{"id":764,"date":"2019-07-15T14:27:34","date_gmt":"2019-07-15T14:27:34","guid":{"rendered":"https:\/\/henristeenkamp.com\/?p=764"},"modified":"2019-07-15T14:28:33","modified_gmt":"2019-07-15T14:28:33","slug":"saratoga-investment-corp-announces-fiscal-first-quarter-2020-financial-results","status":"publish","type":"post","link":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/saratoga-investment-corp-announces-fiscal-first-quarter-2020-financial-results\/","title":{"rendered":"Saratoga Investment Corp. Announces Fiscal First Quarter 2020 Financial Results"},"content":{"rendered":"
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Jul 10, 2019<\/div>\n<\/div>\n
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Saratoga Investment Corp. Announces Fiscal First Quarter 2020 Financial Results<\/a><\/div>\n<\/div>\n
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NEW YORK,\u00a0July 10, 2019\u00a0(GLOBE NEWSWIRE) —\u00a0Saratoga Investment Corp.\u00a0(NYSE:SAR) (\u201cSaratoga Investment\u201d or \u201cthe Company\u201d), a business development company, today announced financial results for its 2020 fiscal first quarter.<\/p>\n

Summary Financial Information<\/p>\n

The Company\u2019s summarized financial information is as follows:<\/p>\n

\"Henri.steenkamp.pressrelease\"<\/p>\n

\u201cHighlights from our fiscal 2020 first quarter include LTM return on equity of 11.7%, an increase in NAV per share of\u00a0$0.44 to $24.06, and adjusted NII per share of\u00a0$0.60,\u201d said\u00a0Christian L. Oberbeck, Chairman and Chief Executive Officer of\u00a0Saratoga Investment. \u201cThese results have been achieved while we continue to strengthen our organizational and capital foundation and grow our high quality asset base. Important differentiating metrics include dividend coverage – our adjusted NII per share of\u00a0$0.60\u00a0is\u00a0five cents\u00a0above our current\u00a0$0.55\u00a0dividend; relative performance – LTM ROE of 11.7% is almost 300 basis points above the BDC industry mean; and NAV growth – NAV per share of\u00a0$24.06\u00a0is up 4.3% from the same period last year. Last month, we also increased our dividend for the nineteenth consecutive quarter, a\u00a0$0.01\u00a0increase to\u00a0$0.55\u00a0per share. Our management team continues to generate outperformance despite increasingly challenging market conditions.\u201d<\/p>\n

Michael J. Grisius, President and Chief Investment Officer, added, \u201cThis fiscal quarter has again demonstrated our ability to steadily build AUM without sacrificing quality, despite a borrower-friendly environment that has made this difficult to accomplish. Our capital deployed this quarter matched our redemptions, which continue to be lumpy and difficult to predict, and importantly, the portfolio investments rated in our highest category remained at a very high 99%. We also continue to increase our investments in new platforms, with three more investments in new portfolio companies added this quarter, and one more since quarter-end. Despite growing market headwinds, we remain confident that we can steadily improve portfolio size and maintain quality over the long-term by remaining true to our disciplined investment approach, exceptional underwriting standards and the long-term strategy and focus that has guided us since taking over management of the BDC.\u201d<\/p>\n

As of\u00a0May 31, 2019,\u00a0Saratoga Investment\u00a0increased its assets under management (\u201cAUM\u201d) to\u00a0$409.5 million, an increase of 1.8% from\u00a0$402.0 million\u00a0as of\u00a0February 28, 2019, and an increase of 19.2% from\u00a0$343.4 million\u00a0as of\u00a0May 31, 2018. The increase this quarter consists of originations of\u00a0$27.4 million\u00a0offset by repayments and amortizations of\u00a0$26.9 million, with the bulk of the quarterly increase reflecting unrealized appreciation. Including realized and unrealized gains, Saratoga Investment\u2019s portfolio has continued to grow this quarter and remains strong, with a continued high level of investment quality in loan investments, with 98.7% of its loans this quarter at its highest internal rating. Included in this quarter\u2019s originations are also three investments in new portfolio companies. Since\u00a0Saratoga Investment\u00a0has taken over the management of the BDC,\u00a0$375.7 million\u00a0of repayments and sales of investments originated by Saratoga have generated a gross unlevered IRR of 13.9%.<\/p>\n

