NEW YORK, May 14, 2018 /PRNewswire/ -- Saratoga
Investment Corp. (NYSE: SAR) ("Saratoga Investment" or "the
Company"), a business development company, today announced
financial results for its 2018 fiscal year end and fourth
quarter.
Summary Financial Information
The Company's summarized financial information is as
follows:
|
For the year
ended and as of
February 28, 2018
|
For the year
ended and as of
February 28, 2017
|
For the year
ended and as of
February 29, 2016
|
|
($ thousands
except per share)
|
AUM
|
342,694
|
292,661
|
283,996
|
NAV
|
143,691
|
127,295
|
125,150
|
NAV per
share
|
22.96
|
21.97
|
22.06
|
Investment
Income
|
38,615
|
33,157
|
30,051
|
Net Investment Income
per share
|
2.11
|
1.68
|
1.91
|
Adjusted Net
Investment Income per share
|
2.27
|
2.01
|
1.90
|
Earnings per
share
|
2.93
|
1.98
|
2.09
|
Return on Equity –
last twelve months
|
13.2%
|
9.0%
|
9.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
quarter
ended February
28, 2018
|
For the
quarter
ended November
30, 2017
|
For the
quarter
ended February
28, 2017
|
|
($ thousands
except per share)
|
AUM
|
342,694
|
338,838
|
292,661
|
NAV
|
143,691
|
138,846
|
127,295
|
NAV per
share
|
22.96
|
22.58
|
21.97
|
Investment
Income
|
10,128
|
9,526
|
8,358
|
Net Investment Income
per share
|
0.53
|
0.50
|
0.19
|
Adjusted Net
Investment Income per share
|
0.60
|
0.54
|
0.49
|
Earnings per
share
|
0.89
|
0.71
|
0.22
|
Return on Equity –
last twelve months
|
13.2%
|
10.2%
|
9.0%
|
– annualized quarter
|
15.7%
|
12.9%
|
3.9%
|
"Saratoga Investment Corp completed a very strong fiscal year
2018. We successfully expanded our assets under management,
maintained our strong investment quality, broadened our investor
base, maintained our diversified sources of low-cost and fixed rate
liquidity and made our pipeline of available deal sources more
robust," said Christian L. Oberbeck,
Chairman and Chief Executive Officer of Saratoga Investment. "These
important achievements were in keeping with the overall long-term
objectives of growing the size and improving the quality of our
asset base that has guided us since taking over management of the
BDC in 2010. These milestones led to us recently increasing our
quarterly dividend for the 14th consecutive quarter to
$0.50 per share, reflecting a 9%
year-over-year increase while still overearning the dividend by
14%, with an annual fiscal year 2018 total dividend paid of
$1.90 per share. Our talented
business development and origination team put $108 million of new capital to work this year,
enabling us to stay ahead of ongoing redemptions. Year-over-year,
NAV grew by 13% and NAV per share by 4.5%. In addition, we are well
structured for a potential higher interest rate environment, with
almost 80% of our investments having floating interest rates and
all of our currently outstanding debt fixed-rate and long-term. Our
LTM ROE for the year was 13.2%, which puts near the top of all BDCs
for the past year. We are extremely pleased with the strong and
leading risk-adjusted investment performance we have delivered for
our shareholders this year."
Michael J. Grisius, President and
Chief Investment Officer, added, "During fiscal year 2018, the
steady expansion of our asset base continued, with a year-on-year
increase in our investments at fair value of 17%, and a 261%
increase since 2012. Despite a difficult market environment, our
deal pipeline remained robust and continued to grow. Furthermore,
market headwinds did not impair our consistent ability to deploy
capital in high quality credits at multiples lower than the market
average. We continue to see demand for financing in the lower end
of the market and believe that our ongoing investments in new
business development and origination capabilities will result in
continued pipeline improvement, and overall growth. Our belief
remains that successful investing rests on sound judgment and
steady, continuous discipline, taken one decision at a time."
