Core Viewpoint - Saratoga Investment Corp. has declared a base quarterly dividend of $0.75 per share for the third quarter of fiscal 2026, maintaining a consistent dividend policy to provide attractive returns to shareholders [1][2]. Dividend Declaration - The declared dividends for the third quarter of fiscal 2026 are as follows: - September 2025: $0.25 per share, record date October 7, 2025, payment date October 23, 2025 - October 2025: $0.25 per share, record date November 4, 2025, payment date November 20, 2025 - November 2025: $0.25 per share, record date December 2, 2025, payment date December 18, 2025 [1][2]. Dividend Yield - The annualized dividend rate of $0.75 per share implies a 12.2% dividend yield based on the stock price of $24.54 as of September 9, 2025 [1]. Historical Dividend Distributions - The total dividend for fiscal year 2026 is projected to be $2.25 per share, with consistent quarterly distributions of $0.25 per share [3]. Company Overview - Saratoga Investment is a specialty finance company focused on providing customized financing solutions to U.S. middle-market businesses, primarily investing in senior and unitranche leveraged loans and mezzanine debt [5]. - The company is regulated as a business development company under the Investment Company Act of 1940 and is externally managed by Saratoga Investment Advisors, LLC [5]. - Saratoga Investment manages a $500 million collateralized loan obligation (CLO) fund and co-manages a joint venture fund with a $400 million CLO [5].

Core Points - Saratoga Investment Corp. is urging stockholders to vote their shares immediately to reduce solicitation costs associated with the upcoming Annual Meeting on September 25, 2025 [1][3] - The Company has distributed proxy materials for the Annual Meeting and stockholders as of July 29, 2025, are eligible to vote [1][2] Company Overview - Saratoga Investment is a specialty finance company that provides customized financing solutions primarily to U.S. middle-market businesses [4] - The Company invests mainly in senior and unitranche leveraged loans and mezzanine debt, with a focus on generating attractive risk-adjusted returns through current income and long-term capital appreciation [4] - Saratoga Investment is regulated as a business development company and is externally managed by Saratoga Investment Advisors, LLC [4] - The Company manages a $650 million collateralized loan obligation (CLO) fund that is in wind-down and co-manages a joint venture fund owning a $400 million CLO [4]

Earnings Performance - Saratoga Investment reported quarterly earnings of $0.66 per share, missing the Zacks Consensus Estimate of $0.69 per share, and down from $1.05 per share a year ago, representing an earnings surprise of -4.35% [1] - The company posted revenues of $32.32 million for the quarter ended May 2025, missing the Zacks Consensus Estimate by 1.36%, and down from $38.68 million year-over-year [2] Market Performance - Saratoga Investment shares have increased approximately 6.4% since the beginning of the year, outperforming the S&P 500's gain of 5.9% [3] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.73 on revenues of $33.12 million, and for the current fiscal year, it is $2.84 on revenues of $133.6 million [7] - The Zacks Industry Rank indicates that the Financial - SBIC & Commercial Industry is currently in the bottom 5% of over 250 Zacks industries, which may impact stock performance [8] Estimate Revisions - The estimate revisions trend for Saratoga Investment was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

[Fiscal First Quarter 2026 Financial Highlights](index=1&type=section&id=Fiscal%20First%20Quarter%202026%20Financial%20Highlights) Saratoga Investment Corp. delivered strong Q1 FY26 financial results, featuring increased Adjusted NII per share, NAV growth, and a robust ROE [Summary Financial Information](index=1&type=section&id=Summary%20Financial%20Information) Saratoga Investment Corp. reported a 17.9% increase in Adjusted NII per share and a 0.9% increase in NAV from the previous quarter for Q1 fiscal 2026, achieving a quarterly ROE of 14.1% - Adjusted NII per share increased by **17.9%** from the previous quarter, and NAV increased by **0.9%**[2](index=2&type=chunk) - Quarterly ROE was **14.1%**, significantly above the BDC industry average of **7.0%**[2](index=2&type=chunk) Key Financial Metrics (Q1 FY26 vs. Q4 FY25 vs. Q1 FY25) | Metric | May 31, 2025 ($ thousands) | Feb 28, 2025 ($ thousands) | May 31, 2024 ($ thousands) | | :--- | :--- | :--- | :--- | | Assets Under Management (AUM) | 968,318 | 978,078 | 1,095,559 | | Net Asset Value (NAV) | 396,369 | 392,666 | 367,855 | | NAV per share | 25.52 | 25.86 | 26.85 | | Total Investment Income | 32,319 | 31,295 | 38,678 | | Net Investment Income (NII) per share | 0.66 | 0.56 | 1.05 | | Adjusted NII per share | 0.66 | 0.56 | 1.05 | | Earnings per share | 0.91 | (0.05) | 0.48 | | Dividends per share (declared) | 0.75 | 0.74 | 0.74 | | Return on Equity – annualized quarter | 14.1% | (0.7%) | 7.2% | | Originations | 50,086 | 41,802 | 39,301 | | Repayments | 64,330 | 15,867 | 75,703 | [CEO Commentary and Business Outlook](index=1&type=section&id=Christian%20L.