Saratoga Investment Corp. Announces Fiscal First Quarter 2020 Financial Results
Summary Financial Information
The Company’s summarized financial information is as follows:
| For the quarter ended and as of May 31, 2019 | For the quarter ended and as of February 28, 2019 | For the quarter ended and as of May 31, 2018 | ||||||||||
| ($ in thousands except per share) | ||||||||||||
| AUM | 409,451 | 402,020 | 343,351 | |||||||||
| NAV | 186,784 | 180,875 | 144,845 | |||||||||
| NAV per share | 24.06 | 23.62 | 23.06 | |||||||||
| Investment Income | 12,751 | 12,984 | 10,488 | |||||||||
| Net Investment Income per share | 0.48 | 0.54 | 0.63 | |||||||||
| Adjusted Net Investment Income per share | 0.60 | 0.66 | 0.64 | |||||||||
| Earnings per share | 0.99 | 1.04 | 0.61 | |||||||||
| Dividends per share (declared) | 0.55 | 0.54 | 0.51 | |||||||||
| Return on Equity – last twelve months | 11.7 | % | 10.6 | % | 14.9 | % | ||||||
| – annualized quarter | 16.6 | % | 17.7 | % | 10.7 | % | ||||||
| Originations | 27,369 | 29,340 | 35,204 | |||||||||
| Repayments | 26,917 | 77,042 | 36,540 | |||||||||
“Highlights from our fiscal 2020 first quarter include LTM return on equity of 11.7%, an increase in NAV per share of
As of
For the three months ended
As compared to the three months ended
Net investment income on a weighted average per share basis was
Net investment income yield as a percentage of average net asset value (“Net Investment Income Yield”) was 8.0% for the quarter ended
Net Asset Value (“NAV”) was
- For the three months ended
May 31, 2019 ,$3.7 million of net investment income and$4.0 million of net unrealized appreciation were earned, partially offset by$0.02 million deferred tax expense on net unrealized gains in Saratoga Investment’s blocker subsidiaries and$4.2 million of dividends declared. In addition,$0.7 million of stock dividend distributions were made through the Company’s dividend reinvestment plan (“DRIP”), and 76,448 shares were sold through the Company’s At-the-Market (“ATM”) equity offering during the quarter.
NAV per share was
- For the three months ended
May 31, 2019 , NAV per share increased by$0.44 per share, primarily reflecting the$3.5 million , or$0.45 per share increase in net assets (net of the$0.54 dividend paid during the first fiscal quarter of 2020). This was slightly offset by the$0.01 dilutive impact of the quarter’s 107,688 share issuances from the DRIP and ATM programs. The Company made no purchases of common stock in the open market during the quarter.
Return on equity for the last twelve months ended
Earnings per share for the quarter ended
Investment portfolio activity for the quarter ended
- Cost of investments made during the period:
$27.4 million , including investments in three new portfolio companies - Principal repayments during the period:
$26.9 million
Additional Financial Information
For the fiscal quarter ended
The
Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income was
Total expenses, excluding interest and debt financing expenses, base management fees and incentive management fees, increased from
Portfolio and Investment Activity
As of
For the fiscal quarter ended
As of
Liquidity and Capital Resources
As of
With
On
On
Dividend
On
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 fiscal years 2018 and 2019, this share repurchase plan was extended for another year at the same level of approval, currently through
2020 Fiscal First Quarter Conference Call/Webcast Information
| When: | Thursday, July 11, 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, July 11, 2019 through 1:00 p.m. ET on Thursday, July 18, 2019 by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada), passcode for both replay numbers: 4992926. | |
| Webcast: | Interested parties may access a simultaneous webcast of the call and find the Q1 2020 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 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 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. 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
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
Consolidated Statements of Assets and Liabilities
| May 31, 2019 | February 28, 2019 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Investments at fair value | ||||||||
| Non-control/Non-affiliate investments (amortized cost of $308,061,752 and $307,136,188, respectively) | $ | 309,830,182 | $ | 306,511,427 | ||||
| Affiliate investments (amortized cost of $18,557,809 and $18,514,716, respectively) | 11,676,118 | 11,463,081 | ||||||
| Control investments (amortized cost of $78,739,023 and $76,265,189, respectively) | 87,945,041 | 84,045,212 | ||||||
| Total investments at fair value (amortized cost of $405,358,584 and $401,916,093, respectively) | 409,451,341 | 402,019,720 | ||||||
| Cash and cash equivalents | 37,183,604 | 30,799,068 | ||||||
| Cash and cash equivalents, reserve accounts | 23,812,643 | 31,295,326 | ||||||
| Interest receivable (net of reserve of $873,414 and $647,210, respectively) | 3,815,502 | 3,746,604 | ||||||
| Due from affiliate (See Note 6) | 1,243,197 | 1,673,747 | ||||||
| Management and incentive fee receivable | 279,828 | 542,094 | ||||||
| Other assets | 550,093 | 595,543 | ||||||
| Total assets | $ | 476,336,208 | $ | 470,672,102 | ||||
| LIABILITIES | ||||||||
| Revolving credit facility | $ | - | $ | - | ||||
| Deferred debt financing costs, revolving credit facility | (581,922 | ) | (605,189 | ) | ||||
