Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the
Company”), a business development company, today announced
financial results for its 2019 fiscal second quarter.
Summary Financial Information
The Company’s summarized financial information
is as follows:
|
|
For the quarter ended and as of August 31,
2018 |
|
|
For the quarter ended and as of May 31, 2018 |
|
|
For the quarter ended and as of August 31,
2017 |
|
|
|
($ in thousands except per share) |
|
AUM |
|
|
392,887 |
|
|
|
343,351 |
|
|
|
332,970 |
|
NAV |
|
|
172,658 |
|
|
|
144,845 |
|
|
|
133,460 |
|
NAV
per share |
|
|
23.16 |
|
|
|
23.06 |
|
|
|
22.37 |
|
Investment Income |
|
|
11,403 |
|
|
|
10,488 |
|
|
|
10,254 |
|
Net
Investment Income per share |
|
|
0.74 |
|
|
|
0.63 |
|
|
|
0.49 |
|
Adjusted Net Investment Income per share |
|
|
0.69 |
|
|
|
0.64 |
|
|
|
0.62 |
|
Earnings per share |
|
|
0.45 |
|
|
|
0.61 |
|
|
|
1.15 |
|
Return on Equity – last twelve months |
|
|
11.6 |
% |
|
|
14.9 |
% |
|
|
8.3 |
% |
– annualized quarter |
|
|
7.9 |
% |
|
|
10.7 |
% |
|
|
21.1 |
% |
“Our second fiscal quarter of 2019 has been a
very important one for us with many important accomplishments,
including continued growth of our high quality asset base,
sustained industry leadership in performance metrics and a material
expansion of our long-term capital structure,” said Christian L.
Oberbeck, Chairman and Chief Executive Officer of Saratoga
Investment. “This quarter we successfully raised $40.0 million of
new seven-year fixed rate notes under the ticker symbol “SAF”, and
issued $28.75 million of new equity at a premium to NAV – this
equity raise helped increase our total NAV to $172.7 million, and
importantly also increased our share float by 1.15 million shares.
In addition, we recently received a “green light” letter from the
SBA for a second SBIC license. And last month we also increased our
dividend for the sixteenth consecutive quarter, a $0.01 increase to
$0.52 per share. Importantly, we continue to out-earn our dividend
payments on a fully diluted basis factoring in the equity raise. In
the current rising rate environment, we believe we are
well-structured, with 82% of our interest earning investments
having floating-rate interest rates and through their LIBOR floors,
and all of our debt at quarter-end being fixed-rate.”
Michael J. Grisius, President and Chief
Investment Officer, added, “This fiscal quarter has again
demonstrated our long-term strategy to grow assets without
sacrificing the quality of our investment portfolio, something we
were able to accomplish this quarter with significant success. Our
asset base grew by 14% since last quarter, while our credit quality
remained strong at our highest levels. The asset growth also came
not only in the form of follow-ons, but with investments in new
platforms, with another four new portfolio companies added this
quarter, bringing the total to seven since May this year. We remain
confident that sticking to our long-term strategy of identifying
and underwriting high quality credits will continue to garner
positive results.”
As of August 31, 2018, Saratoga Investment
increased its assets under management (“AUM”) to $392.9 million, an
increase of 14.4% from $343.4 million as of May 31, 2018, and an
increase of 18.0% from $333.0 million as of August 31, 2017. The
increase this quarter reflects originations of $51.7 million,
offset by amortizations of $1.0 million. Including realized and
unrealized gains, Saratoga Investment’s portfolio has grown this
quarter and credit quality remains strong, with a continued high
level of investment quality in loan investments, with 99.4% of our
loans this quarter at our highest internal rating. Included in this
quarter’s originations are also four investments in new portfolio
companies. Since Saratoga management has taken over the management
of the BDC, $299.1 million of repayments and sales of investments
originated by Saratoga have generated a gross unlevered IRR of
13.4%.
For the three months ended August 31, 2018,
total investment income of $11.4 million increased $1.1 million, or
11.2%, compared to $10.3 million for the three months ended August
31, 2017. This increased investment income was generated from an
investment base that has grown by 18.0% since last year. The
weighted average current coupon on all investments dropped slightly
to 10.8%, primarily due to an increase in equity positions on which
there is generally no interest income to 9.1% from 8.2% last year.
