Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the
Company”), a business development company (“BDC”), today announced
financial results for its 2021 fiscal third quarter.
Summary Financial Information
The Company’s summarized financial information
is as follows:
|
|
For the quarterended and as of Nov 30, 2020 |
For the quarterended and as of Aug 31, 2020 |
For the quarterended and as of Nov 30, 2019 |
|
|
($ in thousands except per share) |
AUM |
|
546,944 |
|
508,117 |
|
487,031 |
|
NAV |
|
299,853 |
|
298,177 |
|
282,180 |
|
NAV per share |
|
26.84 |
|
26.68 |
|
25.30 |
|
Investment Income |
|
14,283 |
|
13,856 |
|
14,196 |
|
Net Investment Income per share |
|
0.40 |
|
0.48 |
|
0.46 |
|
Adjusted Net Investment Income per share |
|
0.50 |
|
0.49 |
|
0.61 |
|
Earnings per share |
|
0.57 |
|
1.95 |
|
1.37 |
|
Dividends per share (declared) |
|
0.42 |
|
0.41 |
|
0.56 |
|
Return on Equity |
– last twelve months |
11.0 |
% |
14.3 |
% |
17.6 |
% |
|
– annualized quarter |
8.5 |
% |
30.1 |
% |
21.7 |
% |
Originations |
|
51,320 |
|
31,709 |
|
40,766 |
|
Repayments |
|
18,296 |
|
23,282 |
|
51,230 |
|
|
|
|
|
|
“During the past nine challenging months, we and
our portfolio companies have managed through substantial economic
headwinds and uncertainties and we continue to believe that
Saratoga remains well positioned to face potential future economic
challenges,” said Christian L. Oberbeck, Chairman and Chief
Executive Officer of Saratoga Investment. “Our third quarter
results highlight the strength of our financial position and
portfolio performance. Our quarterly metrics include LTM return on
equity of 11.0%, adjusted NII per share of $0.50 per share,
adjusted LTM NII yield of 8.0% and NAV per share growth of 16c per
share, which is our eleventh quarterly increase in the last
thirteen quarters. Significant economic uncertainty presented by
the COVID-19 pandemic remains, and, as a result, 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 $300 million of equity
supporting $108 million of long-term covenant-free non-SBIC debt
and $176 million of long-term covenant free SBIC debentures. Our
quarter-end regulatory leverage of 377% substantially exceeds our
150% requirement, and in addition to our undrawn Madison revolving
credit facility, we have $34 million of quarter-end cash to support
our existing portfolio companies, and $149 million of available
SBIC II facilities which can be used to finance new opportunities,
all of which are expected to be highly accretive to earnings.
Reflecting our current strong portfolio performance, the Board of
Directors decided to increase our quarterly dividends by a further
$0.01 per share and declare a $0.42 per share dividend for the
quarter ended November 30, 2020.”
“Portfolio management continues to be critically
important, and we are highly discerning in the current environment.
Fortunately, we continued to bring new platform investments into
the portfolio, with investments in three 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, all totaling $51.3 million invested in the fiscal
quarter. We have also started seeing increased repayment activity,
with two realizations occurring this quarter. Our credit quality
remained at a high level at quarter-end and increased slightly from
last quarter, with 93% of credits rated in our highest category and
$6.0 million unrealized appreciation recognized in the quarter,
putting our portfolio in a strong position from which to face the
continued volatility and uncertainty ahead. With 75% of our
investments at quarter-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 believe our portfolio is well structured for these
uncertain times. We remain confident in our experienced management
team, high underwriting standards and time-tested investment
strategy. We believe our resources are sufficient to weather the
economic challenges ahead, and that our team will be able to
continue to steadily grow portfolio size and maintain quality and
investment performance over the long-term.”
