SAR - Earnings call transcript Q1 2019 | Saratoga Investment Corp.

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Operator

Welcome to Saratoga Investment Corp's Fiscal First Quarter 2019 Financial Results Conference Call. Please note that today's call is being recorded.

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

Following management's prepared remarks, we will open the line for your questions. At this time, I would now like to turn the call over to Saratoga Investment Corp's Chief Financial and Compliance Officer, Mr. Steenkamp. Henri ahead. go please Sir,

Henri Steenkamp

ask so projections. you. I we Investment call. everyone Saratoga the projections. to conference most statements actual undertake to recent to not filings would fiscal first like be cause with We and could Corp's statements materially conference for includes unless that welcome presentation call. to do quarter refer call our to important to SEC to forward-looking Thank differ you XXXX during Today's Today, from our We forward-looking by these referencing a factors results forward-looking will required do statements law. and our update earnings

site. through details. find Christian X:XX & replay our remarks. also IR now to A in be refer fiscal for release our earnings call Officer, and the today XXXX quarter page the be our few is a can in making Presentations to shareholder who'll release A our from press over Chairman July Chief Events of will available I night. the distributed to last presentation XX. call web link turn Executive earnings Please You Oberbeck, Section press of to first PM like introductory Relations conference would our this Investor

Christian Oberbeck

Thank you, Henri, and welcome everyone.

at sector. growth BDC earnings, the in as As quarter, we maintaining recent credit quality, outperformance continued back most within we are look the fiscal well this in pleased to progress note our as

Our of growing available deal greater sources, scale. and to flexible effective of capital pipeline and robust support structure diversified sources our continued cost assets, liquidity

highest continue To far categories has generating top this strengthen the of year, performance high and month strongest a our of outpacing level X, Within remain quarter, by yet. past of financial a XX.X% for on our X.X% slide returns shareholders. Generating basis, originations recap many our remains the rating, industry our quality, in XX and BDC with of at unlevered investments X.X%, having a XX.X% this maintaining quarter equity from unlevered and our up first, XX.X% on the to While meaningful credit of briefly IRR on quality our of we gross unrealized a in challenging level last persists, of consistent trailing on investment with IRR foundation XX.X% competition, and environment indicators, environment, on Investment Saratoga maintaining the our total loan to and a return and and our industry gross strong. $XXX terms of total mean key beating risen competitive portfolio, of million. realizations credit

expanded as end $XXX.X of from Second, the reflects under XXX% assets longer to term from we our management million, of year $XXX.X and the million $XX of from increase as quarter, at current year. last million fiscal Taking a a time increased $XXX.X perspective, XXXX. our same and AUM last million

This to a platform, of origination our million quarter continues demonstrate originations. with growing healthy the of success $XX

Although leading equaled our or of consisted exits our investments, non-accrual originations, healthier lower yielding this of cash. redeployment repayment substantially to the from a repayments

we new quarter. portfolio investments addition, three In this closed

to us enabled first share. quarter's our share XXXX past on of paid This increase was the dividend quarter consecutive We dividend XXXX. per has per foundation XXth $X.XX per increase an $X.XX quarter. financial the the of our quarterly over June for dividend of strengthening of continued share quarterly the XX, Third, for of a $X.XX

by All distinguishes from XX%, quarter same the income adjusted of net of exceeded as which other BDCs. comfortably periods, over earning for by our investment dividend our dividend us payments we and were been most our end, have

And continues We liquidity our finally, the remains increased are one over also and of having strong only of dividends seven improve. year. to BDCs base past

share premium of as morning, at million. of price is and NAV per a we shares of underwriting costs this of The approximately at to a $XX, to commission is X,XXX,XXX which estimated end. of offering, transaction this be placed quarter $XX.X proceeds a from Just our offering net public X.X%

also outstanding our objectives issued common and underwriters net we reduce offering, our We of these We in granted purchase substantially stock. the make in a to also intend to corporate accordance market dividend. up additional have in use still overearned would for offering proceeds strategies, of all our of in general last the shares XX all may outstanding and purposes. net night's the If shares portion our to to to XXX,XXX companies, use middle this borrowings. common an We day proceeds public were QX, investment investments with option

stock improving share by our issue to these subsequent our liquidity further or in not for any QX. increase We under increases our our [float][ph] ATM Importantly, XX%, will more investors. either trading did than

continued XX, indicators, ended quarter saw within our strong quarters XX, key and May XXXX. compared as This XXXX the performance performance February to

