SAR - Earnings call transcript Q4 2022 | Saratoga Investment Corp 8.00%

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Saratoga Investment Corps Fiscal Fourth Quarter and Fiscal Year 2022 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.

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

Henri Steenkamp

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

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

Christian Oberbeck

and Henri everyone. you, welcome Thank

opportunities activity. the upside well substantial in as to and the continuation be have increase Despite recovery fortunate to fiscal of far quarter positioned the Our reflect continues and we market future and thus challenges. to challenges continues Saratoga financial strength believe global and position economic volatility in these impacts, through of feel potential a resilience fourth position year XXXX for portfolio ongoing We current and our well to as navigated to benefit COVID-XX the and from of very companies. be market performance

development business deals with metrics our are well, positive issued companies Our existing pipeline performing and remains term and current portfolio and sheets robust executed.

$XXX to $XX as million, follow million of realized with on net unrealized new Our growth and AUM offset across by $XXX repayments. platforms gains Year-to-date originated originations of achievement $XXX record million credit metrics we of million and of this net and $XX million grew quarter or $XX saw significant appreciation sense and all significantly investments, contributing million fiscal equity to return rewarded. portfolio growth latest on our makes $XXX us taking of our our million, equity how XX when months all Investment it XX.X%. net XXXX positions to of also in when has available of been demonstrate strategy companies gains AUM and

$XXX of total million. total a on to per a increase by NAV investments. unlevered historical with from quarter our again retaining basis, quarters. XX% We credit all XX% platform our on investments first of quarter's added past up we performance bring gross financial for quarter, portfolio the with XX.X% $XX.XX, end, Slide trailing registering above total credit gross all quality, return the and unlevered fiscal to loan new portfolio, with investment share made high our past equity our of XXth quarter the fair increase value bar drove were realizations the briefly of of high at quarter recap continue in To existing the we continue quarter three set while our on a in a portfolio maintaining this foundation our XX XX.X% on rating cost investments, strengthen highest X% level a QX over last credit generating our also maintaining this growth onto and BDC. extremely the IRR to the IRR and of portfolio, a record is on of our XX.X% originations this XX-month Notably, by X, current X.X% of unrealized for The of

substantially this as last and the under XX% from million assets XX% $XXX year. our $XXX increased Second, quarter, a to time management of million $XXX increase same of as million a increase last quarter, from

Our portfolio million new XX net and originations with robust quarter pipeline since new originations companies included current and approximately three follow-on investments remains $XX our of end.

liquidity economic preservation NAV are balance as us. Third, we volatile experiencing, in such paramount and for conditions currently remained sheet strength,

equity $XX.X end of $XXX million structure million covenant million was free, $XX long-term at non-SBIC long-term mark of strong. borrowings. revolving market quarter of long-term covenant SBIC We debentures, capital Our entered and supported million to debt, $XXX free

total outstanding portfolio $XX million. to undrawn Our existing lending are companies uncommitted, commitments

earnings substantially quarter $XX Our to and liquidity when had XXX% with available companies total $XXX at support follow-on dedicated in of portfolio new quarter our requirement. We and million XXX% our of million end accretive end exceeded our fund fully to to regulatory leverage $XX would cash deployed. the SBIC be of that II million opportunities of

and week, of this deployed demonstrated be than quarter since end. invested replenished As new opportunistic hand been cash of more the XXXX X% on which $XX we to bond all today, baby ability the has last of million with cash our issuance our $XX.X million

As bond far is as baby the we this issued this know, year. only

paid dividend ended the Directors Finally, Board performance which our XXXX. February on based for quarter XX, share the March on was $X.XX XXXX, per declared quarterly overall XX, of of liquidity, and a

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

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

$X.XX, Saratoga X% ATM NII on year, quarter. adjusted and provide yet inception XX.X% equity share and the was and $XX unchanged NAV deployed. issued Latest this XX is our Our up X% adjusted past management is last per million dilutive from detail last of a return up of quarter, in million up up year equity two $XX.XX and NII is not $X.XX months NII the $X.XX per fully quarter, this to impact last quarterly proceeds more shares from year, quarter. will quarters is there last a investments per $X.XX down two later. $X.XX $XX.XX, This and from Notably, share year since last share the highest the XX.X%, from from years, while our year, Comparing $XX.XX $XX.X from up last the we in is adjusted last up fiscal X% from and $XX.X is XX% from XXXX. for million, NAV and

and Slide see high nonaccruals. current credits consistently years with can X, under ago, have remain over As since of and you BDC risen management almost our steadily the quality no assets took we the our on XX

like as well capital into while credit of our being our continue available this in now over the and growing performance composition that, our trend evolving I the at as financial Henri back this we deploy the same Our management as pipeline, team With call to is turn working time portfolio. diligently to to results cautious to would review environment. positive appropriately our

