Saratoga Investment ( NYSE: SAR ) stock has surged 12% in Tuesday after-hours trading after the posted better-than-expected Q3 results and said a recently received third SBIC license will add to its liquidity and is expected to be "highly accretive to earnings" when fully deployed.
The business development company's fiscal Q2 adjusted net investment income of $0.58, topping the $0.51 consensus estimate, increased from $0.53 in Q2, but slipped from $0.63 in Q3 2021.
Net investment per share of $28.27 at Aug. 31 declined from $28.69 at May 31, reflecting the impact of widening market spreads on its core portfolio and the volatility in the broader syndicated loan market.
Total investment income for the quarter ended Aug. 31, 2022 was $21.9M, up from $18.7M in the previous quarter and from $18.4M in the year-ago quarter.
The quarter was marked by significant market volatility sparked by increasing inflation, supply chain constraints, rising rates, and global instability, said Chairman, President and CEO Christian L. Oberbeck "During uncertain times such as these, we continue to focus on balance sheet and liquidity strength, and growing our asset base in high quality credits."
Q3 originations of $140.6M jumped from $97.2M in the prior quarter and from $116.0M in the year-ago period.
It had repayments of $75.1M during the quarter compared with $10.1M in Q2 and $134.8M in Q3 2021.
After the repayment of its SAK baby bond, Saratoga ( SAR ) has $337M of equity supporting $376M of long-term and covenant-free SBIC debt, $234M of long-term covenant-free SBIC debentures, and $25M of long-term revolving borrowings.
It recently received approval for a third SBIC license, which adds an additional $107M to its available liquidity base. While the new license allows for an additional $175M of SBA debentures, the company is limited to $350M total outstanding debentures across all three of its SBIC licenses, Oberbeck said. In addition to the liquidity from SBIC III, it has an additional $38M cash and other liquidity available to support its existing portfolio companies and to finance new investments.
Assets under management was $954.7M at Aug. 31, 2022, up 6.7% from $894.5M as of May 31, 2022.
Earlier, Saratoga Investment ( SAR ) non-GAAP NII of $0.58 beats by $0.07, total investment income of $21.85M beats by $1.95M
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Saratoga Investment stock climbs after Q2 beat, new SBIC license boosts liquidity