Discussion of Financial Results for the Quarter
ended November 30, 2020:
As of November 30, 2020, Saratoga Investment’s
assets under management (“AUM”) was $546.9 million, an increase of
12.3% from $487.0 million as of November 30, 2019, and an increase
of 7.6% from $508.1 million as of August 31, 2020. The increase
this past quarter consists of $51.3 million in originations, offset
by $18.3 million of repayments and amortizations, as well as $6.0
million in 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 74.5% of
the portfolio in first liens, and a continued high level of
investment quality in loan investments, with 92.8% of its loans
this quarter at its highest internal rating. This quarter’s
originations include three investments in new platforms, and five
follow-ons in existing portfolio companies. Since Saratoga
Investment took over the management of the BDC, $523.4 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 November 30, 2020,
total investment income of $14.3 million was up $0.1 million from
$14.2 for the three months ended November 30, 2019. This quarter’s
investment income was generated from an investment base that has
grown by 12.3% since last year. All of this quarter’s originations
occurred in the second half of the quarter, with repayments mostly
in the first month of the quarter. In addition, the asset growth
was offset by lower interest rates, with the weighted average
current coupon on non-CLO BDC investments decreasing from 10.1% to
9.5% (based on cost) year-over-year. In addition, this quarter’s
investment income was up 3.1% on a quarter-on-quarter basis from
$13.9 million for the quarter ended August 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 November
30, 2019, net investment income decreased due to (i) increased base
management fees, professional fees and administrator expenses
generated from the management of this larger pool of investments,
and (ii) the non-recurrence of a deferred income tax benefit
recognized last year. This decrease was partially offset by
decreased interest and debt financing expenses, reflecting the
repayment of the $74.5 million baby bond last year.
Net investment income on a weighted average per
share basis was $0.40 for the quarter ended November 30, 2020.
Adjusted for the incentive fee accrual related to net capital
gains, the net investment income on a weighted average per share
basis was $0.50. This compares to adjusted net investment income
per share of $0.49 for the quarter ended August 31, 2020, and $0.61
for the quarter ended November 30, 2019. During these periods,
weighted average common shares outstanding increased from 10.0
million shares for the three months ended November 30, 2019, to
11.2 million shares for both the three months ended August 31,
2020, and November 30, 2020.
Net investment income yield as a percentage of
average net asset value (“Net Investment Income Yield”) was 6.0%
for the quarter ended November 30, 2020. Adjusted for the incentive
fee accrual related to net capital gains, the Net Investment Income
Yield was 7.4%. In comparison, adjusted Net Investment Income Yield
was 7.6% and 9.7% for the quarters ended August 31, 2020, and
November 30, 2019, respectively.
Net Asset Value (“NAV”) was $299.9 million as of
November 30, 2020, an increase of $1.7 million from $298.2 million
as of August 31, 2020, and an increase of $17.7 million from $282.2
million as of November 30, 2019.
- For the three months ended November 30, 2020, $4.5 million of
net investment income and $6.0 million of net unrealized
appreciation were earned, offset by $3.9 million federal tax paid
on net capital gains realized in fiscal 2020, $0.2 million deferred
tax expense on net unrealized gains in Saratoga Investment’s
blocker subsidiaries and $4.6 million of dividends declared. In
addition, $0.8 million of stock dividend distributions were made
through the Company’s dividend reinvestment plan (“DRIP”), and
50,000 shares were purchased for $0.9 million pursuant to the share
repurchase plan, all in this quarter.
NAV per share was $26.84 as of November 30,
2020, compared to $26.68 as of August 31, 2020, $27.13 as of
February 29, 2020, and $25.30 as of November 30, 2019.
- For the three months ended November 30, 2020, NAV per share
increased by $0.16 per share, reflecting the $0.40 per share net
investment income and $0.54 per share unrealized appreciation on
investments, offset by $0.35 per share tax expense impact on net
capital gains realized in fiscal 2020, the second quarter dividend
of $0.41 per share declared during this quarter and $0.02 deferred
tax expense on net unrealized appreciation in Saratoga Investment’s
blocker subsidiaries. The benefit of repurchasing shares below NAV
pursuant to the share repurchase plan was offset by the DRIP shares
issued during the quarter.
Return on equity for the last twelve months
ended November 30, 2020, was 11.0%, down from 17.6% for the
comparable period last year.
Earnings per share for the quarter ended
November 30, 2020, was $0.57, compared to $1.95 for the quarter
ended August 31, 2020, and earnings per share of $1.37 for the
quarter ended November 30, 2019.
Investment portfolio activity for the quarter
ended November 30, 2020:
- Cost of investments made during the period: $51.3 million,
including investments in three new portfolio companies.
- Principal repayments during the period: $18.3 million.
