Q2 2025 New Mountain Finance Corp Earnings Call
Operator: Good day and welcome to the New Mountain Finance Corporation's second quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to John Kline, president and CEO. Please go ahead.
Please signal a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions to ask a question. You may press star then 1 on your telephone keypad to withdraw your question. Please press star and 2. Please note this event is being recorded. I would now like to turn the conference over to John Kline president and CEO. Please go ahead.
John Kline: Thank you, and good morning, everyone. Welcome to New Mountain Finance Corporation's second quarter 2025 earnings call. On the line with me here today are Steve Klinsky, chairman of NMFC and CEO of New Mountain Capital, Laura Holson, COO of NMFC, and Kris Corbett, CFO and treasurer of NMFC. Steve is going to make some introductory remarks, but before he does, I'd like to ask Kris to make some important statements regarding today's call.
Thank you and good morning, everyone. Welcome to New Mountain Finance. Corporation second quarter, 2025 earnings call.
On the line with me here today are. Steve klinsky, chairman of nmfc and CEO of new Mountain Capital. Laura holsen COO of nmfc and Chris Corbett CFO and treasurer of nmfc.
Kris Corbett: Thanks, John. Good morning, everyone. Before we get into the presentation, I would like to advise everyone that today's call and webcast are being recorded. Please note that they are the property of New Mountain Finance Corporation, and any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our August 4th earnings press release. I would like to call your attention to the customary safe harbor disclosures in our press release and on pages two and three of the slide presentation regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from those statements and projections.
Steve is going to make some introductory remarks. But before he does, I'd like to ask Chris to make some important statements regarding today's call.
Before we get into the presentation, I would like to advise everyone that today's call and webcast are being recorded.
Please note that they are the property of new Mountain. Finance, Corporation, that any unauthorized broadcast in any form, is strictly prohibited information. About the audio replay of this call is available in our August 4th earnings press release.
I would like to call your attention to the customary Safe Harbor disclosures and our press release, as well as on pages 2 and 3 of the slide presentation regarding forward-looking statements.
Kris Corbett: We do not undertake to update our forward-looking statements or projections unless required to by law. To obtain copies of our latest SEC filings and to access the slide presentation that we'll be referencing throughout this call, please visit our website at www.newmountainfinance.com. At this time, I'd like to turn the call over to Steve Klinsky, NMFC's chairman, who will give some highlights beginning on page five of the slide presentation. Steve?
Today's conference call and webcast, may include forward-looking statements and projections. And we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from those statements and projections.
We do not undertake to update our forward-looking statements or projections unless required to, by law.
to obtain copies of our latest SEC filings and to assess the slide presentation, that will be referencing throughout this call, please visit our website at www.new Mountain, finance.com
Steve Klinsky: Thanks, Kris. It's great to be able to address you all today, both as NMFC's chairman and as a major fellow shareholder. Adjusted net investment income for the quarter was 32 cents per share, covering our 32 cents per share dividend that was paid in cash on June 30th. NII was supported by consistent recurring income from our loan portfolio, no new non-accruals, full utilization of the dividend protection program, and a modest incremental fee waiver. Our net asset value per share of $12.21 declined 24 cents compared to Q1. While overall credit performance was strong across the majority of our portfolio, NMFC did experience modest declines across three positions, which John will address later in the call. Importantly, 95% of our investments are green on our heat map, and our portfolio has nearly 80% exposure to senior-oriented assets.
At this time, I'd like to turn the call over to Steve kolinsky and mfc's chairman who will give some highlights beginning on page 5 with slide presentation. Steve
Thanks Chris.
It's great to be able to address you all today. Both, as nmfc, chairman
And as a major fellow shareholder.
Adjusted, net investment income for the quarter was 32 cents, per share.
Covering our 32 Cent per share dividend that was paid in cash on June 30th.
Nii was supported by consistent. Recurring income from our loan portfolio.
No new non-accruals, full utilization of the Dividend Protection Program, and a modest incremental fee waiver.
Our net asset value per share of $12.21 declined, 24 cents, compared to q1.
While overall credit performance was strong across the majority of our portfolio. Nmfc did experience modest decline of 3 positions, which John will address later in the call.
Steve Klinsky: NMFC lends chiefly in sectors such as healthcare information technology, software, insurance services, and infrastructure services, which we believe are well positioned in today's economic environment. NMFC's portfolio loan-to-value stands at just 45%. Our lending lines are being refinanced at lower rates, and our percentage of first lien assets is growing while our PIC income is falling. Looking forward to Q3, we would like to announce a 32-cent dividend payable on September 30th to shareholders of record on September 16th. NMFC's dividend is supported by our strong recurring earnings from our well-performing credit portfolio, increased portfolio activity compared to Q2, and the dividend protection program, which we have in place through the fourth quarter of 2026.
Importantly, 95% of our investments are green on our heat map and our portfolio has nearly 80% exposure to senior oriented assets nmfc lends. Chiefly in sectors, such as Healthcare Information. Technology, software, insurance, services and infrastructure services.
Which we believe are well, positioned in today's economic environment.
Nmfc ends portfolio loan to value stands. At just 45% are lending lines are being refinanced at lower rates and our percentage of first Lane assets is growing. While our pick income is falling
Looking forward to Q3, we would like to announce a 32 Cent dividend payable on September 30th to shareholders of record on September 16th.
Steve Klinsky: The dividend protection program represents a shareholder-friendly way to stabilize the dividend in a period of time that is characterized by tighter new issue spreads and lower fees that have been the result of below-normal private equity deal activity. Our view at New Mountain is that these trends are likely to normalize as deal flow picks up. Our current stock price implies a 15% discount to book value, and the dividend of 32 cents quarterly, or $1.28 annually, represents over a 12% yield, all with a 14-year track record of just a one basis point total net realized loss rate since IPO. As a result of the ongoing discount, NMFC entered into a stock repurchase program where the company has repurchased approximately $16 million of shares year to date, with an additional $31 million of board authorization remaining.
Nmfc is dividend, is supported by our strong, recurring earnings from our well-performing credit portfolio, increased portfolio, activity compared to Q2 and the dividend Protection Program, which we have in place through the fourth quarter of 2026, the dividend Protection Program, represents a shareholder friendly way to stabilize the dividend in a period of time. That is characterized by tighter new issues, spreads and lower fees that have been the result of below normal private Equity deal activity.
Our view at new Mountain is at these Trends are likely to normalize as deal flow picks up.
Senior track record of just 1 basis point. Total net realized loss rate since IPO.
