Financial News

New Mountain Finance Corporation Announces Financial Results for the Quarter Ended September 30, 2024

Reports Adjusted Net Investment Income1 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 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.

Third Quarter Highlights2

  • Adjusted net investment income1 of $36.7 million, or $0.34 per weighted average share
  • Net asset value of $12.62 per share compared to $12.74 per share as of June 30, 2024
  • Continued strong credit performance with approximately 97.3% of the portfolio rated green on our internal risk rating system, up from 97.0% at June 30, 2024
  • Generated $146.2 million of gross originations3, partially offset by $100.6 million of repayments3 and $1.5 million of asset sales
  • Declared a regular fourth quarter 2024 distribution of $0.32 per share and a supplemental distribution related to third quarter earnings of $0.01 per share, each payable on December 31, 2024 to holders of record as of December 17, 2024

($ in millions, except per share data)

 

Q3 2024

 

Q3 2023

Net Investment Income per Weighted Average Share

 

$

0.33

 

 

$

0.40

 

Non-recurring Adjustments1

 

 

0.01

 

 

 

 

Net Adjusted Investment Income1 per Weighted Average Share

 

$

0.34

 

 

$

0.40

 

Regular & Supplemental Dividends Paid per Share in Quarter

 

$

0.34

 

 

$

0.36

 

Annualized Dividend Yield5

 

 

11.9

%

 

 

11.7

%

 

 

September 30, 2024

 

June 30, 2024

Investment Portfolio6

 

$

3,278.8

 

$

3,227.3

NAV per Share

 

$

12.62

 

$

12.74

Statutory Debt/Equity4

 

1.26x

 

1.21x

Statutory Debt/Equity (Net of Available Cash)4

 

1.23x

 

1.14x

Management Comments on Third Quarter Performance

“Our third quarter results reflect another good quarter for NMFC,” 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. Additionally, our commitment to the 1.25% base management fee, along with the extension of our dividend protection program, demonstrates our focus to providing value and stability for our shareholders."

John R. Kline, CEO, commented: “NMFC continues perform well with adjusted earnings per share of $0.34, in line with our implied guidance. The underlying portfolio remains strong with over 97% of the portfolio rated green on our risk rating scale. Additionally, we continue to make substantial improvements to our liabilities. During the quarter, we upsized and extended our NMFC Credit Facility at a lower cost, reduced the spread on our Holdings Credit Facility and completed an attractively priced unsecured note issuance."

Portfolio and Investment Activity6

As of September 30, 2024, the Company’s NAV2 was $1,361.3 million and its portfolio had a fair value of $3,278.8 million of investments in 128 portfolio companies, with a weighted average YTM at Cost7 of approximately 10.5%. For the three months ended September 30, 2024, the Company generated $146.2 million of originations3, $100.6 million of cash repayments3 and realized $1.5 million of asset sales.

Portfolio and Asset Quality

NMFC’s mandate is to primarily target businesses in the middle market that, consistent with New Mountain’s private equity platform, are high quality, defensive growth companies in industries that are well-researched by New Mountain. The Company’s focus is on defensive growth businesses that generally exhibit the following characteristics: (i) acyclicality, (ii) sustainable secular growth drivers, (iii) niche market dominance and high barriers to competitive entry, (iv) recurring revenue and strong free cash flow, (v) flexible cost structures and (vi) seasoned management teams.

Portfolio Industry Composition based on Fair Value9

Software

 

Business Services

 

ERP

8.1 %

 

 

Engineering & Consulting Services

5.4 %

 

IT Infrastructure & Security

7.1 %

 

 

Real Estate Services

4.6 %

 

Human Capital Management

5.3 %

 

 

Insurance & Benefits Services

3.6 %

 

Ecommerce & Logistics

4.0 %

 

 

Misc Services

3.5 %

 

Governance, Risk & Compliance

3.1 %

 

 

Digital Transformation

2.3 %

 

Finance & Accounting

3.0 %

 

 

Utility Services

0.9 %

 

Integrated Payments

1.6 %

 

 

Data & Information Services

0.2 %

Total Software

32.2 %

 

Total Business Services

20.5 %

 

 

 

 

 

 

 

 

 

Healthcare

 

Other Industries

 

 

Healthcare Services

9.8 %

 

 

Consumer Services

6.9 %

 

Healthcare Software

6.0 %

 

 

Education

6.5 %

 

Tech-Enabled Healthcare

1.0 %

 

 

Financial Services

4.3 %

 

Pharma Services

0.7 %

 

 

Distribution & Logistics

4.0 %

 

Healthcare Products

0.2 %

 

 

Packaging

2.4 %

 

 

 

 

 

Other

5.5 %

Total Healthcare

17.7 %

 

Total Other Industries

29.6 %

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 Green, Yellow, Orange and Red with Green reflecting an investment that is in-line with or above expectations and Red reflecting an investment performing materially below expectations.

