Financial Data and Key Metrics Changes - The net asset value per share decreased slightly to $13.06, an $0.08 decline compared to the last quarter, indicating stable credit performance across the portfolio [7][60] - Adjusted net investment income for Q3 was $0.40 per share, exceeding the regular dividend of $0.32 per share [18][36] - Total investment income for the quarter was $94.1 million, a 20% increase over the prior year, while total net expenses were approximately $53.7 million, an 18% increase [36] Business Line Data and Key Metrics Changes - The average yield of the portfolio increased from 11.6% in Q2 to 11.8% in Q3, primarily due to the higher base rate environment [32] - The net lease portfolio, although only 4% of the total portfolio, continues to perform strongly with a weighted average cash yield of approximately 11% [31] Market Data and Key Metrics Changes - The portfolio had approximately $3.1 billion in investments at fair value, with total assets of $3.3 billion and total liabilities of $2 billion [60] - The weighted average EBITDA of borrowers has increased to $147 million over the last several quarters, indicating a positive trend in borrower performance [58] Company Strategy and Development Direction - The company focuses on defensive growth sectors such as software, healthcare, and business services, which are expected to perform well in uncertain economic times [19][47] - The strategy has been consistent over 12 years, allowing the company to operate confidently in various economic environments [47] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the long-term value proposition and prospects for recovery in first lien positions despite short-term operational headwinds [13] - The outlook for the sponsor-backed direct lending market is positive, with expectations for continued strong credit performance and elevated base rates [54] Other Important Information - The company has returned over $1.1 billion to shareholders through its dividend program since its IPO in 2011, generating an annualized return of approximately 10% [12] - Senior management and employee share ownership has risen over time, with management now owning approximately 13% of total shares [10] Q&A Session Summary Question: Can you expand on the adviser revolver upsize post quarter? - The management company revolver was upsized from $50 million to $100 million and extended to December 2027, signaling support for liquidity [67][68] Question: Will the trend of balance sheet leverage working lower continue? - The company aims to operate within a leverage range of 1 to 1.25 times and is focused on moving towards the middle of that range due to the current macro environment [77][78] Question: What drove the markdown for Edmentum this quarter? - The markdown was consistent with the overall M&A environment where valuations have come down, reflecting the need to fair value all positions [82] Question: Is the income from joint ventures expected to remain stable? - The income from joint ventures has been growing, and the current run rate is expected to be stable, with no significant one-time items anticipated [83]

NEW MOUNTAIN FINANCE Important Notices and Safe Harbor Statement Past performance is not indicative nor a guarantee of future returns, the realization of which is dependent on many factors, many of which are beyond the control of NMFC. There can be no assurances that future dividends will match or exceed historic ones, or that they will be made at all. Net returns give effect to all fees and expenses. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2023 o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | Commission File Number | Exact name of registrant as specified in its charter, address of principal executive offices, telephone numbers and states or other jurisdictions of incorporation or organi ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents New Mountain Finance Corporation's unaudited consolidated financial statements as of and for the periods ended June 30, 2023, including key financial statements and a detailed investment schedule [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) As of June 30, 2023, total assets slightly decreased to $3.30 billion, while total net assets increased to $1.34 billion, raising NAV per share to $13.14 Consolidated Statements of Assets and Liabilities Highlights (in thousands, except per share data) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total investments at fair value | $3,179,465 | $3,221,247 | | Total assets | $3,296,981 | $3,354,927 | | Net borrowings | $1,908,300 | $1,980,661 | | Total liabilities | $1,959,019 | $2,028,736 | | Total net assets | $1,337,962 | $1,326,191 | | Net asset value per share | $13.14 | $13.02 