X% NII adjusted million versus year, versus this up Our is quarter. up $X last last million and quarter, $X.X $X.X million XX%

$X.XX this up from last year last share from up per is NII quarter, adjusted Our and XX% $X.XX X% $X.XX quarter.

last X% our Our from year, NAV and is XX.XX our XX.X%, pleased year from latest X.X% on equity per last our Overall, progress later. we remain and with from provide up these share detail performance. Henri month last XX is and quarter. more up XX.XX return accomplishments, will XX.XX, up

the credit in asset past, our mentioned of to further As term maintaining while we advancing quality. committed base, long size its we overall have the remain often high

is call and management you As quality review to financial the composition to assets risen under to well our as portfolio. see as now level I Henri, results, that, XXXX our our forward and positive performance of steadily our credits back on long yet. the of this We since term trend. look turn its can the like highest With have X, to at over slide continuing would

Henri Steenkamp

quarter, quarterly The was of increase cash already highlights NII expense, now you from When that increased in results reflects Across unrealized the adjusting to incurring interest Chris. Adjusted quarter the primarily to positive increased see metrics, credit compared Slide Thank the year, second up these our the The quarter. income was as higher was Adjusted incentive up as higher capital yield points XX, X% $X.X yielding in improved due May quality and last XX, adjusted fee million the investment $X three our from and to year, gains full and last was results. on for incentive AUM ended XXXX, up was redeployed assets related you, per the a XXXX. year, into $X.XX XXX last key fee last level when available for adjusted $X.X QX. share up impact primarily X.X% net assets interest for last for X metrics last all performance non-accrual and can our May This interest from of and calculation, X.X% with and new XX.X% per $X.XX $XX.X%, up of last fee million $X.XX, quarter. income, and share sequential partially per Mac our $X.XX deployed. basis from from increase $X.XX million share Taco year, quarter's including points portfolio accrual. quarter, yield up XX.X% as from investments of last up certain from companies. investments, XX new incentive lower from accrual is basis NII were NII

gains investments, resulting of a million first $X.XX or million, million of million in operations in indicator Ice $X.X total million share, share. unrealized net in Return by subsidiaries. this on a gains. unrealized million net realized remains deferred gain appreciation important comprised was The Saratoga net on us, on on our blocker net Investment's per in Investments Investment. equity or net of and appreciation assets $X.X an in Saratoga on we per unrealized of $X.X includes million For net loss resulting weighted expense unrealized increase and from investments, offset $X.XX both unrealized experienced which The on realized quarter, appreciation loss on $X.X $X.X $X.X average million includes performance for $X.X tax investments investments Easy $X.X

same due of deal for average fees expenses, this interest well last to quarter above Sarbanes company higher is and as on touching qualifies as excluding fees the total months, increased fees XX.X% accelerated broken debt remained year, that XX this, assets last average million administrator quarter, X.X%. an BDC and from from this Quickly to on as fees, higher $X.X at reflecting the Despite up was base professional XX.X% return management and management expenses, increased Our a filer. expenses, of in expenses industry million incentive and last percentage expenses year, financing the well as $X.X the Oxley X.X%. equity period activities, now unchanged total

at sheet statement is note particular Of maintained. that added management Saratoga has interest have our took have starting we We in shows metrics trends end XX, upward since slide the from the slides, income the KPI run and appendix XX margin how balance also quarters, and the the of the for rate of past presentation, again nine our highlighting BDC. tripled slide over the net

on of X; this NAV of increase increase million $XXX.X of end, of million of quarter and $XXX.X a from was the as per period quarter year. a the of $XXX.X to yearend, NAV year $XX.XX share as from and Moving from was million at from this million $XX.X NAV as of $XX.XX slide same $X.X up million as as quarter $XX.XX last up quarter end, NAV end, same last year.

