New Mountain Finance Corporation Announces Third Quarter Financial Results

Reports Net Investment Income of $0.40 per share

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

NEW YORK--(BUSINESS WIRE) — November 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 September 30, 2023. The Company reported third quarter net investment income ("NII") of $0.40 per weighted average share, representing a 25% year-over-year increase, and net asset value (“NAV”) per share of $13.06. The Company also announced that its board of directors declared a fourth quarter regular distribution of $0.32 per share and a supplemental distribution of $0.04, which will be payable on December 29, 2023 to holders of record as of December 15, 2023.
Selected Financial Highlights
(in thousands, except per share data)September 30, 2023
Investment Portfolio1
$3,128,403 
Total Assets$3,279,586 
Total Statutory Debt2
$1,602,672 
NAV3
$1,325,018 
NAV per Share$13.06 
Net Investment Income per Weighted Average Share$0.40 
Regular Third Quarter Distribution Paid per Share
$0.32 
Supplemental Distribution Paid per Share$0.04 
Statutory Debt/Equity1.21x
Statutory Debt/Equity (net of available cash)1.16x
Management Comments on Third Quarter Performance
“Our third quarter results reflect another successful quarter for 2023 with year-over-year net investment income per share growth of approximately 25%. We believe our credit performance remains strong even in a more difficult market environment,” 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.”
John R. Kline, CEO, commented: “NMFC reported another strong quarter, outearning its dividend, and demonstrating New Mountain’s ability to deliver solid risk-adjusted returns amid an uncertain market environment. We remain confident in New Mountain’s defensive growth portfolio that offers an enhanced margin of safety, while distributing capital to shareholders through our regular and supplemental dividend programs.”
Portfolio and Investment Activity1
As of September 30, 2023, the Company’s NAV was $1,325.0 million and its portfolio had a fair value of $3,128.4 million in 110 portfolio companies, with a weighted average YTM at Cost4 of approximately 11.8%. For the three months ended September 30, 2023, the Company generated $15.6 million of originations5 and cash repayments5 of $75.4 million.
Consolidated Results of Operations6
The Company’s total investment income for the three months ended September 30, 2023 and 2022 was $94.1 million and $78.1 million, respectively. The Company’s total net expenses, after income tax expense, for the three months ended September 30, 2023 and 2022 were $53.7 million and $45.6 million, respectively. The Company's NII for the three months ended September 30, 2023 and 2022 was $40.4 million and $32.5 million, respectively. The Company's NII per share for the three months ended
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September 30, 2023 and 2022 was $0.40 and $0.32, respectively. For the three months ended September 30, 2023 and 2022, the Company recorded $11.7 million and $24.8 million, respectively, of net realized and unrealized losses.
Liquidity and Capital Resources
As of September 30, 2023, the Company had cash and cash equivalents of $83.3 million and total statutory debt outstanding of $1,602.7 million2. The Company's statutory debt to equity was 1.21x as of September 30, 2023. Additionally, the Company had $300.0 million of SBA-guaranteed debentures outstanding as of September 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 New Mountain’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 September 30, 2023:
(in millions)
As of September 30, 2023
Risk RatingCostPercentFair ValuePercent
Red$54.6 1.7 %$5.5 0.2 %
Orange101.2 3.2 %60.1 1.9 %
Yellow1
179.7 5.6 %144.3 4.6 %
Green7
2,863.2 89.5 %2,918.5 93.3 %
 Total$3,198.7 100.0 %$3,128.4 100.0 %

As of September 30, 2023, all investments in the Company’s portfolio had a Green Risk Rating, with the exception of eight portfolio companies that had a Yellow Risk Rating, six 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 September 30, 2023:
(in thousands)
Investment Portfolio CompositionSeptember 30, 2023Percent of Total
First Lien$1,691,480 54.0 %
Second Lien1
546,113 17.5 %
Subordinated86,238 2.8 %
Preferred Equity196,308 6.2 %
Investment Fund252,400 8.1 %
Common Equity and Other7
355,864 11.4 %
Total$3,128,403 100.0 %
Recent Developments
On October 24, 2023, the Company’s board of directors declared a regular fourth quarter 2023 distribution of $0.32 per share and a supplemental distribution related to third quarter earnings of $0.04 per share, each payable on December 29, 2023 to holders of record as of December 15, 2023.
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On October 26, 2023, the Company entered into the Eighth Amendment to Loan and Security Agreement (the "Eighth Amendment"), which amended the Holdings Credit Facility, to, among other things, extend the Facility Maturity Date, as defined in the Loan and Security Agreement, from April 20, 2026 to October 26, 2028.
On October 31, 2023, the Company entered into Amendment No. 8 to the Loan Financing and Servicing Agreement, which amended the DB Credit Facility to, among other things, extend the Maturity Date, as defined in the LFSA, from March 25, 2026 to March 25, 2027 and reduce the applicable interest rate.
On October 31, 2023, the Company entered into the Second Amended and Restated Uncommitted Revolving Loan Agreement, which amended the Unsecured Management Company Revolver to, among other things, extend the Maturity Date, as defined in the Agreement, from December 31, 2024 to December 31, 2027 and increase the maximum amount available from $50.0 million to $100.0 million.

Third Quarter 2023 Conference Call
New Mountain Finance Corporation will host an earnings conference call and webcast at 11:00 am Eastern Time on Friday, November 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 February 3, 2024. The full webcast replay will be available through November 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: 1426978
For additional details related to the quarter ended September 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 September 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 $(0.2) million and $(0.5) million, respectively, of realized gains and unrealized losses is excluded from net realized and unrealized losses.
(7)Includes investment held in NMNLC.