%20Oberbeck,%20Chairman%20and%20Chief%20Executive%20Officer%20of%20Saratoga%20Investment,%20commented) The CEO highlighted strong Q1 FY26 performance, including increased adjusted NII per share, NAV growth, and a robust ROE, while maintaining a high-quality portfolio and improving net interest margin - Adjusted NII per share increased by **17.9%** from the previous quarter, and NAV continued to grow, with a strong return on equity beating the industry average[3](index=3&type=chunk) - Announced a base dividend of **$0.25 per share** per month, totaling **$0.75 per share** for Q2 FY26, representing an **11.8%** yield[4](index=4&type=chunk) - Originated **$50.1 million** in two new portfolio companies and six follow-ons, alongside **$64.3 million** in repayments and an equity realization generating **$2.9 million** in realized gains[4](index=4&type=chunk)[5](index=5&type=chunk) - Net interest margin expanded from **$13.7 million** last quarter to **$15.6 million**, driven by increased non-CLO interest income and decreased interest expense[6](index=6&type=chunk) - Overall credit quality remained steady at **99.7%** of credits rated in the highest category, with **86.9%** of investments in first lien debt[6](index=6&type=chunk) [Detailed Financial Performance Analysis](index=3&type=section&id=Discussion%20of%20Financial%20Results%20for%20the%20Quarter%20ended%20May%2031,%202025) This section analyzes Saratoga Investment Corp.'s financial performance, detailing trends in AUM, investment income, NII, NAV, and ROE [Assets Under Management (AUM)](index=3&type=section&id=AUM%20as%20of%20May%2031,%202025) AUM decreased by 11.6% year-over-year and 1.0% quarter-over-quarter, primarily due to significant net repayments in the last six months AUM Trends | Period | AUM ($ millions) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | May 31, 2025 | $968.3 | -11.6% | -1.0% | | May 31, 2024 | $1,095.0 | - | - | | Feb 28, 2025 | $978.1 | - | - | [Total Investment Income](index=4&type=section&id=Total%20investment%20income%20for%20the%20three%20months%20ended%20May%2031,%202025) Total investment income decreased by 16.4% YoY but increased by 3.3% QoQ, with the weighted average interest rate on the core BDC portfolio remaining stable QoQ at 11.5% Total Investment Income Trends | Period | Total Investment Income ($ millions) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | May 31, 2025 | $32.3 | -16.4% | +3.3% | | May 31, 2024 | $38.7 | - | - | | Feb 28, 2025 | $31.3 | - | - | - Weighted average interest rate on the core BDC portfolio was **11.5%** as of May 31, 2025, unchanged QoQ but down from **12.6%** YoY due to SOFR base rate decreases[8](index=8&type=chunk) [Operating Expenses (Excluding Certain Items)](index=4&type=section&id=Total%20expenses%20for%20the%20quarter%20ended%20May%2031,%202025) Total operating expenses (excluding interest, debt financing, management/incentive fees, and taxes) decreased slightly YoY to $2.8 million but increased QoQ, remaining at 0.8% of average total assets Total Operating Expenses (Excluding Certain Items) | Period | Expenses ($ millions) | YoY Change | QoQ Change | % of Avg Total Assets (Annualized) | | :--- | :--- | :--- | :--- | :--- | | May 31, 2025 | $2.8 | -$0.1 | +$1.4 | 0.8% | | May 31, 2024 | $2.9 | - | - | 1.0% | | Feb 28, 2025 | $1.4 | - | - | 0.8% | [Net Investment Income (NII) and Adjusted NII](index=4&type=section&id=Adjusted%20NII%20for%20the%20quarter%20ended%20May%2031,%202025) Adjusted NII decreased by 29.3% YoY to $10.1 million but increased by 26.2% QoQ, primarily due to the non-recurrence of an annual excise tax Adjusted NII Trends | Period | Adjusted NII ($ millions) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | May 31, 2025 | $10.1 | -29.3% | +26.2% | | May 31, 2024 | $14.3 | - | - | | Feb 28, 2025 | $8.0 | - | - | - QoQ increase in Adjusted NII was primarily due to the non-recurrence of a **$2.4 million** annual excise tax recognized last quarter[8](index=8&type=chunk) [Net Asset Value (NAV) and NAV per Share](index=4&type=section&id=NAV%20was%20%24396.4%20million%20as%20of%20May%2031,%202025) NAV increased by $28.5 million YoY and $3.7 million QoQ, reaching $396.4 million, though NAV per share decreased to $25.52 NAV Trends | Period | NAV ($ millions) | YoY Change ($ millions) | QoQ Change ($ millions) | | :--- | :--- | :--- | :--- | | May 31, 2025 | $396.4 | +$28.5 | +$3.7 | | May 31, 2024 | $367.9 | - | - | | Feb 28, 2025 | $392.7 | - | - | NAV per Share Trends | Period | NAV per Share | | :--- | :--- | | May 31, 2025 | $25.52 | | May 31, 2024 | $26.85 | | Feb 28, 2025 | $25.86 | - Excluding a one-time **$0.50 per share** dividend impact from a policy change, NAV per share would have been **$26.02**, a **0.6%** increase[4](index=4&type=chunk) [Return on Equity (ROE)](index=4&type=section&id=Return%20on%20equity%20(%22ROE%22)%20for%20the%20last%20twelve%20months%20ended%20May%2031,%202025) LTM ROE increased to 9.3% from 4.4% YoY and 7.5% QoQ, with annualized quarterly ROE significantly improving to 14.1% ROE Trends | Metric | May 31, 2025 | May 31, 2024 | Feb 28, 2025 | | :--- | :--- | :--- | :--- | | LTM ROE | 9.3% | 4.4% | 7.5% | | Annualized Qtr ROE | 14.1% | 7.2% | (0.7%) | [Weighted Average Common Shares Outstanding](index=4&type=section&id=The%20weighted%20average%20common%20shares%20outstanding%20for%20the%20quarter%20ended%20May%2031,%202025) Weighted average common shares outstanding increased to 15.3 million, up from 14.5 million QoQ and 13.7 million YoY Weighted Average Common Shares Outstanding | Period | Shares Outstanding (millions) | | :--- | :--- | | May 31, 2025 | 15.3 | | Feb 28, 2025 | 14.5 | | May 31, 