Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investment Corp's 2024 Fiscal Third Quarter 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 Chief Compliance Officer, Mr. Henri Steenkamp. Sir, please go ahead.

Thank you. I would like to welcome everyone to Saratoga Investment Corp's 2024 fiscal third quarter 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 third quarter 2024 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. 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 Oberbeck, who will be making a few introductory remarks.

Thank you, Henri, and welcome everyone. Saratoga's adjusted net investment income per share increased 31% as compared to last year, yet decreased slightly as compared to last quarter. The sequential quarterly per share decrease equates to the $0.07 dilution from the increased weighted average shares outstanding from our recent ATM equity issuances, with much of that cash yet to be deployed. This quarterly performance significantly exceeded our recently increased dividend by 40%. The level of interest rates stabilized in the recent quarter, resulting in elevated margins on our growing portfolio relative to the past year. In addition, the continued general contraction of available credit for smaller middle market businesses and our ongoing development of sponsor relationships has created an abundant flow of attractive investment opportunities from high-quality sponsors at attractive pricing terms and absolute rates. We believe Saratoga continues to be well positioned for potential future economic opportunities and challenges. Saratoga's credit structure with largely interest-only, covenant-free, long-duration debt incorporating maturities primarily two to 10 years out has positioned us well with the increase in interest rates delivering increased margins. Most importantly, at the foundation of our performance is the high-quality nature, resilience and balance of our approximately $1.11 billion portfolio, which has been marked down 3% overall versus cost in this challenging environment. Our core BDC portfolio, excluding our CLO and JV, is down less than 1% versus cost, including markdowns in four specific credits, partially offset by $4.3 million of net realized appreciation in the rest of the core BDC portfolio. This overall portfolio performance reflects the strength of our underwriting and our solid growing portfolio of companies and sponsors in well selected industry segments. Our portfolio strength is further manifested in our many key performance indicators this past quarter outlined on Slide 2, including, first, quarterly adjusted…

Thank you, Chris. Slide 5 highlights our key performance metrics for the fiscal third quarter ended November 30, 2023, most of which Chris already highlighted. Of note, the weighted average common shares outstanding of 13.1 million shares in Q3 increased from 11.9 million last year and 12.2 million last quarter. Adjusted NII increased this quarter, up 43.8% from last year but down 1% from last quarter primarily from, first, the impact of higher interest rates, both base rates and spreads with a weighted average current coupon on non-CLO BDC investments increasing from 11.7% to 12.5% year-over-year and relatively unchanged from last year -- from last quarter; second, average non-CLO BDC assets increasing by 15.7% year-over-year and by 1.6% since last quarter; and third, other income including a $1.3 million dividend received from the Saratoga Investment joint venture. Adjusted NII yield was 14.6%. This yield is up from 10.8% last year but slightly down from 15.0% last quarter. Total expenses for this quarter, excluding interest and debt financing expenses, base management fees and incentive fees and income and excise taxes increased from $2.1 million both last quarter and last year to $2.3 million this quarter. This represented 0.8% of average total assets on an annualized basis unchanged from both Q3 last year and last quarter. Also, we have again added the KPI slides 28 through 31 in the appendix at the end of the presentation that shows our income statement and balance sheet metrics for the past nine quarters and the upward trends we have maintained, including a 57% increase in net interest margin over the past year. Moving on to Slide 6, NAV was $359.6 million as of this quarter-end, a $2.5 million decrease from last quarter and a $23.8 million increase from the same quarter last year. This quarter,…

