{"id":829,"date":"2020-05-06T08:00:04","date_gmt":"2020-05-06T08:00:04","guid":{"rendered":"https:\/\/henristeenkamp.com\/?p=829"},"modified":"2020-05-07T15:06:34","modified_gmt":"2020-05-07T15:06:34","slug":"saratoga-investment-corp-announces-fiscal-year-end-and-fourth-quarter-2020-financial-results","status":"publish","type":"post","link":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/saratoga-investment-corp-announces-fiscal-year-end-and-fourth-quarter-2020-financial-results\/","title":{"rendered":"Saratoga Investment Corp. Announces Fiscal Year-End and Fourth Quarter 2020 Financial Results"},"content":{"rendered":"
\n
Saratoga Investment Corp. Announces Fiscal Year-End and Fourth Quarter 2020 Financial Results<\/div>\n<\/div>\n
<\/div>\n
\n

NEW YORK,\u00a0May 06, 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 year-end and fourth quarter.<\/p>\n

Summary Financial Information<\/p>\n

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

\"Screen<\/p>\n

\"Screen<\/p>\n

\u201cComing off a record year of achievements and operating performance, we believe Saratoga is in a strong position heading into this calamitous health and economic environment,\u201d said\u00a0Christian L. Oberbeck, Chairman and Chief Executive Officer of\u00a0Saratoga Investment. \u201cWe believe our performance metrics for fiscal 2020 were remarkably strong with LTM return on equity of 23.6%, adjusted NII per share of\u00a0$2.49\u00a0per share, earnings per share of\u00a0$5.98, and an additional increase in NAV per share this quarter of\u00a0$1.83, or 7.2%, resulting in a total increase for the year of\u00a0$3.51, or 14.9%, to\u00a0$27.13. This NAV number includes the completion of the Easy Ice sale we previously communicated to you, resulting in a\u00a0$31.2 million\u00a0realized gain. As we look ahead to the numerous challenges that the COVID-19 pandemic presents to the economy and particularly small businesses, balance sheet strength, liquidity and NAV preservation are paramount. Our current capital structure is the strongest in Saratoga\u2019s history, with\u00a0$304 million\u00a0of equity supporting\u00a0$60 million\u00a0of long-term covenant-free non-SBIC debt. Our regulatory leverage of 607% substantially exceeds our 150% requirement. Our liquidity and dedicated credit facilities of\u00a0$260 million\u00a0at year-end are available to support our portfolio companies, including\u00a0$175 million\u00a0of SBIC II facilities dedicated to new opportunities. We had\u00a0$18 million\u00a0of committed undrawn lending commitments as of year-end.<\/p>\n

In light of the dramatic uncertainties in the economy, and to ensure we retain liquidity to support our portfolio companies and preserve NAV during these challenging times, while remaining positioned to fund attractive new investments for small businesses in need, Saratoga\u2019s\u00a0Board of Directors believes it is in the best near and long-term interests of our shareholders to maintain a conservative and cautious approach to our dividend policy. The Board of Directors has therefore decided to defer our dividend for the quarter ended\u00a0February 29, 2020. We will continue to reassess this on at least a quarterly basis as we gain better visibility on the economy and business activities. An important consideration for this decision arises from our historically conservative management of our RIC compliance obligations, such that we have no ordinary income spillover obligations and therefore substantial spillover flexibility and consequent liquidity. This provides us the ability to defer future quarterly dividends and we may choose to do so depending on liquidity, portfolio and overall economic assessment.\u201d<\/p>\n

Michael J. Grisius, President and Chief Investment Officer, added, \u201cThis fiscal year 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$8.0 millionEasy Ice\u00a0investment resulting in a\u00a0$31.2 million\u00a0gain, following directly after our 11x return and\u00a0$11.3 million\u00a0realized gain on Censis in Q3, for a total net realized gain of\u00a0$42.9 million\u00a0in FY20. We also continued to bring new platform investments into the portfolio, with two investments in new companies added this quarter, in addition to the success we continue to have with follow-ons in existing borrowers.\u00a0We believe the quality of our asset base remained at an exceptionally high level at year-end, with 99% of credits rated in our highest category, putting our portfolio in a strong position heading into the volatility and uncertainty ahead. With 71.3% of our investments at year-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 remain confident thus far in the durability of our portfolio in these uncertain times. However, we do anticipate that the adverse effects COVID-19 has on market conditions and the overall economy, including, but not limited to, the related declines in market multiples, increases in underlying market credit spreads and company-specific negative impacts on operating performance, will lead to unrealized and potentially realized depreciation being recognized in our portfolio in the coming quarters. We have confidence in our experienced management team, high underwriting standards and time-tested investment strategy and believe we have the resources to weather the economic challenges ahead, and that once these volatile conditions subside and uncertainty is reduced, that our team will be able to continue to steadily grow portfolio size and maintain quality over the long-term.\u201d<\/p>\n

