Saratoga Investment Corp

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investment Corp's fiscal fourth quarter and fiscal year 2021 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. Following management's prepared remarks, we will open the line for questions. At this time, I would like to turn the call over to Saratoga Investment Corp's Chief Financial and Compliance Officer, Mr. Henry Steenkamp. Sir, please go ahead.

Thank you. I would like to welcome everyone to Saratoga Investment Corp's fiscal fourth quarter and fiscal year 2021 earnings conference call. Today's conference call includes forward-looking statements and projections. We ask you to refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections. We do not undertake to update our forward-looking statements unless required to do so by law. Today, we will be referencing a presentation during our call. You can find our fiscal fourth quarter and fiscal year 2021 shareholder presentation in the events and presentations section of our investor relations website. A link to our IR page is in the earnings press release distributed last night. A replay of this conference call will also be available from 4 p.m. today through May 13th. please refer to our earnings press release for details. I would now like to turn the call over to our Chairman and Chief Executive Officer, Christian Overbeck, who will be making a few introductory remarks.

Thank you, Henry, and welcome, everyone. Our fiscal 2021 results reflect a full 12 months of unprecedented times during which our company and our industry proved resilient as we and our portfolio companies successfully managed through these challenges. Looking ahead, we have confidence that our conservative approach to investing, strong capital structure and levels of liquidity, organization and management experience positions us to effectively capitalize on potential future opportunities and navigate through the inevitable future challenges. We look forward to presenting our most recent quarterly and full-year results and reviewing our solid capitalization and continued improvement in liquidity on today's call. Our annual performance metrics for fiscal 2021 include full-year return on equity of 5 percent, including the full-year impact of COVID, and adjusted NII per share of $2.02, and last 12-month NAV per share growth of 12 cents or 0.4 percent, one of only a handful of BDCs to grow this metric over this period. Our year-end NAV per share of $27.25 represents our highest level yet. To briefly recap the highlights of the past quarter and year on slide two, first, we continue to strengthen our financial foundation this quarter by maintaining a high level of investment credit quality with 93 percent of our loan investments continuing to have our highest rating at year end, generating a return on equity of 5 percent on a trailing 12-month basis, significantly ahead of the BDC industry mean of 0.4 percent. And as of year end, registering a gross unlevered IRR of 13 percent on our total unrealized portfolio, with our current fair value 1 percent above our total cost of our portfolio, and a gross unlevered IRR of 16.5 percent on total realizations to date of $561 million. Second, our assets under management increased slightly this quarter to $554 million, a 1 percent increase relative to Q3, including the impact of the refinancing of the CLO at quarter end, which included an upsizing of the CLO from $500 million to $650 million, and extending the reinvestment period by a further three years. For the year, our AUM is up 14 percent from $487 million as of last year end. With $130 million of repayments this year, we again demonstrated the ability of our origination platform to keep pace with ongoing redemptions, with $202 million of new investments originated during fiscal 2021. We've continued to originate both new investments and follow-ons throughout the year, despite the many market challenges, which has been a great differentiator for us. Mike will discuss this more in detail later. Third, despite improving economic conditions, balance sheet strength, liquidity, and NAV preservation remain paramount for us. Our capital structure remains strong, with $304 million of mark-to-market equity at year end, supporting $123 million of long-term covenant-free non-SBIC debt. This translates into regulatory leverage of 347 percent, with substantial cushion over our 150 percent requirement. Our liquidity and credit facilities of $216 million at year-end are available to support our portfolio companies, with $141 million of the total dedicated to new opportunities in our SBIC II fund. The all-in cost of this new SBIC2 debt is currently approximately 2%. Total committed undrawn lending commitments outstanding to existing portfolio companies are just $13 million. Subsequent to year end, we issued a $50 million, 4.375% five-year unsecured bond that strengthens both our capital and liquidity position, and also importantly, reduces our current cost of non-SBIC capital by almost 200 basis points. Finally, reflecting on our improved liquidity and overall portfolio resiliency, the Board of Directors decided to again increase our quarterly dividend by one cent to 43 cents per share for the quarter ended February 28th, 2021, paid on April 22nd, 2021. We will continue to evaluate our dividend payments on at least a quarterly basis as we gain better visibility on the intermediate term economy and fundamental portfolio performance. This quarter saw continued solid performance within our key performance indicators as compared to the quarter ended November 30th, 2020. Our adjusted NII is $5.8 million this quarter, up 5% versus $5.5 million last quarter. Our adjusted NII per share is 52 cents this quarter, up from 50 cents last quarter. Latest 12 months return on equity is 5% this quarter, down from 11% last quarter. Our NAV per share is $27.25, up 2% from 2684 last quarter. Henry will provide more detail later. As you can see on slide three, AUM has steadily risen since we took over management at the BDC more than 10 years ago, and the quality of our credits continue to remain high. We are working diligently to continue this trend as we deploy our available capital, while at the same time being appropriately cautious in this evolving credit environment. With that, I would like to now turn the call back over to Henry to review our financial results, as well as the composition and performance of our portfolio.