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Total investment income significantly increased for the three and six months ended June 30, 2023, driven by higher interest income, leading to improved net investment income and basic earnings per share Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total investment income | $95,492 | $73,110 | $187,445 | $142,073 | | Net expenses | $54,632 | $41,493 | $108,101 | $80,453 | | Net investment income | $39,928 | $31,704 | $78,316 | $61,612 | | Net increase in net assets | $34,830 | $15,954 | $79,403 | $52,146 | | Basic earnings per share | $0.35 | $0.16 | $0.79 | $0.52 | | Diluted earnings per share | $0.32 | $0.16 | $0.71 | $0.50 | [Consolidated Statements of Changes in Net Assets](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) For the six months ended June 30, 2023, net assets increased by $11.6 million, primarily due to operations, partially offset by capital transactions Changes in Net Assets for the Six Months Ended June 30 (in thousands) | Description | 2023 | 2022 | | :--- | :--- | :--- | | **Net Increase from Operations** | **$79,403** | **$52,146** | | Net Investment Income | $78,316 | $61,612 | | Net Realized/Unrealized Gains | $1,087 | $(7,247) | | **Net Decrease from Capital Transactions** | **($67,775)** | **($21,781)** | | Net Proceeds from Shares Sold | $0 | $37,051 | | Distributions Declared | ($67,628) | ($59,804) | | **Net Increase in Net Assets** | **$11,628** | **$30,365** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly reversed to $119.9 million for the six months ended June 30, 2023, primarily due to higher proceeds from investment sales and paydowns Consolidated Cash Flows Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $119,939 | ($79,100) | | Net cash (used in) provided by financing activities | ($145,251) | $61,868 | | **Net decrease in cash and cash equivalents** | **($25,312)** | **($17,232)** | | Cash and cash equivalents at end of period | $45,930 | $40,712 | [Consolidated Schedule of Investments](index=7&type=section&id=Consolidated%20Schedule%20of%20Investments) As of June 30, 2023, the $3.18 billion investment portfolio comprised 113 companies, primarily in first lien debt (53.6%) and equity (26.0%), with top concentrations in Software, Business Services, and Healthcare Total Investments by Control Type (June 30, 2023, in thousands) | Investment Category | Cost | Fair Value | | :--- | :--- | :--- | | Non-Controlled/Non-Affiliated | $2,486,589 | $2,364,179 | | Non-Controlled/Affiliated | $104,459 | $149,260 | | Controlled Investments | $627,156 | $666,026 | | **Total Investments** | **$3,218,204** | **$3,179,465** | Portfolio Composition by Investment Type (June 30, 2023) | Investment Type | Percent of Total Investments at Fair Value | | :--- | :--- | | First lien | 53.59% | | Second lien | 17.72% | | Subordinated | 2.66% | | Equity and other | 26.03% | | **Total** | **100.00%** | Top 5 Industry Concentrations (June 30, 2023) | Industry Type | Percent of Total Investments at Fair Value | | :--- | :--- | | Software | 26.44% | | Business Services | 18.84% | | Healthcare | 16.65% | | Investment Funds | 7.94% | | Education | 7.65% | [Notes to the Consolidated Financial Statements](index=61&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies, investment valuation, debt facilities, and joint ventures, highlighting the company's BDC and RIC structure and fair value measurement methodologies - The company is a BDC and has elected to be treated as a RIC, requiring it to distribute at least **90% of its investment company taxable income** to stockholders[164](index=164&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - The company's investment objective is to generate current income and capital appreciation by sourcing and originating senior secured loans and select junior capital positions in growing, defensive U.S. upper middle-market companies[167](index=167&type=chunk) - Fair value of investments is determined by the board of directors quarterly. Level 3 investments, for which quotes are not readily available, are valued using a multi-step process involving internal analysis, and for material investments, review by an independent valuation firm[176](index=176&type=chunk)[183](index=183&type=chunk) - The company has several investments on non-accrual status, including positions in Ansira Holdings, National HME, American Achievement Corporation, and Education Management II LLC[216](index=216&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - The company has two significant joint ventures, SLP III and SLP IV, with SkyKnight affiliates, which are capitalized with equity and invest primarily in broadly syndicated first lien senior secured