Business Update:<\/p>\n

Saratoga Investment\u00a0is focused on ensuring the safety of its employees and the employees of its portfolio companies, while also managing its ongoing business activities.\u00a0 The Company continues to work collaboratively with its employees and portfolio companies to navigate the significant challenges created by the novel coronavirus (\u201cCOVID-19\u201d) pandemic.<\/p>\n

Saratoga Investment\u00a0believes it has taken the necessary steps to ensure that its personnel can effectively operate remotely.\u00a0 Its senior management team and staff remain fully engaged and capable of working remotely.\u00a0 Thus far, the Company has not experienced any significant operational limitations, and has been capable of providing the necessary support or service that its portfolio companies have required.<\/p>\n

Saratoga Investment\u00a0has been actively engaged with its portfolio companies and continues to be pleased with the diligent and proactive actions taken by the portfolio company management teams and their ability to respond effectively to the continuing challenges in the current environment.\u00a0 The Company stands ready to assist them as they manage their respective businesses.\u00a0 While virtually every business has had some of level of impact in the near-term, the ultimate impact of\u00a0COVID-19 on any individual business remains unknown.\u00a0 Notwithstanding these uncertainties, based on the information we have in hand, the Company believes that its portfolio companies are generally taking the right steps to help mitigate both the near and long-term effect of\u00a0COVID-19 on their businesses. The Company\u2019s lower middle market portfolio companies have also been actively evaluating the programs and relief under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, stimulus packages that may be available to assist these portfolio companies as they navigate the impact of\u00a0COVID-19 on their businesses, employees and operations, and many have availed themselves of that relief.<\/p>\n

Saratoga Investment\u00a0believes that its historically conservative approaches to investing, leverage utilization and maintaining solid levels of liquidity, put it in a position of strength going into this uncertain and challenging time.\u00a0 While no business can anticipate with clarity how long the displacement in the market and global economy will last, the Company believes that Saratoga Investment\u2019s capital structure, liquidity and management experience will enable it to effectively navigate the grave challenges presented by COVID-19.<\/p>\n

Subsequent Events Update:<\/p>\n

Saratoga Investment\u00a0evaluated subsequent events from\u00a0February 29, 2020\u00a0through\u00a0May 6, 2020. On\u00a0March 11, 2020, the\u00a0World Health Organization\u00a0declared COVID-19 as a pandemic, and on\u00a0March 13, 2020\u00a0the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including\u00a0the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. Such actions are creating disruption in global supply chains and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty and risks with respect to the underlying value of the Company\u2019s portfolio companies, the Company\u2019s business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, Company decisions to delay, defer and\/or modify the character of dividends in order to preserve liquidity, increased costs of operations, changes in law and\/or regulation, and uncertainty regarding government and regulatory policy.<\/p>\n

As of\u00a0February 29, 2020, the Company valued its portfolio investments in conformity with\u00a0U.S.\u00a0GAAP based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic has caused during the months that followed its\u00a0February 29, 2020\u00a0valuation, any valuations conducted now or in the future in conformity with\u00a0U.S.\u00a0GAAP could result in a lower fair value of its portfolio.<\/p>\n

The potential impact to Saratoga Investment\u2019s results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain\u00a0COVID-19 or treat its impact, all of which are beyond our control. Accordingly, the Company cannot accurately predict the extent to which its financial condition and results of operations will be affected at this time.<\/p>\n

Discussion of Financial Results for the Year and Quarter ended\u00a0February 29, 2020:<\/p>\n

As of\u00a0February 29, 2020,\u00a0Saratoga Investment\u00a0increased its assets under management (\u201cAUM\u201d) to\u00a0$485.6 million, an increase of 20.8% from\u00a0$402.0 million\u00a0as of\u00a0February 28, 2019, and relatively unchanged from\u00a0$487.0 million\u00a0as of\u00a0November 30, 2019. The annual increase reflects originations of\u00a0$204.6 million\u00a0investments during the year ended\u00a0February 29, 2020, offset by repayments and amortizations of\u00a0$167.3 million. This past quarter,\u00a0$44.0 million\u00a0in originations was offset by repayments and amortizations of\u00a0$70.1 million, with repayments including the sale of our\u00a0Easy Ice\u00a0preferred equity investment that generated a\u00a0$31.2 million\u00a0realized gain on a\u00a0$10.7 million\u00a0cost basis. Saratoga Investment\u2019s portfolio remains strong, with 71.3% of the portfolio in first liens, and 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 two investments in new platforms, and five follow-ons in existing portfolio companies. Since\u00a0Saratoga Investment\u00a0took over the management of the BDC,\u00a0$474.4 million\u00a0of repayments and sales of investments originated by\u00a0Saratoga Investment\u00a0have generated a gross unlevered IRR of 16.9%.<\/p>\n