As of February 28, 2018, Saratoga
Investment increased its assets under management ("AUM") to
$342.7 million, an increase of 17.1%
from $292.7 million as of
February 28, 2017, and an increase of
1.2% from $338.8 million as of
November 30, 2017. This increase
reflects originations of $107.7
million new investments during the year ended February 28, 2018, offset by repayments of
$66.3 million during fiscal year
2018. These investments and repayments for the year are inclusive
of the $20.8 million in originations
and $20.8 million in repayments
during the quarter ended February 28,
2018. Since Saratoga
management has taken over the management of the BDC, $249.4 million of repayments and sales of
investments originated by Saratoga
have generated a gross unlevered IRR of 16.2%. Saratoga
Investment's portfolio has remained strong, with a continued high
level of investment quality in loan investments with 96.8% of our
loans at our highest internal rating for this quarter.
As a result, both the year and quarter ended February 28, 2018 benefitted from higher
investment income as compared to the prior period – investment
income increased to $38.6 million for
the year ended February 28, 2018, up
16.5% from $33.2 million for the year
ended February 28, 2017, and up to
$10.1 million from $8.4 million for the same quarterly periods, a
21.2% increase. This increased investment income was generated from
an investment base that has grown by 17.1% since last year, with
the weighted average current yield increasing from 10.9% to 11.1%,
both resulting in higher interest income. In addition, this
quarter's investment income was also up 6.3% from $9.5 million for the quarter ended November 30, 2017.
As compared to the year ended February
28, 2017, the investment income increase was offset by (i)
increased debt and financing expenses from higher outstanding Notes
payable and SBA debentures this year reflective of the growing
investment and asset base, (ii) increased base and incentive
management fees generated from the management of this larger pool
of investments, and (iii) increased total expenses, excluding
interest and debt financing expenses, base management fees and
incentive fees, reflecting primarily higher administrator expenses
and higher professional fees due to increased Sarbanes-Oxley
("SOX") activities now that the Company qualifies as an accelerated
filer next year.
Net investment income on a weighted average per share basis was
$2.11 and $0.53 for the year and quarter ended February 28, 2018, respectively. Adjusted for the
incentive fee accrual related to net unrealized capital gains, the
net investment income on a weighted average per share basis was
$2.27 and $0.60, respectively. This compares to adjusted
net investment income per share of $2.01 and $0.49 for
the year and quarter ended February 28,
2017, reflecting an increase of 12.9% and 22.4%,
respectively. This also compares to adjusted net investment income
per share of $0.54 per share for the
quarter ended November 30, 2017, an
increase of 11.1%. In addition to the incentive fee accrual related
to net unrealized capital gains, the year and quarter ended
February 28, 2017 amounts are also
adjusted for (i) the loss on extinguishment of our 2020 notes, and
(ii) the interest on the 2020 notes during the call notice period
while the 2023 notes were already issued and outstanding.
Net investment income yield as percentage of average net asset
value ("Net Investment Income Yield") was 9.5% and 9.4% for the
year and quarter ended February 28,
2018, respectively. Adjusted for the incentive fee accrual
related to net unrealized capital gains, the Net Investment Income
Yield was 10.2% and 10.7%, respectively. In comparison, adjusted
Net Investment Income Yield was 9.1% for the year ended
February 28, 2017, and 9.6% and 8.8%
for the quarters ended November 30,
2017 and February 28, 2017,
respectively.
Net Asset Value ("NAV") increased $16.4
million from $127.3 million as
of February 28, 2017 to $143.7 million as of February 28, 2018.
- For the year ended February 28,
2018, $12.7 million of net
investment income and $4.9 million of
net realized and unrealized gains were earned, offset by
$11.4 million of dividends declared.
In addition, $2.4 million of stock
dividend distributions were made through the Company's dividend
reinvestment plan ("DRIP") and $7.7
million of net shares sold through the Company's
At-the-Market ("ATM") equity offering.
NAV per share was $22.96 as of
February 28, 2018, compared to
$21.97 as of February 28, 2017 and $22.58 as of November 30,
2017.
- During the past twelve months, NAV per share increased by
$0.99 per share, primarily reflecting
the $6.3 million, or $1.01 per share increase in net assets (net of
the $1.90 dividend paid during fiscal
year 2018). This was slightly offset by the $0.02 dilutive impact of the quarter's share
issuances, with the dilutive impact of the 114,306 shares issued
during the year pursuant to the DRIP, representing four quarters'
dividend payments, mostly offset by the 348,123 shares issued under
the Company's ATM offering above net asset value. The Company made
no purchases of common stock in the open market during the
year.
