Saratoga Investment Corp (NYSE:SAR) Q2 2020 Earnings Conference Call - Final Transcript

Oct 10, 2019 • 10:00 am ET

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Saratoga Investment Corp (NYSE:SAR) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to the Saratoga Investments Corp Fiscal Second Quarter 2020 Financial Results Conference Call.

[Operator Instructions]

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

Executive
Henri J. Steenkamp

Thank you. I would like to welcome everyone to Saratoga Investment Corp's fiscal second quarter 2020 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 2020 shareholder presentation in the Events & Presentations section of our Investor Relations website. A link to our IR page is in the earnings press release distributed last night. A replay of this conference call will also be available from 1:00 p.m. today through October 17th. 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.

Executive
Christian L. Oberbeck

Thank you, Henri, and welcome everyone. This second fiscal quarter has been a particularly strong and important one for us with many significant accomplishments. All of this quarter's achievements will support our efforts to build upon our industry leadership within the BDC sector and grow our high-quality portfolio utilizing our strengthened capital and liquidity base. While a challenging and competitive environment persists, our origination efforts combined with our flexible capital solutions and diversified sources of cost effective liquidity continue to support our robust pipeline of available deal sources driving greater scale.

To briefly recap this past quarter's highlights on Slide 2, first, we received approval for a second SBIC license providing us access up to $175 million in additional long-term cost-effective capital in the form of SBA debentures to further enable us to support our core small business constituency. Second, we continue to strengthen our financial foundation this quarter by maintaining a high level of investment credit quality with 99% of our loan investments having our highest rating, generating a return on equity of 14.3% on a trailing 12-month basis, 14.7% annualized in Q2, both significantly beating the BDC industry mean of 8.7%; increasing NAV by a net $2.6 million realized and unrealized gain in this quarter; and registering a gross unlevered IRR of 13.5% on our total unrealized portfolio; and a gross unlevered IRR of 14% on total realizations to date of $393 million. Third, our assets under management grew to $487 million this quarter, a 19% increase from $410 million as of last quarter and a 24% increase from $393 million as of the same time last year. This quarter continues to demonstrate the success