For the three months ended\u00a0May 31, 2019, total investment income of\u00a0$12.8 million\u00a0increased\u00a0$2.3 million, or 21.6%, compared to\u00a0$10.5 millionfor the three months ended\u00a0May 31, 2018. This increased investment income was generated from an investment base that has grown by 19.2% since last year. In addition, the benefit of an increase in interest earned on CLO equity was partially offset by the weighted average current coupon on non-CLO BDC investments decreasing from 11.3% to 10.8%. In addition, this quarter\u2019s investment income was down 1.8% on a quarter-on-quarter basis from\u00a0$13.0 million\u00a0for the quarter ended\u00a0February 28, 2019.<\/p>\n

As compared to the three months ended\u00a0May 31, 2018, the investment income increase of\u00a0$2.3 million\u00a0was offset by: (i) increased debt and financing expenses, as the growth in AUM this year was partially financed from increased SBA debentures and the\u00a0$60.0 million\u00a0baby bond issuance last year; (ii) increased base and incentive management fees generated from the management of this larger pool of investments; and (iii) the non-recurrence of the\u00a0$0.3 million\u00a0income tax benefit generated last year from net operating losses in Saratoga Investment\u2019s blocker subsidiaries. Total expenses, excluding interest and debt financing expenses, base management fees and incentive fees and income tax benefit, reduced from\u00a0$1.5 million\u00a0for the three months ended\u00a0May 31, 2018\u00a0to\u00a0$1.3 million\u00a0for the three months ended\u00a0May 31, 2019.<\/p>\n

Net investment income on a weighted average per share basis was\u00a0$0.48\u00a0for the quarter ended\u00a0May 31, 2019. Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income on a weighted average per share basis was\u00a0$0.60. This compares to adjusted net investment income per share of\u00a0$0.66\u00a0for the quarter ended\u00a0February 28, 2019, and\u00a0$0.64\u00a0for the quarter ended\u00a0May 31, 2018, reflecting decreases of\u00a0$0.06\u00a0per share and\u00a0$0.04\u00a0per share, respectively. During these periods, weighted average common shares outstanding increased from 6.3 million shares for the three months ended\u00a0May 31, 2018, to 7.5 million shares and 7.7 million shares for the three months ended\u00a0February 28, 2019\u00a0and\u00a0May 31, 2019, respectively.<\/p>\n

Net investment income yield as a percentage of average net asset value (\u201cNet Investment Income Yield\u201d) was 8.0% for the quarter ended\u00a0May 31, 2019. Adjusted for the incentive fee accrual related to net unrealized capital gains, the Net Investment Income Yield was 10.1%. In comparison, adjusted Net Investment Income Yield was 11.2% and 11.1% for the quarters ended\u00a0February 28, 2019\u00a0and\u00a0May 31, 2018, respectively.<\/p>\n

Net Asset Value (\u201cNAV\u201d) was\u00a0$186.8 million\u00a0as of\u00a0May 31, 2019, an increase of\u00a0$5.9 million\u00a0from\u00a0$180.9 million\u00a0as of\u00a0February 28, 2019, and an increase of\u00a0$42.0 million\u00a0from\u00a0$144.8 million\u00a0as of\u00a0May 31, 2018.<\/p>\n

    \n
  • For the three months ended\u00a0May 31, 2019,\u00a0$3.7 million\u00a0of net investment income and\u00a0$4.0 million\u00a0of net unrealized appreciation were earned, partially offset by\u00a0$0.02 million\u00a0deferred tax expense on net unrealized gains in Saratoga Investment\u2019s blocker subsidiaries and\u00a0$4.2 million\u00a0of dividends declared. In addition,\u00a0$0.7 million\u00a0of stock dividend distributions were made through the Company\u2019s dividend reinvestment plan (\u201cDRIP\u201d), and 76,448 shares were sold through the Company\u2019s At-the-Market (\u201cATM\u201d) equity offering during the quarter.<\/li>\n<\/ul>\n

    NAV per share was\u00a0$24.06\u00a0as of\u00a0May 31, 2019, compared to\u00a0$23.62\u00a0as of\u00a0February 28, 2019, and\u00a0$23.06\u00a0as of\u00a0May 31, 2018.<\/p>\n

