On October 9, 2023, Saratoga Investment Corp (SAR, Financial) announced its financial results for the 2024 fiscal second quarter. Despite a 15% decrease from the previous quarter, Net Investment Income (NII) per share saw a significant 80% increase over the same quarter last year. Adjusted NII per share remained unchanged from the last quarter but was up 86% from last year. The substantial YoY increase in earnings reflects growth in Assets under Management (AUM), stable overall portfolio performance, and margin improvement from rising rates on Saratoga Investment’s largely floating rate assets, with costs of financing liabilities remaining largely fixed.
Financial Highlights
The company's AUM stood at $1,098,945, up from $954,664 in the same period last year. The NAV was $362,079, compared to $337,213 in the previous year. Investment income for the quarter was $35,514, a significant increase from $21,853 in the same quarter last year. Net Investment Income per share was $1.15, up from $0.64 in the previous year. Adjusted Net Investment Income per share was $1.08, up from $0.58 in the same period last year. Earnings per share stood at $0.65, up from $0.08 in the previous year.
Company's Performance Analysis
Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment, commented on the company's performance, stating,
Rising interest rates are producing increased margins on our growing portfolio, and both the general contraction of available credit and our ongoing investment in sponsor relationships are creating an abundant flow of attractive investment opportunities from high-quality sponsors at competitive pricing, terms, and absolute rates."He further added that Saratoga's strong and improving performance is reflected in its continued strong key performance indicators this past quarter.
Balance Sheet Improvement
To further support the growth of its portfolio companies, Saratoga Investment raised $34 million in equity at net asset value since the end of Q1, with $24 million of equity raised in Q2 and another $10 million since quarter-end. This equity supports the company's strong originations, strengthens its capital structure, and reduces its regulatory leverage.
Portfolio Quality
At the foundation of Saratoga's performance is the high-quality nature, resilience, and balance of its $1.099 billion portfolio, marked down just 1.4% overall as compared to its cost. The company's portfolio remains strong, with 84.6% of the portfolio in first liens, and a continued high level of investment quality in loan investments, with 98.2% of its loans this quarter at its highest internal rating.
Looking Ahead
As Saratoga navigates through this challenging and volatile environment, it remains confident in its experienced management team, high underwriting standards, and ability to steadily grow portfolio size and maintain quality and investment performance over the long term.
