Full Transcript: Saratoga Investment Q1 2027 Earnings Call

Saratoga Investment (NYSE: SAR ) released first-quarter financial results and hosted an earnings call on Wednesday.

Read the complete transcript below.

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Access the full call at Summary Saratoga Investment Corp reported net positive originations of $31 million, with AUM growing 1.6% to a near-record $1.126 billion, maintaining strong credit quality despite a challenging macro environment.

The company declared a monthly base dividend of $0.25 per share, with an annualized yield of 14%, but adjusted NII decreased to $0.47 per share from $0.53 last quarter due to lower interest rates and tightening spreads.

Management emphasized strong credit quality and strategic focus on disciplined asset selection, with a robust pipeline and ongoing business development efforts, despite challenges in spread compression and market dynamics.

The company's NAV decreased by 4.5% from last quarter, impacted by portfolio markdowns and market conditions, but management remains optimistic about closing the NII and dividend gap over time.

Saratoga continues to leverage its conservative balance sheet and available liquidity of $197 million to support growth and navigate current economic uncertainties, with a strong long-term performance track record.

Full Transcript OPERATOR Good morning, ladies and gentlemen, and thank you for standing by.

Welcome to Saratoga Investment Corp's Fiscal First Quarter 2027 Financial Results Conference Call.

Please note that today's call is being recorded.

During today's presentation, all parties will be in listen-only mode.

Following management's prepared remarks, we will open the line for questions.

At this time, I would like to turn the call over to Saratoga Investment Corp's Chief Financial Officer and Chief Compliance Officer, Mr.

Henry Steenkamp.

Sir, please go ahead.

Henri Steenkamp CA, Chief Financial Officer Thank you.

I would like to welcome everyone to Saratoga Investment Corp's fiscal first quarter 2027 earnings conference call.

Today's conference call includes forward-looking statements and projections.

We ask you to refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections.

We do not undertake to update our forward-looking statements unless required to do so by law.

Today we will be referencing a presentation during our call.

You can find our fiscal first quarter 2027 shareholder presentation in the Events and Presentations section of our Investor Relations website.

A link to our IR page is in the earnings press release distributed last month on February 28th, so any reference to Q1 results reflects our May 31st quarter end period.

A replay of this conference call will also be available.

Please refer to our earnings press release for details.

I would now like to turn the call over to our Chairman and Chief Executive Officer, Christian Oberbeck, who will be making a few introductory remarks.

Christian Oberbeck, Chairman of the Board & Chief Executive Officer Thank you, Henry, and welcome everyone.

Saratoga Investment Corp's highlights this quarter include net positive originations of $31 million, including two new portfolio companies originated in the quarter, sustained long-term AUM growth with AUM growing 1.6% during the quarter and reaching close to a record level of $1.126 billion.

Latest 12 months return on equity of 4%, continuing to beat the BDC industry average of 2.4% and importantly continued overall solid performance from the core BDC portfolio in a challenging and volatile macro environment with core BDC portfolio fair value remaining within 0.2% of cost, demonstrating solid overall credit quality in a challenging and volatile macroeconomic environment.

Continuing our historical strong dividend distribution history, we announced a monthly base dividend of $0.25 per share or $0.75 per share in aggregate for the second quarter of fiscal 2027, which when annualized represents a 14% yield based on the stock price of $21.42 as of July 6, 2026.

Offering strong current income, originations and AUM growth during the quarter contributed to adjusted NII of $0.47 per share compared to $0.53 per share last quarter.

Overall, our adjusted NII continues to reflect the impact of significantly lower short-term interest rates and tightening spreads on our largely floating rate asset base as well as a full period impact of the recent changes to our growing capital structure.

During the quarter, deal activity remained robust reflecting the impact of our recent business development efforts.

Despite persistent sector headwinds and cautious sentiment across the broader private credit sector, market dynamics continue to be very competitive and while our portfolio saw multiple debt repayments in Q1, our strong origination activity more than offset those exits, resulting in net originations of $31 million for the quarter from $79 million in new originations across 2 new investments and 10 follow-ons including $11 million in new BB and BBB CLO debt investments.