Saratoga Investment (SAR) investor relations material

Executive summary

• Assets under management grew 1.6% sequentially to $1.126 billion, with net originations of $31 million and two new portfolio companies added; portfolio now includes 113 investments across 50 companies.

• NAV per share declined 4.9% sequentially to $23.23, with net assets at $378.5 million, primarily due to unrealized depreciation and under-earning of the dividend.

• Return on equity (LTM) was 4.0%, outperforming the BDC industry average of 2.4%.

• Portfolio fair value remained within 0.2% of cost, with 98.3% of loans at the highest internal rating and only two on non-accrual, representing 1.2% of cost, well below the industry average of 3.7%.

• Adjusted NII per share was $0.47, down from $0.53 last quarter, reflecting lower short-term rates and tighter spreads.

Financial highlights

• Total investment income for the quarter was $30.8 million, down 4.8% year-over-year and 1.1% sequentially.

• Adjusted NII for the quarter was $7.6 million, a 25.1% decrease year-over-year and 11.0% sequentially.

• NAV decreased by $17.9 million year-over-year and $17.7 million sequentially, ending at $378.5 million.

• Weighted average yield on the portfolio was 9.8%, with first lien loans yielding 10.5%.

• Portfolio marked down $15.0 million, mainly due to unrealized depreciation in the non-CLO core portfolio and company-specific performance.

Outlook and guidance

• Management expects continued robust deal flow, improving spreads on new originations, and ongoing portfolio growth supported by strong liquidity and new credit facilities.

• Dividend guidance for Q2 FY2027 is $0.75 per share, representing a 14.0% yield based on recent stock price.

• Management is confident in closing the gap between NII and dividend over the next four to five quarters.

• Focus remains on disciplined underwriting, capital preservation, and maintaining strong asset coverage amid macro uncertainty.

• Pipeline remains strong, with $47 million in follow-ons closed post quarter-end.