New Mountain Finance Corporation Announces Second Quarter Financial Results

Reports Net Investment Income of $0.39 per share and stable Net Asset Value

Declares a Regular Third Quarter Distribution of $0.32 per Share and a Supplemental Distribution of $0.04 per Share

NEW YORK--(BUSINESS WIRE) — August 2, 2023 -- 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, 2023. The Company reported second quarter net investment income ("NII") of $0.39 per weighted average share, a 26% increase in year-over-year NII, and net asset value (“NAV”) per share of $13.14, in line with prior quarter NAV of $13.14. The Company also announced that its board of directors declared a third quarter regular distribution of $0.32 per share and a supplemental distribution of $0.04, which will be payable on September 29, 2023 to holders of record as of September 15, 2023.
Selected Financial Highlights
(in thousands, except per share data)June 30, 2023
Investment Portfolio1
$3,195,965 
Total Assets$3,296,981 
Total Statutory Debt2
$1,623,483 
NAV3
$1,326,101 
NAV per Share$13.14 
Net Investment Income per Weighted Average Share$0.39 
Regular Second Quarter Distribution Paid per Share$0.32 
Supplemental Distribution Paid per Share$0.03 
Statutory Debt/Equity1.22x
Statutory Debt/Equity (net of available cash)1.19x
Management Comments on Second Quarter Performance
“New Mountain Finance Corporation delivered strong second quarter operating results, highlighted by net investment income of $0.39 per share and resilient credit performance,” said Steven B. Klinsky, NMFC Chairman. “New Mountain continues to benefit from our disciplined, defensive growth strategy that is focused on end markets that perform well in all economic cycles.”
“We are pleased to report stable book value in Q2, which was supported by our high-quality portfolio of loans to issuers in defensive growth industries,” said John R. Kline, President and Chief Executive Officer. “New Mountain is positioned to deliver enhanced risk-adjusted returns and continue our track record of returning capital to our fellow shareholders through our regular and supplemental dividend programs.”
Portfolio and Investment Activity1
As of June 30, 2023, the Company’s NAV was $1,326.1 million and its portfolio had a fair value of $3,196.0 million in 114 portfolio companies, with a weighted average YTM at Cost4 of approximately 11.6%. For the three months ended June 30, 2023, the Company generated $29.5 million of originations5, $119.9 million of asset sales and cash repayments5 of $3.9 million.
Consolidated Results of Operations6
The Company’s total investment income for the three months ended June 30, 2023 and 2022 was $95.2 million and $72.8 million, respectively. The Company’s total net expenses, after income tax expense, for the three months ended June 30, 2023 and 2022 were $55.5 million and $41.4 million, respectively. The Company's NII for the three months ended June 30, 2023 and 2022 was $39.7 million and $31.4 million, respectively. The Company's NII per share for the three months ended June 30, 2023 and 2022 was $0.39 and $0.31, respectively, which represents a 26% increase year-over-year. For the three months ended June 30, 2023 and 2022, the Company recorded $4.8 million and $15.4 million, respectively, of net realized and unrealized losses.
1


Liquidity and Capital Resources
As of June 30, 2023, the Company had cash and cash equivalents of $45.9 million and total statutory debt outstanding of $1,623.5 million2. The Company's statutory debt to equity was 1.22x as of June 30, 2023. Additionally, the Company had $300.0 million of SBA-guaranteed debentures outstanding as of June 30, 2023.
Portfolio and Asset Quality1
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 Red, Orange, Yellow and Green, with Red reflecting an investment performing materially below expectations and Green reflecting an investment that is in-line with or above expectations.
The following table shows the Risk Rating of the Company’s portfolio companies as of June 30, 2023:
(in millions)
As of June 30, 2023
Risk RatingCostPercentFair ValuePercent
Red$54.6 1.7 %$9.0 0.3 %
Orange86.5 2.7 %51.1 1.6 %
Yellow1
182.7 5.6 %142.8 4.5 %
Green7
2,924.4 90.0 %2,993.1 93.6 %
 Total$3,248.2 100.0 %$3,196.0 100.0 %

