Saratoga Investment Corp (NYSE:SAR) Q3 2020 Earnings Conference Call - Final Transcript

Jan 08, 2020 • 10:00 am ET

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Saratoga Investment Corp (NYSE:SAR) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentleman and thank you for standing by. Welcome to Saratoga Investment Corp.'s Fiscal Third Quarter 2020 Financial Results Conference Call. [Operator Instructions]. 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 and Compliance Officer, Mr. Henri Steenkamp. Please go ahead.

Executive
Henri J. Steenkamp

Thank you. I would like to welcome everyone to Saratoga Investment Corp.'s fiscal third 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 third quarter 2020 shareholder presentation in the Events & Presentation 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 p.m. today through January 16. 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 fiscal quarter has continued our financial outperformance and furthered our ongoing progress in growing the capital base of Saratoga. Despite a challenging and competitive investment environment, our origination efforts combined with our flexible capital solutions and diversified sources of cost effective liquidity continued to support our robust pipeline of available deal sources driving greater scale. The quality of our underwriting re-affirmed further this quarter has propelled us to the top ranks of our BDC competitors over the long term.

As we complete the first decade of this BDC under the management of Saratoga, our accomplishments this fiscal year, including the receipt of our second SBIC license, our return on equity of 17.6% and the 63% increase in NAV and the 9% increase in NAV per share further our momentum and provide a strong foundation for future growth.

To briefly recap the past quarter's highlights on Slide 2. First, we continued 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 17. 6% on a trailing 12-month basis, 21.7% annualized in Q3, both significantly ahead of the BDC industry mean of 7.6% and increasing NAV by a net $9.1 million realized and unrealized gains this quarter or $0.91 per share. This includes a realized gain of $10.7 million on our Censis investment in Q3, for a total Censis realised gain of $11.2 million and as of the end of Q3, we have registered a gross un-levered IRR of 14.1%