Thank you, Henri. I'll take a few minutes to describe our perspective on the current state of the market and then comment on our current portfolio performance and investment strategy. The overall deal market has remained relatively unchanged since our last update, as it seems to be in a bit of a holding pattern to see what happens in the broader macro environment. While liquidity among private equity firms remains abundant, an opaque economic outlook, high financing costs and elevated levels of inflation continue to constrain the private equity deal market, which drives much of the demand for new credits. Lenders, especially banks, remain more risk sensitive, backing off historically volatile sectors and taking a harder stance on the use of capital, which creates a lending vacuum for borrowers. Overall, lenders are requiring greater equity capitalizations regardless of the enterprise multiples and, in some cases, have reduced their pace of deployment as well as their hold positions. All of these factors are positive for us and support the confidence we have in our ability to carefully deploy capital in a manner that is accretive to our shareholders. Leverage levels appear to be increasing and remain full for strong credits. The growth in absolute yields appears to have abated and with fears of an economic slowdown dampening among some market participants, we have seen some lenders offer tighter spreads to win mandates. The Saratoga management team has successfully managed through a number of credit cycles and that experience has made us particularly aware of the importance of: first, being disciplined when making investment decisions; and second, being proactive in managing our portfolio. We're keeping a very watchful eye on how continued inflationary pressures and labor costs, high rates and a potential economic slowdown could affect both prospective and existing portfolio companies.…

Thank you, Mike. As outlined on Slide 20, our latest dividend of $0.72 per share for the quarter ended November 30, 2023 was paid on December 28, 2023. This is the largest quarterly dividend in our history and reflects a 6% and 36% increase over the past one and two years, respectively. The Board of Directors will continue to evaluate the dividend level on at least a quarterly basis considering both company and general economic factors, including the current interest rate environment's impact on our earnings. Recognizing the divergence of opinions on when interest rate cuts will commence and at what pace, the expected overall economic performance, Saratoga's Q3 over-earning of its dividend by 40% or $1.01 per share versus $0.72 per share this quarter provides a substantial cushion should economic conditions deteriorate or base rates decline. Moving to Slide 21, our total return over the last 12 months, which includes both capital appreciation and dividends, has generated total returns of 14%, uncharacteristically underperforming the BDC index of 30% for the same period. Our longer-term performance is outlined on our next Slide 22. Our three- and five-year returns place us in the top quartile of all BDCs for both time horizons. Over the past three years, our 66% return exceeded the average index return of 45%. Over the past five years, our 100% return exceeded the index's average of only 64%. Since Saratoga took over management of the BDC in 2010, our total return has been 712% versus the industry's 241%. On Slide 23, you can further see our performance placed in the context of the broader industry and specific to certain key performance metrics. We continue to focus our long-term metrics such as return on equity, NAV per share, NII yield and dividend growth and coverage, all of which…

[Operator Instructions] And our first question comes from Erik Zwick with Hovde Group. Your line is now open.

Good morning, everyone.

Good morning.

I'm wondering if you start first with that question -- on the pipeline, I wonder if you could kind of break out how you characterize the opportunities that are likely to enter the portfolio in terms of new investments versus existing. It sounds like at this point based on what transpired in the last quarter, there's certainly more attractive opportunities to extend to existing investments. I'm curious if you're kind of near-term outlook for the next quarter or two is similar or if you're seeing some more attractive opportunities for new investments?

It's a good question. We are continuing to see good opportunities to deploy capital. We didn't find anything in this past quarter, and that was mostly reflective of the fact that the deals that we saw in terms of the leverage that they were looking for relative to the strength of the business model, we just couldn't get comfortable and didn't pass our underwriting bar. I think, I wouldn't say that that's characteristic of our pipeline in general, but that certainly was characteristic of what we ended -- where we ended up this past quarter. The pace of investment that we're experiencing is certainly being influenced to some degree by lower deal activity just in general in the middle market. We're still seeing a disconnection between what value sellers think that they ought to fetch and what buyers are willing to pay in this market. So, there's not -- we're not seeing as much deal volume as we've seen historically, but we still are seeing healthy activity and have confidence that we'll find opportunities to deploy capital.