The following table shows the Risk Rating of the Company’s portfolio companies as of September 30, 2024:

(in millions)

As of September 30, 2024

Risk Rating

 

Cost

 

Percent

 

Fair Value

 

Percent

 

Weighted Average Mark

Green8

 

$

3,143.6

 

95.4

%

 

$

3,189.0

 

97.3

%

 

99.0

%

Yellow6

 

 

80.3

 

2.4

%

 

 

53.0

 

1.6

%

 

65.9

%

Orange

 

 

72.4

 

2.2

%

 

 

36.8

 

1.1

%

 

64.4

%

Red

 

 

 

 

 

 

 

 

 

 

Total

 

$

3,296.3

 

100.0

%

 

$

3,278.8

 

100.0

%

 

 

As of September 30, 2024, all investments in the Company’s portfolio had a Green Risk Rating, with the exception of four portfolio companies that had a Yellow Risk Rating and six portfolio companies that had an Orange Risk Rating. As of September 30, 2024, there were no portfolio companies that had a Red Risk Rating.

The following table shows the Company’s investment portfolio composition as of September 30, 2024:

(in millions)

 

 

 

 

Investment Portfolio Composition

 

September 30, 2024

 

Percent of Total

First Lien

 

$

2,072.5

 

63.2

%

Senior Loan Funds (SLP III & SLP IV) & NMNLC

 

 

397.3

 

12.1

%

Second Lien6

 

 

264.4

 

8.1

%

Subordinated

 

 

109.8

 

3.3

%

Preferred Equity

 

 

235.1

 

7.2

%

Common Equity and Other

 

 

199.8

 

6.1

%

Total

 

$

3,278.8

 

100.0

%

Liquidity and Capital Resources

As of September 30, 2024, the Company had cash and cash equivalents of $61.9 million and total statutory debt outstanding of $1,719.2 million4. The Company's statutory debt to equity was 1.26x as of September 30, 2024. Additionally, the Company had $300.0 million of SBA-guaranteed debentures outstanding as of September 30, 2024. As of September 30, 2024, the Company had $1,007.9 million of available capacity on its NMFC Credit Facility, Holdings Credit Facility, Unsecured Management Company Revolver and the NMNLC Credit Facility II.

Third Quarter 2024 Conference Call

New Mountain Finance Corporation will host an earnings conference call and webcast at 10:00 am Eastern Time on Thursday, October 31, 2024. 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.

A replay of the conference call can be accessed one hour after the end of the conference call through January 31, 2025. The full webcast replay will be available through October 31, 2025. 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: 7380144

For additional details related to the quarter ended September 30, 2024, 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)

Adjusted net investment income for Q3 2024 includes $1.2 million of net accelerated deferred financing costs related to the termination of the DB Credit Facility and a corresponding incentive fee adjustment.

(2)

Excludes non-controlling interest in New Mountain Net Lease Corporation (“NMNLC”).

(3)

Originations exclude payment-in-kind (“PIK”); originations, repayments, and sales excludes revolvers, unfunded commitments, bridges, return of capital, and realized gains / losses.

(4)

Excludes the Company’s United States Small Business Administration (“SBA”) guaranteed debentures.

(5)

Dividend yield calculation uses the closing stock price of $11.44 on October 28, 2024 and $12.33 on October 30, 2023 and includes regular and supplemental dividends.

(6)

Includes collateral for securities purchased under collateralized agreements to resell.

(7)

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 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.

(8)

Includes investments held in NMNLC.

(9)

Excludes NMFC Senior Loan Program III LLC ("SLP III"), NMFC Senior Loan Program IV LLC ("SLP IV") and NMNLC.