Additional Financial Information
For the fiscal quarter ended November 30, 2020,
Saratoga Investment reported net investment income of $4.5 million,
or $0.40 on a weighted average per share basis, and a net realized
and unrealized gain on investments of $1.9 million, or $0.17 on a
weighted average per share basis, resulting in a net increase in
net assets from operations of $6.4 million, or $0.57 on a weighted
average per share basis. The $1.9 million net gain on investments
was comprised of $6.0 million in net unrealized appreciation on
investments, offset by $3.9 million in income tax provision from
realized gain on investment and $0.2 million of net change in
provision for deferred taxes on unrealized appreciation on
investments. The $6.0 million unrealized appreciation reflects a
1.2% 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 two
thirds of the reduction in the value of the overall portfolio in
the first quarter has been reversed since May 31, 2020. This is
compared to the fiscal quarter ended November 30, 2019, with net
investment income of $4.6 million, or $0.46 on a weighted average
per share basis, and a net realized and unrealized gain on
investments of $9.1 million, or $0.91 on a weighted average per
share basis, resulting in a net increase in net assets from
operations of $13.7 million, or $1.37 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 $6.1 million for the quarters ended November 30, 2020, and
November 30, 2019, respectively – a decrease of $0.6 million
year-over-year, or 10.0%.
Total expenses, excluding interest and debt
financing expenses, base management fees, incentive management fees
and income tax benefit, increased from $1.5 million for the quarter
ended November 30, 2019 to $1.6 million for the same period ended
November 30, 2020. This represented 1.1% of average total assets,
also unchanged from last year.
Portfolio and Investment Activity
As of November 30, 2020, the fair value of
Saratoga Investment’s portfolio was $546.9 million (excluding $33.9
million in cash and cash equivalents), principally invested in 42
portfolio companies and one collateralized loan obligation fund
(“CLO”). The overall portfolio composition consisted of 74.5% of
first lien term loans, 9.2% of second lien term loans, 4.9% of
unsecured term loans, 5.7% of subordinated notes in a CLO and 5.7%
of common equity.
For the fiscal quarter ended November 30, 2020,
Saratoga Investment invested $51.3 million in three new and five
existing portfolio companies and had $18.3 million in aggregate
amount of exits and repayments, resulting in net investments of
$33.0 million for the quarter.
As of November 30, 2020, the weighted average
current yield on Saratoga Investment’s portfolio based on current
fair values was 9.4%, which was comprised of a weighted average
current yield of 9.5% on first lien term loans, 11.5% on second
lien term loans, 4.4% on unsecured term loans, 17.6% on CLO
subordinated notes and 0.0% on equity interests.
Liquidity and Capital Resources
As of November 30, 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 outstanding in its SBIC I license, $26.0 million SBA
debentures outstanding in its SBIC II license, $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 $33.9 million in cash and cash
equivalents.
With $45.0 million available under the credit
facility and the $33.9 million of cash and cash equivalents as of
November 30, 2020, Saratoga Investment has a total of $78.9 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 $149.0 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 $30.1 million of committed undrawn lending commitments and
$18.8 million of discretionary funding commitments.
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 November 30, 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 nine months ended November
30, 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 and a $0.41 per share dividend for the
quarter ended August 31, 2020. Furthermore, the Board of Directors
declared a $0.42 per share dividend for this quarter ended November
30, 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 January 5, 2021, and is payable on February 10, 2021,
to common stockholders of record on January 26, 2021. 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 $1.23 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 through 2021, this share repurchase plan was extended
for another year at the same level of approval, currently through
January 15, 2022. 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 November 30, 2020, the Company
purchased 50,000 shares of common stock, at the average price of
$18.28 for approximately $0.9 million pursuant to this repurchase
plan. These share repurchases during the quarter offset the 45,706
shares issued as part of the DRIP shares issued in November 2020.
During the nine months ended November 30, 2020, the Company
purchased 140,321 shares of common stock, at the average price of
$17.56 for approximately $2.5 million pursuant to the Share
Repurchase Plan.