That's helpful. Thank you. And then, you mentioned in the comment in one of the slides that you've got quite a bit of liquidity on hand right now and the ability to potentially grow AUM as much as 20% without harnessing or kind of tapping external financing. Just curious, is that -- goal is to actually get that full 20%? And if so, over what time horizon would you expect to put that to work?

It's interesting, we -- go ahead, Chris.

Sorry, Mike. Just at a very high level, we've tried to run our business with ample liquidity to take advantage of opportunities. And so, we have the dry powder available. We have a large group of portfolio companies that continue to grow. As you saw this past quarter, there's a lot of follow-on opportunities. We're financing a number of buildups. And so, we want to make sure that we're there for and available to be there for our portfolio companies when they need the capital for whatever reason, mostly positive reasons. But so we want to have that available for that. And then, we also want to be available for new opportunities for our existing relationships and for building new ones. And so, that's a stance we've kind of maintained for the whole time, the last 13 years. That's what we continue to maintain. As to the pace of deployment and our expectations for that, I mean that's sort of not in our control. I mean, I think as Mike said just earlier, we had a lot of opportunities. We could have put out a whole lot more money this past quarter, but we refrained from doing so. So, we're going to pick our spots, we're going to support our portfolio companies when merited, and we're going to be selective going forward. So unfortunately, we can't give you a hard forecast for when and how we would deploy that, and it's really going to be subject to the opportunity set both from our existing portfolio and from new opportunities.

The only thing I'd add to that, too, just to augment that is that, you had asked if we had a goal to deploy that additional capital, we tend not to think about our business that way as Chris was explaining. We just really set ourselves up for the best opportunities we can to deploy capital in a way that we feel very comfortable to be accretive to our shareholders, and let the rest take care of itself. But definitely don't set goals around kind of where we want to move the balance sheet. It's really more of function of what opportunities we see. And if we see those, we certainly want to avail ourselves and let the -- of those opportunities and let the shareholders benefit from it.

Got it. And one last one and I'll step aside. Just in terms of the Zollege investment, I think I didn't get the exact quote, but I think you mentioned the core business and operating trends remain solid, but they did miss the two interest -- monthly interest payment. So, just curious, it's kind of balancing those two, what led to their decision to skip those payments and any timeframe expectations for when they might return to accrual?

The company is experiencing some execution and cost challenges that have constrained their liquidity, and we're working with the sponsor and management on some initiatives to improve performance. But the decision certainly was made as a result of those liquidity challenges to suspend interest payments. We are -- as we look at the core business though, a lot of the fundamentals that we originally liked in the business remain intact. And so, we're seeing a lot of stability in terms of student starts and enrollment and things that you point to fundamentally to feel comfortable that the business model has a compelling value proposition for its customers, but work to do on the execution side. Can't really put a date or time around kind of a timeframe for improved performance, but that's what we're focused on for sure.

Thanks for taking my questions.

Thank you. One moment for our next question. Our next question comes from Mickey Schleien with Ladenburg Thalmann. Your line is now open.

Yes, good morning everyone. I wanted to follow up on your comments on Netreo. It sounded like you attributed most of the decline in the valuation to comparable valuation. But I saw in the Q that you also mentioned higher leverage. Was that due to declining EBITDA or a bank coming in ahead of you, or could you just expand on that, please?

There's higher leverage because we've been supporting the growth of the business with our own debt. So there's nothing that's coming in front of us, but there is a higher debt load. Most of the change, just to reiterate, in value was due to a change in multiple as we looked at macro factors and just where valuation is, combined with lesser performance of the underlying business. And then, the thing I'd point out to, Mickey, is that the vast majority of that write-down was reversal of appreciation that we have -- unrealized appreciation that we had before that.

I understand. Thanks for that, Mike. Your last fiscal quarter also includes December, which is historically the busiest month of the year for BDCs. Could you give us any sense of how active you were in December in terms of fulfilling your pipeline?

