New Mountain Finance (NMFC) - 2025 Q1 - Quarterly Results

Financial and Operational Highlights NMFC's Q1 2025 performance shows stable net investment income, strong credit quality, and strategic debt cost reduction First Quarter 2025 Performance Summary 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] - Key operational achievements in Q1 2025 include: - Sustained strong credit performance with ~96.5% of the portfolio rated green[5] - Reduced cost of debt on the Holdings Credit Facility from SOFR + 2.15% to SOFR + 1.95%[5] - Increased senior-oriented asset mix to 77%, up from 75% at the end of 2024[5] Management Commentary 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] - 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] Portfolio Analysis 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 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] - 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] Portfolio Quality and Industry Composition 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] 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 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 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 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 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 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 Information on the upcoming earnings call and details about NMFC's direct lending strategy and its manager, New Mountain Capital Conference Call Information 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] - A replay of the conference call will be available for three months, and the webcast replay will be available for one year[16] About New Mountain Finance Corporation and New Mountain Capital 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] - New Mountain Capital, the investment manager, has over $55 billion in assets under management across private equity, credit, and net lease strategies[31]