In addition, this quarter’s investment income was up 8.7% on a
quarter-over-quarter basis from $10.5 million for the quarter ended
May 31, 2018.
As compared to the three months ended August 31,
2017, in addition to the investment income increase of $1.1
million, there was also (i) decreased debt and financing expenses,
as the growth in AUM last year was financed primarily by the
revolving credit facility, while this year’s growth came from
lower-cost SBA debentures and the recent equity raise, and (ii)
decreased total expenses, excluding interest and debt financing
expenses, base management fees and incentive fees, reflecting
primarily the deferred income tax benefit generated by equity
investments held in taxable blockers generating net operating
losses. These benefits were offset by increased base management
fees generated from the management of this larger pool of
investments.
Net investment income on a weighted average per
share basis was $0.74 for the quarter ended August 31, 2018.
Adjusted for the incentive fee accrual related to net unrealized
capital gains, the net investment income on a weighted average per
share basis was $0.69. This compares to adjusted net investment
income per share of $0.64 for the quarter ended May 31, 2018 and
$0.62 for the quarter ended August 31, 2017, reflecting increases
of $0.05 and $0.07, respectively.
Net investment income yield as a percentage of
average net asset value (“Net Investment Income Yield”) was 12.9%
for the quarter ended August 31, 2018. Adjusted for the incentive
fee accrual related to net unrealized capital gains, the Net
Investment Income Yield was 11.9%. In comparison, adjusted Net
Investment Income Yield was 11.1% and 11.3% for the quarters ended
May 31, 2018 and August 31, 2017, respectively.
Net Asset Value (“NAV”) was $172.7 million as of
August 31, 2018, an increase of $29.0 million from $143.7 million
as of February 28, 2018, and an increase of $39.2 million from
$133.5 million as of August 31, 2017.
- For the six months ended August 31, 2018, $9.1 million of net
investment income and $0.2 million of net realized gains were
earned, partially offset by $0.8 million of deferred tax expense on
net unrealized gains in Saratoga Investment’s blocker subsidiaries,
$1.5 million net unrealized depreciation on investments and $6.3
million of dividends declared. In addition, $27.4 million of common
stock was issued, net of offering costs, and $1.0 million of stock
dividend distributions were made through the Company’s dividend
reinvestment plan (“DRIP”). No shares were sold through the
Company’s At-the-Market (“ATM”) equity offering during the
year.
NAV per share was $23.16 as of May 31, 2018,
compared to $22.96 as of February 28, 2018 and $22.37 as of August
31, 2017.
- For the six months ended August 31, 2018, NAV per share
increased by $0.20 per share, primarily reflecting (i) the $0.11
accretive impact of the last six months 1,196,998 share issuances,
including both the equity offering and the DRIP, and (ii) the $0.7
million, or $0.09 per share increase in net assets resulting from
operations (net of the $1.01 dividend paid during the first half of
FY2019).
Return on equity for the last twelve months
ended August 31, 2018 was 11.6%, compared to 8.3% for the
comparable period last year.
Earnings per share for the quarter ended August
31, 2018 was $0.45, compared to earnings per share of $0.61 for the
quarter ended May 31, 2018 and $1.15 for the quarter ended August
31, 2017.
Investment portfolio activity for the quarter
ended August 31, 2018:
- Cost of investments made during the period: $51.7 million,
including investments in four new portfolio companies
- Principal repayments during the period: $1.0 million
Additional Financial Information
For the fiscal quarter ended August 31, 2018,
Saratoga Investment reported net investment income of $5.1 million,
or $0.74 on a weighted average per share basis, and a net realized
and unrealized loss on investments of $2.0 million, or $0.29 on a
weighted average per share basis, resulting in a net increase in
net assets from operations of $3.1 million, or $0.45 on a weighted
average per share basis. The $2.0 million net loss on investments
was comprised of $2.2 million in net unrealized depreciation on
investments, offset by $0.2 million of net deferred tax benefit on
unrealized losses in Saratoga Investment’s blocker subsidiaries.
