New Mountain Finance Corporation Announces Financial Results for the Quarter Ended June 30, 2024

Reports Net Investment Income of $0.36 per Share

Declares a Regular Third Quarter Distribution of $0.32 per Share and a Supplemental Distribution of $0.02 per Share

New Mountain Finance Corporation (NASDAQ: NMFC) (“New Mountain,” “New Mountain Finance” or the “Company”) today announced its financial results for the quarter ended June 30, 2024.

Second Quarter Highlights1

Net investment income of $38.2 million, or $0.36 per weighted average share
Net asset value of $12.74 per share compared to $12.77 per share as of March 31, 2024
Plan to permanently reduce base management fee to 1.25%
Amending and extending the dividend protection program
Continued strong credit performance with approximately 97.0% of the portfolio rated green on our internal risk rating system, up from 96.5% at March 31, 2024
Increased portfolio velocity with $437.3 million of gross originations2, $299.1 million of repayments2 and $5.5 million of asset sales
Significant first lien loan originations contributed to asset mix improvement
Successful repricing of the Wells Fargo Credit Facility, reducing the spread from S + 2.50% to S + 2.15%
Declared a regular third quarter 2024 distribution of $0.32 per share and a supplemental distribution related to second quarter earnings of $0.02 per share, each payable on September 30, 2024 to holders of record as of September 16, 2024

($ in millions, except per share data)

Q2 2024

Q2 2023

Net Investment Income per Weighted Average Share

0.36

0.39

Dividends Paid per Share4

0.34

0.35

Annualized Dividend Yield5

11.0

June 30, 2024

March 31, 2024

Investment Portfolio6

3,227.3

3,086.5

NAV per Share

12.74

12.77

Statutory Debt/Equity3

1.21x

1.08x

Statutory Debt/Equity (Net of Available Cash)3

1.14x

1.03x

Management Comments on Second Quarter Performance

“Our second quarter results reflect another good quarter for NMFC,” said Steven B. Klinsky, NMFC Chairman. “NMFC’s consistent book value and dividend coverage reflect the benefit of our disciplined, defensive growth strategy focused on end markets that perform well across economic cycles.”

John R. Kline, CEO, commented: “We delivered solid performance with stable sequential NII and strong originations totaling more than $437 million in the second quarter. NMFC remains well positioned to capitalize on high-quality investment opportunities in our core defensive growth power alleys. Further, we have maintained strong credit performance, improved our asset mix and reduced the interest rate on our core credit facility.”

Portfolio and Investment Activity6

As of June 30, 2024, the Company’s NAV1 was $1,374.1 million and its portfolio had a fair value of $3,227.3 million in 123 portfolio companies, with a weighted average YTM at Cost7 of approximately 11.1%. For the three months ended June 30, 2024, the Company generated $437.3 million of originations2, cash repayments2 of $299.1 million and had $5.5 million of asset sales.

Portfolio and Asset Quality

NMFC’s mandate is to primarily target businesses in the middle market that, consistent with New Mountain’s private equity platform, are high quality, defensive growth companies in industries that are well-researched by New Mountain. The Company’s focus is on defensive growth businesses that generally exhibit the following characteristics: (i) acyclicality, (ii) sustainable secular growth drivers, (iii) niche market dominance and high barriers to competitive entry, (iv) recurring revenue and strong free cash flow, (v) flexible cost structures and (vi) seasoned management teams.

Portfolio Industry Composition based on Fair Value10

Software

Business Services

ERP

8.2 %

Engineering & Consulting Services

5.4 %

IT Infrastructure & Security

6.9 %

Real Estate Services

4.5 %

Human Capital Management

5.3 %

Misc Services

3.3 %

Ecommerce & Logistics

4.0 %

Insurance & Benefits Services

3.0 %

Finance & Accounting

3.2 %

Utility Services

2.3 %

Governance, Risk & Compliance

3.0 %

Digital Transformation

1.6 %

Integrated Payments

1.4 %

Data & Information Services

0.2 %

Total Software

32.0 %

Total Business Services

20.3 %

Healthcare

Other Industries

Healthcare Services

9.6 %

Education

7.0 %

Healthcare Software

6.0 %

Consumer Services

6.8 %

Tech-Enabled Healthcare

1.0 %

Distribution & Logistics

4.3 %

Pharma Services

0.9 %

Financial Services

4.1 %

Healthcare Products

0.2 %

Packaging

2.4 %

Other

5.6 %

Total Healthcare

17.7 %

Total Other Industries

30.2 %

The Company monitors the performance and financial trends of its portfolio companies on at least a quarterly basis. The Company attempts to identify any developments within the portfolio company, the industry, or the macroeconomic environment that may alter any material element of the Company’s original investment strategy. As described more fully in the Company's Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission, the portfolio monitoring procedures are designed to provide a simple, yet comprehensive analysis of the Company’s portfolio companies based on their operating performance and underlying business characteristics, which in turn forms the basis of its Risk Rating. The Risk Rating is expressed in categories of Green, Yellow, Orange and Red with Green reflecting an investment that is in-line with or above expectations and Red reflecting an investment performing materially below expectations.