I mean, we tend not to get into that detail post quarter-end. But I think we've continued to support our portfolio companies kind of consistent with what we've done in the past. Haven't seen a whole lot of change in sort of what you saw through the last reported quarter.

Okay. My last question is in regards to the notes coming due in March. I understand that they're extendable at your discretion for a year. Those are at 8.75%. I'm just trying to understand whether you're more predisposed to trying to refinance those or just extend them for a year and see how rates go?

Yeah. I don't think we've made a decision on that yet. We've still got two-and-a-half months to go, Mickey. So, I think we're still sort of considering our options, but it's obviously nice to have the flexibility with an instrument like that, especially a short-term instrument like that.

I understand.

If I could just add also to that, I mean, I think inside of that optionality to do that, I think that's something that we try and preserve. I think Henri did a very good job in negotiating that to allow us that option. It could have been straight up to your facility, but we gave ourselves the option to be able to repay it. So, I think it's reflective of how we think about our capital structure relative to potential changes in interest rates. The other thing I would say, and this is sort of a broader concept that's running through the broader marketplace and the BDC marketplace is what is the course of interest rates next year? What do people expect? What's going to happen? And I think the core answer is that nobody really knows. I think if you were to put up the charts of all the forecasts of short-term interest rate cuts that have been forecast over the last several years, I think they've been universally wrong. So, we just don't know enough right now about the market, right, for debt instruments to make that call. And just look what's happened in the last two-and-a-half months. What people would have said or didn't say two-and-a-half months ago and what they've been saying the last couple of weeks is pretty radically different. And there's a lot of more information we're going to get before we have to make the call on that, as Henri said. So, we're going to wait till the -- right up to it and obviously, evaluate all our financing alternatives relative to that extension.

Yeah. I completely agree with you. I know that we don't know where interest rates are going to go and I understand your rationale. And I suppose it's similar with the undistributed taxable income you seem to be carrying, right, Henri, that's something you'll evaluate sort of, I guess, in the middle of this year? Is that correct?

Yeah, absolutely. I mean, we actually -- we talk about it the whole time. And again, it's being able to have optionality and flexibility, especially at a time like this, where one sort of at a moment in the market where a lot could be changing. It might not, it might, but it's just nice to have that flexibility right now.

I understand. That's it from me this morning. I appreciate your time. Thank you.

Thank you, Mickey.

Thanks, Mickey.

Thank you. One moment for our next question. Our next question comes from Robert Dodd with Raymond James. Your line is now open.

Hi, guys. First question, if I can, on leverage. Obviously, you've brought the regulatory leverage down a bit versus where it was a couple of quarters, I mean, with raising equity and the manager supporting that financially. So, are you -- is this scenario where you're kind of we should expect you to remain comfortable in the [1.60s] (ph)? Or is it contingent or market? If the market gets more active, you're willing to go higher again on the regulatory leverage side? Or can you give us any thought? I know you don't give us an explicit target, but some framework thoughts around where we should expect leverage to play out.

Sure. I think that, again, that -- as we answered the last question, that's something we think about, talk about continuously. I think also just going back to consistent theme on this call and all of our prior calls is that we tend not to forecast and project what our deployment is going to be against any kind of goal per se. We try and address each opportunity as it comes. And as you can see in the last quarter, we declined to make further new platform investments. That wasn't driven by any broader sort of metrics that we're operating to, but it really was sort of on a case-by-case basis us not seeing the risk-reward situation fitting within what we felt it should fit in with it. And we will continue that going forward. So, we really -- it's possible we may see some tremendously opportunistic deals coming our way, in which case, we will be favorably inclined then. But we're going to be judicious and prudent as we said about how we deploy relative to sort of everything. Obviously, leverage is a factor and opportunity is a factor and credit quality is a factor. So again, it's difficult for us to ask -- answer that question for you prospectively because it's going to be a function of the opportunities that are presented or that we generate for ourselves.

