Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the
Company”), a business development company (“BDC”), today announced
financial results for its 2021 fiscal second quarter.
Summary Financial Information
The Company’s summarized financial information
is as follows:
|
For the quarter ended and
as of Aug 31,
2020 |
For the quarter ended and
as of May 31,
2020 |
For the quarter ended and
as of Aug
31,
2019 |
|
|
($ in thousands except per share) |
|
AUM |
508,117 |
|
482,947 |
|
486,880 |
|
|
NAV |
298,177 |
|
281,631 |
|
224,337 |
|
|
NAV per share |
26.68 |
|
25.11 |
|
24.47 |
|
|
Investment Income |
13,856 |
|
13,297 |
|
13,888 |
|
|
Net Investment Income per share |
0.48 |
|
0.80 |
|
0.59 |
|
|
Adjusted Net Investment Income per share |
0.49 |
|
0.51 |
|
0.68 |
|
|
Earnings per share |
1.95 |
|
(2.02 |
) |
0.91 |
|
|
Dividends per share (declared) |
0.41 |
|
0.40 |
|
0.56 |
|
|
Return on Equity – last twelve months |
14.3 |
% |
9.9 |
% |
14.3 |
% |
|
– annualized quarter |
30.1 |
% |
(30.9 |
)% |
14.7 |
% |
|
Originations |
31,709 |
|
38,999 |
|
93,194 |
|
|
Repayments |
23,282 |
|
9,350 |
|
19,004 |
|
|
“Following two volatile and challenging
quarters, we continue to believe that Saratoga remains in a strong
position and well positioned to face potential future economic
challenges related to COVID-19,” said Christian L. Oberbeck,
Chairman and Chief Executive Officer of Saratoga Investment. “We
believe our performance for the fiscal second quarter 2021
reflected the market’s economic difficulties, and importantly,
highlighted the strength of our financial position and portfolio.
Our quarterly metrics include LTM return on equity of 14.3%,
adjusted NII per share of $0.49 per share and adjusted NII yield of
7.6%. There still remains significant uncertainty presented by the
COVID-19 pandemic to the economy and particularly small businesses,
and so balance sheet strength, liquidity and NAV preservation
continues to be paramount, both for our portfolio companies and
ourselves. Our current capital structure at quarter-end was strong,
with $298 million of equity supporting $108 million of long-term
covenant-free non-SBIC debt. Our quarter-end regulatory leverage of
376% substantially exceeds our 150% requirement, following the new
long-term debt we issued this quarter, and in addition to our
Madison revolving credit facility we have $65 million of
quarter-end cash to support our existing portfolio companies, and
$155 million of available SBIC II facilities which can be used to
finance new opportunities, all of which will be highly accretive to
earnings.”
“Reflecting our current strong portfolio
performance, the Board of Directors decided to increase our
quarterly dividends by $0.01 per share and declare a $0.41 per
share dividend for the quarter ended August 31, 2020. We will
continue to assess the amount of our dividends on at least a
quarterly basis as we gain better visibility on the economy and our
business performance. We have historically conservatively managed
our RIC compliance obligations, such that we had no ordinary income
spillover obligations going into the pandemic and therefore
substantial spillover flexibility and consequent liquidity. Payment
of this dividend further preserves our spillover liquidity
position.”
Michael J. Grisius, President and Chief
Investment Officer, added, “Portfolio management continues to be
critically important. In terms of new investments, we have become
much more discerning in the current environment. Despite this, we
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 with strong business models and balance sheets,
totaling $31.7 million invested in the fiscal quarter. We believe
the quality of our asset base remains high, with our end of August
valuations reflecting quarter-end market spreads and individual
COVID-19 impacts, resulting in a recovery of over half of the first
quarter’s reduction in fair value. This translated into a $16.6
million unrealized appreciation booked this quarter. Our credit
quality remained at a high level at quarter-end and increased from
last quarter, with over 92% of credits rated in our highest
category, putting our portfolio in a strong position from which to
face the continued volatility and uncertainty ahead. With 77% 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. We remain confident 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 our team will be
able to continue to steadily grow portfolio size and maintain
quality over the long-term.”