For the year ended\u00a0February 29, 2020, total investment income increased by\u00a0$10.7 million\u00a0to\u00a0$58.4 million, up 22.5% from\u00a0$47.7 million\u00a0for the year ended\u00a0February 28, 2019. For the three months ended\u00a0February 29, 2020, total investment income of\u00a0$17.6 million\u00a0increased by\u00a0$4.6 million, or 35.7%, from\u00a0$13.0 million\u00a0as compared to the three months ended\u00a0February 28, 2019, and sequentially by\u00a0$3.4 million, or 24.0%, compared to\u00a0$14.2 million\u00a0for the three months ended\u00a0November 30, 2019. This increased investment income was generated from an investment base that has grown by 20.8% since last year. \u00a0In addition, this quarter\u2019s total investment income included\u00a0$3.0 million\u00a0of advisory fee income and\u00a0$1.4 million\u00a0of prepayment premiums related to the Easy Ice realization. These increases were offset by the weighted average current coupon on non-CLO BDC investments decreasing to 9.8% this quarter from 10.9% last year and 10.1% 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 year ended\u00a0February 28, 2019, the investment income increase of\u00a0$10.7 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 late last year; and (ii) increased base and incentive management fees generated from the management of this larger pool of investments. As compared to the quarters ended\u00a0February 28, 2019\u00a0and\u00a0November 30, 2019, the investment income increases of\u00a0$4.6 million\u00a0and\u00a0$3.4 million, respectively,\u00a0 benefitted from the reduction in debt and financing expenses resulting from the full extinguishment of the\u00a0$74.5 million\u00a02023 notes during the current quarter, while increased base and incentive management fees from the annual growth in AUM partially offset the year-over increases.<\/p>\n

Saratoga Investment\u00a0recognized a\u00a0$1.6 million\u00a0loss on extinguishment related to the repayment of the 2023 notes in\u00a0December 2019\u00a0and\u00a0January 2020.<\/p>\n

Net investment income on a weighted average per share basis was\u00a0$1.42\u00a0and\u00a0$0.01\u00a0for the year and quarter ended\u00a0February 29, 2020, respectively. Net investment income includes the second incentive management fee expense directly related to the Censis and\u00a0Easy Ice\u00a0realizations, however this excludes the\u00a0$42.9 million\u00a0net realized gain that was generated and presented separately. Adjusted for the incentive fee accrual related to net capital gains and the loss on extinguishment of our 2023 notes, the net investment income on a weighted average per share basis was\u00a0$2.49\u00a0and\u00a0$0.61, respectively. This compares to adjusted net investment income per share of\u00a0$2.63\u00a0and\u00a0$0.66\u00a0for the year and quarter ended\u00a0February 28, 2019, reflecting a decrease of\u00a0$0.14\u00a0and\u00a0$0.05, respectively. This also compares to adjusted net investment income of\u00a0$0.61\u00a0per share for the quarter ended\u00a0November 30, 2019, where there was no change on a quarter-on-quarter basis.<\/p>\n

During these periods, weighted average common shares outstanding increased from 7.0 million shares for the year ended\u00a0February 28, 2019, to 9.3 million shares for the year ended\u00a0February 29, 2020. In addition, weighted average common shares outstanding increased from 7.5 million shares for the three months ended\u00a0February 28, 2019, to 10.0 million shares and 11.2 million shares for the three months ended\u00a0November 30, 2019, and\u00a0February 29, 2020, respectively. These share increases primarily reflect the 3.4 million shares issued during last year pursuant to the At-the-Market (\u201cATM\u201d) equity offering program, which was accretive to net asset value (\u201cNAV\u201d) per share.<\/p>\n

Net investment income yield as a percentage of average net asset value (\u201cNet Investment Income Yield\u201d) was 5.6% and 0.1% for the year and quarter ended\u00a0February 29, 2020, respectively. Adjusted for the incentive fee accrual related to net capital gains and the loss on extinguishment of our 2023 notes, the Net Investment Income Yield was 9.9% and 9.3%, respectively. In comparison, adjusted Net Investment Income Yield was 10.6% for the year ended\u00a0February 28, 2019, and 9.7% and 11.2% for the quarters ended\u00a0November 30, 2019, and\u00a0February 29, 2020, respectively.<\/p>\n