2024 | 13.7 | [Portfolio and Investment Activities](index=5&type=section&id=Portfolio%20and%20Investment%20Activity%20for%20the%20Quarter%20Ended%20May%2031,%202025) This section reviews Saratoga Investment Corp.'s portfolio, detailing fair value, investment activities, historical performance, and current composition [Portfolio Overview and Fair Value Changes](index=5&type=section&id=Fair%20value%20of%20Saratoga%20Investment's%20portfolio%20was%20%24968.3%20million) The portfolio fair value was $968.3 million, primarily invested across 46 companies, one CLO, one JV, and nine BB CLO debt investments, increasing by $3.8 million during the quarter - Portfolio fair value was **$968.3 million**, excluding **$224.3 million** in cash, invested across **46** portfolio companies, one CLO, one JV, and nine BB CLO debt investments[11](index=11&type=chunk) - Overall portfolio fair value increased by **$3.8 million** during the quarter, driven by **$2.6 million** net appreciation in core non-CLO portfolio, **$0.2 million** net unrealized appreciation in new BB CLO debt, **$0.6 million** net realized appreciation from an equity realization, and **$0.7 million** net realized gains from escrow payments[11](index=11&type=chunk) - As of quarter-end, total portfolio fair value was **2.1%** below cost, while the core non-CLO portfolio was **1.7%** above cost[5](index=5&type=chunk) [Investment Originations and Repayments](index=5&type=section&id=Cost%20of%20investments%20made%20during%20the%20quarter%20ended%20May%2031,%202025) New investments totaled $50.1 million, including two new portfolio companies and six follow-ons, while principal repayments amounted to $64.3 million Investment Activity (Q1 FY26) | Activity | Amount ($ millions) | Details | | :--- | :--- | :--- | | Originations | $50.1 | Two new portfolio companies, six follow-ons | | Repayments | $64.3 | One equity realization, four full repayments, five partial repayments | [Historical Investment Performance](index=5&type=section&id=Since%20taking%20over%20management%20of%20the%20BDC%20in%202010) Since 2010, the company has generated $1.26 billion in repayments and sales from Saratoga-originated investments, achieving a gross unlevered IRR of 15.0% - Since 2010, **$1.26 billion** in repayments and sales from Saratoga-originated investments, yielding a gross unlevered IRR of **15.0%**[11](index=11&type=chunk) - Total investments originated by Saratoga amount to **$2.36 billion** across **122** portfolio companies[11](index=11&type=chunk) [Portfolio Composition and Yields](index=5&type=section&id=The%20overall%20portfolio%20composition%20consisted%20of%2086.9%25%20of%20first%20lien%20term%20loans) The portfolio is predominantly composed of first lien term loans (86.9%), with a weighted average current yield on the total portfolio of 10.7% Portfolio Composition and Yields | Asset Type | % of Portfolio | Weighted Average Current Yield | | :--- | :--- | :--- | | First Lien Term Loans | 86.9% | 11.3% | | Second Lien Term Loans | 0.7% | 16.8% | | Unsecured Term Loans | 1.7% | 10.6% | | Structured Finance Securities | 2.8% | 15.6% | | Common Equity | 7.9% | 0.0% | | **Total Portfolio** | **100%** | **10.7%** | [Liquidity and Capital Management](index=5&type=section&id=Liquidity%20and%20Capital%20Resources) This section details Saratoga Investment Corp.'s liquidity and capital management, including outstanding borrowings, undrawn capacity, and share offering programs [Outstanding Borrowings](index=5&type=section&id=Outstanding%20Borrowings) As of May 31, 2025, Saratoga Investment had $70.0 million outstanding under its revolving credit facilities, $170.0 million in SBA debentures, and $269.4 million in listed baby bonds Outstanding Borrowings (May 31, 2025) | Debt Instrument | Amount ($ millions) | | :--- | :--- | | Revolving Credit Facilities | $70.0 | | SBA Debentures (SBIC II & III) | $170.0 | | Listed Baby Bonds | $269.4 | | Unsecured Unlisted Institutional Bonds | $250.0 | | Unlisted Issuances | $32.0 | [Undrawn Borrowing Capacity](index=6&type=section&id=Undrawn%20Borrowing%20Capacity) The company had a total undrawn borrowing capacity of $430.3 million, including credit facilities, cash, and undrawn SBA debentures, alongside committed and discretionary funding commitments Undrawn Borrowing Capacity (May 31, 2025) | Source | Amount ($ millions) | | :--- | :--- | | Undrawn Credit Facility Capacity | $70.0 | | Cash and Cash Equivalents | $224.3 | | Undrawn SBA Debentures (SBIC III) | $136.0 | | **Total Undrawn Borrowing Capacity** | **$430.3** | | Committed Undrawn Lending Commitments | $58.6 | | Discretionary Funding Commitments | $77.7 | - The company has an active ATM offering program to sell up to **$300.0 million** of common stock, having sold **8,089,547** shares for **$214.3 million** gross proceeds to date[14](index=14&type=chunk) [Shareholder Returns](index=7&type=section&id=Shareholder%20Returns) This section outlines Saratoga Investment Corp.'s shareholder return strategies, including dividend declarations, historical trends, and the share repurchase program [Dividend Declaration and Policy](index=7&type=section&id=Dividend) Saratoga Investment declared a base quarterly dividend of $0.75 per share for Q2 fiscal 2026, payable as three monthly dividends, with shareholders having a DRIP option - Declared a base quarterly dividend of **$0.75 per share** for Q2 FY26, distributed as three monthly payments of **$0.25 