New Mountain Finance Corp Q3 FY2024 earnings call

• Adjusted net investment income was $0.34 per share, covering the $0.32 per share regular dividend. Net asset value per share was $12.62, down $0.12. • No new non-accruals during the quarter. • Originated $146 million of assets and had $102 million of repayments/sales, remaining fully invested at target leverage. • Portfolio is in defensive sectors like software, business services, healthcare. • Interest rate sensitivity: Evolving capital structure to offset earnings pressure from rate changes, with plans to swap fixed to floating and refinance debt. • Diversified portfolio across 128 companies, with top 10 issuers at 25% of fair value.

Adjusted net investment income for the quarter was $0.34 per share. The loan portfolio is 86% floating rate and 14% fixed rate. Originated $146 million of assets and had $102 million of repayments and sales. The portfolio is diversified across 128 portfolio companies, with top 10 single-name issuers accounting for 25% of total fair value. The weighted average EBITDA of borrowers increased to $189 million, and loan-to-value is at 41%.

• Expect to continue covering the base dividend but not pay supplemental dividends. • If quarterly NII below $0.32 per share in 2025-2026, will reduce incentive fee to achieve $0.32 per share NII. • Plan to reduce PIK exposure by replacing PIK repayments with cash-oriented assets to get PIK ratio under 10-12%.

• Interest rate sensitivity could impact earnings; evolving capital structure is a mitigation but market changes could still affect. • Potential credit risks in PIK positions if performance deteriorates. • Market volatility could affect the value of investments.

Q: On portfolio credit stats, comment on leverage change.

A: Combination of factors, loan-to-value cushion is comfortable.

Q: On PIK, plans to reduce.

A: Refinancing vintage PIK assets and replacing with cash-oriented assets.

Q: On SLPs, income up but dividend down.

A: Timing related, SLPs are strong performers.

Q: On stock buyback and valuation.

A: Stock has been weak due to PIK, focused on strengthening performance and using buyback if beneficial.

Q: On SBA maturity and SBIC license.

A: Aware of SBA maturity, target leverage range remains 1-1.25 times; no material updates on SBIC license.