☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended May 31, 2023 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 814-00732 SARATOGA INVESTMENT CORP. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q Maryland 20-8700615 (I.R.S. Emp ...

Saratoga Investment Corp (NYSE:SAR) Q4 2023 Earnings Conference Call May 3, 2023 12:00 PM ET Company Participants Christian Oberbeck - Chairman, Chief Executive Officer Henri Steenkamp - Chief Financial and Compliance Officer Michael Grisius - Chief Investment Officer Conference Call Participants Bryce Rowe - B. Riley Mickey Schleien - Ladenburg Casey Alexander - Compass Point Research & Trading Robert Dodd - Raymond James Erik Zwick - Hovde Group Operator Good morning, ladies and gentlemen. Thank you for s ...

[PART I](index=5&type=section&id=PART%20I) [Business](index=5&type=section&id=Item%201.%20Business) Saratoga Investment Corp. provides customized financing to U.S. middle-market businesses, primarily via senior and unitranche leveraged loans Portfolio Overview as of February 28, 2023 | Metric | Value | | :--- | :--- | | Total Assets | $1,078.2 million | | Number of Portfolio Companies | 49 | | Weighted Average Yield on Investments | 12.1% | | Total Return (Market Value) | 10.35% | | Total Return (NAV) | 9.46% | Portfolio Composition as of February 28, 2023 | Investment Type | Percentage of Portfolio | | :--- | :--- | | First Lien Term Loans | 82.1% | | Second Lien Term Loans | 1.5% | | Unsecured Loans | 2.1% | | Structured Finance Securities | 4.3% | | Equity Interests | 10.0% | - The company operates as a BDC, which allows it to borrow funds with an asset coverage ratio of at least **150%**, an increase from the previous **200%** requirement, effective April 16, 2019[21](index=21&type=chunk) - The company has three wholly-owned SBIC subsidiaries, which collectively provide access to up to **$350.0 million** in long-term capital through SBA-guaranteed debentures[23](index=23&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to its business structure, economic environment, investment adviser, and specific investments - The use of leverage magnifies potential gains and losses. The company's asset coverage requirement was reduced from **200%** to **150%** effective April 16, 2019, which could increase investment risk[171](index=171&type=chunk)[213](index=213&type=chunk) - The company is exposed to interest rate risk, as rising rates could increase borrowing costs and negatively impact portfolio companies' ability to service their debt. The transition from LIBOR to alternative rates like SOFR introduces uncertainty[181](index=181&type=chunk)[185](index=185&type=chunk) - A majority of the company's debt investments (**77%** as of Feb 28, 2023) are structured as "interest-only" loans with a large balloon payment at maturity, which increases repayment risk[286](index=286&type=chunk) - The investment in Saratoga CLO represents a first-loss position in a leveraged portfolio of senior secured loans, subjecting the company to a higher degree of risk and volatility[292](index=292&type=chunk) - The company's notes are unsecured and are effectively subordinated to any existing and future secured indebtedness, including borrowings under the Encina Credit Facility and structurally subordinated to the liabilities of its subsidiaries, including SBA-guaranteed debentures[352](index=352&type=chunk)[354](index=354&type=chunk) [PART II](index=64&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=64&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Common stock trades on NYSE under 'SAR', fluctuating at a discount to NAV, with active share repurchases and consistent quarterly dividends Common Stock Price Range vs. NAV (Fiscal Year 2023) | Quarter | NAV per Share | High Closing Price | Low Closing Price | High as % of NAV | Low as % of NAV | | :--- | :--- | :--- | :--- | :--- | :--- | | Q1 | $28.69 | $28.31 | $24.98 | (1.3)% | (12.9)% | | Q2 | $28.27 | $26.95 | $22.70 | (4.7)% | (19.7)% | | Q3 | $28.25 | $27.16 | $20.36 | (3.9)% | (27.9)% | | Q4 | $29.17 | $27.77 | $25.02 | (4.8)% | (14.2)% | - The company has a share repurchase plan, which was extended to January 15, 2024, and increased to **1.7 million shares**. During the fiscal year ended February 28, 2023, the company purchased **438,192 shares** at an average price of **$24.70** for approximately **$10.8 million**[383](index=383&type=chunk) - The company recommenced quarterly dividends in September 2014 and has a Dividend Reinvestment Plan (DRIP) in place for stockholders[390](index=390&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=73&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2023 investment income increased to $99.1 million due to portfolio growth and higher rates, despite unrealized depreciation Key Operating Results (Fiscal Year Ended Feb 28) | Metric ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total Investment Income | $99.1 | $70.7 | $57.7 | | Net Investment Income | $35.2 | $19.9 | $23.1 | | Net Realized Gains (Losses) | $7.4 | $13.4 | ($8.7) | | Net Change in Unrealized Appreciation | ($15.2) | $17.0 | $5.0 | | Net Increase in Net Assets | $24.7 | $45.7 | $14.8 | - Investment income for FY 2023 increased by **40.1%** year-over-year, primarily due to a **19.0%** growth in total investments and a rise in the weighted average current yield from **7.7%** to **10.7%**[521](index=521&type=chunk) - Operating expenses for FY 2023 increased by **25.8%** to **$63.9 million**, largely due to a **68.5%** increase in interest and debt financing expenses from higher average debt balances and rising interest rates[530](index=530&type=chunk)[531](index=531&type=chunk) Portfolio Growth and Composition (Fair Value) | Metric | Feb 28, 2023 | Feb 28, 2022 | | :--- | :--- | :--- | | Total Investments | $972.6 million | $817.6 million | | Number of Portfolio Companies | 49 | 45 | | First Lien Term Loans % | 82.1% | 77.3% | - As of February 28, 2023, the company had significant liquidity sources, including **$65.7 million** in cash, **$31.1 million** available under its Encina Credit Facility, and access to SBA