loans[228](index=228&type=chunk)[248](index=248&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=109&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a 32% increase in total investment income for the first six months of 2023, driven by higher interest rates on floating-rate assets [Portfolio and Investment Activity](index=118&type=section&id=Portfolio%20and%20Investment%20Activity) For the six months ended June 30, 2023, new investments totaled $124.6 million, with proceeds of $202.2 million from repayments and sales, resulting in a slight portfolio fair value decrease to $3.18 billion Portfolio and Investment Activity (in millions) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | New investments | $124.6 | $397.1 | | Debt repayments | $36.0 | $146.9 | | Sales of securities | $166.2 | $145.8 | | Change in unrealized appreciation | $59.6 | $49.9 | | Change in unrealized depreciation | ($61.1) | ($92.6) | [Monitoring of Portfolio Investments](index=117&type=section&id=Monitoring%20of%20Portfolio%20Investments) As of June 30, 2023, 93.6% of the portfolio's fair value was rated Green, indicating strong performance, while a small portion was rated Yellow, Orange, or Red, with several investments on non-accrual status Portfolio Risk Rating (June 30, 2023, in millions) | Risk Rating | Fair Value | Percent | | :--- | :--- | :--- | | Red | $9.0 | 0.3% | | Orange | $51.1 | 1.6% | | Yellow | $142.8 | 4.5% | | Green | $2,993.1 | 93.6% | | **Total** | **$3,196.0** | **100.0%** | - As of June 30, 2023, investments on non-accrual status included positions in Ansira, National HME, American Achievement Corporation, UniTek, and Education Management II LLC[460](index=460&type=chunk)[462](index=462&type=chunk)[463](index=463&type=chunk) [Results of Operations](index=119&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2023, total investment income increased 32% to $187.4 million due to higher interest rates, while net operating expenses rose to $109.1 million, primarily from increased interest and financing expenses - For Q2 2023, total investment income increased by **31% YoY to $95.5 million**, mainly due to higher interest income from increased LIBOR and SOFR rates[468](index=468&type=chunk) - For Q2 2023, interest and financing expenses rose by **$11.0 million YoY**, driven by higher rates on floating-rate borrowings and interest on the new 2022 Convertible Notes[471](index=471&type=chunk) - For the six months ended June 30, 2023, the net gain of **$1.6 million** from investment activities was primarily driven by realized gains in Haven Midstream and unrealized gains in UniTek, partially offset by realized and unrealized losses in other portfolio companies like National HME and Ansira[479](index=479&type=chunk)[480](index=480&type=chunk) [Liquidity, Capital Resources, Off-Balance Sheet Arrangements, Borrowings and Contractual Obligations](index=123&type=section&id=Liquidity%2C%20Capital%20Resources%2C%20Off-Balance%20Sheet%20Arrangements%2C%20Borrowings%20and%20Contractual%20Obligations) The company's liquidity is supported by credit facilities and operations, with an asset coverage ratio of 181.7% as of June 30, 2023, and total outstanding borrowings of $1.92 billion across various facilities - As of June 30, 2023, the company's asset coverage ratio was **181.7%**, exceeding the regulatory minimum of 150%[483](index=483&type=chunk)[484](index=484&type=chunk) - The company had cash and cash equivalents of **$45.9 million** as of June 30, 2023[485](index=485&type=chunk) - As of June 30, 2023, the company had outstanding unfunded commitments of **$197.4 million**[489](index=489&type=chunk) Contractual Obligations as of June 30, 2023 (in millions) | Obligation | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Holdings Credit Facility | $574.3 | $— | $574.3 | $— | $— | | Unsecured Notes | $391.5 | $116.5 | $200.0 | $75.0 | $— | | Convertible Notes | $376.8 | $116.8 | $260.0 | $— | $— | | SBA-guaranteed debentures | $300.0 | $— | $117.7 | $32.3 | $150.0 | | DB Credit Facility | $186.4 | $— | $186.4 | $— | $— | | NMFC Credit Facility | $91.3 | $— | $91.3 | $— | $— | | NMNLC Credit Facility II | $2.9 | $— | $2.9 | $— | $— | | **Total** | **$1,923.2** | **$233.3** | **$1,432.6** | **$107.3** | **$150.0** | [Quantitative and Qualitative Disclosures About Market Risk](index=135&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk, with 87.4% of its investment portfolio in floating-rate assets, and a 100 basis point interest rate increase would boost net interest income by an estimated 7.77% - As of June 30, 2023, approximately **87.4%** of the company's investments at fair value (excluding non-accrual and non-interest bearing equity) are floating-rate, while its credit facilities are also subject to floating rates[557](index=557&type=chunk) Interest Rate Sensitivity Analysis (as of June 30, 2023) | Change in Interest Rates | Estimated Percentage Change in Interest Income Net of Interest Expense | | :--- | :--- | | -25 Basis Points | (1.94)% | | Base Interest Rate | — % | | +100 Basis Points | 7.77% | | +200 Basis Points | 15.54% | | +300 Basis Points | 23.31% | [Controls and Procedures](index=136&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were **effective** at a reasonable assurance level[561](index=561&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2023[562](index=562&type=chunk) [PART II. OTHER INFORMATION](index=137&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=137&type=section&id=Item%201.