Discussion of Financial Results for the Quarter
ended August 31, 2020:
As of August 31, 2020, Saratoga Investment’s
assets under management (“AUM”) was $508.1 million, an increase of
4.4% from $486.9 million as of August 31, 2019, and an increase of
5.2% from $482.9 million as of May 31, 2020. The increase this past
quarter consists of $31.7 million in originations, offset by $23.3
million of repayments and amortizations, as well as $16.6 million
in net realized and unrealized appreciation, reflecting 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 76.7% of the
portfolio in first liens, and a continued high level of investment
quality in loan investments, with 92.1% of its loans this quarter
at its highest internal rating. This quarter’s originations include
two investments in new platforms, and three follow-ons in existing
portfolio companies. Since Saratoga Investment took over the
management of the BDC, $505.9 million of repayments and sales of
investments originated by Saratoga Investment have generated a
gross unlevered IRR of 16.6%.
For the three months ended August 31, 2020,
total investment income of $13.9 million remained unchanged when
compared to the three months ended August 31, 2019. This quarter’s
investment income was generated from an investment base that has
grown by 4.4% 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 10.4% to 9.9%
year-over-year. In addition, this quarter’s investment income was
up 4.2% on a quarter-on-quarter basis from $13.3 million for the
quarter ended May 31, 2020, primarily due to the growing investment
base and the full-period impact of originations closed last
quarter.
As compared to the three months ended August 31,
2019, net investment income decreased due to (i) increased base
management fees generated from the management of this larger pool
of investments, and (ii) the non-recurrence of an income tax
benefit recognized last quarter, offset by decreased interest and
debt financing expenses reflecting the repayment of the $74.5
million baby bond last year. Total expenses, excluding interest and
debt financing expenses, base management fees and incentive fees
and income tax benefit, remained unchanged at $1.4 million for the
three months ended August 31, 2019, and August 31, 2020.
Net investment income on a weighted average per
share basis was $0.48 for the quarter ended August 31, 2020.
Adjusted for the incentive fee accrual related to net capital
gains, the net investment income on a weighted average per share
basis was $0.49. This compares to adjusted net investment income
per share of $0.51 for the quarter ended May 31, 2020, and $0.68
for the quarter ended August 31, 2019. During these periods,
weighted average common shares outstanding increased from 8.3
million shares for the three months ended August 31, 2019, to 11.2
million shares for both the three months ended May 31, 2020, and
August 31, 2020.
Net investment income yield as a percentage of
average net asset value (“Net Investment Income Yield”) was 7.4%
for the quarter ended August 31, 2020. Adjusted for the incentive
fee accrual related to net capital gains, the Net Investment Income
Yield was 7.6%. In comparison, adjusted Net Investment Income Yield
was 7.9% and 11.0% for the quarters ended May 31, 2020, and August
31, 2019, respectively.
Net Asset Value (“NAV”) was $298.2 million as of
August 31, 2020, an increase of $16.6 million from $281.6 million
as of May 31, 2020, and an increase of $73.9 million from $224.3
million as of August 31, 2019.
-
For the three months ended August 31, 2020, $5.3 million of net
investment income, $0.01 million in net realized gain from
investments and $16.6 million of net unrealized depreciation were
earned, offset by $0.1 million deferred tax expense on net
unrealized gains in Saratoga Investment’s blocker subsidiaries and
$4.5 million of dividends declared. In addition, $0.8 million of
stock dividend distributions were made through the Company’s
dividend reinvestment plan (“DRIP”), and 90,321 shares were
purchased for $1.6 million pursuant to the share repurchase plan,
all in this quarter.
NAV per share was $26.68 as of August 31, 2020,
compared to $25.11 as of May 31, 2020, $27.13 as of February 29,
2020, and $24.47 as of August 31, 2019.
-
For the three months ended August 31, 2020, NAV per share increased
by $1.57 per share, reflecting the $1.47 per share net realized and
unrealized gain on investments and $0.48 per share net investment
income, offset by the first quarter dividend of $0.40 per share
declared in this quarter. There was a $0.02 net accretion to NAV
per share resulting from repurchasing shares below NAV pursuant to
the share repurchase plan, offset by the DRIP shares issued during
the quarter.
Return on equity for the last twelve months
ended August 31, 2020, was 14.3%, unchanged from 14.3% for the
comparable period last year.