The following table shows the Risk Rating of the Company’s portfolio companies as of June 30, 2024:

(in millions)

As of June 30, 2024

Risk Rating

Cost

Percent

Fair Value

Percent

Weighted Average Mark

Green9

3,078.3

95.1 %

3,130.3

97.0 %

98.1 %

Yellow6

87.0

2.7 %

58.2

1.8 %

66.8 %

Orange

59.4

1.8 %

35.8

1.1 %

74.3 %

Red

12.9

0.4 %

3.0

0.1 %

36.2 %

Total

3,237.6

100.0 %

3,227.3

100.0 %

As of June 30, 2024, all investments in the Company’s portfolio had a Green Risk Rating, with the exception of four portfolio companies that had a Yellow Risk Rating, five portfolio companies that had an Orange Risk Rating and one portfolio company that had a Red Risk Rating.

The following table shows the Company’s investment portfolio composition as of June 30, 2024:

(in millions)

Investment Portfolio Composition

June 30, 2024

Percent of Total

First Lien

2,017.6

63 %

Senior Loan Funds & NMNLC11

376.0

12 %

Second Lien6

290.5

9 %

Subordinated

106.8

3 %

Preferred Equity

224.4

6 %

Common Equity and Other

212.0

7 %

Total

3,227.3

100 %

Liquidity and Capital Resources

As of June 30, 2024, the Company had cash and cash equivalents of $119.6 million and total statutory debt outstanding of $1,659.5 million3. The Company's statutory debt to equity was 1.21x as of June 30, 2024. Additionally, the Company had $300.0 million of SBA-guaranteed debentures outstanding as of June 30, 2024. As of June 30, 2024, the Company had $498.1 million of available capacity on its Holdings Credit Facility, DB Credit Facility and NMFC Credit Facility.

For the three months ended June 30, 2024, the Company sold 1,562,122 shares of common stock under its equity distribution agreement. For the same period, the Company received total accumulated net proceeds of approximately $19.8 million, including $0.0 million of offering expenses, from these sales.

Second Quarter 2024 Conference Call

New Mountain Finance Corporation will host an earnings conference call and webcast at 10:00 am Eastern Time on Thursday, August 1, 2024. To participate in the live earning conference call, please use the following dial-in numbers or visit the audio webcast link. To avoid any delays, please join at least fifteen minutes prior to the start of the call.

United States: +1 (877) 443-9109
International: +1 (412) 317-1082
Live Audio Webcast

A replay of the conference call can be accessed one hour after the end of the conference call through November 1, 2024. The full webcast replay will be available through August 1, 2025. To access the earnings webcast replay please visit the New Mountain Investor Relations website.

United States: +1 (877) 344-7529
International: +1 (412) 317-0088
Access Code: 8717497

For additional details related to the quarter ended June 30, 2024, please refer to the New Mountain Finance Corporation Quarterly Report on Form 10-Q filed with the SEC and the supplemental investor presentation which can be found on the Company's website at http://www.newmountainfinance.com.

____________________________________________

(1)

Excludes non-controlling interest in New Mountain Net Lease Corporation (“NMNLC”). For the quarter ended June 30, 2024 and 2023, $0.3 million and $0.2 million, respectively, is excluded from investment income, $0.1 million and $0.0 million, respectively, of net direct and indirect professional, administrative, other general and administrative is excluded from net expenses and $0.2 million and $0.2 million, respectively, is excluded from net investment income.

(2)

Originations exclude payment-in-kind (“PIK”); originations, repayments, and sales excludes revolvers, unfunded commitments, bridges, return of capital, and realized gains / losses.

(3)

Excludes the Company’s United States Small Business Administration (“SBA”) guaranteed debentures.

(4)

Includes the regular quarter distribution and the supplemental distribution paid in the quarter.

