Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the
Company”), a business development company (“BDC”), today announced
financial results for its 2022 fiscal third quarter.
Summary Financial Information
The Company’s summarized financial information
is as follows:
|
For the quarterended and as ofNov 30, 2021 |
For the quarterended and as ofAug 31, 2021 |
For the quarterended and as ofNov 30, 2020 |
|
($ in thousands except per share) |
AUM |
661,793 |
|
666,097 |
|
546,944 |
|
NAV |
324,602 |
|
324,112 |
|
299,853 |
|
NAV per share |
29.17 |
|
28.97 |
|
26.84 |
|
Investment Income |
16,502 |
|
18,442 |
|
14,283 |
|
Net Investment Income per share |
0.45 |
|
0.57 |
|
0.40 |
|
Adjusted Net Investment Income per share |
0.53 |
|
0.63 |
|
0.50 |
|
Earnings per share |
0.73 |
|
0.71 |
|
0.57 |
|
Dividends per share (declared) |
0.53 |
|
0.52 |
|
0.42 |
|
Return on Equity – last twelve months |
14.6% |
|
14.4% |
|
11.0% |
|
–
annualized quarter |
10.0% |
|
9.9% |
|
8.5% |
|
Originations |
58,572 |
|
116,015 |
|
51,320 |
|
Repayments |
66,450 |
|
134,846 |
|
18,296 |
|
|
|
|
|
“Our Fiscal 2022 third quarter performance
continues to demonstrate the resilience and strength of Saratoga
and our portfolio companies. For the third quarter in a row, our
NAV per share of $29.17 has reached an historic high, and we
continue to believe Saratoga is well positioned for potential
future economic opportunities and challenges,” said Christian L.
Oberbeck, Chairman, Chief Executive Officer and President of
Saratoga Investment. “Our third quarter results continue to
highlight the strength of our financial position and portfolio
performance. These quarterly metrics include LTM return on equity
of 14.6%, adjusted NII per share of $0.53, and NAV per share
quarterly growth of $0.20 per share, or 1%. Market activity
continues to be extremely robust and we continue to believe that
balance sheet and liquidity strength, and NAV preservation, remains
paramount both for our BDC and our portfolio companies. Our current
capital structure at quarter-end was strong, with $343 million of
equity supporting $238 million of long-term and covenant-free
non-SBIC debt, $207 million of long-term covenant free SBIC
debentures and $12.5 million of long-term revolving borrowings. Our
quarter-end regulatory leverage of 237% provides substantial
cushion above our 150% requirement, and in addition to the $37.5
million we have available through our revolving credit facility, we
have $144 million of quarter-end cash and $76 million of available
SBIC II facilities to support our existing portfolio companies and
finance new opportunities. When deployed, we expect this capital to
be highly accretive to earnings. Taking into account our strong
overall results and robust pipeline of new opportunities, our Board
of Directors in November decided to increase our quarterly dividend
by 1c per share, or 2%, and declare a 53c per share dividend for
the quarter ended November 30, 2021.”
“As always, our primary focus is to remain
prudent and discerning in terms of originations in the robust
current environment. We continue to bring new platform investments
into the portfolio, with investments in two new companies added
this fiscal quarter, in addition to the success we continue to have
with follow-ons in existing borrowers with strong business models
and balance sheets. Total originations in Q3 totaled $59 million
invested, and repayments totaled $66 million. Reflecting the
strength of our pipeline, we have seen $130 million in new
originations with $11 million of repayments subsequent to
quarter-end. Importantly, the Q3 repayments included almost $10
million of realized gains on our Grey Heller and Texas Teachers
investments. Our credit quality remained at a high level at
quarter-end, increasing to 95% of credits rated in our highest
category, with no credits on non-accrual. With 76% 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
market conditions. 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.”
Discussion of Financial Results for the Quarter
ended November 30, 2021:
As of November 30, 2021, Saratoga Investment’s
assets under management (“AUM”) was $661.8 million, an increase of
21.0% from $547.0 million as of November 30, 2020, and a decrease
of 0.6% from $666.1 million as of August 31, 2021. The decrease
this past quarter consists of $58.6 million in originations, offset
by $66.4 million of repayments and amortizations, reflecting both
continued strong pace of originations as well as the high and
ongoing lumpy nature of repayments. In addition, the fair value of
the portfolio increased by $3.9 million of realized and
unrealized gains, representing an increase of 0.6% to the overall
portfolio, driven by the impact of changes to market spreads,
EBITDA multiples and/or revised portfolio company performance on
the quarter-end valuations. Saratoga Investment’s portfolio remains
strong, with 76.4% of the portfolio in first liens, and a continued
high level of investment quality in loan investments, with 95.0% of
its loans this quarter at its highest internal rating. Saratoga
Investment’s portfolio has a fair value that is 2.9% in excess of
its cost basis. This fiscal quarter’s originations include two
investments in new platforms, and six follow-ons in existing
portfolio companies, including drawdowns on committed facilities.