Earnings per share for the quarter ended August
31, 2020, was $1.95, compared to loss per share of ($2.02) for the
quarter ended May 31, 2020, and earnings per share of $0.91 for the
quarter ended August 31, 2019.
Investment portfolio activity for the quarter
ended August 31, 2020:
-
Cost of investments made during the period: $31.7 million,
including investments in two new portfolio companies.
-
Principal repayments during the period: $23.3 million.
Additional Financial Information
For the fiscal quarter ended August 31, 2020,
Saratoga Investment reported net investment income of $5.3 million,
or $0.48 on a weighted average per share basis, and a net realized
and unrealized gain on investments of $16.5 million, or $1.47 on a
weighted average per share basis, resulting in a net increase in
net assets from operations of $21.8 million, or $1.95 on a weighted
average per share basis. The $16.5 million net gain on investments
was comprised of $16.6 million in net unrealized appreciation on
investments and $0.01 million in net realized gain on investments,
offset by $0.1 million of net change in provision for deferred
taxes on unrealized appreciation on investments. The $16.6 million
unrealized appreciation reflects a 3.6% increase in the total value
of the portfolio, primarily related to improvements in market
spreads, EBITDA multiples and/or revised portfolio company
performance – therefore, more than half of the reduction in the
total value of the portfolio in the first quarter was reversed this
quarter. This is compared to the fiscal quarter ended August 31,
2019, with net investment income of $5.0 million, or $0.59 on a
weighted average per share basis, and a net realized and unrealized
gain on investments of $2.6 million, or $0.31 on a weighted average
per share basis, resulting in a net increase in net assets from
operations of $7.6 million, or $0.91 on a weighted average per
share basis.
Adjusted for the incentive fee accrual related
to net capital gains, the net investment income was $5.5 million
and $5.6 million for the quarters ended August 31, 2020, and August
31, 2019, respectively – a decrease of $0.1 million year-over-year,
or 2.5%.
Total expenses, excluding interest and debt
financing expenses, base management fees and incentive management
fees and income tax benefit, remained unchanged at $1.4 million for
the quarters ended August 31, 2019 and August 31, 2020. This
represented 1.1% of average total assets, also unchanged from last
year.
Portfolio and Investment Activity
As of August 31, 2020, the fair value of
Saratoga Investment’s portfolio was $508.1 million (excluding $65.4
million in cash and cash equivalents), principally invested in 40
portfolio companies and one collateralized loan obligation fund
(“CLO”). The overall portfolio composition consisted of 76.7% of
first lien term loans, 9.9% of second lien term loans, 1.3% of
unsecured term loans, 6.1% of subordinated notes in a CLO and 6.0%
of common equity.
For the fiscal quarter ended August 31, 2020,
Saratoga Investment invested $31.7 million in two new and three
existing portfolio companies and had $23.3 million in aggregate
amount of exits and repayments, resulting in net investments of
$8.4 million for the quarter.
As of August 31, 2020, the weighted average
current yield on Saratoga Investment’s portfolio based on current
fair values was 9.6%, which was comprised of a weighted average
current yield of 9.7% on first lien term loans, 11.4% on second
lien term loans, 5.9% on unsecured term loans, 16.4% on CLO
subordinated notes and 0.0% on equity interests.
Liquidity and Capital Resources
As of August 31, 2020, Saratoga Investment had
no outstanding borrowings under its $45 million senior secured
revolving credit facility with Madison Capital Funding LLC. At
the same time, Saratoga Investment had $150.0 million SBA
debentures in its SBIC I license outstanding, $20.0 million in SBA
debentures in its SBIC II license outstanding, $108.1 million of
baby bonds issued, including two listed issuances of 60.0 million
and $43.1 million, respectively, and one unlisted issuance of $5.0
million, and an aggregate of $65.4 million in cash and cash
equivalents.
With $45.0 million available under the credit
facility and the $65.4 million of cash and cash equivalents as of
August 31, 2020, Saratoga Investment has a total of $110.4 million
of undrawn borrowing capacity and cash and cash equivalents for new
investments or to support its existing portfolio companies. In
addition, Saratoga Investment has $155.0 million in undrawn SBA
debentures from the most recently approved SBIC II license to
finance new SBIC-eligible portfolio companies. 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. As of quarter-end, Saratoga Investment
had $11.1 million of committed undrawn lending commitments and
$33.8 million of discretionary funding commitments.