%20Legal%20Proceedings) As of June 30, 2023, the company and its subsidiaries are not subject to any material pending legal proceedings outside the normal course of business - The company is not currently subject to any material pending legal proceedings[566](index=566&type=chunk) [Risk Factors](index=137&type=section&id=Item%201A.%20Risk%20Factors) This section highlights key risks, including potential adverse impacts from banking system strain, fewer protections from 'covenant-lite' loans, and uncertainties associated with the LIBOR to SOFR transition - Recent volatility and strain on the banking system could adversely impact the company's business, which is dependent on bank relationships[568](index=568&type=chunk) - The company's portfolio includes 'covenant-lite' loans, which have less restrictive terms and may offer fewer protections, potentially making recovery more challenging in cases of distress[569](index=569&type=chunk) - The transition from LIBOR to alternative reference rates like SOFR is substantially complete, but these new rates may not yield similar economic results, and the market for instruments referencing them is still developing[570](index=570&type=chunk)[572](index=572&type=chunk)[573](index=573&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=139&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not engage in any unregistered sales of equity securities during Q2 2023, and no shares were repurchased under its stock repurchase program, though 194,942 shares were purchased for the dividend reinvestment plan - No unregistered sales of equity securities occurred in the three months ended June 30, 2023[576](index=576&type=chunk) - During the six months ended June 30, 2023, **194,942 shares** were purchased in the open market for the dividend reinvestment plan[577](index=577&type=chunk) - The company did not repurchase any shares under its **$50 million** stock repurchase program during the six months ended June 30, 2023. Approximately **$47.1 million** remains available under the program, which extends until December 31, 2023[579](index=579&type=chunk) [Defaults Upon Senior Securities](index=139&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[580](index=580&type=chunk) [Other Information](index=139&type=section&id=Item%205.%20Other%20Information) On June 27, 2023, Barbara Daniel was appointed as a new independent director to the company's board, effective July 1, 2023, and assigned to several key committees - Barbara Daniel was appointed as an independent director to the Board of Directors, effective July 1, 2023[583](index=583&type=chunk) [Exhibits](index=140&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including amendments to credit agreements and required certifications by the CEO and CFO

New Mountain Finance Corporation (NASDAQ:NMFC) Q1 2023 Earnings Conference Call May 9, 2023 10:00 AM ET Company Participants John Kline - President and CEO Steve Klinsky - Chairman, NMFC and CEO, New Mountain Capital Robert Hamwee - Vice Chairman Laura Holson - Chief Operating Officer and Interim CFO Conference Call Participants Ryan Lynch - KBW Erik Zwick - Hovde Group Bryce Rowe - B. Riley Operator Good day. And welcome to the New Mountain Finance Corporation First Quarter 2023 Earnings Call. All particip ...

Important Notices and Safe Harbor Statement NEW MOUNTAIN FINANCE | --- | --- | |-----------------------|-------| | | | | | | | | | | Earnings Presentation | | This presentation contains forward looking statements, which are not guarantees of future performance, conditions or results, and involve substantial risks and uncertainties, including the impact of COVID-19, the current conflict between Russia and Ukraine, and related changes in base interest rates and significant volatility on our business, portfoli ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2023 o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | Commission File Number | Exact name of registrant as specified in its charter, address of principal executive offices, telephone numbers and states or other jurisdictions of incorporation or organizati ...

