Released on October 9, 2023, Saratoga Investment Corp (SAR, Financial) announced its financial results for the 2024 fiscal second quarter. The company reported a 15% decrease in Net Investment Income (NII) per share from the previous quarter, though it marked an 80% increase over last year's second quarter. The adjusted NII per share remained unchanged from the last quarter and was up 86% from the previous year. This substantial YoY increase in earnings reflects growth in Assets under Management (AUM), stable overall portfolio performance, and margin improvement from rising rates on SAR's largely floating rate assets, with costs of financing liabilities remaining largely fixed.
Financial Highlights
The company's AUM stood at $1,098,945, an increase from $1,084,098 in the previous quarter and $954,664 in the same quarter last year. The Net Asset Value (NAV) was $362,079, up from $337,451 in the previous quarter and $337,213 in the same quarter last year. The company reported investment income of $35,514, up from $34,632 in the previous quarter and $21,853 in the same quarter last year. The net investment income per share was $1.15, down from $1.35 in the previous quarter but up from $0.64 in the same quarter last year.
CEO's Commentary
Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment, commented on the company's performance. He stated,
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."
Financial Analysis
The company's strong performance is reflected in its key performance indicators this past quarter, including sequential quarterly adjusted NII per share increases, current assets under management growing to $1.099 billion, and dividend increasing to 71c per share, up 31% from 54c per share in Q2 last year.
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 the company's performance is the high-quality nature, resilience, and balance of its $1.099 billion portfolio. 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.
