NEW YORK, Jan. 09, 2019 (GLOBE NEWSWIRE) -- Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the Company”), a business development company, today announced financial results for its 2019 fiscal third quarter.

Summary Financial Information

The Company’s summarized financial information is as follows:

		For the quarter ended and as of November 30, 2018				For the quarter ended and as of August 31, 2018				For the quarter ended and as of November 30, 2017
		($ in thousands except per share)
AUM			443,812				392,887				338,838
NAV			173,269				172,658				138,846
NAV per share			23.13				23.16				22.58
Investment Income			12,833				11,403				9,526
Net Investment Income per share			0.69				0.74				0.50
Adjusted Net Investment Income per share			0.65				0.69				0.54
Earnings per share			0.49				0.45				0.71
Return on Equity – last twelve months			10.1	%			11.6	%			10.2	%
– annualized quarter			8.5	%			7.9	%			12.9	%
Originations			73,732				51,726				5,214
Repayments			23,365				1,016				1,770

“Our third fiscal quarter of 2019 continued the growth of our high quality asset base and sustained industry leadership in key performance metrics,” said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. “This quarter reflects the full impact of July’s $28.75 million equity offering and August’s new $40.0 million baby bonds issuance, all of which was deployed by the end of this quarter. This has contributed to the increased interest income generated this quarter. We also again increased our dividend for the seventeenth consecutive quarter, a $0.01 increase to $0.53 per share, while continuing to over-earn our dividend by 23% as compared to this quarter’s adjusted NII per share. We remain well-structured for rising rates, with 83% of our interest earning investments having floating-rates and through their LIBOR floors, and all of our debt, except for our Madison credit facility, being fixed-rate. And subsequent to quarter-end, we successfully refinanced our CLO and upsized it to $500 million of assets, with a corresponding increase to interest and management fee income.”

Michael J. Grisius, President and Chief Investment Officer, added, “During this fiscal quarter, we were able to originate a healthy $73.7 million of investments and grow our assets under management by 13%, without sacrificing the strength and the quality of the credits in our portfolio. The fact that we’ve been able to consistently accomplish this underscores the continued growth of our sourcing pipeline, and the strength of our originations team and their investment judgement. We have added eight new portfolio companies 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 November 30, 2018, Saratoga Investment increased its assets under management (“AUM”) to $443.8 million, an increase of 13.0% from $392.9 million as of August 31, 2018, and an increase of 31.0% from $338.8 million as of November 30, 2017. The increase this quarter reflects originations of $73.7 million, offset by amortizations and repayments of $23.4 million. 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 98.6% of the loans this quarter at Saratoga Investment’s highest internal rating. Included in this quarter’s originations is also an investment in one new portfolio company. 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 November 30, 2018, total investment income of $12.8 million increased $3.3 million, or 34.7%, compared to $9.5 million for the three months ended November 30, 2017. This increased investment income was generated from an investment base that has grown by 31.0% since last year. The weighted average current coupon on all investments decreased slightly to 10.8%, primarily due to an increase in equity positions on which there is generally no interest income, which increased to 8.7% of the total portfolio from 8.4% last year. In addition, this quarter’s investment income was up 12.5% on a quarter-over-quarter basis from $11.4 million for the quarter ended August 31, 2018.

As compared to the three months ended November 30, 2017, the investment income increase was offset by (i) increased debt and financing expenses, as the growth in AUM this year was partially financed from increased SBA debentures and the recently issued $40.0 million baby bond issuance, and (ii) 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 $0.69 for the quarter ended November 30, 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 $0.65. This compares to adjusted net investment income per share of $0.69 for the quarter ended August 31, 2018 and $0.54 for the quarter ended November 30, 2017, reflecting a quarter-on-quarter decrease of $0.04 and a year-on-year increase of $0.11.