(5)

Dividend yield calculation uses the closing stock price of $12.42 on July 29, 2024 and $12.75 on July 31, 2023 and includes regular and supplemental dividends.

(6)

Includes collateral for securities purchased under collateralized agreements to resell.

(7)

References to “YTM at Cost” assume the accruing investments, including secured collateralized agreements, in the Company's portfolio as of a certain date, the ‘‘Portfolio Date’’, are purchased at cost on that date and held until their respective maturities with no prepayments or losses and are exited at par at maturity. This calculation excludes the impact of existing leverage. YTM at Cost uses the Sterling Overnight Interbank Average Rate ("SONIA”), Euro Interbank Offered Rate ("EURIBOR") and Secured Overnight Financing Rate (“SOFR”) curves at each quarter’s respective end date. The actual yield to maturity may be higher or lower due to the future selection of SONIA, EURIBOR and SOFR contracts by the individual companies in the Company’s portfolio or other factors.

(8)

Includes investments in joint ventures.

(9)

Includes investments held in NMNLC.

(10)

Excludes NMFC Senior Loan Program III LLC ("SLP III"), NMFC Senior Loan Program IV LLC ("SLP IV") and NMNLC.

(11)

Senior Loan Funds includes SLP III and SLP IV.

New Mountain Finance Corporation

Consolidated Statements of Assets and Liabilities

(in thousands, except shares and per share data)

(unaudited)

June 30, 2024

December 31, 2023

Assets

Investments at fair value

Non-controlled/non-affiliated investments (cost of $2,429,377 and $2,283,490, respectively)

2,411,396

2,209,867

Non-controlled/affiliated investments (cost of $119,130 and $107,895, respectively)

118,351

133,659

Controlled investments (cost of $659,042 and $646,823, respectively)

684,033

667,796

Total investments at fair value (cost of $3,207,549 and $3,038,208, respectively)

3,213,780

3,011,322

Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively)

13,500

16,500

Cash and cash equivalents

119,607

70,090

Interest and dividend receivable

48,071

44,107

Deferred tax asset

—

594

Receivable from affiliates

154

Other assets

28,506

16,519

Total assets

3,423,618

3,159,214

Liabilities

Borrowings

Unsecured Notes

685,974

506,500

Holdings Credit Facility

386,563

515,063

SBA-guaranteed debentures

300,000

Convertible Notes

260,150

260,207

DB Credit Facility

182,000

186,400

NMFC Credit Facility

141,840

36,813

NMNLC Credit Facility II

2,948

2,853

Deferred financing costs (net of accumulated amortization of $58,243 and $54,263, respectively)

(22,516

)

(22,387

)

Net borrowings

1,936,959

1,785,449

Payable for unsettled securities purchased

51,199

—

Interest payable

22,937

20,440

Management fee payable

10,490

10,116

Incentive fee payable

9,550

8,555

Payable to broker

1,650

—

Derivative liability at fair value

1,552

—

Deferred tax liability

—

Other liabilities

2,701

2,931

Total liabilities

2,037,101

1,827,491

Commitments and contingencies

Net assets

Preferred stock, par value $0.01 per share, 2,000,000 shares authorized, none issued

—

Common stock, par value $0.01 per share, 200,000,000 shares authorized, and 107,851,415 and 102,558,859 shares issued and outstanding, respectively

1,079

1,026

Paid in capital in excess of par

1,398,438

1,331,269

Accumulated undistributed earnings

(25,399

)

(12,344

)

Total net assets of New Mountain Finance Corporation

1,374,118

1,319,951

Non-controlling interest in New Mountain Net Lease Corporation

12,399

11,772

Total net assets

1,386,517

1,331,723

Total liabilities and net assets

3,423,618

3,159,214

Number of shares outstanding

107,851,415

102,558,859

Net asset value per share of New Mountain Finance Corporation

12.74

12.87

New Mountain Finance Corporation

Consolidated Statements of Operations

(in thousands, except shares and per share data)

(unaudited)

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Investment income

From non-controlled/non-affiliated investments:

Interest income (excluding Payment-in-kind ("PIK") interest income)

57,583

64,649

113,820

125,407

PIK interest income

4,437

3,767

9,120

7,711

Dividend income

2,284

2,577

Non-cash dividend income

4,797

4,305

9,481

8,471

Other income

3,291

686

4,891

2,604

From non-controlled/affiliated investments:

Interest income (excluding PIK interest income)

376

683

744

692

PIK interest income

873

414

1,709

1,105

Non-cash dividend income

1,374

1,139

2,618

2,244

Other income

125

126

From controlled investments:

