NMFC

This article first appeared on GuruFocus. Adjusted Net Investment Income (NII): $0.26 per share for Q2 2026, covering the $0.25 per share dividend. Dividend: Q3 2026 dividend declared at $0.25 per share, payable September 30. Net Asset Value (NAV): $10.89 per share, down $0.03 (30 basis points) from Q1 2026. Non-Accruals: Improved to 1.5% of fair value, down from 2.6% in the prior quarter. Total Investment Income: $61 million, down 11% from the prior quarter. Total Net Expenses: Approximately $37 million, broadly unchanged from the prior quarter. Incentive Fee Rate: Effective rate of 15% for Q2, reflecting a voluntary waiver of $1.4 million. PIK Income: Represented 13% of total investment income from origination; modified PIK was 3%. Originations: $73 million in new investments, offset by $105 million in sales and repayments. Net Debt-to-Equity Ratio: 1.11 times, below the midpoint of the target range. Share Repurchases: Approximately $9 million of stock repurchased in Q2 at about $8 per share; $66 million year-to-date. Warning! GuruFocus has detected 2 Warning Sign with NMFC. High Yield Dividend Stocks in Gurus' Portfolio This Powerful Chart Made Peter Lynch 29% A Year For 13 Years How to calculate the intrinsic value of a stock? Is NMFC fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. New Mountain Finance Corp (NASDAQ:NMFC) reported adjusted net investment income of $0.26 per share for Q2 2026, covering its $0.25 per share dividend, and projects continued coverage for upcoming quarters. Non-accruals at fair value improved significantly to 1.5% in Q2 2026 from 2.6% in the prior quarter, reflecting stable credit performance. The company repurchased approximately $9 million of stock at a ~27% discount to book value during the quarter, with $80 million remaining capacity for future buybacks. NMFC's portfolio is well-diversified across 113 companies, with 88% of the portfolio carrying a green risk rating and a low loan-to-value ratio of 49%. Management is optimistic about potential catalysts for monetizing equity positions and realizing upside from loans marked down due to market sentiment, which could lead to book value appreciation. The company has proactively managed its liabilities by closing a $150 million private placement and extending its corporate revolving credit facility to 2031, with nearly 60% of debt maturing in 2029 or later. Net asset value per share declined by $0.03 to $10.89 in Q2 2026, primarily due to a write-down on the non-accruing position in Convey. Total investment income decreased 11% quarter-over-quarter to $61 million, partly due to the smaller portfolio following the secondary sale. The resumption of the incentive fee, which had been fully waived in Q1, offset lower interest expense, keeping total net expenses broadly unchanged. PIK income increased as a percentage of total investment income to 13%, reflecting a denominator effect from the secondary sale and some PIK compounding. The company saw an increase in the yellow risk rating category, representing modestly underperforming positions, despite declines in red and orange categories. Origination activity was light, with $73 million of investments originated offset by $105 million of sales and repayments, leaving the company fully invested without significant new deployment. Q: Can you provide more color on the timeline and process for rotating out of equity and non-income-producing assets?A: John Kline, President and CEO, stated that for several smaller positions, there is high optimism for exits within the next quarter or two. For larger positions, there are "a lot of irons in the fire" regarding monetization events, though exact timing is uncertain. He emphasized that many of these positions are performing well and that the company believes it can exit them in a value-accretive manner for shareholders, with a focus on executing these deals over the coming quarters. Q: What is the outlook for refinancing the unsecured debt stack given upcoming maturities?A: Laura Holson, Interim CFO and COO, explained that the rotation of the liability stack is viewed as a real opportunity. The ability to achieve lower borrowing costs is tied to executing strategic initiatives like monetizing equity positions and improving portfolio diversity. She noted that much of the maturing debt is not the lowest-cost debt, so refinancing in the unsecured market presents an opportunity to reduce the overall cost of financing over time. Q: Are you dependent on a more active M&A market to rotate out of these assets, or can it be achieved under current conditions?A: John Kline responded that while the M&A market is improving and will help with new originations and exits, the company does not need macro help. He highlighted that the underlying performance of many portfolio positions is strong, making them easier to exit regardless of the environment. He expressed confidence that the company is "a couple of moves away" from delivering a portfolio with great diversity and better income quality, though timing remains uncertain. Q: What should we expect for the pacing of repayments and originations for the remainder of the year?A: John Kline stated that the biggest catalyst for the back half of the year is a better overall environment. The first half was challenging due to low M&A activity and volatility around the "SaaSpocalypse." Looking forward, the pipeline shows more activity, which is a positive sign. For equity positions, this involves a more proactive approach to selling entire companies, and the company believes the current environment is suitable for that as well. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes the $0.03 NAV decline primarily to a write-down of the non-accruing position in Convey, which was partially offset by accretive share repurchases and unrealized gains. Non-accruals at fair value improved significantly from 2.6% to 1.5%, reflecting what management describes as stable credit performance and a de-risking of the broader portfolio. The company is actively executing a strategy to acquire secondary market loans at discounts, betting on 'pull-to-par' appreciation as market sentiment regarding software sectors stabilizes. Management characterized 'SaaSpocalypse' fears as excessive, noting they have marked well-performing loans lower solely due to negative market sentiment and fair value accounting standards. Strategic focus remains on defensive, non-cyclical sectors with recurring revenue models to insulate the portfolio from inflationary pressures and supply chain disruptions. The portfolio sale in Q1 successfully reduced PIK income and improved position diversity, though total investment income declined 11% sequentially due to the smaller, more senior asset base. Management anticipates several realization opportunities for concentrated equity positions over the next year, which are expected to catalyze further portfolio diversity and reduce PIK income. The company projects that net investment income will continue to cover the $0.25 quarterly dividend, supported by the anticipated earnings power of the current portfolio. Future share buybacks remain a priority but are contingent on maintaining adequate excess capital and staying within the stated leverage range of 1.0x to 1.25x. Management expects a more active M&A environment in the second half of 2026 to facilitate both new originations and the exit of existing equity positions. The firm plans to continue increasing the floating rate portion of its liabilities to better align with its 89% floating rate asset base and reduce interest rate mismatches. Management voluntarily waived $1.4 million in incentive fees this quarter, moving toward a permanent reduction of the incentive fee rate to 15% scheduled for 2027. Approximately 12% of the portfolio is currently rated below 'green' on the internal heat map, with these challenged positions carrying a weighted average mark of $0.67. The company successfully extended its corporate revolving credit facility maturity to 2031, with nearly 60% of debt now maturing in 2029 or later. Internal ownership by New Mountain executives increased to approximately 18%, which management cites as a sign of alignment with shareholders during a period they believe the stock is 'oversold'. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management indicated high optimism for exiting several smaller positions within the next one to two quarters. Larger positions have 'many irons in the fire,' though specific timing remains uncertain as it depends on executing value-accretive deals for well-performing underlying businesses. The company views upcoming maturities as an opportunity to reduce the cost of financing, as the maturing debt is not their lowest-cost capital. Success in reducing PIK income and increasing portfolio diversity is expected to improve the terms NMFC can achieve when returning to the unsecured market. While a better M&A environment would be helpful, management believes their well-performing businesses can be exited even in the current environment. The fall pipeline shows increased activity compared to a muted first half of the year, which was hampered by volatility and low deal volume.

