New Mountain Finance Corporation Announces Second Quarter Financial Results

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/Equity	1.22x
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.

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 million^2. 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 Rating		Cost			Percent			Fair Value			Percent
Red		$	54.6		1.7	%		$	9.0		0.3	%
Orange			86.5		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 Composition		June 30, 2023			Percent of Total
First Lien			1,703,788		53.4	%
Second Lien1			579,833		18.1	%
Subordinated			84,683		2.6	%
Preferred Equity			195,279		6.1	%
Investment Fund			252,400		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.

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: [phone]
• International: [phone]
• 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: [phone]
• International: [phone]
• 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.

New Mountain Finance Corporation Consolidated Statements of Assets and Liabilities (in thousands, except shares and per share data) (unaudited)
	June 30, 2023				December 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 equivalents		45,930				71,190
Interest and dividend receivable		40,528				36,154
Receivable from unsettled securities sold		683				—
Other assets		13,875				9,797
Total assets	$	3,296,981			$	3,354,927
Liabilities
Borrowings
Holdings Credit Facility	$	574,263			$	618,963
Unsecured Notes		391,500				531,500
Convertible Notes		377,104				316,853
SBA-guaranteed debentures		300,000				300,000
DB Credit Facility		186,400				186,400
NMFC Credit Facility		91,290				40,359
NMNLC Credit Facility II		2,926				3,785
Deferred financing costs (net of accumulated amortization of $50,855 and $47,531, respectively)		(15,183	)			(17,199	)
Net borrowings		1,908,300				1,980,661
Interest payable		18,797				19,627
Management fee payable		10,481				10,524
Incentive fee payable		9,982				6,296
Payable for unsettled securities purchased		4,897				—
Deferred tax liability		3,080				8,487
Payable to affiliates		93				78
Other liabilities		3,389				3,063
Total liabilities		1,959,019				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 par		1,305,798				1,305,945
Accumulated undistributed earnings		19,294				7,519
Total net assets of New Mountain Finance Corporation	$	1,326,101			$	1,314,473
Non-controlling interest in New Mountain Net Lease Corporation		11,861				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 outstanding		100,937,026				100,937,026
Net asset value per share of New Mountain Finance Corporation	$	13.14			$	13.02

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, 2023				June 30, 2022				June 30, 2023				June 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 income		3,767				2,934				7,711				6,236
Dividend income		47				87				94				135
Non-cash dividend income		4,305				3,189				8,471				6,274
Other income		686				4,287				2,604				5,918
From non-controlled/affiliated investments:
Interest income (excluding PIK interest income)		683				263				692				518
PIK interest income		414				258				1,105				509
Non-cash dividend income		1,139				1,012				2,244				1,994
Other income		63				62				126				125
From controlled investments:
Interest income (excluding PIK interest income)		1,243				1,715				2,687				3,371
PIK interest income		3,686				4,085				8,074				9,055
Dividend income		12,143				10,671				23,138				22,316
Non-cash dividend income		1,292				1,063				2,522				2,075
Other income		1,375				2,395				2,570				5,014
Total investment income		95,492				73,110				187,445				142,073
Expenses
Interest and other financing expenses		31,700				20,672				62,496				39,309
Management fee		11,577				11,770				23,215				23,323
Incentive fee		9,982				7,926				19,579				15,403
Administrative expenses		953				932				2,001				2,141
Professional fees		1,003				817				1,968				1,754
Other general and administrative expenses		513				518				1,001				995
Total expenses		55,728				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 expenses		54,632				41,493				108,101				80,453
Net investment income before income taxes		40,860				31,617				79,344				61,620
Income tax expense		932				(87	)			1,028				8
Net investment income		39,928				31,704				78,316				61,612
Net realized gains (losses):
Non-controlled/non-affiliated investments		(7,314	)			(594	)			(8,622	)			(664	)
Controlled investments		9,880				17,112				11,853				36,354
Foreign currency		1				40				13				385
Net change in unrealized (depreciation) appreciation :
Non-controlled/non-affiliated investments		2,174				(20,507	)			(755	)			(25,031	)
Non-controlled/affiliated investments		1				2,999				(15	)			13,758
Controlled investments		(9,488	)			(15,266	)			(691	)			(31,434	)
Securities purchased under collateralized agreements to resell		(39	)			—				(39	)			(2,021	)
Foreign currency		29				(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 operations		35,078				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 - basic		100,937,026				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 - diluted		127,016,910				113,853,773				125,313,634				112,768,447
Distributions declared and paid per share	$	0.35			$	0.30			$	0.67			$	0.60

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.

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The New Mountain Finance Stock at the time of publication of the news with a raise of +0,61 % to 11,64USD on Lang & Schwarz stock exchange (02. August 2023, 22:19 Uhr).