As of June 30, 2023, all investments in the Company’s portfolio had a Green Risk Rating, with the exception of nine portfolio companies that had a Yellow Risk Rating, five portfolio companies that had an Orange Risk Rating and three portfolio companies that had a Red Risk Rating.
The following table shows the Company’s investment portfolio composition as of June 30, 2023:
(in thousands, except per share data)
Investment Portfolio CompositionJune 30, 2023Percent of Total
First Lien1,703,788 53.4 %
Second Lien1
579,833 18.1 %
Subordinated84,683 2.6 %
Preferred Equity195,279 6.1 %
Investment Fund252,400 7.9 %
Common Equity and Other7
379,982 11.9 %
Total$3,195,965 100.0 %
Recent Developments
On July 27, 2023, the Company’s board of directors declared a regular third quarter 2023 distribution of $0.32 per share and a supplemental distribution related to Q2 earnings of $0.04 per share, each payable on September 29, 2023 to holders of record as of September 15, 2023.



2


Second Quarter 2023 Conference Call
New Mountain Finance Corporation will host an earnings conference call and webcast at 12:00 pm Eastern Time on Thursday, August 3, 2023. 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 3, 2023. The full webcast replay will be available through August 3, 2024. 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: 3039293
For additional details related to the quarter ended June 30, 2023, 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)Includes collateral for securities purchased under collateralized agreements to resell.
(2)Excludes the Company’s United States Small Business Administration (“SBA”) guaranteed debentures.
(3)Excludes non-controlling interest in New Mountain Net Lease Corporation (“NMNLC”).
(4)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 London Interbank Offered Rate (“LIBOR”), 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.
(5)Originations exclude payment-in-kind (“PIK”); originations, repayments, and sales excludes revolvers, unfunded commitments, bridges, return of capital, and realized gains / losses.
(6)Excludes net income related to non-controlling interests in NMNLC. For the quarter ended June 30, 2023 and 2022, $0.2 million and $0.3 million, respectively, of dividend income is excluded from investment income, $0.0 million and $0.0 million, respectively, of net direct and indirect professional, administrative, other general and administrative is excluded from net expenses, and $0.0 million and $(1.1) million, respectively, of realized gains and unrealized losses is excluded from net realized and unrealized losses.
(7)Includes investment held in NMNLC.

3


New Mountain Finance Corporation
Consolidated Statements of Assets and Liabilities
(in thousands, except shares and per share data)
(unaudited)
 June 30, 2023December 31, 2022
Assets  
Investments at fair value  
Non-controlled/non-affiliated investments (cost of $2,486,589 and $2,523,522, respectively)
$2,364,179 $2,400,425 
Non-controlled/affiliated investments (cost of $104,459 and $85,971, respectively)
149,260 130,787 
Controlled investments (cost of $627,156 and $650,474, respectively)
666,026 690,035 
Total investments at fair value (cost of $3,218,204 and $3,259,967, respectively)
3,179,465 3,221,247 
Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively)
16,500 16,539 
Cash and cash equivalents45,930 71,190 
Interest and dividend receivable40,528 36,154 
Receivable from unsettled securities sold683 — 
Other assets13,875 9,797 
Total assets$3,296,981 $3,354,927 
Liabilities  
Borrowings
     Holdings Credit Facility$574,263 $618,963 
     Unsecured Notes391,500 531,500 
     Convertible Notes377,104 316,853 
     SBA-guaranteed debentures300,000 300,000 
     DB Credit Facility186,400 186,400 
     NMFC Credit Facility91,290 40,359 
        NMNLC Credit Facility II2,926 3,785 
     Deferred financing costs (net of accumulated amortization of $50,855 and $47,531, respectively)
(15,183)(17,199)
Net borrowings1,908,300 1,980,661 
Interest payable18,797 19,627 
Management fee payable10,481 10,524 
Incentive fee payable9,982 6,296 
Payable for unsettled securities purchased4,897 — 
Deferred tax liability3,080 8,487 
Payable to affiliates93 78 
Other liabilities3,389 3,063 
Total liabilities1,959,019 2,028,736 
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 100,937,026 and 100,937,026 shares issued and outstanding, respectively
1,009 1,009 
Paid in capital in excess of par1,305,798 1,305,945 
Accumulated undistributed earnings19,294 7,519 
Total net assets of New Mountain Finance Corporation$1,326,101 $1,314,473 
Non-controlling interest in New Mountain Net Lease Corporation11,861 11,718 
Total net assets$1,337,962 $1,326,191 
Total liabilities and net assets$3,296,981 $3,354,927 
Number of shares outstanding100,937,026 100,937,026 
Net asset value per share of New Mountain Finance Corporation$13.14 $13.02 