      \n
    • For the three months ended\u00a0May 31, 2019, NAV per share increased by\u00a0$0.44\u00a0per share, primarily reflecting the\u00a0$3.5 million, or\u00a0$0.45\u00a0per share increase in net assets (net of the\u00a0$0.54\u00a0dividend paid during the first fiscal quarter of 2020). This was slightly offset by the\u00a0$0.01dilutive impact of the quarter\u2019s 107,688 share issuances from the DRIP and ATM programs. The Company made no purchases of common stock in the open market during the quarter.<\/li>\n<\/ul>\n

      Return on equity for the last twelve months ended\u00a0May 31, 2019, was 11.7%, compared to 14.9% for the comparable period last year.<\/p>\n

      Earnings per share for the quarter ended\u00a0May 31, 2019, was\u00a0$0.99, compared to earnings per share of\u00a0$1.04\u00a0for the quarter ended\u00a0February 28, 2019, and\u00a0$0.61\u00a0for the quarter ended\u00a0May 31, 2018.<\/p>\n

      Investment portfolio activity for the quarter ended\u00a0May 31, 2019:<\/p>\n

        \n
      • Cost of investments made during the period:\u00a0$27.4 million, including investments in three new portfolio companies<\/li>\n
      • Principal repayments during the period:\u00a0$26.9 million<\/li>\n<\/ul>\n

        Additional Financial Information<\/p>\n

        For the fiscal quarter ended\u00a0May 31, 2019,\u00a0Saratoga Investment\u00a0reported net investment income of\u00a0$3.7 million, or\u00a0$0.48\u00a0on a weighted average per share basis, and a net realized and unrealized gain on investments of\u00a0$4.0 million, or\u00a0$0.51\u00a0on a weighted average per share basis, resulting in a net increase in net assets from operations of\u00a0$7.6 million, or\u00a0$0.99\u00a0on a weighted average per share basis. The\u00a0$4.0 million\u00a0net gain on investments was comprised entirely of\u00a0$4.0 million\u00a0in net unrealized appreciation on investments, offset slightly by\u00a0$0.02 million\u00a0of net deferred tax expense on unrealized gains in Saratoga Investment\u2019s blocker subsidiaries.<\/p>\n

        The\u00a0$4.0 million\u00a0unrealized appreciation primarily reflects (i)\u00a0$1.6 million\u00a0unrealized appreciation on the Company\u2019s Censis Technologies investment, (ii)\u00a0$1.2 million\u00a0unrealized appreciation on the Company\u2019s Flywheel investment that was realized subsequent to quarter-end, (iii)\u00a0$1.2 million\u00a0unrealized appreciation on Saratoga\u2019s CLO equity investment, reflecting first quarter performance exceeding projections, and (iv)\u00a0$0.8 million\u00a0unrealized appreciation on the Company\u2019s Ohio Medical investment reflecting improved performance. This was offset primarily by\u00a0$0.7 million\u00a0unrealized depreciation on the Company\u2019s My Alarm Center investment. This is compared to the fiscal quarter ended\u00a0May 31, 2018, with net investment income of\u00a0$3.9 million, or\u00a0$0.63\u00a0on a weighted average per share basis, and a net realized and unrealized loss on investments of\u00a0$0.09 million, or\u00a0$0.01\u00a0on a weighted average per share basis, resulting in a net increase in net assets from operations of\u00a0$3.8 million, or\u00a0$0.61\u00a0on a weighted average per share basis. The\u00a0$0.09 million\u00a0net loss on investments consisted of\u00a0$0.2 million\u00a0in net realized gains on investments and\u00a0$0.6 million\u00a0in unrealized appreciation, offset by\u00a0$0.9 million\u00a0in net deferred tax expense on unrealized gains in Saratoga Investment\u2019s blocker subsidiaries.<\/p>\n

        Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income was\u00a0$4.6 million\u00a0and\u00a0$4.0 million\u00a0for the quarters ended\u00a0May 31, 2019, and\u00a0May 31, 2018, respectively \u2013 an increase of\u00a0$0.6 million\u00a0year-over-year, or 15.9%.<\/p>\n

