New Mountain Finance (NMFC) Q1 2025 Earnings Call May 06, 2025 10:00 AM ET Speaker0 Good day, and welcome to the New Mountain Finance Corporation First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Mr. John Klein, President and Chief Executive Officer. Please go ahead. Speaker1 Thank you, and good morning, everyone. Welcome to New Mountain Finance Corporation's first ...

May 6, 2025 14 Important Notices and Safe Harbor Statement This presentation contains forward looking statements, which are not guarantees of future performance, conditions or results, and involve substantial risks and uncertainties, including the current conflict between Russia and Ukraine, conflict in the Middle East, and related changes in base interest rates and significant volatility on our business, portfolio companies, our industry, the global economy, and uncertainty associated with the imposition o ...

New Mountain Finance (NMFC) came out with quarterly earnings of $0.32 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.36 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this business development company would post earnings of $0.33 per share when it actually produced earnings of $0.32, delivering a surprise of -3.03%.Over the last four quarters, the company has not been able to surpass consensus EPS estimates. ...

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, 2025 o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | Commission | Exact name of registrant as specified in its charter, address of principal executive | I.R.S. Employer | | --- | --- | --- | | File Number | offices, telephone numbers and states or other ...

New Mountain Finance Corporation Announces Financial Results for the Quarter Ended March 31, 2025 Reports First Quarter Net Investment Income of $0.32 per Share and Declares a Second Quarter Distribution of $0.32 per Share NEW YORK--(BUSINESS WIRE) — May 5, 2025 -- New Mountain Finance Corporation (NASDAQ: NMFC) ("New Mountain," "New Mountain Finance" or the "Company") today announced its financial results for the quarter ended March 31, 2025. First Quarter and Recent Highlights 1 | ($ in millions, except p ...

Core Insights - The article emphasizes the importance of innovation and disruption in the financial sector, particularly focusing on high-tech and early growth companies [1] Group 1: Company Insights - The financial researcher highlights a beneficial long position in NMFC shares, indicating confidence in the company's future performance [2] - The article discusses the potential for growth buyouts and value stocks, suggesting that these areas may present significant investment opportunities [1] Group 2: Industry Trends - There is a strong focus on the pace of technological advancements and their impact on investment strategies within the industry [1] - The article suggests that current events and major news in the industry are crucial for identifying potential investment opportunities [1]

Financial Data and Key Metrics Changes - Adjusted net investment income for Q4 was $0.32 per share, covering the regular dividend of $0.32 per share paid on December 31 [8] - Net asset value per share declined by $0.07 or 0.6% to $12.55, indicating stable credit performance across the portfolio [8][26] - Total investment income for Q4 was $91 million, a 2% decrease year-over-year, while total net expenses decreased by 9% to $57 million [49] Business Line Data and Key Metrics Changes - The portfolio had over $3 billion of investments at fair value, with total assets of $3.2 billion and total liabilities of $2 billion [47] - Approximately 75% of investments are senior in nature, with second lien positions down to 7% from 8% last quarter [40] - The average yield of NMFC's portfolio increased to 11% for Q4, primarily due to the higher for longer shift in the forward SOFR curve [42] Market Data and Key Metrics Changes - The NMFC loan portfolio is 86% floating rate and 14% fixed rate, while liabilities are 49% floating and 51% fixed rate [36] - The weighted average EBITDA of borrowers decreased slightly to $184 million, reflecting the realization of larger companies during the quarter [43] - The current portfolio has an average loan to value of 41%, with weighted average interest coverage increasing to 1.8 times [44] Company Strategy and Development Direction - The company aims to maintain or increase its heavily senior-oriented asset mix, focusing on first lien and unitranche loans [20] - NMFC seeks to optimize the cost, duration, and quality of its liabilities, targeting a floating rate liability mix of approximately 75% over the next twelve months [23][56] - The company continues to focus on defensive growth sectors, avoiding cyclical and volatile industries [16] Management's Comments on Operating Environment and Future Outlook - Management believes that direct lending remains an attractive asset class despite a slower start to 2025 [32] - There is an expectation of increased M&A activity in 2025, driven by private equity dry powder and attractive financing markets [34] - Credit selection remains critical in a backdrop of volatility and uncertainty, with minimal pricing and structural flexibility [35] Other Important Information - The company has never experienced a bankruptcy or missed an interest payment in its private equity funds, managing over $55 billion in assets [12] - The internal risk rating of the portfolio remains consistent at approximately 97% green rated, with only $38 million or 1.2% of the portfolio on non-accrual [24][28] - The company has a diversified portfolio across 121 companies, with the top ten single name issuers accounting for 27% of total fair value [45] Q&A Session Summary Question: Inquiry about UniTek's exit valuation - Management indicated that the enterprise value for UniTek is modestly higher than the Q4 mark [62] Question: Concerns about market uncertainties affecting activity - Management feels that while the start of 2025 has been slower than expected, they remain optimistic about reducing PIK positions [65][66] Question: Allocation strategy among senior loans, loan funds, and net lease - Management stated that the mix within the senior category will remain the same [68] Question: Thoughts on market spreads and potential for repricing - Management noted that spreads have stabilized and do not expect further downward pressure, especially if M&A activity picks up [71][72] Question: Repricing activity within the portfolio - Management believes that most deals that could reprice have already gone through that exercise, indicating confidence in the current portfolio [73]