NAV was\u00a0$304.3 million\u00a0as of\u00a0February 29, 2020, an increase of\u00a0$22.1 million\u00a0from\u00a0$282.2 million\u00a0as of\u00a0November 30, 2019, and an increase of\u00a0$123.4 million\u00a0from\u00a0$180.9 million\u00a0as of\u00a0February 28, 2019.<\/p>\n

    \n
  • For the twelve months ended\u00a0February 29, 2020, there were\u00a0$13.3 million\u00a0of net investment income,\u00a0$42.9 million\u00a0of net realized gain from investments and\u00a0$0.4 million\u00a0deferred tax benefit on net unrealized depreciation earned, partially offset by\u00a0$0.8 million\u00a0of net unrealized depreciation and\u00a0$20.1 million\u00a0of dividends declared. In addition,\u00a0$3.1 million\u00a0of stock dividend distributions were made through the Company\u2019s dividend reinvestment plan (\u201cDRIP\u201d), and 3,427,346 shares were sold through the ATM equity offering during the twelve months, for net proceeds of\u00a0$84.7 million.<\/li>\n<\/ul>\n

    NAV per share was\u00a0$27.13\u00a0as of\u00a0February 29, 2020, compared to\u00a0$25.30\u00a0as of\u00a0November 30, 2019\u00a0and\u00a0$23.62\u00a0as of\u00a0February 28, 2019.<\/p>\n

      \n
    • The increase in NAV per share includes the\u00a0$1.6 million, or\u00a0$0.14\u00a0per share loss associated with the extinguishment of our 2023 notes.<\/li>\n
    • For the twelve months ended\u00a0February 29, 2020, NAV per share increased by\u00a0$3.51\u00a0per share, primarily reflecting the\u00a0$35.6 million, or\u00a0$3.77\u00a0per share increase in net assets (net of the\u00a0$2.21\u00a0dividend paid during the year). The\u00a0$0.26\u00a0difference is primarily due to the different share amounts used for the NAV per share and dividend per share calculations throughout the year, with 3.5 million shares were being issued pursuant to the ATM and DRIP programs. The Company made no repurchases of common stock in the open market during this period.<\/li>\n<\/ul>\n

      Return on equity for the last twelve months ended\u00a0February 29, 2020, was 23.6%, compared to 10.6% for the comparable period last year.<\/p>\n

      Earnings per share for the year and quarter ended\u00a0February 29, 2020, was\u00a0$5.98\u00a0per share and\u00a0$2.39\u00a0per share, respectively, compared to earnings per share of\u00a0$2.63\u00a0per share and\u00a0$1.04\u00a0per share for the year and quarter ended\u00a0February 28, 2019, respectively, and\u00a0$1.37\u00a0per share for the quarter ended\u00a0November 30, 2019.<\/p>\n

      Investment portfolio activity for the year ended\u00a0February 29, 2020:<\/p>\n

        \n
      • Cost of investments made during the period:\u00a0$204.6 million<\/li>\n
      • Principal repayments and amortizations during the period:\u00a0$167.3 million<\/li>\n<\/ul>\n

        Investment portfolio activity for the three months ended\u00a0February 29, 2020:<\/p>\n

          \n
        • Cost of investments made during the period:\u00a0$44.0 million<\/li>\n
        • Principal repayments during the period:\u00a0$70.1 million<\/li>\n<\/ul>\n

          Additional Financial Information<\/p>\n

          For the fiscal year ended\u00a0February 29, 2020,\u00a0Saratoga Investment\u00a0reported net investment income of\u00a0$13.3 million, or\u00a0$1.42\u00a0on a weighted average per share basis, and a net gain on investments of\u00a0$42.5 million, or\u00a0$4.56\u00a0on a weighted average per share basis, resulting in a net increase in net assets from operations of\u00a0$55.7 million, or\u00a0$5.98\u00a0on a weighted average per share basis. The\u00a0$42.5 million\u00a0net gain on investments was comprised of\u00a0$42.9 million\u00a0in net realized gain on investments and\u00a0$0.4 million\u00a0of net deferred tax benefit on unrealized depreciation on investments in Saratoga Investment\u2019s blocker subsidiaries, offset by\u00a0$0.8 million\u00a0in net unrealized depreciation. The net realized gain primarily relates to the\u00a0$31.2 million\u00a0gain on the Company\u2019s\u00a0Easy Ice\u00a0preferred equity investment realized in this quarter, and the\u00a0$11.3 million\u00a0gain on the Company\u2019s Censis Technologies investment realized in the third ended\u00a0November 30, 2019. The\u00a0$0.8 million\u00a0unrealized depreciation primarily reflects a reversal of the previously recognized\u00a0$3.8 million\u00a0appreciation following the realization of the Company\u2019s\u00a0Easy Ice\u00a0preferred equity investment, offset by (i)\u00a0$1.3 million\u00a0unrealized appreciation on the Company\u2019s GreyHeller investment, and (ii)\u00a0$1.7 million\u00a0unrealized appreciation on the Company\u2019s\u00a0Netreo Holdings\u00a0investment. This compared to the fiscal year ended\u00a0February 28, 2019, with net investment income of\u00a0$18.3 million, or\u00a0$2.60\u00a0on a weighted average per share basis, and a net gain on investments of\u00a0$0.2 million, or\u00a0$0.03\u00a0on a weighted average per share basis, resulting in a net increase in net assets from operations of\u00a0$18.5 million, or\u00a0$2.63\u00a0on a weighted average per share basis. The\u00a0$0.2 million\u00a0net gain on investments consisted of\u00a0$4.9 million\u00a0in net realized gains on investments offset by\u00a0$2.9 million\u00a0unrealized depreciation and\u00a0$1.8 million\u00a0of net deferred tax expense on unrealized gains in Saratoga\u2019s blocker subsidiaries.<\/p>\n