Interested in New Mountain Finance Corporation? Here are five stocks we like better. NMFC’s second-quarter adjusted net investment income was $0.26 per share, covering its $0.25 dividend. The board declared another $0.25 quarterly dividend, while NAV declined modestly to $10.89 per share from $10.92. Credit metrics improved, with fair-value non-accruals falling to 1.5% from 2.6% and 88% of the portfolio receiving the company’s green risk rating. The portfolio was effectively fully invested after $73 million of originations and $105 million of repayments and sales. The balance sheet remained positioned for flexibility: net debt-to-equity was 1.11x, borrowing capacity exceeded $2 billion, and nearly 60% of debt matures in 2029 or later. Management also cited early signs of improving deal activity despite weak second-quarter direct-lending volume. New Mountain Finance (NASDAQ:NMFC) reported second-quarter adjusted net investment income of $0.26 per share, covering its $0.25 per-share cash dividend, while net asset value declined modestly and non-accruals improved from the prior quarter. Chairman Steve Klinsky said the business development company’s net asset value was $10.89 per share at June 30, down $0.03, or 30 basis points, from $10.92 at the end of the first quarter. He attributed the relatively stable book value to portfolio credit performance, though the quarter included a write-down on non-accruing borrower Convey. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control The company’s board declared a third-quarter dividend of $0.25 per share, payable Sept. 30 to shareholders of record Sept. 16. Klinsky said management expects net investment income to continue covering the quarterly dividend in coming quarters. Non-accruals at fair value improved to 1.5% of the portfolio from 2.6% in the first quarter. John Kline, President and CEO, said 88% of the portfolio carried the company’s green risk rating at quarter-end. The red and orange categories, representing the most challenged positions, both declined during the quarter, while the yellow category of modestly underperforming investments increased. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? Non-green investments were marked at a weighted-average value of about $0.67 on the dollar, Kline said, reflecting what management views as substantial de-risking already incorporated into portfolio marks. During the second quarter, NMFC originated $73 million of investments and recorded $105 million of sales and repayments, according to Laura Holson, the company’s chief operating officer, interim chief financial officer and treasurer. Holson said the activity left the company effectively fully invested. Yields on new investments exceeded those on repayments, partly due to purchases of discounted secondary-market positions. → Why Rare Earth Processing Could Be the Real 2027 Opportunity The portfolio included investments in 113 companies as of June 30. About 80% of the portfolio, including first-lien investments, SLPs and net lease investments, was senior in nature, while equity positions represented approximately 6% of the portfolio. Excluding SLP and net lease fund investments, the company’s 10 largest single-name issuers represented 24% of fair value. Kline said portfolio diversification remains a priority following a portfolio sale completed late in the first quarter. Management expects potential exits from concentrated investments and smaller preferred and common equity holdings to further improve diversification and reduce PIK, or payment-in-kind, income. Total investment income was $61 million in the second quarter, down 11% from the preceding quarter. Holson said the decline primarily reflected a smaller, more senior and more diversified portfolio after the secondary sale. Total net expenses were about $37 million, broadly unchanged from the first quarter. Lower interest expense was offset by the resumption of an incentive fee that had been fully waived in the first quarter. NMFC’s effective incentive fee rate was 15% in the second quarter, including a voluntary waiver of $1.4 million ahead of a previously announced permanent reduction in the incentive fee rate to 15% in 2027. PIK income from investments structured with PIK at origination represented 13% of total investment income, while modified PIK from amendments or restructurings accounted for 3%. Investments generating non-cash income were marked at a weighted-average fair value of roughly 95% of par, and 89% of that income came from investments rated green, Holson said. NMFC repurchased approximately $9 million of stock during the quarter at about $8 per share, representing an approximately 27% discount to book value, Klinsky said. Year to date, the company repurchased roughly $66 million of shares and had about $80 million of remaining repurchase capacity. Klinsky said future repurchases will depend on excess capital and keeping leverage within the company’s stated range. He added that New Mountain executives’ ownership rose by 100 basis points sequentially and 400 basis points from a year earlier to approximately 18% of shares outstanding as of June 30. At quarter-end, NMFC had total assets of $2.4 billion, total liabilities of $1.4 billion and net asset value of $1 billion. Its net debt-to-equity ratio was 1.11 times, below the midpoint of its target range of 1.0 to 1.25 times. The company had more than $2 billion of total borrowing capacity, including approximately $830 million available under credit facilities, subject to borrowing-base limitations. That capacity exceeded its roughly $160 million in unfunded commitments and 2027 debt maturities, Holson said. NMFC completed a $150 million private placement with a delayed funding date during the quarter and, after quarter-end, extended the maturity of its corporate revolving credit facility to 2031. Nearly 60% of outstanding debt matures in 2029 or later. As of June 30, 89% of the loan portfolio was floating rate, compared with 74% of liabilities. Holson said muted merger-and-acquisition activity reduced industry direct-lending volume in the second quarter. PitchBook LCD data showed second-quarter volume declined approximately 55% from the first quarter and 13% year over year for the first half of 2026. Still, management said it sees signs of improving activity. Holson cited a substantial backlog of potential private-equity exits, sponsor dry powder and an increase in deal activity in recent weeks. She said spreads for sectors viewed as insulated from artificial-intelligence disruption had stabilized around SOFR plus 500 basis points. During the question-and-answer session, Kline said NMFC expects some smaller equity positions could be exited over the next quarter or two, while management is pursuing monetization opportunities for several larger holdings. He said the timing remains uncertain, but management believes a number of the businesses are performing well and could be exited in a manner that adds value for shareholders. New Mountain Finance Corp. is a closed-end, externally managed business development company (BDC) that provides customized debt and equity capital solutions to U.S. middle-market companies. As a BDC organized under the Investment Company Act of 1940, New Mountain Finance invests in sponsor-backed and founder-led businesses that span a range of industry sectors, with a focus on companies demonstrating resilient growth and recurring revenue streams. The company's investment portfolio typically includes first-lien senior secured loans, second-lien and junior debt instruments, mezzanine financing and equity co-investments. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "New Mountain Finance Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

New Mountain Finance (NMFC) came out with quarterly earnings of $0.26 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $0.32 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this business development company would post earnings of $0.32 per share when it actually produced earnings of $0.32, delivering no surprise. Over the last four quarters, the company has not been able to surpass consensus EPS estimates. New Mountain, which belongs to the Zacks Financial - SBIC & Commercial Industry industry, posted revenues of $61.48 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 2.18%. This compares to year-ago revenues of $83.49 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. New Mountain shares have lost about 25.2% since the beginning of the year versus the S&P 500's gain of 9.4%. While New Mountain has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for New Mountain was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.26 on $63.63 million in revenues for the coming quarter and $1.10 on $259.38 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - SBIC & Commercial Industry is currently in the bottom 33% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Horizon Technology Finance (HRZN), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 4. This investment company is expected to post quarterly earnings of $0.13 per share in its upcoming report, which represents a year-over-year change of -53.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Horizon Technology Finance's revenues are expected to be $25.23 million, up 2.