Henri Steenkamp

the from $X.X X quarter, incentive Thank $X.X $X.X from X The was last you, compared capital second were $X.XX, million, shares last for and unchanged $X.XX year since $XX.X from high QX income, three XX, as $XX.X this to and from weighted offset accrual per undeployed. to $XX.X our did QX. last issuances was increase ATM investments quarter, non-CLO from NII and by share and X.X% million share $X.XX our dollars AUM quarter, The up quarter. February year-over-year. points is Chris. QX still and basis and interest $X.XX from fee for X.X% and per related up up unchanged NII incentive year above the XXXX. NAV quarter weighted was while earnings Adjusted is of in year's adjusting in reflects outstanding we quarter, performance quarter. X.X% to common million to down key metrics Slide year's to net yield NII a from highlights adjusted program last X.X% a XX% adjusted lower absolute quarters other impact capital of with investments rates level coupon and NII this the primarily the higher from calculation, last for resulted When XX share million on under X.X% fourth this last and for reflects million X.X%. in up average year, interest Across last decreasing QX. the with average NII current as ended quarter, gains for yield million Adjusted fee BDC X.X% the last per dilution This equity resultant last last

gains an company's to $X.X Artemis Wax by investments million yearend. by million loss in equity million preferred million and $X.X unrealized on of The in unrealized the per the company's in million of $X.X net of company's million and investment the a payment was million $X.X This For company's $X.XX $X.X million a a $X.X and appreciation investments, on SBIC gain primarily unrealized investment, from share dollars stock appreciation weighted and as company's unrealized the broadly unrealized market $X.XX $X.X or gain realized net share, on equity reflects net unrealized escrow loan per the in million increase share. or million $X.X Destiny $X.X quarter, the $X.X deferred per CLO and $X.XX million realized PDDS on Netreo on the preferred operations net weighted investment, volatility unrealized syndicated net million appreciation we in assets realized fourth net JV investments the or on comprises $X.X million appreciation expense appreciation. I unrealized debentures average the gain repayment appreciation offset on appreciation net respectively. The investments this comprised tax reflects, a appreciation $X.X depreciation of on million $X.X resulting offset total $X.X million on first $X.X partially equity of dollars experienced of average

an unrealized portfolio, realized In the other increasing X.X% non-CLO both total Return on remains us overall the addition, gains. in for during indicator resulting total value across the by which there in net important were quarter. performance and includes equity numerous portfolio appreciations

and on the $X.X million well excluding last Total of X.X% of our for and Competition fierce, earn expenses, blended average above average financing of months. and remained last management down assets remains we cost Both XX above our basis, for our expenses, Our compared ROE year. equity this of is from opportunities of XX.X% unchanged to to return taxes an yearend. capital. interest NII X.X% X.X% at debt incentive represented capital fees was on to This and LTM year. quarter adjusted fees as total find X.X% continue our both annualized last income of cost but

trends benefit up the Slide NII during incentive added to fee million was we of presentation income full X.X%. $X.XX our shows of upward past million in for statement Slides our is past BDC the X at $X.XX, yield SAF NII from work and Adjusted end $XX.X adjusted NII the increased note basis key the last and the net year, on highlights X.X%, have increase putting for that We sheet by from $XX.X starting from the When the $X.XX how have gains and slides compared XX Slide particular appendix the this as these fiscal our of quarters X% in also bonds accrual also amount rate metrics balance the was the quadrupled period XX.X% baby to through related metrics Of XX yet cash. was capital has margin has QX up again XX for undeployed to Saratoga maintained. year. and the of KPI took nine run net points performance to share over the significant of the from since call continued and interest per receiving interest the year. XX redeemed highlighting same XX adjusting adjusted not still almost while months, management and up

net share. year or dollars, loss fiscal average gain debt, a per weighted investments per $X.X on million share, appreciation $XX.X $XX.X total $X.XX operations and assets the investments $X.XX gains, of shape, million million a For net increase of various in for on million of pieces weighted experienced of on XXXX, per net or realized net a we average and net in or repayment realized included gain resulting $XX.X million This in this $X.XX in year. $XX from unrealized

by $XX.X a quarter net Moving from increase on last gains issuances. $XX.X year, of X, unrealized as driven NAV to quarter million $XXX.X a million dollars and the quarter, last end, ATM Slide this accretive increase same and from equity and million was realized primarily

