New Mountain Finance Announces Q2 2025 Results

08/04/2025 – 04:37 PM

Reports Second Quarter Net Investment Income of $0.32 per Share and Declares a Third Quarter Distribution of $0.32 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, 2025. Wall Street is watching as NMFC navigates a complex market environment.

Second Quarter and Recent Highlights¹

• Net investment income of $34.5 million, or $0.32 per weighted average share. This figure, while solid, underscores the pressure BDCs are facing to maintain profitability amidst fluctuating interest rates.

• Net asset value of $12.21 per share compared to $12.45 per share as of March 31, 2025. A slight dip that could indicate tightening valuations across the portfolio.

• ~95% of the portfolio is rated green on our internal heatmap. This high percentage suggests a portfolio of relatively healthy assets, but investors will be keen to understand how this rating translates to actual repayment performance in the coming quarters.

• Increased senior oriented asset mix to 78%, compared to 75% as of June 30, 2024. Shifting towards senior secured assets is a common defensive strategy in the current climate, offering more downside protection.

• Received a third license from the Small Business Administration for the SBIC program in July 2025. Access to SBA funding provides a competitive advantage, but responsible deployment of this capital will be critical.

• Repurchased $9.6 million of outstanding shares in the second quarter. A sign of management confidence and a move to bolster shareholder value, but analysts will be monitoring the pace and extent of future buybacks.

• Declared a third quarter 2025 distribution of $0.32 per share, payable on September 30, 2025, to holders of record as of September 16, 2025. Maintaining the dividend is a key signal to investors in the BDC space, where yield is a primary attraction.

Management Comments on Second Quarter Performance

“In Q2, NMFC once again delivered its dividend, despite tight credit spreads in the market generally,” said Steven B. Klinsky, NMFC Chairman and New Mountain Capital CEO. “We remain committed to maintaining credit discipline and serving our shareholders.” His words convey confidence, but the market’s skepticism remains palpable.

John R. Kline, NMFC CEO, added: “We continued to advance our strategic priorities for NMFC of both increasing the percentage of senior-oriented assets to nearly 80% and building more position diversification across the portfolio. Additionally, NMFC repurchased $9.6 million worth of shares in the quarter, demonstrating our belief that the stock is undervalued at current trading levels.” Kline’s comments emphasize a proactive approach, but the jury’s still out on whether these measures will be enough to weather the storm.

Portfolio and Investment Activity⁵

As of June 30, 2025, the Company’s NAV¹ was $1,305.9 million and its portfolio had a fair value of $3,014.2 million of investments in 124 portfolio companies, with a weighted average YTM at Cost⁶ of approximately 10.6%. For the three months ended June 30, 2025, the Company originated $122.2 million of investments², offset by $141.4 million of repayments² and $13.7 million of asset sales¹⁰. The figures raise questions about the deal flow and the portfolio’s capacity to churn out returns given the repayments.

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 Value⁸

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Jam

Jan, a seasoned journalist, specializes in major corporations' stock industry and the IT tech internet field. With years of experience, she's known for dissecting global tech giants' stock moves, analyzing financial impacts and industry trends. Jan excels at simplifying complex data and tech concepts, and her work appears in renowned financial and tech publications.