debentures[663](index=663&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=113&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate fluctuation, impacting investment income from floating-rate assets and interest expense on borrowings - The company's principal market risk is interest rate volatility, which impacts net interest income[665](index=665&type=chunk)[666](index=666&type=chunk) Hypothetical Annual Impact of Interest Rate Changes on Net Investment Income (as of Feb 28, 2023) | Basis Point Change | Increase/(Decrease) in Net Investment Income ($ in thousands) | Increase/(Decrease) in Net Investment Income per Share | | :--- | :--- | :--- | | +300 | $19,654 | $1.64 | | +100 | $6,551 | $0.55 | | -100 | ($6,551) | ($0.55) | - As of February 28, 2023, approximately **99%** of the company's debt investments bore interest at a floating rate, making its income sensitive to rate changes[668](index=668&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=114&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for Saratoga Investment Corp. and its subsidiaries, including the auditor's report - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements, stating they are presented fairly in all material respects in conformity with U.S. GAAP[739](index=739&type=chunk) - A critical audit matter identified was the valuation of Level 3 investments, which totaled **$959.5 million** and required significant management judgment and estimation[745](index=745&type=chunk) - The filing includes the full consolidated financial statements, schedules of investments, and notes to the financial statements for Saratoga Investment Corp[721](index=721&type=chunk) - Separate audited financial statements for the portfolio company Saratoga Investment Corp. CLO 2013-1, Ltd. are also included, as required by SEC rules[1074](index=1074&type=chunk) [PART III](index=116&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=116&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Details board composition, executive officers, and corporate governance practices, including the Code of Business Conduct and Ethics - The Board of Directors is comprised of five members: Christian L. Oberbeck (Chairman, CEO), Henri J. Steenkamp (CFO), Steven M. Looney, Charles S. Whitman III, and G. Cabell Williams[687](index=687&type=chunk) - The board has determined that Messrs. Looney, Whitman, and Williams are independent directors. Mr. Looney serves as the chairman of the audit committee and is designated as an "audit committee financial expert"[700](index=700&type=chunk)[715](index=715&type=chunk) - The company's insider trading policy generally prohibits directors, officers, and employees from engaging in short-term trading, short sales, hedging, or pledging of the company's securities[698](index=698&type=chunk) [Executive Compensation](index=118&type=section&id=Item%2011.%20Executive%20Compensation) Executive officers are compensated by the investment adviser, while independent directors receive direct annual and meeting fees - The company has no employees and does not directly compensate its executive officers. Their services are provided by Saratoga Investment Advisors[701](index=701&type=chunk) Independent Director Compensation for FY 2023 | Director | Fees Earned or Paid in Cash | | :--- | :--- | | Steven M. Looney | $143,000 | | Charles S. Whitman III | $135,000 | | G. Cabell Williams | $135,000 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=119&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of May 1, 2023, directors and executive officers collectively owned 13.8% of common stock, with the CEO holding the largest insider stake Security Ownership as of May 1, 2023 | Beneficial Owner | Percentage of Class | | :--- | :--- | | Christian L. Oberbeck | 12.8% | | All Directors as a Group | 13.8% | | Black Diamond Capital Management, L.L.C. | 8.0% | - The ownership percentage is based on **12,124,175 shares** of common stock outstanding as of May 1, 2023[707](index=707&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=120&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Key related party transactions exist with the investment adviser, controlled by the CEO, with Audit Committee oversight for approvals - The company has entered into a Management Agreement, Administration Agreement, and a trademark license agreement with its investment adviser, Saratoga Investment Advisors, LLC[710](index=710&type=chunk) - The Audit Committee is responsible for reviewing and approving all transactions with related persons[711](index=711&type=chunk) - The board of directors has determined that **three** of its members are independent, as they are not "interested persons" of the Company as defined in Section 2(a)(19) of the 1940 Act[714](index=714&type=chunk)[715](index=715&type=chunk) [Principal Accounting Fees and Services](index=121&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) FY2023 fees to Ernst & Young LLP totaled $630,700 for audit and tax services, all pre-approved by the audit committee Fees Paid to Ernst & Young LLP | Fee Type | Fiscal Year 2023 | Fiscal Year 2022 | | :--- | :--- | :--- | | Audit Fees | $584,500 | $513,000 | | Tax Fees | $46,200 | $43,650 | | **Total Fees** | **$630,700** | **$556,650** | - The audit committee's policy is to pre-approve all audit, review, or attest engagements and permissible non-audit services performed by the independent registered public accounting firm[719](index=719&type=chunk) [PART IV](index=122&type=section&id=PART%20IV) [Exhibits, Consolidated Financial Statement Schedules](index=122&type=section&id=Item%2015.%20Exhibits,%20Consolidated%20Financial%20Statement%20Schedules) Lists all documents filed as part of the Annual Report, including consolidated financials, separate portfolio company financials, and an exhibit index - The filing includes the full consolidated financial statements for Saratoga Investment Corp[721](index=721&type=chunk) - An index of exhibits is provided, referencing key corporate documents, material agreements (including the Investment Advisory and Administration Agreements), and indentures for various note offerings[725](index=725&type=chunk)