NAV repurchased QX During at while price the an price our $XX.XX proceeds XX This per shares XXX,XXX, per share, were ago. sold at was net highlights $XX.XX. approximately as million NAV $XX.XX XX of quarters. of of NAV average historical from were share of has an also yearend, XX for of shares $XX.X XX,XXX $XX.XX, increased per which share our now up months chart includes past average

value Our demonstrated steadily growth per been share. XXXX by and has increase consistent net has the since this all accretive asset NAV increased in as

the to unrealized and on at benefit in Starting $X.XX you reconciliation other volatile by in more a quarterly partial impact from continue a gains. our base interest increase share top, a a We normalized income in of On net sequential non-CLO major originations interest share will see expenses decrease and markets, share simple changes fees CLO $X.XX NAV in per a from of increase basis. seven, levels. management the operating AUM the increase remained and of $X.XX realized in Slide a $X.XX adjusted in the increase public offset NII per from history were consistent $X.XX and at the reflecting a higher per income income same higher $X.XX NII to

$X.XX In dilution. excise addition, our net tax resulted to issued a reduction, net and a new the $X.XX in shares led XXXX

count the base sequential a on the On to offset gains from from dividend last from higher to share a same and year year. $X.XX top the from on the of income were Slide the $X.XX unrealized increase The this share see increase were for the quarter. dilution the primarily higher basis. lower by per by on $X.XX now X, share NII slide, appreciation paid increase per increased $X.XX a NAV average adjusted year. but $X.XX in realized drivers per The There this investments share NII will per AUM. in management net share QX. net Moving in and half GAAP X.XX offset you $X.XX reconciles at originations other $X.XX the increased annual primary a reconciliation, was of fees $X.XX Starting cent for also of

On to a of million. $X.XX as per of the from appreciation. expense powder The year. were This lower deferred Slide between X $X.XX net for undrawn available blockers $X.XX the NAV $X.XX GAAP by secured realized of net realized which a half and unrealized the related the $X.XX gains provision partially tax during unrealized outlines year, this taxes income yearend, gains The loss a realized on appreciation extinguishment the was in slide, dry us $X.XX of facility. offset reconciles tax our increase cash, share NII dividend and $XXX.X paid our spread debt. of $X.XX and undrawn the and totaled to available SBA debentures on credit

account $XX grow of when level liquidity is the quarter sources our the fully rate XXXX, liquidity rising $XX.X nature our public with our million, with slide. debt leverage and just assets with offering without debt of is of especially available access no liquidity, sheet, is XX% million that rate need outlined X.X% importantly, XXXX. an liquidity week including almost of within by additional low long-term and closed the next of and debt balance remain closed our and and the accretive overall environment. cash allows This debentures that years, in to being maturing end bond due taking almost baby SBA on into non-SBIC notes us million January, nature our million our this fact and it bond with three fixed X.XX% pleased external $XX baby all both $XX to we We bond in This diverse end accretive. also liquidity year available all it last to private financing, NII and conservative to this of pricing In for we its position institutional cost our an very accretive that's deployed, due

XX fund investment one Now like invested or joint the to highlights fair I of portfolio. one XX of at XX move value and companies, Slides cost now XX and review portfolio AUM million to $XXX our CLO would through venture. have on $XXX yield we that and Slide million at in composition

well yield due as year. primarily in CLO, Our can first the in On is This see our on points assets, total yield lien XX% lien dropped of Slide total has percentage to below basis our as positions. XX% BDC another our how core which investments, first tightening our you this assets excluding lost spreads of out of with market is quarter. X% is continued our XX this XX,

addition, of some fiscal in In than this equity resulting rather dividend in of income. increased while strong equity valuations equity that the other equity to the reflected is that that P&L preferred due to X.X% in in year QX. earns positions from significantly the appreciation is also have of income our in the existing Much performance, is from form XX.X% increase income interest

