k**), subordinated and first lien term loans in **American Achievement Corporation** (cost **$31,369k**, fair value **$17,999k**), and junior preferred shares in **Eclipse Topco Holdings, Inc.** (cost **$2,565k**, fair value **$2,702k**)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) SLP III Portfolio Summary | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------------------------- | :---------------------------- | :------------------------------- | | First lien investments (principal amount) | $710,505 | $727,619 | | Weighted average interest rate | 8.31 % | 8.49 % | | Number of portfolio companies | 90 | 90 | | Largest portfolio company investment | $17,650 | $17,697 | | Total of five largest investments | $80,092 | $80,215 | SLP IV Consolidated Portfolio Summary | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------------------------- | :---------------------------- | :------------------------------- | | First lien investments (principal amount) | $467,692 | $481,040 | | Weighted average interest rate | 8.38 % | 8.54 % | | Number of portfolio companies | 79 | 79 | | Largest portfolio company investment | $18,015 | $17,933 | | Total of five largest investments | $66,265 | $62,752 | [Note 4. Fair Value](index=94&type=section&id=Note%204.%20Fair%20Value) The company categorizes its investments within a three-level fair value hierarchy, with Level III representing investments valued using significant unobservable inputs, requiring extensive management judgment and the application of market-based and income-based valuation approaches, and also uses derivative instruments, classified as Level II, to manage interest rate risk - Fair value measurements are categorized into a three-level hierarchy: **Level I** (quoted prices in active markets), **Level II** (observable inputs other than Level I), and **Level III** (unobservable inputs)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) Fair Value Hierarchy of Portfolio Investments (March 31, 2025) | Investment Type | Total (in thousands) | Level I (in thousands) | Level II (in thousands) | Level III (in thousands) | | :-------------------------- | :------------------- | :--------------------- | :---------------------- | :----------------------- | | First lien | $1,959,038 | $— | $29,393 | $1,929,645 | | Second lien | $173,598 | $— | $48,594 | $125,004 | | Subordinated | $104,948 | $— | $— | $104,948 | | Structured Finance Obligations | $3,232 | $— | $— | $3,232 | | Equity and other | $793,395 | $— | $— | $793,395 | | Total investments | $3,034,211 | $— | $77,987 | $2,956,224 | - For **Level III investments**, the company primarily uses a **Market Based Approach** (EBITDA or revenue multiples of comparable companies/transactions) and an **Income Based Approach** (discounted cash flow analysis)[282](index=282&type=chunk)[283](index=283&type=chunk) Unobservable Inputs for Level III Investments (March 31, 2025) | Type | Approach | Unobservable Input | Low | High | Weighted Average | | :---------- | :------------------- | :----------------- | :---- | :---- | :--------------- | | First lien | Market & Income | EBITDA multiple | 6.5x | 33.0x | 14.2x | | | | Revenue multiple | 4.0x | 18.5x | 9.2x | | | | Discount rate | 6.3 % | 21.9 %| 9.3 % | | Second lien | Market & Income | EBITDA multiple | 8.0x | 20.0x | 17.3x | | | | Discount rate | 9.5 % | 13.3 %| 9.9 % | | Subordinated| Market & Income | EBITDA multiple | 8.0x | 24.5x | 15.7x | | | | Discount rate | 12.6 %| 27.6 %| 17.6 % | | Equity | Market & Income | EBITDA multiple | 6.0x | 23.0x | 11.7x | | | | Revenue multiple | 5.0x | 20.0x | 6.7x | | | | Discount rate | 8.6 % | 32.6 %| 9.0 % | Derivative Instruments Fair Value (March 31, 2025) | Derivative Type | Notional Amount (in thousands) | Fair Value Asset (in thousands) | Fair Value Liability (in thousands) | | :---------------- | :----------------------------- | :------------------------------ | :---------------------------------- | | Interest rate swaps | $600,000 | $3,117 | $(3,368) | | Total net derivatives | $600,000 | $— | $(251) | [Note 5. Agreements](index=99&type=section&id=Note%205.%20Agreements) The company's Investment Management Agreement with the Investment Adviser was re-approved, with the base management fee reduced to an annual rate of 1.25% of gross assets as of January 29, 2025, and incentive fees are 20.0% of Pre-Incentive Fee Net Investment Income, subject to a hurdle rate, with both management and incentive fees partially waived for the three months ended March 31, 2025 - The **base management fee** was reduced from an annual rate of 1.4% to **1.25%** of the company's gross assets, effective January 29, 2025[294](index=294&type=chunk) Management and Incentive Fees Incurred (in thousands) | Fee Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | Management fee | $10,233 | $10,997 | | Less: fee waiver | $(288) | $(901) | | Total management fee | $9,945 | $10,096 | | Incentive fee | $8,247 | $9,389 | | Less: fee waiver | $(1,534) | $— | | Total incentive fee | $6,713 | $9,389 | - The **incentive fee is 20.0%** of Pre-Incentive Fee Net Investment Income, subject to a hurdle rate of **2.0% per quarter** (8.0% annualized) and a catch-up provision[297](index=297&type=chunk)[298](index=298&type=chunk)[302](index=302&type=chunk) [Note 6. Related Parties](index=102&type=section&id=Note%206.