Return on equity for the year ended February 28, 2018 was 13.2%, compared to 9.0% for
the comparable period last year.
Earnings per share for the year and quarter ended February 28, 2018 was $2.93 per share and $0.89 per share, respectively, compared to
earnings per share of $1.98 per share
and $0.22 per share for the year and
quarter ended February 28, 2017,
respectively, and $0.71 per share for
the quarter ended November 30,
2017.
Investment portfolio activity for the year ended February 28, 2018:
- Cost of investments made during the period: $107.7 million
- Principal repayments during the period: $66.3 million
Investment portfolio activity for the quarter ended February 28, 2018:
- Cost of investments made during the period: $20.8 million
- Principal repayments during the period: $20.8 million
Additional Financial Information
For the fiscal year ended February 28,
2018, Saratoga Investment reported net investment income of
$12.7 million, or $2.11 on a weighted average per share basis, and
a net gain on investments of $4.9
million, or $0.82 on a
weighted average per share basis, resulting in a net increase in
net assets from operations of $17.7
million, or $2.93 on a
weighted average per share basis. The $4.9
million net gain on investments was comprised of
$5.9 million in net realized loss on
investments offset by $10.8 million
in net unrealized appreciation on investments. The net realized
loss primarily relates to the $7.7
million loss on Saratoga Investment's My Alarm Center
Investment, partially offset by $1.8
million in other realized gains, mainly from the sale of
Saratoga Investment's Mercury Network investment. The net
unrealized appreciation was due primarily to (i) $1.9 million unrealized appreciation on Saratoga
Investment's CLO equity investment, (ii) $1.9 million unrealized appreciation on Saratoga
Investment's Easy Ice preferred equity investment, (iii)
$2.6 million unrealized appreciation
on Saratoga Investment's Elyria equity investment, and (iv) net
unrealized depreciation being adjusted to zero to reflect the
recognition of the net realized loss on the two realizations above.
This compared to the fiscal year ended February 28, 2017 with net investment income of
$9.7 million, or $1.68 on a weighted average per share basis, and
a net gain on investments of $1.7
million, or $0.30 on a
weighted average per share basis, resulting in a net increase in
net assets from operations of $11.4
million, or $1.98 on a
weighted average per share basis. The $1.7
million net gain on investments consisted of $12.4 million in net realized gains on
investments offset by $10.6 million
unrealized depreciation.
Adjusted for the incentive fee accrual related to net unrealized
capital gains, and for the comparable period, also (i) the loss on
extinguishment of our 2020 notes, and (ii) the interest on the 2020
notes during the call notice period while the 2023 notes were
already issued and outstanding, the net investment income was
$13.7 million and $9.8 million for the years ended February 28, 2018 and February 28, 2017, respectively – this is an
increase of $3.9 million
year-over-year, or 39.4%.
For the quarter ended February 28,
2018, Saratoga Investment reported net investment income of
$3.3 million, or $0.53 on a weighted average per share basis, and
a net gain on investments of $2.2
million, or $0.35 on a
weighted average per share basis, resulting in a net increase in
net assets from operations of $5.5
million, or $0.89 on a
weighted average per share basis. The $2.2
million net gain on investments was largely comprised of
$2.4 million in net unrealized
appreciation on investments offset by $0.2
million in net realized losses. The unrealized appreciation
included $1.3 million related to
Saratoga Investment's TM Restaurant Group investment that was
restructured subsequent to year-end. This compared to the quarter
ended February 28, 2017 with net
investment income of $1.1 million, or
$0.19 on a weighted average per share
basis, and a net gain on investments of $0.2
million, or $0.03 on a
weighted average per share basis, resulting in a net increase in
net assets from operations of $1.3
million, or $0.22 on a
weighted average per share basis. The $0.2
million net gain on investments consisted of $0.07 million in net realized gains and
$0.09 million in net unrealized
appreciation on investments.
Adjusted for the incentive fee accrual related to net unrealized
capital gains, and for the comparable period, also (i) the loss on
extinguishment of our 2020 notes, and (ii) the interest on the 2020
notes during the call notice period while the 2023 notes were
already issued and outstanding, the net investment income was
$3.8 million and $2.8 million for the quarters ended February 28, 2018 and February 28, 2017, respectively – this is an
increase of $1.0 million
year-over-year, or 37.1%.