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report New Mountain Finance Corporation (NMFC) : Free Stock Analysis Report Horizon Technology Finance Corporation (HRZN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Reports Second Quarter Adjusted Net Investment Income1 of $0.26 per Share and Declares a Third Quarter Distribution of $0.25 per Share NEW YORK, August 03, 2026--(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, 2026. Second Quarter and Recent Highlights2 Adjusted net investment income1 of $24.7 million, or $0.26 per weighted average share Net asset value of $10.89 per share compared to $10.92 per share as of March 31, 2026 Declared a third quarter 2026 distribution of $0.25 per share, payable on September 30, 2026, to holders of record as of September 16, 2026 Non-accruals decreased from 2.6% of fair value in Q1 to 1.5% for Q2; ~88% of the portfolio is rated green on our internal heatmap Extended the maturity date of the NMFC Credit Facility to July 2031 Management Comments on Second Quarter Performance "Our second quarter results reflect stable NAV and solid credit performance across the portfolio," said Steven B. Klinsky, NMFC Chairman and New Mountain Capital CEO. "We believe NMFC remains undervalued, with a dividend yield of 15% based on Friday's closing share price. Our insider ownership now represents 18% of shares outstanding, demonstrating our confidence in the Company’s long-term value." John R. Kline, NMFC CEO, added: "During the second quarter, NMFC improved its portfolio composition through a reduction in non-accruals. Looking ahead, we remain focused on our strategic priorities which include selling certain equity positions, reducing PIK income and increasing portfolio diversification." Portfolio and Investment Activity4 As of June 30, 2026, the Company’s NAV2 was $1,028.2 million and its portfolio had a fair value of $2,295.5 million of investments in 113 portfolio companies, with a weighted average YTM at Cost6 of approximately 11.1%. For the three months ended June 30, 2026, the Company originated $73.3 million of investments7, offset by $61.0 million of repayments7 and $43.4 million of 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 Value8 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, 2026: As of June 30, 2026, most of the investments in the Company’s portfolio had a Green Risk Rating, with the exception of thirteen portfolio companies that had a Yellow Risk Rating, seven portfolio companies that had an Orange Risk Rating and one portfolio company had a Red Risk Rating. The following table shows the Company’s investment portfolio composition as of June 30, 2026: Liquidity and Capital Resources As of June 30, 2026, the Company had cash and cash equivalents of $64.8 million and total statutory debt outstanding of $1,192.5 million5. The Company's statutory debt to equity was 1.16x (or 1.11x net of available cash) as of June 30, 2026. Additionally, the Company's wholly-owned SBIC subsidiaries had $169.3 million of SBA-guaranteed debentures outstanding as of June 30, 2026. As of June 30, 2026, the Company had $668.5 million of available capacity on its Holdings Credit Facility, NMFC Credit Facility and Unsecured Management Company Revolver. Second Quarter 2026 Conference Call New Mountain Finance Corporation will host an earnings conference call and webcast at 10:30 am Eastern Time on Tuesday, August 4, 2026. 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 (646) 769-9200 International: (800) 330-6710 Access Code: 1670693 Live Audio Webcast A replay of the conference call will be available for one year following the call. To access the earnings webcast replay please visit the New Mountain Investor Relations website. For additional details related to the quarter ended June 30, 2026, 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. ABOUT NEW MOUNTAIN FINANCE CORPORATION New Mountain Finance Corporation (NASDAQ: NMFC) is focused on providing direct lending solutions to U.S. upper middle market companies backed by top private equity sponsors. Our investment objective is to generate current income and capital appreciation through the sourcing and origination 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 $60 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 $60 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.newmountainfinance.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/20260803224246/en/ Contacts New Mountain Finance CorporationInvestor RelationsLaura C. Holson, Authorized [email protected] (212) 220-3505

NEW YORK, July 06, 2026--(BUSINESS WIRE)--New Mountain Finance Corporation (NASDAQ: NMFC) ("New Mountain" or the "Company") announced today that it will release its financial results for the quarter ended June 30, 2026, on Monday, August 3, 2026, after markets close. The Company will host an earnings conference call and webcast at 10:30 am Eastern Time on Tuesday, August 4, 2026. During the live conference call, the Company’s officers will review the second quarter performance, discuss recent events and conduct a question-and-answer session. Second Quarter 2026 Conference Call InformationTo participate in the live earnings conference call, please use the following dial-in numbers or visit the audio webcast link below. To avoid any delays, please join at least fifteen minutes prior to the start of the call. United States: +1 (646) 769-9200International: (800) 330-6710Access Code: 1670693Live Audio Webcast Second Quarter 2026 Webcast Replay InformationThe full webcast replay will be available for one year following the call. To access the earnings webcast replay, please visit the New Mountain Investor Relations website. ABOUT NEW MOUNTAIN FINANCE CORPORATIONNew Mountain Finance Corporation (NASDAQ: NMFC) is focused on providing direct lending solutions to U.S. upper middle market companies backed by top private equity sponsors. Our investment objective is to generate current income and capital appreciation through the sourcing and origination 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 $60 billion of assets under management. FORWARD-LOOKING STATEMENTSStatements 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/20260706918058/en/ Contacts New Mountain Finance CorporationInvestor RelationsLaura C. Holson, Authorized [email protected] (212) 220-3505

Image source: The Motley Fool. Tuesday, May 5, 2026 at 10 a.m. ET Chairman — Steven Klinsky Chief Executive Officer — John Kline Chief Operating Officer — Laura Holson Chief Financial Officer and Treasurer — Kris Corbett John Kline: Thank you, and good morning, everyone. Welcome to New Mountain Finance Corporation's First Quarter 2026 Earnings Call. On the line with me here today are Steve Klinsky, Chairman of NMFC and CEO of New Mountain Capital; Laura Holson, COO of NMFC; and Kris Corbett, CFO and Treasurer of NMFC. As announced in our 8-K, our CFO, Kris Corbett, will be leaving us at the end of May to pursue another career opportunity. Kris has been a valuable and respected member of the team, and we would like to thank him for his hard work during his time at New Mountain. Upon Kris' departure, Laura Holson will assume the additional duty of interim CFO until a successor is found. Steve is going to make some introductory remarks, but before he does, I'd like to ask Kris to make some important statements regarding today's call. Kris Corbett: Thanks, John. Good morning, everyone. Before we get into the presentation, I would like to advise everyone that today's call and webcast are being recorded. Please note that they are the property of New Mountain Finance Corporation and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available on our May 4 earnings press release. I would also like to call your attention to the customary safe harbor disclosure in our press release and on Pages 2 and 3 of the slide presentation regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from those statements and projections. We do not undertake to update our forward-looking statements or projections unless required to by law. To obtain copies of our latest SEC filings and to access the slide presentation that we will be referencing throughout this call, please visit our website at www.newmountainfinance.com. At this time, I'd like to turn the call over to Steve Klinsky, NMFC's Chairman, who will give some highlights beginning on Page 6 of the slide presentation. Steve? Steven Klinsky: Thanks, Chris. It's great to be able to address you all today. Both as NMFC's Chairman and as a major fellow shareholder. Adjusted net investment income for the first quarter was $0.32 per share covering our $0.32 per share dividend that was paid in cash on March 31. Our net investment income and dividend were supported by consistent recurring income from our loan portfolio and a full voluntary incentive fee waiver of $6.1 million. Looking forward to Q2, consistent with our announcement on our previous earnings call, we would like to announce a $0.25 dividend payable on June 30 to shareholders of record as of June 16. Based on NMFC's earnings power, we expect this dividend will be more than covered by the earnings from our core business. As also previously discussed, we believe NMFC made a very positive and well-timed strategic pivot several months ago. We sold approximately $470 million of some of our most illiquid and hardest value positions at 94% of December 31 book value. That transaction closed and was funded in March. With that liquidity, we have now delevered our balance sheet, and have capacity to buy high-quality assets opportunistically at far less than $0.94 on the dollar. Some of those investments were completed by March 31, and some were done or will be done after March 31, but can be judged by their expected pro forma impact. First, we have been buying back our own stock