Saratoga Investment Corp.

For the fiscal first quarter ended May 30, 2026, Saratoga reported adjusted NII of $7.6 million, or $0.47 per share, down 11.0% sequentially and down 25.1% year over year. NAV was $378.5 million, and NAV per share was $23.23, down from $24.42 last quarter and $25.52 a year ago. The company recorded a $15.2 million markdown on its $1.126 billion portfolio; the core non-CLO portfolio ended 0.2% below cost and total portfolio valuation was 3.6% below cost. Management declared a monthly base dividend of $0.25 per share, or $0.75 per share for the second quarter of fiscal 2027, and said quarter-end investment capacity was $197 million, including $61 million of cash, $90 million from revolving credit facilities, and $40 million available under SBIC 3. For the current quarter, management did not provide formal EPS or revenue guidance, but said it expects spread conditions to improve gradually and believes the dividend/NII gap may close over a 4 to 5 quarter horizon.

Christian Oberbeck emphasized that Saratoga is still growing AUM and originating attractively, even in a difficult private credit market. He said the firm remains disciplined on underwriting, focused on first-lien structures, and willing to use FILO positions selectively when they enhance yield without compromising control. His tone was cautious but confident, repeatedly pointing to strong credit quality, ample liquidity, and a belief that the current NII shortfall is more about market pricing and funding costs than portfolio deterioration.

Henri Steenkamp focused on the financial drivers behind the quarter’s lower earnings and NAV. He said adjusted NII fell because of the full-period impact of new debt financing, lower base rates, and tighter spreads on new originations versus repayments, while total expenses excluding interest, fees, and taxes were $2.7 million versus $2.8 million last year and $2.4 million last quarter. He highlighted $197 million of available capital, including $61 million of cash, $46 million of undrawn SBA debentures, and callable baby bonds as a source of flexibility, and noted spillover was about $1.75 per share as of May 31 and about $1.50 after the dividend. He also pointed to low nonaccruals at 1.2% of cost versus a 3.7% industry average.

Analysts focused on the lower spread environment, the gap between NII and the dividend, leverage, and whether Saratoga would use buybacks or more FILO structures to support earnings. Management said new deal spreads are improving but are still not fully offsetting the higher-yielding assets rolling off, and they think the NII gap could close over the next 4 to 5 quarters, though they were not ready to make a hard call. On capital allocation, they said share repurchases remain a case-by-case option if the stock trades at a more attractive discount, and that liquidity is sufficient to support that choice if needed. On Exigo, management said principal is at risk and recovery is uncertain, though interest is currently being paid and they are actively working on strategic alternatives.