        Total expenses, excluding interest and debt financing expenses, base management fees and incentive management fees, increased from\u00a0$1.2 million\u00a0for the quarter ended\u00a0May 31, 2018, to\u00a0$1.3 million\u00a0for the quarter ended\u00a0May 31, 2019, but decreased from 1.4% to 1.1% of average total assets.<\/p>\n

        Portfolio and Investment Activity<\/p>\n

        As of\u00a0May 31, 2019, the fair value of Saratoga Investment\u2019s portfolio was\u00a0$409.5 million\u00a0(excluding\u00a0$61.0 million\u00a0in cash and cash equivalents), principally invested in 33 portfolio companies and one collateralized loan obligation fund (\u201cCLO\u201d). The overall portfolio composition consisted of 53.6% of first lien term loans, 26.7% of second lien term loans, 0.5% of unsecured term loans, 9.3% of subordinated notes in a CLO and 9.9% of common equity.<\/p>\n

        For the fiscal quarter ended\u00a0May 31, 2019,\u00a0Saratoga Investment\u00a0invested\u00a0$27.4 million\u00a0in new or existing portfolio companies and had\u00a0$26.9 million\u00a0in aggregate amount of exits and repayments, resulting in net investments of\u00a0$0.5 million\u00a0for the quarter.<\/p>\n

        As of\u00a0May 31, 2019, the weighted average current yield on Saratoga Investment\u2019s portfolio for the twelve months ended was 10.6%, which was comprised of a weighted average current yield of 10.7% on first lien term loans, 11.8% on second lien term loans, 0.0% on unsecured term loans, 16.0% on CLO subordinated notes and 2.8% on equity interests.<\/p>\n

        Liquidity and Capital Resources<\/p>\n

        As of\u00a0May 31, 2019,\u00a0Saratoga Investment\u00a0had no outstanding borrowings under its $45\u00a0million senior secured revolving credit facility with Madison Capital Funding\u00a0LLC. At the same time,\u00a0Saratoga Investment\u00a0had\u00a0$150.0 million\u00a0SBA debentures outstanding,\u00a0$134.5 million\u00a0of baby bonds (fair value of\u00a0$137.5 million) issued and an aggregate of\u00a0$61.0 million\u00a0in cash and cash equivalents.<\/p>\n

        With\u00a0$45.0 million\u00a0available under the credit facility and the\u00a0$61.0 million\u00a0of cash and cash equivalents,\u00a0Saratoga Investment\u00a0has a total of\u00a0$107.1 million\u00a0of undrawn borrowing capacity and cash and cash equivalents available as of\u00a0May 31, 2019. This would allow\u00a0Saratoga Investment\u00a0to grow current AUM by 26% without any new external financing. The net proceeds from the DRIP and ATM equity program totaled\u00a0$2.4 million\u00a0of equity issuances for the quarter ended\u00a0May 31, 2019.\u00a0Saratoga Investment\u00a0also has the ability to issue additional equity or baby bonds through the existing shelf registration statement.<\/p>\n

        On\u00a0March 16, 2017,\u00a0Saratoga Investment\u00a0entered into an equity distribution agreement with\u00a0Ladenburg Thalmann & Co. Inc., through which Saratoga may offer for sale, from time to time, up to\u00a0$30.0 million\u00a0of its common stock through an ATM offering. Subsequent to this,\u00a0BB&T Capital Markets\u00a0and\u00a0B. Riley FBR, Inc\u00a0were also added to the agreement. On\u00a0July 9, 2019, the amount of common stock to be offered through this offering was increased to\u00a0$70.0 million. As of\u00a0May 31, 2019, the Company sold 571,120 shares for gross proceeds of\u00a0$13.0 million\u00a0at an average price of\u00a0$22.78\u00a0for aggregate net proceeds of\u00a0$12.9 million\u00a0(net of transaction costs) since inception, with\u00a0$1.8 million\u00a0gross proceeds generated in the quarter ended\u00a0May 31, 2019.<\/p>\n