As a XX% is our of reminder, XX.X% have LIBOR investments flow less. variable of basis points portfolio a our or XXX interest of earning rate and

the with basis So we breaking points expect recently, rising to NII LIBOR earnings see of our through XXX to rates shortly. impact three-month a

Our impact XX represents. portfolio, The market diversity that basis diversified our a our incentive how quarter-on-quarter you US. XXX yield $X.XX annual to first see Slide forma reflecting investments XX widely current industry and decreased can is NII, shows to XX-K through performing The pro the net CLO for benefit are to our And fee of CLO breadth currently current. the on XX.X% performance. outlines portfolio increases points. the rate the including of Slide and

software, on industries services are and consumer and spread investments focus over distinct healthcare with education, services. XX Our IT a large healthcare

of our Of part total of a investment to as investments interests, JV, investment finance are overall and portfolio which the in our addition CLO remain important our consists strategy. XX.X% which securities. structured equity In very here included

to the of from equity were NAV over Elyria accretive realization to over fully gains Saratoga due gains And carried management were degree combined took realized of year. final last the loss total we years, past two smaller to investments. the BDC. sale My this XX forwards of million of unused And these For that fiscal sale carry year Center or write the $XX down over a from early capital redemption when and Alarm a net interests or have the other of historical thirds

NAV, has end. financial credit now to my concludes portfolio We our loss remaining at the highlights year our Officer continue investment for That grow long-term helped to our and Investment have million healthy realized quality Chief I over gain our is consistent market. $X ROE. of performance review. reflected the capital This portfolio call in turn and Michael overview Grisius, an will

Michael Grisius

the were a seen. on that of covenant describe Thank accelerated is spreads we've portfolio leverage of continuing in our Broadly update comment and and to deal experiencing be looser Credit you, ever and keeping market, rising and and see continue quality first Since currently we a but take actionable ways, markets performance for among Pricing our are to movement QX, strategy. they market. tight, in albeit minutes the high very Investors to much the not yet multiples are last other year-over-year couple slightly We Henri. are low deals lower and very but absolute yields. be lower most transaction on as with close XXXX, market. extremely pipeline. pre-COVID-XX high our in calendar be quarter differentiate than aggressive, themselves volumes such to Liquidity competitive restrictions. activity, M&A investment where syndicated current an have exceeding metrics the then and remains volumes a perspective in continuing state market January, I'll robust. middle to seeing lower timing demand the to much In of tight. levels abundant. conditions spreads, saw continue loan we borrowers yields High current we

in Now keeping Despite We're of thinly most that are lenders level for base terms requiring in said, our could the of our hikes aggregate continued this, of staying wary and expected covenants. and minimum by environment. eye are market reasonable part deals, how exacerbated the a strong and a interest equity disciplined have still watchful position capitalized and rate credit combined pressures rate possibly in entering conflict, credit with affect confidence inflationary markets on we different the Russia-Ukraine economy.

companies to as to existing strong remains of capital balance year a yet bar Follow-on pace. record has high for important for and us, continues underwriting year. Most teams. capital, strong the notably, be environment XX deployment borrowers this in delayed business we with past with draws. important, in to Portfolio Our deployment including in avenue Calendar XX XXXX discuss as follow-ons contact origination we quarter remain to opportunities usual, in shortly. with investments fiscal alone, in as new critically model, and actively with management our we year, have incredibly find us last with close XX invested management continue an be continued fiscal investments been this will platform a demonstrated deploy our engaged an we sheets portfolio

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$XX.X overall strong in gains XX% by strong believe in industries well We this durability. assets lien exceeds year firstly enterprise its debt, fair recognized basis now unrealized overall reflects attributes realized is and Saratoga's performance our value have historically that its cost We bolster performed also values by portfolio certain of stress this X.X%. our situations. fiscal portfolio of generally that in supported in net of and million the

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Our investment approach has yielded exceptional realized returns.

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Christian Oberbeck

Thank Mike. you,

As dividend ended latest XX, Directors quarter considering XX, evaluate XX, The both general February to and Slide a economic on XXXX on level Board at XXXX. of basis March factors. least company was paid on for dividend the outlined the quarterly our continue

return Moving includes total and total both capital dividends, has of the to appreciation with in XX% line for the Slide on XX, returns BDC generated our XX of last months index which XX%.