Steve Klinsky: Additionally, I and my fellow managers at New Mountain are the largest shareholders of NMFC and have steadily increased our ownership level over time. We believe that our current share price represents a compelling entry point for prospective investors as we seek to deliver stable, consistent yield and exhibit clear opportunity for equity upside in the months ahead through further advancing our strategic initiatives. As a reminder, New Mountain's flagship private equity funds have never had a bankruptcy or missed an interest payment, and the firm now manages over $55 billion of assets. We employ over 90,000 people at our PE portfolio companies in the field, and our New Mountain team has now grown to over 280 employees and senior advisors and approximately 70 members of our executive advisory council.
As a result of the ongoing discount nmfc entered into a stock repurchase program, where the company has repurchased approximately 16 million of shares? Year-to-date with an additional 31 million of board. Authorization remaining
Additionally, I and my fellow managers in new Mountain are the largest shareholders of nmfc and have steadily increased our ownership level over time.
We believe that our current share price represents a compelling entry point for prospective investors. As we seek to deliver stable, consistent yield, we exhibit a clear opportunity for equity upside. In the months ahead, we will further advance our strategic initiatives.
As a reminder, new mountains, Flagship private, Equity Funds have never had a bankruptcy or missed an interest payment and the firm now manages over 55 billion dollars of assets.
Steve Klinsky: Our goal is to apply this same PE business-building skill and knowledge to benefit NMFC and our credit platform as a whole. We thank you for your ownership and partnership, and we are working diligently to serve your interests in the months and years ahead. With that, let me turn the call to John.
We employ over 90,000 people at our PE portfolio companies in the field and our new Mountain team has now grown to over 280 employees, and Senior advisors, and approximately 70 members of our executive advisory Council.
Our goal is to apply the same PE business building skill, and knowledge, to benefit nmfc and our credit platform as a whole.
John Kline: Thank you, Steve. I would like to begin on page eight, which offers an overview of our differentiated approach to direct lending. First and foremost, we focus only on sectors of the economy that we believe are defensive and have stable tailwinds that will benefit companies within these chosen sectors. We do not invest in industries that are volatile, cyclical, or secularly challenged. Secondly, we believe that we have a better model for research as New Mountain uses in-house industry executives and private equity personnel to underwrite direct lending deals within our chosen sectors. Finally, we continue to have very strong shareholder alignment with 14% of our outstanding shares owned by NMC employees and senior advisors, and we actively support shareholder returns through our dividend protection program.
We thank you for your ownership and partnership and we are working diligently to serve your interests in the months. And years ahead with that, let me turn the call to John
Thank you, Steve. I would like to begin on page 8, which offers an overview of our differentiated approach to direct lending.
First and foremost we focus only on sectors of the economy that we believe are defensive and have stable Tailwind that will benefit companies Within These chosen. Sectors,
we do not invest in industries that are volatile cyclical or secularly challenged,
Secondly, we believe that we have a better model for research as new Mountain uses in-house. Industry Executives and private Equity, Personnel to underwrite. Direct lending deals within our chosen sectors.
John Kline: Page nine provides key performance statistics showing a long-term track record of delivering consistent enhanced yield by minimizing credit losses and distributing virtually all of our excess income to shareholders. Since our IPO in 2011, NMFC has returned approximately $1.4 billion to shareholders through our dividend program, generating an annualized return of 10%. Today, our dividend yield is over 12% annualized based on the 32-cent quarterly payout. We have been a good steward of capital with negligible net realized losses over 14-plus years and maintain investment-grade ratings at Moody's and Fitch. Turning to page 10, NMFC continues to make progress on strategic priorities, which focus on improving the quality and diversity of our asset base, optimizing our liabilities with low-cost floating-rate debt, and enhancing the quality and character of our income.
Finally, we continue to have very strong shareholder alignment, with 14% of our outstanding shares owned by NMC employees and senior advisors. We actively support shareholder returns through our Dividend Protection Program.
Page, 9 provides key performance. Statistics showing a long-term track record of delivering consistent, enhanced yield by minimizing credit losses and distributing virtually all of our excess income to shareholders.
Since our IPO in 2011, nmfc has returned approximately 1.4 billion dollars to shareholders through our dividend program. Generating an annualized return of 10%
Today, our dividend yield is over 12%, annualized, based on the 32 Cent quarterly payout.
We have been a good Steward of capital with negligible net realized losses over 14 plus years and maintain investment grade ratings at Moody's and Fitch.
John Kline: To that end, in Q2, we increased senior-oriented assets to nearly 80% of the overall portfolio and further diversified our top holdings with the full repayment of Office Ally, previously a 2.5% position. On the liability side, our team is preparing to refinance the 7.5% convertible notes and the 8.25% unsecured notes, both of which mature or are callable in Q4 of this year. We expect to access the unsecured debt market and lock in interest rate hedges on the notional amount of these transactions. Finally, we continue to sell equity positions and exit PIC assets. In Q2, we monetized NMFC's $15 million position in Office Ally's common equity and received a full repayment on our position in ARCO's preferred shares, including all previously accrued PIC. We will seek to exit more PIC positions in the coming quarters.
Turning to page 10 NFC continues to make progress on a strategic priorities, which focus on improving the quality and diversity of our asset base. Optimizing our liabilities with low cost floating rate, debt and enhancing the quality, and character of our income.
To that end in Q2, we increase senior oriented assets to nearly 80% of the overall portfolio and further Diversified our top Holdings with the full repayment of Office Ally, previously, a 2 and a half percent position.
On the liability side, our team is preparing to refinance the 7 and 1/2% convertible notes and the 8 and a quarter percent unsecured notes both of which mature or are callable in Q4 of this year.
We expect to assess the unsecured debt market and lock in interest rate. Hedges on the notional amount of these transactions.
Finally, we continue to sell Equity positions and exit pick assets.
In Q2 we must mfc's 15 million position in office, allies common equity and received a full repayment on our position in arroz preferred shares. Including all previously, accured pick
John Kline: As shown on pages 11 and 12, the internal risk ratings of our portfolio decreased slightly during the quarter, with approximately 95% of the portfolio rated green. At the margin, we did see a few select names migrate down on our rating scale, representing $79 million, or less than 3% of the portfolio. Perhaps the most notable movement was the migration from yellow to red of a consumer products company in the portfolio. While this company is still current on its interest, its performance has been significantly impacted by tariffs on its predominantly China-oriented supply chain and will need liquidity support before year-end. It's worth noting that NMFC's loan is at the top of the capital structure, and there is no material debt ahead of our position.
We will seek to exit more pick positions in the coming quarters.
At the margin, we did see, a few select names. Migrate down on our rating, scale representing 79 million or less than 3% of the portfolio.
