Summary of Saratoga Investment Corp. Q4 2026 Earnings Call

1Key Financial Results and Metrics

Net Asset Value (NAV): $396.2 million, up 0.9% year-over-year but down 4.1% from the previous quarter.

NAV per Share: $24.42, down from $25.86 a year ago and $25.59 last quarter.

Adjusted Net Investment Income (NII): $8.5 million for the quarter, up 6.2% year-over-year but down 12.8% from the prior quarter; adjusted NII per share was $0.53 (down 5.4% year-over-year and 13.1% quarter-over-quarter).

Return on Equity (ROE): 9.1%, up from 7.5% last year, down from 9.7% last quarter, significantly above the industry average of 4.3%.

Dividend: Monthly base dividend of $0.25 per share, totaling $0.75 for the quarter, representing a 12.6% yield based on the stock price of $23.89.

Portfolio Size: Total portfolio valued at $1.109 billion, with 82.1% in first lien debt.

2Strategic Updates and Business Highlights

Originations: Strong quarter with net originations of $101.1 million, driven by five new portfolio companies and 15 follow-on investments.

Business Development: Increased deal activity attributed to enhanced business development efforts, with a focus on building relationships with sponsors.

Portfolio Quality: 96.8% of credits rated in the highest category; only two investments on nonaccrual status, representing 0.2% of fair value.

Management Changes: Appointment of David DeSantis as Chief Operating Officer, enhancing the management team’s capabilities.

3Forward Guidance and Outlook

Market Environment: Anticipation of continued volatility due to geopolitical tensions and economic uncertainty, but management remains optimistic about growth opportunities.

Investment Strategy: Focus on disciplined underwriting and capital deployment in strong credit opportunities, with a goal to expand the asset base prudently.

Dividend Policy: The Board will evaluate dividend levels quarterly, considering economic factors and company performance.

4Bad News, Challenges, or Points of Concern

Portfolio Markdowns: Total portfolio marked down 1% during the quarter, with unrealized depreciation in both the core portfolio and CLO investments.

Yield Pressure: Decreasing yields on new investments compared to repayments, with concerns about potential continued pressure on NII due to competitive market dynamics.

CLO Performance: The CLO F note placed on nonaccrual due to insufficient cash flows from underperforming assets; management is assessing refinancing options.

Credit Quality: Slight decline in overall credit quality, with a decrease in nonaccrual investments and increased scrutiny on portfolio performance.

5Notable Q&A Insights

Yield Outlook: Management acknowledged potential continued pressure on yields but noted stabilization in SOFR rates and increased business development activity to offset this.

CLO Recovery Potential: Discussion around the CLO F note highlighted that recovery in value is contingent on potential refinancing, which is being continuously assessed.

Business Development Strategy: Management emphasized the vast opportunity in the lower middle market and the ongoing efforts to cultivate relationships with sponsors, indicating no ceiling on potential deal flow.

Industry Dynamics: Insights shared on the competitive landscape, with management noting a shift away from software investments due to stricter underwriting requirements and a focus on sectors like education and healthcare. This summary encapsulates the key points from Saratoga Investment Corp.'s Q4 2026 earnings call, highlighting financial performance, strategic initiatives, and challenges faced in the current market environment.