New Mountain Finance (NMFC) Q3 2025 Earnings Call Transcript
Adjusted Net Investment Income $0.32 per share, covering the $0.32 per share dividend paid in cash on September 30. Supported by consistent recurring income from the loan portfolio, full utilization of the dividend protection program, and an incremental fee waiver.
Net Asset Value (NAV) per share Declined $0.15 compared to Q2, to $12.06. Decline attributed to modest decreases across four investments.
Stock Repurchase Program $47 million worth of shares repurchased this year at an average price of approximately $10. Fully utilized the $50 million 10b5-1 stock repurchase program. A new $100 million share buyback program has been approved.
Portfolio Loan-to-Value Stands at 45%. Reflects a defensive growth strategy in sectors like healthcare, IT software, insurance services, and infrastructure services.
Nonaccruals $51 million or 1.7% of the portfolio on nonaccrual at fair value. Includes a first lien debt position in Beauty Industry Group moved to nonaccrual status due to weaker consumer demand, go-to-market challenges, and tariffs on its China-oriented supply chain.
Total Investment Income $80 million for the quarter, a 4% decrease compared to the prior quarter. Driven by strong core income and effective incentive fee rate of 7.6%.
Portfolio Yield Decreased slightly to 10.4% due to lower yields on originations compared to repayments as the portfolio continues to rotate more senior.
Weighted Average EBITDA of Portfolio Companies Increased slightly to $180 million due to growth at individual companies and realization of smaller companies during the quarter.
Net Debt-to-Equity Ratio 1.23:1, within the target range of 1:1.25.
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New Mountain Capital Closes $1.2 Billion Private Equity Fund
- Fund Size Achievement: New Mountain Capital announced the successful closing of its second non-control private equity fund, New Mountain Strategic Equity Fund II (SEF II), at $1.2 billion, exceeding its $1 billion hard cap due to strong investor demand.
- Investment Focus: SEF II will concentrate on minority investments in defensive growth sectors such as infrastructure services, life sciences, and advanced materials, aiming to drive business development and value creation through non-control transactions.
- Diverse Investor Base: The fund's investors include pensions, insurance companies, asset managers, endowments, family offices, and high-net-worth individuals, reflecting broad market confidence and recognition of New Mountain Capital's strategic approach.
- Asset Management Scale: New Mountain Capital currently manages approximately $60 billion in assets across private equity, strategic equity, credit, and net lease real estate funds, with a team of over 300 professionals, continuously enhancing its research and underwriting capabilities in defensive growth sectors.
Upcoming Sale of New Mountain Assets Serves as a Benchmark for Private Credit Market
- Potential Asset Sale: New Mountain Finance is considering a $500 million sale of assets, which could significantly impact its operations.
- Market Implications: This move is seen as a critical test for the business-development company and the broader private credit market, valued at $1 trillion and currently facing scrutiny.