Net investment income yield as a percentage of average net asset value (“Net Investment Income Yield”) was 11.9% for the quarter ended November 30, 2018. Adjusted for the incentive fee accrual related to net unrealized capital gains, the Net Investment Income Yield was 11.2%. In comparison, adjusted Net Investment Income Yield was 11.9% and 9.6% for the quarters ended August 31, 2018 and November 30, 2017, respectively.

Net Asset Value (“NAV”) was $173.3 million as of November 30, 2018, an increase of $29.6 million from $143.7 million as of February 28, 2018, and an increase of $34.5 million from $138.8 million as of November 30, 2017.

• For the nine months ended November 30, 2018, $14.2 million of net investment income and $0.1 million of net realized gains were earned, offset by $1.2 million of deferred tax expense on net unrealized gains in Saratoga Investment’s blocker subsidiaries, $2.5 million net unrealized depreciation on investments and $10.2 million of dividends declared. In addition, $27.6 million of common stock was issued, net of offering costs, and $1.6 million of stock dividend distributions were made through the Company’s dividend reinvestment plan (“DRIP”). 10,373 shares were sold through the Company’s At-the-Market (“ATM”) equity program during the year.

NAV per share was $23.13 as of November 30, 2018, compared to $23.16 as of August 31, 2018, $22.96 as of February 28, 2018 and $22.58 as of November 30, 2017.

• For the nine months ended November 30, 2018, NAV per share increased by $0.17 per share, primarily reflecting (i) the $0.12 accretive impact of the last nine months 1,233,154 share issuances, including the equity offering, the ATM and the DRIP, and (ii) the $0.4 million, or $0.05 per share increase in net assets resulting from operations (net of the $1.53 dividend paid during the nine months of fiscal 2019).

Return on equity for the last twelve months ended November 30, 2018 was 10.1%, compared to 10.2% for the comparable period last year.

Earnings per share for the quarter ended November 30, 2018 was $0.49, compared to earnings per share of $0.45 for the quarter ended August 31, 2018 and $0.71 for the quarter ended November 30, 2017.

Investment portfolio activity for the quarter ended November 30, 2018:

• Cost of investments made during the period: $73.7 million
• Principal repayments and amortizations during the period: $23.4 million

Additional Financial Information

For the fiscal quarter ended November 30, 2018, Saratoga Investment reported net investment income of $5.1 million, or $0.69 on a weighted average per share basis, and a net realized and unrealized loss on investments of $1.5 million, or $0.20 on a weighted average per share basis, resulting in a net increase in net assets from operations of $3.7 million, or $0.49 on a weighted average per share basis. The $1.5 million net loss on investments was comprised of $1.0 million in net unrealized depreciation on investments, $0.4 million of net deferred tax expense on unrealized gains in Saratoga Investment’s blocker subsidiaries, and $0.07 million in net realized loss from investments. The $1.0 million unrealized depreciation is primarily due to (i) $1.6 million of unrealized depreciation on Saratoga Investment’s CLO equity investment, mostly reflecting the transaction fees of the refinancing and upsizing post quarter-end , (ii) $0.4 million unrealized depreciation on the Company’s Roscoe Medical investment, and (iii) $0.7 million unrealized depreciation on the Company’s Health Media Network investment, reflecting a partial reduction of previously recognized unrealized gains to reflect the value that has actually been realized subsequent to quarter-end. These depreciations were offset by $1.2 million unrealized appreciation on the Company’s Easy Ice investment, most notably the participating preferred equity, and $0.7 million unrealized appreciation on the Company’s Netreo Holdings investment. This compared to the fiscal quarter ended November 30, 2017 with net investment income of $3.0 million, or $0.50 on a weighted average per share basis, and a net realized and unrealized gain on investments of $1.2 million, or $0.21 on a weighted average per share basis, resulting in a net increase in net assets from operations of $4.3 million, or $0.71 on a weighted average per share basis. The $1.2 million net gain on investments consisted of $1.2 million in net unrealized appreciation on investments and $0.02 million in net realized gain.

Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income was $4.8 million and $3.3 million for the quarters ended November 30, 2018 and November 30, 2017, respectively – an increase of $1.5 million year-over-year, or 49.0%.