Perhaps the most notable movement was the migration from yellow to Red of a consumer Products Company in the portfolio.
While this company is still current on. Its interest is performance has been significantly impacted by tariffs on its predominantly China oriented supply chain and will need liquidity support before year end.
John Kline: Despite the modest negative move in overall risk ratings, our most challenged names, marked orange and red, represent only 2.1% of NMFC's fair value, making them a small part of the portfolio. Turning to page 13, we provide a graphical analysis of NAV changes during the quarter, resulting in a book value of $12.21, a 24-cent decline compared to last quarter. Overall, the quarter benefited from good core credit performance, offset by declines in Admentum, a dental healthcare business, and the aforementioned consumer products business. Admentum continues to deliver steady operating performance; however, there is debt and preferred equity that is accreting senior to our common equity position, which is pressuring our valuation. Admentum continues to work on new growth levers, including a career learning offering and other operating initiatives to enhance top and bottom-line performance.
It's worth noting that nmfc loan is at the top of the capital structure and there is no material debt ahead of our position.
Despite the modest negative move and overall risk. Ratings are most challenged names marked, orange and red represent. Only 2.1% of nmfc, fair value. Making them a small part of the portfolio.
Turning to page 13. We provide a graphical analysis of nav changes, during the quarter resulting in a book value of 12.21 a 24 Cent decline compared to last quarter.
Overall the quarter benefited from good Core Credit performance, offset by declines in momentum, a dental health care business and the aforementioned consumer products business.
At momentum continues to deliver a steady operating performance. However, there is debt and preferred Equity that is accreting senior to our common Equity position, which is pressuring our valuation,
John Kline: We have started to see M&A activity pick up in the sector and believe Admentum remains an attractive and well-positioned platform. The dental business has faced challenging labor inflation against the backdrop of lower patient volumes combined with price pressure. The company's financial sponsors have given the business a meaningful liquidity runway to improve operations and have made management changes that we hope will catalyze better execution. Page 14 addresses NMFC's non-accrual performance. On the left side of the page, we show that non-accruals continue to be very low, with only $38 million, or 1.2% of the portfolio on non-accrual. On the right side of the page, we show our cumulative credit performance since IPO. During that time, NMFC has made $10.2 billion of investments while realizing losses net of realized gains of just $16 million over the course of our history as a public company.
At momentum continues to work on New Growth levers, including a career learning offering and other operating initiatives to enhance top and bottom line performance. We have started to see m&a activity pick up in the sector and believed it meant to remains an attractive and well positioned platform.
The dental business has faced challenging labor inflation. Against the backdrop of lower patient volumes combined with price pressure.
The company's Financial sponsors have given the business a meaningful liquidity, Runway to improve operations, and have made management changes that we hope will catalyze better execution.
Page 14 addresses, nfc's, non-accrual performance, on the left side of the page, we show that non-accruals continue to be very low, with only 38 million or 1.2% of the portfolio on. Non-accrual
John Kline: On page 15, we present NMFC's consistent returns over the last 14 years. Cumulatively, NMFC has earned over $1.4 billion in net investment income while generating only $16 million of cumulative net realized losses and only $138 million of cumulative net unrealized depreciation, resulting in nearly $1.3 billion of value created for shareholders. While the realized loss rate remains very strong, we as a management team are focused on reversing the unrealized depreciation within the existing portfolio. I will now turn the call over to our Chief Operating Officer, Laura Holson, to discuss the current market environment and provide more details on NMFC's quarterly performance.
On the right side of the page, we show our cumulative credit performance, since IPO during that time, nmfc has made 10.2 billion dollars of Investments while realizing losses. Net of realized gains of just 16 million dollars over the course of our history as a public company.
On page 15, we present nfc's consistent returns over the last 14 years. Cumulatively nmfc has earned over 1.4 billion in net investment income. While generating only 16 million of cumulative, net realized losses, and only 138 million of cumulative. Net unrealized appreciation, resulting in nearly 1.3 billion of value, created for shareholders.
While the realized loss rate remains very strong, we as a management team are focused on reversing the unrealized appreciation within the existing portfolio.
Laura Holson: Thanks, John. While deal activity remains constrained in Q2, given tariffs and regulatory uncertainty, we have seen an increase in deal volume over the past several weeks. A combination of IPOs, take-privates, as well as general LBO activity indicates an unfreezing of the post-liberation day markets. The pipeline of potential PE exits remains exceptionally full, given the extended hold times for many PE-owned assets. The pressure to both deploy dry powder and return capital to LPs are key drivers of sponsor activity. As some of the headline noise stabilizes, we think the remainder of the year could be a productive period for LBO activity. We believe direct lending remains an attractive asset class in today's market and continues to provide good risk-adjusted returns relative to other asset classes, including the syndicated loan market, which has continued to experience meaningful repricing waves.
I will now turn the call over to our chief operating officer Laura holsen to discuss the current market environment and provide more details on nmfc quarterly performance.
Thanks, John. While deal activity remains constrained in Q2 given tariffs and regulatory uncertainty, we have seen an increase in deal volume over the past several weeks.
a combination of IPOs take privates as well as general lbo activity, indicates an unfreezing of the post Liberation, day markets,
The pipeline of potential PE exits. Remains exceptionally full, given the extended hold times for many PE owned assets.
The pressure to both deploy dry powder and return Capital to LPS are key drivers of sponsor activity.
As some of the headline noise stabilizes, we think the remainder of the Year could be a productive period for ldo activity.
We will leave direct lending remains an attractive asset class in today's market and continues to provide good risk adjusted returns relative to other asset classes.
Laura Holson: Direct lending spreads, while tighter than 12 months ago, have largely stabilized. We have particularly noted the lack of dispersion in pricing based on both asset quality and asset size. Most unit tranche loans are pricing at the SOFR plus $4.75 to $5.25 range, even for slightly lower quality or smaller companies. While we continue to find opportunities in our defensive growth verticals where we can make loans that attach a $1.01 in the capital structure at 9% to 10% unlevered returns, our underwriting bar remains higher than ever, and our pass rate on deals has increased. Deal structures generally remain compelling with significant sponsor equity contribution representing the vast majority of the capital structures. Page 17 presents an interest rate analysis that provides insight into the effect of base rates on NMFC's earnings.
Including the syndicated loan market, which has continued to experience meaningful repricing waves.
Lack of dispersion in pricing based on both asset quality and asset size.
Most unitron loans are pricing at the sofa plus 475 to 525 range.
Even for slightly lower quality, or smaller companies.