2021 Fiscal Third Quarter Conference
Call/Webcast Information
When: |
Thursday, January 7, 2021, 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, January 7, 2021 through
1:00 p.m. ET on Thursday, January 14, 2021 by dialing (855)
859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and
Canada), passcode for both replay numbers: 6679522. |
|
|
Webcast: |
Interested parties may access a
simultaneous webcast of the call and find the Q3 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 |
|
|
|
|
|
November 30, 2020 |
|
February 29, 2020 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Investments at fair value |
|
|
|
Non-control/Non-affiliate investments (amortized cost of
$463,588,455 and $418,006,725, respectively) |
$ |
456,552,179 |
|
|
$ |
420,442,928 |
|
Affiliate investments (amortized cost of $28,338,471 and
$23,998,917, respectively) |
|
21,403,802 |
|
|
|
18,485,854 |
|
Control investments (amortized cost of $65,055,003 and $44,293,619,
respectively) |
|
68,987,521 |
|
|
|
46,703,192 |
|
Total investments at fair
value (amortized cost of $556,981,929 and $486,299,261,
respectively) |
|
546,943,502 |
|
|
|
485,631,974 |
|
Cash and cash equivalents |
|
21,060,224 |
|
|
|
24,598,905 |
|
Cash and cash equivalents,
reserve accounts |
|
12,836,663 |
|
|
|
14,851,447 |
|
Interest receivable (net of
reserve of $1,982,033 and $1,238,049, respectively) |
|
4,192,177 |
|
|
|
4,810,456 |
|
Management fee receivable |
|
284,256 |
|
|
|
272,207 |
|
Other assets |
|
740,361 |
|
|
|
701,007 |
|
Total assets |
$ |
586,057,183 |
|
|
$ |
530,865,996 |
|
|
|
|
|
LIABILITIES |
|
|
|
Revolving credit facility |
$ |
- |
|
|
$ |
- |
|
Deferred debt financing costs, revolving credit facility |
|
(674,638 |
) |
|
|
(512,628 |
) |
SBA debentures payable |
|
176,000,000 |
|
|
|
150,000,000 |
|
Deferred debt financing costs, SBA debentures payable |
|
(2,725,309 |
) |
|
|
(2,561,495 |
) |
6.25% Notes Payable 2025 |
|
60,000,000 |
|
|
|
60,000,000 |
|
Deferred debt financing costs, 6.25% notes payable 2025 |
|
(1,766,709 |
) |
|
|
(2,046,735 |
) |
7.25% Notes Payable 2025 |
|
43,125,000 |
|
|
|
- |
|
Deferred debt financing costs, 7.25% notes payable 2025 |
|
(1,480,977 |
) |
|
|
- |
|
7.75% Notes Payable 2025 |
|
5,000,000 |
|
|
|
- |
|
Deferred debt financing costs, 7.75% notes payable 2025 |
|
(252,746 |
) |
|
|
- |
|
Base management and incentive
fees payable |
|
4,775,801 |
|
|
|
15,800,097 |
|
Deferred tax liability |
|
1,434,505 |
|
|
|
1,347,363 |
|
Accounts payable and accrued
expenses |
|
1,514,585 |
|
|
|
1,713,157 |
|
Interest and debt fees
payable |
|
931,938 |
|
|
|
2,234,042 |
|
Directors fees payable |
|
44,500 |
|
|
|
61,500 |
|
Due to manager |
|
278,343 |
|
|
|
543,842 |
|
Total liabilities |
|
286,204,293 |
|
|
|
226,579,143 |
|
|
|
|
|
NET ASSETS |
|
|
|
Common stock, par value
$0.001, 100,000,000 common shares |
|
|
|
authorized, 11,170,028 and 11,217,545 common shares issued and
outstanding, respectively |
|
11,170 |
|
|
|
11,218 |
|
Capital in excess of par
value |
|
288,590,554 |
|
|
|
289,476,991 |
|
Total distributable
earnings |
|
11,251,166 |
|
|
|
14,798,644 |
|
Total net assets |
|
299,852,890 |
|
|
|
304,286,853 |
|
Total liabilities and net
assets |
$ |
586,057,183 |
|
|
$ |
530,865,996 |
|
NET ASSET VALUE PER SHARE |
$ |
26.84 |
|
|
$ |
27.13 |
|
|
|
|
|
Asset Coverage Ratio |
|
377.3 |
% |
|
|
607.1 |
% |
|
|
|
|
Saratoga Investment Corp. |
Consolidated Statements of Operations |
(unaudited) |
|
|
|
|
|
For the three months ended |
|
November 30, 2020 |
|
November 30, 2019 |
INVESTMENT INCOME |
|
|
|
Interest from investments |
|
|
|
Interest income: |