Total expenses, excluding interest and debt financing expenses, base management fees and incentive management fees, increased from $1.2 million for the quarter ended November 30, 2017 to $1.3 million for the quarter ended November 30, 2018, decreasing from 1.4% to 1.2% of average total assets.

Portfolio and Investment Activity

As of November 30, 2018, the fair value of Saratoga Investment’s portfolio was $443.8 million (excluding $4.2 million in cash and cash equivalents), principally invested in 36 portfolio companies and one collateralized loan obligation fund (“CLO”). The overall portfolio composition consisted of 53.6% of first lien term loans, 29.2% of second lien term loans, 5.0% of unsecured term loans, 3.5% of subordinated notes in a CLO, and 8.7% of common equity.

For the fiscal quarter ended November 30, 2018, Saratoga Investment invested $73.7 million in new or existing portfolio companies and had $23.4 million in aggregate amount of exits and repayments, resulting in net investment of $50.4 million for the quarter.

As of November 30, 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 11.2% on first lien term loans, 12.1% on second lien term loans, 10.1% on unsecured term loans, 13.3% on CLO subordinated notes, and 3.4% on equity interests.

As of November 30, 82.6% 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 November 30, 2018, assuming that the investments as of November 30, 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 $3.3 million to interest income over twelve months.

Liquidity and Capital Resources

As of November 30, 2018, Saratoga Investment had $11.8 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 $150.0 million SBA debentures outstanding, $114.5 million of baby bonds (fair value of $116.7 million) issued and an aggregate of $4.2 million in cash and cash equivalents.

With $33.2 million available under the credit facility and the $4.2 million of cash and cash equivalents, Saratoga Investment has a total of $37.4 million of undrawn borrowing capacity and cash and cash equivalents available as of November 30, 2018. The proceeds from the ATM and DRIP programs totaled $0.8 million of equity investments in the third fiscal quarter of 2019. Saratoga Investment also has the ability to issue additional equity or baby bonds through the existing shelf registration statement.

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. and B. Riley FBR, 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 November 30, 2018, the Company sold 358,496 shares for gross proceeds of $8.1 million at an average price of $22.54 for aggregate net proceeds of $8.0 million (net of transaction costs).

On December 3, 2018, the Company completed the third refinancing of the Saratoga CLO. This refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity to January 2030. A non-call period of January 2020 was also added. In addition and as part of the refinancing, the CLO has also been upsized to approximately $500 million from its prior $300 million in assets. As part of this refinancing and upsizing, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the CLO, as well as also purchased $2.5 million in aggregate principal amount of the Class F notes tranche and $7.5 million in aggregate principal amount of the Class G notes at par. Concurrently, the existing $4.5 million of Class F notes and $20.0 million CLO 2013-1 Warehouse Loan was repaid.

Dividend

On November 27, 2018, Saratoga Investment announced a dividend of $0.53 per share for the fiscal quarter ended November 30, 2018, payable on January 2, 2019, to all stockholders of record at the close of business on December 17, 2018. Since the end of fiscal year 2018, Saratoga Investment has paid three dividends, $0.52 per share for the quarter ended August 31, 2018, $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.

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 both fiscal years 2018 and 2019, this share repurchase plan was extended for another year, most recently through January 2020, at the same level of approval. As of November 30, 2018, Saratoga purchased 218,491 shares of common stock, at the average price of $16.84 for approximately $3.7 million pursuant to this repurchase plan.

2019 Fiscal Third Quarter Conference Call/Webcast Information

When:

Thursday, January 10, 2019, 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 10, 2019 through 1:00 p.m. ET on Thursday, January 17, 2019 by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada), passcode for both replay numbers: 7596939.