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New Mountain Finance Corporation
Consolidated Statements of Assets and Liabilities
(in thousands, except shares and per share data)
(unaudited)
 September 30, 2023December 31, 2022
Assets  
Investments at fair value  
Non-controlled/non-affiliated investments (cost of $2,429,421 and $2,523,522, respectively)
$2,318,232 $2,400,425 
Non-controlled/affiliated investments (cost of $105,889 and $85,971, respectively)
135,875 130,787 
Controlled investments (cost of $633,409 and $650,474, respectively)
657,796 690,035 
Total investments at fair value (cost of $3,168,719 and $3,259,967, respectively)
3,111,903 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 equivalents83,265 71,190 
Interest and dividend receivable45,602 36,154 
Other assets22,316 9,797 
Total assets$3,279,586 $3,354,927 
Liabilities  
Borrowings
     Holdings Credit Facility$569,563 $618,963 
     Unsecured Notes391,500 531,500 
     SBA-guaranteed debentures300,000 300,000 
     Convertible Notes260,236 316,853 
     NMFC Credit Facility192,115 40,359 
     DB Credit Facility186,400 186,400 
        NMNLC Credit Facility II2,858 3,785 
     Deferred financing costs (net of accumulated amortization of $52,507 and $47,531, respectively)
(13,515)(17,199)
Net borrowings1,889,157 1,980,661 
Interest payable23,202 19,627 
Management fee payable10,321 10,524 
Incentive fee payable10,169 6,296 
Payable for unsettled securities purchased4,678 — 
Deferred tax liability2,790 8,487 
Payable to affiliates256 78 
Other liabilities2,319 3,063 
Total liabilities1,942,892 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 101,439,649 and 100,937,026 shares issued and outstanding, respectively
1,014 1,009 
Paid in capital in excess of par1,312,352 1,305,945 
Accumulated undistributed earnings11,652 7,519 
Total net assets of New Mountain Finance Corporation$1,325,018 $1,314,473 
Non-controlling interest in New Mountain Net Lease Corporation11,676 11,718 
Total net assets$1,336,694 $1,326,191 
Total liabilities and net assets$3,279,586 $3,354,927 
Number of shares outstanding101,439,649 100,937,026 
Net asset value per share of New Mountain Finance Corporation$13.06 $13.02 

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New Mountain Finance Corporation
Consolidated Statements of Operations
(in thousands, except shares and per share data)
(unaudited)
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Investment income
From non-controlled/non-affiliated investments:
Interest income (excluding Payment-in-kind ("PIK") interest income)$63,892 $49,401 $189,299 $127,934 
PIK interest income4,061 2,688 11,772 8,924 
Dividend income49 9 143 144 
Non-cash dividend income4,458 3,837 12,929 10,111 
Other income791 1,517 3,395 7,435 
From non-controlled/affiliated investments:
Interest income (excluding PIK interest income)884 270 1,576 788 
PIK interest income265 264 1,370 773 
Non-cash dividend income1,173 1,042 3,417 3,036 
Other income63 62 189 187 
From controlled investments:
Interest income (excluding PIK interest income)1,351 2,914 4,038 6,285 
PIK interest income3,591 3,241 11,665 12,296 
Dividend income11,041 9,867 34,179 32,183 
Non-cash dividend income1,357 1,116 3,879 3,191 
Other income1,373 2,221 3,943 7,235 
Total investment income94,349 78,449 281,794 220,522 
Expenses
Interest and other financing expenses31,425 24,648 93,921 63,957 
Management fee11,334 11,717 34,549 35,040 
Incentive fee10,169 8,202 29,748 23,605 
Administrative expenses995 881 2,996 3,022 
Professional fees850 775 2,818 2,529 
Other general and administrative expenses542 545 1,543 1,540 
Total expenses55,315 46,768 165,575 129,693 
Less: management fee waived(1,013)(1,115)(3,172)(3,349)
Less: expenses waived and reimbursed— — — (238)
Net expenses54,302 45,653 162,403 126,106 
Net investment income before income taxes40,047 32,796 119,391 94,416 
Income tax (benefit) expense(627)(13)401 (5)
Net investment income40,674 32,809 118,990 94,421 
Net realized gains (losses):
Non-controlled/non-affiliated investments113 (239)(8,509)(903)
Controlled investments4,560 17 16,413 36,371 
Foreign currency— (166)13 219 
Net change in unrealized (depreciation) appreciation:
Non-controlled/non-affiliated investments12,419 (31,944)11,664 (56,975)
Non-controlled/affiliated investments(14,815)(13,381)(14,830)377 
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Controlled investments(14,483)20,398 (15,174)(11,036)
Securities purchased under collateralized agreements to resell— — (39)(2,021)
Foreign currency(60)(10)(5)(625)
Benefit (provision) for taxes 291 30 66 (127)
Net realized and unrealized losses(11,975)(25,295)(10,401)(34,720)
Net increase in net assets resulting from operations28,699 7,514 108,589 59,701 
Less: Net (increase) decrease in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation(3)191 (490)150 
Net increase in net assets resulting from operations related to New Mountain Finance Corporation$28,696 $7,705 $108,099 $59,851 
Basic earnings per share$0.28 $0.08 $1.07 $0.60 
Weighted average shares of common stock outstanding - basic100,954,898 100,830,075 100,943,049 99,955,432 
Diluted earnings per share$0.27 $0.08 $0.98 $0.59 
Weighted average shares of common stock outstanding - diluted123,183,269 114,087,660 124,595,709 113,213,017 
Distributions declared and paid per share$0.36 $0.30 $1.03 $0.90 

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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 $45 billion of assets under management as of September 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 $45 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

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