Saratoga Investment Corp. Announces Fiscal Third Quarter 2013 Financial Results
NEW YORK, Jan. 14, 2013 /PRNewswire/ -- Saratoga Investment Corp. (NYSE: SAR) ("Saratoga Investment" or "the Company"), a business development company, today announced financial results for its 2013 fiscal third quarter.
Operating Results
For the fiscal quarter ended November 30, 2012, Saratoga Investment reported net investment income of $2.5 million or $0.63 on a weighted average per share basis, and net loss on investments of $1.7 million, or $0.44 on a weighted average per share basis, resulting in an increase in net assets from operations of $0.8 million, or $0.19 on a weighted average per share basis. The $1.7 million net loss on investments was comprised of $1.8 million in net unrealized depreciation on investments and $0.1 million in net realized gains from investments.
Net asset value ("NAV") was $102.9 million as of November 30, 2012, compared to $105.4 million as of August 31, 2012 and $100.6 million as of May 31, 2012. NAV per share was $21.75 ($27.39 before the effect of the dividend described below) as of November 30, 2012 and $27.20 as of August 31, 2012 and $25.94 as of May 31, 2012.
The decrease in reported NAV per share from August 31, 2012 was primarily the result of the $16.5 million cash/stock dividend (which consisted of $3.3 million in cash and 853,455 shares of common stock) declared by Saratoga Investment's Board of Directors on November 9, 2012 and paid on December 31, 2012. In accordance with generally accepted accounting principles ("GAAP"), the number of shares outstanding used to calculate NAV per share as of November 30, 2012 was retroactively adjusted to reflect the additional shares issued in connection with the cash/stock dividend.
Christian L. Oberbeck, Chairman, Chief Executive Officer and President of Saratoga Investment, said, "Our growing pipeline and financial strength enabled us to make another $6.4 million of investments in new and existing portfolio companies during the quarter, plus an additional $30 million of investments during December in four new and one existing portfolio company. We continue to see attractive opportunities, and the trend of improving credit quality within the overall portfolio continues. During this quarter, we have increased both the amount and proportion of internally rated strong credits."
Portfolio and Investment Activity
As of November 30, 2012, the fair value of the Company's investment portfolio was $119.3 million, principally invested in 23 portfolio companies and one collateralized loan obligation fund (the "CLO"). The overall portfolio composition consisted of 53.7% of first lien term loans, 8.4% of second lien term loans, 8.8% of senior secured notes, 1.9% of unsecured notes, 20.7% of subordinated notes of the CLO and 6.5% of common equity.
During the 2013 fiscal third quarter, the Company invested $6.4 million in new or existing portfolio companies and had $1.5 million in aggregate amount of exits and repayments on its investments, resulting in net investments of $4.9 million for the period. The Company invested an additional $29.7 million in December with $0.7 million of exits and repayments resulting in net investments of $29.0 million for the month of December 2012.
As of November 30, 2012, the weighted average current yield on Saratoga Investment's first lien term loans, second lien term loans, senior secured notes, unsecured notes and the CLO subordinated notes were 10.0%, 11.3%, 16.8%, 19.9%, and 22.9%, respectively, which resulted in an aggregate weighted average current yield of 12.9%.
Liquidity and Capital Resources
As of November 30, 2012, Saratoga Investment had $14.9 million in outstanding borrowings under its $45 million senior secured revolving credit facility with Madison Capital Funding LLC. In addition, Saratoga Investment had an aggregate of $2.5 million in cash and cash equivalents and $3.8 million in cash and cash equivalents, reserve accounts, at November 30, 2012. The Company is required to use the amounts held in cash and cash equivalents, reserve accounts to pay interest expense, reduce borrowings or pay other amounts in accordance with the terms of its senior secured revolving credit facility. As of November 30, 2012, the Company's Small Business Investment Company subsidiary had $25 million in regulatory capital and $4.0 million of debentures guaranteed by the Small Business Administration.
2013 Fiscal Third Quarter Conference Call/Webcast Information
When: Jan. 15, 2013 at 9:00 a.m. Eastern Time (ET)
Call: Interested parties may participate by dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside U.S. and Canada).
A replay of the call will be available from 11:00 a.m. ET on Jan. 15, 2013 through 11:59 p.m. ET on Jan. 22, 2013 by dialing (800) 585-8367 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada). Passcode for both replay numbers is 88743795.
Webcast: Interested parties may also access a simultaneous webcast of the call by going to http://ir.saratogainvestmentcorp.com/events.cfm.
About Saratoga Investment Corp.
Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses. The Company invests primarily in mezzanine debt, leveraged loans and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors. Saratoga Investment Corp.'s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments. Saratoga Investment Corp. has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies. Within the BDC, Saratoga Investment manages both an SBIC-licensed subsidiary and a $400 million Collateralized Loan Obligation (CLO) fund. These diverse funding sources, combined with a permanent capital base, enable Saratoga Investment to offer a broad range of financing solutions.