          Adjusted for the incentive fee accrual related to net capital gains and the loss on extinguishment of our 2023 notes, the net investment income was\u00a0$23.2 million\u00a0and\u00a0$18.6 million\u00a0for the years ended\u00a0February 29, 2020, and\u00a0February 28, 2019, respectively \u2013 this is an increase of\u00a0$4.6 million\u00a0year-over-year, or 25.2%.<\/p>\n

          For the fiscal quarter ended\u00a0February 29, 2020,\u00a0Saratoga Investment\u00a0reported net investment income of\u00a0$0.07 million, or\u00a0$0.01\u00a0on a weighted average per share basis, and net realized and unrealized gain on investments of\u00a0$26.7 million, or\u00a0$2.39\u00a0on a weighted average per share basis, resulting in a net increase in net assets from operations of\u00a0$26.8 million, or\u00a0$2.39\u00a0on a weighted average per share basis. The\u00a0$26.7 million\u00a0net gain on investments was comprised of\u00a0$30.3 million\u00a0in net realized gain on investments and\u00a0$2.1 million\u00a0of net deferred tax benefit on unrealized depreciation in Saratoga Investment\u2019s blocker subsidiaries, offset by\u00a0$5.7 million\u00a0in net unrealized depreciation on investments.<\/p>\n

          The\u00a0$30.3 million\u00a0net realized gain reflects the\u00a0$31.2 million\u00a0gain from the realization of the Company\u2019s\u00a0Easy Ice\u00a0preferred equity investment, offset by the\u00a0$0.9 million\u00a0realized loss on the Company\u2019s legacy\u00a0M\/C Communications\u00a0investment. The\u00a0$5.7 million\u00a0net unrealized depreciation primarily reflects (i) the\u00a0$9.5 million\u00a0reversal of previously recognized appreciation following the realization of the Company\u2019s\u00a0Easy Ice\u00a0investment and (ii)\u00a0$1.4m\u00a0unrealized depreciation on the Company\u2019s CLO equity and related investments, partially offset by (i) the\u00a0$1.4 million\u00a0reversal of previously recognized depreciation following the realization of the Company\u2019s\u00a0M\/C Communications\u00a0investment, (ii) seven other investments with appreciation of between\u00a0$0.25 million\u00a0and\u00a0$0.4 million, and (iii) numerous other investments with smaller appreciations.<\/p>\n

          This is compared to the fiscal quarter ended\u00a0February 28, 2019, with net investment income of\u00a0$4.1 million, or\u00a0$0.54\u00a0on a weighted average per share basis, and net realized and unrealized gain on investments of\u00a0$3.8 million, or\u00a0$0.50\u00a0on a weighted average per share basis, resulting in a net increase in net assets from operations of\u00a0$7.9 million, or\u00a0$1.04\u00a0on a weighted average per share basis. The\u00a0$3.8 million\u00a0net gain on investments consisted of\u00a0$4.7 million\u00a0in net realized gain, offset by\u00a0$0.4 million\u00a0in net unrealized depreciation on investments, and\u00a0$0.6 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 capital gains and the loss on extinguishment of our 2023 notes, net investment income was\u00a0$6.8 million\u00a0and\u00a0$4.9 million\u00a0for the three months ended\u00a0February 29, 2020, and\u00a0February 28, 2019, respectively \u2013 an increase of\u00a0$1.9 million\u00a0year-over-year, or 37.8%.<\/p>\n