Since Saratoga Investment took over the management of the BDC,
$753.1 million of repayments and sales of investments originated by
Saratoga Investment have generated a gross unlevered IRR of
16.4%.
For the three months ended November 30, 2021,
total investment income of $16.5 million increased by $2.2 million,
or 15.5%, when compared to $14.3 million for the three months ended
November 30, 2020. This quarter’s investment income was generated
from an investment base that has grown by 21.0% since last year.
This asset growth was offset by lower interest rates, with the
weighted average current coupon on non-CLO BDC investments
decreasing from 9.5% to 8.8% year-over-year. In addition, this
quarter’s investment income was down 10.5% on a quarter-on-quarter
basis from $18.4 million for the quarter ended August 31, 2021,
primarily due to the non-recurrence of the $0.6 million Taco Mac
interest reserve release last quarter, as well as the reduction in
other income resulting from lower advisory and prepayment fees
generated by both reduced originations and repayments this
quarter.
As compared to the three months ended November
30, 2020, adjusted net investment income increased $0.6 million, or
10.1%, from $5.5 million to $6.1 million. The $2.2
million increase 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 generated
from the management of this larger pool of investments. Total
expenses, excluding interest and debt financing expenses, base
management fees and incentive fees and income taxes decreased
from $1.6 million to $1.2 million, as compared to
November 30, 2020. This represented 0.6% of average total assets on
an annualized basis, down from 1.1% last year. As compared to the
three months ended August 31, 2021, adjusted net investment income
decreased $0.9 million, or 13.0%, from $7.0 million last quarter,
primarily due to the changes in investment income noted above.
Net investment income on a weighted average per
share basis was $0.45 for the quarter ended November 30, 2021.
Adjusted for the incentive fee accrual related to net capital
gains, the net investment income on a weighted average per share
basis was $0.53. This compares to adjusted net investment income
per share of $0.63 for the quarter ended August 31, 2021, and $0.50
for the quarter ended November 30, 2020. During these periods,
weighted average common shares outstanding were 11.5 million for
the period ended November 30, 2021 and 11.2 million for both
periods ended August 31, 2021 and November 30, 2020.
Net investment income yield as a percentage of
average net asset value (“Net Investment Income Yield”) was 6.2%
for the quarter ended November 30, 2021. Adjusted for the incentive
fee accrual related to net capital gains, the Net Investment Income
Yield was 7.3%. In comparison, adjusted Net Investment Income Yield
was 8.7% and 7.4% for the quarters ended August 31, 2021, and
November 30, 2020, respectively.
Net Asset Value (“NAV”) was $342.6 million as of
November 30, 2021, an increase of $18.5 million from $324.1 million
as of August 31, 2021, and an increase of $42.7 million from $299.9
million as of November 30, 2020.
-
For the three months ended November 30, 2021, $5.2 million of net
investment income, $9.9 million in net realized gains from
investments and $2.5 million deferred tax benefit on unrealized
depreciation from investments were earned, offset by $6.0 million
of net unrealized depreciation, $2.4 million current income tax
expense on realized gains, $0.8 million realized losses on
extinguishment of debt and $5.9 million of dividends declared. In
addition, $1.0 million of stock dividend distributions were made
through the Company’s dividend reinvestment plan (“DRIP”), and
$15.2 million of shares were issued under the Company’s equity ATM
program.
NAV per share was $29.17 as of November 30,
2021, compared to $28.97 as of August 31, 2021, $27.25 as of
February 28, 2021, and $26.84 as of November 30, 2020.
-
For the three months ended November 30, 2021, NAV per share
increased by $0.20 per share, reflecting the $0.45 per share net
investment income, $0.34 per share net realized gains and
unrealized appreciation on investments, and $0.01 per share net
accretion from the share repurchases, DRIP and ATM offering plan,
offset by $0.01 per share net change in income and deferred taxes
on realized gains and unrealized appreciation, the $0.52 per share
second quarter dividend paid out this quarter and $0.07 per share
in realized losses on the extinguishment of the Madison credit
facility.
-
This is the highest level of NAV per share since Saratoga took over
the management of the Company, and reflects the sixteenth increase
in NAV per share over the past eighteen quarters.
Return on equity for the last twelve months
ended November 30, 2021, was 14.6%, up from 11.0% for the
comparable period last year.
Earnings per share for the quarter ended
November 30, 2021, was $0.73, compared to $0.71 for the quarter
ended August 31, 2021, and $0.57 for the quarter ended November 30,
2020.
Investment portfolio activity for the quarter
ended November 30, 2021:
-
Cost of investments made during the period: $58.6 million,
including investments in two new portfolio companies.
-
Principal repayments during the period: $66.4 million, including
three repayments of existing investments, plus amortization.