Total expenses, excluding interest and debt financing expenses,
base management fees and incentive management fees, increased from
$4.3 million for the year ended
February 28, 2017 to $4.8 million for the year ended February 28, 2018, remaining consistent at 1.4%
of average total assets for both years. For the quarters ended
February 28, 2018 and February 28, 2017, these total expenses remained
relatively unchanged at $1.2 million.
Portfolio and Investment Activity
As of February 28, 2018, the fair
value of Saratoga Investment's portfolio was $342.7 million (excluding $13.8 million in cash and cash equivalents),
principally invested in 30 portfolio companies and one
collateralized loan obligation fund ("CLO"). The overall portfolio
composition consisted of 57.6% of first lien term loans, 27.7% of
second lien term loans, 4.8% of CLO subordinated notes, 1.2% of
syndicated loans, and 8.7% of common equity.
For the fiscal year ended February 28,
2018, Saratoga Investment invested $107.7 million in new or existing portfolio
companies and had $66.3 million in
aggregate amount of exits and repayments, resulting in net
investments of $41.4 million for the
year. For the quarter ended February
28, 2018, Saratoga Investment invested $20.8 million in new or existing portfolio
companies, and had $20.8 million in
aggregate amount of exits and repayments, resulting in zero net
investments for the quarter.
As of February 28, 2018, the
weighted average current yield on Saratoga Investment's portfolio
for the twelve months ended was 11.1%, which was comprised of a
weighted average current yield of 11.1% on first lien term loans,
11.9% on second lien term loans, 21.2% on CLO subordinated notes,
5.9% on syndicated loans and 3.6% on equity interests.
As of February 28, 2018, 79% of
Saratoga Investment's portfolio is in floating rate debt, with many
of these investments having floors. For all of these investments,
the relevant 1-month or 3-month LIBOR rate is currently above the
floors. Saratoga Investment has analyzed the potential impact of
changes in interest rates on interest income from investments, and
assuming that the investments as of February 28, 2018 were to
remain constant for a full fiscal year and no actions were taken to
alter the existing interest rate terms, a hypothetical change of
1.0% in interest rates would cause a corresponding increase of
approximately $2.3 million to
interest income.
Portfolio Update:
Shortly after year-end, Saratoga Investment's first lien and
revolver investment in TM Restaurant Group was restructured in a
change of control transaction, with Saratoga Investment receiving
$7.3 million in cash and a
$2.2 million subordinated term loan.
This transaction resulted in $1.3
million unrealized appreciation for the quarter ended
February 28, 2018, with the
investment being fair valued at year-end to reflect the value of
the transaction shortly after year-end. A $0.2 million loss is to be realized for the three
months ended May 31, 2018. This
realized loss will be accounted for as a reclassification from
unrealized to realized, resulting in no net impact to the financial
statements in the first quarter.
Liquidity and Capital Resources
As of February 28, 2018, Saratoga
Investment had $0.0 million in
outstanding borrowings under its $45 million senior secured
revolving credit facility with Madison Capital Funding LLC. At
the same time, Saratoga Investment had $137.7 million outstanding of SBA debentures,
$74.5 million of Baby Bonds (fair value of $76.5 million) and an aggregate of $13.8 million in cash and cash equivalents.
With the $45.0 million credit
facility and the $12.3 million
additional borrowing capacity at the SBIC subsidiary, as well as
the $13.8 million of cash and cash
equivalents, Saratoga Investment has a total of $71.1 million of undrawn borrowing capacity and
cash and cash equivalents available as of February 28, 2018. The proceeds from the DRIP and
ATM equity program totaled $2.3
million of equity issuances in the fourth fiscal quarter of
2018, for a total of $10.1 million
for the year ended February 28, 2018.
Saratoga Investment also has the ability to issue additional
Baby Bonds through the existing
shelf registration statement.
On March 16, 2017, we 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. As of February 28, 2018,
the Company sold 348,123 shares for gross proceeds of $7.8 million at an average price of $22.52 for aggregate net proceeds of $7.8 million (net of transaction costs).
