Saratoga Investment : Q4 2021 Saratoga Earnings Presentation

Saratoga Investment Corp.

Fiscal Fourth Quarter and Fiscal Year 2021 Shareholder Presentation

May 6, 2021

Continued Growth and Outperformance in FY21 & Q4

Fiscal Year-End and Fourth Quarter 2021 Highlights:

• Continued high quality portfolio and strong performance
• • Investment quality remains strong
  • • 93.3% of loan investments with highest internal rating
  • Return on equity of 5.0% for LTM and 12.3% for Q4, beating BDC industry mean of 0.4%
  • • Unrealized appreciation of $5.6 million in Q4, over 95% of Q1 reduction in value now recovered
  • Gross Unlevered IRR of 13.0% on total unrealized portfolio as of February 28, 2021
  • • Fair value of $554.3 million is 1% above total cost of portfolio
    • Gross Unlevered IRR of 16.5% on $560.5 million of total realizations
• Consistent strong long-term originations contribute to growing assets under management
• • AUM up 14% since last year-end with originations of $202.3 million in FY 2021 and $80.2 million in Q4
  • Completed fourth refinancing of the Saratoga CLO, upsized from $500 million to $650 million
• Base of liquidity and capital remains strong
• • Year-endliquidity allows growth of AUM by 39% and is mostly long-term
  • Does not include $50 million 4.375% 5-year unsecured bond issued on March 10, 2021
• Increased dividend by $0.01 to $0.43 per share for the quarter ended February 28, 2021, paid on April 22, 2021
• Key performance indicators of Q4 continue to grow from Q3
• • Adjusted NII of $5.8 million is up 4.5%, Adjusted NII per share of 52c is up 2c, LTM ROE of 5.0% is down from 11.0% and NAV per share of $27.25 is up 1.5%, or $0.41, to highest level yet
  • • NAV per share has increased 12 of the past 14 quarters

2

Continued Asset Growth and Strong Credit Quality

Asset Base Expansion Trend

Overall Credit Quality Remains Strong

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

	Investments at Fair Value ($ million)		Performing	Underperforming Expected Loss of Principal
	Fair value of AUM			93% of our SAR loan
increased 14% year-			investments hold our highest
	over-year			internal rating; two on non-
				accrual at quarter-end*

Fair value of $554m at
FY21 is 1% above cost	* Excludes our investment in our CLO and our equity positions
	3

Q4 FY21: Strong Financial Foundation and Momentum

Key Performance Metrics for the Fiscal Quarter

For the quarter ended	Feb 29, 2020	Nov 30, 2020	Feb 28, 2021
and as of
($ in millions except per share)
Net investment income	$1,649	$4,471	$4,289
Adjusted net investment income*	$6,812	$5,530	$5,780
Net investment income per share	$0.15	$0.40	$0.38
Adjusted net investment income per share*	$0.61	$0.50	$0.52
Net investment income yield	2.3%	6.0%	5.7%
Adjusted net investment income yield*	9.3%	7.4%	7.7%
Return on Equity - Last Twelve Months	23.6%	11.0%	5.0%
Fair value of investment portfolio	$485.6	$546.9	$554.3
Total net assets	$304.3	$299.9	$304.2
Investments in new/existing portfolio	$43.2	$51.3	$80.2
companies
Loan Investments held in "Performing" credit	99.0%	92.8%	93.3%
ratings

$5,000

$0

$10,000

$0

$0.70 $0.00 $0.70

$0.00

13%

0%

13%

0%

50%

0%

$600

$400

$310 $300 $290

$100

$0

100%

90%

80%

*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 fourth quarter 2021 earnings release.	4

FY21: Strong Financial Foundation and Momentum

Key Performance Metrics for the Fiscal Year

For the year ended	Feb 28, 2019		Feb 29, 2020	Feb 28, 2021
and as of
($ in millions except per share)
Net investment income	$18,302		$14,862	$23,113
Adjusted net investment income*	$18,553		$23,221	$22,569
Net investment income per share	$2.60		$1.59	$2.07
Adjusted net investment income per share*	$2.63		$2.49	$2.02
Net investment income yield	10.5%		6.3%	7.8%
Adjusted net investment income yield*	10.6%		9.9%	7.6%
Return on Equity - Last Twelve Months	10.6%		23.6%	5.0%
Fair value of investment portfolio	$402.0		$485.6	$554.3
Total net assets	$180.9		$304.3	$304.2
Investments in new/existing portfolio	$187.7		$204.6	$202.3
companies
Loan Investments held in "strong" credit	98.6%		99.0%	93.3%
ratings
*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 fourth quarter 2021 earnings release.		5

$50,000

$0

$50,000

$0 $5.00

$0.00 $5.00

$0.00 20%

0%

20%

0% $50

$0

$1,000

$0

$500

$0

$250 $200 $150

100%

90%