        On\u00a0September 27, 2018, the SBA issued a “green light” letter inviting\u00a0Saratoga Investment\u00a0to file a formal license application for a second SBIC license. If approved, the additional SBIC license would provide the Company with an incremental source of long-term capital by permitting\u00a0Saratoga Investment\u00a0to issue, subject to SBA approval, up to\u00a0$175.0 million\u00a0of additional SBA-guaranteed debentures in addition to the\u00a0$150.0 million\u00a0already approved under the Company\u2019s first license. Receipt of a green light letter from the SBA does not assure an applicant that the SBA will ultimately issue an SBIC license and the Company has received no assurance or indication from the SBA that it will receive an additional SBIC license, or of the timeframe in which it would receive an additional license, should one ultimately be granted.<\/p>\n

        Dividend<\/p>\n

        On\u00a0May 28, 2019,\u00a0Saratoga Investment\u00a0announced a dividend of\u00a0$0.55\u00a0per share for the fiscal quarter ended\u00a0May 31, 2019, payable on\u00a0June 27, 2019, to all stockholders of record at the close of business on\u00a0June 13, 2019. This increase is the nineteenth sequential increase to the Company\u2019s quarterly dividends. On\u00a0February 26, 2019,\u00a0Saratoga Investment\u00a0announced a dividend of\u00a0$0.54\u00a0per share for the fiscal quarter ended\u00a0February 28, 2019, paid on\u00a0March 28, 2019, to all stockholders of record at the close of business on\u00a0March 14, 2019. Total dividends declared for the fiscal years ended\u00a0February 28, 2019\u00a0and 2018 were\u00a0$2.10\u00a0per share and\u00a0$1.94\u00a0per share, respectively.<\/p>\n

        Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Company\u2019s DRIP.<\/p>\n

        Share Repurchase Plan<\/p>\n

        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 and 2019, this share repurchase plan was extended for another year at the same level of approval, currently through\u00a0January 2020. As of\u00a0May 31, 2019, Saratoga purchased 218,491 shares of common stock, at the average price of\u00a0$16.87\u00a0for approximately\u00a0$3.7 million\u00a0pursuant to this repurchase plan.<\/p>\n

        Saratoga Investment\u00a0made no purchases of common stock in the open market during the quarter ended\u00a0May 31, 2019.<\/p>\n

        2020 Fiscal First Quarter Conference Call\/Webcast Information<\/p>\n

        \"Sar1\"<\/p>\n

        Saratoga Investment Corp.
        \nConsolidated Statements of Operations
        \n(unaudited)<\/p>\n

        \"Sar2\"<\/p>\n

        Supplemental Information Regarding Adjusted Net Investment Income, Adjusted Net Investment Income Yield and Adjusted Net Investment Income per share<\/p>\n

        On a supplemental basis,\u00a0Saratoga Investment\u00a0provides 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 unrealized gains. The management agreement with the Company\u2019s 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,\u00a0Saratoga Investment\u00a0accrues, but do not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such,\u00a0Saratoga Investment\u00a0believes 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 unrealized gains. 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 months ended\u00a0May 31, 2019, and\u00a0May 31, 2018.<\/p>\n

        \"Screen<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

        Jul 10, 2019 Saratoga Investment Corp. Announces Fiscal First Quarter 2020 Financial Results NEW YORK,\u00a0July 10, 2019\u00a0(GLOBE NEWSWIRE) —\u00a0Saratoga Investment Corp.\u00a0(NYSE:SAR) (\u201cSaratoga Investment\u201d or \u201cthe Company\u201d), a business development company, today announced financial results for its 2020 fiscal first quarter. Summary Financial Information The Company\u2019s summarized financial information is as follows: \u201cHighlights from our fiscal […]<\/p>\n","protected":false},"author":1176,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_mi_skip_tracking":false,"footnotes":""},"categories":[3,9,10,1],"tags":[69,94,110,111,112],"class_list":["post-764","post","type-post","status-publish","format-standard","hentry","category-blog","category-saratoga-posts","category-saratoga-press-releases","category-uncategorized","tag-henri-steenkamp","tag-press-release","tag-saratoga","tag-saratoga-corp","tag-saratoga-investment"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/posts\/764","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/users\/1176"}],"replies":[{"embeddable":true,"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/comments?post=764"}],"version-history":[{"count":0,"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/posts\/764\/revisions"}],"wp:attachment":[{"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/media?parent=764"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/categories?post=764"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/tags?post=764"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}