Saratoga Investment Corp. · NYSE:SAR
Saratoga Investment — Q3 2025 Earnings Presentation
29 slides from Saratoga Investment's earnings presentation, Jan 9, 2025
Slide 1: Saratoga Investment Corp. Fiscal Third Quarter 2025 Shareholder Presentation
Saratoga Investment Corp. Fiscal Third Quarter 2025 Shareholder Presentation January 9, 2025
Slide 2: Steady Long-Term Performance in Q3 2025
Steady Long-Term Performance in Q3 2025 Fiscal Third Quarter 2025 Highlights: Continued high quality portfolio and solid performance • Investment quality remains solid o 99.7% of loan investments with highest internal rating and two residual non-accruals (0.3% of fair value / 0.3% of cost) o Two rem
Slide 3: Saratoga Double Digit Long-Term ROE Substantially Ahead of the BDC Industry
Saratoga Double Digit Long-Term ROE Substantially Ahead of the BDC Industry Positive performance has led to SAR ROE beating the BDC industry eight of the past ten years, with a 10-year average that is almost 1.5x the industry and consistently positive every year 3
Slide 4: Consistent Long-Term Asset Growth and Solid Credit Quality
Consistent Long-Term Asset Growth and Solid Credit Quality Asset Base Expansion Trend Overall Credit Quality Remains Solid $1,200 100% $1,139 $1,000 $973 $960 $800 $818 $600 80% 98.3% 98.6% 99.0% 98.5% 98.1% 99.7% 96.8% 95.9% 94.2% 94.1% 93.3% $554 90.5% $486 $400 82.4% $402 $343 $284 $293 $200 $241
Slide 5: Q3 FY25: Strong Financial Foundation
Q3 FY25: Strong Financial Foundation Key Performance Metrics for the Fiscal Quarter For the quarter ended and as of November 30, 2023 August 31, 2024 November 30, 2024 ($ in millions except per share) $20,000 Net investment income $14.2 $18.2 $12.4 $15,000 $10,000 $20,000 1 Adjusted net investment i
Slide 6: Long-Term NAV and NAV Per Share Growth Despite Recent Discrete Weakness
Long-Term NAV and NAV Per Share Growth Despite Recent Discrete Weakness Net Asset Value and NAV per Share (FY 11 to Q3 FY25) NAV: 1% increase this quarter. 336% increase since Saratoga took over management. NAV/Share: 0.4% decrease this quarter. 23% increase since FY17 with increases 22 of the last
Slide 7: Quarterly Reconciliation of NII and NAV per Share
Quarterly Reconciliation of NII and NAV per Share (1) Reconciliation of Quarterly Adjusted NII per Share $(0.44) $0.09 $0.02 $(0.03) $(0.02) $(0.05) $1.33 $0.90 Adjusted NII per Non-recurrence of Decrease in Increase in Decrease in Increase in Net Dilutive Impact of Adjusted NII per Share for Q2 FY2
Slide 8: Dry Powder Remains Available
Dry Powder Remains Available Total Borrowing Available Remaining Fixed / (As of November 30, 2024) Outstanding Call Period Capacity Liquidity Maturity Period Floating Rate Encina Credit Facility $65.0 million $32.5 million $32.5 million 1 Year - Floating Live Oak Credit Facility $75.0 million $20.0
Slide 9: Portfolio Composition and Yield
Portfolio Composition and Yield Portfolio Composition – $960.1m Portfolio Yield – 10.8% (Based on Fair Values (Weighted Average as of November 30, 2024) Current Yield of Total Existing Portfolio) Structured Finance Structured Second Lien Securities Common Second Lien Finance Common Equity 0.6% 1.9%
Slide 10: Yield of BDC Grew With Rising Rates
Yield of BDC Grew With Rising Rates Weighted Average Current Yields Annual 13.4% 14.0% 11.8% 11.8% 11.1% 10.8% 11.1% 10.7% 9.3% 9.1% 7.7% 10.7% 11.4% 10.8% Totals1 12.6% $1,000 24.6% 7.4% $800 8.9% $ Millions $600 11.6% 12.6% 11.4% 12.1% 11.8% $400 14.6% 5.9% 5.3% 21.2% 9.5% 7.6% 14.0% 6.2% 16.4% 9.