On June 24, 2020, the Company issued $37.5
million in aggregate principal amount of 7.25% fixed-rate notes due
2025 (the “7.25% 2025 Notes”) for net proceeds of $36.3 million
after deducting underwriting commissions of approximately $1.2
million. Offering costs incurred were approximately $0.3 million.
The Company also granted the underwriters an option to purchase up
to an additional $5.625 million in aggregate principal amount
of Notes within 30 days, which they fully exercised on July 6,
2020, for additional net proceeds of $5.4 million after deducting
additional underwriting commissions of approximately $0.2 million.
Interest on the 7.25% 2025 Notes is paid quarterly in arrears on
February 28, May 31, August 31 and November 30, at a rate of 7.25%
per year, beginning August 31, 2020. The 7.25% 2025 Notes mature on
June 30, 2025, and commencing June 24, 2022, may be redeemed in
whole or in part at any time or from time-to-time at our option.
The net proceeds from the offering were used for general corporate
purposes in accordance with the Company’s investment objective and
strategies. The 7.25% 2025 Notes are listed on the New York Stock
Exchange under the trading symbol “SAK” with a par value of $25.00
per share. The Company has received an investment grade private
rating of “BBB” from Egan-Jones Ratings Company, an independent,
unaffiliated rating agency.
On July 9, 2020, the Company issued $5.0 million
aggregate principal amount of 7.75% fixed-rate Notes due in 2025
(the “7.75% Notes 2025”) for net proceeds of $4.8 million after
deducting underwriting commissions of approximately $0.2 million.
Offering costs incurred were approximately $0.1 million. Interest
on the 7.75% Notes 2025 is paid quarterly in arrears on February
28, May 31, August 31 and November 30, at a rate of 7.75% per year,
beginning August 31, 2020. The 7.75% Notes 2025 mature on July 9,
2025 and may be redeemed in whole or in part at any time or from
time to time at our option. The net proceeds from the offering were
used for general corporate purposes in accordance with our
investment objective and strategies. The 7.75% 2025 Notes are
unlisted and with a par value of $25.00 per share.
On March 16, 2017, Saratoga Investment entered
into an equity distribution agreement with Ladenburg Thalmann &
Co. Inc., through which Saratoga may offer for sale, from
time-to-time, up to $30.0 million of its common stock through an
ATM offering. Subsequent to this, BB&T Capital Markets and B.
Riley FBR, Inc. were also added to the agreement. On July 11, 2019,
the amount of common stock to be offered through this offering was
increased to $70.0 million, and on October 8, 2019, the amount of
common stock to be offered through this offering was further
increased to $130.0 million. As of August 31, 2020, the Company
sold 3,992,018 shares for gross proceeds of $97.1 million at an
average price of $24.77 for aggregate net proceeds of $95.9 million
(net of transaction costs). During the three months ended August
31, 2020, there was no activity related to the ATM offering.
On September 14, 2020, the Company entered into
a fifth amendment to the Credit Facility with Madison Capital
Funding LLC to, among other things:
- extend the
commitment termination date of the Credit Facility from September
17, 2020 to September 17, 2021, with no change to the maturity date
of September 17, 2025.
- provide for the
transition away from the LIBOR Rate in the market, and
- expand the
definition of Eligible Loan Asset to allow investments with certain
recurring revenue features to qualify as Collateral and be included
in the borrowing base.
Dividend
Saratoga Investment has 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 Investment’s Board of Directors (the “Board of
Directors”) deferred its dividend for the final quarter of fiscal
2020.
Furthermore, while many BDCs have spillover
obligations from prior years, representing taxable income from past
obligations yet to be distributed, Saratoga Investment has
historically managed its distributions conservatively so it is
current with all spillover obligations, other than those related to
our Easy Ice long-term net capital gains. This therefore means that
Saratoga Investment is not obligated to pay current dividends
related to historical earnings and enabling preservation of
precious liquidity in this challenging market environment.