per share**[15](index=15&type=chunk) - Shareholders can elect to receive dividends in cash or common stock at a **5%** discount via the DRIP[15](index=15&type=chunk) [Dividend History](index=7&type=section&id=The%20following%20table%20highlights%20Saratoga%20Investment's%20dividend%20history%20over%20the%20past%20fourteen%20quarters) The company's dividend history shows a consistent base dividend, with a special dividend declared in Fiscal Q3 2025, and a projected full-year fiscal 2026 base dividend of $1.50 per share Dividend History (Past Fourteen Quarters) | Period (Fiscal Year ends Feb) | Base Dividend Per Share | Special Dividend Per Share | Total Dividend Per Share | | :--- | :--- | :--- | :--- | | Fiscal Q2 2026 (August 2025) | $0.25 | - | $0.25 | | Fiscal Q2 2026 (July 2025) | $0.25 | - | $0.25 | | Fiscal Q2 2026 (June 2025) | $0.25 | - | $0.25 | | Fiscal Q1 2026 (May 2025) | $0.25 | - | $0.25 | | Fiscal Q1 2026 (April 2025) | $0.25 | - | $0.25 | | Fiscal Q1 2026 (March 2025) | $0.25 | - | $0.25 | | Full Year Fiscal 2026 | $1.50 | - | $1.50 | | Fiscal Q4 2025 | $0.74 | - | $0.74 | | Fiscal Q3 2025 | $0.74 | $0.35 | $1.09 | | Fiscal Q2 2025 | $0.74 | - | $0.74 | | Fiscal Q1 2025 | $0.74 | - | $0.74 | | Full Year Fiscal 2025 | $2.96 | $0.35 | $3.31 | | Fiscal Q4 2024 | $0.73 | - | $0.73 | | Fiscal Q3 2024 | $0.72 | - | $0.72 | | Fiscal Q2 2024 | $0.71 | - | $0.71 | | Fiscal Q1 2024 | $0.70 | - | $0.70 | | Full Year Fiscal 2024 | $2.86 | - | $2.86 | | Fiscal Q4 2023 | $0.69 | - | $0.69 | | Fiscal Q3 2023 | $0.68 | - | $0.68 | | Fiscal Q2 2023 | $0.54 | - | $0.54 | | Fiscal Q1 2023 | $0.53 | - | $0.53 | | Full Year Fiscal 2023 | $2.44 | - | $2.44 | [Share Repurchase Program](index=8&type=section&id=Share%20Repurchase%20Plan) As of May 31, 2025, the company had repurchased 1,035,203 shares for approximately $22.8 million under its Share Repurchase Plan, which was extended to January 15, 2026 - As of May 31, 2025, **1,035,203** shares were repurchased for approximately **$22.8 million** under the plan[17](index=17&type=chunk) - The Share Repurchase Plan, extended to January 15, 2026, allows for repurchases of up to **1.7 million** shares below NAV[18](index=18&type=chunk) - No shares were purchased under the plan during the three months ended May 31, 2025[17](index=17&type=chunk) [Company Information and Forward-Looking Statements](index=8&type=section&id=Company%20Information%20and%20Forward-Looking%20Statements) This section provides details on Saratoga Investment Corp.'s conference call, company overview, forward-looking statements, and investor contacts [Conference Call/Webcast Details](index=8&type=section&id=Fiscal%20First%20Quarter%202026%20Conference%20Call/Webcast%20Information) Saratoga Investment Corp. scheduled a conference call and webcast for July 9, 2025, at 10:00 a.m. ET to discuss its Q1 FY26 financial results, with access details available online - Conference call and webcast for Q1 FY26 financial results scheduled for Wednesday, July 9, 2025, at **10:00 a.m. ET**[19](index=19&type=chunk) - Access to the live webcast and presentation, along with a replay, is available on Saratoga Investment Corp.'s investor relations website[19](index=19&type=chunk) [About Saratoga Investment Corp.](index=8&type=section&id=About%20Saratoga%20Investment%20Corp.) Saratoga Investment Corp. is a specialty finance company and BDC providing customized financing solutions to U.S. middle-market businesses, aiming for attractive risk-adjusted returns through diverse investments and funding sources - Saratoga Investment Corp. is a specialty finance company and BDC focused on providing customized financing solutions to U.S. middle-market businesses[20](index=20&type=chunk) - Invests primarily in senior and unitranche leveraged loans, mezzanine debt, and equity, aiming for attractive risk-adjusted returns through current income and capital appreciation[20](index=20&type=chunk) - Manages a **$650 million** CLO fund and co-manages a joint venture fund that owns a **$400 million** CLO fund, with diverse funding sources and a permanent capital base[20](index=20&type=chunk) [Forward-Looking Statements and Risk Factors](index=9&type=section&id=Forward%20Looking%20Statements) This section contains forward-looking statements based on current beliefs and expectations, subject to various risks and uncertainties, with readers advised to review SEC filings for comprehensive risk discussions - Forward-looking statements are based on current beliefs and expectations, subject to risks and uncertainties including market changes, economic downturns, interest rate volatility, tariffs, supply chain issues, and inflation[22](index=22&type=chunk) - Readers should not place undue reliance on forward-looking statements and are advised to review the company's SEC filings, including the 'Risk Factors' sections, for a complete discussion of risks[23](index=23&type=chunk) - The company undertakes no duty to update forward-looking statements unless required by law[23](index=23&type=chunk) [Contacts](index=9&type=section&id=Contacts) Contact information for Saratoga Investment Corporation, including its Chief Financial Officer, Henri Steenkamp, and investor relations contacts at The Equity Group Inc. is provided - Contact information provided for Saratoga Investment Corporation, including Henri Steenkamp (CFO) and investor relations representatives Lena Cati and Val Ferraro from The Equity Group Inc[24](index=24&type=chunk) [Consolidated Financial Statements](index=10&type=section&id=Saratoga%20Investment%20Corp.