%20Related%20Parties) The company maintains various business relationships with affiliated entities, including the Investment Adviser and Administrator, both wholly-owned subsidiaries of New Mountain Capital, and co-investment transactions with affiliates are permitted under an SEC exemptive order, subject to independent director approval, while the Unsecured Management Company Revolver, an unsecured credit facility with an affiliate, was increased to a maximum of $100,000k and extended to December 31, 2027 - The **Investment Adviser and Administrator** are wholly-owned subsidiaries of New Mountain Capital[309](index=309&type=chunk)[311](index=311&type=chunk) - The company is permitted to **co-invest in portfolio companies with certain affiliated funds** under an SEC exemptive order, subject to specific conditions and approval by a majority of independent directors[314](index=314&type=chunk) - The **Unsecured Management Company Revolver** with NMF Investments III, L.L.C. (an affiliate) was increased to a maximum of **$100,000k** and its maturity date extended to **December 31, 2027**[317](index=317&type=chunk) [Note 7. Borrowings](index=103&type=section&id=Note%207.%20Borrowings) The company's asset coverage ratio was 187.0% as of March 31, 2025, exceeding the 150.0% minimum, and it maintains several debt facilities, including the Holdings Credit Facility ($270,563k outstanding), NMFC Credit Facility ($29,059k outstanding), 2022 Convertible Notes ($258,784k outstanding), and various Unsecured Notes ($985,227k outstanding), while the DB Credit Facility and NMNLC Credit Facility II were terminated in Q4 2024, and the company also utilizes SBA-guaranteed debentures ($262,500k outstanding) for leverage - As of March 31, 2025, the company's **asset coverage ratio was 187.0%**, exceeding the minimum requirement of 150.0%[318](index=318&type=chunk) Key Borrowing Details (March 31, 2025) | Borrowing Type | Outstanding Balance (in thousands) | Maximum Facility Amount (in thousands) | Maturity Date | Interest Rate (as of Mar 28, 2025) | | :----------------------------- | :--------------------------------- | :------------------------------------- | :-------------- | :--------------------------------- | | Holdings Credit Facility | $270,563 | $730,000 | March 28, 2030 | SOFR + 1.95% | | NMFC Credit Facility | $29,059 | $638,500 | Sep 28, 2029 | SOFR/SONIA/EURIBOR + 1.90-2.10% | | 2022 Convertible Notes | $258,784 | N/A | October 15, 2025| 7.50% | | Unsecured Notes | $985,227 | N/A | Various | 3.875% - 8.250% | | SBA-guaranteed debentures | $262,500 | N/A | Various | Fixed rates | - The **DB Credit Facility was terminated** on September 30, 2024, and the **NMNLC Credit Facility II was terminated** on November 22, 2024[330](index=330&type=chunk)[335](index=335&type=chunk) [Note 8. Regulation](index=112&type=section&id=Note%208.%20Regulation) The company intends to maintain its status as a Regulated Investment Company (RIC) and Business Development Company (BDC), requiring timely distributions of taxable income and adherence to asset diversification rules, where at least 70.0% of total assets must be 'qualifying assets' - The company intends to qualify annually as a **RIC**, requiring timely distribution of at least **90.0% of its investment company taxable income**[373](index=373&type=chunk) - As a **BDC**, at least **70.0% of total assets** must be 'qualifying assets' (with limited exceptions) at the time of acquisition[374](index=374&type=chunk) [Note 9. Commitments and Contingencies](index=112&type=section&id=Note%209.%20Commitments%20and%20Contingencies) As of March 31, 2025, the company had significant unfunded commitments, including $137,398k for revolving credit facilities and $113,028k for other future funding, and additionally, it held commitment letters to purchase investments totaling $4,727k Unfunded Commitments (in thousands) | Commitment Type | March 31, 2025 | December 31, 2024 | | :---------------------------------- | :------------- | :---------------- | | Unfunded revolving credit facilities | $137,398 | $126,723 | | Other future funding commitments | $113,028 | $116,953 | | Commitment letters to purchase investments | $4,727 | $83,638 | [Note 10. Net Assets](index=113&type=section&id=Note%2010.%20Net%20Assets) The company's total net assets decreased from $1,359,291k at December 31, 2024, to $1,348,178k at March 31, 2025, reflecting offering costs, distributions declared, and the net increase in net assets resulting from operations Changes in Net Assets (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :---------------------------------------------- | :------------- | :---------------- | | Net assets at period end | $1,348,178 | $1,359,291 | | Offering costs | $(28) | N/A | | Distributions declared | $(34,602) | N/A | | Net increase in net assets from operations | $23,517 | N/A | [Note 11. Earnings Per Share](index=114&type=section&id=Note%2011.%20Earnings%20Per%20Share) Basic and diluted earnings per share for the three months ended March 31, 2025, were $0.22, a decrease from $0.26 in the prior year, with the diluted EPS calculation including the potential dilutive effect of the 2022 Convertible Notes Earnings Per Share (EPS) Data | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Basic earnings per share | $0.22 | $0.26 | | Diluted earnings per share | $0.22 | $0.26 | | Weighted average shares outstanding - basic | 107,851,415 | 103,660,370 | | Weighted average shares outstanding - diluted | 126,852,911 | 122,443,478 | [Note 12. Financial Highlights](index=115&type=section&id=Note%2012.%20Financial%20Highlights) Key financial highlights for the three months ended March 31, 2025, show a net asset value per share of $12.45, with a total return based on market value of 0.77% and on net asset value of 1.73%, and an asset coverage ratio of 186.95% Financial Highlights | Metric | March 31, 2025 | March 31, 2024 | | :---------------------------------------------- | :------------- | :------------- | | Net asset value, January 1 | $12.55 | $12.87 | | Net asset value, March 31 | $12.45 | $12.77 | | Per share market value, March 31 | $11.03 | $12.67 | | Total return based on market value | 0.77 % | 2.45 % | | Total return based on net asset value | 1.73 % | 1.99 % | | Asset coverage ratio | 186.95 % | 192.25 % | [Note 13. Recent Accounting Standards Updates](index=116&type=section&id=Note%2013.