Forward Looking Statements
This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release and the filings Saratoga Investment Corp. makes with the SEC. Saratoga Investment Corp. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Financial Statements
| Saratoga Investment Corp. |
|||||
| Consolidated Statements of Assets and Liabilities |
|||||
| As of |
|||||
| November 30, 2012 |
February 29, 2012 |
||||
| (unaudited) |
|||||
| ASSETS |
|||||
| Investments at fair value |
|||||
| Non-control/non-affiliate investments (amortized cost of $97,083,018 and $73,161,722, respectively) |
$ 94,649,656 |
$ 69,513,434 |
|||
| Control investments (cost of $20,361,593 and $23,540,517, respectively) |
24,641,107 |
25,846,414 |
|||
| Total investments at fair value (amortized cost of $117,444,611 and $96,702,239, respectively) |
119,290,763 |
95,359,848 |
|||
| Cash and cash equivalents |
2,494,552 |
1,325,698 |
|||
| Cash and cash equivalents, reserve accounts |
3,787,183 |
25,534,195 |
|||
| Outstanding interest rate cap at fair value (cost of $0 and $131,000, respectively) |
- |
75 |
|||
| Interest receivable, (net of reserve of $228,113 and $273,361, respectively) |
1,906,186 |
1,689,404 |
|||
| Deferred credit facility financing costs, net |
1,453,985 |
1,199,490 |
|||
| Management fee receivable |
216,947 |
227,581 |
|||
| Other assets |
18,973 |
94,823 |
|||
| Receivable from unsettled trades |
- |
59,511 |
|||
| Total assets |
$ 129,168,589 |
$ 125,490,625 |
|||
| LIABILITIES |
|||||
| Revolving credit facility |
$ 14,850,000 |
$ 20,000,000 |
|||
| SBA debentures payable |
4,000,000 |
- |
|||
| Payable for unsettled trades |
- |
4,072,500 |
|||
| Dividend payable |
3,295,306 |
- |
|||
| Management and incentive fees payable |
3,364,719 |
2,885,670 |
|||
| Accounts payable and accrued expenses |
508,042 |
704,949 |
|||
| Interest and credit facility fees payable |
140,424 |
53,262 |
|||
| Due to manager |
117,877 |
394,094 |
|||
| Total liabilities |
$ 26,276,368 |
$ 28,110,475 |
|||
| NET ASSETS |
|||||
| Common stock, par value $.001, 100,000,000 common shares |
|||||
| authorized, 4,730,116 and 3,876,661 common shares issued and outstanding, respectively |
$ 4,730 |
$ 3,877 |
|||
| Capital in excess of par value |
174,824,076 |
161,644,426 |
|||
| Distribution in excess of net investment income |
(25,319,688) |
(13,920,068) |
|||
| Accumulated net realized loss from investments and derivatives |
(48,463,047) |
(48,874,767) |
|||
| Net unrealized appreciation (depreciation) on investments and derivatives |
1,846,150 |
(1,473,318) |
|||
| Total Net Assets |
102,892,221 |
97,380,150 |
|||
| Total liabilities and Net Assets |
$ 129,168,589 |
$ 125,490,625 |
|||
| NET ASSET VALUE PER SHARE |
$ 21.75 |
$ 25.12 |
|||
| Saratoga Investment Corp. |
||||||||
| Consolidated Statements of Operations |
||||||||
| For the three months ended November 30, |
For the nine months ended November 30, |
|||||||
| 2012 |
2011 |
2012 |
2011 |
|||||
| (unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
|||||
| INVESTMENT INCOME |
||||||||
| Interest from investments |
||||||||
| Non-control/Non-affiliate investments |
$ 2,466,595 |
$ 1,877,650 |
$ 6,951,338 |
$ 5,212,182 |
||||
| Control investments |
1,046,285 |
1,155,241 |
3,186,751 |
3,095,304 |
||||
| Total interest income |
3,512,880 |
3,032,891 |
10,138,089 |
8,307,486 |
||||
| Interest from cash and cash equivalents |
731 |
1,567 |
5,368 |
6,815 |
||||
| Management fee income |
500,454 |
501,920 |
1,500,519 |
1,512,091 |
||||
| Other income |
19,750 |
92,671 |
172,310 |
238,579 |
||||
| Total investment income |
4,033,815 |
3,629,049 |
11,816,286 |
10,064,971 |
||||
| EXPENSES |
||||||||
| Interest and credit facility financing expenses |
529,858 |
307,221 |
1,808,586 |
987,042 |
||||
| Base management fees |
528,735 |
393,888 |
1,492,345 |
1,203,820 |
||||
| Professional fees |
347,459 |
356,144 |
986,781 |
1,282,009 |
||||
| Administrator expenses |
250,000 |
250,000 |
750,000 |
730,000 |
||||
| Incentive management fees |
(412,654) |
1,178,750 |
887,020 |
842,097 |
||||
| Insurance |
128,891 |
145,105 |
389,506 |
448,786 |
||||
| Directors fees and expenses |
53,705 |
51,000 |
155,705 |
153,000 |
||||
| General & administrative |
117,357 |
121,019 |
265,720 |
290,232 |
||||
| Other expense |
1,311 |
2,150 |
4,434 |
5,340 |
||||
| Total expenses |
1,544,662 |
2,805,277 |
6,740,097 |
5,942,326 |
||||
| NET INVESTMENT INCOME |
2,489,153 |
823,772 |
5,076,189 |
4,122,645 |
||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: |
||||||||
| Net realized gain (loss) from investments |
95,372 |
(5,831,905) |
542,720 |
(5,839,864) |
||||
| Net realized loss from derivatives |
- |
- |
(131,000) |
- |
||||
| Net unrealized appreciation (depreciation) on investments |
(1,838,957) |
11,221,387 |
3,188,543 |
11,927,052 |
||||
| Net unrealized appreciation (depreciation) on derivatives |
- |
166 |
130,925 |
(15,108) |
||||
| Net gain (loss) on investments |
(1,743,585) |
5,389,648 |
3,731,188 |
6,072,080 |
||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ 745,568 |
$ 6,213,420 |
$ 8,807,377 |
$ 10,194,725 |
||||
| WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE |
$ 0.19 |
$ 1.88 |
$ 2.25 |
$ 3.10 |
||||
| WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED |
3,970,447 |
3,310,021 |
3,907,696 |
3,287,979 |
||||
Contact: Richard Petrocelli
Saratoga Investment Corp.
212-906-7800
Roland Tomforde
Broadgate Consultants
212-232-2222
SOURCE Saratoga Investment Corp.
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