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

About this update from New Mountain Finance Corporation

Reports Net Investment Income of $0.36 per Share Declares a Regular Third Quarter Distribution of $0.32 per Share and a Supplemental Distribution of $0.02 per Share NEW YORK --(BUSINESS WIRE)-- 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, 2024 . Second Quarter Highlights1 Net investment income of $38.2 million , or $0.36 per weighted average share Net asset value of $12.74 per share compared to $12.77 per share as of March 31, 2024 Plan to permanently reduce base management fee to 1.25% Amending and extending the dividend protection program Continued strong credit performance with approximately 97.0% of the portfolio rated green on our internal risk rating system, up from 96.5% at March 31, 2024 Increased portfolio velocity with $437.3 million of gross originations2, $299.1 million of repayments2 and $5.5 million of asset sales Significant first lien loan originations contributed to asset mix improvement Successful repricing of the Wells Fargo Credit Facility, reducing the spread from S + 2.50% to S + 2.15% Declared a regular third quarter 2024 distribution of $0.32 per share and a supplemental distribution related to second quarter earnings of $0.02 per share, each payable on September 30, 2024 to holders of record as of September 16, 2024 ($ in millions, except per share data) Q2 2024 Q2 2023 Net Investment Income per Weighted Average Share $ 0.36 $ 0.39 Dividends Paid per Share4 $ 0.34 $ 0.35 Annualized Dividend Yield5 11.0 % 11.0 % June 30, 2024 March 31, 2024 Investment Portfolio6 $ 3,227.3 $ 3,086.5 NAV per Share $ 12.74 $ 12.77 Statutory Debt/Equity3 1.21x 1.08x Statutory Debt/Equity (Net of Available Cash)3 1.14x 1.03x Management Comments on Second Quarter Performance “Our second quarter results reflect another good quarter for NMFC,” said Steven B. Klinsky , NMFC Chairman. “NMFC’s consistent book value and dividend coverage reflect the benefit of our disciplined, defensive growth strategy focused on end markets that perform well across economic cycles.” John R. Kline , CEO, commented: “We delivered solid performance with stable sequential NII and strong originations totaling more than $437 million in the second quarter. NMFC remains well positioned to capitalize on high-quality investment opportunities in our core defensive growth power alleys. Further, we have maintained strong credit performance, improved our asset mix and reduced the interest rate on our core credit facility.” Portfolio and Investment Activity 6 As of June 30, 2024 , the Company’s NAV1 was $1,374.1 million and its portfolio had a fair value of $3,227.3 million in 123 portfolio companies, with a weighted average YTM at Cost7 of approximately 11.1%. For the three months ended June 30, 2024 , the Company generated $437.3 million of originations2, cash repayments2 of $299.1 million and had $5.5 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 Value10 Software Business Services ERP 8.2 % Engineering & Consulting Services 5.4 % IT Infrastructure & Security 6.9 % Real Estate Services 4.5 % Human Capital Management 5.3 % Misc Services 3.3 % Ecommerce & Logistics 4.0 % Insurance & Benefits Services 3.0 % Finance & Accounting 3.2 % Utility Services 2.3 % Governance, Risk & Compliance 3.0 % Digital Transformation 1.6 % Integrated Payments 1.4 % Data & Information Services 0.2 % Total Software 32.0 % Total Business Services 20.3 % Healthcare Other Industries Healthcare Services 9.6 % Education 7.0 % Healthcare Software 6.0 % Consumer Services 6.8 % Tech-Enabled Healthcare 1.0 % Distribution & Logistics 4.3 % Pharma Services 0.9 % Financial Services 4.1 % Healthcare Products 0.2 % Packaging 2.4 % Other 5.6 % Total Healthcare 17.7 % Total Other Industries 30.2 % 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 June 30, 2024 : (in millions) As of June 30, 2024 Risk Rating Cost Percent Fair Value Percent Weighted Average Mark Green9 $ 3,078.3 95.1 % $ 3,130.3 97.0 % 98.1 % Yellow6 87.0 2.7 % 58.2 1.8 % 66.8 % Orange 59.4 1.8 % 35.8 1.1 % 74.3 % Red 12.9 0.4 % 3.0 0.1 % 36.2 % Total $ 3,237.6 100.0 % $ 3,227.3 100.0 % As of June 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, five