Additional Financial Information
For the fiscal quarter ended November 30, 2021,
Saratoga Investment reported net investment income of $5.2 million,
or $0.45 on a weighted average per share basis, and net realized
and unrealized gains on investments of $3.9 million, or $0.34 on a
weighted average per share basis, offset by $0.8 million realized
losses on extinguishment of debt, or $0.07 on a weighted average
per share basis, resulting in a net increase in net assets from
operations of $8.3 million, or $0.73 on a weighted average per
share basis. The $3.9 million net gain on investments was comprised
of $9.9 million in net realized gains on investments and $2.5
million of deferred tax benefit on unrealized depreciation on
investments, offset by $6.0 million in net unrealized depreciation
on investments, and $2.4 million of income tax expense from
realized gains on investments.
The $9.9 million net realized gain on
investments comprises a $7.3 million realized gain on the sale of
the Company’s Grey Heller investment and a $2.6 million realized
gain on the Company’s Texas Teachers investment. The $6.0
million net unrealized depreciation reflects (i) the $7.7
million reversal of previously recognized appreciation on
the Grey Heller equity realization, (ii) the $2.6 million
reversal of previously recognized appreciation on the Texas
Teachers realization and (iii) a $2.6 million unrealized
depreciation on the Company’s CLO equity investment reflecting
market volatility, partially offset by a 1.1% increase in the total
value of the remaining portfolio, primarily related to improvements
in market spreads, EBITDA multiples and/or revised portfolio
company performance – all of the net reduction in the value of the
non-CLO portfolio in the first quarter of last year has been more
than reversed since May 31, 2020, and the overall portfolio
fair value is now 2.9% above cost.
This is compared to the fiscal quarter ended
November 30, 2020, with net investment income of $4.5 million, or
$0.40 on a weighted average per share basis, and a net realized and
unrealized gain on investments of $1.9 million, or $0.17 on a
weighted average per share basis, resulting in a net increase in
net assets from operations of $6.4 million, or $0.57 on a weighted
average per share basis.
Portfolio and Investment Activity
As of November 30, 2021, the fair value of
Saratoga Investment’s portfolio was $661.8 million (excluding
$144.1 million in cash and cash equivalents), principally invested
in 43 portfolio companies and one collateralized loan obligation
fund (“CLO”). The overall portfolio composition consisted of 76.4%
of first lien term loans, 6.8% of second lien term loans, 0.4% of
unsecured term loans, 6.1% of subordinated notes in a CLO and 10.3%
of common equity.
For the fiscal quarter ended November 30, 2021,
Saratoga Investment invested $58.6 million in two new and six
existing portfolio companies and had $66.4 million in aggregate
amount of three exits and repayments, including realized gains,
resulting in net repayments of $7.8 million for the quarter.
As of November 30, 2021, the weighted average
current yield on Saratoga Investment’s portfolio based on current
fair values was 8.1%, which was comprised of a weighted average
current yield of 8.6% on first lien term loans, 11.1% on second
lien term loans, 8.1% on unsecured term loans, 11.6% on CLO
subordinated notes and 0.0% on equity interests.
Portfolio and Liquidity Update:
Subsequent to quarter-end, Saratoga Investment
has executed approximately $130.0 million of new originations in
two new portfolio companies and nine follow-ons, and had repayments
of approximately $10.5 million in one exit and realizations, for a
net increase in investments of $119.5 million.
Liquidity and Capital Resources
On October 4, 2021, Saratoga Investment closed a
new $50.0 million senior secured credit facility with Encina Lender
Finance, LLC. The credit facility will be supported by loans held
by Saratoga Investment and pledged to Encina under the terms of the
credit agreement. Saratoga Investment may request an increase in
the commitment amount to up to $75.0 million during the first two
years. The terms of the credit facility require a minimum drawn
amount of $12.5 million at all times during the first six months,
which increases to the greater of $25.0 million or 50% of the
commitment amount in effect at any time thereafter. The term of the
credit facility is three years. The interest rate on the borrowings
under the Facility is LIBOR plus 4.0%, with LIBOR having a floor of
0.75%. Concurrently with the closing of this Facility, all
remaining amounts outstanding on the Company’s existing revolving
credit facility with Madison Capital Funding, LLC were repaid and
the facility terminated.
As of November 30, 2021, Saratoga Investment had
$12.5 million in outstanding borrowings under its $50 million
senior secured revolving credit facility with Encina. At the same
time, Saratoga Investment had $108.0 million SBA debentures in its
SBIC I license outstanding, $99.0 million in SBA debentures in its
SBIC II license outstanding, $43.1 million of listed baby bonds
issued, an unsecured unlisted $175.0 million institutional bond
issuance, and three unlisted issuances of $20.0 million in total,
and an aggregate of $144.1 million in cash and cash
equivalents.