On April 16, 2018, as
permitted by the Small Business Credit Availability Act, which was
signed into law on March 23, 2018,
the non-interested Board of Directors of the Company approved of
the Company becoming subject to a minimum asset coverage ratio of
150% under Sections 18(a)(1) and 18(a)(2) of the Investment Company
Act, as amended. The 150% asset coverage ratio will become
effective on April 16, 2019,
providing Saratoga Investment access to more than $100m of additional borrowing capacity, based on
NAV at the end of fiscal 2018. When combined with our existing
available borrowing capacity, that could increase our current AUM
by almost 50%.
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 year 2018, this
share repurchase plan was extended for another year, through
October 2018, at the same level of
approval. As of February 28, 2018,
the Company purchased 218,491 shares of common stock, at the
average price of $16.87 for
approximately $3.7 million pursuant
to this repurchase plan.
We made no purchases of common stock in the open market during
the year ended February 28, 2018.
Dividend
During fiscal year 2018, Saratoga Investment declared and paid
dividends of $1.90 per share,
composed of $0.46 for the quarter
ended February 28, 2017, $0.47 per share for the quarter ended
May 31, 2017, $0.48 per share for the quarter ended
August 31, 2017, and $0.49 per share for the quarter ended
November 30, 2017. In addition, on
February 26, 2018, Saratoga
Investment announced a dividend of $0.50 per share for the fiscal quarter ended
February 28, 2018, paid on
March 26, 2018 to all stockholders of
record at the close of business on March 14,
2018.
2018 Fiscal Year End and Fourth Quarter Conference Call/Webcast
Information
When:
|
Tuesday, May 15,
2018, 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 Tuesday, May 15, 2018
through 1:00 p.m. ET on Tuesday, May 22, 2018 by dialing (855)
859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and
Canada), passcode for both replay numbers: 6099629.
|
|
|
Webcast:
|
Interested parties
may access a simultaneous webcast of the call and find the FY2018
presentation by going to the "Events & Presentations" section
of Saratoga Investment's investor relations website,
http://www.saratogainvestmentcorp.com/investor.html
|
About Saratoga Investment Corp.
Saratoga Investment Corp. 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, 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 Corp.'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 Corp. has elected to be
regulated as a business development company ("BDC") 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 Corp. owns an SBIC-licensed subsidiary and manages a
$300 million Collateralized Loan
Obligation (CLO) fund. It also owns 100% of the subordinated
notes of the CLO. These diverse funding sources, combined
with a permanent capital base, enable Saratoga Investment Corp. to
provide a broad range of financing solutions.
Forward Looking Statements
This press release contains certain forward-looking
statements. These forward-looking statements are subject to
risks and uncertainties and other factors enumerated in this press
release and the filings Saratoga Investment Corp. makes
with the SEC. Saratoga Investment Corp. undertakes
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Financials
Saratoga
Investment Corp.
|
|
|
|
|
|
|
Consolidated
Statements of Assets and Liabilities
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
February 28,
2018
|
|
February 28,
2017
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Investments at fair
value
|
|
|
|
|
|
Non-control/Non-affiliate investments (amortized cost
of $281,534,277 and $243,415,755, respectively)
|
|
$
286,061,722
|
|
$
234,751,514
|
|
Affiliate investments
(amortized cost of $18,358,611 and $7,783,141,
respectively)
|
|
12,160,564
|
|
7,780,000
|
|
Control investments