gains, of million net tax investment and million quarter, $X.X $X.X For unrealized of by unrealized of deferred $X.X declared. the three Saratoga blocker in partially realized expense net were Investments appreciation this months and on earned, million income, million $X.X ended net gains dividends offset $X.X of subsidiaries, million net

made quarter. plan. shares equity stock million through were dividend the were In sold offering through addition, DRIP the of $X.X the distributions ATM company's No during

history $X.XX lower net CLO on $X.XX income, will gains. benefit offset NAV we Starting total per and sequential realized reflecting a changes and incentive per in of changes the of basis. a fees. to per $X.XX of by investments, from X, share NII a were shown continue increase fee increases interest income. These yielding into and you assets share at net per other value simple some NII the see all a reconciliation increase since QX the redeployment from The new reduction income a has QX. and share in share and are increased steadily incentive of Our to consistent significant top, in XXXX, in $X.XX at major at were $X.XX non-accrual increased On slide quarterly changes a asset

per investments, Moving year increase was as previously expense generated NII the to $X.XX end offset at for appreciation mentioned. the cumulative the from record QX of for the net by recognition a quarter. The this for a this dividend quarter on and lower $XX.XX slide; deferred primarily share to reconciles the $XX.XX by date, half $X.XX tax with $X.XX and declared QX, GAAP on $X.XX of NAV our

X quarter, recognition which adopted by revenue this and impacted our CLO shares Slide between of timing drypowder NAV undrawn to million. and us a and XX, the as SBA also reduced we May the our available fee the ASC-XXX, During facility. undrawn both XXXX, Madison of outlines spread issued new incentive which DRIP of various debentures, sources which was accrual, standard available totaled This cash, $X.XX. $XX.X of we program,

net a offering earlier, Chris As we of million. public $XX.X of proceeds stock mentioned common receiving completed last approximately night,

in at our position, quarter We debt post offering, with sheet, it into of taking from well nature liquidity balance actually investments account is QX. of the the and this was proceeds all years term as our pleased very various overall remain liquidity conservative received fact the remains the all and five long available plus. our relatively that our Following as similar from nature, draws, where especially end

part, facility the Madison except fixed have borrowings we this also cost rising in our interest being For environment, primarily rate all fixed rate. our with our most

of we Now floors, to have them, asset of on short over are all we they floating our the X, term investments moving have interest big of and our rates, of through earning beneficiary sheet slide which across means although side XX% rising balance a remain LIBOR rates.

incremental rate terms, remain will fiscal were of no to $X.X Assuming other quarter existing alter rate were that existing full earnings, of to XX, increase our XXXX without by a any to for interest approximately our and in hypothetical May actions a increase income constant This quarter. as basis per all points million interest XXX the investments interest changes. is our taken

consistent, yields continued investment slide review weighted core our our XX, range, XX, shows that move as would of with relatively has composition asset despite like current the assets, several yield, yield and the our million BDC remain and in on the can the past $XXX slide to the with through yield syndicated X XX% composition of fund, these to invested X I and CLO and and portfolio. the of well On and for investments of consistent how our in replacement Slide lien. remained first and see XX XX% you companies portfolio average our one years, Now excluding on as in levels our loans, repayments total assets. high CLO past,

slightly This one increased XX.X%. LIBOR increasing and three quarter, assets our yields to were increased month in yield from investments last and increasing XX.X% quarter. XX.X% to co-asset reflects syndicated month by the CLO primarily our XX.X%, overall category with to rates, our our this repaid offset This

investments $X.X XX, quarter. fiscal exits companies we portfolio follow-ons in of amortizations, and three in three new quarter, in for of had made four plus Turning the net $XX.X first slide the million million to million during resulting $XX.X decrease and a investments in

geography by with well healthcare as on diversified spread highly and large type, services. of industry, distinct focus remain investments and a business, as over terms XX in Our education industries,