          Total expenses, excluding interest and debt financing expenses, base management fees, incentive fees and income tax benefit, increased from\u00a0$5.5 million\u00a0for the year ended\u00a0February 28, 2019\u00a0to\u00a0$5.7 million\u00a0for the year ended\u00a0February 29, 2020, remaining at 1.1% of average assets over both periods. For the quarters ended\u00a0February 29, 2020\u00a0and\u00a0February 28, 2019, these expenses increased from\u00a0$1.4 million\u00a0to\u00a0$1.5 million.<\/p>\n

          Portfolio and Investment Activity<\/p>\n

          As of\u00a0February 29, 2020, the fair value of Saratoga Investment\u2019s portfolio was\u00a0$485.6 million\u00a0(excluding\u00a0$39.5 million\u00a0in cash and cash equivalents), principally invested in 35 portfolio companies and one collateralized loan obligation fund (\u201cCLO\u201d). The overall portfolio composition consisted of 71.3% of first lien term loans, 15.1% of second lien term loans, 0.9% of unsecured term loans, 6.7% of subordinated notes in the CLO and 6.0% of common equity.<\/p>\n

          For the fiscal year ended\u00a0February 29, 2020,\u00a0Saratoga Investment\u00a0invested\u00a0$204.6 million\u00a0in new or existing portfolio companies and had\u00a0$167.3 million\u00a0in aggregate amount of exits and repayments, resulting in net investments of\u00a0$37.0 million\u00a0for the year.\u00a0 For the quarter ended\u00a0February 29, 2020,\u00a0Saratoga Investment\u00a0invested\u00a0$44.0 million\u00a0in new or existing portfolio companies, and had\u00a0$70.1 million\u00a0in aggregate amount of exits and repayments, resulting in\u00a0$26.1 million\u00a0of net exits and repayments for the quarter. Both these repayment numbers include the net realized gains recognized during the periods, primarily related to the sales of our\u00a0Easy Ice\u00a0and Censis investments.<\/p>\n

          As of\u00a0February 29, 2020, the weighted average current yield on Saratoga Investment\u2019s total portfolio as of year-end is 9.3%, which was comprised of a weighted average current yield of 9.6% on first lien term loans, 10.7% on second lien term loans, 9.3% on unsecured term loans, 11.4% on CLO subordinated notes and 0.0% on equity interests.<\/p>\n

          Portfolio Update:<\/em><\/p>\n

          Due to the unique developments since Saratoga Investment\u2019s fiscal year-end, the Company is taking the unusual step of providing a post quarter-end update. Subsequent to quarter-end,\u00a0Saratoga Investment\u00a0has executed approximately\u00a0$34.9 million\u00a0of new originations in one new portfolio company and nine existing portfolio companies, and also had one repayment of approximately\u00a0$8.5 million, for net investments originated of\u00a0$26.4 million\u00a0as of\u00a0May 6, 2020. This included numerous drawdowns of committed delayed draw facilities totaling\u00a0$8.5 million\u00a0that has reduced the Company\u2019s outstanding exposure to committed delayed draw facilities to\u00a0$9.1 million.<\/p>\n

          Liquidity and Capital Resources<\/p>\n

          As of\u00a0February 29, 2020,\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$60.0 million\u00a0of baby bonds (fair value of\u00a0$60.6 million) issued and an aggregate of\u00a0$39.5 million\u00a0in cash and cash equivalents.<\/p>\n

          With\u00a0$45.0 million\u00a0available under the credit facility, the\u00a0$39.5 million\u00a0of cash and cash equivalents and\u00a0$175.0 million\u00a0in undrawn SBA debentures from the newly approved second SBIC license,\u00a0Saratoga Investment\u00a0has a total of\u00a0$259.5 million\u00a0of undrawn borrowing capacity and cash and cash equivalents available as of\u00a0February 29, 2020. It should be noted that, depending on portfolio company performance, availability under the Madison credit facility might be reduced. In addition, certain follow-on investments in SBIC I and the BDC will not qualify for SBIC II funding.\u00a0Saratoga Investment\u00a0also has the ability to issue additional equity or baby bonds through the existing shelf registration statement pursuant to existing market conditions, which are disrupted at this time.<\/p>\n

          On\u00a0November\u00a015, 2019, the Company\u00a0caused notices to be issued to the holders of its 6.75% 2023 baby bonds regarding the Company\u2019s exercise of its option to redeem, in part, the issued and outstanding 2023 baby bonds.\u00a0 The Company redeemed\u00a0$50.0 million\u00a0in aggregate principal amount of the\u00a0$74.5 million\u00a0in aggregate principal amount of issued and outstanding 2023 baby bonds on\u00a0December\u00a021, 2019\u00a0(the \u201cRedemption Date\u201d). The baby bonds were redeemed at 100% of their principal amount ($25\u00a0per baby bond), plus the accrued and unpaid interest thereon from\u00a0September\u00a030, 2019, through, but excluding, the Redemption Date.<\/p>\n