at roughly $8 per share or about a 27% discount to book value. We had a $95 million buyback authorization in place at year-end 2025. And -- about $57 million of buybacks were completed by March 31, and about $9 million have been executed since leaving us with approximately $30 million remaining in our originally existing program. Book value per share was $10.92 per share on March 31 and is $10.95 pro forma for the post-March buybacks already done, all else equal. Further, our Board has now authorized an incremental $50 million for buybacks in the future, bringing our total remaining capacity to around $80 million. Again, all else equal, the math is that every $10 million of buyback at $8 per share can add approximately $0.04 per share of book value. In addition, book value on March 31 was primarily brought down by a general market bearishness in valuations rather than issues of performance in our specific loans. Today, the average mark of our green rated names is about $0.96 on the dollar, which implies potential upside if the market normalizes and these loans accrete back to par. Third, we have been using the market disruption to buy specific names in the secondary market when they appear to be oversold. For example, we bought one name, which is a multibillion-dollar public company at a value through the debt of just 2x EBITDA and at $0.65 on the dollar. This loan rapidly traded up approximately 10 points since our first purchase. Fourth, spreads in the market appear to have widened in general, and we are deploying our cash into new loans at significantly higher and more attractive yields than existed 12 months ago. Last and importantly, we believe we are seeing forward momentum at some of the companies we own from past defaults such as Benevis, UniTek and Permian. Our goal is to ultimately sell these companies at above their current marks and redeploy the proceeds into attractive alternatives. I and my fellow NMC executives remain the largest shareholders of NMFC stock and our ownership position has been increasing over time. During the first quarter, I purchased 1.5 million shares and other senior NMC leaders bought shares as well. Overall, New Mountain ownership increased from approximately 14% to approximately 17% of total shares outstanding. I believe we had more insider buying than any publicly traded BDC, our size or larger. We thank you as always for your ownership and partnership and we are working diligently to serve your interest in the months and years ahead. With that, let me turn the call over to John for more details and comments. John Kline: Thank you, Steve. I would like to begin on Page 7, which offers an overview of our differentiated approach to direct lending. First and foremost, we focus only on select parts of the economy that we believe are defensive and have sustainable tailwinds that will benefit companies within these chosen sectors. We provide heightened transparency into our industry niches as opposed to the standard practice of using broad sector classifications. This enhanced disclosure provides our investors with more clarity into the specific types of companies that we invest in. Secondly, we have a unique investment model where our credit team partners with in-house industry executives and private equity personnel to underwrite direct lending deals within our chosen sectors. If an investment underperforms and we are compelled to take ownership of the company, New Mountain is well positioned to improve the underlying business using our private equity expertise and in-house operating talent. As Steve mentioned, there are several situations in that category that are bearing fruit today. As we consider industry exposure, the impact of AI remains a major topic of conversation in the investment community, particularly as it relates to software end markets. While there will certainly be winners and losers in the software sector, we believe that as a group, NMFC software companies are well positioned to benefit as they implement AI into workflows at a rapid pace and use AI-assisted coding to improve software functionality and the overall user experience. From our vantage point as lenders, we see our sponsor partners acting proactively across all industries as it relates to AI. It's clear to private equity sponsors that there are more opportunities today than ever before to enhance margins and improve operating efficiency in almost every business. As a senior lending partner, NMFC can be a big beneficiary of these improvements. Page 8 provides key performance statistics showing a long-term track record of delivering consistent, enhanced yield by minimizing credit losses and distributing virtually all of our excess income to shareholders. Since our IPO in 2011, MFC has returned over $1.5 billion to shareholders through our dividend program, generating an annualized return of approximately 10%. Our dividend yield at the current stock price is approximately 12% annualized based on the revised $0.25 quarterly payout, which is fully covered by net investment income. Our loan-to-value ratio is just 47% and includes the latest view of enterprise value at our portfolio companies. We recalculate this metric every quarter to ensure we are accurately reflecting market movements. We do not blindly anchor to loan-to-value ratios based on what the sponsor paid for the business. Finally, we maintain an investment-grade rating at both Moody's and Fitch, which we have held for more than 5 years. Turning to the next page. We have made really great progress on our strategic priorities so far this year. the portfolio sale catalyzed improvements in a number of areas. It enabled us to reduce the amount of PIK income in the portfolio, increase portfolio diversity and decreased single name exposures and we also moderated our software exposure, which is a sector that has clearly been scrutinized by the market. Additionally, our team was timely in their efforts to reprice the Wells Fargo credit facility from SOFR plus 195 to SOFR plus 185. This lower pricing maximizes the gap between our assets and liabilities ahead of what we feel will be a wider asset spread environment. The next step in our process is to focus on monetizing some of our equity winners in the near and medium term. These actions will be dependent on continued strong portfolio performance and an improving M&A marketplace. And of course, redeploying equity proceeds into cash yielding loans could have a powerful impact on NMFC's earnings power and income quality. As shown on Page 10, 91% of the portfolio is green on our risk rating scale. We continue to focus on transparent and accurate scoring with a few select names migrating negatively during the quarter, but risk ratings for the vast majority of the portfolio were stable. Importantly, our most challenged names, marked orange and red represent only 3.5% of NMFC's fair value, making them a small portion of the portfolio. Turning to Page 11. We provide a graphical analysis of NAV changes during the quarter, resulting in a book value of $10.92 a $0.23 decline compared to $11.15 for Q4 pro forma for the impact of the secondary sale. The main driver of the decline this quarter was broader market movement, which accounted for 2/3 of the overall write-down. The remaining 1/3 decrease was related to credit-specific movement. We see continued tailwinds at Benefits and UniTek that are offset by a restructuring process currently taking place at Affordable Care and an adjustment to our wind down assumption on North Star, which is currently in liquidation. Today, NorthStar is a small position that represents approximately $20 million of value. We expect cash recovery on this name to begin next year. Finally, as Steve discussed, we aggressively repurchased shares this quarter, which represented $0.26 of book value accretion. Today, we maintain approximately $80 million of buyback authorization to repurchase additional shares in the future. Page 12 addresses NMFC's credit performance. For the quarter, nonaccruals at fair value stood at 2.6%, which was a modest increase from last quarter. During the quarter, Affordable Care's first lien position and convey were added to the list. Despite these migrations, we see an improving outlook for both names. We expect Affordable Care, a dental business specializing in higher-margin tooth replacement implant services to come off non accrual in the coming quarters as the lending group effectuates a change in control. The new capital structure will include a smaller sized cash pay first lien loan and a large equity account controlled by the former lenders, the management team and the doctors. We believe a much lower debt burden and more overall financial flexibility will allow affordable care to recruit new talent pursue operational improvement and refocus on growth. CONVEY is a smaller health care services company that has faced operational challenges in some of its business units. In partnership with the lender group, New Mountain has already recruited a new leader for the business, and we are optimistic about our ability to achieve a strong near-term recovery. In addition to Affordable Care and convey, we see multiple other near-term catalysts for existing nonaccruals to exit the portfolio and expect to be able to report positive migrations next quarter. Finally, on the right side of the page, we show our cumulative credit performance since IPO. During that time, MFC has made approximately $10.5 billion of investments while realizing losses net of gains of $56 million. We remain focused on reversing