Reports 3.6% Increase in NAV and 0.4% Increase in NAV Per Share from Previous Quarter

Quarterly ROE of 13.8% Generates LTM ROE of 9.1% and Beats the BDC Industry Average of 7.3%

Zollege Investment Returned to Accrual Status; Only One Investment Remains on Non-Accrual, Representing 0.2% of Portfolio at Fair Value and 0.3% at Cost

NEW YORK, Oct. 07, 2025 (GLOBE NEWSWIRE) -- Saratoga Investment Corp. $(SAR)$ ("Saratoga Investment" or "the Company"), a business development company ("BDC"), today announced financial results for its fiscal second quarter 2026 ended August 31, 2025.

Summary Financial Information

The Company's summarized financial information is as follows:

 
                               For the three months ended and as of 
                    ---------------------------------------------------------- 
($ in thousands, 
except per share)   August 31, 2025      May 31, 2025      August 31, 2024 
                    ---------------      ------------      --------------- 
Assets Under 
 Management (AUM)           995,295           968,318            1,040,711 
Net Asset Value 
 $(NAV)$                      410,500           396,369              372,054 
NAV per share                 25.61             25.52                27.07 
Total Investment 
 Income                      30,626            32,319               43,003 
Net Investment 
 Income (NII) per 
 share                         0.58              0.66                 1.33 
Adjusted NII per 
 share                         0.58              0.66                 1.33 
Earnings per share             0.84              0.91                 0.97 
Dividends per 
 share (declared)              0.75              0.75                 0.74 
Return on Equity 
 -- last twelve 
 months                         9.1%              9.3%                 5.8% 
      -- 
       annualized 
       quarter                 13.8%             14.1%                14.4% 
Originations                 52,222            50,086                2,584 
Repayments                   29,824            64,330               60,140 
 

Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment, commented, "This quarter's highlights include continued NAV and NAV per share growth from the previous quarter and year, a strong return on equity beating the industry, net originations of $22.4 million, and importantly, continued solid performance from the core BDC portfolio in a volatile macro environment, including the return of our Zollege investment to accrual status reducing our non-accrual investments to just one, representing only 0.2% of portfolio fair value."

"Continuing our strong dividend distribution history, we announced a base dividend of $0.25 per share per month, or $0.75 per share in aggregate for the third quarter of fiscal 2026. Our annualized second quarter dividend of $0.75 per share represents a 12.3% yield based on the stock price of $24.41 as of October 6, 2025, offering strong current income from an investment value standpoint. Our Q2 adjusted NII of $0.58 per share continues to reflect the impact of the past twelve-month trend of decreasing levels of short-term interest rates and spreads on Saratoga Investment's largely floating rate assets, and the continued impact of the recent repayments. This has resulted in $200.8 million of cash, as of August 31, 2025, available to be deployed accretively in investments or repay existing debt."

"During the quarter, we continued to see very competitive market dynamics. Despite these macro factors, our portfolio again saw multiple debt repayments in Q2, in addition to solid new originations. We originated $52.2 million in three follow-ons, as well as closing on new investments in multiple BB and BBB structured credit securities. Our strong reputation and differentiated market positioning, combined with our ongoing development of sponsor relationships, continues to create attractive investment opportunities from high quality sponsors, which is continuing post quarter-end with three new portfolio company investments either closed or in closing in Q3 so far, which further improves our run rate earnings. We continue to remain prudent and discerning in terms of new commitments in the current volatile environment"

"Saratoga's overall performance is reflected in our key performance indicators this past quarter, including: (i) Q2 ROE of 13.8% generating LTM ROE of 9.1%, beating the BDC industry average of 7.3%, (ii) deleveraging from 159.6% regulatory leverage last year to 166.6% this year, due in part to the NAV increase of $38.4 million during the last twelve months ($372.1 million to $410.5 million), (iii) an increase in NAV per share of $0.09 per share from $25.52 per share the previous quarter to $25.61 per share, (iv) an increase in AUM of $27.0 million, or 2.8%, to $995.3 million from the previous quarter, (v) adjusted NII of $0.58 per share versus $0.66 per share last quarter, (vi) EPS of $0.84 per share versus $0.91 per share last quarter, and (vii) dividends of $0.75 per share, up $0.01 per share from $0.74 per share last year.