New Mountain Finance Corporation

Consolidated Statements of Assets and Liabilities

(in thousands, except shares and per share data)

(unaudited)

 

 

September 30, 2024

 

December 31, 2023

Assets

 

 

 

Investments at fair value

 

 

 

Non-controlled/non-affiliated investments (cost of $2,459,913 and $2,283,490, respectively)

$

2,446,773

 

 

$

2,209,867

 

Non-controlled/affiliated investments (cost of $121,649 and $107,895, respectively)

 

113,017

 

 

 

133,659

 

Controlled investments (cost of $684,751 and $646,823, respectively)

 

705,481

 

 

 

667,796

 

Total investments at fair value (cost of $3,266,313 and $3,038,208, respectively)

 

3,265,271

 

 

 

3,011,322

 

Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively)

 

13,500

 

 

 

16,500

 

Cash and cash equivalents

 

61,943

 

 

 

70,090

 

Interest and dividend receivable

 

45,905

 

 

 

44,107

 

Derivative asset at fair value

 

8,320

 

 

 

 

Receivable from affiliates

 

139

 

 

 

82

 

Deferred tax asset

 

 

 

 

594

 

Other assets

 

19,178

 

 

 

16,519

 

Total assets

$

3,414,256

 

 

$

3,159,214

 

Liabilities

 

 

 

Borrowings

 

 

 

Unsecured Notes

$

993,577

 

 

$

506,500

 

Holdings Credit Facility

 

407,563

 

 

 

515,063

 

SBA-guaranteed debentures

 

300,000

 

 

 

300,000

 

Convertible Notes

 

260,120

 

 

 

260,207

 

NMFC Credit Facility

 

55,031

 

 

 

36,813

 

NMNLC Credit Facility II

 

2,908

 

 

 

2,853

 

DB Credit Facility

 

 

 

 

186,400

 

Deferred financing costs (net of accumulated amortization of $61,723 and $54,263, respectively)

 

(26,229

)

 

 

(22,387

)

Net borrowings

 

1,992,970

 

 

 

1,785,449

 

Interest payable

 

18,485

 

 

 

20,440

 

Management fee payable

 

10,730

 

 

 

10,116

 

Payable to broker

 

10,370

 

 

 

 

Incentive fee payable

 

8,821

 

 

 

8,555

 

Deferred tax liability

 

1,100

 

 

 

 

Derivative liability at fair value

 

781

 

 

 

 

Other liabilities

 

3,420

 

 

 

2,931

 

Total liabilities

 

2,046,677

 

 

 

1,827,491

 

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 107,851,415 and 102,558,859 shares issued and outstanding, respectively

 

1,079

 

 

 

1,026

 

Paid in capital in excess of par

 

1,398,395

 

 

 

1,331,269

 

Accumulated undistributed earnings

 

(38,178

)

 

 

(12,344

)

Total net assets of New Mountain Finance Corporation

$

1,361,296

 

 

$

1,319,951

 

Non-controlling interest in New Mountain Net Lease Corporation

 

6,283

 

 

 

11,772

 

Total net assets

$

1,367,579

 

 

$

1,331,723

 

Total liabilities and net assets

$

3,414,256

 

 

$

3,159,214

 

Number of shares outstanding

 

107,851,415

 

 

 

102,558,859

 

Net asset value per share of New Mountain Finance Corporation

$

12.62

 

 

$

12.87

 

New Mountain Finance Corporation

Consolidated Statements of Operations

(in thousands, except shares and per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30, 2024

 

September 30, 2023

 

September 30, 2024

 

September 30, 2023

Investment income

 

 

 

 

 

 

 

From non-controlled/non-affiliated investments:

 

 

 

 

 

 

 

Interest income (excluding Payment-in-kind ("PIK") interest income)

$

61,788

 

 

$

63,892

 

 

$

175,608

 

 

$

189,299

 

PIK interest income

 

4,340

 

 

 

4,061

 

 

 

13,460

 

 

 

11,772

 

Dividend income

 

185

 

 

 

49

 

 

 

2,762

 

 

 

143

 

Non-cash dividend income

 

5,077

 

 

 

4,458

 

 

 

14,558

 

 

 

12,929

 

Other income

 

1,454

 

 

 

791

 

 

 

6,345

 

 

 

3,395

 

From non-controlled/affiliated investments:

 

 

 

 

 

 

 

Interest income (excluding PIK interest income)

 

349

 

 

 

884

 

 

 

1,093

 

 

 

1,576

 

PIK interest income

 

971

 

 

 

265

 

 

 

2,680

 

 

 

1,370

 

Non-cash dividend income

 

1,593

 

 

 

1,173

 

 

 

4,211

 

 

 

3,417

 

Other income

 

63

 

 

 

63

 

 

 

188

 

 

 

189

 

From controlled investments:

 

 

 

 

 

 

 

Interest income (excluding PIK interest income)

 

1,651

 

 

 

1,351

 

 

 

4,395

 

 

 

4,038

 

PIK interest income

 

3,739

 

 

 

3,591

 