While we continue to find opportunities in our defensive growth verticals where we can make loans that attach a dollar 1 in the capital structure at 9 to 10% unlevered returns.
are underwriting bar remains higher than ever and our pass rate on deals has increased
Deal structures generally, remain compelling with significant sponsor, Equity contribution representing the vast majority of the capital structures.
Laura Holson: The NMFC loan portfolio is 86% floating rate and 14% fixed rate, while our liabilities are 49% floating rate and 51% fixed rate. Pro forma for the expected upcoming refinancing activity over the next six months, we expect our mix will shift meaningfully to 81% floating and 19% fixed. This will nearly align us with our target of matching our percentage of liabilities that float with the percentage of our assets that float. As shown in the bottom table, while we would expect to see earnings pressure in the scenarios where base rates decrease, we are evolving our capital structure to help offset some of that pressure. Moving on to page 18, Q2 was a lighter quarter in origination activity, given what I mentioned on deal flow and quality. In Q2, we originated $122 million of assets, offset by $155 million of repayments and sales.
H17 presents an interest rate analysis, that provides insight into the effect of Base rates on nmfc earnings.
The nmfc loan portfolio is 86% floating rate and 14% fixed rate.
While our liabilities are 49% floating rate, and 51% fixed rate,
proforma, for the expected upcoming refinancing activity, over the next 6 months,
We expect our mix will shift, meaningfully to 81% floating and 19% fixed.
This will nearly align us with our Target of matching, our percentage of liabilities, that float with the percentage of our assets that float,
As shown in the bottom table, while we would expect to see earnings pressure in the scenarios where base rates, decrease?
We are evolving our capital structure to help offset some of that pressure.
Moving on to page 18, Q2 was a lighter or quarter in origination activity, given what I mentioned on Deal flow and quality.
Laura Holson: Our originations consisted of investments in our core defensive growth power alleys, including niches of business services like insurance and utility services. Notable repayments in the quarter included our first lien and equity positions in Office Ally, which, as mentioned previously, provided us the opportunity to rotate into senior cash-yielding loans. As John noted, we also received a repayment in our preferred equity investment in ARCO's, collecting our previously accrued PIC in full. Turning to page 19, approximately 78% of our investments, inclusive of first lien, SLPs, and net lease, are senior in nature, up from 75% in the prior year. Second lien positions represent just 6% of our portfolio. Approximately 7% of the portfolio is comprised of our equity positions, the largest of which are shown on the right side of the page. We continue to dedicate meaningful time and resources to business building at these companies.
In Q2, we originated 122 million of assets offset by 155 million of repayments and sales.
Our originations consisted of investments in our core defensive growth power alleys, including niches of Business Services like Insurance and Utility Services.
Notable repayments in the quarter included, our first lean and Equity positions in office ally, which as mentioned previously, provided us the opportunity to rotate into senior cash yielding loans.
John noted. We also received a repayment in our preferred Equity investment in arroz. Collecting our previously. Acred pick in full.
Turning to page 19 approximately 78% of our investments inclusive of first lean slps and net lease, our senior and nature.
Up from 75% in the prior year.
Secondly, in positions represent just 6% of our portfolio.
Approximately 7% of the portfolio, is comprised of our Equity positions, the largest of, which are shown on the right side of the page.
We continue to dedicate meaningful time and resources to business building at these companies.
Laura Holson: Page 20 shows that the average yield of NMFC's portfolio decreased slightly to 10.6% for Q2, partially due to a small downward shift in the forward SOFR curve. Despite lower yields on our originations compared to on our repayments, we believe total yields remain attractive for the risk. Page 21 highlights the scale and positive credit trends of our underlying borrowers. The weighted average EBITDA of our portfolio companies increased slightly in the second quarter to $176 million, primarily due to growth at the individual companies we lend to. We also show the relevant leverage and interest coverage stats across the portfolio. These metrics have remained relatively consistent over the last several quarters. Loan-to-values continue to be quite compelling, and the current portfolio has an average loan-to-value of 45%. Finally, as illustrated on page 22, we have a diversified portfolio across 124 portfolio companies.
Page 20 shows that the average yield of nfc's portfolio decreased slightly to 10.6% for Q2.
Partially due to a small downward shift in the forward. So for curve
Despite lower yields on our originations compared to on our repayments We Believe total yields remain attractive for the risk.
Page, 21 highlights the scale and positive credit trends of our underlying Borrowers.
The weighted average evaa of our portfolio companies increased slightly in the second quarter to 176 million.
primarily due to growth at the individual companies, we lend to
We also show the relevant leverage and interest coverage stats across the portfolio.
These metrics have remained relatively consistent over the last several quarters.
Loan to values. Continue to be quite compelling and the current portfolio has an average loan to value of 45.
Laura Holson: Excluding our investments in the SLPs and net lease funds, the top 10 single-name issuers account for 25% of total fair value. I will now turn the call over to our Chief Financial Officer, Kris Corbett, to discuss our financial results.
Finally, as Illustrated on page 22, we have a diversified portfolio across 124 portfolio companies.
Excluding our investments in the slps and net lease funds. The top 10 single name, issuers account for 25% of total fair value.
Kris Corbett: Thank you, Laura. For more details, please refer to our quarterly report on Form 10-Q that was filed yesterday with the SEC. As shown on slide 23, the portfolio had $3 billion in investments at fair value on June 30th and total assets of $3.2 billion. Total liabilities were $1.9 billion, of which statutory debt outstanding was $1.5 billion. Net asset value of $1.3 billion, or $12.21 per share, was down slightly compared to prior quarter. At quarter end, our statutory debt-to-equity ratio was 1.17 to 1 and 1.13 to 1 net of available cash on the balance sheet, which is in the middle of our target range of 1 to 1.25 times. On slide 24, we show our quarterly income statement results. For the current quarter, we earned total investment income of $83 million, a 12% decrease over prior year.
I will now turn the call over to our Chief Financial Officer. Chris Corbett to discuss our financial results.
Cue that was filed yesterday with the SEC.
As shown on slide 23. The portfolio had 3 billion in Investments at fair value on June 30th and total assets of 3.2 billion.
Total liabilities were 1.9 billion of which statutory debt outstanding was 1.5 billion.
Net asset value of 1.3 billion or 12.21 cents per share was down slightly compared to Prior quarter.
At quarter end, our statutory debt to equity, ratio, was 1 spot, 17 to 1 and 1 Spot, 1 3 to 1. Net of available cash on the balance sheet, which is in the middle of our target range of 1 to 1.25 times.