to Of gains had net gas to have realized interest, QX, our remain oil $XXX,XXX. no continue We an part total of we direct portfolio, of consists our overall investment the of which In investment strategy. X.X% exposure important and industry. equity

sale years, our performance past or the combined gains continues portfolio sale redemption a This realized we of the million be other $XX.X or of of For fiscal to a net investments. consistent including of the I equity market. good QX, early interest, had over quality to credit indicator for That Chief from six an has grow now financial turn Grisius, long NAV our Officer, review. term portfolio healthy, my in reflected investment and our overview and call will is President Michael ROE. and helped the of Investment concludes our of

Michael Grisius

to we U.S. downward since in market's strategy. and as our Thanks describe $XX challenging performance May. will number remained call Henri. minutes a I XX current then trend the transactions will extremely sizes the it, market indicates below I have Slide comment investment take see of continued a portfolio couple per on million. conditions deal last of competitive in our a in The

the seen have an spreads we As liquidity this Not in environment, competition growth, the due in fund some narrowed economic borrower periods continued broad LIBOR increase quarter continued to past reality trend markets in capital sustained part again formation. to This remain of compression. significant. to overabundance and surprisingly have past reflects of of is and Thankfully, provided terms this counterbalance friendly. spread

lower the the find at experience and the and market market are believe our there, believe, transactions risk as of we most most shareholders, market capital. the deploy attractive middle marketplace We target continue deliver sheer sift allows dynamics. part our to returns of to to that market, of regardless The to our to segment, likely number of companies this adjusted best us through the end

that their to high, industry continue remain slide extremely on money to aggressive Now work. you XX, see in debt be can of as putting multiples lenders pursuit

able of we for repayment Total to the credits deals. a remaining confident XX, have been our for sustainably is return a slightly modest average where the lower the this and profile. exceptionally as numerous exceed of March the we portfolio quarter, times, our from of leverage profiles value our investing last leverage With As continue reflecting to dollar with primarily previous overall enterprise attractive achieve on the risk of are up X.XX four were businesses quarter risk strong relatively multiples times. focus the this that business XXXX, backdrop, leverage we will models, above Nevertheless, investment. results

have an long record market of through ahead seven addition, four while originations quarter, investments second illustrates established consistent generate follow-ons, that level With dynamics. term, consistent we slide portfolio including over this pace, new difficult is calendar origination companies the last to despite investment and year's new applying our the In ability XX criteria.

in also investments investments two to in companies six the increasing portfolio in have further are pleased closed platforms two We portfolio months. our to new July, new for past

Taco we our loans will our yielding be accretive Mac new future Although redeployed which by our repayments, offset investments, were QX non-accrual and lower earnings. investment healthy into originations to syndicated

to in can confident of emphasize on term, successful judgment, that all one waver size we AUM originations, that, both quality. to sound continue and be We which and on the quarter's discipline, critical a and a quarterly decision basis repayments rests investing believe purely steadily taking not we over Nonetheless, time on foremost grow first credit and the continuous lumpy. our Having do at on this pipeline. we can that continue remain illustrate focused remains this health continue decisions. said We to long and originations criteria nature, our

significant to to development slide for that has continue Moving relationships, mature, new relationships new have team's on experience skillset, strategic to our and sources XX, and focus business led become on our deals.

our couple the see of the companies deals on private XX% the without discipline. deals sourcing. materially conditions. competitive has proprietary can The deal equity market of our underscoring you As past sourced importance these rest evaluated sponsors. also from originations over years, relationships despite increased from of our number in ownership, institutional chart come slide, and The of come underscores

While grown, sheets the XXX the to at XX, increasing the XXXX, in have sourced from top in last months funnel XXX issued same not of June is the deals ended the percentage. sourced by increased size term XX deals XXXX

level high the that the deals the of overarching how today's at find as goal our we to business doing deals in a quality, at to maintain credit we is are that to underscoring means It quality. due year. now, no get in we in looking same many worth matter past of to many number we same have inconsistent have deals, outcome, similar top, high the quality see it's harder fact, order price In we more something recognize work of to as market. Nevertheless,

us with companies strengthening deals pipeline close further strength the is business of new noteworthy, platform. enabled our especially that past two six has our months, giving to in the of Now validation portfolio development

benefit a frequently as foundation for future deal have companies New portfolio serving the of added flow.