The $2.2 million unrealized depreciation is primarily due to $0.8
million unrealized depreciation on Saratoga Investment’s My Alarm
Center investment, primarily the preferred equity Class B units,
$0.9 million unrealized depreciation on Saratoga Investment’s
Elyria Foundry investment and $0.4 million unrealized depreciation
on Saratoga Investment’s Tile Redi Holdings investment. This
compared to the fiscal quarter ended August 31, 2017 with net
investment income of $2.9 million, or $0.49 on a weighted average
per share basis, and a net realized and unrealized gain on
investments of $4.0 million, or $0.67 on a weighted average per
share basis, resulting in a net increase in net assets from
operations of $6.9 million, or $1.15 on a weighted average per
share basis. The $4.0 million net gain on investments consisted of
$9.7 million in net unrealized appreciation on investments, offset
by $5.8 million in net realized loss.
Adjusted for the incentive fee accrual related
to net unrealized capital gains, the net investment income was $4.8
million and $3.7 million for the quarters ended August 31, 2018 and
August 31, 2017, respectively – an increase of $1.1 million
year-over-year, or 29.4%.
Total expenses, excluding interest and debt
financing expenses, base management fees and incentive management
fees, decreased from $1.2 million for the quarter ended August 31,
2017 to $0.9 million for the quarter ended August 31, 2018,
decreasing from 1.4% to 0.9% of average total assets. The primary
reason for the decrease was the recognition of a $0.3 million
deferred income tax benefit generated by equity investments held in
taxable blockers generating net operating losses.
Portfolio and Investment Activity
As of August 31, 2018, the fair value of
Saratoga Investment’s portfolio was $392.9 million (excluding $43.3
million in cash and cash equivalents), principally invested in 35
portfolio companies and one collateralized loan obligation fund
(“CLO”). The overall portfolio composition consisted of 58.0% of
first lien term loans, 25.5% of second lien term loans, 3.1% of
unsecured term loans, 4.3% of subordinated notes in a CLO, and 9.1%
of common equity.
For the fiscal quarter ended August 31, 2018,
Saratoga Investment invested $51.7 million in new or existing
portfolio companies and had $1.0 million in aggregate amount of
exits and repayments, resulting in net investment of $50.7 million
for the quarter.
As of August 31, 2018, the weighted average
current yield on Saratoga Investment’s portfolio for the twelve
months ended was 10.8%, which was comprised of a weighted average
current yield of 11.0% on first lien term loans, 12.0% on second
lien term loans, 9.6% on unsecured term loans, 17.6% on CLO
subordinated notes, and 3.1% on equity interests.
As of August 31, 2018, 81.5% of Saratoga
Investment’s interest earning 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. Pursuant to the disclosure included in
Item 3 of Saratoga Investment’s Form 10-Q for the quarter ended
August 31, 2018, assuming that the investments as of August 31,
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 $2.8 million to
interest income over twelve months.
Liquidity and Capital Resources
As of August 31, 2018, 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 outstanding, $114.5 million of baby bonds (fair value of
$118.2 million) issued and an aggregate of $43.3 million in cash
and cash equivalents.
With $45.0 million available under the credit
facility and the $43.3 million of cash and cash equivalents,
Saratoga Investment has a total of $88.3 million of undrawn
borrowing capacity and cash and cash equivalents available as of
August 31, 2018. The proceeds from the DRIP program totaled $0.5
million of equity investments in the second fiscal quarter of 2019.
Saratoga Investment also has the ability to issue additional equity
or baby bonds through the existing shelf registration
statement.
On July 13, 2018, Saratoga Investment issued
1,150,000 shares of its common stock priced at $25.00 per share
(par value $0.001 per share) for an aggregate total of $28.75
million. The net proceeds, after deducting underwriting commissions
of $1.15 million and offering costs of approximately $0.2 million,
amounted to approximately $27.4 million. The Company also granted
the underwriters a 30-day option to purchase up to an additional
172,500 shares of its common stock, which was not exercised.
On August 28, 2018, Saratoga Investment issued
$40.0 million in aggregate principal amount of 6.25% fixed-rate
notes due 2025 (the “2025 Notes”) for net proceeds of $38.7 million
after deducting underwriting commissions of approximately $1.25
million and offering costs of approximately $0.2 million. The
issuance included the full exercise of the underwriters’ option to
purchase an additional $5.0 million aggregate principal amount of
2025 Notes within 30 days. Interest on the 2025 Notes is paid
quarterly in arrears on February 28, May 31, August 31 and November
30, at a rate of 6.25% per year, beginning November 30, 2018. The
2025 Notes mature on August 31, 2025 and commencing August 28,
2021, may be redeemed in whole or in part at any time or from time
to time at our option. The 2025 Notes are listed on the NYSE under
the trading symbol “SAF” with a par value of $25.00 per share.