Kris Corbett: Total net expenses of $49 million decreased 13% versus prior year, inclusive of the fee waiver previously mentioned. Our effective incentive fee rate for the quarter was 13.5%. Our adjusted net investment income for the quarter was 32 cents per weighted average share, which covered our Q2 dividend. Slide 25 highlights that 95% of our total investment income is recurring second quarter. On the following page, you can see that over 80% of our investment income was paid in cash and 14% was PIC income from positions that included PIC from inception to best enable these borrowers to execute on their strategic growth plans. Only 3% of investment income is driven by modified PIC from an amendment or restructuring.
On slide 24, we show our quarterly income statement results for the current quarter. We earned total investment income of 83 million. A 12% decrease over prior year. Total net expenses of 49 million decreased 13% versus prior year inclusive of the fee waiver previously mentioned.
Our effective incentive fee rate for the quarter was 13.5%.
Our adjusted, net investment income for the quarter was 32 cents per weighted average share which covered our Q2 dividend.
Slide 25 highlights that 95% of our total investment income is recurring in the second quarter.
On the following page, you can see that over 80% of our investment income was paid in cash and 14% was picking come from positions that included pick from inception to best enable these borrowers to execute on their strategic growth plans.
Kris Corbett: Importantly, investments generating non-cash income during the second quarter are marked at a weighted average fair market value of 96% of par, and 92% of this income is generated from our green-rated names. In the second quarter, we collected $8 million of PIC income, primarily associated with the aforementioned ARCO's preferred share repayment. We continue to make progress in monetizing PIC income and see continued opportunities to do so in the coming quarters. Turning to slide 27, the red line shows the coverage of our dividend. For Q3 2025, our board of directors has again declared a dividend of 32 cents per share. On slide 29, we highlight our various financing sources and diversified leverage profile. Taking into account SBA guaranteed diventures, we have $2.9 billion of total borrowing capacity with nearly $1.1 billion available on our revolving lines, subject to borrowing-based limitations.
Only 3% of investment income, is driven by modified pick for an amendment or restructuring.
Importantly, investments generating non-cash income during the second quarter are marked at a weighted average fair market value of 96% of par, and 92% of this income is generated from our green-rated names.
In the second quarter, we collected 8 million of picking come primarily associated with the aforementioned arroz, preferred share repayment
we continue to make progress in monetizing, pick income and
if he continued opportunities to do so, in the coming quarters,
turning the slide 27. The red line shows the coverage of our dividend for Q3 2025. Our board of directors has again declared a dividend of 32 cents per share.
Kris Corbett: This more than covers our unfunded commitments of $262 million, as well as all of our near-term bond maturities. Looking forward to the remainder of 2025, the facilities outlined in red represent opportunities we see to refinance and either maintain or potentially reduce our cost of financing in the near term. We believe this contrasts with the industry, which faces an increased cost of financing as debt issued in 2020 and 2021 mature. Finally, on slide 30, we show our leverage maturity schedule. We continue to ladder our maturities and have sufficient liquidity to manage upcoming maturities in 2025 and early 2026. Notably, over 67% of our debt matures in or after 2027, with near-term maturities representing an opportunity to continue to access the investment-grade bond market. With that, I would like to turn the call back over to John.
On slide 29. We highlight our various financing sources and diversified leverage profile, taking into account, SBA guaranteed deventures. We have 2.9 billion of total borrowing capacity with nearly 1.1 billion, available on our revolving lines subject to borrowing base limitations
Is more than covers our unfunded commitments of 262 million, as well as all of our near-term bond maturities.
Looking forward to the remainder of 2025 the facilities. Outlined in red represent opportunities. We see to refinance and either maintained or potentially reduce our cost of financing in near term.
We believe this contrasts with the industry, which faces an increased cost of financing, a debt issued in 2020 and 2021 mature.
Finally, on slide 30, we show our leverage maturity schedule. We continue to ladder our maturities and have sufficient liquidity to manage upcoming maturities in 2025 and early 2026.
Notably over 67% of our debt matures in, or after 2027 with near-term maturities representing an opportunity to continue to assess the investment grade bond market.
John Kline: Thank you, Kris. In closing, we once again would like to thank all of our stakeholders for the ongoing partnership and support and look forward to speaking to you again on our next call in November. I will now turn things back to the operator to begin Q&A. Operator?
With that, I would like to turn the call back over to John.
Thank you, Chris, in closing. We once again, would like to thank all of our stakeholders for the ongoing partnership and support and look forward to speaking to you again, on our next call in November,
I will now turn things back to the operator to begin Q&A operator.
Operator: Thank you. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. The first question comes from Finian O'Shea with Wells Fargo. Please go ahead.
Thank you to ask a question. You may press star then 1 on your telephone keypad. If you're using a speaker-phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question please press star then 2
The first question comes from Finny and OSHA with Wells Fargo. Please go ahead.
Finian O'shea: Hey, everyone. Good morning. A question on the healthcare names. I know you highlighted the dental downgrade. It sounds idiosyncratic, but seeing if there's any industry headwinds there when noticing there are a couple more healthcare names on your slide 33 that are downgraded on a business characteristics perspective. And then sort of another add-on there, Alliance Animal Health, one of your larger names, continues to hold up well. We're seeing some challenges across the veterinary, the vet industry, and seeing if these sort of headwinds relate to that as well. Thank you. Hello?
uh hey everyone, good morning um a question on the the health care names, I know you you highlighted the the dental um downgrade sounds idiosyncratic but seeing if there's any
Industry headwinds there. When noticing there are a couple more Health Care names on your, um, slide 33 that are are downgraded on a, a business characteristics, uh, perspective,
Continues to hold up. Well, we're seeing, uh, some challenges across the, the veterinary, the vet industry. And, um, you know, seeing if these sort of headwinds, um, relate to that as well. Thank you.
Hello.
Operator: Sorry, we're just kind of reconnecting the speaker line. Just a second. Are you able to hear us?
Sorry, they're just kind of reconnecting the speaker lines.
Finian O'shea: Yes.
Are you able to hear us?
Operator: Okay.
Yes.
John Kline: Great. Sorry about that, Finn.
Operator: I'm having technical difficulties over here.
John Kline: No.
Operator: But just starting on the.
John Kline: Did you have a question?
Operator: I did, yes. Thank you.
John Kline: Okay.
Operator: Just starting on the dental side and physician practice businesses, generally speaking, you know that is a sector that you know we've studied a lot at the firm level. It does have some good secular tailwinds when we think about you know just some of the demographics and the async locality of a lot of those underlying niches. But I think you know as we've owned businesses in the space, as we've invested in many you know over the years as well, I think you know some of the learnings around that sector in particular is, number one, just at the you know, the top line, it's a business that you know, you don't have a lot of pricing levers to pull, right, when you think about just reimbursement.
