New Mountain Guardian IV BDC Sees Q2 Income Surge Amid Rising Expenses

TL;DR

**NMG4 is generating more income but unrealized losses are eating into capital, making it a mixed bag for investors.**

AI Summary

New Mountain Guardian IV BDC, L.L.C. reported a net increase in members' capital from operations of $17,969 thousand for the three months ended June 30, 2025, up from $12,183 thousand in the prior year period, representing a 47.5% increase. For the six months ended June 30, 2025, net investment income rose to $45,844 thousand, a significant increase from $22,913 thousand for the same period in 2024. Total investment income for the six months ended June 30, 2025, was $85,333 thousand, compared to $47,494 thousand in the prior year, driven by a substantial increase in interest income (excluding PIK) to $79,181 thousand from $41,359 thousand. Total expenses also increased, reaching $39,345 thousand for the six months ended June 30, 2025, up from $24,659 thousand, primarily due to higher interest and other financing expenses of $25,713 thousand and increased income-based incentive fees of $7,860 thousand. The company experienced a net change in unrealized depreciation of investments of $7,487 thousand for the six months ended June 30, 2025, a reversal from $2,142 thousand in unrealized appreciation in the prior year. Members' capital decreased slightly to $812,742 thousand as of June 30, 2025, from $820,098 thousand at December 31, 2024, with members' capital per unit at $10.04.

Why It Matters

This 10-Q reveals New Mountain Guardian IV BDC's strong growth in investment income, particularly from interest, which is crucial for a BDC's profitability and ability to distribute income to investors. The significant increase in expenses, especially financing costs and incentive fees, indicates both growth in the portfolio and the cost of capital in the current interest rate environment. For investors, the slight decrease in members' capital per unit to $10.04 from $10.13, despite higher net investment income, suggests that unrealized depreciation and distributions are impacting overall equity value. The competitive landscape for BDCs remains intense, with firms vying for attractive debt investments, and NMG4's performance reflects its ability to deploy capital effectively.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant net change in unrealized depreciation of investments, totaling $7,487 thousand for the six months ended June 30, 2025, compared to an appreciation of $2,142 thousand in the prior year. This indicates potential volatility in the fair value of its investment portfolio. Additionally, while investment income is up, total liabilities increased to $857,948 thousand from $727,651 thousand, driven by higher borrowings, which could expose the BDC to interest rate risk.

Analyst Insight

Investors should scrutinize the drivers of the $7,487 thousand net change in unrealized depreciation of investments and monitor future fair value adjustments. While the increase in net investment income is positive, the rising interest and financing expenses warrant attention. Consider NMG4 for its income generation, but be aware of potential portfolio valuation headwinds and the impact of higher borrowing costs on net returns.

Financial Highlights

revenue

$85,333 thousand

total Assets

$1,670,690 thousand

total Debt

$769,875 thousand

net Income

$45,844 thousand

cash Position

$23,515 thousand

revenue Growth

+79.7%

Revenue Breakdown

Key Numbers

• $17,969 thousand — Net increase in members' capital from operations (for the three months ended June 30, 2025, up 47.5% from $12,183 thousand in 2024)
• $45,844 thousand — Net investment income (for the six months ended June 30, 2025, up from $22,913 thousand in 2024)
• $85,333 thousand — Total investment income (for the six months ended June 30, 2025, up from $47,494 thousand in 2024)
• $79,181 thousand — Interest income (excluding PIK) (for the six months ended June 30, 2025, up from $41,359 thousand in 2024)
• $39,345 thousand — Total expenses (for the six months ended June 30, 2025, up from $24,659 thousand in 2024)
• $25,713 thousand — Interest and other financing expenses (for the six months ended June 30, 2025, up from $15,982 thousand in 2024)
• $7,487 thousand — Net change in unrealized depreciation of investments (for the six months ended June 30, 2025, compared to $2,142 thousand in appreciation in 2024)
• $812,742 thousand — Total members' capital (as of June 30, 2025, down from $820,098 thousand at December 31, 2024)
• $10.04 — Members' capital per unit (as of June 30, 2025, down from $10.13 at December 31, 2024)
• 80,974,363 — Outstanding common membership units (as of August 12, 2025)