%20Consolidated%20Statements%20of%20Assets%20and%20Liabilities) This section presents Saratoga Investment Corp.'s consolidated financial statements, including assets, liabilities, operations, and supplemental adjusted net investment income [Consolidated Statements of Assets and Liabilities](index=10&type=section&id=Saratoga%20Investment%20Corp.%20Consolidated%20Statements%20of%20Assets%20and%20Liabilities) The consolidated balance sheet shows total assets of $1,202.3 million as of May 31, 2025, with a modest increase in total net assets despite slight changes in investments and cash Consolidated Statements of Assets and Liabilities (May 31, 2025 vs. Feb 28, 2025) | Metric | May 31, 2025 ($) | Feb 28, 2025 ($) | | :--- | :--- | :--- | | Total investments at fair value | 968,317,962 | 978,077,750 | | Cash and cash equivalents | 131,562,513 | 148,218,491 | | Cash and cash equivalents, reserve accounts | 92,724,212 | 56,505,433 | | Total assets | 1,202,269,333 | 1,191,543,857 | | Total liabilities | 805,900,018 | 798,878,389 | | Total net assets | 396,369,315 | 392,665,468 | | NET ASSET VALUE PER SHARE | $25.52 | $25.86 | | Asset Coverage Ratio | 163.8% | 162.9% | [Consolidated Statements of Operations](index=12&type=section&id=Saratoga%20Investment%20Corp.%20Consolidated%20Statements%20of%20Operations) For the three months ended May 31, 2025, total investment income was $32.3 million, with net investment income at $10.1 million, and a net increase in net assets from operations of $13.9 million Consolidated Statements of Operations (Q1 FY26 vs. Q1 FY25) | Metric | May 31, 2025 ($) | May 31, 2024 ($) | | :--- | :--- | :--- | | Total investment income | 32,318,617 | 38,678,150 | | Total operating expenses | 22,176,585 | 24,343,145 | | NET INVESTMENT INCOME | 10,142,032 | 14,335,005 | | Net realized gain (loss) from investments | 2,901,339 | (21,194,997) | | Net change in unrealized appreciation (depreciation) on investments | 943,977 | 13,931,431 | | Net increase (decrease) in net assets resulting from operations | 13,932,263 | 6,610,438 | | WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE | $0.91 | $0.48 | [Supplemental Adjusted Net Investment Income Information](index=14&type=section&id=Supplemental%20Information%20Regarding%20Adjusted%20Net%20Investment%20Income,%20Adjusted%20Net%20Investment%20Income%20Yield%20and%20Adjusted%20Net%20Investment%20Income%20per%20Share) This section provides non-GAAP measures for adjusted net investment income (NII), NII yield, and NII per share, which exclude capital gains incentive fee expense or reversal - Adjusted Net Investment Income (NII) is a non-GAAP measure excluding capital gains incentive fee expense or reversal attributable to realized and unrealized gains[31](index=31&type=chunk) Adjusted NII Reconciliation (Q1 FY26 vs. Q1 FY25) | Metric | May 31, 2025 ($) | May 31, 2024 ($) | | :--- | :--- | :--- | | Net Investment Income | 10,142,033 | 14,335,005 | | Changes in accrued capital gains incentive fee expense/ (reversal) | - | - | | Adjusted net investment income | 10,142,033 | 14,335,005 | | Net investment income yield | 10.3% | 15.5% | | Adjusted net investment income yield | 10.3% | 15.5% | | Net investment income per share | $0.66 | $1.05 | | Adjusted net investment income per share | $0.66 | $1.05 |

Core Insights - Saratoga Investment Corp. reported a 17.9% increase in adjusted net investment income (NII) per share and a 0.9% increase in net asset value (NAV) from the previous quarter, with a quarterly return on equity (ROE) of 14.1%, generating a last twelve months (LTM) ROE of 9.3%, surpassing the BDC industry average of 7.0% [1][2][4] Financial Performance - As of May 31, 2025, assets under management (AUM) were $968.3 million, down 11.6% from $1.095 billion a year earlier and down 1.0% from $978.1 million in the previous quarter [4] - Total investment income for the quarter was $32.3 million, a decrease of 16.4% from $38.7 million year-over-year but an increase of 3.3% from $31.3 million in the previous quarter [4][6] - NAV increased to $396.4 million, up $28.5 million from $367.9 million a year ago and up $3.7 million from $392.7 million in the previous quarter [4][6] - Adjusted NII for the quarter was $10.1 million, a decrease of 29.3% from $14.3 million year-over-year but an increase of 26.2% from $8.0 million in the previous quarter [6][4] Investment Activity - The company originated $50.1 million in new investments during the quarter, including two new portfolio companies and six follow-on investments [4][6] - Principal repayments totaled $64.3 million, which included one equity realization and multiple full and partial repayments of existing investments [4][6] - The fair value of the portfolio increased by $3.8 million during the quarter, with net realized gains of $2.9 million [4][6] Dividend and Shareholder Returns - The company declared a base dividend of $0.75 per share for the second quarter of fiscal 2026, representing an 11.8% yield based on the stock price of $25.44 as of July 7, 2025 [2][4] - The change to monthly dividends resulted in a one-time additional $0.50 per share dividend, increasing total dividends for the quarter to $1.25 per share [3][4] Portfolio Quality and Credit Metrics - The overall credit quality remained steady, with 99.7% of credits rated in the highest category, and only two investments on non-accrual status [4][6] - The portfolio composition consisted of 86.9% first lien term loans, indicating a strong focus on secured investments [4][6] Liquidity and Capital Resources - As of May 31, 2025, the company had $224.3 million in cash and cash equivalents, providing significant liquidity in a volatile macro environment [4][6] - The total undrawn borrowing capacity, including cash and credit facilities, was $430.3 million, allowing for potential new investments or support for existing portfolio companies [4][6]