 

 

11,595

 

 

 

11,665

 

Dividend income

 

11,789

 

 

 

11,041

 

 

 

36,812

 

 

 

34,179

 

Non-cash dividend income

 

1,649

 

 

 

1,357

 

 

 

4,715

 

 

 

3,879

 

Other income

 

679

 

 

 

1,373

 

 

 

2,049

 

 

 

3,943

 

Total investment income

 

95,327

 

 

 

94,349

 

 

 

280,471

 

 

 

281,794

 

Expenses

 

 

 

 

 

 

 

Interest and other financing expenses

 

37,661

 

 

 

31,425

 

 

 

101,790

 

 

 

93,921

 

Management fee

 

11,700

 

 

 

11,334

 

 

 

34,048

 

 

 

34,549

 

Incentive fee

 

8,821

 

 

 

10,169

 

 

 

27,760

 

 

 

29,748

 

Administrative expenses

 

1,059

 

 

 

995

 

 

 

3,135

 

 

 

2,996

 

Professional fees

 

1,019

 

 

 

850

 

 

 

3,213

 

 

2,818

 

Other general and administrative expenses

 

531

 

 

 

542

 

 

 

1,523

 

 

 

1,543

 

Total expenses

 

60,791

 

 

 

55,315

 

 

 

171,469

 

 

 

165,575

 

Less: management fee waived

 

(970

)

 

 

(1,013

)

 

 

(2,732

)

 

 

(3,172

)

Net expenses

 

59,821

 

 

 

54,302

 

 

 

168,737

 

 

 

162,403

 

Net investment income before income taxes

 

35,506

 

 

 

40,047

 

 

 

111,734

 

 

 

119,391

 

Income tax expense (benefit)

 

118

 

 

 

(627

)

 

 

353

 

 

 

401

 

Net investment income

 

35,388

 

 

 

40,674

 

 

 

111,381

 

 

 

118,990

 

Net realized (losses) gains:

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments

 

(75

)

 

 

113

 

 

 

(46,899

)

 

 

(8,509

)

Controlled investments

 

(456

)

 

 

4,560

 

 

 

3,375

 

 

 

16,413

 

Foreign currency

 

(1,455

)

 

 

 

 

 

(1,455

)

 

 

13

 

Net change in unrealized appreciation (depreciation):

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments

 

419

 

 

 

12,419

 

 

 

56,474

 

 

 

11,664

 

Non-controlled/affiliated investments

 

(7,853

)

 

 

(14,815

)

 

 

(34,396

)

 

 

(14,830

)

Controlled investments

 

(4,260

)

 

 

(14,483

)

 

 

(243

)

 

 

(15,174

)

Securities purchased under collateralized agreements to resell

 

 

 

 

 

 

 

(3,000

)

 

 

(39

)

New Mountain Net Lease Corporation

 

1,533

 

 

 

 

 

 

1,533

 

 

 

 

Foreign currency

 

1,690

 

 

 

(60

)

 

 

1,796

 

 

 

(5

)

(Provision) benefit for taxes

 

(1,037

)

 

 

291

 

 

 

(1,804

)

 

 

66

 

Net realized and unrealized losses

 

(11,494

)

 

 

(11,975

)

 

 

(24,619

)

 

 

(10,401

)

Net increase in net assets resulting from operations

 

23,894

 

 

 

28,699

 

 

 

86,762

 

 

 

108,589

 

Less: Net increase in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation

 

(5

)

 

 

(3

)

 

 

(994

)

 

 

(490

)

Net increase in net assets resulting from operations related to New Mountain Finance Corporation

$

23,889

 

 

$

28,696

 

 

$

85,768

 

 

$

108,099

 

Basic earnings per share

$

0.22

 

 

$

0.28

 

 

$

0.81

 

 

$

1.07

 

Weighted average shares of common stock outstanding - basic

 

107,851,415

 

 

 

100,954,898

 

 

 

106,140,789

 

 

 

100,943,049

 

Diluted earnings per share

$

0.22

 

 

$

0.27

 

 

$

0.78

 

 

$

0.98

 

Weighted average shares of common stock outstanding - diluted

 

126,779,819

 

 

 

123,183,269

 

 

 

125,000,872

 

 

 

124,595,709

 

Distributions declared and paid per share

$

0.34

 

 

$

0.36

 

 

$

1.04

 

 

$

1.03

 

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 $55 billion of assets under management.

ABOUT NEW MOUNTAIN CAPITAL

New Mountain Capital ("NMC") 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 $55 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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