portfolio companies that had an Orange Risk Rating and one portfolio company that had a Red Risk Rating. The following table shows the Company’s investment portfolio composition as of June 30, 2024 : (in millions) Investment Portfolio Composition June 30, 2024 Percent of Total First Lien $ 2,017.6 63 % Senior Loan Funds & NMNLC11 376.0 12 % Second Lien6 290.5 9 % Subordinated 106.8 3 % Preferred Equity 224.4 6 % Common Equity and Other 212.0 7 % Total $ 3,227.3 100 % Liquidity and Capital Resources As of June 30, 2024 , the Company had cash and cash equivalents of $119.6 million and total statutory debt outstanding of $1,659.5 million 3. The Company's statutory debt to equity was 1.21x as of June 30, 2024 . Additionally, the Company had $300.0 million of SBA-guaranteed debentures outstanding as of June 30, 2024 . As of June 30, 2024 , the Company had $498.1 million of available capacity on its Holdings Credit Facility, DB Credit Facility and NMFC Credit Facility. For the three months ended June 30, 2024 , the Company sold 1,562,122 shares of common stock under its equity distribution agreement. For the same period, the Company received total accumulated net proceeds of approximately $19.8 million , including $0.0 million of offering expenses, from these sales. Second Quarter 2024 Conference Call New Mountain Finance Corporation will host an earnings conference call and webcast at 10:00 am Eastern Time on Thursday, August 1, 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. 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 1, 2024 . The full webcast replay will be available through August 1, 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: 8717497 For additional details related to the quarter ended June 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) Excludes non-controlling interest in New Mountain Net Lease Corporation (“NMNLC”). For the quarter ended June 30, 2024 and 2023, $0.3 million and $0.2 million , respectively, is excluded from investment income, $0.1 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 $0.2 million , respectively, is excluded from net investment income. (2) Originations exclude payment-in-kind (“PIK”); originations, repayments, and sales excludes revolvers, unfunded commitments, bridges, return of capital, and realized gains / losses. (3) Excludes the Company’s United States Small Business Administration (“SBA”) guaranteed debentures. (4) Includes the regular quarter distribution and the supplemental distribution paid in the quarter. (5) Dividend yield calculation uses the closing stock price of $12.42 on July 29, 2024 and $12.75 on July 31, 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 in joint ventures. (9) Includes investments held in NMNLC. (10) Excludes NMFC Senior Loan Program III LLC ("SLP III"), NMFC Senior Loan Program IV LLC ("SLP IV") and NMNLC. (11) Senior Loan Funds includes SLP III and SLP IV. New Mountain Finance Corporation Consolidated Statements of Assets and Liabilities (in thousands, except shares and per share data) (unaudited) June 30, 2024 December 31, 2023 Assets Investments at fair value Non-controlled/non-affiliated investments (cost of $2,429,377 and $2,283,490 , respectively) $ 2,411,396 $ 2,209,867 Non-controlled/affiliated investments (cost of $119,130 and $107,895 , respectively) 118,351 133,659 Controlled investments (cost of $659,042 and $646,823 , respectively) 684,033 667,796 Total investments at fair value (cost of $3,207,549 and $3,038,208 , respectively) 3,213,780 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 119,607 70,090 Interest and dividend receivable 48,071 44,107 Deferred tax asset — 594 Receivable from affiliates 154 82 Other assets 28,506 16,519 Total assets $ 3,423,618 $ 3,159,214 Liabilities Borrowings Unsecured Notes $ 685,974 $ 506,500 Holdings Credit Facility 386,563 515,063 SBA-guaranteed debentures 300,000 300,000 Convertible Notes 260,150 260,207 DB Credit Facility 182,000 186,400 NMFC Credit Facility 141,840 36,813 NMNLC Credit Facility II 2,948 2,853 Deferred financing costs (net of accumulated amortization of $58,243 and $54,263 , respectively) (22,516 ) (22,387 ) Net borrowings 1,936,959 1,785,449 Payable for unsettled securities purchased 51,199 — Interest payable 