completed CLEO, companies the and value and their recognizing growth With Identity Automation, to we as follow-on Knowland, of by returns Ice, many consistency, numerous and portfolio investment outsized have fundamental over shareholders, others; our businesses time. such of Easy supporting to Vector, our measure HMN, ability deliver existing demonstrating supporting

management and the in taking overall portfolio strong, into even is since quality BDC over credit taking account, stronger, by XXXX. when the Our assets originated is us,

slide XX, realized see unlevered you on and IRR on combined IRR on is $XXX Saratoga our on of rest As invested gross the basis, gross SBIC, Management $XXX invested the XX.X% team XX.X% Investment approximately million made in can by of the investments on million unleveraged approximately XX.X% million On the our is a BDC. $XX realizations. in

chart see weighted of securities XX of our XX times, Saratoga overall that low highlights when SBIC on million the the IRR our over unrealized $XXX to the with and Slide mix remains unlevered investments. you right, SBIC BDC to is can leverage. of relatively that gross total XX.X% The combined investments investments On since at especially in management. took X.XX market XX.X% these investments senior our conservative, was of profile lien leverage compared portfolio of comprised the first

stretching from to factor. cost favorable the risk deliver returns capital shareholders, our without highly accretive us this out of to Our allows on program,

can SBIC from assets Moving see XX, $XXX.X quarter last million on to quarter. up $XXX.X increase to slide as million of our end, you

review new our of our end, cash, over capacity due and license. demonstrate these asset growing procedures, sourcing extremely our to long underwriting debentures we culminating investment both the available Producing capacity, subsequent $XX diligence us our This new strength high a approximately assets capabilities, turn Credit to and tough high end. quarter a This overall required the quarter's firm quality in approach. results SBIC capacity continues leverage Overall, our and quality to term. results of our market, market. our million of committed this remain million current remains CEO. quarter growing quarter available end, leading selection concludes fund remain growth come origination over we as platforms, operating High Chris? to quality and $XX including total as focus, my from remaining call I'd of And the to diligent as well to of the total SBIC represented back base investments. like to within has in of quality was XX% we to follow-ons. this top within drew which As had of

Christian Oberbeck

Thank you, Mike.

grown stock on increases. As dividend quarters our by be quarter This quarter. most to the we us since consistent industry. end, XX, dividend sequential of launched. BDC represents giving were we over-earning by overearning XX night's shares of If our first outstanding the our Despite payment dividend cash in the one of increases, as coverages following QX, quarter slide higher $X.XX, last dividend common increase from dividend has XX%, quarterly would these dividend the was outlined our at recent all program our XXX% in still offering program this

seven As near can which of you grown top us we see peers also one dividends comparable. places at have list, directly had top BDCs an policies, therefore of on easily past that dividend not our the This only slide the growth, the dividend variable have year-over-year of the in some list includes year. X.X% have and BDCs XX, very

had dividend of believe truly increases; sequential no increases most our us the size BDCs has the have or of increased We have quarters within their XX either continually now differentiated dividend payments. marketplace. decreased We while had dividend

the We Saratoga also see industry. continue to outperforming

and to the generated has of X%. XX, significantly than returns includes our which And appreciation months, more year five XX, beating BDCs you all capital BDC last the management places as on horizons. total our when of is three Moving top over longer dividends which return took of slide time over two slide the both for for the both viewed can see total when in we us a XX XX%, time return of BDC, the and horizon, index

compared exceeded as management further the years XX, manager our see BDC return. of three XX% return when alternatively, ago, as with XXX% the can context became the of On specific -- eight to Over metrics. investment and our certain XXX% index in of outperformance our past exceeded broader the and XX% the years, return performance placed the you our index, key the slide industry, return the