Key Players & Entities

• New Mountain Guardian IV BDC, L.L.C. (company) — registrant
• Wells Credit Facility (company) — borrowing facility
• UBS Credit Facility (company) — borrowing facility
• BMO Subscription Line (company) — borrowing facility
• Viper Bidco, Inc. (company) — portfolio company
• Coupa Holdings, LLC (company) — portfolio company
• Diamondback Acquisition, Inc. (company) — portfolio company
• Accession Risk Management Group, Inc. (company) — portfolio company
• Anaplan, Inc. (company) — portfolio company
• WEG Sub Intermediate Holdings, LLC (company) — portfolio company

FAQ

Industry Context

Business Development Companies (BDCs) like New Mountain Guardian IV operate in a dynamic environment, providing capital to middle-market companies. The industry is sensitive to interest rate fluctuations, credit market conditions, and regulatory changes. Increased competition and the need for robust underwriting remain key challenges.

Regulatory Implications

BDCs are subject to regulations under the Investment Company Act of 1940, which can impact their capital structure and investment strategies. Compliance with these regulations is crucial for operational continuity and investor confidence.

What Investors Should Do

1. Monitor the trend of unrealized depreciation: The shift from appreciation to depreciation of $7,487 thousand in the first half of 2025 is a significant concern that could impact future realized gains or losses.
2. Analyze expense structure: While investment income grew substantially, total expenses also rose significantly, particularly interest and financing costs ($25,713 thousand) and incentive fees ($7,860 thousand). Understanding the drivers of these increases is important.
3. Evaluate the sustainability of income growth: The strong increase in interest income is positive, but investors should assess whether this growth is sustainable given market conditions and the company's investment portfolio composition.

Glossary

PIK interest income

Payment-in-kind interest income is interest that is paid in the form of additional debt or equity rather than cash. This can accrue and be added to the principal balance of the loan. (It is a component of total investment income, and its trend (decreasing in this period) impacts the overall income generation.)

Members' Capital

Represents the total equity of the members in the company. It is calculated as total assets minus total liabilities. (A key indicator of the company's net worth and financial stability. A slight decrease from December 31, 2024, to June 30, 2025, warrants attention.)

Net investment income

The profit generated from a company's core investment activities after deducting operating expenses. For a BDC, this typically includes interest income, dividend income, and fee income, less operating expenses. (A primary measure of profitability for BDCs. The significant increase to $45,844 thousand for the six months ended June 30, 2025, is a positive sign.)

Unrealized depreciation of investments

A decrease in the fair value of investments that has not yet been sold. This is a non-cash item that affects the net income but not the cash flow from operations. (The shift from unrealized appreciation to depreciation ($7,487 thousand in 2025 vs. $2,142 thousand appreciation in 2024) indicates a decline in the market value of the company's investment portfolio.)

Year-Over-Year Comparison

New Mountain Guardian IV BDC, L.L.C. has demonstrated robust growth in investment income for the first six months of 2025, with total investment income rising by 79.7% to $85,333 thousand compared to the prior year. This surge was primarily driven by a near doubling of interest income (excluding PIK) to $79,181 thousand. However, this top-line growth was accompanied by a significant increase in total expenses, up 59.5% to $39,345 thousand, largely due to higher interest and financing costs and incentive fees. A notable concern is the reversal in investment valuation, with a net change of $7,487 thousand in unrealized depreciation for the period, contrasting with prior year appreciation.