Our term is next outlined our longer performance slide. on

for and of all us horizons. both the Our BDCs half returns top time place three five-year in

greatly see broader XX return. exceeded key the the three the our the years return past certain five placed the specific our return index's context XX% of XX% XX% further in On Slide in the and of exceeded the metrics. you Over can past outperformance years, are return XX% to performance index industry over

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A and our long-term portfolio our management Our and which Access with include grade of the B+ make long-term at equity issued levels per and in low our increased public with NII equity, XX%. on NAV support risk baby yield, putting investments one industry a growth. accretive bond attractive High industry quality helped of issuances, maintaining the last differentiating [indiscernible] recently cost private characteristics and rating highest week. to triple historic investment to solid and new share liquidity the top share, at leading of historic growing [indiscernible] bond for per us profile. return active and earnings return, with

liquidity balance and our that the call closing, minimal I tested Saratoga's including team, like structure sheet, support our to and for and all capital current In long-term. the near environment future addition, high and quality would portfolio their underwriting historically the exposure and ongoing and like the would I our now will conventionally questions. thank confident investment of time the We in through shareholders open industries, that benefit and shareholders again management well oil to for strategy, historical remain credit and to in contains industry. gas standards, market in experienced strong challenges cyclical our In service battling

Operator

[Operator question of Ladenburg. will from the Instructions] Schleien Our Mickey from line come first

is Your line open.

Mickey Schleien

well. depending Couple cyclical. defensive, particularly retail which questions. are restaurants, hospitality, pretty could portfolio be companies looks and more some Hope of large, not everyone. you're afternoon, investments, The but in on there they the but good Yes, are

And So you withstand slowing at I'm ability do feel recession you're whether road? of the signs a to their about seeing how down curious potential things down any these companies?

Michael Grisius

make into for toward we that instance, might that Mickey, is we demand, with of there's That's in question, referenced. or thinking a scenarios good there's in correction is a that a just Mike. industries and the the where less where and underwrite this you an portfolio demand our mindset all go consumer environment modeling you way The about investments

that the relative we lot we more And so industry instance, giving deals leader, look like and focused prospects balance couple And of end away historically. one that reference, structure cases when far we a that think, we've they're to we experience there structure and I feel balance was that is referenced date, a value. we by that so as confidence prepared in have participates of the got a enterprise that COVID. on sheet time, like the thought very to the the But the is where you been having time and following we're sit one we that of strongly, a we've the as of deal it that sit in sheet, as space. comfortable the in reflection remarks, we hospitality performance and the restaurant really well other very on the performance feel And have hospitality over feel and for in with to business sheet. get through is do balance We some should of COVID, we their for I that as it's the where

that say overall, say, I at I instruments want at economy construct during So deal a do, fundamentals how to though, that we looking so the balance we're we the every fact the debt we're and thinking our I potentially period, time, we not downturn our in where business, in investment always it terms about reiterate about again be in sheet. and thinking the where I go the that we but thoughtful of of the ourselves we will could through position this think are very

typically with well. margins, very flow down debt. good resistant lead track strong They' As their that to healthy proven ones in to teams cash recession are pay very and management markets. to we to businesses margins a strong very got gravitate strong the think businesses ownerships, a which sustainable a their proposition really with value result, they those and very customers have as generally, just offer And that is we where They've much variety and they're of compelling record service a fundamentals.

have lots But very not the that them. constructed some a portfolio, see go how result businesses of about with generally, it's All You're can associated of recession. good impact you to businesses as volatility going we get our feel beginning. at we referenced as us at into look as

Mickey Schleien

of is the in I'm about with, more popular That's a CLO, of BDC the is curious But you're little next a high more in level which Mike. quite these amongst and segment different form that credit that usually vehicles a obviously in fund. itself take operate sense own Those potentially on. question larger to BDCs maybe are a with manage My a pick senior for really effectively leverage markets can Thanks low unique helpful. the new the you senior fund. some loan

So why add the just senior the business? loan of fund CLO expanding instead

Christian Oberbeck

maybe answer Mickey, I'll that.