unrealized losses through initiatives that we have discussed earlier on this call. I will now turn the call over to our Chief Operating Officer, Laura Holson, to discuss the current market environment and provide more details on NMFC's quarterly performance. Laura Holson: Thanks, John. Since our call last quarter, the media has increased its scrutiny of the private credit asset class. We thought it would be helpful to address our perspective on some of those headlines. First, [ SaaS apocalypse ] Recent media coverage has implied that all software loans are bad and with private credit having approximately 30% exposure to software on average that such exposure presents significant risk. Consistent with John's commentary, not all software is created equal, particularly when thinking about AI. While the technology continues to evolve real time, the market seems to be starting to delineate between the software businesses that are true systems of records with data or other moats versus the low-code point solution-type business models that we believe are more at risk. As a reminder, in order for our primarily senior software loans to be impaired private equity capital junior to us would first need to be wiped out in full. Second, potential systemic credit stress. While the media has highlighted one-off examples, we are not seeing signs that there is a systemic credit stress across the asset class. As evidenced by default rates that remain below the 10-year average. There are a handful of idiosyncratic challenges across the universe of direct lending loans. However, we have yet to see evidence that overall portfolios or certain subsectors are fundamentally impaired. We expect the primary driver of NAV declines this quarter to be mark-to-market movement in sympathy with the broadly syndicated loan market. Third, heightened redemptions. There has been significant attention to the redemptions in the perpetual non traded BDCs in Q1. However, there have also been meaningful inflows to the asset class. Note that we don't view this as gating. This is how these funds have been designed to protect remaining investors given the underlying illiquid assets. Importantly, the majority of the $2 trillion private credit market is funded by institutional investors. We are seeing more sophisticated investors, reconsider new allocation to the asset class as the supply/demand rebalances following the exit of some of the more headline-driven investors. Fourth, a sector-wide lack of transparency. All PVCs disclosed in their schedule of investments, line-by-line detail of company name, industry, spread, maturity, par, fair value, et cetera. We believe we provide a heightened level of transparency, as John discussed earlier with our heat map, detailed industry classifications and leverage levels for each portfolio company. All that said, M&A activity was seasonally slower in Q1 as expected, and further impacted by the AI-induced volatility. The backlog of potential private equity exits remains full, and there is still pressure to deploy private equity dry powder. So we remain cautiously optimistic about the outlook for 2026 and have started to see new deal activity pick up again in recent weeks. We continue to believe direct lending remains an attractive asset class in today's market and provides good risk-adjusted returns and enhanced yield relative to other asset classes. We have seen some spread widening occur as compared to the 2025 type and a more meaningful increase in pricing dispersion. The more challenging environment underscores the importance of our differentiated underwriting strategy, which allows us to go deeper on diligence, and identify the most compelling credit opportunities, both in the primary and secondary markets. Page 14 presents an interest rate analysis that provides insight into the effective base rates on NMFC's earnings. As of 3/31, the NMFC loan portfolio was 89% floating rate and 11% fixed rate. While our liabilities were 73% floating rate and 27% fixed rate. As discussed over the last several quarters, we have meaningfully shifted this liability mix to increase the percentage of our liabilities that flow. We are now nearly achieving our goal of matching our percent of liabilities that float with the percent of assets that float. Last year at this time, our liability mix was just 50% floating rate. As shown on the bottom table, we would expect to see earnings pressure in the scenarios where base rates decrease but the evolution of our liability structure helps to alleviate some of that pressure. Moving on to Page 15. During Q1, PenamSC originated $117 million of assets offset by $492 million of sales and repayments, primarily related to the secondary portfolio sale. Our originations consisted of investments in our core defensive growth power alleys, including health care, business services and IT infrastructure and security. We also purchased a few positions at meaningful discounts in the secondary market, where we believe we have a differentiated view and opportunity for meaningful book value upside if our thesis proves correct. Turning to Page 16. Approximately 81% of our investments, inclusive of first lien, SLTs and net lease are senior in nature up from 77% in the prior year period. Approximately 5% of the portfolio is comprised of our equity positions, the largest of which are shown on the right side of the page. We continue to dedicate meaningful time and resources to business building at these companies. And as Steve mentioned, we believe we are making positive progress. Page 17 shows that the average yield of NMFC's portfolio increased to 11.1% during the quarter due to the higher yield on our originations as compared to our repayments as well as the higher for longer shift in the forward curve. The higher yield on our originations relates in part to some of the secondary discounted purchases I mentioned when discussing our Q1 originations -- we continue to believe that yields remain attractive for the risk. Finally, as illustrated on Page 18, we have a diversified portfolio across 115 companies. Excluding our investments in the SLP and net lease funds, the top 10 single name issuers account for just 24% of total fair value, down from 25.7% in the prior year. The progress here largely relates to the benefit of the secondary sale as we discussed last quarter. I will now turn the call over to our Chief Financial Officer, Kris Corbett, to discuss our financial results. Kris Corbett: Thank you, Laura. For more details, please refer to our quarterly report on Form 10-Q that was filed yesterday with the SEC. As shown on Slide 19, the portfolio had $2.3 billion in investments at fair value on March 31 and total assets of $2.4 billion. Total liabilities were $1.4 billion, of which total statutory debt outstanding was $1.2 billion. Net asset value was $1 billion or $10.92 per share. At quarter end, our net debt-to-equity ratio was 1.08:1, which remains within our target range of 1x to 1.25x. On Slide 20, we show our quarterly income statement results. For the current quarter, we earned total investment income of $69 million, an 11% decrease compared to prior quarter. Total net expenses of $37 million decreased 18% versus the prior quarter, inclusive of the fee waiver previously mentioned. Our adjusted net investment income for the quarter was $0.32 per weighted average share, which covered our Q1 dividend. Our earnings were driven by our strong core income and incentive fee waiver and the share repurchase program. Slide 21 highlights that 98% of our total investment income is recurring in the first quarter. On the following page, you can see that 83% of our investment income was paid in cash, up from 77% prior quarter. of investment income was pick income from physicians that included Pick from inception to best enable these borrowers to execute on their strategic growth plans. Only 3% of investment income is driven by modified PIK from an amendment or restructuring. Importantly, investments generating noncash income during the first quarter are marked at weighted average fair market value of 96% of par. During the quarter, we also collected approximately $35 million of previously accrued PIK income as part of the secondary sale. Turning to Slide 23. The red line shows the coverage of our dividend. For Q2 2026, our Board of Directors has declared a dividend of $0.25 per share. On Slide 24, we highlight our various financing sources and diversified leverage profile. As a reminder, our Wells Fargo facility is non-mark-to-market and tied to the operating performance of the underlying companies we lend to. New Mountain Finance Corporation has maintained a long and deep relationship with more than a dozen banks dating back over the course of our nearly 15 years as a public company. NMFC benefits from the stability provided by these relationships from across the entire New Mountain platform. Taking into account SBA guaranteed debentures, we have over $2 billion of total borrowing capacity with approximately $690 million available on the revolving lines, subject to borrowing base limitations. This molten covers our unfunded commitments of $190 million. Finally, on Slide 25, we show our leverage maturity schedule. We continue to ladder our maturities with less than 1% of outstanding debt maturing in 2026 and Notably, 60% of our outstanding debt matures in or after 2029. We remain focused on continuing to access the unsecured market in 2026. With that, I would like to turn the call back over to John. John Kline: Thank you, Chris. In closing, we would