%20Recent%20Accounting%20Standards%20Updates) The FASB issued ASU 2024-03, requiring disaggregated disclosure of certain costs and expenses, effective for fiscal years beginning after December 15, 2026, which the company is currently assessing but does not expect a material effect on its consolidated financial statements - **ASU 2024-03** requires disaggregated disclosure of certain costs and expenses within income statement captions[388](index=388&type=chunk) - The standard is effective for fiscal years beginning after **December 15, 2026**, with early adoption permitted[388](index=388&type=chunk) - The company does not expect a **material impact** on its consolidated financial statements from ASU 2024-03[388](index=388&type=chunk) [Note 14. Segment Reporting](index=116&type=section&id=Note%2014.%20Segment%20Reporting) The company operates as a single operating and reporting segment, with its Chief Executive Officer serving as the chief operating decision maker (CODM), who assesses performance and makes operating decisions on a consolidated basis, primarily using net income - The company operates through a **single operating and reporting segment**[389](index=389&type=chunk) - The **Chief Executive Officer is the CODM** and assesses performance on a consolidated basis, primarily using net income[389](index=389&type=chunk) [Note 15. Subsequent Events](index=116&type=section&id=Note%2015.%20Subsequent%20Events) On April 22, 2025, the board of directors declared a second quarter 2025 distribution of $0.32 per share, payable on June 30, 2025 - On **April 22, 2025**, the board declared a **second quarter 2025 distribution of $0.32 per share**, payable on June 30, 2025[390](index=390&type=chunk) [Report of Independent Registered Public Accounting Firm](index=115&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP, the independent registered public accounting firm, reviewed the company's interim financial information for the three months ended March 31, 2025, and found no material modifications needed for conformity with GAAP, also confirming the fair statement of the December 31, 2024, consolidated statement of assets and liabilities - **Deloitte & Touche LLP** reviewed the interim financial information for the three months ended March 31, 2025[392](index=392&type=chunk) - The firm found **no material modifications needed** for the interim financial information to conform with GAAP[392](index=392&type=chunk) - The consolidated statement of assets and liabilities as of December 31, 2024, was **fairly stated in all material respects**[393](index=393&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=116&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, including an overview of its business, critical accounting estimates, and detailed analysis of revenue, expenses, and investment performance, also covering liquidity, capital resources, off-balance sheet arrangements, and contractual obligations, along with discussions on related party transactions and distributions [Forward-Looking Statements](index=118&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements that involve risks and uncertainties, such as credit market liquidity, economic conditions, and interest rate volatility, where actual results may differ materially from projections, and the company does not undertake to update these statements except as required by law - The report contains **forward-looking statements** subject to risks and uncertainties, including impacts from credit market liquidity, economic conditions, and interest rate volatility[398](index=398&type=chunk) - Actual results could differ materially from projections due to various factors, including those in the **Risk Factors section of the Annual Report on Form 10-K**[399](index=399&type=chunk) - The company assumes **no obligation to update or revise publicly** any forward-looking statements, except as required by law[400](index=400&type=chunk) [Overview](index=118&type=section&id=Overview) New Mountain Finance Corporation operates as a BDC and RIC, specializing in direct lending to U.S. upper middle market companies, with an investment strategy focused on senior secured loans and junior capital positions in defensive growth businesses, and as of March 31, 2025, the portfolio's fair value was approximately $3,034.2 million across 118 companies, with a weighted average yield to maturity at cost of 10.7% - The company is a leading **BDC focused on providing direct lending solutions** to U.S. upper middle market companies backed by top private equity sponsors[405](index=405&type=chunk) - As of March 31, 2025, the portfolio had a **fair value of approximately $3,034.2 million** in 118 portfolio companies[409](index=409&type=chunk) - The **weighted average yield to maturity at cost** for income producing investments was approximately **10.7%**, and for all investments was approximately **10.2%**[409](index=409&type=chunk) - Top five industry concentrations as of March 31, 2025, were **software, healthcare, business services, investment funds, and consumer services**[408](index=408&type=chunk) [Recent Developments](index=120&type=section&id=Recent%20Developments) The board of directors declared a second quarter 2025 distribution of $0.32 per share, payable on June 30, 2025 - On **April 22, 2025**, the board of directors declared a **second quarter 2025 distribution of $0.32 per share**, payable on June 30, 2025[412](index=412&type=chunk) [Critical Accounting Estimates](index=120&type=section&id=Critical%20Accounting%20Estimates) The company's financial statements are prepared in accordance with GAAP and ASC 946, with critical estimates primarily related to the valuation of portfolio investments, where the board of directors is solely responsible for determining fair value quarterly, utilizing a three-level