Okay, great. Sorry about that. Technical difficulties over here. No. Um, but just starting on the question or I did. Yes, thank you. Okay. Um, just starting on the dental side and Physicians, you know, visit practice businesses, generally speaking, you know, that is a sector that, you know, we've studied a lot at the firm level. Um, it does have some good secular Tailwinds and we think about, you know, just some of the demographics and and the asy locality um of a lot of those underlying niches.
Operator: And you know that's not a lever that really is available, despite the fact that there are some good volume trends in many of these underlying sectors. And then I think more importantly, on the expense side, it's a business that's very operationally intensive and does you know really require excellent execution when you think about just managing the expense space. And it does have a decent amount of operating leverage in these businesses. So as we've kind of lived with this sector and gotten deeper on it, it is one that's very management-sensitive also. And so it's an area that we've spent less time on as of late. You know when talking about the specific one that we downgraded, it is a bit more idiosyncratic.
Um, but I think, you know, as we've, um, owned businesses in the space as we've invested in many, um, you know, over the years as well. I think, you know, some of the learnings around that se that sector in particular is, um, number 1. Just at the, you know, the Top Line, it's a business that, you know, you don't have a lot of pricing levers to pull right when you think about just reimbursement, um, and, you know, that's not a lever that really is available. Um, despite the fact that there are some good volume Trends, um, in many of these underlying factors and then I think more importantly, on the expense side, it's a it's a business that's very operationally intensive.
Operator: We don't think you know in general we're seeing you know headwinds across the space writ large, but certainly, as I said, because of how operationally intensive it is, it does require very specific execution. And therefore, just as a lender, it's not a space that we've been prioritizing on a go-forward basis. But that really is the one that you know we did downgrade, again, for some idiosyncratic reasons that John alluded to, specifically around just some underperformance on the volume side, but not necessarily a trend that we think is impacting overall. But again, just on a go-forward basis, less of a focus for us as we originate new deals. And then switching gears to the veterinary side of things, again, another space that has a lot of good secular tailwinds. You know things that we like about it, just more people are getting pets.
Operator: These pets are living longer. There's more types of procedures and things that you can do to help pets. So again, a lot of good things here. And then the additional benefit versus maybe the dental space is that you know you don't have that limitation from a top-line perspective because it's typically cash pay, no reimbursement risk, etc. So there's a lot of things here that we do like about this space. You mentioned Alliance Animal Health in particular. It is one of our larger positions. Generally speaking, we feel like that space is performing quite well overall. We have seen some volume trends, not on that company in particular, but just in general in the industry, come off a little bit from what the COVID peak was.
Operator: A lot of people got puppies and kittens during COVID, and those pets go to the vet three to four times in their first year of life, and then it's more like once a year thereafter. But as those pets age, we will expect to see the other side of that from a volume perspective. But again, more levers here, a little less execution-intensive, and it's a space that we like quite a bit.
Finian O'shea: Okay, that's helpful. Thanks. And then just hitting on the dividend protection, you waived a little extra this quarter. Can you just talk about how you're thinking about that high level? I know there are a few levers that you outlined to improve NOI, but there's headwinds as well, of course. So seeing how you're kind of thinking about this during the protection program and after. Thanks.
John Kline: Sure. The dividend protection program is meant to be a form of shareholder support where we can give our shareholders really good visibility on what the dividend is going to be. We've had this in place for a while, and we're committed to keeping the program in place through the end of '26. So very shareholder-friendly. And we are in an environment, as you know, where spreads have come off a little bit, OIDs have come off or are actually higher than they were. Deal flow is not quite what we've wanted it to be, just given some volatility around the Trump tariffs. So that's why I think the dividend protection program is so important. It really gets us through periods of time like right now where it does feel a little bit tight out there.
John Kline: And so as we look forward, the big focus for our team is really to optimize our leverage across both the core fund as well as our JVs. We're in the process of optimizing in both areas. We do see better velocity, which is good for fee income in Q3 and Q4. And that really dovetails with more activity that we see in our pipeline right now. So that's a real positive. We see a big catalyst around refinancing our higher-cost debt. I know we showed that in our deck, and I think that's a real positive catalyst for NMFC. We have a new SBIC coming online, and then, of course, we have the buyback as well. So there are a bunch of things that we have at the top of our mind to offset some of the pressures that we do see.
Sure the dividend Protection Program is meant to be a form of, uh, shareholder support where we can give our shareholders really good visibility on what the dividend is going to be. Um, we've had this in place for a while and we're committed to to, to keeping the program in place through the end of of 26. So, uh, very shareholder friendly and we are in an environment as, as you know, where spreads have come off a little bit oids have have have come off or are actually higher, uh, than than they were. Um, you know, deal flow is not quite what we've wanted it to be. Just given some volatility around, you know, the Trump tariffs. So, um, I that's why I think the dividend Protection Program is so important. It it really gets us through, you know, periods of of time like like right now where where it does feel a little a little bit tight out there. And so as we look forward, you know, the big Focus, uh, you know, for our team is really, uh, you know, to optimize our leverage across both the core fund as well as our JVS, uh, we're in the process.
John Kline: And it feels great to have the New Mountain firm support around the dividend protection program. And as you mentioned, in this quarter, we did go a little bit above and beyond because we do feel strongly about maintaining that consistency of dividend.
Of optimizing in, in both areas, uh, we do see better velocity, which is good for, for fee, income, in, in Q3, and Q4. And, and, and that really dovetailed with more activity that we see in our pipeline right now. Uh, so, so that's a real positive. Um, we see a big Catalyst around, uh, refinancing or higher cost debt. I know, I know we showed that in our deck and, and, and I think that's a real positive Catalyst for nmfc. Uh, we have a new SBI coming online and then, of course, we have the buyback as well. So, there, there are a bunch of of of, of, of things that we have at the top of our mind to, to offset, you know, some of the pressures that, that we do. See and it feels great to have, uh, you know, the new Mountain Firm support around the dividend Protection Program. And as you mentioned in this quarter, we did go a little bit of and Beyond, uh, because we do feel strongly about about, you know, maintaining that consistency of dividend
Finian O'shea: Okay. So I mean, it sounds like the incremental fee wait, you know, kind of forget the 15% number. You'll waive incremental to make the 32 through 26. And then just, and you know, correct me if I'm wrong there. How do you, how should we?
Okay. So so I mean it sounds like the incremental fee with, you know, kind of forget the 15% number.
You'll wave incremental to make the 32.
Through 26.