On September 27, 2018, the SBA issued a "green
light" letter inviting us to file a formal license application for
a second SBIC license. If approved, the additional SBIC license
would provide the Company with an incremental source of long-term
capital by permitting us to issue, subject to SBA approval, up to
$175.0 million of additional SBA-guaranteed debentures in addition
to the $150.0 million already approved under the Company’s first
license. Receipt of a green light letter from the SBA does not
assure an applicant that the SBA will ultimately issue an SBIC
license and the Company has received no assurance or indication
from the SBA that it will receive an additional SBIC license, or of
the timeframe in which it would receive an additional license,
should one ultimately be granted.
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. No shares were sold during the quarter under the ATM.
Dividend
On August 28, 2018, Saratoga Investment
announced a dividend of $0.52 per share for the fiscal quarter
ended August 31, 2018, payable on September 27, 2018, to all
stockholders of record at the close of business on September 17,
2018. Since the end of fiscal year 2018, Saratoga Investment has
paid two dividends, $0.51 per share for the quarter ended May 31,
2018 and $0.50 per share for the quarter ended February 28,
2018.
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.
Shareholders have the option to receive payment
of the dividend in cash, or receive shares of common stock,
pursuant to the Company’s DRIP.
2019 Fiscal Second Quarter Conference
Call/Webcast Information
When: |
Thursday, October 11, 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 Thursday,
October 11, 2018 through 1:00 p.m. ET on Thursday, October 18, 2018
by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406
(outside U.S. and Canada), passcode for both replay numbers:
4889246. |
|
|
Webcast: |
Interested parties may access a simultaneous webcast of the call
and find the Q2 2019 presentation by going to the “Events &
Presentations” section of Saratoga Investment Corp.’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 |
|
|
|
August 31,
2018 |
|
|
February 28,
2018 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Investments at fair
value |
|
|
|
|
|
|
Non-control/Non-affiliate investments (amortized
cost of $313,696,967 and $281,534,277, respectively) |
|
$ |
317,441,955 |
|
|
$ |
286,061,722 |
|
Affiliate investments (amortized cost of $18,434,416 and
$18,358,611, respectively) |
|
|
10,905,065 |
|
|
|
12,160,564 |
|
Control investments (amortized cost of $59,263,490 and $39,797,229,
respectively) |
|
|
64,540,473 |
|
|
|
44,471,767 |
|
Total investments at fair value (amortized cost of $391,394,873 and
$339,690,117, respectively) |
|
|
392,887,493 |
|
|
|
342,694,053 |
|
Cash and
cash equivalents |
|
|
37,409,160 |
|
|
|
3,927,579 |
|
Cash and
cash equivalents, reserve accounts |
|
|
5,842,732 |
|
|
|
9,849,912 |
|
Interest
receivable (net of reserve of $367,870 and $1,768,021,
respectively) |
|
|
4,193,153 |
|
|
|
3,047,125 |
|
Management and incentive fee receivable |
|
|
171,676 |
|
|
|
233,024 |
|
Other
assets |
|
|
559,077 |
|
|
|
584,668 |
|
Receivable from unsettled trades |
|
|
67,164 |
|
|
|
- |
|
Total assets |
|
$ |
441,130,455 |
|
|
$ |
360,336,361 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Revolving credit facility |
|
$ |
- |
|
|
$ |
- |
|
Deferred