| SBA debentures payable | 150,000,000 | 150,000,000 | ||||||
| Deferred debt financing costs, SBA debentures payable | (2,274,866 | ) | (2,396,931 | ) | ||||
| 2023 Notes payable | 74,450,500 | 74,450,500 | ||||||
| Deferred debt financing costs, 2023 notes payable | (1,819,617 | ) | (1,919,620 | ) | ||||
| 2025 Notes payable | 60,000,000 | 60,000,000 | ||||||
| Deferred debt financing costs, 2025 notes payable | (2,320,888 | ) | (2,377,551 | ) | ||||
| Base management and incentive fees payable | 7,522,070 | 6,684,785 | ||||||
| Deferred tax liability | 762,783 | 739,716 | ||||||
| Accounts payable and accrued expenses | 1,430,701 | 1,615,443 | ||||||
| Interest and debt fees payable | 1,978,494 | 3,224,671 | ||||||
| Directors fees payable | 63,500 | 62,000 | ||||||
| Due to manager | 341,752 | 319,091 | ||||||
| Total liabilities | $ | 289,552,507 | $ | 289,796,915 | ||||
| Commitments and contingencies (See Note 8) | ||||||||
| NET ASSETS | ||||||||
| Common stock, par value $.001, 100,000,000 common shares | ||||||||
| authorized, 7,764,844 and 7,657,156 common shares issued and outstanding, respectively | $ | 7,765 | $ | 7,657 | ||||
| Capital in excess of par value | 205,988,350 | 203,552,800 | ||||||
| Total distributable earnings (loss) | (19,212,414 | ) | (22,685,270 | ) | ||||
| Total net assets | 186,783,701 | 180,875,187 | ||||||
| Total liabilities and net assets | $ | 476,336,208 | $ | 470,672,102 | ||||
| NET ASSET VALUE PER SHARE | $ | 24.06 | $ | 23.62 | ||||
| Asset Coverage Ratio | 238.9 | % | 234.5 | % | ||||
Consolidated Statements of Operations
(unaudited)
| For the three months ended | ||||||||
| May 31, 2019 | May 31, 2018 | |||||||
| INVESTMENT INCOME | ||||||||
| Interest from investments | ||||||||
| Interest income: | ||||||||
| Non-control/Non-affiliate investments | $ | 8,527,740 | $ | 7,405,909 | ||||
| Affiliate investments | 249,325 | 239,350 | ||||||
| Control investments | 1,648,146 | 1,146,665 | ||||||
| Payment-in-kind interest income: | ||||||||
| Non-control/Non-affiliate investments | 151,897 | 216,010 | ||||||
| Affiliate investments | 40,150 | 34,147 | ||||||
| Control investments | 985,869 | 564,857 | ||||||
| Total interest from investments | 11,603,127 | 9,606,938 | ||||||
| Interest from cash and cash equivalents | 51,359 | 16,293 | ||||||
| Management fee income | 629,516 | 385,194 | ||||||
| Incentive fee income | - | 199,183 | ||||||
| Other income | 467,182 | 280,410 | ||||||
| Total investment income | 12,751,184 | 10,488,018 | ||||||
| OPERATING EXPENSES | ||||||||
| Interest and debt financing expenses | 3,864,576 | 2,722,792 | ||||||
| Base management fees | 1,812,169 | 1,532,468 | ||||||
| Incentive management fees | 2,113,169 | 1,072,612 | ||||||
| Professional fees | 395,126 | 542,797 | ||||||
| Administrator expenses | 500,000 | 437,500 | ||||||
| Insurance | 64,619 | 63,859 | ||||||
| Directors fees and expenses | 60,000 | 95,500 | ||||||
| General & administrative | 258,601 | 347,850 | ||||||
| Income tax expense (benefit) | 2,136 | (267,310 | ) | |||||
| Excise tax expense (credit) | - | (270 | ) | |||||
| Other expense | - | 12,572 | ||||||
| Total operating expenses | 9,070,396 | 6,560,370 | ||||||
| NET INVESTMENT INCOME | 3,680,788 | 3,927,648 | ||||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||
| Net realized gain (loss) from investments: | ||||||||
| Non-control/Non-affiliate investments | - | 212,008 | ||||||
| Net realized gain (loss) from investments | - | 212,008 | ||||||
| Net change in unrealized appreciation (depreciation) on investments: | ||||||||
| Non-control/Non-affiliate investments | 2,393,191 | 303,705 | ||||||
| Affiliate investments | 169,944 | (475,562 | ) | |||||
| Control investments | 1,425,995 | 815,062 | ||||||
| Net change in unrealized appreciation (depreciation) on investments | 3,989,130 | 643,205 | ||||||
| Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments | (20,930 | ) | (940,546 | ) | ||||
| Net realized and unrealized gain (loss) on investments | 3,968,200 | (85,333 | ) | |||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 7,648,988 | $ | 3,842,315 | ||||
| WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE | $ | 0.99 | $ | 0.61 | ||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 7,746,187 | 6,275,494 | ||||||
Supplemental Information Regarding Adjusted Net Investment Income, Adjusted Net Investment Income Yield and Adjusted Net Investment Income per share
On a supplemental basis,
| For the three months ended May 31, |
||||||||
| 2019 | 2018 | |||||||
| Net Investment Income | $ | 3,680,788 | $ | 3,927,648 | ||||
| Changes in accrued capital gains incentive fee expense/reversal | 954,007 | 72,266 | ||||||
| Adjusted net investment income | 4,634,795 | 3,999,914 | ||||||
| Net investment income yield | 8.0 | % | 10.9 | % | ||||
| Changes in accrued capital gains incentive fee expense/reversal | 2.1 | % | 0.2 | % | ||||
| Adjusted net investment income yield (1) | 10.1 | % | 11.1 | % | ||||
| Net investment income per share | $ | 0.48 | $ | 0.63 | ||||
| Changes in accrued capital gains incentive fee expense/reversal | $ | 0.12 | $ | 0.01 | ||||
| Adjusted net investment income per share (2) | $ | 0.60 | $ | 0.64 | ||||
| (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. 212-906-7800Roland Tomforde Broadgate Consultants 212-232-2222
Source: Saratoga Investment Corp