"At the foundation of our strong operating performance is the high-quality nature, resilience and balance of our $995.3 million portfolio in the current environment. Where we have encountered significant challenges in four of our portfolio companies over the past two years, we have completed decisive actions and resolved all four of these situations through two sales and two restructurings. And one of the restructurings, Zollege, is seeing improved financial performance and has been returned to accrual status this quarter. Our current core non-CLO portfolio was marked up by $3.9 million this quarter, and the CLO and JV markdown of $0.3 million was largely offset by $0.2 million of net appreciation in our new BB investments and further net realized gains of $0.1 million from an escrow payment on our Modern Campus investment. This all resulted in the fair value of the portfolio increasing by $3.8 million during the quarter. As of quarter-end, our total portfolio fair value was 1.7% below cost, while our core non-CLO portfolio was 2.1% above cost. The overall financial performance and solid earnings power of our current portfolio reflects strong underwriting in our growing portfolio companies and sponsors in well-selected industry segments."

"During the quarter, our net interest margin decreased from $15.1 million last quarter to $13.1 million, driven by a $2.1 million decrease in non-CLO interest income. This decrease was due to (i) average assets decreasing approximately $11.0 million, or 1.1%, to $954.0 million, (ii) the timing of originations and repayments closings during the current and previous quarter, with repayments more fully reflected in earnings and the full impact of new originations still having to flow through, and (iii) the absolute yields on the non-CLO portfolio decreasing from 11.5% to 11.3% as a result of SOFR rates resetting from earlier reductions combined with the impact of lower yielding new originations during the quarter. In addition, the full-period impact of the 0.2 million shares issued through the ATM program in Q1, and the partial impact of the additional 0.4 million shares issued in Q2, resulted in a $0.02 per share dilution to NII per share."

"Though our quarter-end cash position decreased from $224.3 million last quarter to $200.8 million in the current quarter, we have maintained a strong level of cash availability in a very volatile macro environment. This level of cash improves our current regulatory leverage of 166.6% to 186.5%, netting available cash against outstanding debt."

"Our overall credit quality for this quarter remained steady at 99.7% of credits rated in our highest category. There is just one investment remaining on non-accrual status, Pepper Palace, which has been successfully restructured, representing only 0.2% and 0.3% of fair value and cost, respectively. With 84.3% of our investments at quarter-end in first lien debt and generally supported by strong enterprise values and balance sheets in industries that have historically performed well in stressed situations, we believe our portfolio and company leverage is well structured for future economic conditions and uncertainty."

Mr. Oberbeck concluded, "While geopolitical tensions and macroeconomic uncertainty remain ongoing factors, we are encouraged by the resilience of our portfolio and the continued strength of our pipeline. Backed by our experienced management team, disciplined underwriting, and solid balance sheet, we are well positioned to further expand the size and quality of our portfolio, drive consistent investment performance, and deliver attractive risk-adjusted returns for our shareholders over the long term."

Discussion of Financial Results for the Quarter ended August 31, 2025:

   -- AUM as of August 31, 2025 was $995.3 million, a decrease of 4.4% from 
      $1.041 billion as of August 31, 2024, and an increase of 2.8% from $968.3 
      million as of last quarter. 
 
   -- Total investment income for the three months ended August 31, 2025 was 
      $30.6 million, a decrease of $12.4 million, or 28.8%, from $43.0 million 
      for the quarter ended August 31, 2024, and a decrease of $1.7 million, or 
      5.2%, as compared to $32.3 million for the quarter ended May 31, 2025. 
      This quarter's investment income decreases as compared to last year were 
      due to (i) non-recurrence of $7.9 million interest income related to the 
      Knowland investment recognized last year that was previously on 
      non-accrual, (ii) this past year's interest base rate decreases, and 
      (iii) lower recent AUM levels, reflecting outsized repayments in the last 
      twelve months. This quarter's sequential decrease is driven by the full 
      period impact of Q1 repayments not offset by the partial impact of Q2 
      originations. Investment income reflects a weighted average interest rate 

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October 07, 2025 16:05 ET (20:05 GMT)