there's of something type also by also diversification co-investors. that in CLO The diversification And thing. it's in that It's important, of for of time. periods another of is think I occurs source we certain another diversification an there dynamics and but and is that source capital. have so element cycle and existing driven our that's call

so this more And us to diversification have over time. allows

Mickey Schleien

there? the the CLO, That's you was or seeing estimated just the yields that are teens some following that prepared the And remarks helpful, to I north the and previous there estimated I other And see but estimated on performing, what's I X.X understand. are of vehicles CLO depressing yield in down equity XX. XX.X said know, space Chris. the yield quarter. Henri that problems is on cash in the up percolating the know flows in from that in credit

Henri Steenkamp

Henri. Yes, Mickey, it's hi

that you valuation. average know an doing. our valuation the changes of our output a output is of as as firstly an when of valuation interest it's February, And sort no the assumptions. that, this you actually we saw that sort made end to the is the as February, as of past valuation And period at measurement of So of look quarter and rate you is we if calculated weighted was what of did gets a how yield reminder,

one XX part in the trading last or that under they XX a quarter. So number level, assumptions we when certain that any things remained they it were of is under came assets the actually level valuation you or the valuation, because assess for the And same. the of to defaulted unchanged as of assets were trading

unrealized quicker at you the initial months than a of a wasn't environment, when if firstly, the liabilities And interest of of reprice in you valuation assets main impact the because Really the that whereas secondly, XX output decreases end the happens bit immediately. assets driver liabilities also either reprice have assets are really definitely by rising is the it temporary rate, well, little of recall, if rise So what month basis points. February unrealized the is reflection the in flows was that some recall, CLO the one through rates often there's the then saw which credit. rate of all in LIBOR repricing, as the in or place and a driven you was of appreciation a appreciation, three lot three-month February, so and only a

of sort yet So floors. end that February, the through saw through of the not rise that you asset was

of flows once the in timing, And as cash down of down the flows go that projected flows a so reduction net and as And in valuation, well. impact rate sort cash interest of the the drives the the those resulted projected XXX. in

on of based temporary a it's February, of So, the end existed else. at anything than phenomenon what more it's

Mickey Schleien

sounds us, like that you to in Yes, where was reverse the up? remind period go going Henri reinvestment CLO? in you can it just ask I just interest are could itself as the rates

Henri Steenkamp

XXXX. over of is -- so it next beginning years, it a at refi is just think I refi-ed the and in year ago We for three the period

Christian Oberbeck

is the again. consider Oh you the it where refi-fying [indiscernible] it end would of

Mickey Schleien

I understand. afternoon. me Thank this That's it you time. for from your

Christian Oberbeck

Thanks, Mickey.

Henri Steenkamp

Thanks, Mickey.

Michael Grisius

Thank you.

Operator

from line Bryce Our Hovde next Group. from Row the of question come will

You may begin.

Bryce Row

Thanks, afternoon. good

post Let's thinking how as wanted SBA, see, I on maybe and the to post usage that fit the balance you've some drawn and of end the quarter activity here new of would the with SBA balance available debentures quarter this here of ask about SBA, just sheet, leverage deals the down the you SBIC. activity end the recent sheet, haven't if as and done about you're just well curious I see some

Henri Steenkamp

first, go there. Hi, Bryce. I'll Yes,

related end post quite activity quarter investments. had SBIC and So to yes, we've qualified that of activity healthy some yes,

So downs partially there that. fund of draw to was some debentures SBA our

structure we that unsecured to one in And probably we've on a long-term know, always long-term. have perspective cash us maybe week, rate In in we did afforded last you And bond for a lock addition, as we you as then as a liked. saw and a hand. from baby structure, well, week, did which a the structuring last opportunity

that a is So, of SBIC remaining as the that since we're saw see And we of a post in did the debentures partially quarter of still the using and quarter issuance combination obviously, you as think end that you pipeline sort if of also new of we're end we cash. some healthy the well reflection horizon,

Michael Grisius

of Well portfolio sort that then The of trend companies it quarter since the and end we new what follow-ons had QX number you did this done really end of Mike. a a you is we two in as well. is we've healthy we've and the saw QX is post mix what continuation quarter in have, post, in indicative that's of new invested of companies and portfolio where

Bryce Row

look expect the helpful to a that and kind that's in of quarter. perspective, year? terms seeing looks Is activity like we in Okay, kind we've the repayment balance out what repayment so continue from something And it to relatively far February here here added the of as of saw quarter-to-date of we light. light you relatively you're