like to thank all of our stakeholders for the ongoing partnership and look forward to speaking to you again on our second quarter 2026 earnings call in August. I will now turn things back to the operator to begin Q&A. Operator? . Operator: [Operator Instructions] We'll take our first question from Finian O'Shea with Wells Fargo Securities. Finian O'Shea: Just starting with a couple small items on the deck, the nonaccruals jumped a bit more than just convey would explain, I think, up to 1.43% at cost, seeing if there's anything else in there and then on the new fundings reported yield at 15.5%. Is that sort of a simple average considering the discounted purchases? Or is there sort of extra economics embedded in something like the health span? John Kline: Thanks, Fin. Good morning. On nonaccruals, the 2 new nonaccruals were affordable care first lien I believe last quarter, we put the prep on nonaccrual, and we had mentioned on last quarter's call that Affordable Care would be going through a restructuring process, and that's still happening. So the first lien is a new nonaccrual this quarter along with convey. So I think that would bridge the gap. And then as I mentioned in my comments, both of those, particularly affordable care should be coming off accrual in the near future over the next order. As we set a new capital structure in place in conjunction with the rest of the lender group, which we feel very positive about. So we feel that this is a good moment for Affordable Care despite the fact that it is currently a nonaccrual. Laura Holson: And to your question, just around the yields of the Q1 originations. So it is a weighted average based on the dollars deployed. But there's no kind of in economics or anything, but it does take into account the OID or in some cases, for the secondary purchases, the material discount at which we bought those assets. Finian O'Shea: So what made it 15.5% then? Laura Holson: Yes. So if you look at our originations on Page 15 of the slide deck, you can see a couple of those originations were done at meaningful discounts because they were done in the secondary market. As we touched on, we did find some more opportunistic investments over the course of the quarter were loans that we thought were misunderstood by the market. We had a differentiated view on. And so that accounts for the uptick in the yield this quarter. Finian O'Shea: Okay. And just a follow-up. SBIC II, you repaid some early, can you give us the sort of why on that and what that means for your go-forward debt stack? Laura Holson: It was a pretty modest amount that we repeat early there. As you know, the SBIC 1 and 2 are kind of out of their reinvestment period. And so just from a mechanical perspective, in some cases, to maximize liquidity, it makes more sense for us to do that. . But we also have our third SBIC license that we can use from a ramp perspective as well. So there are some puts and takes when we look at our overall liability stack. But ultimately, that's what we did in Q1. Operator: We'll move to our next question from Ethan Kaye with Lucid Capital Markets. Ethan Kaye: And congrats on the asset sale. But kind of with the asset sale in the rearview mirror now, already seeing some kind of progress deleveraging, diversifying and reducing PIC, et cetera. Hoping you can just talk about kind of the path forward with respect to these initiatives. Like was the asset sale a first step, albeit a big one there's more to be done? Or do you kind of feel that the bulk of what needed to be done has been taken care of with the sale? John Kline: Sure. Thanks for the question. We think it was a big step forward, as Steve talked about, and we think that there's ongoing benefits from that asset sale that are even occurring today as we redeploy the proceeds. Really, the next step for us is some of the other positions that we talked about. When we think about our PIK income and some of our concentration in equity positions. A lot of that is derived from a couple of big positions that are actually performing pretty well. We mentioned Benevis and UniTek and there are a couple of other small ones as well. And we're very focused on monetizing some of the PICC positions that are performing well as at nonyielding equity. And I think we showed that in the deck a little bit. And we feel like that is the next step to becoming even more conforming having more cash income as a percentage of our total income, having more diversity. And we're really excited for that next step. We think we're on the doorstep of really transforming the company as we monetize those positions over the next medium -- short to medium term. Ethan Kaye: Great. And then one on yields and spreads. So there is an uptick in portfolio yields quarter-on-quarter, sentinally some of that's due to the rotation of some of those non-income-producing assets, but you did also -- you guys mentioned redeploying some proceeds and higher spread widening, right? So I'm wondering if you kind of have a sense of what share of that call it, 60 to 70 basis point yield increase was from rotating -- simply rotating those nonincome-producing assets versus how much was maybe attributable to kind of higher spread opportunities and then if you can just kind of quantify the increase in kind of spreads you're seeing on some of the on-the-run deals here, that would be helpful. Laura Holson: Sure. Yes. If you look at Page 17 of our deck, I think we try to lay out kind of the bridge, if you will. So it's not any one thing, I would say, when you look at the uptick in yield. It was a bit of the SOFR curve movement, a bit of the origination activity and a bit of the rotation piece. So it kind of all contributes to it. I think the main driving factor as we talked about of the increase in Q1 origination yields related to some of those secondary opportunities. But stepping back a little bit to answer your broader question about what are we seeing in spreads. I think in general, we've seen spreads for regular way deals probably widen to the tune of 25 to 50 basis points. So what was the SOFR 450 unitranche loan in late last year would probably be a silver 500 unitranche loan today with maybe a little bit more -- so that's kind of the generic loan. And then if you look at anything more on the software ecosystem, we're probably seeing a little bit broader spread widening even than that. So instead of $500 million, that's probably 550 plus -- so directionally, that's kind of what we've been seeing in terms of opportunities, and that's why as John said, when we think about some of the benefits of the secondary sale, certainly redeploying into some of these newer assets is also a key component of that. Operator: [Operator Instructions] We'll take our next question from Robert Dodd with Raymond James. Robert Dodd: Congrats on getting the asset sales done and you've been kind of aggressive on the buyback. And I also want to say best of luck. I don't want to Chris on whatever he's heading off to. So a couple of questions. I mean one of them ties in the context of Beavis and UniTek and some of the others, you talked about maybe monetizing those in the short to medium term or near to medium term, whatever the exact wording was. And then Leo's comments that the M&A market is starting to pick back up. I mean -- what's the confidence level in moving some because obviously, I mean, the market has been a little suffice to say choppy. And normally, when it rebounds from a period like that, it's premium. As assets that move first not to knock [indiscernible] but they have had issues in the past. I mean are they -- so what's the kind of where does the confidence come from that may be monetizable in the near to medium term, what I would have thought maybe a little longer for assets that have had issues in the past, given how the market tends to respond to that? John Kline: Sure. Thank you, Robert. That's a great question. I think the confidence really comes from the underlying performance of the businesses. So Benefit is in a more challenged sector. It's a dental business. But we really feel we have a great management team. We have improving numbers, and we think that we've built a winner in what has been a more difficult space. And I think there should be really good value to investing in winters generally. So that's where our confidence is derived from. I think the obvious challenge is that it has been a more difficult space. So we'll have to navigate that. And we believe that we have a good plan to do so as we think about the exit. With regard to UniTek, that has been a bit of a long road, but we've really positioned the business to be right in the center of broadband build and this data center explosion and we're doing just a lot of work as it relates to multiple broadband initiatives around the country that have a lot of private and public funding, and we have a big backlog of projects that enact existing and new data centers. And I think that boom as well discussed and well known about. So UniTek is just in a really good position, and it's executing well in what is, I think, a honesty. So that, I think, has all the positive elements going forward. Robert Dodd: Got it. I'm kind of tied to the whole as the market is going to do most. I mean , Lou mentioned more dispersion in loan pricing. And that spread expansion, I mean, obviously, 25 to 50, 50-plus for software. I mean how why is the dispersion and kind of what's your appetite to play at the tight end of that versus the middle versus the wider end of that dispersion in terms of risk? Laura