(amortized cost of $39,797,229 and $49,283,536,
respectively)
|
|
44,471,767
|
|
50,129,799
|
|
Total investments at
fair value (amortized cost of $339,690,117 and $300,482,432,
respectively)
|
|
342,694,053
|
|
292,661,313
|
Cash and cash
equivalents
|
|
3,927,579
|
|
9,306,543
|
Cash and cash
equivalents, reserve accounts
|
|
9,849,912
|
|
12,781,425
|
Interest receivable
(net of reserve of $1,768,021 and $157,560,
respectively)
|
|
3,047,125
|
|
3,294,450
|
Management and
incentive fee receivable
|
|
233,024
|
|
171,106
|
Other
assets
|
|
584,668
|
|
183,346
|
Receivable from
unsettled trades
|
|
-
|
|
253,041
|
|
Total
assets
|
|
$
360,336,361
|
|
$
318,651,224
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Revolving credit
facility
|
|
$
-
|
|
$
-
|
Deferred debt
financing costs, revolving credit facility
|
|
(697,497)
|
|
(437,183)
|
SBA debentures
payable
|
|
137,660,000
|
|
112,660,000
|
Deferred debt
financing costs, SBA debentures payable
|
|
(2,611,120)
|
|
(2,508,280)
|
Notes
payable
|
|
74,450,500
|
|
74,450,500
|
Deferred debt
financing costs, notes payable
|
|
(2,316,370)
|
|
(2,689,511)
|
Base management and
incentive fees payable
|
|
5,776,944
|
|
5,814,692
|
Accounts payable and
accrued expenses
|
|
924,312
|
|
852,987
|
Interest and debt
fees payable
|
|
3,004,354
|
|
2,764,237
|
Directors fees
payable
|
|
43,500
|
|
51,500
|
Due to
manager
|
|
410,371
|
|
397,505
|
|
Total
liabilities
|
|
$
216,644,994
|
|
$
191,356,447
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
|
|
Common stock, par
value $.001, 100,000,000 common shares
|
|
|
|
|
|
authorized, 6,257,029
and 5,794,600 common shares issued and outstanding,
respectively
|
|
$
6,257
|
|
$
5,795
|
Capital in excess of
par value
|
|
188,975,590
|
|
190,483,931
|
Distribution in
excess of net investment income
|
|
(27,862,543)
|
|
(27,737,348)
|
Accumulated net
realized loss
|
|
(20,431,873)
|
|
(27,636,482)
|
Net unrealized
appreciation (depreciation) on investments
|
|
3,003,936
|
|
(7,821,119)
|
|
Total net
assets
|
|
143,691,367
|
|
127,294,777
|
|
|
|
|
|
|
Total liabilities and
net assets
|
|
$
360,336,361
|
|
$
318,651,224
|
|
|
|
|
|
|
NET ASSET VALUE PER
SHARE
|
|
$
22.96
|
|
$
21.97
|
|
|
|
|
|
|
Asset Coverage
Ratio
|
|
285.5%
|
|
271.0%
|
Saratoga
Investment Corp.
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
For the year
ended
February 28, 2018
|
|
For the year
ended
February 28, 2017
|
|
For the year
ended
February 29, 2016
|
INVESTMENT
INCOME
|
|
|
|
|
|
|
Interest from
investments
|
|
|
|
|
|
|
|
Interest
income:
|
|
|
|
|
|
|
|
Non-control/Non-affiliate
investments
|
|
$
26,648,380
|
|
$
26,167,951
|
|
$
23,165,823
|
|
Affiliate
investments
|
|
886,948
|
|
246,035
|
|
-
|
|
Control
investments
|
|
4,768,534
|
|
2,281,397
|
|
2,665,648
|
|
Payment-in-kind
interest income:
|
|
|
|
|
|
|
|
Non-control/Non-affiliate
investments
|
|
984,305
|
|
652,847
|
|
1,039,398
|
|
Affiliate
investments
|
|
80,460
|
|
-
|
|
-
|
|
Control
investments
|
|
1,741,334
|
|
-
|
|
-
|
|
Total interest
from investments
|
|
35,109,961
|
|
29,348,230
|
|
26,870,869
|
Interest from cash
and cash equivalents
|
|
27,495
|
|
31,151
|
|
5,420
|
Management fee
income
|
|
1,509,317
|
|
1,499,001
|
|
1,494,779
|
Incentive fee
income
|
|
591,368
|
|
-
|
|
-
|
Other
income
|
|
1,376,837
|
|
2,278,770
|
|
1,679,602
|
|
Total investment
income
|
|
38,614,978
|
|
33,157,152
|
|
30,050,670
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
Interest and debt
financing expenses
|
|
10,938,654
|
|
9,888,127
|
|
8,456,467
|
Base management
fees
|
|
5,846,400
|
|
4,898,657
|
|
4,528,589
|
Professional
fees
|
|
1,590,798
|
|
1,243,400
|
|
1,336,214
|
Administrator
expenses
|
|
1,645,833
|
|
1,366,667
|
|
1,175,000
|
Incentive management
fees
|
|
4,333,983
|
|
2,947,543
|
|
2,232,188
|
Insurance
|
|
259,571
|
|
275,787
|
|
330,867
|
Directors fees and