Part I. Financial Information [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The consolidated financial statements present Saratoga Investment Corp.'s financial position as of May 31, 2025, and its performance for the three-month period then ended, highlighting total assets of $1.20 billion and a net increase in net assets of $13.9 million [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) As of May 31, 2025, Saratoga's total assets increased to $1.20 billion, with net assets growing to $396.4 million, though Net Asset Value (NAV) per share decreased to $25.52 Consolidated Statements of Assets and Liabilities Highlights (in thousands) | Metric | May 31, 2025 | February 28, 2025 | | :--- | :--- | :--- | | Total investments at fair value | $968,318 | $978,078 | | Total assets | $1,202,269 | $1,191,544 | | Total liabilities | $805,900 | $798,878 | | Total net assets | $396,369 | $392,665 | | **Net asset value per share** | **$25.52** | **$25.86** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended May 31, 2025, total investment income decreased to $32.3 million, resulting in a net increase in net assets of $13.9 million, or $0.91 per share, driven by a shift from net realized/unrealized losses to gains Quarterly Operating Results (in thousands, except per share data) | Metric | Three months ended May 31, 2025 | Three months ended May 31, 2024 | | :--- | :--- | :--- | | Total investment income | $32,319 | $38,678 | | Total operating expenses | $22,177 | $24,343 | | Net investment income | $10,142 | $14,335 | | Net realized and unrealized gain (loss) | $3,790 | $(7,725) | | **Net increase in net assets** | **$13,932** | **$6,610** | | **Earnings per share** | **$0.91** | **$0.48** | [Consolidated Statements of Changes in Net Assets](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) For the quarter ended May 31, 2025, net assets increased by $3.7 million, primarily due to a $13.9 million net gain from operations and $8.8 million from capital share transactions, partially offset by $19.0 million in distributions Reconciliation of Net Assets for the three months ended May 31, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Net assets at beginning of period | $392,665 | | Net increase from operations | $13,932 | | Distributions to shareholders | $(18,980) | | Net increase from capital share transactions | $8,752 | | **Net assets at end of period** | **$396,369** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) During the three months ended May 31, 2025, the company generated $32.3 million in cash from operating activities, resulting in a net increase in cash and cash equivalents of $19.6 million Summary of Cash Flows (in thousands) | Activity | Three months ended May 31, 2025 | Three months ended May 31, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $32,291 | $52,145 | | Net cash from financing activities | $(12,728) | $645 | | **Net increase in cash** | **$19,563** | **$52,790** | | Cash at end of period | $224,287 | $93,297 | [Consolidated Schedule of Investments](index=9&type=section&id=Consolidated%20Schedule%20of%20Investments) As of May 31, 2025, Saratoga's investment portfolio had a fair value of $968.3 million across 46 portfolio companies, primarily composed of first lien term loans, with top concentrations in Healthcare Services, Consumer Services, and HVAC Services and Sales Investment Portfolio Composition by Type (May 31, 2025) | Investment Type | Fair Value (in millions) | % of Net Assets | | :--- | :--- | :--- | | Non-control/Non-affiliate | $875.4 | 220.9% | | Affiliate | $52.0 | 13.1% | | Control | $40.9 | 10.3% | | **Total Investments** | **$968.3** | **244.3%** | Top 5 Industry Concentrations by Fair Value (May 31, 2025) | Industry | Fair Value (in millions) | % of Total Portfolio | | :--- | :--- | :--- | | Healthcare Services | $83.6 | 8.6% | | Consumer Services | $59.2 | 6.1% | | HVAC Services and Sales | $53.8 | 5.6% | | Real Estate Services | $51.7 | 5.3% | | Healthcare Software | $45.9 | 4.7% | - The total fair value of the investment portfolio was **$968.3 million** as of May 31, 2025, compared to **$978.1 million** as of February 28, 2025[10](index=10&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=119&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for the quarter ended May 31, 2025, highlighting a decrease in investment income, stable portfolio credit quality, and adequate liquidity with an asset coverage ratio of 163.8% [Overview](index=121&type=section&id=MD%26A%20Overview) Saratoga Investment Corp. is a BDC focused on generating income and capital appreciation by investing in U.S. middle-market companies, operating as a RIC and utilizing leverage through its SBIC subsidiaries, credit facilities, and a CLO - The company's investment objective is to generate current income and long-term capital appreciation