Saratoga Investment Corp. reported its financial results for the three months ended May 31, 2025, marking the first quarter of fiscal year 2026. Total investment income decreased by 16.4% to $32.32 million, down from $38.68 million in the prior year period. This decline was primarily driven by an 18.4% decrease in interest income from investments, which fell to $28.00 million.
The reduction in investment income stemmed from a smaller investment portfolio, which decreased by 11.6% to $968.3 million, and a lower weighted average current yield of 10.6%, down from 11.5%, influenced by a reduction in SOFR base rates. However, interest income from cash and cash equivalents increased to $2.03 million from $0.62 million, reflecting higher cash balances due to substantial portfolio repayments. Total operating expenses saw an 8.9% decrease to $22.18 million, primarily due to lower interest and debt financing expenses, as well as reduced base and incentive management fees.
Despite the decrease in net investment income to $10.14 million from $14.34 million in the prior year, the company reported a net change in unrealized appreciation on investments of $0.94 million. This marks a significant improvement compared to a net unrealized depreciation of $13.93 million in the same period last year, attributed to improved performance in certain portfolio companies and decreased leverage. The net increase in net assets resulting from operations was $13.93 million, a substantial rise from $6.61 million in the prior year period.
Saratoga maintains a strong liquidity position with $131.6 million in cash and cash equivalents and an additional $92.7 million in reserve accounts as of May 31, 2025. The company's asset coverage ratio stood at 163.8%, exceeding the 150% regulatory minimum. Furthermore, the company declared monthly dividends of $0.25 per share for June, July, and August 2025, payable in cash or stock.
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