Taking all of this into account, including
Saratoga Investment’s recent baby bond issuances and substantially
improved position, and the current performance of its portfolio,
the Board of Directors paid a $0.40 per share dividend for the
quarter ended May 31, 2020. Furthermore, the Board of Directors
declared a $0.41 per share dividend for the quarter ended August
31, 2020, increasing last quarter’s dividend by $0.01 per share.
The Board of Directors will continue to assess this on at least a
quarterly basis as better visibility is gained on the economy and
business performance. An important consideration for this decision
arises from Saratoga Investment’s historically conservative
management of its RIC compliance obligations, such that it has no
ordinary income spillover obligations and therefore substantial
spillover flexibility and consequent liquidity.
The Board of Directors declared this quarter’s
dividend on October 7, 2020, and is payable on November 10, 2020,
to common stockholders of record on October 26, 2020. Stockholders
have the option to receive payment of the dividend in cash, or
receive shares of common stock pursuant to the Company’s DRIP.
Total dividends declared thus far for fiscal
year 2021 is $0.81 per share. In fiscal year 2020, the Company
declared a quarterly dividend of $0.56 per share for the quarter
ended November 30, 2019, $0.56 per share for the quarter ended
August 31, 2019, $0.55 per share for the quarter ended May 31,
2019, and $0.54 per share for the quarter ended February 28, 2019.
Total dividends declared for the fiscal years ended February 28,
2019, and 2018, were $2.06 per share and $1.90 per share,
respectively.
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, 2019 and 2020, this share repurchase plan was extended
for another year at the same level of approval, currently through
January 15, 2021. 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 August 31, 2020, the Company
purchased 90,321 shares of common stock, at the average price of
$17.17 for approximately $1.6 million pursuant to this repurchase
plan.
These share repurchases during the quarter more
than offset the 47,098 shares issued as part of the DRIP shares
issued in October 2020.
2021 Fiscal Second Quarter Conference
Call/Webcast Information
When: |
Thursday, October 8, 2020, 10:00 a.m. Eastern Time (ET) |
|
|
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, October 8, 2020, through
1:00 p.m. ET on Thursday, October 15, 2020, by dialing (855)
859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and
Canada), passcode for both replay numbers: 4292268 |
|
|
Webcast: |
Interested parties may access a
simultaneous webcast of the call and find the Q2 2021 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 $500 million collateralized loan obligation (“CLO”)
fund. It also owns 100% of the Class F-R-2, G-R-2 and 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 |
|
|
|
|
|
|
|
August 31, 2020 |
|
February 29, 2020 |
|
|
(unaudited) |
|
|
ASSETS |
|
|
|
|
Investments
at fair value |
|
|
|
|
Non-control/Non-affiliate investments (amortized cost of
$452,233,107 and $418,006,725, respectively) |
|
$ |
440,847,945 |
|
|
$ |
420,442,928 |
|
Affiliate investments (amortized cost of $26,051,719 and
$23,998,917, respectively) |
|
|
18,731,636 |
|
|
|
18,485,854 |
|
Control investments (amortized cost of $45,869,421 and $44,293,619,
respectively) |