We on per marks latest the NII value coverage, equity, net yield, asset and months diverse including achieve latest dividend yield share continue to months XX year-over-year portfolio, growth, as Of metrics. moving note, starting is capacity. that we ratio industry our while have we most the the to and assets our industry investment outperformed grown categories, other interest high are scale, across on XX closer to is return in dividend expense averages, reach

We on our receiving. months outperformance, latest continue NAV growing per the emphasize shareholders to our XX reflects return which equity share and value are

to ownership of XX a industries, BDC, Moving help quality at latest A differentiated Saratoga highest AUM, base, belief. is characteristics include solid current our dividend, all risk. this on of discussed and profile, quality quarter XX%, raise. including attractive further our drive our grow premier risk [indiscernible] designed the with characteristics has of exposure call this long minimal outlined oil industry. the to growing adjusted on among term XX% equity Strong rate continuing With and we Investment, supports We with investor the per and marketplace. this and over-earning will make low our XX, one of share, in yield term potential, the management earnings interest slide competitive and and of available equity, that cyclical NII at expansion by that performance, to levels portfolio high this community. over-earn the night's credit markets and contains steady, capital to end, to growth of attractive substantial an long months equity strong initiatives overall the protection BDCs more Last maintain to maintaining of addition in high the NII a highly offering potential have post are our as Saratoga with asset Investments recognition institutions. base, These quality size liquidity, on slide cost ample which gas achieved against return that

goal accomplished benefitting we a We XX, of Finally, while looking without lot and at scale. our asset long have our this course to our quarter, financial slide quality, proud remain credit base with expand term are sacrificing on results. from

to close would consistent total increase by capabilities. like of adding all and I investments, continue capacity management industry support. ongoing again team performance. to shareholders our on should our also source, analyze, to In our our shareholder our manage thank continued result simple in for We and Executing to return leadership their and objectives our closing, and

We are excited for and open for I to call growth that profitability the would now Corp. Saratoga lies questions. ahead for like Investment the

Operator

Instructions]. [Operator

Our first Mickey Ladenburg. question is Schleien from from

line now is Your open.

Mickey Schleien

with everyone. you with war that portfolio sticking. morning. actually question seems developing trade traction, like mind? how more strategy, those is about the morning Good those this about tariffs in to My to up understand so news may are It positioning developments some gaining I'd obviously investment terms be end the in of your

Christian Oberbeck

the investment and given implications and everyone are very organization, largely very that we kind where the to side because to opaque. oriented. export or I of domestic smaller a of say Not like consequences are middle an of as that as good the would of to we these they on complex focus Well investing supply the market, think oriented, tariffs I chains of this. seen, a going type we are that's import yet think I very companies all question, in though, not are be the much exactly of affect, are obviously that knows

have lot companies. We of a services, software-as-a-services business

approach we believe so even our more portfolio their our right positioned to and if So had issues niches, seek broadly, our investments and from for that economic now of what our and have problems -- we issues, cyclical aren't kind investments in reasonably own that and is that's investments. we the trade

in and dynamics whatever and do are of We is and that power are internal through in, marketplaces. on their that, based try the environment find not what will macroeconomists we companies trained kind we

with domestically And us they as dimension hard portfolio, operating being risk. war perceive of potential and we of very we portfolio, almost kind the our now, implications don't believe as and the with of But it the strength stands the right now, general in a that comfortable are really feel circumstance our to trade right so, markets and any exact of focused can for foresee. economy in, U.S. in a substantial are we the strength also that we

Mickey Schleien

Thanks helpful. very Chris. for me morning. all That's That's this

Christian Oberbeck

Thanks Mickey.

