Financial Performance - Fourth Quarter Net Investment Income was $0.32 per share, down from $0.40 per share in Q4 2023[3] - Total investment income for 2024 was $371,666, a slight decrease of 0.45% from $374,836 in 2023[27] - Net investment income before income taxes decreased to $146,222, down 8.75% from $160,316 in 2023[27] - Basic earnings per share for 2024 were $1.06, down from $1.34 in 2023, reflecting a decrease of 20.9%[28] - Net increase in net assets resulting from operations was $114,503, down from $136,090 in 2023, a decline of 15.87%[27] Dividends and Distributions - Regular and Supplemental Dividends paid per share in the quarter were $0.33, compared to $0.36 in Q4 2023, resulting in an annualized dividend yield of 10.7%[3] - A first quarter 2025 distribution of $0.32 per share has been declared, payable on March 31, 2025[5] - Distributions declared and paid per share decreased to $1.37 from $1.49, a reduction of 8.05%[28] Assets and Liabilities - As of December 31, 2024, the Company's NAV was $1,353.3 million, with a portfolio fair value of $3,104.5 million across 121 portfolio companies[5] - Total assets increased to $3,246,701, up from $3,159,214, representing a growth of 2.75% year-over-year[24] - Total liabilities increased to $1,887,410, compared to $1,827,491 in 2023, marking a rise of 3.28%[24] - The Company had cash and cash equivalents of $80.3 million and total statutory debt outstanding of $1,560.9 million as of December 31, 2024[14] - Cash and cash equivalents increased to $80,320 from $70,090, a growth of 14.06%[24] Investment Portfolio - The investment portfolio composition includes 62.9% in First Lien investments and 12.5% in Senior Loan Funds[13] - Approximately 97% of the portfolio is rated green, indicating strong credit performance[5] - The partial sale of UniTek valued the company at $370 million, with NMFC retaining a 31% ownership stake[4] - The Company generated $33.1 million in originations and realized $58.9 million from asset sales during the quarter[5] Debt and Equity - The statutory debt/equity ratio decreased to 1.15x, down from 1.26x as of September 30, 2024[3] - The number of shares outstanding increased to 107,851,415 from 102,558,859, an increase of 5.1%[24] - Non-controlled/non-affiliated investments saw a net realized loss of $45,365, compared to a loss of $49,267 in 2023[27]

Group 1 - The golden era for Business Development Companies (BDCs) is coming to an end as elevated interest rates impact portfolio quality, leading to challenges for borrowers [3] - Some BDCs are experiencing a decline in the quality of their portfolios due to the prolonged high-interest rate environment [3] Group 2 - The article highlights the importance of analyzing market conditions and their effects on investment vehicles like BDCs, emphasizing the need for investors to stay informed [3]

Core Insights - New Mountain Finance Corporation (Nasdaq: NMFC) managed to cover its dividend with net investment income in the third quarter [1] - The company lowered its supplemental dividend to $0.01 per share and paused its supplemental dividend program [1] Financial Performance - NMFC's net investment income was sufficient to cover its regular dividend obligations [1] - The decision to lower the supplemental dividend indicates a shift in the company's financial strategy [1] Dividend Policy - The supplemental dividend program has been paused, reflecting potential changes in the company's capital allocation priorities [1]

NEW MOUNTAIN FINANCE | --- | --- | |-------|-------| | | | | | | 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, and the global eco ...