hierarchy and employing market-based and income-based approaches for Level III investments - Financial statements are prepared in conformity with **GAAP and ASC 946**, with critical accounting policies including the valuation and leveling of portfolio investments[413](index=413&type=chunk)[414](index=414&type=chunk)[415](index=415&type=chunk) - The **board of directors is ultimately and solely responsible** for determining the fair value of portfolio investments quarterly, especially for those without readily available market prices[416](index=416&type=chunk) - Fair value measurements are classified into a **three-level hierarchy** (Level I, II, III), with Level III inputs being unobservable and requiring significant judgment[420](index=420&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk) - Valuation approaches for **Level III investments** include the **Market Based Approach** (EBITDA/revenue multiples) and the **Income Based Approach** (discounted cash flow analysis)[428](index=428&type=chunk)[429](index=429&type=chunk) [NMFC Senior Loan Program III LLC](index=122&type=section&id=NMFC%20Senior%20Loan%20Program%20III%20LLC) SLP III is a private joint venture with SkyKnight Income II, LLC, focused on investing in senior secured loans, and as of March 31, 2025, the company and SkyKnight II had committed $160.0 million and $40.0 million in equity, respectively, with SLP III's portfolio having a fair value of approximately $688.2 million and $477.7 million outstanding under its revolving credit facility - **SLP III** is a private joint venture investment fund between the company and SkyKnight Income II, LLC, primarily investing in senior secured loans[431](index=431&type=chunk) - As of March 31, 2025, the company and SkyKnight II had committed and contributed **$160.0 million and $40.0 million**, respectively, of equity to SLP III[433](index=433&type=chunk) SLP III Portfolio and Credit Facility Summary | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :---------------------------------------- | :--------------------------- | :------------------------------ | | Total investments at fair value | $688.2 | $715.1 | | Debt outstanding under credit facility | $477.7 | $511.2 | | Maximum borrowing capacity | $600.0 | $600.0 | | Unfunded commitments (delayed draws) | $4.9 | $2.7 | [NMFC Senior Loan Program IV LLC](index=124&type=section&id=NMFC%20Senior%20Loan%20Program%20IV%20LLC) SLP IV is another private joint venture with SkyKnight Income Alpha, LLC, also focused on senior secured loans, and as of March 31, 2025, the company and SkyKnight Alpha had contributed $112.4 million and $30.6 million in equity, respectively, with SLP IV's consolidated portfolio having a fair value of approximately $451.1 million and $323.4 million outstanding under its revolving credit facility - **SLP IV** is a private joint venture investment fund between the company and SkyKnight Income Alpha, LLC, investing primarily in senior secured loans[438](index=438&type=chunk) - As of March 31, 2025, the company and SkyKnight Alpha had transferred and contributed **$112.4 million and $30.6 million**, respectively, of membership interests to SLP IV[439](index=439&type=chunk) SLP IV Consolidated Portfolio and Credit Facility Summary | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :---------------------------------------- | :--------------------------- | :------------------------------ | | Total investments at fair value | $451.1 | $469.3 | | Debt outstanding under credit facility | $323.4 | $334.4 | | Maximum borrowing capacity | $370.0 | $370.0 | | Unfunded commitments (delayed draws) | $2.8 | $1.2 | [New Mountain Net Lease Corporation](index=124&type=section&id=New%20Mountain%20Net%20Lease%20Corporation) NMNLC is a majority-owned consolidated subsidiary that acquires commercial real estate properties under 'triple net' leases, and as of March 31, 2025, the fair value of its properties totaled approximately $114,521k - **NMNLC** is a majority-owned consolidated subsidiary that acquires commercial real estate properties subject to 'triple net' leases[404](index=404&type=chunk)[444](index=444&type=chunk) NMNLC Summarized Property Information (March 31, 2025) | Portfolio Company / Tenant | Fair Value (in thousands) | | :------------------------- | :------------------------ | | NM NL Holdings LP / NM GP Holdco LLC | $105,594 | | NM YI, LLC (Young Innovations, Inc.) | $8,927 | | Total | $114,521 | [Collateralized agreements or repurchase financings](index=125&type=section&id=Collateralized%20agreements%20or%20repurchase%20financings) The company holds one collateralized agreement to resell with a cost basis of $30.0 million and a fair value of $13.5 million as of March 31, 2025, which is on non-accrual status due to the liquidation of the guaranteeing private hedge fund, PPVA Fund, L.P., which breached its repurchase obligation - The company held one collateralized agreement to resell with a **cost basis of $30.0 million** and a **fair value of $13.5 million** as of March 31, 2025[447](index=447&type=chunk) - The collateralized agreement is on **non-accrual status** because the guaranteeing private hedge fund, PPVA Fund, L.P., is in liquidation and breached its obligation to repurchase the collateral[447](index=447&type=chunk) [PPVA Black Elk (Equity) LLC](index=125&type=section&id=PPVA%20Black%20Elk%20(Equity)%20LLC) The company settled a fraudulent conveyance claim related to a $20.5 million repayment from Black Elk Energy Offshore Operations, LLC for $16.0 million, and the underlying SPP Agreement, with a cost basis of $14.5 million and a fair value of $6.5 million as of March 31, 2025, remains in effect as the private hedge fund guarantor is in liquidation - The company settled a fraudulent conveyance claim for **$16.0 million** related to a **$20.5 million repayment** from Black Elk Energy