Interest income (excluding PIK interest income)

1,383

1,243

2,744

2,687

PIK interest income

3,721

3,686

7,856

8,074

Dividend income

12,340

12,143

25,023

23,138

Non-cash dividend income

1,570

1,292

3,066

2,522

Other income

497

1,375

1,370

2,570

Total investment income

94,588

95,492

185,144

187,445

Expenses

Interest and other financing expenses

33,113

31,700

64,129

62,496

Management fee

11,351

11,577

22,348

23,215

Incentive fee

9,550

9,982

18,939

19,579

Professional fees

1,127

1,003

2,194

1,968

Administrative expenses

1,108

953

2,076

2,001

Other general and administrative expenses

527

513

992

1,001

Total expenses

56,776

55,728

110,678

110,260

Less: management fee waived

(861

)

(1,096

)

(1,762

)

(2,159

)

Net expenses

55,915

54,632

108,916

108,101

Net investment income before income taxes

38,673

40,860

76,228

79,344

Income tax expense

234

932

235

1,028

Net investment income

38,439

39,928

75,993

78,316

Net realized (losses) gains:

Non-controlled/non-affiliated investments

(34,966

)

(7,314

)

(46,824

)

(8,622

)

Controlled investments

3,800

9,880

3,831

11,853

Foreign currency

—

Net change in unrealized appreciation (depreciation):

Non-controlled/non-affiliated investments

32,895

2,174

56,055

(755

)

Non-controlled/affiliated investments

(4,080

)

(26,543

)

(15

)

Controlled investments

1,697

(9,488

)

4,017

(691

)

Securities purchased under collateralized agreements to resell

(3,000

)

(39

)

(3,000

)

(39

)

Foreign currency

129

106

Provision for taxes

(130

)

(94

)

(767

)

(225

)

Net realized and unrealized (losses) gains

(3,655

)

(4,850

)

(13,125

)

1,574

Net increase in net assets resulting from operations

34,784

35,078

62,868

79,890

Less: Net increase in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation

(313

)

(248

)

(989

)

(487

)

Net increase in net assets resulting from operations related to New Mountain Finance Corporation

34,471

34,830

61,879

79,403

Basic earnings per share

0.32

0.35

0.59

0.79

Weighted average shares of common stock outstanding - basic

106,891,784

100,937,026

105,276,077

100,937,026

Diluted earnings per share

0.31

0.32

0.56

0.71

Weighted average shares of common stock outstanding - diluted

125,759,769

127,016,910

124,101,624

125,313,634

Distributions declared and paid per share

0.34

0.35

0.70

0.67

ABOUT NEW MOUNTAIN FINANCE CORPORATION

New Mountain Finance Corporation (NASDAQ: NMFC) is a leading business development company (BDC) focused on providing direct lending solutions to U.S. middle market companies backed by top private equity sponsors. Our portfolio consists primarily of senior secured loans, and select junior capital positions, to growing businesses in defensive industries that offer attractive risk-adjusted returns. Our differentiated investment approach leverages the deep sector knowledge and operating resources of New Mountain Capital, a global investment firm with approximately $55 billion of assets under management.

ABOUT NEW MOUNTAIN CAPITAL

New Mountain Capital ("NMC") is a New York-based investment firm that emphasizes business building and growth, rather than debt, as it pursues long-term capital appreciation. The firm currently manages private equity, credit and net lease investment strategies with approximately $55 billion in assets under management. New Mountain seeks out what it believes to be the highest quality growth leaders in carefully selected industry sectors and then works intensively with management to build the value of these companies. For more information on New Mountain Capital, please visit http://www.newmountaincapital.com.

FORWARD-LOOKING STATEMENTS

Statements included herein may contain “forward-looking statements”, which relate to our future operations, future performance or our financial condition. Forward-looking statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties, including changes in base interest rates and significant volatility on our business, portfolio companies, our industry and the global economy. Actual results and outcomes may differ materially from those anticipated in the forward-looking statements as a result of a variety of factors, including those described from time to time in our filings with the Securities and Exchange Commission or factors that are beyond our control. New Mountain Finance Corporation undertakes no obligation to publicly update or revise any forward-looking statements made herein, except as may be required by law. All forward-looking statements speak only as of the time of this press release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731979861/en/

New Mountain Finance Corporation Investor Relations Laura C. Holson, Authorized Representative NMFCIR@newmountaincapital.com (212) 220-3505

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