John Kline: I mean, the policy in place is the core dividend protection. And then, of course, you know, we have the option to do more if we see fit. And I think what I was trying to describe is we do see some positive catalysts as it relates to our core earnings capability that should help support the overall dividend. So we have the announced program, and that's what we're committing to.
And then just and you know, correct me if I'm wrong there. But how do you how should we think about the the the policy in place is the core dividend protection? And then, of course, you know, we have the option to do to do more, if we, if we see fit and I think what I was trying to describe is we do see some some positive catalysts as it relates to our current core earnings
Uh, capability, uh, you know that that should, uh, you know, help support, you know, the overall dividend. So we we have the announced program and that's what we're committing to.
Finian O'shea: Okay, thanks so much.
Okay, thanks so much.
Operator: Once again, if you have a question, please press star, then one. The next question comes from Robert Dodd with Raymond James. Please go ahead.
Once again, if you have a question, please press star then 1.
Robert Dodd: Hi everyone. On the red downgrade, the consumer products business, you highlighted obviously tariff exposure. I presume that was one of the businesses you had already identified as being at risk from tariffs given the nature of what it does. So what kind of, it looks like you also downgraded operational performance as well as, now is that tariffs related, or was there something beyond the tariffs that kind of caught you by surprise with that business? Because it just seems, you know, you already knew about the tariff risk, and it was flagged, presumably internally, based on that, and it seems to have been worse than you expected.
The next question comes from Robert Dodd with Raymond James, please go ahead.
Robert Dodd: So can you give us any color about like general terms what happened there, and is there, to extend the question even further, is there risk that those kind of things happen to other businesses in the portfolio as well as we go forward?
Hi everyone. Um, on on the, the red, um, downgrade, uh, the consumer products business, if you would, um, you know, you highlight there are obviously tariff exposure. I I presume that was 1 of the businesses you had already identified as, as being, at risk from, from tariffs, given the, the the nature of what it does. So um, what kind of it looks like you also don't regret like you know, operational performance as well as yeah. Now is that tariff related or or was there something beyond the the tariffs that kind of caught you by surprise, with that business? Because it, it just seems, you know, you already knew about the Tariff risk and it was, it was, um, it was flagged. Um, presumably internally based on that, and it seems to have been worse than you expected. So can you give us any color about, like,
John Kline: Great, Robert. Thank you for the question. I'll give a couple of comments, and Laura can support my comments. But great question. The name in question is the name that we've been upfront about from the beginning of the tariffs. This is our one name that we feel like does have material exposure. I believe we talked about it last quarter. And going into the tariffs, it was not a green name. It was, I believe, a yellow name. And so there was some operating underperformance already present at the company, and that was borne out in our ratings. And then from our perspective, really, the tariff situation, which is still out there, there's still a fair amount of tariff volatility, even though it doesn't feel quite as present in the headlines of the Wall Street Journal. There are still some headwinds.
General terms, what happened there? And is there to, to extend the question for is there risk that those kind of things happen to other businesses in the portfolio as well as we go forward.
John Kline: And this company is materially exposed to a Chinese, an Asian-centric supply chain, and the business is working through that. But really, it was an underperformer, and I think the tariffs hurt it even more. And I think there's still a lot yet to be known about the end state of this company. In my own head, it's not a long-term impairment. I still have a personal optimism that we can get a full recovery on this name, but it's important to be very transparent and honest about the current state of the company, which is, in our view, a red. The business, as we said in our comments, will need some more liquidity. And so the sponsor can put that liquidity in, or the lenders may have to put it in. We're not sure which direction that's going to go.
There was some operating underperformance already present at the company and that was borne out in our ratings and then then from our perspective, really the Tariff uh situation which is still out there. There's still uh, you know, a fair amount of tariff volatility. Even though it doesn't feel quite as present in the headlines of the Wall Street Journal there. There are still some headwinds um, and you know this company is materially exposed to a, a Chinese, an Asian Centric supply chain and the business is working through that, but but really, it was an underperformer. And I think that the tariffs heard it, uh, even more. And, and I think there's still a lot yet to be to, to be known about, uh, you know, the end state of this company uh, in my own head. Uh, it's not a long-term impairment. I still have a personal optimism that we can get our a full recovery on this name, but it's important to, to be very transparent and honest about, you know, the the current state of the company, which is in our
John Kline: But over a long period of time, we do, or a longer period of time, we do feel like there's plenty of opportunity for this business to recover full par. But the fair value has been moved lower, and we do have it as a red.
View a red, uh, the the business as we said in our comments, uh, will need some more liquidity. And so, uh, the sponsor can can put that liquidity in or uh the lenders may have to put it in. We're not sure which direction that's going to go. Um, but but over the over a long period of time, we do or a longer period of time, we do feel like there's plenty of opportunity for this business to to recover, you know, full par. But the fair value, it has been has been moved, uh, lower and
Operator: Yeah, and only the other thing to add just to your question about, you know, is there a risk of, you know, was this a surprise and is there a risk of any other kind of surprising news from a tariff perspective? As John said, this is one that we flagged last quarter, but we did not move the risk rating at that point, just given the massive amount of uncertainty at that particular moment. But now that they're, even though it's not totally certain, we have a little bit more of a view as to what the tariff impact is likely to be. But from the rest of the portfolio perspective, you know, we've continued to refresh perspectives on tariff exposure, and we continue to think that otherwise, you know, it's very minimal, you know, across the rest of the portfolio.
We do have it as a red.
Robert Dodd: Got it. Thank you. One more thing, to Steve's points in the opening remarks, I mean, spreads are tight. The house view seems to be that that is likely to normalize. Obviously, it does, even if origination spreads wide, and it takes a while, depending on, to your point, John, the velocity of activity, it takes a while for that to progress through the full portfolio. And then you've got a lot that you're doing on the optimization of the liability side as well. I mean, given the timeframe that you've committed to on the dividend protection program, end of 2026, do you think you can complete all your activities in terms of optimizing the liability stack, having maybe some spread widening make its way through the portfolio, and maybe monetize some of the equity?
Yeah, the only other thing to add, um, just to your question about, you know, is there a risk of, you know, was this a surprise? And was, there is there risk of any others, kind of surprising news, from a tariff perspective. As John said, this is 1 that we flagged last quarter, um, but we did not move the risk rating at that point. Just giving the massive amount of uncertainty at that particular moment. But now that they're even though it's not totally certain, they have a little bit more, um, of a view as to what you know, the Tariff impact is likely to be. Um, but from the rest of the portfolio perspective, you know, we've continued to refresh perspectives on tariff exposure and we continue to think this. Otherwise, you know, it's very minimal, um, you know, across the rest of the portfolio.
