New Mountain Finance Corp (NMFC) Q4 2025 Earnings Call Highlights: Strategic Asset Sale and …

GuruFocus News

Thu, February 26, 2026 at 8:03 AM GMT+9 4 min read

In this article:

NMFC

-4.04%

This article first appeared on GuruFocus.

**Adjusted Net Investment Income:** $0.32 per share for Q4 2025.

**Dividend:** $0.32 per share paid in cash on December 31, 2025.

**Net Asset Value (NAV):** Declined to $11.52 per share from $12.06 per share.

**Asset Sale:** $477 million sale of assets scheduled to close in March 2026.

**Net Debt to Equity Ratio:** 1.21 to 1, decreasing to approximately 0.9 times post asset sale.

**Total Investment Income:** $77 million for Q4 2025, a 4% decrease from the prior quarter.

**Total Liabilities:** $1.7 billion as of December 31, 2025.

**Portfolio Investments:** $2.8 billion at fair value as of December 31, 2025.

**Recurring Investment Income:** 97% of total investment income in Q4 2025.

**Non-Accruals:** 1.4% of the portfolio at fair value.

**Share Repurchase:** Approximately $52 million of shares repurchased in 2025.

Warning! GuruFocus has detected 4 Warning Signs 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: February 25, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

New Mountain Finance Corp (NASDAQ:NMFC) successfully covered its $0.32 per share dividend with adjusted net investment income of $0.32 per share for the fourth quarter.

The company announced a $0.32 dividend payable on March 31st, with a continued reduction in performance fees to 15% under the dividend protection program.

NMFC's loan portfolio is largely stable, with approximately 95% ranked green on their heat map and no positions ranked red.

The company completed a $477 million asset sale, which is expected to diversify the portfolio and reduce exposure to high-risk assets.

NMFC has a strong track record, having generated $1.3 billion of value for shareholders since its IPO, with a low realized loss rate.

Negative Points

Net asset value declined to $11.52 per share from $12.06, primarily due to a lower valuation on the common equity piece of Edmentum.

The asset sale resulted in a 6% discount, which will initially reduce book value by approximately $0.35 per share.

The long-term sustainable dividend rate is expected to decrease to $0.25 per share per quarter starting in Q2 2026 due to base rate compression and lower market spreads.

NMFC's net asset value decreased by 4.5% compared to the prior quarter, with a net debt to equity ratio of 1.21 to 1.

The company faces ongoing scrutiny and challenges in the software loan market, with potential risks from AI-driven disruptions.

 






Story Continues  

Q & A Highlights

Q: Is the 94% discount on the asset sale inclusive of any advisory fees, and what is the updated leverage posture following the sale? A: The 94% of par was the purchase price of the assets, and there will be fees and expenses associated with the transaction, expected to be about $7 million. We are maintaining our leverage target between 1 and 1.25. The sale puts us under our stated leverage target, and we plan to deploy the proceeds into a better market for credit and direct lending, as well as potential stock buybacks. John Kline, President, CEO, Director

Q: Did you attempt to sell any of the more struggling or depressed assets in the portfolio sale? A: We like our portfolio and believe we have many good assets. The sale was driven by a desire to reduce concentration and pick income, not to offload poor assets. The transaction allows us to quickly deliver on strategic initiatives, and we retain upside in positions like Benevis. John Kline, President, CEO, Director

Q: Were there multiple bidders for the asset sale, and how were the assets selected and priced? A: It was a competitive process led by Evercore, with multiple bids received. The assets were selected based on our goals to reduce pick income and diversify our top positions. The sale included our largest positions to manage portfolio concentration effectively. John Kline, President, CEO, Director

Q: How do you interpret the pricing of the assets relative to internal marks, given the 94% valuation? A: We believe it was a fair deal for both sides. The buyer received great assets at a slight discount, which is commercially normal. The sale validates our marks, reduces concentration, and improves portfolio composition, especially given our stock trades below book value. John Kline, President, CEO, Director

Q: Can you provide more details on the strategic initiatives following the asset sale? A: Post-sale, our top five positions are now just 14% of NMFC’s portfolio value, and senior-oriented assets represent 81% of the portfolio. We expect to redeploy proceeds primarily in first lien assets, reducing pick income by 20-25%. John Kline, President, CEO, Director

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Terms and Privacy Policy

Privacy Dashboard

More Info