          On\u00a0January 8, 2020, the Company\u00a0caused notices to be issued to the remaining holders of its 6.75% 2023 baby bonds regarding the Company\u2019s exercise of its option to redeem the remaining\u00a0$24.45 million\u00a0in aggregate principal amount of issued and outstanding 2023 baby bonds.\u00a0 The Company redeemed the remaining amount of issued and outstanding 2023 baby bonds on\u00a0February 7, 2020\u00a0(the \u201cSecond Redemption Date\u201d). These baby bonds were also redeemed at 100% of their principal amount ($25\u00a0per baby bond), plus the accrued and unpaid interest thereon from\u00a0December 31, 2019, through, but excluding, the Second Redemption Date.<\/p>\n

          On\u00a0March 16, 2017,\u00a0Saratoga Investment\u00a0entered into an equity distribution agreement with\u00a0Ladenburg Thalmann & Co. Inc., through which\u00a0Saratoga Investment\u00a0may 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 11, 2019, the amount of common stock to be offered through this offering was increased to\u00a0$70.0 million, and on\u00a0October 8, 2019, the amount of common stock to be offered through this offering was further increased to\u00a0$130.0 million. As of\u00a0February 29, 2020, the Company sold 3,922,018 shares for gross proceeds of\u00a0$97.1 million\u00a0at an average price of\u00a0$24.77\u00a0for aggregate net proceeds of\u00a0$95.9 million\u00a0(net of transaction costs). For the year ended\u00a0February 29, 2020, the Company sold 3,427,346 shares for gross proceeds of\u00a0$85.9 million\u00a0at an average price of\u00a0$25.06\u00a0for aggregate net proceeds of\u00a0$84.7 million\u00a0(net of transaction costs).<\/p>\n

          On\u00a0April 24, 2020, we entered into a fourth amendment to the Credit Facility with\u00a0Madison Capital Funding LLC\u00a0to, among other things:<\/p>\n

            \n
          • permit certain amendments related to the Paycheck Protection Program (\u201cPermitted PPP Amendment\u201d) to Loan Asset Documents;<\/li>\n
          • exclude certain debt and interest amounts allowed by the Permitted PPP Amendments from certain calculations related to Net Leverage Ratio, Interest Coverage Ratio and EBITDA; and<\/li>\n
          • exclude such Permitted PPP Amendments from constituting a Material Modification.<\/li>\n<\/ul>\n

            Dividend<\/p>\n

            Saratoga Investment\u00a0has raised its dividend for the past five years. In light of the dramatic uncertainties currently present in the economy, and to ensure we retain liquidity to not only support our current portfolio companies during these challenged times, but to also create new, important relationships through the provision of critically crucial liquidity in new situations, Saratoga\u00a0Investment\u2019s Board of Directors (the \u201cBoard of Directors\u201d) believes it is in the best near- and long-term interests of our shareholders to maintain a conservative and cautious approach to our dividend policy.<\/p>\n

            Furthermore, while many BDCs have spillover obligations from prior years, representing taxable income from past obligations yet to be distributed,\u00a0Saratoga Investment\u00a0has historically managed its distributions conservatively so it is current with all spillover obligations, other than those related to our\u00a0Easy Ice\u00a0and Censis long-term capital gains. This therefore means that\u00a0Saratoga Investment\u00a0is not obligated to pay current dividends related to historical earnings and enabling preservation of precious liquidity in this challenging market environment.<\/p>\n

            The Board of Directors has therefore decided to defer our dividend for the quarter ended\u00a0February 29, 2020. We will continue to reassess this decision on at least a quarterly basis as we gain more visibility on the economy and business activities.<\/p>\n

            In fiscal year 2020, the Company declared a quarterly dividend of\u00a0$0.56\u00a0per share for the quarter ended\u00a0November 30, 2019,\u00a0$0.56\u00a0per share for the quarter ended\u00a0August 31, 2019,\u00a0$0.55\u00a0per share for the quarter ended\u00a0May 31, 2019\u00a0and\u00a0$0.54\u00a0per share for the quarter ended\u00a0February 28, 2019. Total dividends declared for the fiscal years ended\u00a0February 28, 2019, and 2018, were\u00a0$2.06\u00a0per share and\u00a0$1.90\u00a0per share, respectively.<\/p>\n