Filing Documents

• nmg4-20250630.htm (10-Q) — 6879KB
• nmg4-06302025xexhibit311.htm (EX-31.1) — 9KB
• nmg4-6302025xexhibit312.htm (EX-31.2) — 9KB
• nmg4-6302025xexhibit321.htm (EX-32.1) — 4KB
• nmg4-6302025xexhibit322.htm (EX-32.2) — 4KB
• 0001925531-25-000014.txt ( ) — 19479KB
• nmg4-20250630.xsd (EX-101.SCH) — 68KB
• nmg4-20250630_cal.xml (EX-101.CAL) — 54KB
• nmg4-20250630_def.xml (EX-101.DEF) — 373KB
• nmg4-20250630_lab.xml (EX-101.LAB) — 690KB
• nmg4-20250630_pre.xml (EX-101.PRE) — 460KB
• nmg4-20250630_htm.xml (XML) — 4581KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Consolidated Statements of Assets, Liabilities and Members' Capital as of June 30, 2025 (unaudited) and December 31, 2024 3 Consolidated Statements of Operations for the three and s ix months ended June 30, 2025 (unaudited) and June 30, 2024 (unaudited) 4 Consolidated Statements of Changes in Members' Capital for the three and s ix months ended June 30, 2025 (unaudited) and June 30, 2024 (unaudited) 5 Consolidated Statements of Cash Flows for the six months ended June 30, 2025 (unaudited) and June 30, 2024 (unaudited) 6 Consolidated Schedule of Investments as of June 30, 2025 (unaudited) 7 Consolidated Schedule of Investments as of December 31, 2024 29 Notes to the Consolidated Financial Statements of New Mountain Guardian IV BDC, L.L.C. (unaudited) 49 Report of Independent Registered Public Accounting Firm 71 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 72 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 85 Item 4.

Controls and Procedures

Controls and Procedures 86

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 87 Item 1A.

Risk Factors

Risk Factors 87 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 87 Item 3. Defaults Upon Senior Securities 87 Item 4. Mine Safety Disclosures 87 Item 5. Other Information 87 Item 6. Exhibits 88

Signatures

Signatures 89 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements New Mountain Guardian IV BDC, L.L.C. Consolidated Statements of Assets, Liabilities and Members' Capital (in thousands, except units and per unit data) (unaudited) June 30, 2025 December 31, 2024 Assets Non-controlled/non-affiliated investments at fair value (cost of $ 1,613,402 and $ 1,503,719 , respectively) $ 1,618,819 $ 1,516,623 Cash and cash equivalents 23,515 19,866 Interest and dividend receivable 10,988 10,866 Other assets 17,368 394 Total assets $ 1,670,690 $ 1,547,749 Liabilities Borrowings Wells Credit Facility $ 474,500 $ 437,200 UBS Credit Facility 277,000 262,500 BMO Subscription Line 24,500 — Deferred financing costs (net of accumulated amortization of $ 2,125 and $ 1,361 , respectively) ( 6,125 ) ( 5,770 ) Net borrowings 769,875 693,930 Payable for unsettled securities purchased 51,585 20,051 Distribution payable 23,159 — Interest payable 4,163 4,636 Income based incentive fee payable 4,047 3,379 Management fee payable 2,401 2,213 Accrued capital gains incentive fee 609 1,907 Payable to affiliate 438 344 Deferred tax liability 232 57 Other liabilities 1,439 1,134 Total liabilities 857,948 727,651 Commitments and contingencies (See Note 8) Members' Capital Common units, 80,974,363 and 80,974,363 units issued and outstanding, respectively 806,386 806,386 Accumulated underdistributed (overdistributed) earnings 6,356 13,712 Total members' capital $ 812,742 $ 820,098 Total liabilities and members' capital $ 1,670,690 $ 1,547,749 Outstanding common membership units 80,974,363 80,974,363 Members' capital per unit $ 10.04 $ 10.13 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents New Mountain Guardian IV BDC, L.L.C. Consolidated Statements of Operations (in thousands, except units and per unit data) (unaudited) Three Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Investment inc

View Full Filing

View this 10-Q filing on SEC EDGAR