expenses
|
|
197,500
|
|
235,422
|
|
204,000
|
General &
administrative
|
|
1,058,009
|
|
1,121,594
|
|
995,205
|
Excise tax expense
(credit)
|
|
(14,738)
|
|
44,770
|
|
113,808
|
Other
expense
|
|
27,310
|
|
19,780
|
|
-
|
|
Total operating
expenses
|
|
25,883,320
|
|
22,041,747
|
|
19,372,338
|
Loss on
extinguishment of debt
|
|
-
|
|
1,454,595
|
|
-
|
|
NET INVESTMENT
INCOME
|
|
12,731,658
|
|
9,660,810
|
|
10,678,332
|
|
|
|
|
|
|
|
|
REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
|
|
|
|
|
|
|
Net realized gain
(loss) from investments
|
|
(5,877,568)
|
|
12,368,115
|
|
226,252
|
Net change in
unrealized appreciation (depreciation) on investments
|
|
10,825,055
|
|
(10,641,444)
|
|
740,974
|
|
Net realized and
unrealized gain on investments
|
|
4,947,487
|
|
1,726,671
|
|
967,226
|
|
|
|
|
|
|
|
|
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS
|
|
$
17,679,145
|
|
$
11,387,481
|
|
$
11,645,558
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE -
BASIC AND DILUTED EARNINGS PER COMMON SHARE
|
$
2.93
|
|
$
1.98
|
|
$
2.09
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING - BASIC AND DILUTED
|
6,024,040
|
|
5,740,450
|
|
5,582,453
|
Saratoga
Investment Corp.
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
February 28, 2018
|
|
For the three
months ended
February 28, 2017
|
|
|
|
|
INVESTMENT
INCOME
|
|
|
|
|
Interest from
investments
|
|
|
|
|
|
Interest
income:
|
|
|
|
|
|
Non-control/Non-affiliate
investments
|
|
$
7,170,562
|
|
$
6,231,089
|
|
Affiliate
investments
|
|
223,833
|
|
213,048
|
|
Control
investments
|
|
919,247
|
|
693,472
|
|
Payment-in-kind
interest income:
|
|
|
|
|
|
Non-control/Non-affiliate
investments
|
|
209,149
|
|
170,160
|
|
Affiliate
investments
|
|
32,173
|
|
-
|
|
Control
investments
|
|
736,570
|
|
-
|
|
Total interest
from investments
|
|
9,291,534
|
|
7,307,769
|
Interest from cash
and cash equivalents
|
|
7,144
|
|
14,725
|
Management fee
income
|
|
381,233
|
|
375,442
|
Incentive fee
income
|
|
114,281
|
|
-
|
Other
income
|
|
333,942
|
|
660,532
|
|
Total investment
income
|
|
10,128,134
|
|
8,358,468
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
Interest and debt
financing expenses
|
|
2,693,304
|
|
2,781,258
|
Base management
fees
|
|
1,488,170
|
|
1,248,790
|
Professional
fees
|
|
410,885
|
|
251,677
|
Administrator
expenses
|
|
437,500
|
|
375,000
|
Incentive management
fees
|
|
1,393,633
|
|
616,302
|
Insurance
|
|
62,664
|
|
65,486
|
Directors fees and
expenses
|
|
43,500
|
|
43,000
|
General &
administrative
|
|
273,938
|
|
379,851
|
Excise tax
expense
|
|
-
|
|
44,770
|
Other
expense
|
|
3,893
|
|
(1,867)
|
|
Total operating
expenses
|
|
6,807,487
|
|
5,804,267
|
Loss on
extinguishment of debt
|
|
-
|
|
1,454,595
|
|
NET INVESTMENT
INCOME
|
|
3,320,647
|
|
1,099,606
|
|
|
|
|
|
|
REALIZED AND
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
|
|
|
|
|
Net realized gain
(loss) from investments
|
|
(219,239)
|
|
68,216
|
Net change in
unrealized appreciation on investments
|
|
2,430,801
|
|
86,678
|
|
Net realized and
unrealized gain (loss) on investments
|
|
2,211,562
|
|
154,894
|
|
|
|
|
|
|
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS
|
|
$
5,532,209
|
|
$
1,254,500
|
|
|
|
|
|
|
WEIGHTED AVERAGE -
BASIC AND DILUTED EARNINGS PER COMMON SHARE
|
$
0.89
|
|
$
0.22
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING - BASIC AND DILUTED
|
6,243,896
|
|
5,755,750
|
Supplemental Information Regarding Adjusted Net Investment
Income, Adjusted Net Investment Income Yield and Adjusted Net
Investment Income per share
On a supplemental basis, we provide information relating to
adjusted net investment income, adjusted net investment income
yield and adjusted net investment income per share, which are
non-GAAP measures. These measures are provided in addition to, but
not as a substitute for, net investment income, net investment