Operator

you. Thank

question Hayes B. Our next Jim from from Riley FBR. is

now Your is open. line

Jim Hayes

come Thanks redeploying on and and size taking spread Hey higher if us would impact of couple how guys, questions. yield have the the quarter, morning. had that LIBOR benefit Can for over of much compression this those help quarters past have my just you the good spreads not proceeds? in for

Christian Oberbeck

Jim. negotiate question, give and is to am a I each dependent just a deals, less our That's deals you the originated capital these sense; we good as is, a primary market. of the on one Hi reason hesitating transaction;

depending but points, we much the how where deals, the the is of look fluid, I our each that you basis our several be some so push hard it's a competitive to if And on pressure we been and that business. the different, thing, we directly something different, of it's are range, really probably we larger very say, just XX again, operate, of not week-to-week spreads months. can that over, are more that's the the of each them narrowing spreads points, so do just where me in price tightening, variation say deals is dynamic. answer, that probably risk deals it's do six affected. spreads, -- how it's we are basis market certainly market have of is the But tell a that profile and where really general hundred to market, being But at in in you we could spreads think last deal going. an when week-to-week that end So we feel are But

Jim Hayes

how this then, Got impact this high had fairly activity helpful. accelerated quarter; OID earnings repayment And of fees it. That's an was just wondering, on and much quarter? amortization

Henri Steenkamp

Hi Tim. last had quarter Actually than quarter. impact lesser it this it did a

these that of prepayments was recall So we impact. sort if $X.XX around in you acceleration OID the last noted quarter,

so This it quarter actually slightly had impact, $X.XX less. a

Jim Hayes

it. Got

as on focus or is near expense touched And some you of scale? line of on continue the that at to this or term just kind on any managing Okay. should growth are continue grow wondering, items. If clearly, the just focused you you there to we base, expense point, intermediate

Henri Steenkamp

Tim, operating you think are view We referring relatively that expense view No. and base, we assuming sort of fixed. to our am expenses. I I as

SOX quarterly example, in sort could think, a have quarter, But that increased had a of we little not a implementation line a generally and relatively spike did deal when level if assets. good rate, expenses run obviously spike this spikes, as sensitive bit pretty do are of the for now We like to an are our we perhaps overall we expenses fee and move this view with and fixed a from little. that broken I

Jim Hayes

Got it.

Okay. Thanks for the color.

Christian Oberbeck

Tim. Thanks

Operator

Thank you.

is National next Christopher from question Securities. Our from Testa

open. Your now is line

Christopher Testa

for guys. taking questions morning good Thanks my today. Hey

Ice, picked to bunch Easy on since you Just help them guys what a it of I expand Ice know while cash been the position a improved their interest has further. Easy flow and

guys and are or Just whether go comment cash curious expanding future, Ice? the getting on not, and a any you where in have Easy point from growing you interest could back looking more near to may at just if bit you been they how

Michael Grisius

to that. continues me very Ice The take well. Easy perform Let

just to continue investment, lien evidenced do, business to second plan that quarter, business there, and some as and I look that's we think the the as the equity the to also we past, to capitalize in to and the continues pick where pick that most we we we value can and business, lien value allow in that grow the changing reflective that quarter, but of of is valuing referenced and saw growth, we not are something on capital last in component well, to recent the of fundamentals and our redeploy our interest business. interest equity notes, in this increase of and are second flow the the we extent that business, into valuation you this believe the that of the have in our the that's that's growth accretive how at the cash we

Christopher Testa

it. Got

color thank received debt-to-equity times, much guys stock your Okay. to Board That's in two is good go offering April the total last one. at And know to and Mike, under I night you X.X looking approval the to you. pretty obviously, guys

guys back issue of ATM and perhaps or scaling revolver anticipation either flow higher of having note or you the quarter keep you obviously Just down. doing leverage two, to on ATM on the we in potentially, upsizing have another issuance, basis But the maybe a and in leverage? expect should a kind curious, issuance available