Offshore Operations, LLC[450](index=450&type=chunk) - As of March 31, 2025, the SPP Agreement had a **cost basis of $14.5 million** and a **fair value of $6.5 million**, reflecting the increased inherent risk due to the guarantor's liquidation[450](index=450&type=chunk) [Revenue Recognition](index=126&type=section&id=Revenue%20Recognition) The company recognizes interest and dividend income on an accrual basis, including PIK interest and dividends, if collectible, with other income including non-recurring fees like delayed compensation and structuring fees, and investments are placed on non-accrual status when payments are significantly past due and collectability is doubtful - **Interest and dividend income**, including PIK interest and dividends, are recorded on an accrual basis if deemed collectible[452](index=452&type=chunk)[453](index=453&type=chunk) - For the three months ended March 31, 2025, **PIK and non-cash interest income was approximately $7.6 million**, and **PIK and non-cash dividends income was approximately $8.2 million**[452](index=452&type=chunk) - Investments are placed on **non-accrual status** when principal or interest payments are past due for 30 days or more and there is reasonable doubt of collection[454](index=454&type=chunk) [Monitoring of Portfolio Investments](index=126&type=section&id=Monitoring%20of%20Portfolio%20Investments) The company employs an investment risk rating system (Green, Yellow, Orange, Red) to monitor the credit profile and expected returns of its portfolio, based on operating performance and business characteristics, and as of March 31, 2025, 96.5% of investments by fair value had a Green Risk Rating, with specific investments like National HME and AAC rated Orange, and the collateralized agreement to resell rated Yellow - The company uses an **investment risk rating system (Green, Yellow, Orange, Red)** to monitor the credit profile and expected returns of each investment, based on Operating Performance and Business Characteristics[457](index=457&type=chunk)[463](index=463&type=chunk) Portfolio Risk Rating (as of March 31, 2025) | Risk Rating | Fair Value (in millions) | Percent of Total | | :---------- | :----------------------- | :--------------- | | Green | $2,939.1 | 96.5 % | | Yellow | $71.4 | 2.3 % | | Orange | $37.2 | 1.2 % | | Red | $— | — | - As of March 31, 2025, **National HME and American Achievement Corporation (AAC)** had an **Orange Risk Rating**, while the security purchased under collateralized agreements to resell had a **Yellow Risk Rating**[459](index=459&type=chunk)[460](index=460&type=chunk)[462](index=462&type=chunk) [Portfolio and Investment Activity](index=128&type=section&id=Portfolio%20and%20Investment%20Activity) For the three months ended March 31, 2025, the company invested $121.0 million in new and existing portfolio companies, while experiencing $160.6 million in debt repayments and $26.3 million in sales, with net change in unrealized appreciation/depreciation resulting in a $49.1 million depreciation Portfolio and Investment Activity (in millions) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Investments in new and existing portfolio companies | $121.0 | $192.4 | | Debt repayments in existing portfolio companies | $160.6 | $145.5 | | Sales of securities | $26.3 | $— | | Change in unrealized appreciation | $12.0 | $38.2 | | Change in unrealized depreciation | $(61.1) | $(35.2) | [Recent Accounting Standards Updates](index=128&type=section&id=Recent%20Accounting%20Standards%20Updates) This section refers to Note 13 for details on recent accounting standards updates, specifically ASU 2024-03, which requires disaggregated expense disclosures [Results of Operations for the Three Months Ended March 31, 2025 and March 31, 2024](index=128&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%20March%2031%2C%202024) For the three months ended March 31, 2025, total investment income decreased by 5% year-over-year, primarily due to lower yields, while net operating expenses also decreased, driven by incentive fee waivers, and the period saw net realized gains but significant unrealized depreciation, leading to an overall net realized and unrealized loss [Revenue](index=128&type=section&id=Revenue) Total investment income decreased by 5% to $85.7 million for the three months ended March 31, 2025, compared to the prior year, mainly due to slightly lower portfolio yields, with cash interest income at $52.2 million, PIK and non-cash interest at $7.6 million, and dividend income remaining relatively flat Investment Income (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Total interest income | $61,517 | $67,620 | | Total dividend income | $20,943 | $20,400 | | Other income | $3,203 | $2,536 | | Total investment income | $85,663 | $90,556 | - **Total investment income decreased by approximately $4.9 million, or 5%**, for the three months ended March 31, 2025, compared to the prior year, primarily due to slightly lower yields on the portfolio[466](index=466&type=chunk) - For Q1 2025, total investment income included **$52.2 million in cash interest**, **$7.6 million in PIK and non-cash interest**, **$12.8 million in cash dividends**, and **$8.2 million in PIK and non-cash dividends**[466](index=466&type=chunk) [Operating Expenses](index=129&type=section&id=Operating%20Expenses) Total net operating expenses decreased by approximately $2.0 million for the three months ended March 31, 2025, compared to the prior year, mainly driven by a $2.7 million decrease in incentive fees, attributed to an incentive fee waiver and lower net investment income, while management fees remained relatively stable Operating Expenses (in thousands) | Expense Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total management fee (net of waiver) | $9,945 | $10,096 | | Total incentive fee (net of waiver) | $6,713 | $9,389 | | Interest and other financing expenses | $31,374 | $31,016 | | Total expenses | $51,041 | $53,001 | | Net expenses after income taxes | $51,022 | $53,002 | - **Total net operating expenses decreased by approximately $2.0 million** for the three months ended March 31, 2025, compared to the prior year[467](index=467&type=chunk) - The **incentive fee, net of waiver, decreased by approximately $2.7 million**, primarily due to an incentive fee waiver by the Investment Adviser and a decrease in net investment income[467](index=467&type=chunk) [Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)](index=129&type=section&id=Net%20Realized%20Gains%20(Losses)%20and%20Net%20Change%20in%20Unrealized%20Appreciation%20(Depreciation)) The company reported a net realized and unrealized loss of $11.1 million for the three months ended March 31, 2025, an increase from $9.5 million in the prior year, driven by significant net realized gains ($37.8 million) being more than offset by substantial net unrealized depreciation ($49.1 million), primarily from UniTek Global Services, Inc., TVG-Edmentum Holdings, LLC, and New Permian Holdco, Inc Net Realized and Unrealized Gains (Losses) (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net realized gains (losses) on investments | $37,825 | $(11,827) | | Net change in unrealized (depreciation) appreciation | $(49,077) | $3,017 | | Net change in unrealized appreciation (depreciation) on foreign currency | $150 | $(23) | | Provision for taxes | $(22) | $(637) | | Net realized and unrealized losses | $(11,124) | $(9,470) | - The **net loss for Q1 2025** was primarily driven by unrealized depreciation in **UniTek Global Services, Inc., TVG-Edmentum Holdings, LLC, and New Permian Holdco, Inc.**, partially offset by unrealized appreciation in OA Buyer and HS Purchaser, LLC[468](index=468&type=chunk) [Investment Income and Net Realized and Unrealized (Losses) Gains Related to Non-Controlling Interest in New Mountain Net Lease Corporation ("NMNLC")](index=129&type=section&id=Investment%20Income%20and%20Net%20Realized%20and%20Unrealized%20(Losses)%20Gains%20Related%20to%20Non-Controlling%20Interest%20in%20New%20Mountain%20Net%20Lease%20Corporation%20(%22NMNLC%22)) Net investment income attributable to non-controlling interest in NMNLC decreased to $117k for the three months ended March 31, 2025, from $229k in the prior year, and net change in unrealized appreciation/depreciation related to non-controlling interest in NMNLC also shifted from appreciation to depreciation NMNLC Non-Controlling Interest Impact (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net investment income related to non-controlling interest in NMNLC | $117 | $229 | | Net change in realized gains on investments related to non-controlling interest in NMNLC | $— | $3 | | Net change in unrealized (depreciation) appreciation of investments related to non-controlling interest in NMNLC | $(13) | $444 | [Liquidity, Capital Resources, Off-Balance Sheet Arrangements and Contractual Obligations](index=130&type=section&id=Liquidity%2C%20Capital%20Resources%2C%20Off-Balance%20Sheet%20Arrangements%20and%20Contractual%20Obligations) The company's liquidity is supported by revolving credit facilities, cash flows from operations, and equity offerings, with $85.5 million in cash and cash equivalents and an asset coverage ratio of 187.0% as of March 31, 2025, and off-balance sheet, it had $250.4 million in outstanding commitments to fund investments, with total contractual obligations amounting to $1,811.0 million [Liquidity and Capital Resources](index=130&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily derived from revolving credit facilities, cash flows from operations, and periodic equity offerings, with cash and cash equivalents at $85.5 million and net cash provided by operating activities at $103.9 million for the quarter as of March 31, 2025, and an asset coverage ratio of 187.0%, well above the 150.0% minimum - The company's liquidity is generated through advances from **revolving credit facilities, cash flows from operations, and periodic follow-on equity offerings**[472](index=472&type=chunk) - As of March 31, 2025, the **asset coverage ratio was 187.0%**, exceeding the 150.0% minimum requirement[472](index=472&type=chunk) Cash and Cash Equivalents & Operating Cash Flow (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :---------------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $85.5 | $80.3 | | Net cash provided by operating activities (Q1) | $103.9 | $68.3 | - Approximately **$258.0 million of common stock** remains available for issuance and sale under the ATM program as of March 31, 2025[477](index=477&type=chunk) [Off-Balance Sheet Agreements](index=131&type=section&id=Off-Balance%20Sheet%20Agreements) As of March 31, 2025, the company had $250.4 million in outstanding commitments to third parties to fund investments, including revolving credit facilities and delayed draw commitments, and also held commitment letters to purchase investments totaling $4.7 million Off-Balance Sheet Commitments (in millions) | Commitment Type | March 31, 2025 | December 31, 2024 | | :-------------------------------------------- | :------------- | :---------------- | | Outstanding commitments to fund investments | $250.4 | $243.7 | | Commitment letters to purchase investments | $4.7 | $83.6 | [Contractual Obligations](index=132&type=section&id=Contractual%20Obligations) The company's total contractual payment obligations as of March 31, 2025, amounted to $1,811.0 million, with the largest portion, $810.7 million, due within 3 to 5 years, followed by $539.0 million due in less than 1 year Contractual Obligations Payments Due by Period (in millions) | Period | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | | :----------------- | :--------- | :--------------- | :---------- | :---------- | :---------------- | | Unsecured