4


New Mountain Finance Corporation
Consolidated Statements of Operations
(in thousands, except shares and per share data)
(unaudited)
Three Months EndedSix Months Ended
June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Investment income
From non-controlled/non-affiliated investments:
Interest income (excluding Payment-in-kind ("PIK") interest income)$64,649 $41,089 $125,407 $78,533 
PIK interest income3,767 2,934 7,711 6,236 
Dividend income47 87 94 135 
Non-cash dividend income4,305 3,189 8,471 6,274 
Other income686 4,287 2,604 5,918 
From non-controlled/affiliated investments:
Interest income (excluding PIK interest income)683 263 692 518 
PIK interest income414 258 1,105 509 
Non-cash dividend income1,139 1,012 2,244 1,994 
Other income63 62 126 125 
From controlled investments:
Interest income (excluding PIK interest income)1,243 1,715 2,687 3,371 
PIK interest income3,686 4,085 8,074 9,055 
Dividend income12,143 10,671 23,138 22,316 
Non-cash dividend income1,292 1,063 2,522 2,075 
Other income1,375 2,395 2,570 5,014 
Total investment income95,492 73,110 187,445 142,073 
Expenses
Interest and other financing expenses31,700 20,672 62,496 39,309 
Management fee11,577 11,770 23,215 23,323 
Incentive fee9,982 7,926 19,579 15,403 
Administrative expenses953 932 2,001 2,141 
Professional fees1,003 817 1,968 1,754 
Other general and administrative expenses513 518 1,001 995 
Total expenses55,728 42,635 110,260 82,925 
Less: management fee waived(1,096)(1,142)(2,159)(2,234)
Less: expenses waived and reimbursed— — — (238)
Net expenses54,632 41,493 108,101 80,453 
Net investment income before income taxes40,860 31,617 79,344 61,620 
Income tax expense932 (87)1,028 8 
Net investment income39,928 31,704 78,316 61,612 
Net realized gains (losses):
Non-controlled/non-affiliated investments(7,314)(594)(8,622)(664)
Controlled investments9,880 17,112 11,853 36,354 
Foreign currency1 40 13 385 
Net change in unrealized (depreciation) appreciation :
Non-controlled/non-affiliated investments2,174 (20,507)(755)(25,031)
Non-controlled/affiliated investments1 2,999 (15)13,758 
5


Controlled investments(9,488)(15,266)(691)(31,434)
Securities purchased under collateralized agreements to resell(39)— (39)(2,021)
Foreign currency29 (193)55 (615)
Provision for taxes (94)(155)(225)(157)
Net realized and unrealized (losses) gains(4,850)(16,564)1,574 (9,425)
Net increase in net assets resulting from operations35,078 15,140 79,890 52,187 
Less: Net (increase) decrease in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation(248)814 (487)(41)
Net increase in net assets resulting from operations related to New Mountain Finance Corporation$34,830 $15,954 $79,403 $52,146 
Basic earnings per share$0.35 $0.16 $0.79 $0.52 
Weighted average shares of common stock outstanding - basic100,937,026 100,596,188 100,937,026 99,510,862 
Diluted earnings per share$0.32 $0.16 $0.71 $0.50 
Weighted average shares of common stock outstanding - diluted127,016,910 113,853,773 125,313,634 112,768,447 
Distributions declared and paid per share$0.35 $0.30 $0.67 $0.60 

6


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 over $40 billion of assets under management as of June 30, 2023.
ABOUT NEW MOUNTAIN CAPITAL
New Mountain Capital 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 over $40 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.
CONTACT
New Mountain Finance Corporation
Investor Relations
Laura C. Holson, Authorized Representative
NMFCIR@newmountaincapital.com
(212) 220-3505

7