Financial Performance & Dividends - The current annualized dividend yield is 10%[1] - Since IPO, approximately $1 billion in dividends have been paid [5] - Q4 2022 adjusted net investment income (NII) was $0.35 per share, covering the $0.32 per share dividend [81] - A supplemental dividend program will commence in Q1 2023, with an expected dividend of $0.02 to $0.03 per share [53, 96] - Regular dividend is $0.32 per share for Q1 2023 [53, 81] Portfolio & Credit Quality - As of Q4 2022, 91.5% of the portfolio is rated "Green"[8, 103] - The annual net realized loss rate is 6 bps of $9.9 billion total investments since inception [5] - Top 15 portfolio companies represent $1250.5 million, or 38.6%, of consolidated investments [48] - First lien debt accounts for 87% of Q4 2022 originations [20] Market & Strategy - New Mountain employees are the largest shareholder group, owning 11%+ of shares outstanding [5, 81] - The company focuses on investing in strong businesses in acyclical sectors [5]

Financial Data and Key Metrics Changes - The company reported total investment income of $86.7 million for the quarter, an increase of $8.6 million from the prior quarter, primarily driven by higher interest income from base rate resets [33] - Net asset value (NAV) decreased by $0.18 or 1.4% from the prior quarter, standing at $13.02 per share [31] - Adjusted net investment income (NII) for the quarter was $0.25 per weighted average share, while excluding one-time non-cash charges, it was $0.35 per weighted average share, exceeding the quarterly dividend of $0.32 per share [34] Business Line Data and Key Metrics Changes - In Q4, the company originated $94 million of new loans in core defensive growth verticals, including software, financial services, and consumer services [17] - The average yield of the portfolio remained flat at 11.3% from Q3, with spreads remaining wider, supporting net investment income targets [19] Market Data and Key Metrics Changes - The weighted average EBITDA of borrowers increased to $138 million over the last several quarters, indicating stronger financial health [20] - Portfolio company leverage remained consistent, with an average loan-to-value of 41% [21] Company Strategy and Development Direction - The company is focused on a defensive growth strategy, aiming to maintain superior risk-adjusted returns while driving long-term value for shareholders [3] - A supplemental dividend program was announced, intending to pay out at least 50% of any earnings in excess of the regular dividend, starting in Q1 2023 [52][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to benefit from rising base rates, which are expected to generate a material uplift in earnings [11] - The outlook for 2023 in the sponsor-focused direct lending market appears positive, with opportunities to make loans at attractive spreads despite overall deal flow being down [46] Other Important Information - The company has a diversified portfolio across over 100 portfolio companies, with the top 15 investments accounting for 39% of total fair value [30] - The company has successfully laddered its debt maturities, with approximately 70% of its debt maturing on or after 2025 [40] Q&A Session Summary Question: Why was the dividend payout ratio set at 50%? - Management indicated that the 50% payout ratio was a balance between returning capital to shareholders and maintaining a cushion for potential income fluctuations [6] Question: Will unrealized losses impact the supplemental dividend calculation? - Management clarified that the supplemental dividend is based on over-earnings and not directly affected by mark-to-market changes, focusing instead on real non-accruals and losses [8] Question: How does the company plan to manage upcoming debt maturities? - Management stated that they have sufficient liquidity under credit facilities to manage upcoming maturities and are continuously evaluating both secured and unsecured markets for potential refinancing options [26][27]

Part I [Business](index=4&type=section&id=Item%201.%20Business) NMFC is a BDC investing in U.S. middle-market debt, managing a $3.22 billion portfolio focused on defensive growth companies - NMFC is a closed-end, non-diversified management investment company regulated as a **BDC** and qualifying as a **RIC** for tax purposes[12](index=12&type=chunk) - The company's investment objective is to generate **current income and capital appreciation** by sourcing and originating **debt securities**, with a focus on **U.S. middle-market defensive growth companies**[19](index=19&type=chunk)[20](index=20&type=chunk) Portfolio Summary (as of December 31, 2022) | Metric | Value | | :--- | :--- | | **Portfolio Fair Value** | $3,221.2 million | | **Number of Portfolio Companies** | 107 | | **Weighted Average YTM at Cost** | 11.3% | | **Weighted Average YTM at Cost for Investments** | 10.0% | Portfolio