Financial Data and Key Metrics Changes - Adjusted net investment income for Q3 2024 was $0.34 per share, exceeding the regular dividend of $0.32 per share [5][45] - Net asset value per share declined to $12.62, a decrease of $0.12 or 0.9% from the previous quarter [6][20] - Total investment income for the quarter was $96 million, a 2% increase year-over-year [45] Business Line Data and Key Metrics Changes - The internal risk ratings of the portfolio improved, with 97.3% rated green, the highest level since 2020 [17] - Approximately 75% of investments are senior in nature, with second-lien positions down to 8% of the portfolio [37] - The average yield of the portfolio decreased to 10.5% due to a downward shift in the forward SOFR curve [39] Market Data and Key Metrics Changes - Sponsor-backed M&A activity remained below normal levels, but opportunities were found in defensive growth verticals [26] - The direct lending market continues to be the financing market of choice for sponsors, with expectations for increased activity in early 2025 [29][27] - The weighted average EBITDA of borrowers increased to $189 million, indicating growth among the companies financed [40] Company Strategy and Development Direction - The company focuses on defensive growth sectors such as life science supplies, healthcare IT, and software [10] - The strategy emphasizes minimizing credit losses and distributing excess income to shareholders, with a long-term track record of consistent returns [16] - Management aims to reduce PIK exposure and replace it with cash-oriented assets, targeting a PIK ratio below 10% to 12% [64] Management Comments on Operating Environment and Future Outlook - Management remains optimistic about the prospects for non-green names in the portfolio, with expectations for M&A activity to increase in 2025 [19][27] - The company has successfully improved its liability structure and anticipates further opportunities to refinance and reduce financing costs [50][52] - Management acknowledges the current weakness in stock price is related to PIK levels but sees potential for improvement in 2025 [77] Other Important Information - The company has paid $0.20 per share in supplemental dividends since the program began in Q2 2023 [8] - The company has a diversified portfolio across 128 companies, with the top 10 issuers accounting for 25% of total fair value [43] - The company has $3 billion in total borrowing capacity, highlighting a strong liquidity position [48] Q&A Session Summary Question: Changes in portfolio leverage - Management indicated that the decrease in leverage from 6.7 times to 6.3 times is due to a combination of factors, including the performance of existing businesses and the types of new assets being originated [55][56] Question: PIK assets and refinancing - Management expects to reduce PIK exposure through refinancing as older PIK-preferred investments mature and perform well, aiming for a long-term target of under 10% to 12% [60][64] Question: SLP performance and dividends - Management clarified that the decrease in dividends from SLPs was timing-related and not indicative of any underlying issues, as the SLPs continue to perform well [65] Question: Cash pay assets versus PIK - Management plans to focus on reducing chunky PIK exposures while still offering PIK options on predominantly cash pay loans, aiming for a balanced portfolio [69][70] Question: Direct lending market spreads - Management noted that current spreads are indicative of a tighter market but expect normalization as deal flow increases post-election and into 2025 [72][73] Question: Stock buyback and valuation - Management is open to utilizing the stock buyback program to defend stock value, particularly as the stock trades below historical NAV levels [78][79]

Group 1 - New Mountain Finance (NMFC) reported quarterly earnings of $0.34 per share, missing the Zacks Consensus Estimate of $0.35 per share, and down from $0.40 per share a year ago, representing an earnings surprise of -2.86% [1] - The company posted revenues of $95.33 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.71%, compared to year-ago revenues of $94.35 million [2] - New Mountain shares have underperformed the market, losing about 10.5% since the beginning of the year, while the S&P 500 gained 22.3% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.34 on revenues of $93.27 million, and for the current fiscal year, it is $1.41 on revenues of $372.07 million [7] - The Zacks Industry Rank for Financial - SBIC & Commercial Industry is currently in the bottom 20% of over 250 Zacks industries, indicating potential underperformance compared to the top 50% of ranked industries [8]