Got it. Thank you. I think that actually is pretty clear. I appreciate that. On the two -- I do want to ask a couple of questions on Zollege and Netreo. So, on Zollege, was there any negotiation with the sponsor as to whether to not pay or to potentially pick the interest? If this is a transitory cost issue you believe is fixable, wouldn't it -- was a PIK toggle considered as option, not that I'm saying in paper, but the straight to not paying in when PIK has been increasing across the industry, there's more and more of it, it wouldn't have stood out that much if you've done it. Can you just give us any thoughts on why that either didn't come up in view or was rejected?

Well, we're -- it's a good question. We're continuing to work with the sponsor and the management team in terms of one, focusing on improved performance this year and then the general direction that the business is going to go. It's interesting, if we were to convert to a PIK toggle, let's say, in that case, typically, that kind of discussion becomes one where you're agreeing to not get paid your interest, and you're hoping to get something in exchange for it. I think our view is that, at this point, that interest is due. So it's -- from a legal perspective, the interest is accruing legally, not from an accounting perspective because they're not paying on a current basis. But that interest is still due to us. If we were to convert to -- in any of these negotiations, if we were to convert to a PIK toggle, you're sort of saying to the sponsor, it's okay not to pay us and we're fine with that. Given all the circumstances here and the fact that we're not being paid, we prefer to be in a position where kind of we own a default, if you will, and it allows us to negotiate kind of the course of action from a better position of strength at this juncture.

Got it. Appreciate that. And then, on Netreo, I mean, if we look back two years ago, the asset was marked well above cost across all the security tranches, and you've put in additional capital a couple of times since then. And it seems like it's been on a gradual valuation deterioration from where it was two years ago. So, it just -- it looks like today, it's not performing how you thought it would, but with a pretty long -- prolonged period and it's been gradual deterioration. I mean, what's in the works to fix that? I mean I understand your comments, you think the equity market is primarily comps and performance. But it's been, I think, 25% of your unrealized depreciation over the last two years, that one asset. The NAV performance would have been noticeably better if this asset has been performing better. So, what is it that's the problem that still doesn't seem to have been resolved over a couple of years?

I'll try to be careful in terms of what we...

I realize this is a sponsor investment and you don't want to say too much, but anything you can would be appreciated.

Sure. So, if you think about valuation of this business, and we have a material component of the equity here, a lot of the driver of the value of a business like this is the rate of growth and then there's also just macro multiples that affect the value in general. In this case, it's not that the business' performance has deteriorated in a really meaningful way, but they have faced growth challenges. So, for a business where a lot of that value driver is dependent upon continued growth, when that growth gets dialed back, the valuation multiple has to come in, unfortunately. And that's what we've experienced here. When you couple that with an overall decline in valuation multiples in the macro environment, the combination of those things has caused the value to come down. So, we're obviously very disappointed because we were quite excited about the appreciation that we're experiencing in this asset. We think that the primary volatility around it is in the equity, of course, but -- and the vast majority of our capital is in the debt.

Got it. Appreciate it. Thank you.

Thanks, Robert.

One moment for our next question. Our next question comes from Casey Alexander with Compass Point Research & Trading. Your line is now open.

Hi, good morning. First question with a little series of questions here. There was a quarter-over-quarter reduction in PIK income. Can you tell us what that is attributable to?

Just trying to look at it here.

I think, it was actually -- a big part of it was Zollege, I think, because there was a PIK component to Zollege as well, Casey. And so obviously, going on to non-accrual, we also stopped the PIK on Zollege. I mean, PIK is very small in general for us. So, it has an outsized impact -- not that it was a huge PIK amount, but it has an outsized impact because the overall amount is.

Okay. That's fine. Thank you. Secondly, as part of your optionality, is it deemed dividend considered part of that optionality for some of the back income?

What do you mean by deemed dividend, Casey?

Well, I think you know what I mean.

You mean cash or non-cash?

Yes, the non-cash dividend.