|
|
|
Non-control/Non-affiliate investments |
$ |
10,422,586 |
|
|
$ |
9,749,294 |
|
Affiliate investments |
|
418,418 |
|
|
|
356,958 |
|
Control investments |
|
1,654,359 |
|
|
|
1,300,923 |
|
Payment-in-kind interest income: |
|
|
|
Non-control/Non-affiliate investments |
|
214,422 |
|
|
|
198,984 |
|
Affiliate investments |
|
49,333 |
|
|
|
42,397 |
|
Control investments |
|
44,896 |
|
|
|
1,250,824 |
|
Total interest from
investments |
|
12,804,014 |
|
|
|
12,899,380 |
|
Interest from cash and cash
equivalents |
|
770 |
|
|
|
119,539 |
|
Management fee income |
|
623,817 |
|
|
|
629,671 |
|
Structuring and advisory fee
income* |
|
545,354 |
|
|
|
511,500 |
|
Other income* |
|
308,802 |
|
|
|
35,665 |
|
Total investment income |
|
14,282,757 |
|
|
|
14,195,755 |
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
Interest and debt financing
expenses |
|
3,559,870 |
|
|
|
3,896,968 |
|
Base management fees |
|
2,324,564 |
|
|
|
2,146,214 |
|
Incentive management fees
expense (benefit) |
|
2,295,000 |
|
|
|
3,102,139 |
|
Professional fees |
|
502,979 |
|
|
|
401,010 |
|
Administrator expenses |
|
693,750 |
|
|
|
556,250 |
|
Insurance |
|
67,010 |
|
|
|
63,936 |
|
Directors fees and
expenses |
|
60,000 |
|
|
|
60,000 |
|
General &
administrative |
|
278,734 |
|
|
|
395,024 |
|
Income tax expense
(benefit) |
|
29,748 |
|
|
|
(1,001,089 |
) |
Total operating expenses |
|
9,811,655 |
|
|
|
9,620,452 |
|
NET INVESTMENT INCOME |
|
4,471,102 |
|
|
|
4,575,303 |
|
|
|
|
|
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS |
|
|
|
Net realized gain (loss) from
investments: |
|
|
|
Non-control/Non-affiliate investments |
|
1,798 |
|
|
|
10,739,678 |
|
Net realized gain (loss) from
investments |
|
1,798 |
|
|
|
10,739,678 |
|
Income tax (provision) benefit
from realized gain on investments |
|
(3,895,354 |
) |
|
|
- |
|
Net change in unrealized
appreciation (depreciation) on investments: |
|
|
|
Non-control/Non-affiliate investments |
|
4,348,888 |
|
|
|
(4,322,305 |
) |
Affiliate investments |
|
385,414 |
|
|
|
(41,295 |
) |
Control investments |
|
1,264,528 |
|
|
|
3,827,449 |
|
Net change in unrealized
appreciation (depreciation) on investments |
|
5,998,830 |
|
|
|
(536,151 |
) |
Net change in provision for
deferred taxes on unrealized (appreciation) depreciation on
investments |
|
(210,057 |
) |
|
|
(1,061,608 |
) |
Net realized and unrealized
gain (loss) on investments |
|
1,895,217 |
|
|
|
9,141,919 |
|
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS |
$ |
6,366,319 |
|
|
$ |
13,717,222 |
|
|
|
|
|
WEIGHTED AVERAGE - BASIC AND
DILUTED EARNINGS (LOSS) PER COMMON SHARE |
$ |
0.57 |
|
|
$ |
1.37 |
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC AND DILUTED |
|
11,169,817 |
|
|
|
10,036,086 |
|
|
|
|
|
* Certain prior period amounts
have been reclassified to conform to current period
presentation. |
|
|
|
|
|
|
|
Saratoga Investment Corp. |
Consolidated Statements of Operations |
(unaudited) |
|
|
|
|
|
For the nine months ended |
|
November 30, 2020 |
|
November 30, 2019 |
INVESTMENT INCOME |
|
|
|
Interest from investments |
|
|
|
Interest income: |
|
|
|
Non-control/Non-affiliate investments |
$ |
30,585,868 |
|
|
$ |
26,862,643 |
|
Affiliate investments |
|
1,204,840 |
|
|
|
873,816 |
|
Control investments |
|
4,037,915 |
|
|
|
4,627,395 |
|
Payment-in-kind interest income: |
|
|
|
Non-control/Non-affiliate investments |
|
1,125,306 |
|
|
|
530,728 |
|
Affiliate investments |
|
143,574 |
|
|
|
123,812 |
|
Control investments |
|
117,449 |
|
|
|
3,226,060 |
|
Total interest from
investments |
|
37,214,952 |
|
|
|
36,244,454 |
|
Interest from cash and cash