Notes | $990.0 | $200.0 | $375.0 | $415.0 | $— | | Holdings Credit Facility | $270.6 | $— | $— | $270.6 | $— | | SBA-guaranteed debentures | $262.5 | $80.2 | $32.3 | $99.0 | $51.0 | | 2022 Convertible Notes | $258.8 | $258.8 | $— | $— | $— | | NMFC Credit Facility | $29.1 | $— | $3.0 | $26.1 | $— | | Total Contractual Obligations | $1,811.0 | $539.0 | $410.3 | $810.7 | $51.0 | [Distributions and Dividends](index=133&type=section&id=Distributions%20and%20Dividends) Distributions declared and paid to stockholders for the three months ended March 31, 2025, totaled $34.5 million, or $0.32 per share, and the company intends to pay quarterly distributions sufficient to maintain its RIC status and operates an 'opt out' dividend reinvestment plan - **Distributions declared and paid to stockholders** for the three months ended March 31, 2025, totaled approximately **$34.5 million**[486](index=486&type=chunk) Distributions Declared Per Share | Fiscal Year Ended | Quarter | Per Share Amount | | :---------------- | :------------ | :--------------- | | December 31, 2025 | First Quarter | $0.32 | | December 31, 2024 | Total | $1.37 | | December 31, 2023 | Total | $1.49 | - The company intends to pay quarterly distributions sufficient to maintain its status as a **RIC** and operates an **'opt out' dividend reinvestment plan**[487](index=487&type=chunk)[488](index=488&type=chunk) [Related Parties](index=134&type=section&id=Related%20Parties) The company has ongoing business relationships with affiliated entities, including the Investment Adviser and Administrator, both subsidiaries of New Mountain Capital, and co-investment transactions with affiliates are conducted under an SEC exemptive order, subject to independent director approval, while the Unsecured Management Company Revolver, an unsecured credit facility with an affiliate, has a maximum of $100.0 million available and matures on December 31, 2027 - The **Investment Adviser and Administrator** are wholly-owned subsidiaries of New Mountain Capital, and the company reimburses the Administrator for allocable overhead and expenses[492](index=492&type=chunk) - **Co-investment transactions with affiliates** are permitted under an SEC exemptive order, requiring approval from a 'required majority' of independent directors[491](index=491&type=chunk)[493](index=493&type=chunk) - The **Unsecured Management Company Revolver**, an unsecured credit facility with an affiliate, has a maximum of **$100.0 million** available and matures on **December 31, 2027**[495](index=495&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=134&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate fluctuations, which affect its net investment income due to its leveraged investment strategy, with 83.91% of its investments being floating-rate and 16.09% fixed-rate as of March 31, 2025, and a hypothetical 200 basis point increase or decrease in interest rates would result in an estimated 15.53% change in net interest income - The company's **net investment income is affected by the difference between investment rates and borrowing rates**, exposing it to interest rate fluctuations[497](index=497&type=chunk) - As of March 31, 2025, approximately **83.91% of investments** at fair value (excluding certain categories) were **floating-rate**, and approximately **16.09% were fixed-rate**[497](index=497&type=chunk) Estimated Percentage Change in Interest Income Net of Interest Expense | Change in Interest Rates | Estimated Percentage Change in Interest Income Net of Interest Expense (unaudited) | | :----------------------- | :------------------------------------------------------------------------------- | | -200 Basis Points | (15.53)% | | -150 Basis Points | (11.64)% | | -100 Basis Points | (7.76)% | | -50 Basis Points | (3.88)% | | +50 Basis Points | 3.88 % | | +100 Basis Points | 7.76 % | | +150 Basis Points | 11.64 % | | +200 Basis Points | 15.53 % | [Item 4. Controls and Procedures](index=135&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2025, concluding they were effective, and no

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) NMFC's Q1 2025 performance shows stable net investment income, strong credit quality, and strategic debt cost reduction [First Quarter 2025 Performance Summary](index=1&type=section&id=First%20Quarter%202025%20Performance%20Summary) NMFC reported Q1 2025 net investment income of **$0.32 per share**, with NAV at **$12.45** and **96%** portfolio rated 'Green' Q1 2025 Key Financial Metrics | ($ in millions, except per share data) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Investment Income per Weighted Average Share | $0.32 | $0.36 | | Regular & Supplemental Dividends Paid per Share in Quarter | $0.32 | $0.36 | | Annualized Dividend Yield | 12.8% | 10.7% | | | **March 31, 2025** | **December 31, 2024** | | Investment Portfolio | $3,047.7 | $3,104.5 | | NAV per Share | $12.45 | $12.55 | | Statutory Debt/Equity | 1.15x | 1.15x | - Declared a second quarter 2025 distribution of **$0.32 per share**, payable on June 30, 2025[5](index=5&type=chunk) - Key operational achievements in Q1 2025 include: - Sustained strong credit performance with **~96.5%** of the portfolio rated green[5](index=5&type=chunk) - Reduced cost of debt on the Holdings Credit Facility from **SOFR + 2.15% to SOFR + 1.95%**[5](index=5&type=chunk) - Increased senior-oriented asset mix to **77%**, up from **75%** at the end of 2024[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Comments%20on%20First%20Quarter%20Performance) Management emphasizes NMFC's defensive sector strategy, strong credit performance, and progress on strategic priorities - Chairman Steven B. Klinsky stated that the company's strategy of investing in defensive sectors makes it well-positioned for tariff and