Slide 11: Diversified Across Geography
Diversified Across Geography Investments Diversified Geographically Southwest 6.6% Northeast 12.9% West 13.7% Other 7.3% Midwest 34.4% Northwest 0.0% Southeast 25.1% 11
Slide 12: Diversified Across Industry
Diversified Across Industry Investments across 40 distinct industries Education Services, 2.9% Municipal Government Software, 3.1% Talent Acquisition Software, 2.9% Employee Collaboration Software, 2.8% Health/Fitness Franchisor, 3.1% Financial Services, 2.8% Restaurant, 3.3% Research Software, 2.7%
Slide 13: Net Realized Gains Help Protect Shareholder Capital
Net Realized Gains Help Protect Shareholder Capital Cumulative net realized gains reflect portfolio credit quality $ in thousands Net Realized Gains (all investments) $60,000 $42,877 $40,000 $32,446 $20,000 $13,398 $12,368 $8,495 $3,276 $4,874 $562 $1,271 $226 $22 $154 $0 FY13 FY14 FY15 FY16 FY17 FY
Slide 14: Exercising Disciplined Investment Judgment
Exercising Disciplined Investment Judgment SAR Debt Multiples/Deals Closed (2018-2024)(1) Portfolio leverage with non-recurring revenue underwriting is 5.56x(2)(3) 6/30/2024 9/30/2024 All Senior 3.87x 3.95x 1st Lien/Mezz 4.69x 5.40x Unitranche 5.52x 5.67x 8 9 11 12 9 9 2 New Portfolio Companies 24 2
Slide 15: Pipeline Remains Healthy But Reflects Market Slowdown
Pipeline Remains Healthy But Reflects Market Slowdown New business opportunities impacted by market opportunities and partially offset by follow-on investments 2020 ∆ 2021 ∆ 2022 ∆ 2023 ∆ 2024 Calendar(1) • ~60% of deal flow from private equity sponsors • ~40% of deals from private companies without
Slide 16: Demonstrated Strong Track Record
Demonstrated Strong Track Record Realized Investments(1)(2)(3) Unrealized Investments(1)(2)(3)(4) (Gross Unlevered IRR%) (Gross Unlevered IRR%) 25% $18.7m 16% 20.7% $361.3m $296.6m 20% $560.9m 13.2% 13.0% $1,202.6m $1,035.7m 16.8% $176.5m 12% $446.5m 15.0% 10.5% 15% 13.9% $377.4m 12.8% 7.7% 8% 10% 4
Slide 17: SBIC II Fully Funded - SBIC III Availability
SBIC II Fully Funded - SBIC III Availability (1)(2) $350 $300 $250 $76.7m $136.0m Cash debentures undrawn $200 $ Millions $150 $19.2m Cash $100 $189.1m $143.2m $50 $0 20% 15% SBIC II SBIC III 1) SBIC III cash available for new originations and follow-ons in existing license, with SBIC II cash only a
Slide 18: Long-Term Consistent Dividend Growth
Long-Term Consistent Dividend Growth • Established dividend Dividends Per Share* policy to pay regular quarterly cash dividends to stockholders pursuant to dividend reinvestment $0.74 $0.74 $0.74 $0.73 plan (“DRIP”) in 2014 $0.72 $0.71 $0.70 $0.69 $0.68 • Increased dividend by 211% since program $0.