Holson: Yes. Well, I think like last year, for example, and we've talked about this in some of our calls last year, really no dispersion, right? Everything was pricing, and that's over 450 to 475 and that, we thought was a challenging dynamic, and we had the philosophy very much of staying safe because you're -- particularly last year, you're not getting paid for any extra incremental risk. This year, so far, as I said, we are starting to see more dispersion. Some of that industry, as I alluded to, where software is now pricing wider but even just in general, I think we are starting to see a little bit more dispersion by industry, by size of the company, sponsor, et cetera. Look, our philosophy hasn't changed. We're always focused on staying safe. As you know, we like the most defensive sectors of the economy. We do feel like our research engine is differentiated and allows us to pick the best credits within those safer sectors. So that continues to be our philosophy. We're definitely not -- our goal is not to chase yield at the risk of credit. That being said, some of the opportunistic stuff that we did in Q1, we felt like we had high conviction on and really benefited from the knowledge base that the New Mountain ecosystem has. So that's how I would categorize it. Kris Corbett: Robert, the only thing I would add... John Kline: The only quick thing I'd add is when you think about the dispersion within software, I perceive right now, it is pretty wide. I think it could be anywhere, as Laura was saying from 550 to 1,000. And that dispersion is driven by real and perceived views on the quality of the business model within different within the software ecosystem. And I think that's a more exciting environment to invest in versus the environment that Laura was talking about earlier, where everything is pricing at $475 so I think lenders have the opportunity to take differentiated views in software and potentially get rewarded for making the good credit picks. That's the one thing I would add to that commentary. Robert Dodd: Got it, understood. And one more quick one, if I can. But obviously, it's pretty attractive. If we can get a high-quality loan at 65% in the secondary market and your stock trading at sometimes all at into the secondary and getting the appreciation that way might be attractive. But you did just increase the buyback. You bought a lot in the first quarter. What's kind of your thinking right now on how attractive that buyback versus general deployments versus opportunistic secondary purchases kind of shake out? John Kline: Sure. I think we want to be balanced between managing the business at an appropriate leverage level, taking advantage of opportunities in the secondary market that we see continuing to support sponsor clients. . As well as buying back stock when it's trading at a level that we think is too cheap. So I just think it's a balance of each and I think that's what we've done historically in the first quarter, and that's what we'll continue to do. So I guess that's the way I would answer that question. Operator: [Operator Instructions] We'll go to our next question from Paul Johnson with KBW. Paul Johnson: Just in terms of the credit statistics you provide on the PI portfolio, which is very helpful. I was wondering if you can kind of explain that it looked like there was a bigger drop within just the -- it looked like the green rated names of income generation within could drop to about 83% or so of that -- of those investments. With that because of something to do with just the asset sale or any new names that were placed on pick this quarter or if you can kind of maybe explain the change quarter-over-quarter. Laura Holson: Yes. I think the biggest driver, I mean, obviously, as folks have highlighted, our PIC percentage did come down pretty meaningfully. In the quarter, right, we were around 20% last quarter. This quarter, we're at about 15%. A large driver of that was the secondary sales we talked about. That was one of the key focus areas, one of the drivers behind the secondary sale, amongst other reasons. And so just as the PIC composition just changed pretty meaningfully in 1 single quarter, that was the main driver of the decrease in percentage green versus anything -- any kind of dramatic movement. We did see a little bit of heat map movement this quarter, as John talked about, but it was really more to former the secondary sales. Paul Johnson: Got it. Okay. That's helpful. And then just on EBITDA trends within the portfolio, it looks like EBITDA kind of year-over-year up around 11% leverage declined a little bit, insurance coverage improved a little bit. I mean is that pretty reflective in your opinion, just the underlying kind of trends within the portfolio here this quarter, I mean, we're within, I guess, just the broader context of a little bit more noise within the mark-to-market stuff as well as some credit-related marks this quarter as well. I'm wondering if you can kind of flip the 2 between just kind of the NAV marks and just in general, it looks like credit improvement on the quarter. Laura Holson: Yes. No, I think the takeaway that you're alluding to around just the EBITDA growth, the deleveraging in general, is consistent with what we're seeing. It's kind of a we get the benefit of this time of the year where we're getting a lot of Q4, Q1 and budget reporting from a lot of our portfolio companies. And generally speaking, we think the portfolio is largely performing well. When we think about the NAV movement and John talked about this, but a good chunk of the NAV moving in the quarter, the majority of it related more to just peer mark-to-market and just reflecting the -- where the BSL market is currently trading as opposed to credit specific. So in general, I do look at these trends and think it's illustrative of the portfolio. we did have the modest heat map degradation that I just talked about, but that, to me, was a little bit more idiosyncratic and also trying to reflect some of just the latest enterprise value multiples from the software market in particular. Operator: [Operator Instructions] We'll take our next question from Sean-Paul Adams with B. Riley Securities. Sean-Paul Adams: It sounds like there was a couple of portfolio positives this quarter. It looks like there was a large wave of buybacks, it looks like you guys kind of alluded to that nonaccruals could go down in the next couple of quarters. On just the origination volatility, I guess, what are your thoughts as far as just balancing out the current volume over the next couple of quarters? It looks like you guys got back to a lower leverage ratio. There's been some sizable like portfolio benefits in terms of spread. But where you're looking at in terms of getting back to a target leverage range? Do you have thoughts about continuing the portfolio expansion given opportunistic levels? Or are you kind of more comfortable at your current levels and just looking for more opportunistic deals? Laura Holson: Yes. Thanks for the question. I would say when we think about our target leverage range, I think we've been pretty consistent in articulating the 1x to 1.25x, that's been our target leverage range for a long time at this point. And we are comfortable operating anywhere in that range. we obviously, post secondary sale had delevered slightly below that range as we talked about on last quarter's call and through the combination of some buybacks and some origination activity kind of migrated back to within the range. Look, it's something that's hard to predict and pinpoint exactly, right, because just from a timing of origination and repayment perspective, those things are typically outside of our control. So I can't say that we have a specific target within the range. We are comfortable within the range. And we certainly don't want to be -- there's a few quarters, I think, over the past few years that we were at the high end of the range every quarter, and that is not our goal. We want to be kind of within the range in general. Operator: [Operator Instructions] It appears there are no further questions at this time. I'd like to turn the conference back over to John for any additional or closing remarks. John Kline: Great. Well, I would just like to thank everyone for joining our call today, and we look forward to speaking to everyone again in August. Thank you. Operator: This concludes today's call. Thank you again for your participation. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. NMFC Q1 2026 Earnings Transcript was originally published by The Motley Fool

