New Mountain Finance Corporation reported its fourth‑quarter and full‑year 2025 results, posting a net investment income of $0.32 per share that exactly matched the $0.32 dividend paid to shareholders, giving the company a 100% dividend coverage ratio. The company’s year‑end net asset value per share fell to $11.52 from $12.06 at the end of September, while its statutory debt‑to‑equity ratio stood at 1.26x and the annualized dividend yield was 15.7%.
Revenue for the quarter was $77.4 million, down from $80.53 million in Q3 2025 and $91.19 million in Q4 2024. The figure missed consensus estimates that ranged from $78.84 million to $82.53 million, reflecting a decline in loan origination volume and weaker interest income as credit spreads tightened. The revenue shortfall is consistent with the company’s broader view that the current low‑rate environment is compressing margins across its portfolio.
Management announced that the quarterly dividend will be reduced to $0.25 per share beginning in Q2 2026. The guidance cites base‑rate compression, lower market spreads, and a shift toward a more senior asset mix as the primary drivers for the cut. The company also confirmed a permanent reduction of its incentive fee to 15% over an 8% hurdle, a move intended to align management incentives more closely with shareholder interests.
In addition to the dividend change, New Mountain Finance completed a $477 million sale of assets at 94% of fair value. The transaction was designed to diversify the portfolio, reduce payment‑in‑kind income, and enhance financial flexibility. The sale also supports the company’s strategy of focusing on higher‑quality, more senior assets in a tightening credit market.
Steven B. Klinsky, Chairman and CEO of New Mountain Capital, said, “In Q4, NMFC covered its dividend, despite tight credit spreads in the market generally.” John R. Kline, CEO of New Mountain Finance, added, “We believe that the $477 million asset sale represents a positive catalyst for our business as we seek to reduce PIK income, diversify our portfolio and allocate capital to both new loans and stock buybacks. Since the end of Q3, NMFC has repurchased $30 million worth of shares and we expect repurchases to continue in 2026, underscoring our confidence in NMFC’s long‑term value.”
Investor sentiment was tempered by the revenue miss and the announced dividend reduction, which together offset the positive impact of the earnings beat and the asset‑sale proceeds. The company’s guidance signals caution about near‑term growth while underscoring a commitment to maintaining dividend coverage and strengthening its balance sheet.
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