{"id":793,"date":"2020-01-08T19:25:44","date_gmt":"2020-01-08T19:25:44","guid":{"rendered":"https:\/\/henristeenkamp.com\/?p=793"},"modified":"2020-03-04T18:26:00","modified_gmt":"2020-03-04T18:26:00","slug":"saratoga-investment-corp-announces-fiscal-third-quarter-2020-financial-results-and-quarterly-dividend-of-0-56-per-share-2-24-per-share-on-an-annualized-basis","status":"publish","type":"post","link":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/saratoga-investment-corp-announces-fiscal-third-quarter-2020-financial-results-and-quarterly-dividend-of-0-56-per-share-2-24-per-share-on-an-annualized-basis\/","title":{"rendered":"Saratoga Investment Corp. Announces Fiscal Third Quarter 2020 Financial Results and Quarterly Dividend of $0.56 per Share ($2.24 per Share on an Annualized Basis)"},"content":{"rendered":"
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NEW YORK,\u00a0Jan. 08, 2020\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 third quarter. In addition, the Company announced that its Board of Directors has declared a dividend of\u00a0$0.56\u00a0per share for the fiscal quarter ended\u00a0November 30, 2019, payable on\u00a0February 6, 2020, to all stockholders of record at the close of business on\u00a0January 24, 2020.<\/p>\n

Summary Financial Information<\/p>\n

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

\"Summary<\/p>\n

\u201cOur third quarter quarterly performance metrics were remarkably strong with LTM return on equity of 17.6%, adjusted NII per share of $0.61 per share, earnings per share of $1.37, and an additional increase in NAV per share this quarter of $0.83, or 3.4%, to $25.30. This quarter included another significant realized gain, with our Censis equity investment recognizing an $11 million gain through a sale,\u201d said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. \u201cOur continued strong price and volume stock market performance also enabled us to issue a further $49.4 million of equity accretively under our existing ATM program this quarter, essentially fully funding the equity requirement for our second SBIC license. \u00a0Drawing down debt under our second SBIC license at the 2-to-1 leverage ratio, our approximate all-in 3% cost-of-debt would be highly accretive to earnings and drive future earnings growth when invested consistent with our current portfolio. Today we also announced a $0.56 per share dividend for the quarter ended November 30, 2019, unchanged from the prior quarter. Our liquidity is robust, providing us the ability to grow our AUM by a further 52% utilizing the current liquidity and committed credit facilities at our disposal and following the $50.0 million baby bond repayment in December.<\/p>\n

In addition, subsequent to quarter-end, our entire investment in Easy Ice was repaid in a change of control transaction, resulting in more than\u00a0$35 million\u00a0of proceeds, interest and fees, as well as a repayment of our\u00a0$28 million\u00a0second lien term loans and\u00a0$11 million\u00a0preferred equity. These proceeds are currently estimated to result in at least a\u00a0$17 million, or\u00a0$1.51\u00a0per share increase in NAV, with the exact amounts and characterization to be finally determined after completion of the full fourth quarter and incorporating overall operating results.\u201d<\/p>\n

Michael J. Grisius, President and Chief Investment Officer, added, \u201cThis fiscal quarter has again demonstrated how the long-term measured growth of our AUM in strong portfolio companies can result in outsized equity returns, with our\u00a0$1.0 million\u00a0equity investment in Censis resulting in a\u00a0$11.3 million\u00a0total realized gain. \u00a0The quality of our asset base remains exceptionally high, with 99% of credits rated in our highest category. We\u2019ve maintained our forward momentum in the face of macroeconomic conditions and lending dynamics that continue to provide headwinds, with LIBOR again decreasing this quarter. We also continue to bring new platform investments into the portfolio, with another investment in a new company added this quarter, in addition to the success we continue to have with follow-ons in existing portfolio companies. We remain confident that our experienced origination team, exceptional underwriting standards and tested investment strategy and focus will continue to steadily grow portfolio size and maintain quality over the long-term.\u201d<\/p>\n