Christian Oberbeck

A equity we offering a pricing growth couple equity baby and being our size to the past, is retained the basis think we to in it think, and earnings, bond I growth accretive and in very accomplished offerings all that have is comments shareholders, We very on that. layered our pleased think our we as stride of favorable. we the much have and very offering, NAV guess, base on on to all, first etcetera. this trajectory, of of we with have recent this on are

the much And again, is, we as financing, in so, kind a like based foresee and move measured year. growth anticipate on portfolio. what doing some yes, the would answer on we is we But of strides, as a offering in further throughout way, our this

other consider to as to favorability of makes because conditions, very you things can that it and market conditions, capital, know, need favorable we know. sense if well raising The have market change, yourselves avail as them, we is of all you dimension

a terms an additional Our good recent offering to position, etcetera. capitalization in equity us wise, the issuance, in all bond ratios puts baby very relative of

I consider. tool the think ATM, something And so, absolutely an that's are to we important ours. regard to of ready With that's

is; thereafter, time. period time, again, so, just have the completed ATM for issuances. that just something not a a certain profile is to of And this and then offering, in ATM I quarter, and We look we and in any it would at be an do portfolio will certainly would would on that our we condition market effect, that agreed out the didn't point what growth relative last basis be

and to trying trying judicious everything having taking tune to as on just or in of So and when books. excess really of be also of terms without much raise can, but our a [indiscernible] to lag we we advantage we as our capital, much capital how are growth, supporting our

XXX% in of outstanding, our a highly our clearly, over-earning dividend of our were I how said our would these we our dividend, of a at and the and all we if be in shares of think look importantly, to we remarks, our protection very dividend earnings ranks number prepared relative still times capital raising.

Christopher Testa

And there you sandbox, Okay, broadly part that's syndicated and seems middle market, and from seeing times we of at the the the major market. kind more you more you starting that and adjustments in like upper provide much add-backs borrowers? larger on see what is to your you there guys looking? a deterioration for EBITDA where Have you running to creep are pass-through guys you multiples that in how in Obviously, EBITDA. good docs are deal debt? it or detail that. being and something into, How of that and plus into done are market really Chris. and deals been always the there and you are is still seen obviously, Is significant the confined color your appreciate presentation Thank six terms have

Christian Oberbeck

more time are in -- a to prepared market, response much of why opportunities of confined those and can, those large, and deal in to those the and of facing dynamics. where our pop-up end aggressive just talking as again. don't we is as by aggressive to that's But And that now make of the some large, not lower borrowers. we middle many we spent terms the By scouring about terms. see larger sure lot you deals certainly, as to remarks, find are that that's the some But we of marketplace, trying

the six face we four at closed, were couple the our deals more deals, post quarter, in even last months, of nature, own closed, of couple types deals in that that more since end of of have and of lien we the dynamics. are opportunities, those of built don't securities, think had sponsored efforts. those I first the a that and of relationships And development in end deals we the we all The if proprietary you business that generally -- have through those look ones deals couple referenced quarter. we the in

Christopher Testa

more middle have and months. you Okay. well? All been reading Is guys a in past has encouraged as of the sort fair. market, organic and M&A new of been of market of right. And couple pick-up in the that seen That's money something larger lower and there things in sticking with from kind by growth the that

Michael Grisius

like But it don't see -- a activity more be having do marketplace, opportunities to are feel to and that really desk. that, we the opportunities the tends we larger same there But the own potential is. we flow in are trying more market is in that the said way is There lag does deal find sense that's that building of our aiming getting our general relationships across way. and proprietary at our deals

Christian Oberbeck

are to portfolio. our is seems spirits coming the a confidence. frequently more yeah, The I think, of animal years to mean mean Greenspan quote systems, definitely more I there add-ons in inside I little there little ago, Alan from a be little more

portfolio encouraged from companies. confidence are we our seeing levels feel the by do we -- of So that

Christopher Testa

guys. Okay. taking questions That's my all for for me. Thanks

Christian Oberbeck

Thanks Chris.

Operator

like showing At the for would no Oberbeck this over call am to back remarks. further turn time, Christian I to questions. closing I

Christian Oberbeck

everyone forward to thank for us with next speaking just look to today. quarter. like Well, we'd We you joining

Operator

and This Ladies you conference. program. gentlemen, for the participation concludes thank your in today's

You may disconnect. now

Saratoga Investment (SAR) 11 Jul 182019 Q1 Earnings call transcript