|
|
48,537,411 |
|
|
|
46,703,192 |
|
Total
investments at fair value (amortized cost of $524,154,247 and
$486,299,261, respectively) |
|
|
508,116,992 |
|
|
|
485,631,974 |
|
Cash and
cash equivalents |
|
|
39,052,320 |
|
|
|
24,598,905 |
|
Cash and
cash equivalents, reserve accounts |
|
|
26,342,863 |
|
|
|
14,851,447 |
|
Interest
receivable (net of reserve of $1,729,764 and $1,238,049,
respectively) |
|
|
4,396,518 |
|
|
|
4,810,456 |
|
Management
fee receivable |
|
|
284,122 |
|
|
|
272,207 |
|
Other
assets |
|
|
619,543 |
|
|
|
701,007 |
|
Total assets |
|
$ |
578,812,358 |
|
|
$ |
530,865,996 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Revolving
credit facility |
|
$ |
- |
|
|
$ |
- |
|
Deferred debt financing costs, revolving credit facility |
|
|
(466,094 |
) |
|
|
(512,628 |
) |
SBA
debentures payable |
|
|
170,000,000 |
|
|
|
150,000,000 |
|
Deferred debt financing costs, SBA debentures payable |
|
|
(2,729,422 |
) |
|
|
(2,561,495 |
) |
6.25% Notes
Payable 2025 |
|
|
60,000,000 |
|
|
|
60,000,000 |
|
Deferred debt financing costs, 6.25% notes payable 2025 |
|
|
(1,859,372 |
) |
|
|
(2,046,735 |
) |
7.25% Notes
Payable 2025 |
|
|
43,125,000 |
|
|
|
- |
|
Deferred debt financing costs, 7.25% notes payable 2025 |
|
|
(1,561,533 |
) |
|
|
- |
|
7.75% Notes
Payable 2025 |
|
|
5,000,000 |
|
|
|
- |
|
Deferred debt financing costs, 7.75% notes payable 2025 |
|
|
(266,420 |
) |
|
|
- |
|
Base
management and incentive fees payable |
|
|
3,738,729 |
|
|
|
15,800,097 |
|
Deferred tax
liability |
|
|
1,194,700 |
|
|
|
1,347,363 |
|
Accounts
payable and accrued expenses |
|
|
1,816,618 |
|
|
|
1,713,157 |
|
Interest and
debt fees payable |
|
|
2,287,313 |
|
|
|
2,234,042 |
|
Directors
fees payable |
|
|
59,500 |
|
|
|
61,500 |
|
Due to
manager |
|
|
295,981 |
|
|
|
543,842 |
|
Total liabilities |
|
|
280,635,000 |
|
|
|
226,579,143 |
|
|
|
|
|
|
|
|
|
|
|
NET
ASSETS |
|
|
|
|
Common
stock, par value $0.001, 100,000,000 common shares |
|
|
|
|
authorized, 11,174,322 and 11,217,545 common shares issued and
outstanding, respectively |
|
11,174 |
|
|
|
11,218 |
|
Capital in
excess of par value |
|
|
288,699,868 |
|
|
|
289,476,991 |
|
Total
distributable earnings |
|
|
9,466,316 |
|
|
|
14,798,644 |
|
Total net assets |
|
|
298,177,358 |
|
|
|
304,286,853 |
|
Total
liabilities and net assets |
|
$ |
578,812,358 |
|
|
$ |
530,865,996 |
|
NET ASSET
VALUE PER SHARE |
|
$ |
26.68 |
|
|
$ |
27.13 |
|
|
|
|
|
|
Asset
Coverage Ratio |
|
|
375.8 |
% |
|
|
607.1 |
% |
Saratoga
Investment Corp. |
|
Consolidated
Statements of Operations |
|
(unaudited) |
|
|
|
|
|
|
|
For the three months ended |
|
|
August 31, 2020 |
|
August 31, 2019 |
|
INVESTMENT
INCOME |
|
|
|
|
Interest
from investments |
|
|
|
|
Interest income: |
|
|
|
|
Non-control/Non-affiliate investments |
$ |
10,207,720 |
|
|
$ |
8,585,609 |
|
|
Affiliate investments |
|
388,052 |
|
|
|
267,533 |
|
|
Control investments |
|
1,249,972 |
|
|
|
1,678,326 |
|
|
Payment-in-kind interest income: |
|
- |
|
|
|
- |
|
|
Non-control/Non-affiliate investments |
|
328,938 |
|
|
|
179,847 |
|
|
Affiliate investments |
|
48,018 |
|
|
|
41,265 |
|
|
Control investments |
|
37,771 |
|
|
|
989,367 |
|
|
Total
interest from investments |
|
12,260,471 |
|
|
|
11,741,947 |
|
|
Interest
from cash and cash equivalents |
|
1,610 |
|
|
|
145,793 |
|
|
Management
fee income |
|
625,436 |
|
|
|
629,745 |
|
|
