{"id":753895,"date":"2023-05-02T17:41:11","date_gmt":"2023-05-02T21:41:11","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/saratoga-investment-corp-announces-fiscal-year-end-and-fourth-quarter-2023-financial-results\/"},"modified":"2023-05-02T17:41:11","modified_gmt":"2023-05-02T21:41:11","slug":"saratoga-investment-corp-announces-fiscal-year-end-and-fourth-quarter-2023-financial-results","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/saratoga-investment-corp-announces-fiscal-year-end-and-fourth-quarter-2023-financial-results\/","title":{"rendered":"Saratoga Investment Corp. Announces Fiscal Year-End and Fourth Quarter 2023 Financial Results"},"content":{"rendered":"
\n

NEW YORK, May 02, 2023 (GLOBE NEWSWIRE) — Saratoga Investment Corp. (NYSE:SAR) (\u201cSaratoga Investment\u201d or \u201cthe Company\u201d), a business development company (\u201cBDC\u201d), today announced financial results for its 2023 fiscal year and fourth quarter, with Net Investment Income (\u201cNII\u201d) per share up 69% over both last year and last year\u2019s fourth quarter, and adjusted NII per share notably up 27% and 85%, respectively, over those same periods. This increase in earnings reflects the improving margins, primarily from rising rates on Saratoga Investment\u2019s floating rate assets, which comprise approximately 89% of the Company\u2019s assets under management, and the largely fixed interest rates paid on financing liabilities.<\/p>\n

\n Summary Financial Information <\/u>\n <\/p>\n

The Company\u2019s summarized financial information is as follows:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\u00a0<\/td>\n\n
\n For the year ended
and as of February
28, 2023<\/u>
\n <\/strong>\n <\/td>\n		\u00a0<\/td>\n\u00a0<\/td>\n\n
\n For the year ended
and as of February
28, 2022<\/u>
\n <\/strong>\n <\/td>\n		\u00a0<\/td>\n\u00a0<\/td>\n\n
\n For the year ended
and as of February
28, 2021<\/u>
\n <\/strong>\n <\/td>\n		\u00a0<\/td>\n<\/tr>\n
\u00a0<\/td>\n\n ($ thousands except per share)<\/strong>
\n
\n
\n <\/strong>\n <\/td>\n<\/tr>\n
AUM<\/td>\n972,590<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n817,567<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n554,313<\/td>\n\u00a0<\/td>\n<\/tr>\n
NAV<\/td>\n346,958<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n355,781<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n304,186<\/td>\n\u00a0<\/td>\n<\/tr>\n
NAV per share<\/td>\n29.18<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n29.33<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n27.25<\/td>\n\u00a0<\/td>\n<\/tr>\n
Investment Income<\/td>\n99,104<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n70,741<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n57,650<\/td>\n\u00a0<\/td>\n<\/tr>\n
Net Investment Income per share<\/td>\n2.94<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n1.74<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n2.07<\/td>\n\u00a0<\/td>\n<\/tr>\n
Adjusted Net Investment Income per share<\/td>\n2.85<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n2.24<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n2.02<\/td>\n\u00a0<\/td>\n<\/tr>\n
Earnings per share<\/td>\n2.06<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n3.99<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n1.32<\/td>\n\u00a0<\/td>\n<\/tr>\n
Dividends per share (record date)<\/td>\n2.28<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n1.92<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n1.23<\/td>\n\u00a0<\/td>\n<\/tr>\n
Return on Equity \u2013 last twelve months<\/td>\n7.2<\/td>\n%<\/td>\n\u00a0<\/td>\n13.9<\/td>\n%<\/td>\n\u00a0<\/td>\n5.0<\/td>\n%<\/td>\n<\/tr>\n
Originations<\/td>\n365,250<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n458,075<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n202,261<\/td>\n\u00a0<\/td>\n<\/tr>\n
Repayments<\/td>\n202,390<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n226,931<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n130,259<\/td>\n\u00a0<\/td>\n<\/tr>\n
\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n
\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n
\u00a0<\/td>\n\n
\n For the three
months ended and
as of February 28,
2023<\/u>
\n <\/strong>\n <\/td>\n		\u00a0<\/td>\n\u00a0<\/td>\n\n
\n For the three<\/u>
\n
\n months ended and<\/u>
\n
\n as of November 30,<\/u>
\n
\n 2022<\/u>
\n <\/strong>\n <\/td>\n		\u00a0<\/td>\n\u00a0<\/td>\n\n
\n For the three<\/u>
\n
\n months ended and<\/u>
\n
\n as of February 28,<\/u>
\n
\n 2022<\/u>
\n <\/strong>\n <\/td>\n		\u00a0<\/td>\n<\/tr>\n
\u00a0<\/td>\n\n ($ in thousands except per share)<\/strong>
\n
\n
\n <\/strong>\n <\/td>\n		\u00a0<\/td>\n<\/tr>\n
AUM<\/td>\n972,590<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n982,034<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n817,567<\/td>\n\u00a0<\/td>\n<\/tr>\n
NAV<\/td>\n346,958<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n335,764<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n355,781<\/td>\n\u00a0<\/td>\n<\/tr>\n
NAV per share<\/td>\n29.18<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n28.25<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n29.33<\/td>\n\u00a0<\/td>\n<\/tr>\n
Investment Income<\/td>\n32,315<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n26,257<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n18,981<\/td>\n\u00a0<\/td>\n<\/tr>\n
Net Investment Income per share<\/td>\n0.81<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n0.83<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n0.48<\/td>\n\u00a0<\/td>\n<\/tr>\n
Adjusted Net Investment Income per share<\/td>\n0.98<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n0.77<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n0.53<\/td>\n\u00a0<\/td>\n<\/tr>\n
Earnings per share<\/td>\n1.62<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n0.51<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n0.70<\/td>\n\u00a0<\/td>\n<\/tr>\n
Dividends per share (declared)<\/td>\n0.69<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n0.68<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n0.53<\/td>\n\u00a0<\/td>\n<\/tr>\n
Return on Equity \u2013 last twelve months<\/td>\n7.2<\/td>\n%<\/td>\n\u00a0<\/td>\n4.0<\/td>\n%<\/td>\n\u00a0<\/td>\n13.9<\/td>\n%<\/td>\n<\/tr>\n
\u2013 annualized quarter<\/td>\n22.5<\/td>\n%<\/td>\n\u00a0<\/td>\n7.1<\/td>\n%<\/td>\n\u00a0<\/td>\n9.6<\/td>\n%<\/td>\n<\/tr>\n
Originations<\/td>\n40,036<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n87,574<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n164,320<\/td>\n\u00a0<\/td>\n<\/tr>\n
Repayments<\/td>\n60,175<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n56,917<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n10,694<\/td>\n\u00a0<\/td>\n<\/tr>\n
\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/table>\n

