New Mountain Finance (NMFC) Q2 2024 earnings summary

Executive summary

• Q2 2024 adjusted net investment income was $0.36 per share, exceeding the $0.32 regular dividend and supporting a $0.02 supplemental dividend; net investment income totaled $38.2 million.

• Net asset value per share was $12.74 at June 30, 2024, nearly flat quarter-over-quarter, with total NAV at $1.37 billion.

• Portfolio quality remained high, with 97% of assets rated green and a focus on defensive, non-cyclical sectors such as software, healthcare, and business services.

• Management announced a permanent reduction in the base management fee to 1.25% and extended the dividend protection program through 2026.

• New Mountain employees and senior advisors own approximately 12% of shares, aligning interests with shareholders.

Financial highlights

• Total investment income for Q2 2024 was $94.6 million, down 1% year-over-year; net investment income per share was $0.36.

• Net expenses were $56.1 million, up 1% year-over-year.

• Net asset value was $1.37 billion, or $12.74 per share.

• Statutory debt-to-equity ratio was 1.21x (1.14x net of cash), within the target range.

• Gross originations were $437 million, offset by nearly $300 million in repayments.

Outlook and guidance

• Expectation of at least a $0.01 supplemental dividend in Q3 2024, with future variable dividends dependent on base rates and spreads.

• Management remains confident in portfolio performance and risk-adjusted returns for the remainder of 2024.

• M&A activity is expected to pick up meaningfully in 2025, though Q3 and Q4 2024 are still expected to be active.

• Adviser pledges to reduce its incentive fee as needed through 2026 to support the $0.32 per share regular dividend.

• Recent amendments to credit facilities increased borrowing capacity and extended maturities, supporting future investment activity.