Saratoga Investment : Q1 2022 Saratoga Earnings Presentation

Saratoga Investment Corp.

Fiscal First Quarter 2022 Shareholder Presentation

July 8, 2021

Continued Growth and Outperformance in Q1

Fiscal First Quarter 2022 Highlights:

• Continued high quality portfolio and strong performance
• • Investment quality remains strong
  • • 92.9% of loan investments with highest internal rating
  • Return on equity of 19.4% for LTM and 27.0% for Q4, beating BDC industry mean of 17.6%
  • • Unrealized appreciation of $16.8 million in Q1, reduction in Q1 last year value now more than recovered
  • Gross Unlevered IRR of 13.0% on total unrealized portfolio as of May 31, 2021
  • • Fair value of $677.8 million is 3.2% above total cost of portfolio
    • Gross Unlevered IRR of 16.5% on $573.3 million of total realizations
• Consistent strong long-term originations contribute to growing assets under management
• • AUM up 22% since last quarter and up 40% since last year with originations of $119.2 million in Q1
• Base of liquidity and capital remains strong
• • Quarter-endliquidity allows growth of AUM by 23% and is mostly long-term
  • $50 million 4.375% 5-year unsecured bond issued on March 10, 2021
• Increased dividend by $0.01 to $0.44 per share for the quarter ended May 31, 2021, paid on June 29, 2021
• Key performance indicators of Q1 continue to grow from Q4
• • Adjusted NII of $6.3 million is up 8.2%, Adjusted NII per share of 56c is up 4c, LTM ROE of 19.4% is up from 5.0% and NAV per share of $28.70 is up 5.3%, or $1.45, to highest level yet
  • • NAV per share has increased 13 of the past 15 quarters

2

Continued Asset Growth and Strong Credit Quality

Asset Base Expansion Trend

Overall Credit Quality Remains Strong

$800
$700				100%
$600				$678		98.6% 99.0% 93.3%	92.9%
			80%
					96.8%
$500			$554
				94.1%
$400			$486	60%		98.3%
		$402		94.2%
$300			$343	40%	82.4%	90.5%
$200		$284	$293	64.3%
	$241
$206
$100	$155			20%
$95
$80
$0
				0%

	Investments at Fair Value ($ million)		Performing	Underperforming Expected Loss of Principal
	Fair value of AUM			93% of our SAR loan
increased 22% year-			investments hold our highest
	over-year			internal rating; one on non-

accrual at quarter-end*

Fair value of $678m at
Q1 FY22 is 3% above	* Excludes our investment in our CLO and our equity positions
cost
	3

Q1 FY22: Strong Financial Foundation and Momentum

Key Performance Metrics for the Fiscal Quarter

For the quarter ended	May 31, 2020	Feb 28, 2021	May 31, 2021
and as of
($ in millions except per share)
Net investment income	$9,018	$4,289	$2,556
Adjusted net investment income*	$5,768	$5,780	$6,254
Net investment income per share	$0.80	$0.38	$0.23
Adjusted net investment income per share*	$0.51	$0.52	$0.56
Net investment income yield	12.3%	5.7%	3.3%
Adjusted net investment income yield*	7.9%	7.7%	8.0%
Return on Equity - Last Twelve Months	9.9%	5.0%	19.4%
Fair value of investment portfolio	$482.9	$554.3	$677.8
Total net assets	$281.6	$304.2	$320.3
Investments in new/existing portfolio	$39.0	$80.2	$119.2
companies
Loan Investments held in "Performing" credit	90.4%	93.3%	92.9%
ratings

$10,000

$0

$7,000 $6,000 $5,000

$0.70

$0.00

$0.70

$0.00

13%

0%

13%

0%

50%

0%

$1,000

$0

$400 $300 $200

$200

$0

95%

90%

85%

*Adjusted for accrued capital gains incentive fee expense, reconciliation to GAAP net
investment income, net investment income per share and net investment income yield
included in our fiscal first quarter 2022 earnings release.	4

Long-Term Accretive NAV Growth

						Net Asset Value
						(FY11 to Q1 FY22)
in millions			5% increase this quarter and from
			pre-Covid levels
$350
				272% increase since Saratoga took
						over management
$300
					$304.3
						$282.2
$250						.3
$200						$180.9 $186.8
$150						$143.7
			$122.6	$125.1	$127.3
$100
		$113.0
$86.0	$97.0

$50

$320.3

$299.9 $304.2

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