New Mountain Finance (NMFC) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights The company reported Q2 2025 results showing stable dividends amidst market pressures and strategic portfolio adjustments Second Quarter 2025 Performance Overview 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] Management Commentary 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] - Strategic priorities include increasing the percentage of senior-oriented assets to nearly 80% and building more position diversification across the portfolio[4] - The company repurchased $9.6 million worth of shares in the quarter, signaling management's belief that the stock is undervalued[4] Key Financial and Operational Highlights 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] - Net asset value of $12.21 per share compared to $12.45 per share as of March 31, 2025[5] - Approximately 95% of the portfolio is rated green on the internal heatmap, indicating strong asset quality[5] - Increased senior oriented asset mix to 78%, compared to 75% as of June 30, 2024[5] - Received a third license from the Small Business Administration for the SBIC program in July 2025[5] - Repurchased $9.6 million of outstanding shares in the second quarter[5] - Declared a third quarter 2025 distribution of $0.32 per share, payable on September 30, 2025[5] Portfolio and Investment Activity The report details the company's $3.0 billion investment portfolio, focusing on defensive middle-market businesses and asset quality Portfolio Overview 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] - The portfolio had a fair value of $3,014.2 million of investments in 124 portfolio companies[5] - Weighted average YTM at Cost was approximately 10.6%[5] Q2 2025 Investment Activity | Activity | Amount (millions) | | :--- | :--- | | Originations | $122.2 | | Repayments | $141.4 | | Asset Sales | $13.7 | Portfolio and Asset Quality 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] - The Company monitors the performance and financial trends of its portfolio companies on at least a quarterly basis[9] - 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] Investment Mandate and Characteristics 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] Portfolio Industry Composition 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 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] Investment Portfolio Composition 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 The company maintains a solid liquidity position with significant available credit capacity and a managed debt-to-equity ratio Liquidity and Capital Resources Overview 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] - 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] - The company had $262.5 million of SBA-guaranteed debentures outstanding[14] - Available capacity on its Holdings Credit Facility, NMFC Credit Facility and Unsecured Management Company Revolver was $1,079.7 million[14] Financial Statements This section presents the consolidated statements of assets, liabilities, and operations for the period ended June 30, 2025 Consolidated Statements of Assets and Liabilities 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 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 This section provides background on New Mountain Finance Corporation, its manager, and important legal disclosures About New Mountain Finance Corporation 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] - The investment objective is to generate current income and capital appreciation through senior secured loans and select junior capital positions[30] - Its differentiated investment approach leverages the deep sector knowledge and operating resources of New Mountain Capital[30] About New Mountain Capital 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] - The firm emphasizes business building and growth, rather than debt, to pursue long-term capital appreciation[31] - New Mountain seeks high-quality growth leaders in carefully selected industry sectors and works intensively with management to build company value[31] Forward-Looking Statements 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] - Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including changes in base interest rates and significant volatility[32] - New Mountain Finance Corporation undertakes no obligation to publicly update or revise any forward-looking statements, except as may be required by law[32] Contact Information 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] Conference Call Information Details for the upcoming Q2 2025 earnings conference call and webcast are provided for interested parties Second Quarter 2025 Conference Call Details 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] - 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][22] - 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]