debt financing costs, revolving credit facility |
|
|
(650,963 |
) |
|
|
(697,497 |
) |
SBA
debentures payable |
|
|
150,000,000 |
|
|
|
137,660,000 |
|
Deferred
debt financing costs, SBA debentures payable |
|
|
(2,642,517 |
) |
|
|
(2,611,120 |
) |
2023
Notes payable |
|
|
74,450,500 |
|
|
|
74,450,500 |
|
Deferred
debt financing costs, 2023 notes payable |
|
|
(2,116,365 |
) |
|
|
(2,316,370 |
) |
2025
Notes payable |
|
|
40,000,000 |
|
|
|
- |
|
Deferred
debt financing costs, 2025 notes payable |
|
|
(1,448,274 |
) |
|
|
- |
|
Base
management and incentive fees payable |
|
|
5,871,083 |
|
|
|
5,776,944 |
|
Deferred
tax liability |
|
|
179,458 |
|
|
|
- |
|
Accounts
payable and accrued expenses |
|
|
1,213,953 |
|
|
|
924,312 |
|
Interest
and debt fees payable |
|
|
3,079,968 |
|
|
|
3,004,354 |
|
Directors fees payable |
|
|
75,500 |
|
|
|
43,500 |
|
Due to
manager |
|
|
460,085 |
|
|
|
410,371 |
|
Total liabilities |
|
$ |
268,472,428 |
|
|
$ |
216,644,994 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
ASSETS |
|
|
|
|
|
|
|
|
Common
stock, par value $.001, 100,000,000 common shares authorized,
7,453,947 and 6,257,029 common shares issued and outstanding,
respectively |
|
$ |
7,454 |
|
|
$ |
6,257 |
|
Capital in excess of
par value |
|
|
217,354,149 |
|
|
|
188,975,590 |
|
Distribution in excess of net investment income |
|
|
(25,188,494 |
) |
|
|
(27,862,543 |
) |
Accumulated net realized loss |
|
|
(20,219,702 |
) |
|
|
(20,431,873 |
) |
Accumulated net unrealized appreciation on investments, net of
deferred taxes |
|
|
704,620 |
|
|
|
3,003,936 |
|
Total net assets |
|
|
172,658,027 |
|
|
|
143,691,367 |
|
Total
liabilities and net assets |
|
$ |
441,130,455 |
|
|
$ |
360,336,361 |
|
NET ASSET VALUE PER
SHARE |
|
$ |
23.16 |
|
|
$ |
22.96 |
|
|
|
|
|
|
|
|
|
|
Asset Coverage Ratio |
|
|
250.9 |
% |
|
|
293.0 |
% |
Saratoga Investment
Corp.Consolidated Statements of
Operations(unaudited)
|
|
For the three months ended |
|
|
For the three months ended |
|
|
|
August 31,
2018 |
|
|
August 31,
2017 |
|
INVESTMENT INCOME |
|
|
|
|
|
|
Interest from
investments |
|
|
|
|
|
|
Interest
income: |
|
|
|
|
|
|
Non-control/Non-affiliate investments |
|
$ |
8,046,730 |
|
|
$ |
6,961,488 |
|
Affiliate investments |
|
|
241,607 |
|
|
|
222,269 |
|
Control investments |
|
|
1,251,573 |
|
|
|
1,496,080 |
|
Payment-in-kind interest income: |
|
|
|
|
|
|
|
|
Non-control/Non-affiliate investments |
|
|
145,012 |
|
|
|
282,003 |
|
Affiliate investments |
|
|
35,482 |
|
|
|
16,954 |
|
Control investments |
|
|
594,367 |
|
|
|
207,624 |
|
Total
interest from investments |
|
|
10,314,771 |
|
|
|
9,186,418 |
|
Interest
from cash and cash equivalents |
|
|
11,455 |
|
|
|
6,493 |
|
Management fee income |
|
|
363,962 |
|
|
|
375,957 |
|
Incentive fee income |
|
|
147,061 |
|
|
|
162,358 |
|
Other
income |
|
|
565,525 |
|
|
|
522,440 |
|
Total investment income |
|
|
11,402,774 |
|
|
|
10,253,666 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Interest
and debt financing expenses |
|
|
2,866,414 |
|
|
|
2,962,844 |
|
Base
management fees |
|
|
1,645,653 |
|
|
|
1,481,788 |
|
Incentive management fees |
|
|
807,521 |
|
|
|
1,709,636 |
|
Professional fees |
|
|
468,253 |
|
|
|
407,372 |
|
Administrator expenses |
|
|
458,333 |
|
|
|
395,833 |
|
Insurance |
|
|
63,860 |
|
|
|
66,165 |
|
Directors fees and expenses |
|
|
75,000 |
|
|
|
60,000 |
|
General
& administrative |
|