With $37.5 million available under the
credit facility and the $144.1 million of cash and cash
equivalents as of November 30, 2021, Saratoga
Investment has a total of $179.1 million of undrawn
borrowing capacity and cash and cash equivalents for new
investments or to support its existing portfolio companies in the
BDC. In addition, Saratoga Investment has $76.0
million in undrawn SBA debentures from the most recently
approved SBIC II license to finance new SBIC-eligible portfolio
companies and support existing SBIC II investments. Availability
under the Encina credit facility can change depending on portfolio
company performance and valuation. In addition, certain follow-on
investments in SBIC I and the BDC will not qualify for SBIC II
funding. As of quarter-end, Saratoga
Investment had $20.0 million of committed undrawn
lending commitments and $32.9 million of discretionary
funding commitments.
On July 30, 2021, we entered into an equity
distribution agreement with Ladenburg Thalmann & Co. Inc. and
Compass Point Research and Trading, LLC, through which we may offer
for sale, from time to time, up to $150.0 million of our common
stock through an ATM offering. During the three months ended
November 30, 2021, the Company sold 520,076 shares for gross
proceeds of $15.2 million at an average price of $29.16 for
aggregate net proceeds of $15.0 million (net of transaction cost).
During the nine months ended November 30, 2021, the Company sold
525,517 shares for gross proceeds of $15.3 million at an average
price of $29.15 for aggregate net proceeds of $15.2 million (net of
transaction cost).
Dividend
On November 30, 2021, Saratoga Investment
announced that its Board of Directors declared a quarterly dividend
of $0.53 per share for the fiscal quarter ended November 30, 2021,
payable on January 19, 2022, to all stockholders of record at the
close of business on January 4, 2022.
In fiscal year 2022, the Company also declared a
quarterly dividend of $0.43 per share for the fiscal quarter ended
February 28, 2021, $0.44 per share for the fiscal quarter ended May
31, 2021, and $0.52 per share for the fiscal quarter ended August
31, 2021.
In fiscal year 2021, the Company declared
quarterly dividends of $0.42 per share for the quarter ended
November 30, 2020, $0.41 per share for the quarter ended August 31,
2020 and $0.40 per share for the quarter ended May 31, 2020, for
total dividends in fiscal year 2021 of $1.23 per share. Total
dividends declared for the fiscal years ended February 29, 2020 and
February 28, 2019, were $2.21 per share and $2.06 per share,
respectively.
Shareholders have the option to receive payment
of dividends in cash or receive shares of common stock, pursuant to
the Company’s DRIP.
Share Repurchase Plan
In fiscal year 2015, the Company announced the
approval of an open market share repurchase plan that allows it to
repurchase up to 200,000 shares of its common stock at prices below
its NAV as reported in its then most recently published financial
statements. During fiscal year 2017, the share repurchase plan was
increased to 600,000 shares of common stock, and during fiscal
years 2018 through 2022, this share repurchase plan was extended
for another year at the same level of approval, currently through
January 15, 2023. On May 4, 2020, the Board of Directors increased
the share repurchase plan to 1.3 million shares of common stock.
During the three months ended November 30, 2021, there was no
activity. During the nine months ended November 30, 2021, the
Company purchased 49,623 shares of common stock, at the average
price of $25.23 for approximately $1.3 million pursuant to the
Share Repurchase Plan.
2022 Fiscal Third Quarter Conference
Call/Webcast Information
When: |
Thursday, January 6, 2022 |
|
10:00 a.m. Eastern Time (ET) |
|
|
How: |
Call: Interested parties may participate by
dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside
U.S. and Canada). |
|
|
|
A replay of the call will be available from 1:00 p.m. ET on
Thursday, January 6, 2022 through 1:00 p.m. ET on Thursday, January
13, 2022 by dialing (855) 859-2056 (U.S. and Canada) or (404)
537-3406 (outside U.S. and Canada), passcode for both replay
numbers: 9985742. |
|
|
|
Webcast: Interested parties may access a
simultaneous webcast of the call and find the Q3 2022 presentation
by going to the “Events & Presentations” section of Saratoga
Investment Corp.’s investor relations website,
http://ir.saratogainvestmentcorp.com/events-presentations |
|
|
About Saratoga Investment Corp.
Saratoga Investment is a specialty finance
company that provides customized financing solutions to U.S.
middle-market businesses. The Company invests primarily in senior
and unitranche leveraged loans and mezzanine debt, and, to a lesser
extent, equity to provide financing for change of ownership
transactions, strategic acquisitions, recapitalizations and growth
initiatives in partnership with business owners, management teams
and financial sponsors. Saratoga Investment’s objective is to
create attractive risk-adjusted returns by generating current
income and long-term capital appreciation from its debt and equity
investments. Saratoga Investment has elected to be regulated as a
business development company under the Investment Company Act of
1940 and is externally-managed by Saratoga Investment Advisors,
LLC, an SEC-registered investment advisor focusing on credit-driven
strategies. Saratoga Investment owns two SBIC-licensed subsidiaries
and manages a $650 million collateralized loan obligation (“CLO”)
fund. It also owns 52% of the Class F and 100% of the subordinated
notes of the CLO. The Company’s diverse funding sources, combined
with a permanent capital base, enable Saratoga Investment to
provide a broad range of financing solutions.
