New Mountain Finance (NMFC) Q4 2025 earnings summary

Executive summary

• Q4 2025 adjusted net investment income was $0.32 per share, fully covering the dividend, supported by recurring income and incentive fee waivers.

• Net asset value (NAV) declined to $11.52 per share from $12.06, mainly due to lower valuation of Edmentum's equity.

• Announced a $477 million asset sale at 94% of fair value, expected to close in March, to diversify the portfolio, reduce PIK income, and enhance financial flexibility.

• Board declared a Q1 2026 dividend of $0.32 per share, with plans to reduce to $0.25 per share starting Q2 2026.

• Management pledged to permanently reduce the incentive fee to 15% after 2026.

Financial highlights

• Total investment income for Q4 was $77 million, with annualized NII per share for 2025 at $1.28.

• Net expenses were $44 million, aided by a $2.4 million fee waiver.

• NAV per share decreased 4.5% quarter-over-quarter to $11.52.

• Portfolio size at $2.8 billion as of 12/31/2025.

• Realized total net loss rate since IPO is 2 basis points.

Outlook and guidance

• Dividend expected to reset to $0.25 per share per quarter starting Q2 2026, reflecting lower market spreads and reduced PIK securities.

• Management sees opportunities for earnings and book value growth through buybacks, equity appreciation, and discounted loan purchases.

• Incentive fee to be permanently reduced to 15% after 2026.

• Proceeds from the asset sale will be redeployed into first lien assets and potential share buybacks.

• Pro forma yield projected at ~12% at current stock price and 9% at book value post asset sale.