Financial Data and Key Metrics Changes - Saratoga Investment Corp reported a 33% sequential quarterly increase in adjusted net investment income (NII) per share, significantly outpacing a 26% dividend increase [5][38] - Adjusted NII for the quarter was $9.1 million, reflecting a 31.1% increase from the previous quarter and a 49.8% increase year-over-year [14][38] - The adjusted NII yield rose to 10.8%, up from 8.2% in the previous quarter and 7.3% a year ago [8][41] - NAV per share decreased by 0.1% from the previous quarter to $28.25, and down 3.2% from $29.17 a year ago [7][38] Business Line Data and Key Metrics Changes - The company originated $88 million in new follow-on investments, offset by $57 million in repayments, leading to a total AUM of $982 million, a 3% increase from the previous quarter [6][35] - The current coupon on non-CLO BDC investments increased from 9.9% to 11.7%, contributing to a 59.1% increase in investment income [15][79] Market Data and Key Metrics Changes - The average three-month LIBOR used in the portfolio was 3.59%, with quarter-end LIBOR closing at 4.78%, indicating potential for increased earnings in the upcoming quarters [23][99] - The company’s portfolio is diversified across 39 distinct industries, with a significant focus on healthcare and education software, HVAC services, and IT [50][86] Company Strategy and Development Direction - The company aims to maintain a high level of investment credit quality, with 96% of loan investments retaining the highest credit rating [9][88] - The approval of a third SBIC license allows for continued expansion of investments in support of small businesses [33][93] - The management team is focused on deploying capital into existing portfolio companies while being cautious in the current volatile credit environment [13][60] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's ability to withstand economic pressures, noting that most portfolio companies are performing well despite rising rates [105][106] - The company is closely monitoring inflationary pressures, labor costs, and supply chain issues that could impact portfolio companies [53][94] - Management highlighted the importance of maintaining a conservative balance sheet with long-term fixed-rate debt in a rising rate environment [78][98] Other Important Information - The company declared a quarterly dividend of $0.68 per share, marking a record increase of 26% from the previous quarter [37][95] - Total expenses for Q3, excluding interest and debt financing expenses, were $2.1 million, representing 0.8% of average total assets on an annualized basis [18][19] Q&A Session Summary Question: How is the company positioned regarding interest rates and dividends? - Management indicated that the current dividend level is sustainable in the long run, with plans to build upon it as earnings increase and the rate environment becomes clearer [71][72] Question: How are borrowers reacting to higher rates? - Management noted that portfolio companies are performing well and generating sufficient cash flow to handle increased rates, despite general market pressures [105][106] Question: What is the company's approach to new investments versus follow-ons? - Management confirmed a higher bar for new investments, prioritizing support for existing portfolio companies while remaining open to actionable opportunities [115][116]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended November 30, 2022 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 814-00732 SARATOGA INVESTMENT CORP. (Exact name of registrant as specified in its charter) | Maryland | 20-8700615 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Emplo ...