from investments in private U.S. middle-market companies[389](index=389&type=chunk) - The company operates two SBIC subsidiaries, SBIC II LP and SBIC III LP, which allow for up to **$350.0 million** in combined SBA-guaranteed debentures[391](index=391&type=chunk) - In June 2024, the company completed the fifth refinancing of its Saratoga CLO and amended its Live Oak Credit Facility, increasing the available borrowings from **$50.0 million** to **$75.0 million**[392](index=392&type=chunk)[394](index=394&type=chunk) [Portfolio and Investment Activity](index=129&type=section&id=Portfolio%20and%20Investment%20Activity) For the quarter ended May 31, 2025, the company had net repayments of $14.2 million, with the $968.3 million portfolio composed of 127 investments in 46 companies, primarily first lien term loans, and maintaining strong credit quality with 90.6% rated 'Green' Quarterly Investment Activity (in millions) | Activity | Three months ended May 31, 2025 | Three months ended May 31, 2024 | | :--- | :--- | :--- | | New/Existing Investments | $50.1 | $39.3 | | Exits and Repayments | $(64.3) | $(75.7) | | **Net Activity** | **$(14.2)** | **$(36.4)** | Portfolio Composition by Type (May 31, 2025) | Investment Type | % of Total Portfolio | Weighted Avg. Current Yield | | :--- | :--- | :--- | | First lien term loans | 86.9% | 11.4% | | Second lien term loans | 0.7% | 16.8% | | Unsecured term loans | 1.7% | 10.6% | | Structured finance securities | 2.8% | 15.6% | | Equity interests | 7.9% | - | | **Total** | **100.0%** | **10.7%** | Credit Quality (CMR) Distribution (May 31, 2025) | Color Score | % of Total Portfolio (Fair Value) | | :--- | :--- | | Green (Performing) | 90.6% | | Yellow (Underperforming) | 0.1% | | Red (Default/Loss Expected) | 0.2% | | N/A (Equity/CLO) | 9.1% | [Results of Operations](index=134&type=section&id=Results%20of%20Operations) For Q1 FY2026, total investment income decreased by 16.4% YoY to $32.3 million, while total operating expenses fell 8.9% to $22.2 million, resulting in net investment income of $10.1 million and a net realized gain of $2.9 million Investment Income Comparison (in thousands) | Income Source | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Interest from investments | $28,004 | $34,306 | | Interest from cash | $2,027 | $625 | | Management fee income | $705 | $804 | | Dividend Income | $999 | $1,547 | | Other income | $583 | $1,396 | | **Total Investment Income** | **$32,318** | **$38,678** | Operating Expenses Comparison (in thousands) | Expense Source | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Interest and debt financing | $12,452 | $12,962 | | Base management fees | $4,333 | $4,983 | | Incentive management fees | $2,537 | $3,585 | | Other operating expenses | $2,850 | $2,875 | | **Total Operating Expenses** | **$22,177** | **$24,343** | - The decrease in interest income was due to an **11.6% decrease** in the size of the investment portfolio and a reduction in the weighted average current yield from **11.5% to 10.6%**, primarily due to lower SOFR rates[454](index=454&type=chunk) - The company recognized a net realized gain of **$2.9 million**, primarily from the sale of equity in Identity Automation Systems[470](index=470&type=chunk)[472](index=472&type=chunk)[473](index=473&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=139&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company maintains a diverse liquidity profile with $131.6 million in cash, available credit facilities, and SBA debentures, reporting an asset coverage ratio of 163.8% and unfunded commitments totaling $136.4 million - The company's asset coverage ratio was **163.8%** as of May 31, 2025, exceeding the regulatory minimum of **150%**[490](index=490&type=chunk)[564](index=564&type=chunk) Contractual Obligations as of May 31, 2025 (in thousands) | Obligation | Total | Less Than 1 Year | 1 - 3 Years | 3 - 5 Years | More Than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Encina Credit Facility | $32,500 | $32,500 | $0 | $0 | $0 | | Live Oak Credit Facility | $37,500 | $0 | $37,500 | $0 | $0 | | SBA debentures | $170,000 | $0 | $0 | $20,000 | $150,000 | | Unsecured Notes | $551,375 | $204,000 | $347,375 | $0 | $0 | | **Total** | **$791,375** | **$236,500** | **$384,875** | **$20,000** | **$150,000** | - As of May 31, 2025, the company had unfunded commitments of **$136.4 million**, with **$77.7 million** at the company's discretion and **$58.6 million** at the portfolio company's discretion upon meeting certain covenants[568](index=568&type=chunk)[569](index=569&type=chunk)[570](index=570&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=160&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with approximately 95.1% of debt investments and credit facilities bearing floating rates, where a hypothetical 100 basis point increase would positively impact net interest income - As of May 31, 2025, approximately **95.1%** of the company's debt investments bear interest at floating rates, while **4.9%** are at fixed rates, and the Encina and Live Oak credit facilities are also floating rate[575](index=575&type=chunk) Interest Rate Sensitivity Analysis (Annualized, in thousands) | Basis Point Change | Change in Interest Income | Change in Interest Expense | Change in Net Interest Income (pre-incentive) | Change in Net Interest Income (post-incentive) | | :--- | :--- | :--- | :--- | :--- | | +100 | $8,629 | $(700) | $7,929 | $6,343 | | -100 | $(8,580) | $700 | $(7,880) | $(6,304) | [Controls and Procedures](index=161&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of May 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[581](index=581&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended May 31, 2025[581](index=581&type=chunk) Part II. Other Information [Other Disclosures](index=162&type=section&id=Other%20Disclosures) The company reports no material legal proceedings or changes to risk factors, no defaults on senior securities, and an extended share repurchase plan with no shares repurchased during the quarter - The company is not subject to any material legal proceedings[583](index=583&type=chunk) - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the fiscal year ended February 28, 2025[584](index=584&type=chunk) - The company's share repurchase plan, authorizing up to **1.7 million shares**, was extended to January 15, 2026, with no shares repurchased in the three months ended May 31, 2025, and **1,035,203 shares** purchased to date under the plan[585](index=585&type=chunk)

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on high-quality dividend stocks and assets that provide long-term growth potential, which can significantly contribute to income generation [1]. - A balanced portfolio that includes both growth and income-generating assets can lead to efficient investment income while maintaining a total return aligned with the S&P [1].

Earnings Results - Saratoga Investment Corp. is set to release its first-quarter earnings results on July 8, with analysts expecting earnings of 72 cents per share, a decrease from $1.05 per share in the same period last year [1] - The projected quarterly revenue is $32.79 million, down from $38.68 million a year earlier [1] Recent Performance - On May 7, Saratoga Investment reported weaker-than-expected results for the fourth quarter [2] - The company's shares increased by 0.5%, closing at $24.80 on the preceding Monday [2] Analyst Ratings - Casey Alexander from Compass Point downgraded the stock from Buy to Neutral, reducing the price target from $25.25 to $24.25 on June 9, 2025 [4] - Bryce Rowe from B. Riley Securities maintained a Neutral rating with a price target of $25 on October 10, 2024 [4]

Core Viewpoint - Saratoga Investment Corp. will report its financial results for the fiscal quarter ended May 31, 2025, on July 8, 2025, with a conference call scheduled for July 9, 2025, to discuss these results [1][2]. Company Overview - Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses [3]. - The company primarily invests in senior and unitranche leveraged loans and mezzanine debt, with a lesser focus on equity, to finance ownership changes, strategic acquisitions, recapitalizations, and growth initiatives [3]. - The objective of Saratoga Investment is to generate attractive risk-adjusted returns through current income and long-term capital appreciation from its debt and equity investments [3]. - The company is regulated as a business development company under the Investment Company Act of 1940 and is externally managed by Saratoga Investment Advisors, LLC, which focuses on credit-driven strategies [3]. - Saratoga Investment Corp. owns two active SBIC-licensed subsidiaries and manages a $550 million collateralized loan obligation (CLO) fund, along with co-managing a joint venture fund that owns a $400 million CLO [3]. - The company holds 52% of the Class F and 100% of the subordinated notes of the CLO, as well as 87.5% of both the unsecured loans and membership interests of the JV and 87.5% of the Class E notes of the JV CLO [3]. - The diverse funding sources and a permanent capital base enable Saratoga Investment to offer a wide range of financing solutions [3].

Core Viewpoint - Saratoga Investment Corp. has declared a base quarterly dividend of $0.75 per share for the second quarter of fiscal 2026, continuing its strong dividend distribution history and providing a 12.5% dividend yield based on its recent stock price of $24.08 per share [1][2]. Dividend Declaration - The declared dividends for the second quarter of fiscal 2026 are as follows: - June 2025: $0.25 per share, record date July 8, 2025, payment date July 24, 2025 - July 2025: $0.25 per share, record date August 6, 2025, payment date August 21, 2025 - August 2025: $0.25 per share, record date September 4, 2025, payment date September 24, 2025 [1]. Historical Dividend Distributions - The total dividend for fiscal year 2026 is projected to be $1.50 per share, with consistent monthly dividends of $0.25 per share since fiscal Q1 2026 [3]. - Historical dividends per share for previous fiscal years include: - Fiscal 2025: $2.96 total, with quarterly distributions of $0.74 - Fiscal 2024: $2.86 total, with quarterly distributions of $0.71 to $0.73 - Fiscal 2023: $2.44 total, with quarterly distributions ranging from $0.53 to $0.69 [3]. Company Overview - Saratoga Investment is a specialty finance company focused on providing customized financing solutions to U.S. middle-market businesses, primarily through senior and unitranche leveraged loans and mezzanine debt [4]. - The company aims to generate attractive risk-adjusted returns through current income and long-term capital appreciation from its investments [4]. - Saratoga Investment is regulated as a business development company and is externally managed by Saratoga Investment Advisors, LLC [4].