NEW YORK - New Mountain Finance (NASDAQ:NMFC) Corporation (NASDAQ:NMFC), a business development company, announced Monday that its board of directors has approved the extension of its stock repurchase program. The program, which allows for the repurchase of up to $50 million in common stock, was originally set to expire on December 31, 2024, but will now run through December 31, 2025.
The decision to extend the repurchase program comes as a strategic response to potential market undervaluations of NMFC's common stock due to ongoing market volatility. The company's management has the discretion to buy back shares in the open market, subject to compliance with the company's Code of Ethics and the guidelines of Rule 10b-18 of the Securities Exchange Act of 1934, which imposes certain restrictions on the timing, price, and volume of repurchases.
Since the inception of the repurchase program, New Mountain Finance Corporation has bought back approximately $2.9 million of its common stock. The program will continue until the end of the new expiration date or until the $50 million threshold is reached, whichever comes first. The company, however, has made it clear that there are no guarantees of future repurchases, which will depend on market conditions and other investment opportunities.
This announcement is based on a press release statement from New Mountain Finance Corporation. The company is known for providing direct lending solutions to U.S. middle market companies and is backed by the substantial assets under management of its affiliate, New Mountain Capital. It is important to note that the company has made forward-looking statements regarding its repurchase program and its potential effects, which are subject to a range of risks and uncertainties, including global economic conditions and geopolitical events.
In other recent news, New Mountain Finance Corporation has reported steady Q2 2024 results with an adjusted net investment income of $0.36 per share, exceeding their regular dividend payout of $0.32 per share. In addition, a variable supplemental dividend of $0.02 per share was declared for the quarter. The company's net asset value per share remained steady at $12.74. These are among the recent developments for the company.
In terms of credit arrangements, New Mountain Finance Corporation has made significant changes, increasing its commitments to $638.5 million and extending the maturity of $527.1 million of these commitments to September 2029. This was facilitated with Sumitomo Mitsui (NYSE:SMFG) Banking Corporation acting as the administrative agent. Concurrently, the company terminated its existing DB Credit Facility, meeting all outstanding obligations.
The company has also entered into a significant amendment to its loan and security agreement, modifying the terms related to the Non-Usage Fee Rate within its Holdings Credit Facility. This amendment, executed with Wells Fargo Bank, adjusts the way the Non-Usage Fee Rate is calculated, potentially affecting the fees the company pays when certain thresholds of the Holdings Credit Facility are not utilized.
Future expectations from analysts suggest the company plans to generate a variable supplemental dividend of at least $0.01 per share in the next quarter. These updates highlight the company's recent strategic efforts to optimize its capital structure, enhance its ability to pursue investment opportunities, and deliver risk-adjusted returns to shareholders.
InvestingPro Insights
New Mountain Finance Corporation's decision to extend its stock repurchase program aligns with several key financial indicators and market trends. According to InvestingPro data, NMFC's stock is currently trading near its 52-week low, with a price at 86.54% of its 52-week high. This positioning may present an opportune moment for the company to execute its repurchase strategy, potentially enhancing shareholder value.
The company's financial health appears robust, with a market capitalization of $1.25 billion and a P/E ratio of 10.05, suggesting a relatively attractive valuation. NMFC has demonstrated profitability over the last twelve months, with a revenue of $372.54 million for the same period, representing a 9.57% growth.
One of the most striking features of NMFC is its dividend policy. An InvestingPro Tip highlights that the company "pays a significant dividend to shareholders," which is further supported by the impressive dividend yield of 12.99%. Moreover, NMFC has maintained dividend payments for 14 consecutive years, underscoring its commitment to returning value to shareholders.
Another InvestingPro Tip notes that the stock "generally trades with low price volatility," which could provide a stable environment for the company to implement its repurchase program effectively. This characteristic may also appeal to investors seeking steady returns in a volatile market.
For investors interested in a deeper analysis, InvestingPro offers additional tips and insights. Currently, there are 5 more InvestingPro Tips available for NMFC, providing a comprehensive view of the company's financial position and market performance.
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