\u201cHigher and rising interest rates and a general contraction of available credit are producing higher margins on our portfolio and importantly an abundant flow of attractive investment opportunities from high quality sponsors at increasingly improving pricing, terms and absolute rates. Saratoga continues to be well positioned for this environment with 82%+ first lien floating rate assets with a combined portfolio yield of 12.1%, up from 9.5% in Q1, and funded by largely fixed rate, interest only, essentially covenant free and non-amortizing liabilities, with maturities well into the future at two through ten years out,\u201d said Christian L. Oberbeck, Chairman, Chief Executive Officer and President of Saratoga Investment.<\/p>\n

\u201cThe positive effects are manifested in our many record key performance indicators this past year and since year-end, including: (i) sequential quarterly adjusted NII per share increases of 33% in Q3 (58c to 77c per share), and 27% in Q4 (77c to 98c per share), (ii) current assets under management growing to more than $1.05 billion with net originations of approximately $109 million since year-end, (iii) dividend increases to 69c per share, up 30% from 53c per share in Q4 last year and over earned by 42% as compared to this quarter\u2019s 98c per share adjusted NII, (iv) $301.4 million in long-term, fixed rate, callable in most cases, capital recently raised in volatile markets to support record growth, while maintaining our BBB+ investment grade rating, and (v) receipt of our third SBIC license, providing $175 million of available debt capacity to further support our small business portfolio consistent with the SBA\u2019s mission.\u201d<\/p>\n

\u201cSaratoga\u2019s annualized fourth quarter dividend of 69c per share and adjusted net investment income of 98c per share imply an 11.3% dividend yield and 16.1% earnings yield based on its recent stock price of $24.38 per share on May 1, 2023. This overearning of the dividend by 29c this quarter, or $1.16 annualized per share, increases NAV and also provides a cushion against adverse events.\u201d<\/p>\n

\u201cMost importantly, at the foundation of our performance is the high quality nature and resilience of our portfolio, marked down just 1% since last year, reflecting the strength of our underwriting in our solid, growing portfolio companies and sponsors in well selected industry segments.\u201d \u00a0\u00a0<\/p>\n

\u201cWe continue to remain prudent and discerning in terms of new commitments in the current environment. While our pipeline remains robust with many actionable opportunities, we made just one new platform investment this fiscal quarter, with our fifteen follow-on investments made in existing portfolio companies we know well with strong business models and balance sheets. Originations this quarter totaled $40.0 million invested, with $60.2 million of repayments and amortization. For the year, originations of $365.3 million far outpaced the $202.4 million in repayments continuing our recent experience of strong net originations. Our credit quality for this quarter remained high at 96% of credits rated in our highest category, with one credit on non-accrual. With 82% of our investments at quarter-end in first lien debt and generally supported by strong enterprise values and balance sheets in industries that have historically performed well in stressed situations, we believe our portfolio is well structured for future economic conditions and uncertainty.\u201d<\/p>\n

\u201cAs we navigate through this challenging environment, we remain confident in our experienced management team, high underwriting standards and ability to steadily grow portfolio size and maintain quality and investment performance over the long-term.\u201d<\/p>\n

\n Discussion of Financial Results for the Year and Quarter ended February 28, 2023:<\/u>\n <\/p>\n

