Saratoga Investment (SAR) Q2 2026 earnings summary

Executive summary

• Net asset value (NAV) increased 3.6% sequentially to $410.5 million, with NAV per share up to $25.61; ROE for the last twelve months was 9.1%, above the industry average, and only one non-accrual investment remains, representing 0.2% of fair value.

• Adjusted net investment income (NII) for the quarter was $9.1 million, down 50.1% year-over-year and 10.5% sequentially, reflecting lower AUM, base rates, and non-recurrence of prior one-time income.

• Dividend declared at $0.75 per share for the quarter, up $0.01 year-over-year, with a 12.3% yield and transition to monthly payments.

• Portfolio fair value reached $995.3 million, with $200.8 million in cash available for investments or debt repayment.

• Portfolio credit quality remains strong, with 99.7% of loan investments at the highest internal rating and 84.3% in first lien debt.

Financial highlights

• Total investment income for the quarter was $30.6 million, down 28.8% year-over-year, mainly due to lower interest income and non-recurring items.

• Adjusted NII per share was $0.58, down 56.4% year-over-year and 12.1% sequentially; NII yield was 9.0%.

• NAV per share increased by $0.09 sequentially, driven by $0.27 in net realized/unrealized gains, offset by $0.17 under-earning of the dividend.

• Weighted average shares outstanding increased to 15.8 million from 13.7 million a year ago.

• Return on equity (ROE) for the last twelve months was 9.1%, above the industry average of 7.3%.

Outlook and guidance

• Management expects long-term AUM growth despite recent repayments and muted M&A activity, with a healthy pipeline and three new portfolio company originations and follow-ons totaling $52.3 million post quarter-end.

• Significant available capital positions the company to capitalize on future opportunities as deal flow improves.

• Dividend level to be evaluated quarterly, balancing short-term earnings with long-term growth.

• Management remains cautious but optimistic, citing prudent underwriting amid ongoing macroeconomic and geopolitical uncertainty.