Got it, thank you. Um, what what month I got on on, um, uh to, to Steve's points in the opening remarks, I mean, spread to tight. Um, the the hands-free seems to be that that is likely to normalize. Um, obviously it does even even if origination spreads widen it, it takes a while, depending on, what's your point John velocity of activity takes a while for that to progress through, um, through the full portfolio and then you've got a lot that you're doing on on the optimization of the liability side as well. I mean,
Given given that the time frame, that you've committed to on the dividend Protection Program. End of 2026. Do you think you can complete
um,
Robert Dodd: Do you think all of that can be completed by the end of '26, sufficient to the point that the dividend protection program maybe, hypothetically, might not be necessary at that point?
Uh, all your activities in terms of opening, optimizing the liability stack, um, having maybe some spread widening make its way through the portfolio, and maybe monetize some of the equity. Do you think all of that can be completed by the end of 2026?
Um sufficient to the point that the dividend Protection Program, maybe hypothetically might not be necessary at that point.
John Kline: I think we've been very clear about all the different things that we're doing to improve our company. And I think we've reported on the cadence of improvement over the last few quarters, and I continue to feel very good about it. So when I think about the next six quarters, I think that we'll continue to show really good improvement on the asset quality and the character of the assets, the liability mix. I think we'll continue to show improvement on our PIC income. We're incredibly focused on monetizing some of the largest positions. So I do feel very, very optimistic and positive personally that we're going to be able to make some real progress. It's going to be, you know, there's some hard work to be done, but we've gotten off to a good start.
John Kline: And I see, you know, particularly in a deal environment that we think will be good over the course of the next 6 to 12 months, I am optimistic about improvements on all fronts. You know, when you think about the overall yield characteristics of just the direct lending environment, that's obviously a little tougher to predict overall. So we're just going to focus on the parts of our business that we can control. And again, I feel good about the trajectory there.
I I think we've been very clear about all the different things that we're doing to improve our company and uh I think we've reported on the Cadence of improvement over the last few quarters and I continue to feel very good about it. So when I think about the next 6 quarters, I think that will continue to show uh really good Improvement on uh the asset quality and the character of the assets. Uh the liability mix I think will continue to to show Improvement on our, our pick income, we're incredibly focused on uh monetizing some of the largest positions. So I I do feel very, very optimistic and positive, uh, personally that we're we're going to be able to make some real progress. It's going to be, you know, there's some hard work to be done, uh, but but we've done, we've gotten off to a good start and and I see, you know, particularly in a deal.
Environment that that we think will be good over the course of the next 6 to 12 months. I I am optimistic about about improvements on all fronts. Uh, you know, when you think about the over,
Robert Dodd: Got it. Thank you.
Characteristics of just the the direct lending environment. That's that's obviously a little tougher to protect to predict overall. Um, so we're just going to focus on on the parts of of our business that we can control. And again, I feel good about the the trajectory there.
Got it. Thank you.
Operator: The next question comes from Sean Paul Adams with DRLU. Please go ahead.
Robert Dodd: Hey, guys. Good morning. On a bent.It
Operator: just seems that there's been a continued trend of write-downs on the name. Is this just more of an unwinding that you forecast, you know, throughout the rest of the year or any secular trends in the education space?
Laura Holson: Yeah, no, in terms of events, I'm just as a reminder, you know, the business, you know, it's an edtech business serving the K-12 end market. You know, I think the market is very much there, right? There's more learning loss than ever, right, on the year of COVID. We think the company remains well positioned in that market to address some of that learning loss. And as John mentioned, you know, we do have some other, outside of the just the core business of Edmentum, continuing to expand vectors of the business to to attack the career market. In addition to that, you know, we do think it's a scaled platform. It's well positioned in the space. The underlying performance has been stabilized, right?
Hey guys. Good morning. Um, on a momentum. It just seems that there's been a continued trend of write Downs. On the name, is this just more of a unwinding that you forecast, you know, throughout the rest of the year or, uh, any secular Trends in the education space.
Yeah, no, in terms of events, I'm just a reminder, you know, the business.
It's an edtech.
business serving the k12 and
Um, you know, I I think, uh, the, the market is very much there, right? There's more, uh, learning loss than ever, right? I think you
Laura Holson: If you remember, this is a business that, you know, was performing fine pre-COVID, then had a big spike during COVID, given part of the business relates to virtual learning, which obviously, you know, experienced a tremendous uptick during COVID. And at this point now, that kind of uptick is kind of just re-normalized and the business is stable and on a stable trajectory. But as John mentioned, we just have some securities ahead of us in the capital structure, you know, that are accreting ahead of us, which, you know, modestly impacts the equity where we sit in the capital stack. So, you know, right now the company is in the midst of its, you know, key buying season just from a summer perspective. And I think we'll continue to know more as that evolves over the next, you know, coming months.
We think the company remains well positioned in that market to address some of that learning loss. Um, and as John mentioned, you know, we do have some other, um, outside of the just the core business of adventism continuing to expand vectors of the business to, to attack the career, uh, Market. Uh, in addition to that, um, you know, we we do think it's a, a scaled platform. It's well, positioned in the space. Um, the underlying performance has been has stabilized, right? If you remember, this is a business that, you know, was performing fine preco then had a big spike during Co given part of the business relates to Virtual learning which obviously, you know, experienced a tremendous uptick during Co. Um, and at at this point now, that kind of uptick is, is, um, kind of just renormalized in the business is stable and and on a stable trajectory, but as John mentioned, we just have some some security ahead of us and
Laura Holson: But again, I think big picture, we view it as, you know, well performing and stable underlying performance just has some of this kind of unique capital structure dynamics.
Capital structure, you know that are accreting, uh, ahead of us, which, you know, modestly impacts the equity where we sit in the capital stack. So, you know, right now the company's in the midst of it, you know, keep buying Seasons from a summer perspective, and I think we'll continue to know more as that evolves over the next, you know, coming months. But again, I think big picture, we view it as, you know, well performing and stable underlying performance just has some of these kind of unique capital structure dynamics.
Operator: Perfect. Appreciate the color. Thank you.
Perfect. Appreciate the color. Thank you.
Thank you.
Operator: This concludes our question and answer session. I would like to turn the conference back over to John Kline for any closing remarks. Please go ahead.
Operator: Great. Thank you again for your participation in our earnings call, and we look forward to speaking to you again in November. Have a great day. Thanks.
This concludes your question-and-answer session. I would like to turn the conference back over to John Kline for any closing remarks. Please go ahead.
Great. Thank you again for your participation in our earnings call and we look forward to speaking to you again, in November, have a great day. Thanks.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
The conference is now included. Thank you for attending today's presentation. You may now disconnect