As of\u00a0November 30, 2019,\u00a0Saratoga Investment\u00a0increased its assets under management (\u201cAUM\u201d) to\u00a0$487.0 million, an increase of 0.03% from\u00a0$486.9 million\u00a0as of\u00a0August 31, 2019, and an increase of 9.7% from\u00a0$443.8 million\u00a0as of\u00a0November 30, 2018. The increase this quarter consists of\u00a0$40.8 million\u00a0in originations, offset by repayments and amortizations of\u00a0$51.2 million, reflecting net repayments and amortizations of\u00a0$10.4 million. Repayments includes the sale of our Censis equity that generated an\u00a0$11.3 million\u00a0realized gain on a\u00a0$1.0 million\u00a0cost basis. Saratoga Investment\u2019s portfolio remains strong, with a continued high level of investment quality in loan investments, with 99.0% of its loans this quarter at its highest internal rating. This quarter\u2019s originations include one investment in a new platform, and three follow-ons in existing portfolio companies. Since\u00a0Saratoga Investment\u00a0took over the management of the BDC,\u00a0$435.4 million\u00a0of repayments and sales of investments originated by\u00a0Saratoga Investment\u00a0have generated a gross unlevered IRR of 14.8%.<\/p>\n

For the three months ended\u00a0November 30, 2019, total investment income of\u00a0$14.2 million\u00a0increased by\u00a0$1.4 million, or 10.6%, compared to\u00a0$12.8 million\u00a0for the three months ended\u00a0November 30, 2018, and by 2.2% on a quarter-on-quarter basis from\u00a0$13.9 million\u00a0for the three months ended\u00a0August 31, 2019. This increased investment income was generated from an investment base that has grown by 9.7% since last year and was relatively unchanged from last quarter. In addition, these increases were achieved despite the weighted average current coupon on non-CLO BDC investments decreasing to 10.1% this quarter from 11.3% last year and 10.4% last quarter. The decrease in the current coupon is primarily due to the reductions in LIBOR over these periods.<\/p>\n

As compared to the three months ended\u00a0November 30, 2018, the investment income increase of\u00a0$1.4 million\u00a0was offset by: (i) increased debt and financing expenses, as the growth in AUM this year was partially financed from the\u00a0$20.0 million\u00a0baby bond follow-on issuance last year; 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, incentive fees and income tax benefit, increased from\u00a0$1.4 million\u00a0for the three months ended\u00a0November 30, 2018, to\u00a0$1.5 million\u00a0for the three months ended\u00a0November 30, 2019.<\/p>\n

Net investment income on a weighted average per share basis was\u00a0$0.46\u00a0for the three months ended\u00a0November 30, 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$0.61. This compares to adjusted net investment income per share of\u00a0$0.68\u00a0for the three months ended\u00a0August 31, 2019, and\u00a0$0.65\u00a0for the three months ended\u00a0November 30, 2018. During these periods, weighted average common shares outstanding increased from 7.5 million shares for the three months ended\u00a0November 30, 2018, to 8.3 million shares and 10.0 million shares for the three months ended\u00a0August 31, 2019, and\u00a0November 30, 2019, respectively. These share increases primarily reflect the 1.4 million shares issued last quarter and the 2.0 million shares issued this quarter pursuant to the At-the-Market (\u201cATM\u201d) equity offering program, both of which were accretive to net asset value (\u201cNAV\u201d) per share.<\/p>\n

Net investment income yield as a percentage of average NAV (\u201cNet Investment Income Yield\u201d) was 7.2% for the three months ended\u00a0November 30, 2019. Adjusted for the incentive fee accrual related to net unrealized capital gains, the Net Investment Income Yield was 9.7%. In comparison, adjusted Net Investment Income Yield was 11.0% and 11.2% for the three months ended\u00a0August 31, 2019, and\u00a0November 30, 2018, respectively.<\/p>\n

NAV was\u00a0$282.2 million\u00a0as of\u00a0November 30, 2019, an increase of\u00a0$57.9 million\u00a0from\u00a0$224.3 million\u00a0as of\u00a0August 31, 2019, an increase of\u00a0$101.3 million\u00a0from\u00a0$180.9 million\u00a0as of\u00a0February 28, 2019, and an increase of\u00a0$108.9 million\u00a0from\u00a0$173.3 million\u00a0as of\u00a0November 30, 2018.<\/p>\n