New Mountain Finance Corporation (Nasdaq: NMFC) has recently released its 10-K report, providing a comprehensive overview of its financial performance and operations. The company is a business development firm that focuses on investing and lending to middle market companies in "defensive growth" industries. Its investment portfolio spans a wide range of sectors, including energy, engineering, healthcare, and technology, with a preference for buyout and middle market companies. New Mountain Finance targets investments between $10 million and $125 million per transaction, seeking a majority stake in its portfolio companies.
In the year ended December 31, 2023, New Mountain Finance reported total investment income of $374.8 million, representing a significant increase of approximately $80.2 million, or 27%, compared to the previous year. This income was primarily derived from cash interest, dividends, and other income sources. The increase in interest income was attributed to a higher effective interest rate on the company's portfolio due to higher SOFR rates on its floating rate assets.
The firm's total net operating expenses increased by approximately $39.9 million for the year ended December 31, 2023, compared to the previous year. Notably, the incentive fee increased by $8.4 million, driven by an increase in net investment income. Interest and other financing expenses also rose by approximately $32.4 million due to higher LIBOR and SOFR rates on floating rate borrowings, among other factors.
New Mountain Finance reported a net loss of approximately $23.8 million for the year ended December 31, 2023, compared to a net loss of approximately $45.1 million for the same period in 2022. The net loss in 2023 was primarily driven by a realized loss in Ansira and unrealized depreciation on investments in Edmentum and New Trojan Parent Inc., partially offset by unrealized appreciation in UniTek and CentralSquare Technologies, LLC.
In terms of liquidity and capital resources, the company raised approximately $966.9 million in net proceeds from additional offerings of common stock since its IPO. As of December 31, 2023, New Mountain Finance had cash and cash equivalents of approximately $70.1 million, and its cash provided by operating activities during the year was approximately $332.7 million. The company also entered into an equity distribution agreement, allowing it to issue and sell shares from time to time through the Agents, up to $250.0 million worth of its common stock by means of at-the-market ("ATM") offerings.
Moreover, New Mountain Finance may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its portfolio companies. As of December 31, 2023, the company had outstanding commitments to third parties to fund investments totaling $156.8 million under various undrawn revolving credit facilities, delayed draw commitments, or other future funding commitments.
For more information, read the company's full 10-K submission here.