Well, I think you obviously know that, that is an option. Yeah, absolutely. The statutory requirements for BDC is to pay out anything is -- has an option for a stock issuance. So that is statutory option that is out there. We have not made a decision one way or the other on how to address that.

Okay. Does the JV own any Pepper Palace or Zollege?

No.

No, okay. Is the CLO experiencing -- when you talk about individual credits, has it experienced actual defaults in the CLO?

No. It's mainly been -- it's not necessarily defaulting assets, but the market price of a handful of assets has deteriorated significantly from a mark-to-market, which then makes it classified as a default for purposes of the valuation, which obviously lowers the principal cash flows that you use in your valuation.

So, in essence, it's the bid price that puts it in violation of the CLO measuring stick. Is that what you mean?

Well, just for valuation purposes. So, if mark moves from, let's say, 80 to 50, it is not necessarily in default from a payment terms perspective. But for purposes of our valuation, we treat it as a default. So, we take its cash flows out of the valuation.

Okay. Great. All right. And then, Chris, I'd like to invite you to take this opportunity to have kind of an open discussion with your shareholders about the manner in which you guys are raising equity and why you think a shareholder should be comfortable with the manner in which you're raising equity in the market.

Sure. And I think it's a very good question. I guess, when we started 13 years ago, I think the BDC had $50 million of equity. And today, we're at $373 million of equity. And the bulk of that has come through share issuances over time. And fortunately, we've also had some very good success in terms of capital gains. And so, retention of capital gains has also contributed to that. And over that period of time, we've taken the BDC from kind of inconsequential BDC to certainly consequential relative to our niche in the marketplace, if you will, but we're substantially larger than we were. We were like $80-something million. Now, we're $1.1 billion. And so, we've built our franchise very substantially. And as you know and as you point out, there's leverage capabilities in a BDC that have limits. And in order to grow, one has to raise equity to grow. And we have done that over time. And pretty much, we've done it when we can and when we could have. And the results, I think if you look at our performance, total return performance, I think all the equity -- relative to almost every period -- I mean if you get to super short periods, trading and things like that, less than a year, less than six months, maybe it's a problem. But I think if you look at annual periods or multiyear periods for all the parties that have invested in our equity and stayed with it for a year or more, I'm pretty sure that every single person has had a very, very sizable returns and generally speaking, has outperformed the industry average of the BDC. So, we think all our equity issuances have been accretive, if you will, for people that bought that…

Well, I appreciate that answer. I'm looking at Slide 21, and the period of underperformance of Saratoga relative to the BDC index kind of clearly corresponds with the time period where you've been in the market and selling stock at around 90% of book. So, can you explain until a shareholder is confident that you're no longer in the market at 90% of the book, and look, I appreciate the fact that you're making up the difference at the manager, I understand that fully, but you still supplying the market at 90% of the book. So, can you tell me as a shareholder, why I should be willing to pay more than 90% of book, if I know that you're willing to sell stock at 90% of book?

Well, when you say you, the BDC is not selling at 90% of book. Okay. BDC is selling...

Okay. That's fine.

By the way, Casey...

That's your answer.

But Casey, just by the way, I'm not sure your headline of your report...

The supply is coming into the market at 90% of book, okay? You're making up the difference. But the supply is coming into the market at 90% of book. That's where we know the supply is coming, right? So, explain to me why someone should be willing to pay more than that...

Well, the BDC...

...until they're confident that you're no longer in the market at that level?

Well, first of all, I'll just say what's going into the BDC at $1, so BDC is getting a...

I'm aware of that. I already acknowledge that.