Webcast:

Interested parties may access a simultaneous webcast of the call and find the Q3 2019 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 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 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 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 $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.  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

		November 30, 2018				February 28, 2018
		(unaudited)
ASSETS
Investments at fair value
Non-control/Non-affiliate investments (amortized cost of $349,141,826 and $281,534,277, respectively)		$	351,241,148			$	286,061,722
Affiliate investments (amortized cost of $18,474,051 and $18,358,611, respectively)			11,150,764				12,160,564
Control investments (amortized cost of $75,734,853 and $39,797,229, respectively)			81,420,325				44,471,767
Total investments at fair value (amortized cost of $443,350,730 and $339,690,117, respectively)			443,812,237				342,694,053
Cash and cash equivalents			322,116				3,927,579
Cash and cash equivalents, reserve accounts			3,920,828				9,849,912
Interest receivable (net of reserve of $468,234 and $1,768,021, respectively)			4,701,574				3,047,125
Management and incentive fee receivable			167,218				233,024
Other assets			669,747				584,668
Deferred tax asset			444,497				-
Receivable from unsettled trades			6,463				-
Total assets		$	454,044,680			$	360,336,361
LIABILITIES
Revolving credit facility		$	11,750,000			$	-
Deferred debt financing costs, revolving credit facility			(627,950	)			(697,497	)
SBA debentures payable			150,000,000				137,660,000
Deferred debt financing costs, SBA debentures payable			(2,516,343	)			(2,611,120	)
2023 Notes payable			74,450,500				74,450,500
Deferred debt financing costs, 2023 notes payable			(2,017,449	)			(2,316,370	)
2025 Notes payable			40,000,000				-
Deferred debt financing costs, 2025 notes payable			(1,559,505	)			-
Base management and incentive fees payable			5,807,662				5,776,944
Deferred tax liability			919,557				-
Accounts payable and accrued expenses			1,493,944				924,312
Interest and debt fees payable			2,690,078				3,004,354
Directors fees payable			2,000				43,500
Due to manager			383,095				410,371
Total liabilities		$	280,775,589			$	216,644,994
Commitments and contingencies
NET ASSETS
Common stock, par value $.001, 100,000,000 common shares authorized, 7,490,183 and 6,257,029 common shares issued and outstanding, respectively		$	7,490			$	6,257
Capital in excess of par value			218,172,144				188,975,590
Total distributable loss			(44,910,543	)			(45,290,480	)
Total net assets			173,269,091				143,691,367
Total liabilities and net assets		$	454,044,680			$	360,336,361
NET ASSET VALUE PER SHARE		$	23.13			$	22.96
Certain prior year numbers have been adjusted to conform with the SEC final rules on disclosure updates and simplification effective November 5, 2018.
Asset Coverage Ratio			237.3	%			293.0	%

Saratoga Investment Corp.
Consolidated Statements of Operations
(unaudited)

		For the three months ended
		November 30, 2018				November 30, 2017
INVESTMENT INCOME
Interest from investments
Interest income:
Non-control/Non-affiliate investments		$	9,248,664			$	6,817,026
Affiliate investments			239,781				221,291
Control investments			941,942				1,017,821
Payment-in-kind interest income:
Non-control/Non-affiliate investments			260,440				268,306
Affiliate investments			41,269				31,333
Control investments			1,112,135				535,031
Total interest from investments			11,844,231				8,890,808
Interest from cash and cash equivalents			13,657				6,777
Management fee income			380,765				376,446
Incentive fee income			147,602				209,434
Other income			446,758				42,265
Total investment income			12,833,013				9,525,730
OPERATING EXPENSES
Interest and debt financing expenses			3,613,531				2,758,900
Base management fees			1,849,220				1,485,415
Incentive management fees			923,651				1,054,618
Professional fees			407,422				388,210
Administrator expenses			500,000				437,500
Insurance			62,197				64,577
Directors fees and expenses			60,000				43,000
General & administrative			354,029				299,627
Income tax benefit			(75,978	)			-
Excise tax credit			-				-
Other expense			-				(21,628	)
Total operating expenses			7,694,072				6,510,219
NET INVESTMENT INCOME			5,138,941				3,015,511
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments:
Non-control/Non-affiliate investments			(67,164	)			20,770
Control investments			-				166
Net realized gain (loss) from investments			(67,164	)			20,936
Net change in unrealized appreciation (depreciation) on investments:
Non-control/Non-affiliate investments			(1,645,666	)			2,429,168
Affiliate investments			206,064				(804,483	)
Control investments			408,489				(398,142	)
Net change in unrealized appreciation (depreciation) on investments			(1,031,113	)			1,226,543
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments			(371,581	)			-
Net realized and unrealized gain (loss) on investments			(1,469,858	)			1,247,479
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	3,669,083			$	4,262,990
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE		$	0.49			$	0.71
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED			7,480,134				6,040,311