Composition by Investment Type (as of December 31, 2022) | Investment Type | Percentage of Portfolio (Fair Value) | | :--- | :--- | | First Lien Loans | 54.5% | | Second Lien Loans | 17.4% | | Subordinated Debt | 2.4% | | Equity and Other | 25.7% | Top 5 Industry Concentrations (as of December 31, 2022) | Industry | Percentage of Portfolio (Fair Value) | | :--- | :--- | | Software | 26.7% | | Business Services | 17.7% | | Healthcare | 16.3% | | Investment Fund (Joint Ventures) | 7.5% | | Education | 7.1% | [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business, operational, investment, and securities risks, including market volatility and concentration - The company operates in a period of **capital markets disruption and economic uncertainty**, which could impair its ability to secure debt financing, increase funding costs, and negatively impact the fair value of its investments[125](index=125&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk) - The business is **highly dependent on the key investment personnel** of the Investment Adviser, whose departure could significantly harm the company's ability to achieve its investment objective[161](index=161&type=chunk)[162](index=162&type=chunk) - The use of **leverage magnifies the potential for both gain and loss**, with approximately **$2.0 billion in total debt outstanding** as of December 31, 2022[176](index=176&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The company's portfolio may be **concentrated in a limited number of industries**, subjecting it to significant loss if there is a downturn in those particular sectors[270](index=270&type=chunk)[271](index=271&type=chunk) - The **transition from LIBOR to alternative reference rates** like SOFR creates uncertainty and could adversely affect the value of the company's floating-rate debt securities and reduce net investment income[305](index=305&type=chunk)[306](index=306&type=chunk)[310](index=310&type=chunk) - Shares of the company's common stock have **traded at a discount to Net Asset Value (NAV)** and may do so in the future, which could impair the ability to raise additional equity capital[317](index=317&type=chunk) [Unresolved Staff Comments](index=62&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - **None**[328](index=328&type=chunk) [Properties](index=62&type=section&id=Item%202.%20Properties) The company does not own any material real estate or physical properties, with offices provided by the Administrator - The company **does not own any real estate or other physical properties** material to its operations, with office space provided through its Administration Agreement[329](index=329&type=chunk) [Legal Proceedings](index=62&type=section&id=Item%203.%20Legal%20Proceedings) As of December 31, 2022, the company and its affiliates are not subject to any material pending legal proceedings - The company is **not currently subject to any material pending legal proceedings**[330](index=330&type=chunk) [Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - **Not applicable**[331](index=331&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=63&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) NMFC common stock trades on NASDAQ, supported by a dividend reinvestment plan and a $50 million stock repurchase program Quarterly Stock Performance and Distributions (2022) | Quarter | NAV Per Share ($) | High Closing Price ($) | Low Closing Price ($) | Declared Distributions Per Share ($) | | :--- | :--- | :--- | :--- | :--- | | **Q4 2022** | $13.02 | $12.80 | $11.40 | $0.32 | | **Q3 2022** | $13.20 | $13.50 | $11.26 | $0.30 | | **Q2 2022** | $13.42 | $13.91 | $11.20 | $0.30 | | **Q1 2022** | $13.56 | $13.85 | $12.94 | $0.30 | - The company maintains an **opt out dividend reinvestment plan**, where stockholder cash distributions are automatically reinvested in additional shares unless they elect to receive cash[340](index=340&type=chunk) - A **$50.0 million stock repurchase program** was extended until December 31, 2023, though **no shares were repurchased** under this program during the year ended December 31, 2022[348](index=348&type=chunk) [Reserved](index=74&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=75&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, investment income increased to $294.6 million, but a net loss from investment activities decreased NAV per share Results of Operations Comparison (in thousands) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | **Total Investment Income** | $294,630 | $270,959 | | **Net Expenses after Taxes** | $175,026 | $152,119 | | **Net Investment Income** | $119,604 | $118,840 | | **Net Realized/Unrealized (Losses) Gains** | $(45,076) | $88,342 | - The increase in total investment income was primarily due to **higher SOFR and LIBOR rates** on larger invested balances, while the increase in net operating expenses was driven by **higher