Structuring
and advisory fee income* |
|
940,000 |
|
|
|
1,047,350 |
|
|
Other
income* |
|
28,060 |
|
|
|
323,378 |
|
|
Total investment income |
|
13,855,577 |
|
|
|
13,888,213 |
|
|
|
|
|
|
|
OPERATING
EXPENSES |
|
|
|
|
Interest and
debt financing expenses |
|
3,328,447 |
|
|
|
3,866,722 |
|
|
Base
management fees |
|
2,209,052 |
|
|
|
1,997,240 |
|
|
Incentive
management fees expense (benefit) |
|
1,529,677 |
|
|
|
2,085,486 |
|
|
Professional
fees |
|
367,553 |
|
|
|
384,874 |
|
|
Administrator expenses |
|
602,083 |
|
|
|
518,750 |
|
|
Insurance |
|
67,727 |
|
|
|
64,619 |
|
|
Directors
fees and expenses |
|
75,000 |
|
|
|
97,500 |
|
|
General
& administrative |
|
333,824 |
|
|
|
382,873 |
|
|
Income tax
expense (benefit) |
|
7,501 |
|
|
|
(465,925 |
) |
|
Total operating expenses |
|
8,520,864 |
|
|
|
8,932,139 |
|
|
NET
INVESTMENT INCOME |
|
5,334,713 |
|
|
|
4,956,074 |
|
|
|
|
|
|
|
REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS |
|
|
|
|
Net realized
gain (loss) from investments: |
|
|
|
|
Non-control/Non-affiliate investments |
|
11,929 |
|
|
|
1,870,089 |
|
|
Net realized
gain (loss) from investments |
|
11,929 |
|
|
|
1,870,089 |
|
|
Net change
in unrealized appreciation (depreciation) on investments: |
|
|
|
|
Non-control/Non-affiliate investments |
|
10,601,529 |
|
|
|
365,541 |
|
|
Affiliate investments |
|
637,232 |
|
|
|
731,304 |
|
|
Control investments |
|
5,341,640 |
|
|
|
361,027 |
|
|
Net change
in unrealized appreciation (depreciation) on investments |
|
16,580,401 |
|
|
|
1,457,872 |
|
|
Net change
in provision for deferred taxes on unrealized (appreciation)
depreciation on investments |
|
(116,521 |
) |
|
|
(704,263 |
) |
|
Net realized
and unrealized gain (loss) on investments |
|
16,475,809 |
|
|
|
2,623,698 |
|
|
NET INCREASE
(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ |
21,810,522 |
|
|
$ |
7,579,772 |
|
|
|
|
|
|
|
WEIGHTED
AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE |
$ |
1.95 |
|
|
$ |
0.91 |
|
|
|
|
|
|
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED |
|
11,207,142 |
|
|
|
8,333,570 |
|
|
|
|
|
|
|
|
|
|
|
|
* Certain prior period amounts have been reclassified to conform to
current period presentation. |
|
|
|
Saratoga
Investment Corp. |
Consolidated
Statements of Operations |
(unaudited) |
|
|
|
|
|
For the six months ended |
|
August 31, 2020 |
|
August 31, 2019 |
INVESTMENT
INCOME |
|
|
|
Interest
from investments |
|
|
|
Interest income: |
|
|
|
Non-control/Non-affiliate investments |
$ |
20,163,282 |
|
|
$ |
17,113,349 |
|
Affiliate investments |
|
786,422 |
|
|
|
516,858 |
|
Control investments |
|
2,383,556 |
|
|
|
3,326,472 |
|
Payment-in-kind interest income: |
|
- |
|
|
|
- |
|
Non-control/Non-affiliate investments |
|
910,884 |
|
|
|
331,744 |
|
Affiliate investments |
|
94,241 |
|
|
|
81,415 |
|
Control investments |
|
72,553 |
|
|
|
1,975,236 |
|
Total
interest from investments |
|
24,410,938 |
|
|
|
23,345,074 |
|
Interest
from cash and cash equivalents |
|
13,406 |
|
|
|
197,152 |
|
Management
fee income |
|
1,260,008 |
|
|
|
1,259,261 |
|
Structuring
and advisory fee income* |
|
1,253,306 |
|
|
|
1,363,725 |
|
Other
income* |
|
215,060 |
|
|
|
474,185 |
|
Total investment income |
|
27,152,718 |
|
|
|
26,639,397 |
|
|
|
|
|
OPERATING
EXPENSES |
|
|
|
Interest and
debt financing expenses |
|
5,892,323 |
|
|
|
7,731,298 |
|
Base
management fees |
|
4,369,580 |
|