Saratoga Investment Corp (NYSE:SAR) Q2 2023 Earnings Conference Call October 5, 2022 10:00 AM ET Company Participants Henri Steenkamp - Chief Financial and Compliance Officer Christian Oberbeck - Chairman and Chief Executive Officer Michael Grisius - Chief Investment Officer Conference Call Participants Robert Dodd - Raymond James Casey Alexander - Compass Point Mickey Schleien - Ladenburg Thalmann Erik Zwick - Hovde Group Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Sa ...

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended August 31, 2022 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 814-00732 SARATOGA INVESTMENT CORP. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Maryland 20-8700615 (I.R.S. ...

Saratoga Investment Corp (NYSE:SAR) Q1 2023 Earnings Conference Call July 7, 2022 10:00 AM ET Company Participants Christian Oberbeck - Chairman, CEO & President Henri Steenkamp - CFO, Chief Compliance Officer, Treasurer and Secretary Michael Grisius - Chief Investment Officer Conference Call Participants Robert Dodd - Raymond James Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investments Corp's Fiscal First Quarter 2023 Financial Results Conference Call. Pleas ...

Saratoga Investment Corp. Fiscal First Quarter 2023 Shareholder Presentation July 7, 2022 Continued Growth and Strong Long-Term Performance Fiscal First Quarter 2023 Highlights: • Continued high quality portfolio and strong performance ▫ Investment quality remains strong 95.0% of loan investments with highest internal rating and only one non-accrual ▫ Return on equity of 6.9% for LTM Net realized gains and unrealized depreciation of $9.2 million for Q1, includes $8.6 million unrealized depreciation reflecti ...