Saratoga Investment Corp. Q1 FY2026 earnings call

• Adjusted NII per share up 17.9% from previous quarter.
• Continued growth of NAV, strong return on equity.
• Announced base dividend of $0.25 per share per month or $0.75 per share for second quarter of fiscal 2026.
• Slower deal volume and M&A activity in lower middle market due to macro factors.
• Portfolio had multiple debt repayments, equity realization, healthy new originations.
• $968.3 million portfolio in high-quality nature.
• Net interest margin expanded meaningfully.
• Credit quality steady, 99.7% of credits in highest category.
• $6.4 million new equity raised through ATM program.
• Dry powder available totaled $430.3 million.
• AUM at fair value $968 million, invested in 46 portfolio companies, etc.
• CLO yield decreased, core BDC yield unchanged.
• Investments diversified through U.S. and various industries.
• 7.9% of portfolio consists of equity interest.
• Recently hired new personnel for business development.
• Portfolio companies healthy, fair value of core BDC portfolio 1.7% above cost.
• Deal flow increasing with business development efforts.

Adjusted NII per share increased 17.9% from previous quarter. NAV continued to grow. Return on equity beat industry average. Core BDC portfolio performed solidly. Adjusted NII per share was $0.66. Quarter end cash was $224 million. Portfolio fair value increased by $3.8 million. Core non-CLO portfolio was 1.7% above cost. Adjusted NII was $10.1 million this quarter, down 29.3% from last year and up 26.2% from last quarter. Weighted average interest rate on core BDC portfolio was 11.5%. Total expenses excluding certain items decreased $0.1 million to $2.8 million.

• No specific upward/downward revision mentioned clearly, but discussed focus on prudent deployment of available capital into strong credit opportunities meeting high underwriting standards.
• Confident in experienced management team, robust pipeline, etc. to steadily increase portfolio size, quality, etc. over long term.
• Will be prudent in deploying significant available capital in volatile macro environment.

• Slower level of deal volume and M&A activity in lower middle market following recent tariff developments and slowdown in new debt issuances.
• Uncertainty in macro environment including geopolitical landscape and economic outlook.
• Redemptions and prepayments difficult to predict.
• Potential market dislocations affecting CLO BB investments.

Q: Erik Zwick on commitment to AUM expansion, prepayments visibility, spillover level, liability and funding side, CLO BB investments.

A: Christian Oberbeck and Michael Grisius discussed AUM expansion efforts, prepayments unpredictability, spillover level, flexibility in liability and funding, CLO BB investments being both primary and secondary and potential size.

Q: Robert Dodd on balance sheet liquidity, bias in using cash for deployments or paying down debt, color on quality deals ramping.

A: Christian Oberbeck and Henri Steenkamp and Michael Grisius talked about balance sheet liquidity flexibility, no bias in using cash, and ongoing efforts in business development and pipeline for quality deals.