|
|
3,809,409 |
|
Incentive
management fees expense (benefit) |
|
(328,633 |
) |
|
|
4,198,655 |
|
Professional
fees |
|
754,441 |
|
|
|
780,000 |
|
Administrator expenses |
|
1,158,333 |
|
|
|
1,018,750 |
|
Insurance |
|
135,453 |
|
|
|
129,238 |
|
Directors
fees and expenses |
|
135,000 |
|
|
|
157,500 |
|
General
& administrative |
|
684,638 |
|
|
|
641,474 |
|
Income tax
expense (benefit) |
|
(1,444 |
) |
|
|
(463,789 |
) |
Total operating expenses |
|
12,799,691 |
|
|
|
18,002,535 |
|
NET
INVESTMENT INCOME |
|
14,353,027 |
|
|
|
8,636,862 |
|
|
|
|
|
REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS |
|
|
|
Net realized
gain (loss) from investments: |
|
|
|
Non-control/Non-affiliate investments |
|
20,409 |
|
|
|
1,870,089 |
|
Net realized
gain (loss) from investments |
|
20,409 |
|
|
|
1,870,089 |
|
Net change
in unrealized appreciation (depreciation) on investments: |
|
|
|
Non-control/Non-affiliate investments |
|
(13,821,365 |
) |
|
|
2,758,732 |
|
Affiliate investments |
|
(1,807,020 |
) |
|
|
901,248 |
|
Control investments |
|
258,417 |
|
|
|
1,787,022 |
|
Net change
in unrealized appreciation (depreciation) on investments |
|
(15,369,968 |
) |
|
|
5,447,002 |
|
Net change
in provision for deferred taxes on unrealized (appreciation)
depreciation on investments |
|
151,219 |
|
|
|
(725,193 |
) |
Net realized
and unrealized gain (loss) on investments |
|
(15,198,340 |
) |
|
|
6,591,898 |
|
NET INCREASE
(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ |
(845,313 |
) |
|
$ |
15,228,760 |
|
|
|
|
|
WEIGHTED
AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE |
$ |
(0.08 |
) |
|
$ |
1.89 |
|
|
|
|
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED |
|
11,212,315 |
|
|
|
8,041,365 |
|
|
|
|
|
|
|
|
|
* 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. 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 six
months ended August 31, 2020, and August 31, 2019.
|
For the three months ended August
31 |
|
For the six months ended August
31 |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net Investment Income |
$ |
5,334,713 |
|
|
$ |
4,956,074 |
|
|
$ |
14,353,027 |
|
$ |
8,636,862 |
|
Changes in accrued capital gains incentive fee
expense/reversal |
|
156,235 |
|
|
|
676,801 |
|
|
|
(3,094,003 |
) |
|
|
1,630,809 |
|
Adjusted net investment
income |
$ |
5,490,948 |
|
|
$ |
5,632,875 |
|
|
$ |
11,259,024 |
|
|
$ |
10,267,671 |
|
|
|
|
|
|
|
|
|
Net investment income
yield |
|
7.4 |
% |
|
|
9.6 |
% |
|
|
9.7 |
% |
|
|
8.8 |
% |
Changes in accrued capital
gains incentive fee expense/reversal |
|
0.2 |
% |
|
|
1.4 |
% |
|
|
(2.1 |
%) |
|
|
1.6 |
% |
Adjusted net investment income
yield (1) |
|
7.6 |
% |
|
|
11.0 |
% |
|
|
7.6 |
% |
|
|
10.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income per
share |
$ |
0.48 |
|
|
$ |
0.59 |
|
|
$ |
1.28 |
|
|
$ |
1.07 |
|
Changes in accrued capital
gains incentive fee expense/reversal |
$ |
0.01 |
|
|
$ |
0.09 |
|
|
($ |
0.28 |
) |
|
$ |
0.21 |
|
Adjusted net investment income
per share (2) |
$ |
0.49 |
|
|
$ |
0.68 |
|
|
$ |
1.00 |
|
|
$ |
1.28 |
|
(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.
Contact: Henri Steenkamp Saratoga Investment
Corp. 212-906-7800 Roland Tomforde Broadgate Consultants
212-232-2222
Saratoga Investment (NYSE:SAR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Saratoga Investment (NYSE:SAR)
Historical Stock Chart
From Sep 2023 to Sep 2024