            Shareholders have the option to receive payment of dividends 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, 2019 and 2020, this share repurchase plan was extended for another year at the same level of approval, currently through\u00a0January 15, 2021. On\u00a0May 4, 2020, the Board of Directors increased the share repurchase plan to 1.3 million shares of common stock. As of\u00a0February 29, 2020, the Company 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 three months ended\u00a0February 29, 2020.<\/p>\n

            2020 Fiscal Fourth Quarter and Year End Conference Call\/Webcast Information<\/p>\n

            \"Screen<\/p>\n

            About\u00a0Saratoga Investment Corp.<\/p>\n

            Saratoga Investment\u00a0is a specialty finance company that provides customized financing solutions to\u00a0U.S.\u00a0middle-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.\u00a0 Saratoga Investment\u2019s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments.\u00a0\u00a0Saratoga Investment\u00a0has elected to be regulated as a business development company under the Investment Company Act of 1940 and is externally-managed by\u00a0Saratoga Investment Advisors, LLC, an\u00a0SEC-registered investment advisor focusing on credit-driven strategies.\u00a0\u00a0Saratoga Investment\u00a0owns two SBIC-licensed subsidiaries and manages a\u00a0$500 million\u00a0collateralized loan obligation (\u201cCLO\u201d) fund.\u00a0 It also owns 100% of the Class F-R-2, G-R-2 and subordinated notes of the CLO.\u00a0 The Company\u2019s diverse funding sources, combined with a permanent capital base, enable\u00a0Saratoga Investment\u00a0to provide a broad range of financing solutions.<\/p>\n

            Forward Looking Statements<\/p>\n

            Statements included herein contain certain \u201cforward-looking statements\u201d 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 \u201coutlook,\u201d \u201cbelieves,\u201d \u201cexpects,\u201d \u201cpotential,\u201d \u201ccontinues,\u201d \u201cmay,\u201d \u201cwill,\u201d \u201cshould,\u201d \u201cseeks,\u201d \u201capproximately,\u201d \u201cpredicts,\u201d \u201cintends,\u201d \u201cplans,\u201d \u201cestimates,\u201d \u201canticipates\u201d 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\u00a0U.S.\u00a0and global economy, as well as those described from time to time in our filings with the\u00a0Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made.\u00a0Saratoga Investment Corp.\u00a0undertakes 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.<\/p>\n

            \"Screen<\/p>\n

            \"Screen<\/p>\n

            \"Screen<\/p>\n

            \"Screen<\/p>\n

            \"Screen<\/p>\n

            \"Screen<\/p>\n

            \"Screen<\/p>\n

            \"Screen<\/p>\n

            \"Screen<\/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 realized and 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 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,\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 gains. In addition, adjusted net investment income, adjusted net investment income yield and adjusted net investment income per share also excludes the loss on extinguishment of Saratoga Investment\u2019s 2023 Notes. This expense is directly attributable to the repayment of the 2020 Notes, is deemed to be non-recurring in nature and not representative of the operations of\u00a0Saratoga 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 years ended\u00a0February 29, 2020,\u00a0February 28, 2019, and\u00a0February 28, 2018, and the quarters ended\u00a0February 29, 2020\u00a0and\u00a0February 28, 2019.<\/p>\n

            \"Screen<\/p>\n

            (1) Adjusted net investment income is calculated as adjusted net investment income divided by average net asset value.
            \n(2) Adjusted net investment income per share is calculated as adjusted net investment income divided by weighted average common shares outstanding.<\/p>\n

            \"Screen<\/p>\n

            (1) Adjusted net investment income yield is calculated as adjusted net investment income divided by average net asset value.
            \n(2) Adjusted net investment income per share is calculated as adjusted net investment income divided by weighted average common shares outstanding.<\/p>\n

            Contact<\/strong>:\u00a0Henri Steenkamp
            \nSaratoga Investment Corp.
            \n212-906-7800<\/p>\n

            Roland Tomforde
            \nBroadgate Consultants
            \n212-232-2222<\/p>\n

            \"logo.jpg\"<\/a><\/p>\n

            Source: Saratoga Investment Corp<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

            Saratoga Investment Corp. Announces Fiscal Year-End and Fourth Quarter 2020 Financial Results NEW YORK,\u00a0May 06, 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 year-end and fourth quarter. Summary Financial Information The Company\u2019s summarized financial information is as follows: \u201cComing off a […]<\/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],"tags":[],"class_list":["post-829","post","type-post","status-publish","format-standard","hentry","category-blog"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/posts\/829","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=829"}],"version-history":[{"count":0,"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/posts\/829\/revisions"}],"wp:attachment":[{"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/media?parent=829"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/categories?post=829"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ragnarok-ms.us\/henristeenkamp-com\/wp-json\/wp\/v2\/tags?post=829"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}