Michael Grisius

Well, I'll say, ahead. go

Christian Oberbeck

control. we that's Before you in one go of continue, least at Mike, the things I'll certainly hope say because that would just our

Matt Tjaden

one more see we rate than very I are recapitalizing result undeterminable. have to less repayments but are of their markets. The rising been it cycles, that's over turn of way would we capital no that sheet I'd a say say take of speeds be may having a and portfolio in to likely this declining, that, especially more change is, in spreads so a could I in environment, that, the you our compressing have someone so expect what's where that's, given that way be the else just gets we of though, precisely. general, would control, Bryce. is about through that that, in XX% equal and but basis, tempered a would That's, determining to think environment thing somebody often that that because really But balance normalized is Exactly. as XX% aggressive said not this a that's of year. rate in less possible it's a on all many of advantage that environment, repayment rates

that of of is that base is XX% kind to I XX% of think turn general over reasonable way kind think It about. that's seems our a us. to portfolio likely to case we

Bryce Row

Okay.

back appreciate Okay, queue. thanks jump I I'll it. a the in lot.

Operator

James. Tjaden Raymond Our Instructions] line next come Matt the question will from [Operator of from

Matt Tjaden

see targeted afternoon, you as loan and follow appreciate ROE timing interest could JV, when well of wanted a senior you size of the up and we from vehicle, taking I to questions. a was my I fund for the guys, Hey if could wondering kind sense to the on us as as give membership dividend piece.

Henri Steenkamp

was Hope still haven't guys all we disclosed a an well. components days. ramping total hi, joint of $XX of believe it's so, and because it's Matt. venture. disclosure Yes past did our early as of million busy And doing around, equity. are Sure, the it we and And we about included so that case, or in the in first up from we've time made I the form you that we're the quarter XX, This that yet, was sort investment of just debt investments. it's like

similar most we our that CLO think perspective. this business that's to sort of different an of…If for obviously reason I very mean, it's HVAC to a venture, of for that existing ROE and sort went or that we a From venture work money existing much it's similar you the something Saratoga. it's moment, lines So we our into at of more to to from do perspective, of the the sort And the still first investments us joint joint the it's did. diversity phase. one thinking putting We're an ROE have, our in first like

Matt Tjaden

Got given and the the uncertainty pivot to it? in capital, to appetite a origination outlook, helpful. the bit debt? more lien was say Maybe for kind of what's That's economic wondering, second front, junior the unsecured

Michael Grisius

capital I best approach for it strength with a question. get mean, approach and can then always good found taken adjusted the in road. where may a return of that that we That's lot market about adjusted been a careful the more be of mind, stack potentially down you at risk better we our to shareholders. in the we've is than the business be often we've this opportunities the the in model, the that stack, look the is reasons spot decide at top concerned returns the underwrite of that middle because risk where get economy we could I that and the And think to capital just with stay market

in would position know, bit a You be the normal for probably junior let's than is capital times, say. a higher bar even it

playbook do and heavily in stick we first that's So well. we're accretive shareholders. lean I capital in like We to what positions which very dollar that's debt our very going served on to a a our with way us senior think lien to structure that for can is one being and continue

times are uncertain markets, the seen doesn't years, pay. uncertain stretching So especially for yield, capital in over often we've

that, present Now, that know, themselves. to always may having said you opportunities we're open-minded

to a done was But we'd if opportunity debt capital safe consider. on primarily that historically be So large, by found was lien shareholders and and deploy do securities. focused we would we're like something first we've that what very a super a in felt great investment for our looking something accretive it fashion, we to

Matt Tjaden

I Got time. me. it it. appreciate the That's from

Michael Grisius

Thanks, Matt.

Operator

to I'm And the questions Chris turn you. over like call to back the I'd any showing queue. for Thank further not remarks. Oberbeck in any closing

Christian Oberbeck

next and your quarter. Thank you speaking support, we report, yearend and appreciate our to forward we look again, listening much. with very well, of to all interest Okay, time and you

Operator

conference you for Thank participating. today's concludes this And call.

You day. may have Everyone now disconnect. great a

Saratoga Investment Corp 8.00% (SAJ) 5 May 222022 Q4 Earnings call transcript