other political issues[4](index=4&type=chunk) - CEO John R. Kline highlighted strong credit performance (**over 96% rated green**) and confidence in delivering consistent yield, also noting meaningful progress on strategic priorities such as PIK reduction, investment diversification, and reducing liability costs[4](index=4&type=chunk) [Portfolio Analysis](index=1&type=section&id=Portfolio%20Analysis) The portfolio, valued at **$3.05 billion**, focuses on defensive sectors with **96.5%** 'Green' rated assets and a senior debt emphasis [Portfolio and Investment Activity](index=1&type=section&id=Portfolio%20and%20Investment%20Activity) The portfolio's fair value was **$3.05 billion** across 119 companies, with Q1 2025 seeing **$120.8 million** in new investments - As of March 31, 2025, the portfolio's fair value was **$3,047.7 million** in 119 companies, with a weighted average YTM at Cost of approximately **10.2%**[5](index=5&type=chunk) - In Q1 2025, the company originated **$120.8 million** of new investments, while experiencing **$160.4 million** in repayments and **$26.3 million** in asset sales[5](index=5&type=chunk) [Portfolio Quality and Industry Composition](index=2&type=section&id=Portfolio%20Quality%20and%20Industry%20Composition) NMFC targets defensive growth industries, with Software, Healthcare, and Business Services as top sectors, maintaining **96.5%** 'Green' rated assets - The company focuses on defensive growth businesses characterized by acyclicality, sustainable growth, niche market dominance, recurring revenue, and strong free cash flow[6](index=6&type=chunk) Portfolio Industry Composition (Top 3) | Industry | Percent of Portfolio (Fair Value) | | :--- | :--- | | Software | 31.5% | | Healthcare | 19.8% | | Business Services | 17.3% | Portfolio Risk Rating as of March 31, 2025 | Risk Rating | Percent of Fair Value | | :--- | :--- | | Green | 96.5% | | Yellow | 2.3% | | Orange | 1.2% | | Red | 0.0% | [Investment Portfolio Composition](index=4&type=section&id=Investment%20Portfolio%20Composition) The investment portfolio is heavily weighted towards senior debt, with **64.3%** in First Lien and **12.7%** in Senior Loan Funds Investment Portfolio Composition as of March 31, 2025 | Investment Type | Percent of Total | | :--- | :--- | | First Lien | 64.3% | | Senior Loan Funds (SLP III & SLP IV) & NMNLC | 12.7% | | Second Lien | 6.1% | | Subordinated | 3.4% | | Preferred Equity | 8.0% | | Common Equity and Other | 5.5% | [Liquidity and Capital Resources](index=4&type=section&id=Liquidity%20and%20Capital%20Resources) NMFC maintains strong liquidity with **$85.5 million** cash, a **1.15x** statutory debt-to-equity ratio, and **$1.17 billion** available borrowing capacity Liquidity and Capitalization as of March 31, 2025 | Metric | Value | | :--- | :--- | | Cash and cash equivalents | $85.5 million | | Total statutory debt outstanding | $1,543.7 million | | Statutory debt to equity | 1.15x | | Statutory debt to equity (net of cash) | 1.09x | | Available borrowing capacity | $1,168.8 million | [Financial Statements](index=7&type=section&id=Financial%20Statements) Financial statements show a slight decrease in total assets and net assets, with Q1 2025 net investment income at **$34.6 million** [Consolidated Statements of Assets and Liabilities](index=7&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Total assets decreased to **$3.20 billion** from **$3.25 billion**, leading to a NAV per share decline from **$12.55** to **$12.45** Balance Sheet Comparison (in millions) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments at fair value | $3,034.2 | $3,091.0 | | Total assets | $3,196.7 | $3,246.7 | | Net borrowings | $1,782.9 | $1,836.7 | | Total liabilities | $1,848.5 | $1,887.4 | | Total net assets | $1,348.2 | $1,359.3 | | Net asset value per share | $12.45 | $12.55 | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 total investment income was **$85.7 million**, resulting in net investment income of **$34.6 million** or **$0.32 per share** Statement of Operations Comparison (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total investment income | $85,663 | $90,556 | | Net expenses | $51,041 | $53,001 | | Net investment income | $34,641 | $37,554 | | Net realized and unrealized losses | $(11,124) | $(9,470) | | Net increase in net assets (NMFC) | $23,413 | $27,408 | Per Share Data Comparison | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Basic earnings per share | $0.22 | $0.26 | | Distributions declared and paid per share | $0.32 | $0.36 | [Corporate and Investor Information](index=4&type=section&id=Corporate%20and%20Investor%20Information) Information on the upcoming earnings call and details about NMFC's direct lending strategy and its manager, New Mountain Capital [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) An earnings conference call for Q1 2025 results is scheduled for May 6, 2025, with replay options available - An earnings conference call is scheduled for **10:00 am ET** on **Tuesday, May 6, 2025**[15](index=15&type=chunk) - A replay of the conference call will be available for **three months**, and the webcast replay will be available for **one year**[16](index=16&type=chunk) [About New Mountain Finance Corporation and New Mountain Capital](index=12&type=section&id=About%20New%20Mountain%20Finance%20Corporation%20and%20New%20Mountain%20Capital) NMFC is a BDC focused on direct lending to U.S. upper middle-market companies, managed by New Mountain Capital with over **$55 billion** AUM - NMFC focuses on direct lending to U.S. upper middle-market companies in defensive sectors, backed by top private equity sponsors[30](index=30&type=chunk) - New Mountain Capital, the investment manager, has over **$55 billion** in assets under management across private equity, credit, and net lease strategies[31](index=31&type=chunk)