Forward Looking Statements
Statements included herein contain certain “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, which relate to future events or our future
performance or financial condition. Forward-looking statements can
be identified by the use of forward looking words such as
“outlook,” “believes,” “expects,” “potential,” “continues,” “may,”
“will,” “should,” “seeks,” “approximately,” “predicts,” “intends,”
“plans,” “estimates,” “anticipates” or negative versions of those
words, other comparable words or other statements that do not
relate to historical or factual matters. The forward-looking
statements are based on our beliefs, assumptions and expectations
of our future performance, taking into account all information
currently available to us. These statements are not guarantees of
future performance, condition or results and involve a number of
risks and uncertainties. Actual results may differ materially from
those in the forward-looking statements as a result of a number of
factors, including but not limited to the impact of the COVID-19
pandemic and the pandemic's impact on the U.S. and global economy,
as well as those described from time-to-time in our filings with
the Securities and Exchange Commission. Any forward-looking
statement speaks only as of the date on which it is made. Saratoga
Investment Corp. undertakes no duty to update any forward-looking
statements made herein or on the webcast/conference call, whether
as a result of new information, future developments or otherwise,
except as required by law.Financials
Saratoga
Investment Corp. |
Consolidated
Statements of Assets and Liabilities |
|
|
|
|
|
November 30, 2021 |
|
February 28, 2021 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Investments
at fair value |
|
|
|
Non-control/Non-affiliate investments (amortized cost of
$536,539,603 and $471,328,212, respectively) |
$ |
546,750,922 |
|
|
$ |
469,946,494 |
|
Affiliate investments (amortized cost of $40,075,633 and
$17,331,707, respectively) |
|
40,442,980 |
|
|
|
19,367,740 |
|
Control investments (amortized cost of $66,732,240 and $61,353,761,
respectively) |
|
74,599,110 |
|
|
|
64,998,481 |
|
Total
investments at fair value (amortized cost of $643,347,476 and
$550,013,680, respectively) |
|
661,793,012 |
|
|
|
554,312,715 |
|
Cash and
cash equivalents |
|
120,881,990 |
|
|
|
18,828,047 |
|
Cash and
cash equivalents, reserve accounts |
|
23,186,481 |
|
|
|
11,087,027 |
|
Interest
receivable (net of reserve of $0 and $1,152,086, respectively) |
|
4,566,798 |
|
|
|
4,223,630 |
|
Due from
affiliate |
|
- |
|
|
|
2,719,000 |
|
Management
fee receivable |
|
364,715 |
|
|
|
34,644 |
|
Other
assets |
|
920,315 |
|
|
|
947,315 |
|
Total assets |
$ |
811,713,311 |
|
|
$ |
592,152,378 |
|
|
|
|
|
LIABILITIES |
|
|
|
Revolving
credit facility |
$ |
12,500,000 |
|
|
$ |
- |
|
Deferred debt financing costs, revolving credit facility |
|
(1,291,999 |
) |
|
|
(639,982 |
) |
SBA
debentures payable |
|
207,000,000 |
|
|
|
158,000,000 |
|
Deferred debt financing costs, SBA debentures payable |
|
(4,302,019 |
) |
|
|
(2,642,622 |
) |
6.25% Notes
Payable 2025 |
|
- |
|
|
|
60,000,000 |
|
Deferred debt financing costs, 6.25% notes payable 2025 |
|
- |
|
|
|
(1,675,064 |
) |
7.25% Notes
Payable 2025 |
|
43,125,000 |
|
|
|
43,125,000 |
|
Deferred debt financing costs, 7.25% notes payable 2025 |
|
(1,157,871 |
) |
|
|
(1,401,307 |
) |
7.75% Notes
Payable 2025 |
|
5,000,000 |
|
|
|
5,000,000 |
|
Deferred debt financing costs, 7.75% notes payable 2025 |
|
(197,899 |
) |
|
|
(239,222 |
) |
4.375% Notes
Payable 2026 |
|
175,000,000 |
|
|
|
- |
|
Premium on 4.375% notes payable 2026 |
|
1,157,187 |
|
|
|
- |
|
Deferred debt financing costs, 4.375% notes payable 2026 |
|
(3,603,177 |
) |
|
|
- |
|
6.25% Notes
Payable 2027 |
|
15,000,000 |
|
|
|
15,000,000 |
|
Deferred debt financing costs, 6.25% notes payable 2027 |
|
(433,835 |
) |
|
|
(476,820 |
) |
Base
management and incentive fees payable |
|
12,081,266 |
|
|
|
6,556,674 |
|
Deferred tax
liability |
|
1,053,564 |
|
|
|
1,922,664 |
|
Accounts
payable and accrued expenses |
|