22,937 20,440 Management fee payable 10,490 10,116 Incentive fee payable 9,550 8,555 Payable to broker 1,650 — Derivative liability at fair value 1,552 — Deferred tax liability 63 — Other liabilities 2,701 2,931 Total liabilities 2,037,101 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 1,398,438 1,331,269 Accumulated undistributed earnings (25,399 ) (12,344 ) Total net assets of New Mountain Finance Corporation $ 1,374,118 $ 1,319,951 Non-controlling interest in New Mountain Net Lease Corporation 12,399 11,772 Total net assets $ 1,386,517 $ 1,331,723 Total liabilities and net assets $ 3,423,618 $ 3,159,214 Number of shares outstanding 107,851,415 102,558,859 Net asset value per share of New Mountain Finance Corporation $ 12.74 $ 12.87 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, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Investment income From non-controlled/non-affiliated investments: Interest income (excluding Payment-in-kind ("PIK") interest income) $ 57,583 $ 64,649 $ 113,820 $ 125,407 PIK interest income 4,437 3,767 9,120 7,711 Dividend income 2,284 47 2,577 94 Non-cash dividend income 4,797 4,305 9,481 8,471 Other income 3,291 686 4,891 2,604 From non-controlled/affiliated investments: Interest income (excluding PIK interest income) 376 683 744 692 PIK interest income 873 414 1,709 1,105 Non-cash dividend income 1,374 1,139 2,618 2,244 Other income 62 63 125 126 From controlled investments: Interest income (excluding PIK interest income) 1,383 1,243 2,744 2,687 PIK interest income 3,721 3,686 7,856 8,074 Dividend income 12,340 12,143 25,023 23,138 Non-cash dividend income 1,570 1,292 3,066 2,522 Other income 497 1,375 1,370 2,570 Total investment income 94,588 95,492 185,144 187,445 Expenses Interest and other financing expenses 33,113 31,700 64,129 62,496 Management fee 11,351 11,577 22,348 23,215 Incentive fee 9,550 9,982 18,939 19,579 Professional fees 1,127 1,003 2,194 1,968 Administrative expenses 1,108 953 2,076 2,001 Other general and administrative expenses 527 513 992 1,001 Total expenses 56,776 55,728 110,678 110,260 Less: management fee waived (861 ) (1,096 ) (1,762 ) (2,159 ) Net expenses 55,915 54,632 108,916 108,101 Net investment income before income taxes 38,673 40,860 76,228 79,344 Income tax expense 234 932 235 1,028 Net investment income 38,439 39,928 75,993 78,316 Net realized (losses) gains: Non-controlled/non-affiliated investments (34,966 ) (7,314 ) (46,824 ) (8,622 ) Controlled investments 3,800 9,880 3,831 11,853 Foreign currency — 1 — 13 Net change in unrealized appreciation (depreciation): Non-controlled/non-affiliated investments 32,895 2,174 56,055 (755 ) Non-controlled/affiliated investments (4,080 ) 1 (26,543 ) (15 ) Controlled investments 1,697 (9,488 ) 4,017 (691 ) Securities purchased under collateralized agreements to resell (3,000 ) (39 ) (3,000 ) (39 ) Foreign currency 129 29 106 55 Provision for taxes (130 ) (94 ) (767 ) (225 ) Net realized and unrealized (losses) gains (3,655 ) (4,850 ) (13,125 ) 1,574 Net increase in net assets resulting from operations 34,784 35,078 62,868 79,890 Less: Net increase in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation (313 ) (248 ) (989 ) (487 ) Net increase in net assets resulting from operations related to New Mountain Finance Corporation $ 34,471 $ 34,830 $ 61,879 $ 79,403 Basic earnings per share $ 0.32 $ 0.35 $ 0.59 $ 0.79 Weighted average shares of common stock outstanding - basic 106,891,784 100,937,026 105,276,077 100,937,026 Diluted earnings per share $ 0.31 $ 0.32 $ 0.56 $ 0.71 Weighted average shares of common stock outstanding - diluted 125,759,769 127,016,910 124,101,624 125,313,634 Distributions declared and paid per share $ 0.34 $ 0.35 $ 0.70 $ 0.67 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 approximately $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 approximately $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. View source version on businesswire.com : https://www.businesswire.com/news/home/20240731979861/en/ New Mountain Finance Corporation Investor Relations Laura C. Holson , Authorized Representative [email protected] (212) 220-3505 Source: New Mountain Finance Corporation

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