As of February 28, 2023, Saratoga Investment\u2019s assets under management (\u201cAUM\u201d) was $972.6 million, an increase of 19.0% from $817.6 million as of February 28, 2022, and a slight decrease of 1.0% from $982.0 million as of November 30, 2022. The annual increase consists of $365.3 million in originations, offset by $202.4 million of repayments and amortizations, reflecting both continued strong pace of originations as well as the high and ongoing lumpy nature of repayments. This past quarter, $40.0 million in originations was offset by repayments and amortizations of $60.2 million. In addition, during the fourth quarter the fair value of the portfolio increased by\u00a0$10.6 million\u00a0of net realized and unrealized gains, representing an increase of 1.1% to the overall portfolio, driven by the impact of changes to market spreads, EBITDA multiples and\/or revised portfolio company performance on the year-end valuations. Saratoga Investment\u2019s portfolio remains strong, with 81.9% of the portfolio in first liens, and a continued high level of investment quality in loan investments, with 95.9% of its loans this quarter at its highest internal rating. Saratoga Investment\u2019s portfolio has a fair value that is 1.0% in excess of its cost basis. This fiscal quarter\u2019s originations include one investment in a new platform, and fifteen follow-ons in existing portfolio companies, including drawdowns on committed facilities. Since Saratoga Investment took over the management of the BDC, $907.7 million of repayments and sales of investments originated by Saratoga Investment have generated a gross unlevered IRR of 15.7%.<\/p>\n

For the year ended February 28, 2023, total investment income of $99.1 million increased by $28.4 million, or 40.1%, when compared to $70.7 million for the year ended February 28, 2022. For the three months ended February 28, 2023, total investment income of $32.3 million increased by $13.3 million, or 70.3%, from $19.0 million as compared to the three months ended February 28, 2022. As compared to the quarter ended November 30, 2022, total investment income grew by 23.1% from $26.3 million. This year\u2019s investment income was generated from an investment base that has grown by 19.0% since last year, despite the 1.0% decrease since last quarter. This asset growth was enhanced during the quarter and year by (i) the impact of higher interest rates, both base rates and spreads, with the weighted average current coupon on non-CLO BDC investments increasing from 9.5% to 12.1% year-over-year, and from 11.7% last quarter, as well as (ii) increased other income generated from higher originations and fees, including $3.0 million of dividend and redemption fee income generated from the Artemis Wax sale this quarter.<\/p>\n

As compared to the year and quarter ended February 28, 2022, adjusted net investment income for the year increased $8.4 million, or 32.6%, from $25.7 million to $34.1 million, and for the quarter increased $5.2 million, or 82.4%, from $6.4 million to $11.6 million. The\u00a0increases in investment income was offset by (i) increased interest expense resulting from the various new Notes Payable and SBA debentures issued during the past year and quarter and (ii) increased base and incentive management fees from higher AUM and earnings. As compared to the three months ended November 30, 2022, adjusted net investment income for the quarter increased $2.5 million, or 27.0%, from $9.1 million last quarter, primarily due to the changes in investment income noted above.<\/p>\n

Total expenses for fiscal year 2023, excluding interest and debt financing expenses, base management fees and incentive fees and income and excise taxes, increased from\u00a0$6.6 million\u00a0to\u00a0$8.0 million as compared to fiscal year 2022. This represented 0.8% of average total assets on an annualized basis, down from 0.9% last year. For the quarters ended February 28, 2023, February 28, 2022 and November 30, 2022, these expenses were $2.3 million, $1.8 million and $2.1 million, respectively.<\/p>\n

Net investment income on a weighted average per share basis was $2.94 and $0.81 for the year and quarter ended February 28, 2023. Adjusted for the incentive fee accrual related to net capital gains, the net investment income on a weighted average per share basis was $2.85 and $0.98, respectively. This compares to adjusted net investment income per share of $2.24 and $0.53 for the year and quarter ended February 28, 2022, respectively, and $0.77 for the quarter ended November 30, 2022. The weighted average common shares outstanding increased from 11.5 million to 12.0 million for the years ended February 28, 2022 and February 28, 2023, respectively, but decreased from 12.0 million to 11.9 million for the quarters ended February 28, 2022 and February 28, 2023, respectively, and remained the same as compared to 11.9 million for the quarter ended November 30, 2022.<\/p>\n

Net investment income yield as a percentage of average net asset value (\u201cNet Investment Income Yield\u201d) was 10.2% and 11.5% for the year and quarter ended February 28, 2023, respectively. Adjusted for the incentive fee accrual related to net capital gains, the Net Investment Income Yield was 9.9% and 13.6%, respectively. In comparison, adjusted Net Investment Income Yield was 7.8% and 7.3% for the year and quarter ended February 28, 2022, respectively, and 10.8% for the quarter ended November 30, 2022.<\/p>\n

Net Asset Value (\u201cNAV\u201d) was $347.0 million as of February 28, 2023, a decrease of $8.8 million from $355.8 million as of February 28, 2022, and an increase of $11.2 million from $335.8 million as of November 30, 2022.<\/p>\n