Saratoga Investment Corp.
Consolidated Statements of Operations
(unaudited)

		For the nine months ended
		November 30, 2018				November 30, 2017
INVESTMENT INCOME
Interest from investments
Interest income:
Non-control/Non-affiliate investments		$	24,701,303			$	19,479,392
Affiliate investments			720,738				663,115
Control investments			3,340,180				3,849,287
Payment-in-kind interest income:
Non-control/Non-affiliate investments			621,462				773,582
Affiliate investments			110,898				48,287
Control investments			2,271,359				1,004,764
Total interest from investments			31,765,940				25,818,427
Interest from cash and cash equivalents			41,405				20,351
Management fee income			1,129,921				1,128,084
Incentive fee income			493,846				477,087
Other income			1,292,693				1,042,895
Total investment income			34,723,805				28,486,844
OPERATING EXPENSES
Interest and debt financing expenses			9,202,737				8,245,350
Base management fees			5,027,341				4,358,230
Incentive management fees			2,803,784				2,940,350
Professional fees			1,418,472				1,179,913
Administrator expenses			1,395,833				1,208,333
Insurance			189,916				196,907
Directors fees and expenses			230,500				154,000
General & administrative			908,174				784,071
Income tax benefit			(684,520	)			-
Excise tax credit			(270	)			(14,738	)
Other expense			21,021				23,417
Total operating expenses			20,512,988				19,075,833
NET INVESTMENT INCOME			14,210,817				9,411,011
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments:
Non-control/Non-affiliate investments			145,007				(5,722,049	)
Control investments			-				63,720
Net realized gain (loss) from investments			145,007				(5,658,329	)
Net change in unrealized appreciation (depreciation) on investments:
Non-control/Non-affiliate investments			(2,428,123	)			4,776,523
Affiliate investments			(1,125,240	)			(59,289	)
Control investments			1,010,934				3,677,020
Net change in unrealized appreciation (depreciation) on investments			(2,542,429	)			8,394,254
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments			(1,159,581	)			-
Net realized and unrealized gain (loss) on investments			(3,557,003	)			2,735,925
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	10,653,814			$	12,146,936
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE		$	1.55			$	2.04
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED			6,887,544				5,952,086

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 nine months ended November 30, 2018 and November 30, 2017.

		For the three months ended November 30								For the nine months ended  November 30
		2018				2017				2018				2017
Net Investment Income		$	5,138,941			$	3,015,511			$	14,210,817			$	9,411,011
Changes in accrued capital gains incentive fee expense/reversal			(289,209	)			240,328				(600,061	)			478,003
Adjusted net investment income			4,849,732				3,255,839				13,610,756				9,889,014
Net investment income yield			11.9	%			8.9	%			11.4	%			9.5	%
Changes in accrued capital gains incentive fee expense/reversal			(0.7	%)			0.7	%			(0.5	%)			0.5	%
Adjusted net investment income yield (1)			11.2	%			9.6	%			10.9	%			10.0	%
Net investment income per share		$	0.69			$	0.50			$	2.06			$	1.58
Changes in accrued capital gains incentive fee expense/reversal		($	0.04	)		$	0.04			($	0.08	)		$	0.08
Adjusted net investment income per share (2)		$	0.65			$	0.54			$	1.98			$	1.66

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

Source: Saratoga Investment Corp