New Mountain Finance Corporation (NASDAQ:NMFC) Q4 2024 Earnings Conference Call February 27, 2025 10:00 AM ET Company Participants John Kline - President and CEO Steve Klinsky - Chairman and CEO, New Mountain Capital Laura Holson - Chief Operating Officer Kris Corbett - Chief Financial Officer and Treasurer Conference Call Participants Robert Dodd - Raymond James Operator Good day, and welcome to the New Mountain Finance Corporation's Fourth Quarter 2024 Earnings Call. All participants will be in a listen-o ...

Earnings Performance - New Mountain Finance (NMFC) reported quarterly earnings of $0.32 per share, missing the Zacks Consensus Estimate of $0.33 per share, and down from $0.40 per share a year ago, representing an earnings surprise of -3.03% [1] - The company posted revenues of $91.2 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 2.36%, compared to year-ago revenues of $92.8 million [2] Stock Performance - New Mountain shares have increased approximately 6.2% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.33 on revenues of $91.56 million, and for the current fiscal year, it is $1.31 on revenues of $362.11 million [7] Industry Outlook - The Financial - SBIC & Commercial Industry, to which New Mountain belongs, is currently in the top 20% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry performance can significantly impact stock performance [5][8]

Investment Valuation and Performance - The fair value of the company's investments was approximately $3,091.0 million in 120 portfolio companies as of December 31, 2024, compared to approximately $3,011.3 million in 110 portfolio companies as of December 31, 2023, reflecting an increase of 2.65%[27]. - The weighted average yield to maturity at cost for income-producing investments was approximately 11.0% as of December 31, 2024, up from 10.9% as of December 31, 2023[29]. - The weighted average yield to maturity at cost for all investments was approximately 9.2% as of December 31, 2024, down from 9.7% as of December 31, 2023[29]. - The company's ten largest portfolio investments accounted for 31.8% of total assets as of December 31, 2024, with the largest investment being NMFC Senior Loan Program III LLC at 4.9%[30]. - The software industry represented 26.1% of total assets, while healthcare and business services accounted for 15.5% and 15.3%, respectively, as of December 31, 2024[30]. - The company values its assets on a quarterly basis, with the board of directors responsible for determining the fair value of portfolio investments[42]. - As of December 31, 2024, 14.6% of total assets are represented by investments at fair value that are considered non-qualifying assets[110]. - The company reported a net change in unrealized appreciation of investments of $15,069 in 2024, compared to $10,416 in 2023[519]. - The total fair value of investments as of December 31, 2024, is $81,319,000, representing 5.98% of net assets[526]. - The total fair value of investments as of December 31, 2024, is presented in thousands, indicating a comprehensive financial overview[548]. Investment Strategy and Focus - The company targets debt investments that yield current income and may provide opportunities for capital appreciation through equity securities[36]. - The company’s investment strategy focuses primarily on privately held companies, presenting challenges due to the lack of available information[78]. - The overall investment strategy focuses on first lien and subordinated debt across various sectors, including software and financial services[531]. - The company continues to focus on expanding its portfolio in the software and healthcare sectors, indicating a strategic emphasis on high-growth industries[530]. - The company maintains a diversified portfolio across various sectors, including software and healthcare, enhancing its investment strategy[547]. - The company’s investment strategy includes a mix of first lien and preferred shares across various industries, including healthcare and education[557]. - The company is actively managing its investment portfolio with a focus on undrawn commitments, suggesting a strategy for future capital deployment[571]. Financial Performance and Metrics - Total investment income for the year ended December 31, 2024, was $371,666,000, slightly down from $374,836,000 in 2023, representing a decrease of 0.58%[515]. - Net investment income before income taxes decreased to $146,222,000 in 2024 from $160,316,000 in 2023, a decline of 8.77%[515]. - Basic earnings per share for 2024 were $1.06, down from $1.34 in 2023, indicating a decrease of 20.88%[515]. - Total liabilities increased to $1,887,410,000 in 2024 from $1,827,491,000 in 2023, marking an increase of 3.29%[513]. - The net asset value per share of New Mountain Finance Corporation decreased to $12.55 in 2024 from $12.87 in 2023, a decline of 2.48%[513]. - Total expenses increased to $229,183,000 in 2024 from $218,637,000 in 2023, reflecting an increase of 4.99%[515]. - Distributions declared and paid per share decreased to $1.37 in 2024 from $1.49 in 2023, a reduction of 8.05%[515]. - The net increase in net assets resulting from operations for 2024 was $114,503, down 15.9% from $136,090 in 2023[522]. - Total net decrease in net assets resulting from capital transactions was $80,055 in 2024, compared to a decrease of $129,865 in 2023[519]. - Cash flows provided by operating activities were $41,999 in 2024, a decrease from $332,729 in 2023[522]. Regulatory and Compliance - The company is required to maintain a coverage ratio of at least 150.0%, allowing it to borrow $2 for every $1 of equity[50]. - The company may issue additional equity or debt capital, but cannot sell common stock below net asset value without shareholder approval[51]. - The SEC issued an exemptive order allowing the company to co-invest with affiliates under certain conditions, enhancing investment flexibility[52]. - To qualify as a Regulated Investment Company (RIC), the company must distribute at least 90.0% of its investment company taxable income annually[57]. - The company is subject to a 4.0% nondeductible U.S. federal excise tax on certain undistributed income unless it meets specific distribution requirements[58]. - The company is subject to SBA regulations as it operates SBIC I and SBIC II, which may impact its business operations[78]. - The company has received licenses from the SBA for its subsidiaries to operate as Small Business Investment Companies (SBICs), allowing them to incur leverage[63]. Management and Fees - The base management fee is calculated at an annual rate of 1.25% of gross assets, following a fee waiver agreement that resulted in approximately $3.7 million in waived management fees for the year ended December 31, 2024[87]. - The incentive fee consists of two parts, with 20.0% of Pre-Incentive Fee Net Investment Income payable quarterly, subject to a hurdle rate of 2.0% per quarter (8.0% annualized)[88]. - For the year ended December 31, 2024, no incentive fees were waived, and the Investment Adviser cannot recoup previously waived fees[91]. - The board of directors approved the Investment Management Agreement for a period of 12 months commencing on March 1, 2025, after reviewing the fee structure and performance[107]. - The base management fee is set to be reduced as per Amendment No. 2 of the Investment Management Agreement effective January 29, 2025[103]. Market Conditions and Risks - The company operates in a highly competitive market for investment opportunities, which may affect its ability to compete effectively[74]. - The company may face credit losses and adverse developments in credit markets that could impair its ability to secure debt financing[74]. - The valuation of portfolio investments is determined by the board of directors, which may create uncertainty regarding their fair value[74]. - The company’s performance may differ from historical performance due to a shift towards more primary originations in its investment strategy[82]. - The estimated percentage change in interest income net of interest expense could be a decrease of 15.51% if interest rates drop by 200 basis points[497]. - In September 2024, the Federal Reserve decreased interest rates by 0.50%, followed by an additional 0.25% decrease in December 2024[494]. Future Outlook - Future outlook includes potential market expansions and new product developments to drive growth and enhance shareholder value[547]. - The company’s overall strategy includes market expansion and potential acquisitions to enhance its investment portfolio and improve financial performance[579].