1,961,075 |
|
|
|
1,750,266 |
|
Current
income tax payable |
|
2,833,988 |
|
|
|
- |
|
Interest and
debt fees payable |
|
3,096,334 |
|
|
|
2,645,784 |
|
Directors
fees payable |
|
- |
|
|
|
70,500 |
|
Due to
manager |
|
289,952 |
|
|
|
279,065 |
|
Excise tax
payable |
|
- |
|
|
|
691,672 |
|
Total liabilities |
|
469,111,566 |
|
|
|
287,966,608 |
|
|
|
|
|
Commitments
and contingencies |
|
|
|
|
|
|
|
NET
ASSETS |
|
|
|
|
|
|
|
Common stock, par value $0.001, 100,000,000 common shares
authorized, 11,747,004 and 11,161,416 common shares issued and
outstanding, respectively |
|
11,747 |
|
|
|
11,161 |
|
Capital in
excess of par value |
|
321,559,189 |
|
|
|
304,874,957 |
|
Total
distributable earnings (deficit) |
|
21,030,809 |
|
|
|
(700,348 |
) |
Total net assets |
|
342,601,745 |
|
|
|
304,185,770 |
|
Total
liabilities and net assets |
$ |
811,713,311 |
|
|
$ |
592,152,378 |
|
NET ASSET
VALUE PER SHARE |
$ |
29.17 |
|
|
$ |
27.25 |
|
|
|
|
|
Asset
Coverage Ratio |
|
236.7 |
% |
|
|
347.1 |
% |
Saratoga
Investment Corp. |
Consolidated
Statements of Operations |
(unaudited) |
|
|
|
|
|
For the three months ended |
|
November 30, 2021 |
|
November 30, 2020 |
INVESTMENT
INCOME |
|
|
|
Interest
from investments |
|
|
|
Interest income: |
|
|
|
Non-control/Non-affiliate investments |
$ |
11,152,851 |
|
|
$ |
10,422,586 |
|
Affiliate investments |
|
1,055,947 |
|
|
|
418,418 |
|
Control investments |
|
1,702,096 |
|
|
|
1,654,359 |
|
Payment-in-kind interest income: |
|
|
|
Non-control/Non-affiliate investments |
|
115,724 |
|
|
|
214,422 |
|
Affiliate investments |
|
- |
|
|
|
49,333 |
|
Control investments |
|
110,737 |
|
|
|
44,896 |
|
Total
interest from investments |
|
14,137,355 |
|
|
|
12,804,014 |
|
Interest
from cash and cash equivalents |
|
968 |
|
|
|
770 |
|
Management
fee income |
|
815,739 |
|
|
|
623,817 |
|
Dividend
Income* |
|
537,621 |
|
|
|
12,799 |
|
Structuring
and advisory fee income |
|
582,500 |
|
|
|
545,354 |
|
Other
income* |
|
427,921 |
|
|
|
296,003 |
|
Total investment income |
|
16,502,104 |
|
|
|
14,282,757 |
|
|
|
|
|
OPERATING
EXPENSES |
|
|
|
Interest and
debt financing expenses |
|
4,842,900 |
|
|
|
3,559,870 |
|
Base
management fees |
|
2,923,676 |
|
|
|
2,324,564 |
|
Incentive
management fees expense (benefit) |
|
2,417,628 |
|
|
|
2,295,000 |
|
Professional
fees |
|
(104,438 |
) |
|
|
502,979 |
|
Administrator expenses |
|
750,000 |
|
|
|
693,750 |
|
Insurance |
|
85,399 |
|
|
|
67,010 |
|
Directors
fees and expenses |
|
73,096 |
|
|
|
60,000 |
|
General
& administrative |
|
357,727 |
|
|
|
278,734 |
|
Income tax
expense (benefit) |
|
(40,519 |
) |
|
|
29,748 |
|
Total operating expenses |
|
11,305,469 |
|
|
|
9,811,655 |
|
NET
INVESTMENT INCOME |
|
5,196,635 |
|
|
|
4,471,102 |
|
|
|
|
|
REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS |
|
|
|
Net realized
gain (loss) from investments: |
|
|
|
Non-control/Non-affiliate investments |
|
2,588,468 |
|
|
|
1,798 |
|
Affiliate investments |
|
7,328,457 |
|
|
|
- |
|
Control investments |
|
- |
|
|
|
- |
|
Net realized
gain (loss) from investments |
|
9,916,925 |
|
|
|
1,798 |
|
Income tax
(provision) benefit from realized gain on investments |
|
(2,447,173 |
) |
|
|
(3,895,354 |
) |
Net change
in unrealized appreciation (depreciation) on investments: |
|
|
|
Non-control/Non-affiliate investments |
|
3,887,216 |
|
|
|
4,348,888 |
|
Affiliate investments |
|
(7,412,673 |
) |
|
|
385,414 |
|
Control investments |
|
(2,517,159 |
) |
|
|
1,264,528 |
|
Net change
in unrealized appreciation (depreciation) on investments |
|
(6,042,616 |
) |
|
|
5,998,830 |
|
Net change
in provision for deferred taxes on unrealized (appreciation)
depreciation on investments |
|
2,480,465 |
|
|
|
(210,057 |
) |
Net realized
and unrealized gain (loss) on investments |
|
3,907,601 |
|
|
|
1,895,217 |
|
Realized
losses on extinguishment of debt |
|
(764,123 |
) |
|
|
- |
|
NET INCREASE
(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ |
8,340,113 |
|
|
$ |
6,366,319 |
|
|
|
|
|
WEIGHTED
AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE |
$ |
0.73 |
|
|
$ |
0.57 |
