New Mountain Finance Corp Q4 FY2024 earnings call

• Adjusted net investment income of $0.32 per share covered the $0.32 per share regular dividend paid on December 31. - Announced a $0.32 dividend payable on March 31, 2025. - Sold a stake in UniTek Global Services to BTG Pactual Strategic Capital, returning $42 million to NMFC. - Portfolio has strong credit performance with no new non-accruals and no red names on the heat map. - Strategic focus on 75% senior-oriented assets, including first lien, unitranche loans, senior loan funds, and net lease subsidiary. - Interest rate analysis shows portfolio is evolving to be 75% floating rate inclusive of hedges over the next twelve months. - Originated $33 million of assets in Q4, with $218 million of repayments and sales, driving deleveraging to the middle of target leverage range.

Adjusted net investment income for the quarter was $0.32 per share. Net asset value per share was $12.55, a decline of $0.07 or 0.6%. The portfolio had 97% green-rated assets, 1.2% orange-rated, and 0% red-rated. Senior-oriented assets make up 75% of the portfolio, second lien positions are 7%, and equity positions are 8%.

• Declared a $0.32 dividend per share payable on March 31, 2025, to shareholders of record on March 17. - Aim to monetize accrued PIK income while retaining prudent levels of PIK income. - Evolve capital structure to have 75% of liabilities as floating rate inclusive of hedges over the next twelve months. - Potential to sell certain equity stakes in the future.

• Market volatility and regulatory uncertainty across political and regulatory headlines. - High base rate environment impacting deal activity but being a tailwind to returns. - Bid-ask gap due to higher multiple deals from 2021 aging into maturity. - Spread compression in direct lending affecting repricing opportunities.

Q: How does the enterprise value of the UniTek partial sale stack up with the enterprise value used to inform the mark at Q4?

A: It is modestly higher, generally in line to modestly higher.

Q: How comfortable are you with UniTek aside from lowering PIK exposure as we go through the year?

A: Feel good about it, and expect to show progress on reducing PIK positions with opportunities to continue working down PIK positions.

Q: Would you keep the mix between senior, first lien, loan funds, and net lease the same?

A: Within the senior-oriented category, the mix will stay the same.

Q: Thoughts on market spreads and potential repricing vulnerability in the portfolio?

A: Spreads have stabilized, with Unitranche in the 450-500 area for high-quality companies. Majority of portfolio deals that could reprice have likely already gone through repricing exercise, with majority of vulnerable positions already addressed