Financial Performance - As of September 30, 2024, the net asset value was approximately $1,361.3 million, with a portfolio fair value of approximately $3,265.3 million across 127 portfolio companies[252]. - Total investment income for the three months ended September 30, 2024, was approximately $95.3 million, a slight increase of 1% compared to $94.3 million for the same period in 2023[276]. - Total investment income for the nine months ended September 30, 2024, was approximately $280.5 million, a slight decrease from $281.8 million in the same period of 2023[281]. - The company reported net realized losses of $531,000 for the three months ended September 30, 2024, compared to net realized gains of $4.7 million for the same period in 2023[279]. - Net realized losses on investments for the nine months ended September 30, 2024, were $43.5 million, compared to net realized gains of $7.9 million in the same period of 2023[283]. - The company experienced a net loss of approximately $11.5 million for the three months ended September 30, 2024, compared to a net loss of approximately $12.0 million for the same period in 2023[279]. - The net change in unrealized appreciation of investments was $21.8 million for the nine months ended September 30, 2024, contrasting with a depreciation of $18.3 million in 2023[283]. - Total operating expenses increased by approximately $6.3 million to $168.7 million for the nine months ended September 30, 2024, compared to $162.4 million in 2023[282]. Investment Strategy and Portfolio - The company focuses on providing direct lending solutions to U.S. upper middle market companies, particularly in defensive growth sectors[252]. - The investment strategy includes significant investments in unitranche loans, which combine senior and subordinated debt[252]. - As of September 30, 2024, SLP III had total investments with an aggregate fair value of approximately $680.7 million, an increase from $636.6 million as of December 31, 2023, representing a growth of 6.5%[261]. - SLP IV had total investments with an aggregate fair value of approximately $466.3 million as of September 30, 2024, slightly down from $467.9 million as of December 31, 2023[264]. - The top five industry concentrations as of September 30, 2024, were software, business services, healthcare, investment funds, and consumer services[252]. - New investments totaled $777.2 million in 67 portfolio companies for the nine months ended September 30, 2024, compared to $140.5 million in 32 portfolio companies for the same period in 2023[275]. Debt and Financing - SLP III's debt outstanding under its credit facility increased to $473.2 million as of September 30, 2024, compared to $453.2 million as of December 31, 2023, reflecting a rise of 4.2%[261]. - The debt outstanding under SLP IV's credit facility increased to $341.9 million as of September 30, 2024, compared to $306.5 million as of December 31, 2023, marking an increase of 11.5%[264]. - Interest and other financing expenses increased to $37.66 million for the three months ended September 30, 2024, compared to $31.43 million for the same period in 2023[278]. - Interest and other financing expenses rose by approximately $7.9 million to $101.8 million for the nine months ended September 30, 2024, due to higher borrowing costs[282]. Distributions and Shareholder Returns - A fourth quarter 2024 distribution of $0.32 per share and a supplemental distribution of $0.01 per share were declared, payable on December 31, 2024[254]. - Distributions declared and paid to stockholders for the nine months ended September 30, 2024, totaled approximately $111.6 million[293]. - The company intends to distribute approximately all of its net investment income on a quarterly basis and substantially all of its taxable income on an annual basis[293]. Regulatory and Compliance - The company is regulated as a business development company (BDC) under the Investment Company Act of 1940[248]. - The company has established several wholly-owned subsidiaries to facilitate compliance with regulatory requirements and manage investments[250]. - The company has adopted a formal code of ethics governing the conduct of its officers and directors[296]. - As of September 30, 2024, the company evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective in ensuring timely and accurate reporting[303]. - No changes in internal controls over financial reporting were identified during the quarter ended September 30, 2024, that materially affected the internal control[304]. Market Conditions and Economic Factors - The Federal Reserve cut its benchmark rate in Q3 2024 for the first time since March 2020, indicating possible future rate cuts[299]. - The company’s net investment income is affected by interest rate fluctuations, with potential changes in interest income estimated based on varying interest rate scenarios[299]. - The company reported a change in interest income net of interest expense, with a decrease of 14.16% for a -200 basis points change in interest rates[300]. Cash and Liquidity - As of September 30, 2024, the company had cash and cash equivalents of approximately $61.9 million, down from $70.1 million as of December 31, 2023[287]. - Outstanding commitments to fund investments totaled $277.4 million as of September 30, 2024, compared to $156.8 million as of December 31, 2023[288]. - Total contractual obligations amounted to $2,015.5 million as of September 30, 2024, with $106.7 million due in less than one year[290]. - The company raised approximately $1,034.6 million in net proceeds from additional offerings of common stock since its IPO through September 30, 2024[286]. - The company sold 5,292,556 shares of common stock under the Distribution Agreement for total net proceeds of approximately $67.7 million during the nine months ended September 30, 2024[287]. Investment Valuation - The fair value of collateralized agreements to resell was $13.5 million as of September 30, 2024, down from $16.5 million on December 31, 2023[268]. - The fair value of the SPP Agreement was $6.5 million as of September 30, 2024, compared to $8.0 million on December 31, 2023[269]. - The total square footage of properties in NMNLC's portfolio was 1,058,000 square feet, with a fair value of $124,880,000 as of September 30, 2024[267]. - The aggregate cost basis of the investment in National HME was $7.9 million with a fair value of $3.0 million as of September 30, 2024[273]. - The investment in American Achievement Corporation had an aggregate cost basis of $31.4 million and a fair value of $18.0 million as of September 30, 2024[273]. - The investment in UniTek had a total cost basis of $54.2 million (junior and senior preferred shares combined) with a fair value of approximately $2.4 million as of September 30, 2024[273].

New Mountain Finance Corporation Announces Financial Results for the Quarter Ended September 30, 2024 1 Reports Adjusted Net Investment Income of $0.34 per Share Declares a Regular Fourth Quarter Distribution of $0.32 per Share and a Supplemental Distribution of $0.01 per Share NEW YORK--(BUSINESS WIRE) — October 30, 2024 -- New Mountain Finance Corporation (NASDAQ: NMFC) ("New Mountain," "New Mountain Finance" or the "Company") today announced its financial results for the quarter ended September 30, 2024. ...

Henrik Sorensen New Mountain Finance (NASDAQ:NMFC) is a well-managed business development company that covered its $0.32 per share base dividend with adjusted net investment income in the second quarter. In addition, the business development company paid a $0.02 per share supplemental dividend, which translated into a 94% total dividend pay-out ratio. Furthermore, New Mountain Finance announced that it would lower its base management fee from 1.40% to 1.25% which should yield a higher margin of safety movin ...

New Mountain Finance Corporation (NASDAQ:NMFC) Q2 2024 Earnings Conference Call August 1, 2024 10:00 AM ET Company Participants John Kline - President, CEO & Director Kris Corbett - CFO & Treasurer Steven Klinsky - Chairman Laura Holson - COO Conference Call Participants Finian O'Shea - Wells Fargo Bryce Rowe - B. Riley Securities Robert Dodd - Raymond James Paul Johnston - KBW Operator Good day, and welcome to the New Mountain Finance Corporation Second Quarter 2024 Earnings Call. [Operator Instructions]. ...