Slide 19: SAR LTM Total Return Lagging BDC Index Creates Opportunity
SAR LTM Total Return Lagging BDC Index Creates Opportunity LTM Total Return (%) (December 2023 to December 2024) SAR +4% v BDC Index +13% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 SAR
Slide 20: BDC Total Return Comparison
-20 0 20 40 60 80 -50 -30 -10 -50 110 150 -10 10 50 70 90 30 70 30 RAND-US CGBD-US CGBD-US GLAD-US RAND-US RAND-US MAIN-US MAIN-US FDUS-US SSSS-US HTGC-US HTGC-US MRCC-US FDUS-US GLAD-US HTGC-US GLAD-US CCAP-US CGBD-US FSK-US MAIN-US PFX-US MFIC-US PNNT-US CCAP-US BCSF-US ARCC-US BXSL-US OBDC-US CSW
Slide 21: Differentiated Performance Despite Discrete Non-Accruals
Differentiated Performance Despite Discrete Non-Accruals Interest % on Portfolio LTM NII Yield LTM ROE Regulatory Debt/Equity 14.0% 10% 9.7% 180% 18% 10% 169.7% 12.3% 170% 11.8% 11.9% 15.7% 9% 9.2% 16% 12.0% 160% 9% 14% 9% 150% 10.0% 12.4% 12.3% 9% 140% 12% 9% 8.5% 130% 8% 8.0% 120% 114.5% 10% 8% 11
Slide 22: Establishing Competitive Edge vs. Other BDCs
Establishing Competitive Edge vs. Other BDCs Outstanding performance characteristics Increased quarterly dividend by 211% since program launched until Covid deferral; Latest dividend ► Strong long-term dividend declared of $0.74 per share for the quarter ended November 30, 2024, up 3% over prior yea
Slide 23: Objectives for the Future
Objectives for the Future • Expand our asset base without sacrificing credit quality while benefitting from scale • Increase our capacity to source, analyze, close and manage our investments by adding to our management team and processes • Utilize benefits of fully deploying diverse and available fi
Slide 24: Questions?
Questions? & K' SARATOGA Pt INVESTMENT CORP.
Slide 25: Appendix
& K' SARATOGA Pt INVESTMENT CORP.
Slide 26: KPIs – Balance Sheet – Q3 FY25
KPIs – Balance Sheet – Q3 FY25 FMV Inve stme nt FMV Investment Portfolio Po rtfo lio Pe rio d (in millio ns) (in millions) Q3-23 $ 982.0 $1,200.0 Q4-23 $ 972.6 $1,100.0 Q1-24 $ 1,084.1 Q2-24 $ 1,098.9 $1,000.0 Q3-24 $ 1,114.0 Q4-24 $ 1,138.8 $900.0 Q1-25 $ 1,095.6 Q2-25 $ 1,040.7 $800.0 Q3-23 Q4-23
Slide 27: KPIs – Income Statement – Q3 FY25
KPIs – Income Statement – Q3 FY25 Net Interest Margin Net Interest Margin Excluding CLO Period (in millions) (in millions) Q3-23 $ 14.5 $28.0 Q4-23 $ 15.2 $26.0 Q1-24 $ 17.5 $24.0 Q2-24 $ 19.6 $22.0 Q3-24 $ 20.1 $20.0 Q4-24 $ 20.3 $18.0 $16.0 Q1-25 $ 21.3 $14.0 Q2-25 $ 26.2 Q3-23 Q4-23 Q1-24 Q2-24 Q
Slide 28: KPIs – Income Statement– Q3 FY25 (continued)
KPIs – Income Statement– Q3 FY25 (continued) EPS $2.00 Perio d EPS Q3-23 $ 0.51 $1.50 Q4-23 $ 1.62 Q1-24 $ (0.02) $1.00 Q2-24 $ 0.65 Q3-24 $ (0.31) $0.50 Q4-24 $ 0.39 Q1-25 $ 0.48 Q2-25 $ 0.97 $- Q3-25 $ 0.64 $(0.50) Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Q1-25 Q2-25 Q3-25 LTM ROE Perio d LTM ROE Q3-23
Slide 29: KPIs - SAR Net Interest Margin Continues to Grow
KPIs - SAR Net Interest Margin Continues to Grow SAR Net Interest Margin up 17% the past twelve months and over sixfold since taking over management Net Interest Margin $84,981 $78,605 $52,456 $38,127 $38,964 $33,364 $30,236 $24,185 $19,460 $17,309 $18,414 $14,096 $11,904 FY13 FY14 FY15 FY16 FY17 FY