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED |
|
11,450,861 |
|
|
|
11,169,817 |
|
|
|
|
|
* Certain
prior period amounts have been reclassified to conform to current
period presentation. |
|
|
|
|
|
|
|
Saratoga
Investment Corp. |
Consolidated
Statements of Operations |
(unaudited) |
|
|
|
|
|
|
|
|
|
For the nine months ended |
|
November 30, 2021 |
|
November 30, 2020 |
INVESTMENT
INCOME |
|
|
|
Interest
from investments |
|
|
|
Interest income: |
|
|
|
Non-control/Non-affiliate investments |
$ |
33,687,612 |
|
|
$ |
30,585,868 |
|
Affiliate investments |
|
2,332,967 |
|
|
|
1,204,840 |
|
Control investments |
|
5,616,182 |
|
|
|
4,037,915 |
|
Payment-in-kind interest income: |
|
|
|
Non-control/Non-affiliate investments |
|
1,002,819 |
|
|
|
1,125,306 |
|
Affiliate investments |
|
- |
|
|
|
143,574 |
|
Control investments |
|
298,383 |
|
|
|
117,449 |
|
Total
interest from investments |
|
42,937,963 |
|
|
|
37,214,952 |
|
Interest
from cash and cash equivalents |
|
2,561 |
|
|
|
14,176 |
|
Management
fee income |
|
2,448,593 |
|
|
|
1,883,825 |
|
Dividend
Income* |
|
1,595,119 |
|
|
|
12,799 |
|
Structuring
and advisory fee income |
|
2,922,625 |
|
|
|
1,798,660 |
|
Other
income* |
|
1,852,916 |
|
|
|
511,063 |
|
Total investment income |
|
51,759,777 |
|
|
|
41,435,475 |
|
|
|
|
|
OPERATING
EXPENSES |
|
|
|
Interest and
debt financing expenses |
|
14,367,996 |
|
|
|
9,452,193 |
|
Base
management fees |
|
8,684,681 |
|
|
|
6,694,144 |
|
Incentive
management fees expense (benefit) |
|
9,698,327 |
|
|
|
1,966,367 |
|
Professional
fees |
|
863,376 |
|
|
|
1,257,420 |
|
Administrator expenses |
|
2,156,250 |
|
|
|
1,852,083 |
|
Insurance |
|
258,035 |
|
|
|
202,463 |
|
Directors
fees and expenses |
|
265,596 |
|
|
|
195,000 |
|
General
& administrative |
|
1,301,603 |
|
|
|
963,372 |
|
Income tax
expense (benefit) |
|
18,082 |
|
|
|
28,304 |
|
Total operating expenses |
|
37,613,946 |
|
|
|
22,611,346 |
|
NET
INVESTMENT INCOME |
|
14,145,831 |
|
|
|
18,824,129 |
|
|
|
|
|
REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS |
|
|
|
Net realized
gain (loss) from investments: |
|
|
|
Non-control/Non-affiliate investments |
|
6,140,073 |
|
|
|
22,207 |
|
Affiliate investments |
|
7,328,457 |
|
|
|
- |
|
Control investments |
|
(139,867 |
) |
|
|
- |
|
Net realized
gain (loss) from investments |
|
13,328,663 |
|
|
|
22,207 |
|
Income tax
(provision) benefit from realized gain on investments |
|
(2,896,056 |
) |
|
|
(3,895,354 |
) |
Net change
in unrealized appreciation (depreciation) on investments: |
|
|
|
Non-control/Non-affiliate investments |
|
11,593,037 |
|
|
|
(9,472,477 |
) |
Affiliate investments |
|
(1,668,686 |
) |
|
|
(1,421,606 |
) |
Control investments |
|
4,222,150 |
|
|
|
1,522,945 |
|
Net change
in unrealized appreciation (depreciation) on investments |
|
14,146,501 |
|
|
|
(9,371,138 |
) |
Net change
in provision for deferred taxes on unrealized (appreciation)
depreciation on investments |
|
921,610 |
|
|
|
(58,838 |
) |
Net realized
and unrealized gain (loss) on investments |
|
25,500,718 |
|
|
|
(13,303,123 |
) |
Realized
losses on extinguishment of debt |
|
(2,316,263 |
) |
|
|
- |
|
NET INCREASE
(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ |
37,330,286 |
|
|
$ |
5,521,006 |
|
|
|
|
|
WEIGHTED
AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE |
$ |
3.30 |
|
|
$ |
0.49 |
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED |
|
11,312,991 |
|
|
|
11,198,287 |
|
|
|
|
|
* Certain
prior period amounts have been reclassified to conform to current
period presentation. |
|
|
|
|
|
|
|
Supplemental Information Regarding Adjusted Net
Investment Income, Adjusted Net Investment Income Yield and
Adjusted Net Investment Income per share
On a supplemental basis, Saratoga Investment
provides information relating to adjusted net investment income,
adjusted net investment income yield and adjusted net investment
income per share, which are non-GAAP measures. These measures are
provided in addition to, but not as a substitute for, net
investment income, net investment income yield and net investment