|
206,295 |
|
|
|
287,201 |
|
Income
tax benefit |
|
|
(341,232 |
) |
|
|
- |
|
Excise
tax credit |
|
|
- |
|
|
|
(14,738 |
) |
Other
expense |
|
|
8,449 |
|
|
|
6,514 |
|
Total operating expenses |
|
|
6,258,546 |
|
|
|
7,362,615 |
|
NET
INVESTMENT INCOME |
|
|
5,144,228 |
|
|
|
2,891,051 |
|
|
|
|
|
|
|
|
|
|
REALIZED
AND UNREALIZED GAIN (LOSS) ON INVESTMENTS |
|
|
|
|
|
|
|
|
Net
realized gain (loss) from investments: |
|
|
|
|
|
|
|
|
Non-control/Non-affiliate investments |
|
|
163 |
|
|
|
(5,838,408 |
) |
Control investments |
|
|
- |
|
|
|
63,554 |
|
Net
realized gain (loss) from investments |
|
|
163 |
|
|
|
(5,774,854 |
) |
Net
change in unrealized appreciation (depreciation) on
investments: |
|
|
|
|
|
|
|
|
Non-control/Non-affiliate investments |
|
|
(1,086,162 |
) |
|
|
6,451,921 |
|
Affiliate investments |
|
|
(855,742 |
) |
|
|
677,861 |
|
Control investments |
|
|
(212,617 |
) |
|
|
2,623,880 |
|
Net
change in unrealized appreciation (depreciation) on
investments |
|
|
(2,154,521 |
) |
|
|
9,753,662 |
|
Net
change in provision for deferred taxes on unrealized (appreciation)
depreciation on investments |
|
|
152,546 |
|
|
|
- |
|
Net
realized and unrealized gain (loss) on investments |
|
|
(2,001,812 |
) |
|
|
3,978,808 |
|
NET
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
|
$ |
3,142,416 |
|
|
$ |
6,869,859 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE -
BASIC AND DILUTED EARNINGS PER COMMON SHARE |
|
$ |
0.45 |
|
|
$ |
1.15 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED |
|
|
6,915,966 |
|
|
|
5,955,251 |
|
Saratoga Investment
Corp.Consolidated Statements of
Operations(unaudited)
|
|
For the six months ended |
|
|
For the six months ended |
|
|
|
August 31,
2018 |
|
|
August 31,
2017 |
|
INVESTMENT INCOME |
|
|
|
|
|
|
Interest from
investments |
|
|
|
|
|
|
Interest
income: |
|
|
|
|
|
|
Non-control/Non-affiliate investments |
|
$ |
15,452,639 |
|
|
$ |
12,662,366 |
|
Affiliate investments |
|
|
480,957 |
|
|
|
441,824 |
|
Control investments |
|
|
2,398,238 |
|
|
|
2,831,466 |
|
Payment-in-kind interest income: |
|
|
|
|
|
|
|
|
Non-control/Non-affiliate investments |
|
|
361,022 |
|
|
|
505,276 |
|
Affiliate investments |
|
|
69,629 |
|
|
|
16,954 |
|
Control investments |
|
|
1,159,224 |
|
|
|
469,733 |
|
Total
interest from investments |
|
|
19,921,709 |
|
|
|
16,927,619 |
|
Interest
from cash and cash equivalents |
|
|
27,748 |
|
|
|
13,574 |
|
Management fee income |
|
|
749,156 |
|
|
|
751,638 |
|
Incentive fee income |
|
|
346,244 |
|
|
|
267,653 |
|
Other
income |
|
|
845,935 |
|
|
|
1,000,630 |
|
Total investment income |
|
|
21,890,792 |
|
|
|
18,961,114 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Interest
and debt financing expenses |
|
|
5,589,206 |
|
|
|
5,486,450 |
|
Base
management fees |
|
|
3,178,121 |
|
|
|
2,872,815 |
|
Incentive management fees |
|
|
1,880,133 |
|
|
|
1,885,732 |
|
Professional fees |
|
|
1,011,050 |
|
|
|
791,703 |
|
Administrator expenses |
|
|
895,833 |
|
|
|
770,833 |
|
Insurance |
|
|
127,719 |
|
|
|
132,330 |
|
Directors fees and expenses |
|
|
170,500 |
|
|
|
111,000 |
|
General
& administrative |
|
|
554,145 |
|
|
|
484,444 |
|
Income
tax benefit |
|
|
(608,542 |
) |
|
|
- |
|
Excise
tax credit |
|
|
(270 |
) |
|
|
(14,738 |
) |
Other
expense |
|
|
21,021 |
|
|
|
45,045 |
|
Total operating expenses |
|
|
12,818,916 |
|
|
|
12,565,614 |
|
NET
INVESTMENT INCOME |
|
|