NMFC sold about $470 million of illiquid positions at ~94% of book value, creating liquidity used to delever and fund opportunistic moves including roughly $57M of buybacks by March 31 (plus ~$9M since), a new $50M authorization (leaving ~$80M total buyback capacity), secondary-market purchases, and higher-yield deployments; insiders bought shares (Chairman bought 1.5M), lifting New Mountain ownership to ~17%. Management cut the quarterly dividend to $0.25 (payable June 30) from $0.32, but says the payout is fully covered by adjusted net investment income (Q1 adjusted NII was $0.32 per share, aided by a $6.1M fee waiver) and expects ongoing coverage. NAV fell to $10.92 (down $0.23 pro forma), while portfolio health remains largely intact with 91% of assets rated green, non-accruals at 2.6%, and leverage at a net debt-to-equity of 1.08x; management flagged expected recoveries at several stressed credits and continuing redeployment into cash-yielding loans. Interested in New Mountain Finance Corporation? Here are five stocks we like better. New Mountain Finance (NASDAQ:NMFC) executives highlighted a quarter marked by portfolio repositioning, share repurchases, and a reduced dividend as the business development company discussed first-quarter 2026 results and its outlook for redeploying liquidity created by a large portfolio sale. President and CEO John Kline opened the call by noting a management change: CFO and Treasurer Kris Corbett will leave at the end of May “to pursue another career opportunity.” Kline said COO Laura Holson will assume the additional duty of interim CFO until a successor is found. → Roblox Stock Slides to New Low as Safety Changes Weigh on Outlook Chairman Steve Klinsky said adjusted net investment income (NII) was $0.32 per share for the first quarter, matching and covering the $0.32 per share dividend paid March 31. He attributed support for results to recurring income from the loan portfolio and a “full voluntary incentive fee waiver of $6.1 million.” Looking to the current quarter, Klinsky announced a $0.25 per share dividend payable June 30 to shareholders of record as of June 16. He said the company expects the dividend to be “more than covered by the earnings from our core business.” Kline also referenced that the revised $0.25 quarterly payout is fully covered by net investment income. → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches Klinsky said the company made what he characterized as a “very positive and well-timed strategic pivot” by selling about $470 million of “some of our most illiquid and hardest to value positions” at 94% of December 31 book value, with the transaction closing and funding in March. He said the liquidity has allowed NMFC to delever and pursue opportunities “at far less than $0.94 on the dollar.” Management outlined several uses of proceeds and areas of focus: Share repurchases: Klinsky said NMFC bought back stock at roughly $8 per share, or about a 27% discount to book value. About $57 million of buybacks were completed by March 31 and about $9 million since, leaving roughly $30 million under the original authorization. He said the board added an incremental $50 million authorization. Kline later said the company maintained about $80 million of buyback authorization going forward. Secondary market purchases: Klinsky described buying “oversold” credits, including one investment in a “multi-billion dollar public company” purchased at “2x EBITDA and at $0.65 on the dollar,” which he said traded up about 10 points after the first purchase. Higher new-issue yields: Management said spreads have widened and new deployments are being made at “significantly higher and more attractive yields” than a year ago. Monetizing equity and former defaults: Klinsky and Kline pointed to “forward momentum” at former default situations including Benevis, UniTek, and Permian, with a goal of selling at above current marks and redeploying into cash-yielding loans. → 3 Emerging Markets ETFs to Maximize Exposure to High-Potential Countries Klinsky also highlighted insider purchases, saying he bought 1.5 million shares during the quarter and other New Mountain Capital leaders also bought shares. He said New Mountain ownership increased from about 14% to about 17% of shares outstanding. Kline said net asset value (book value) ended the quarter at $10.92 per share, down $0.23 from $11.15 for fourth-quarter pro forma results reflecting the secondary sale. He attributed about two-thirds of the quarter’s write-down to broader market movements, with the remaining one-third tied to credit-specific changes. He cited tailwinds at Benevis and UniTek, partially offset by a restructuring at Affordable Care and a change to wind-down assumptions at Northstar, which he said is in liquidation and represents about $20 million of value. Kline said the company expects cash recovery on Northstar to begin next year. On portfolio health, Kline said 91% of the portfolio was rated green on NMFC’s internal risk scale, while orange and red names represented 3.5% of fair value. Non-accruals at fair value rose to 2.6%, which he called a modest increase from last quarter. During Q&A, Kline clarified the new non-accrual additions were Affordable Care’s first lien position and Convey. Kline said he expects Affordable Care to come off non-accrual in coming quarters as lenders complete a change in control and implement a new capital structure featuring a smaller cash-pay first lien loan and a larger equity account held by former lenders, management, and doctors. He also said NMFC recruited a new leader at Convey alongside the lender group and is “optimistic” about a near-term recovery. Holson said first-quarter originations totaled $117 million, offset by $492 million of sales and repayments, primarily tied to the secondary portfolio sale. She said originations were focused on defensive growth “power alleys” including healthcare, business services, and IT infrastructure and security, along with several discounted secondary purchases. She said the portfolio’s average yield increased to 11.1% during the quarter, reflecting higher-yielding originations versus repayments and a “higher for longer” shift in the forward curve. In response to analyst questions, Holson said the reported 15.5% yield on new fundings was a weighted average that includes original issue discount and the impact of buying loans at “material discounts” in the secondary market. Holson also addressed market pricing, saying typical unitranche spreads have widened roughly 25 to 50 basis points versus late 2025, and that software-related credits have widened more. Kline added that dispersion within software has become “pretty wide,” citing a range of roughly SOFR+550 to SOFR+1,000 basis points depending on perceived business-model quality. Corbett reviewed balance sheet metrics, stating the portfolio was $2.3 billion at fair value with $2.4 billion of total assets at March 31. Total liabilities were $1.4 billion, including $1.2 billion of statutory debt outstanding, and NAV was $1.0 billion, or $10.92 per share. Net debt-to-equity was 1.08x, within the company’s stated 1.0x to 1.25x target range. Corbett said total investment income was $69 million, down 11% from the prior quarter, while net expenses fell 18% to $37 million including the fee waiver. He added that 98% of total investment income was recurring in the quarter and that 83% of investment income was paid in cash, up from 77% in the prior quarter. He said the company collected about $35 million of previously accrued PIK income as part of the secondary sale. On liquidity, Corbett said NMFC had more than $2 billion of total borrowing capacity, with about $690 million available on revolving lines subject to borrowing base limits, versus $190 million of unfunded commitments. He also said less than 1% of outstanding debt matures in 2026 and that 60% matures in or after 2029, adding that the company remains focused on accessing the unsecured market in 2026. New Mountain Finance Corp. is a closed-end, externally managed business development company (BDC) that provides customized debt and equity capital solutions to U.S. middle-market companies. As a BDC organized under the Investment Company Act of 1940, New Mountain Finance invests in sponsor-backed and founder-led businesses that span a range of industry sectors, with a focus on companies demonstrating resilient growth and recurring revenue streams. The company's investment portfolio typically includes first-lien senior secured loans, second-lien and junior debt instruments, mezzanine financing and equity co-investments. The article "New Mountain Finance Q1 Earnings Call Highlights" was originally published by MarketBeat.

New Mountain Finance (NMFC) came out with quarterly earnings of $0.32 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $0.32 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this business development company would post earnings of $0.32 per share when it actually produced earnings of $0.32, delivering no surprise. Over the last four quarters, the company has not been able to surpass consensus EPS estimates. New Mountain, which belongs to the Zacks Financial - SBIC & Commercial Industry industry, posted revenues of $68.79 million for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 1.61%. This compares to year-ago revenues of $85.66 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. New Mountain shares have lost about 6.6% since the beginning of the year versus the S&P 500's gain of 5.6%. While New Mountain has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for New Mountain was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.26 on $61.74 million in revenues for the coming quarter and $1.12 on $255.28 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - SBIC & Commercial Industry is currently in the bottom 15% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Palmer Square Capital BDC Inc. (PSBD), is yet to report results for the quarter ended March 2026. The results are expected to be released on May 6. This company is expected to post quarterly earnings of $0.40 per share in its upcoming report, which represents no change from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Palmer Square Capital BDC Inc.'s revenues are expected to be $27.75 million, down 11.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report New Mountain Finance Corporation (NMFC) : Free Stock Analysis Report Palmer Square Capital BDC Inc. (PSBD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research