income yield and net investment income per share. Adjusted net
investment income represents net investment income excluding any
capital gains incentive fee expense or reversal attributable
to unrealized gains. The management agreement with our 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,
we accrue, but do not pay, a capital gains incentive fee in
connection with any unrealized capital appreciation, as
appropriate. As such, we believe that adjusted net investment
income, adjusted net investment income yield and adjusted net
income per share is a useful indicator of operations exclusive of
any capital gains incentive fee expense or
reversal attributable to unrealized gains. In addition, for
fiscal 2017, adjusted net investment income also excludes the loss
on extinguishment of our 2020 notes, and the interest expense
related to the 2020 notes during the call notice period while the
2023 notes were already issued and outstanding. Both these expenses
are directly attributable to the issuance of the 2023 notes and the
subsequent repayment of the 2020 notes, and are deemed to be
non-recurring in nature and not representative of the operations of
Saratoga Investment. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for financial results prepared in accordance with GAAP.
The following table provides a reconciliation of net investment
income to adjusted net investment income, net investment income
yield to adjusted net investment income yield and net investment
income per share to adjusted net investment income per share for
the year and quarter ended February 28,
2018 and February 28,
2017.
|
For the three
months ended
February 28
|
|
For the years
ended
February
28
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Net Investment
Income
|
$
3,320,647
|
|
$
1,099,606
|
|
$
12,731,658
|
|
$
9,660,810
|
|
Changes in accrued
capital gains incentive
fee expense/reversal
|
450,502
|
|
(18,053)
|
|
919,806
|
|
133,937
|
|
Loss on
extinguishment of debt
|
-
|
|
1,454,595
|
|
-
|
|
1,454,595
|
|
Interest on 2020
notes during call period(3)
|
-
|
|
268,895
|
|
-
|
|
268,895
|
|
Adjusted net
investment income
|
3,771,149
|
|
2,805,043
|
|
13,651,464
|
|
11,518,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
yield
|
9.4%
|
|
3.5%
|
|
9.5%
|
|
7.6%
|
|
Changes in accrued
capital gains incentive
fee expense/reversal
|
1.3%
|
|
(0.1%)
|
|
0.7%
|
|
0.1%
|
|
Loss on
extinguishment of debt
|
-
|
|
4.6%
|
|
-
|
|
1.2%
|
|
Interest on 2020
notes during call period(3)
|
-
|
|
0.8%
|
|
-
|
|
0.2%
|
|
Adjusted net
investment income yield (1)
|
10.7%
|
|
8.8%
|
|
10.2%
|
|
9.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
February 28
|
|
For the year
ended
February
28
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net investment income
per share
|
$ 0.53
|
|
$ 0.19
|
|
$ 2.11
|
|
$ 1.68
|
|
Changes in accrued
capital gains incentive
fee expense/reversal
|
0.07
|
|
(0.0)
|
|
0.16
|
|
0.03
|
|
Loss on
extinguishment of debt
|
-
|
|
0.25
|
|
-
|
|
0.25
|
|
Interest on 2020
notes during call period(3)
|
-
|
|
0.05
|
|
-
|
|
0.05
|
|
Adjusted net
investment income per share (2)
|
$ 0.60
|
|
$ 0.49
|
|
$ 2.27
|
|
$ 2.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted net
investment income is calculated as adjusted net investment income
divided by average net asset value.
|
(2)
|
Adjusted net
investment income per share is calculated as adjusted net
investment income divided by weighted
average common shares outstanding.
|
(3)
|
Interest on 2020
notes during call period is presented net of the incentive fee
accrual
|
Contact: Henri
Steenkamp
Saratoga Investment Corp.
212-906-7800
Roland Tomforde
Broadgate Consultants
212-232-2222
View original
content:http://www.prnewswire.com/news-releases/saratoga-investment-corp-announces-fiscal-year-end-and-fourth-quarter-2018-financial-results-300648012.html
SOURCE Saratoga Investment Corp.