9,071,876 |
|
|
|
6,395,500 |
|
|
|
|
|
|
|
|
|
|
REALIZED
AND UNREALIZED GAIN (LOSS) ON INVESTMENTS |
|
|
|
|
|
|
|
|
Net
realized gain (loss) from investments: |
|
|
|
|
|
|
|
|
Non-control/Non-affiliate investments |
|
|
212,171 |
|
|
|
(5,742,819 |
) |
Control investments |
|
|
- |
|
|
|
63,554 |
|
Net
realized gain (loss) from investments |
|
|
212,171 |
|
|
|
(5,679,265 |
) |
Net
change in unrealized appreciation (depreciation) on
investments: |
|
|
|
|
|
|
|
|
Non-control/Non-affiliate investments |
|
|
(782,457 |
) |
|
|
2,347,355 |
|
Affiliate investments |
|
|
(1,331,304 |
) |
|
|
745,194 |
|
Control investments |
|
|
602,445 |
|
|
|
4,075,162 |
|
Net
change in unrealized appreciation (depreciation) on
investments |
|
|
(1,511,316 |
) |
|
|
7,167,711 |
|
Net
change in provision for deferred taxes on unrealized (appreciation)
depreciation on investments |
|
|
(788,000 |
) |
|
|
- |
|
Net
realized and unrealized gain (loss) on investments |
|
|
(2,087,145 |
) |
|
|
1,488,446 |
|
NET
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
|
$ |
6,984,731 |
|
|
$ |
7,883,946 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE -
BASIC AND DILUTED EARNINGS PER COMMON SHARE |
|
$ |
1.06 |
|
|
$ |
1.33 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED |
|
|
6,597,324 |
|
|
|
5,908,453 |
|
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 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, Saratoga Investment accrues, but
do not pay, a capital gains incentive fee in connection with any
unrealized capital appreciation, as appropriate. 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 unrealized
gains. The presentation of this additional information is not meant
to be considered in isolation or as a substitute for financial
results prepared in accordance with GAAP. The following table
provides a reconciliation of net investment income to adjusted net
investment income, net investment income yield to adjusted net
investment income yield and net investment income per share to
adjusted net investment income per share for the three and six
months ended August 31, 2018 and August 31, 2017.
|
|
For the three months ended August 31, |
|
|
For the six months ended August 31, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net Investment Income |
|
$ |
5,144,228 |
|
|
$ |
2,891,051 |
|
|
$ |
9,071,876 |
|
|
$ |
6,395,500 |
|
Changes
in accrued capital gains incentive fee expense/reversal |
|
|
(383,118 |
) |
|
|
789,244 |
|
|
|
(310,852 |
) |
|
|
228,976 |
|
Adjusted
net investment income |
|
|
4,761,109 |
|
|
|
3,680,295 |
|
|
|
8,761,024 |
|
|
|
6,624,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income yield |
|
|
12.9 |
% |
|
|
8.9 |
% |
|
|
12.0 |
% |
|
|
9.8 |
% |
Changes
in accrued capital gains incentive fee expense/reversal |
|
|
(1.0 |
%) |
|
|
2.4 |
% |
|
|
(0.5 |
%) |
|
|
0.4 |
% |
Adjusted
net investment income yield (1) |
|
|
11.9 |
% |
|
|
11.3 |
% |
|
|
11.5 |
% |
|
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
per share |
|
$ |
0.74 |
|
|
$ |
0.49 |
|
|
$ |
1.38 |
|
|
$ |
1.08 |
|
Changes
in accrued capital gains incentive fee expense/reversal |
|
$ |
(0.05 |
) |
|
$ |
0.13 |
|
|
$ |
(0.05 |
) |
|
$ |
0.04 |
|
Adjusted
net investment income per share (2) |
|
$ |
0.69 |
|
|
$ |
0.62 |
|
|
$ |
1.33 |
|
|
$ |
1.12 |
|
|
(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
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