income per share. Adjusted net investment income represents net
investment income excluding any capital gains incentive fee expense
or reversal attributable to realized and unrealized gains. The
management agreement with the Company’s advisor provides that a
capital gains incentive fee is determined and paid annually with
respect to cumulative realized capital gains (but not unrealized
capital gains) to the extent such realized capital gains exceed
realized and unrealized losses for such year. In addition, Saratoga
Investment accrues, but does not pay, a capital gains incentive fee
in connection with any unrealized capital appreciation, as
appropriate. All capital gains incentive fees are presented within
net investment income within the Consolidated Statements of
Operations, but the associated realized and unrealized gains and
losses that these incentive fees relate to, are excluded. As such,
Saratoga Investment believes that adjusted net investment income,
adjusted net investment income yield and adjusted net investment
income per share is a useful indicator of operations exclusive of
any capital gains incentive fee expense or reversal attributable to
gains. In addition, adjusted net investment income also
excludes the interest expense and amortization of deferred
financing costs related to the 2025 notes during the call notice
period while the 2026 notes were already issued and outstanding.
Both these expenses are directly attributable to the issuance of
the 2026 notes and the subsequent repayment of the 2025 notes, and
are deemed to be non-recurring in nature and not representative of
the operations of Saratoga Investment. The presentation of
this additional information is not meant to be considered in
isolation or as a substitute for financial results prepared in
accordance with GAAP. The following table provides a reconciliation
of net investment income to adjusted net investment income, net
investment income yield to adjusted net investment income yield and
net investment income per share to adjusted net investment income
per share for the three and nine months ended November 30, 2021,
and November 30, 2020.
|
For the three months ended November
30 |
|
For the nine months ended November
30 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Net Investment Income |
$ |
5,196,635 |
|
|
$ |
4,471,102 |
|
|
$ |
14,145,831 |
|
$ |
18,824,129 |
|
|
Changes in accrued capital
gains incentive fee expense/reversal |
|
894,134 |
|
|
|
1,058,955 |
|
|
|
4,927,592 |
|
|
|
(2,035,048) |
|
|
Interest expense on 2025 Notes
during call period (3) |
|
- |
|
|
|
- |
|
|
|
274,439 |
|
|
|
- |
|
|
Adjusted net investment
income |
$ |
6,090,769 |
|
|
$ |
5,530,057 |
|
|
$ |
19,347,862 |
|
|
$ |
16,789,081 |
|
|
|
|
|
|
|
|
|
|
|
Net investment income
yield |
|
6.2% |
|
|
|
6.0% |
|
|
|
5.8% |
|
|
|
8.5% |
|
|
Changes in accrued capital
gains incentive fee expense/reversal |
|
1.1% |
|
|
|
1.4% |
|
|
|
2.1% |
|
|
|
(0.9%) |
|
|
Interest expense on 2025 Notes
during call period (3) |
|
- |
|
|
|
- |
|
|
|
0.1% |
|
|
|
- |
|
|
Adjusted net investment income
yield (1) |
|
7.3% |
|
|
|
7.4% |
|
|
|
8.0% |
|
|
|
7.6% |
|
|
Net investment income per
share |
$0.45 |
|
|
$0.40 |
|
|
$1.25 |
|
|
$1.68 |
|
|
Changes in accrued capital
gains incentive fee expense/reversal |
$0.08 |
|
|
$0.10 |
|
|
$0.44 |
|
|
($0.18 |
) |
|
Interest expense on 2025 Notes
during call period (3) |
|
- |
|
|
|
- |
|
|
$0.02 |
|
|
|
- |
|
|
Adjusted net investment income
per share (2) |
$0.53 |
|
|
$0.50 |
|
|
$1.71 |
|
|
$1.50 |
|
|
(1) |
Adjusted net investment income yield is calculated as adjusted net
investment income divided by average net asset value. |
(2) |
Adjusted net investment income per share is calculated as adjusted
net investment income divided by weighted average common shares
outstanding. |
(3) |
Interest and amortization of deferred financing costs on 2025 notes
during call period is presented net of the incentive fee
accrual |
|
|
Contact: Henri SteenkampSaratoga Investment
Corp.212-906-7800
Roland TomfordeBroadgate Consultants212-232-2222
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