interest rates on floating-rate borrowings** and new debt issuances[466](index=466&type=chunk)[468](index=468&type=chunk) - The **net loss from investment activities** in 2022 was primarily driven by **unrealized depreciation** on investments in NM CLFX LP, Ansira, National HME, and TVG-Edmentum Holdings, LLC[469](index=469&type=chunk) Liquidity and Capital Resources (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | **Cash and Cash Equivalents** | $71.2 million | | **Total Borrowings Outstanding** | $1,997.9 million | | **Asset Coverage Ratio** | 177.42% | | **Unfunded Commitments** | $224.1 million | - In 2022, the company sold 2,950,300 shares of common stock under its at-the-market (ATM) offering agreement, raising net proceeds of approximately **$40.0 million**[476](index=476&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=101&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk due to its floating-rate investments and borrowings, with sensitivity analysis indicating increased net interest income from rate hikes - The company's primary market risk is **interest rate fluctuation**, as approximately **86.7% of its investments** at fair value are floating-rate, while its credit facilities are also subject to floating rates[546](index=546&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2022) | Change in Interest Rates (Basis Points) | Estimated Percentage Change in Net Interest Income (%) | | :--- | :--- | | -25 | (2.08)% | | +100 | 8.34% | | +200 | 16.68% | | +300 | 25.02% | [Financial Statements and Supplementary Data](index=102&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements, including the independent auditor's report - The independent registered public accounting firm, Deloitte & Touche LLP, issued an **unqualified opinion** on the consolidated financial statements and the company's internal control over financial reporting as of December 31, 2022[553](index=553&type=chunk)[554](index=554&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :--- | :--- | :--- | | **Total Investments at Fair Value** | $3,221,247 | $3,174,364 | | **Total Assets** | $3,354,927 | $3,295,812 | | **Net Borrowings** | $1,980,661 | $1,907,188 | | **Total Liabilities** | $2,028,736 | $1,953,200 | | **Total Net Assets** | $1,326,191 | $1,342,612 | | **Net Asset Value Per Share** | $13.02 | $13.49 | Financial Highlights Per Share | Metric (Year Ended Dec 31) | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | **Net Asset Value, Beginning** | $13.49 | $12.62 | | **Net Investment Income** | $1.18 | $1.21 | | **Net Realized/Unrealized (Losses) Gains** | $(0.43) | $0.86 | | **Distributions Declared** | $(1.22) | $(1.20) | | **Net Asset Value, End** | $13.02 | $13.49 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=217&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - **None**[984](index=984&type=chunk) [Controls and Procedures](index=217&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with an unqualified auditor opinion - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2022[985](index=985&type=chunk) - Management determined that the company's internal control over financial reporting was **effective** as of December 31, 2022, based on the COSO 2013 framework[987](index=987&type=chunk) - **No changes in internal control over financial reporting occurred** during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, internal controls[997](index=997&type=chunk) [Other Information](index=219&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - **None**[998](index=998&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=219&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - **Not Applicable**[999](index=999&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=220&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%20and%2014) Information for Items 10-14, including governance, compensation, and ownership, is incorporated by reference from the 2023 Proxy Statement - Information for Part III (Items 10-14) is **incorporated by reference** from the Registrant's Proxy Statement for its 2023 Annual Meeting of Stockholders[1003](index=1003&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=221&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed with the report, with no separate financial schedules - This section lists **all financial statements** included in Item 8 and **all exhibits** filed with the 10-K, such as the Certificate of Incorporation, Bylaws, Indentures, and various credit and management agreements[1011](index=1011&type=chunk)[1012](index=1012&type=chunk) - **No financial statement schedules are filed** because the required information is either not applicable or has been presented within the consolidated financial statements[1020](index=1020&type=chunk) [Form 10-K Summary](index=228&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - **None**[1021](index=1021&type=chunk)