equivalents |
|
14,176 |
|
|
|
316,691 |
|
Management fee income |
|
1,883,825 |
|
|
|
1,888,932 |
|
Structuring and advisory fee
income* |
|
1,798,660 |
|
|
|
1,875,225 |
|
Other income* |
|
523,862 |
|
|
|
509,850 |
|
Total investment income |
|
41,435,475 |
|
|
|
40,835,152 |
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
Interest and debt financing
expenses |
|
9,452,193 |
|
|
|
11,628,266 |
|
Base management fees |
|
6,694,144 |
|
|
|
5,955,623 |
|
Incentive management fees
expense (benefit) |
|
1,966,367 |
|
|
|
7,300,794 |
|
Professional fees |
|
1,257,420 |
|
|
|
1,181,010 |
|
Administrator expenses |
|
1,852,083 |
|
|
|
1,575,000 |
|
Insurance |
|
202,463 |
|
|
|
193,174 |
|
Directors fees and
expenses |
|
195,000 |
|
|
|
217,500 |
|
General &
administrative |
|
963,372 |
|
|
|
1,036,498 |
|
Income tax expense
(benefit) |
|
28,304 |
|
|
|
(1,464,878 |
) |
Total operating expenses |
|
22,611,346 |
|
|
|
27,622,987 |
|
NET INVESTMENT INCOME |
|
18,824,129 |
|
|
|
13,212,165 |
|
|
|
|
|
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS |
|
|
|
Net realized gain (loss) from
investments: |
|
|
|
Non-control/Non-affiliate investments |
|
22,207 |
|
|
|
12,609,767 |
|
Net realized gain (loss) from
investments |
|
22,207 |
|
|
|
12,609,767 |
|
Income tax (provision) benefit
from realized gain on investments |
|
(3,895,354 |
) |
|
|
- |
|
Net change in unrealized
appreciation (depreciation) on investments: |
|
|
|
Non-control/Non-affiliate investments |
|
(9,472,477 |
) |
|
|
(1,563,573 |
) |
Affiliate investments |
|
(1,421,606 |
) |
|
|
859,953 |
|
Control investments |
|
1,522,945 |
|
|
|
5,614,471 |
|
Net change in unrealized
appreciation (depreciation) on investments |
|
(9,371,138 |
) |
|
|
4,910,851 |
|
Net change in provision for
deferred taxes on unrealized (appreciation) depreciation on
investments |
|
(58,838 |
) |
|
|
(1,786,801 |
) |
Net realized and unrealized
gain (loss) on investments |
|
(13,303,123 |
) |
|
|
15,733,817 |
|
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS |
$ |
5,521,006 |
|
|
$ |
28,945,982 |
|
|
|
|
|
WEIGHTED AVERAGE - BASIC AND
DILUTED EARNINGS (LOSS) PER COMMON SHARE |
$ |
0.49 |
|
|
$ |
3.33 |
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC AND DILUTED |
|
11,198,287 |
|
|
|
8,702,190 |
|
|
|
|
|
* 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 November 30, 2020, and November 30, 2019.
|
For the three months ended November
30 |
|
For the nine months ended November
30 |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income |
$ |
4,471,102 |
|
|
$ |
4,575,303 |
|
|
$ |
18,824,129 |
|
|
$ |
13,212,165 |
|
Changes in accrued capital
gains incentive fee expense/reversal |
|
1,058,955 |
|
|
|
1,566,202 |
|
|
|
(2,035,048 |
) |
|
|
3,197,010 |
|
Adjusted net investment
income |
$ |
5,530,057 |
|
|
$ |
6,141,505 |
|
|
$ |
16,789,081 |
|
|
$ |
16,409,175 |
|
|
|
|
|
|
|
|
|
Net investment income
yield |
|
6.0 |
% |
|
|
7.2 |
% |
|
|
8.5 |
% |
|
|
8.1 |
% |
Changes in accrued capital
gains incentive fee expense/reversal |
|
1.4 |
% |
|
|
2.5 |
% |
|
|
(0.9 |
%) |
|
|
1.9 |
% |
Adjusted net investment income
yield (1) |
|
7.4 |
% |
|
|
9.7 |
% |
|
|
7.6 |
% |
|
|
10.0 |
% |
Net investment income
per share |
$ 0.40 |
|
|
$ 0.46 |
|
|
$ 1.68 |
|
|
$ 1.52 |
|
Changes in accrued capital
gains incentive fee expense/reversal |
$ 0.10 |
|
|
$ 0.15 |
|
|
($ 0.18 |
) |
|
$ 0.37 |
|
Adjusted net investment income
per share (2) |
$ 0.50 |
|
|
$ 0.61 |
|
|
$ 1.50 |
|
|
$ 1.89 |
|
(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 SteenkampSaratoga Investment
Corp.212-906-7800
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