Core Viewpoint - Small-cap companies are rapidly adopting AI technologies, leading to increased efficiency and potential profit growth, while currently being the cheapest sector in the market [2] Group 1: Small-Cap Dividend Stocks - BlackRock TCP Capital (TCPC) has a yield of 15.7% and invests in over 150 companies across 20 industries, but is currently facing restructuring due to credit issues [3] - TCPC is trading at an 18% discount to its net asset value (NAV), with a regular yield of 14% and an additional 1.7% from special dividends [4] - New Mountain Finance (NMFC) offers a 12.1% yield and is also trading at a 14% discount to NAV, focusing on U.S. upper-middle-market businesses [5][6] - NMFC's NAV has declined nearly 2% quarter-over-quarter, with markdowns in healthcare and consumer products, but its credit quality remains stable [8][9] - Kayne Anderson BDC (KBDC) has a yield of 12.6% and targets companies with $10 million to $75 million in EBITDA, with a focus on defensive industries [10] - KBDC has initiated a $100 million buyback program and has seen investments increase in Q3, despite a slight decline in NAV [12] Group 2: Income-Generating Investments - Mach Natural Resources LP (MNR) offers a 16.0% distribution and operates primarily in the Anadarko Basin, with a focus on natural gas [13] - MNR trades at approximately 3.5 times this year's EBITDAX estimates, which is below the average for comparable MLPs [14] - MFA Financial (MFA) has a yield of 14.4% and invests in residential mortgage loans and securities, with a recent 13% QoQ increase in origination fees [15][17] - MFA's distributable earnings are expected to drop significantly this year, but the market does not seem to be pricing in a dividend cut [18] - Armour Residential REIT (ARR) offers a high yield of 19.0% but has a history of dividend cuts, trading at about 90% of book value [19][21]

Company Overview - New Mountain Finance (NASDAQ: NMFC) operates as a business development company focused on providing attractive total returns through a portfolio of debt investments [1] Investment Strategy - The company generates earnings by lending capital, aiming to create a hybrid investment strategy that combines growth and income [1] - The approach includes a mix of classic dividend growth stocks, Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds like the S&P [1]

Group 1 - New Mountain Finance Corporation held its Second Quarter 2025 Earnings Conference Call, with key participants including the President, CEO, CFO, and COO [1][2] - The call was initiated by John Kline, who welcomed attendees and introduced other executives present on the call [2] - Kris Corbett, CFO, provided preliminary statements regarding the call, emphasizing that it is being recorded and that unauthorized broadcasts are prohibited [3] Group 2 - The company highlighted the importance of customary safe harbor disclosures related to forward-looking statements in their press release and presentation slides [3]

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 June 30 [5] - Net asset value per share declined by $0.24 to $12.21 compared to Q1 [5][16] - Total investment income for the quarter was $83 million, a 12% decrease over the prior year [29] Business Line Data and Key Metrics Changes - The portfolio loan-to-value ratio stands at 45%, with nearly 80% exposure to senior-oriented assets [6][25] - The average yield of NMFC's portfolio decreased slightly to 10.6% for Q2 [25] - In Q2, the company originated $122 million of assets, offset by $155 million of repayments and sales [18] Market Data and Key Metrics Changes - The company noted a stabilization in direct lending spreads, with most unitranche loans pricing at SOFR plus $4.75 to $5.25 [21] - Approximately 78% of investments are senior in nature, up from 75% in the prior year [24] - The weighted average EBITDA of portfolio companies increased slightly to $176 million [25] Company Strategy and Development Direction - The company focuses on improving the quality and diversity of its asset base and optimizing liabilities with low-cost floating rate debt [13] - NMFC is committed to its dividend protection program through 2026, which aims to stabilize dividends during tighter market conditions [7][48] - The company is actively working on refinancing its 7.5% convertible notes and 8.25% unsecured notes maturing in Q4 [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for deal flow to normalize as market conditions improve [8][20] - The company is focused on optimizing leverage and enhancing income quality, with expectations for increased portfolio activity in Q3 and Q4 [49] - Management acknowledged challenges in certain sectors, particularly in dental and consumer products, but remains positive about overall portfolio performance [15][60] Other Important Information - NMFC has repurchased approximately $16 million of shares year-to-date, with an additional $31 million of Board authorization remaining [9] - The company has maintained a strong credit performance with only $38 million or 1.2% of the portfolio on non-accrual [18] Q&A Session Summary Question: Concerns about healthcare names and industry headwinds - Management noted that while the dental downgrade was idiosyncratic, the sector has good secular tailwinds, but operational execution is critical [42][44] Question: Dividend protection program and future outlook - The dividend protection program is designed to provide visibility and support to shareholders, with management committed to maintaining it through 2026 [48][51] Question: Risks related to tariff exposure in consumer products - Management confirmed that the consumer products business had been flagged for tariff exposure, and while it was already underperforming, tariffs exacerbated the situation [56][60] Question: Trends in the education space and Edmentum's performance - Management indicated that Edmentum remains well-positioned to address learning loss post-COVID, despite some capital structure challenges [70][72]

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]

Core Viewpoint - 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 $83.49 million for the quarter, missing the Zacks Consensus Estimate by 1.18% and down from $94.59 million year-over-year [2] Financial Performance - NMFC's earnings have not surpassed consensus EPS estimates over the last four quarters [1] - The company has topped consensus revenue estimates only once in the past four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $0.32 on revenues of $85.76 million, and for the current fiscal year, it is $1.28 on revenues of $342.72 million [7] Market Performance - NMFC shares have declined approximately 7.5% since the beginning of the year, contrasting with the S&P 500's gain of 6.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Financial - SBIC & Commercial Industry, to which NMFC belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting potential underperformance compared to higher-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact NMFC's stock performance [5]

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]