Okay. And then whether we're in the market or not, I mean, we can't say. Just as we've answered these other questions about the -- what are we going to deploy over the next period of time and our targets versus leverage, it's a consistent answer relative to this, which is it's going to be a set of opportunities. I mean these stock sales were done in blocks. These were not like open market sales. These were block sales to specific investors with long-term investment outlook. So, in terms of float and all the types of things, again, we're not driving what those investors are thinking and how they're doing it. But those investors aren't buying in blocks at this scale to then kind of trade out much in the volume situation of our stock, okay? So, we believe they're long-term investors. So, on the one hand, you're saying, oh, yes, it's adding to the supply, but it's adding the supply of people that are long-term holders. They're not -- I mean, it's not such a great idea to buy a big block and then trying to get out of it right away. I mean, as you know...

All right. Let me ask you one more question.

Sure.

All right. The shares that you have already sold in the fourth quarter, okay, will you be making up the difference to an NAV of $28.44 or $27.42, the manager?

The higher number. Right, Henri?

Okay. All right. Thank you. That's all my questions. Thanks for taking my questions.

Okay. Thank you.

Thank you. One moment for our next question. Our next question comes from Bryce Rowe with B. Riley. Your line is now open.

Thanks. Good morning. Don't necessarily want to extend the call here, but did want to ask a couple of questions. I want to follow up on that last discussion with Casey. Chris, certainly understand the quality of the leverage profile and do acknowledge that balance sheet leverage is -- on an absolute basis, is elevated relative to the space. And appreciate that you all are subsidizing the equity issuance here to allow the BDC to take it at 100% of NAV. To what extent are you -- is the manager willing to subsidize, especially with the stock now down in the, let's call it, 80%, 85% of NAV range now?

Well, again, that's a prospective question, and I hope you appreciate that we have to be very careful on what we say we're going to do prospectively. I think much like our investment discussions, selling stock is also similar. I mean, in other words, it's not our decision to sell stock. We need a buyer on the other side that's ready to acquire. And as we said before, the stock sales have been in blocks. We haven't been selling stock just -- we haven't been like having a sell in the open market every day, okay? Well, that's not what we've been doing to achieve these sales. And we are very cognizant of trading volumes and things like that. These are specific sales by appointment as opposed to us sort of saying, okay, we're going to sell all the stock to anybody all day and just having an open sell order, no. So, these arguably have been sort of off-market, right, and once the stock has been traded in blocks and it hasn't really affected the market, it's a separate kind of trip. So, we obviously are very sensitive to where our stock trades, how our stockholders effectively are affected by these events. We've been very thoughtful and careful about that. And we think that, that is very, very positive for the company. But we're really excited. And we're also -- we're sort of slightly puzzled by getting so much pushback on selling equity when analysts like yourselves are asking us about our leverage ratio. We would think we would get maybe more -- applaud us for raising equity that is improving that metric on that side, recognizing that the next question everyone has is like, "Well, are you going to deploy it and increase your leverage again?" And our…

Understood that. I appreciate that. Maybe I'll just move on to another topic here. Henri, the quarterly dividend income, you called out $1.3 million from the senior loan fund. There is an additional, let's call it, $500,000 that came in there. Is that -- would we characterize that as kind of recurring in nature, or is that more one-time?

Yeah. There's one portfolio company that regularly pays us a dividend every quarter, but it's more $100,000, $150,000. I'd say the additional piece, you're right, Bryce, was sort of -- it definitely -- it won't be recurring every quarter. It was another one of our portfolio companies who distributed some of their excess flow from operations.

Okay. That's helpful. One more for me. And certainly, I understand you're not going to give specific guidance around kind of repayments, but we've -- or exits, but we've seen relatively muted activity on the repayment exit side for the last few quarters, understandably. So, can you speak to -- and maybe this is a question for Mike, but can you speak to kind of the market activity right now within the portfolio? Is there interest in potential exits? And if there is, can you kind of speak to maybe the velocity or the probability of stuff kind of coming to market over the next little bit? Thanks.

Hey, Bryce, this is Mike. As it relates to that, it's bit of a question mark, right? I think that's going to coincide with the overall deal market picking up. So, really hard to tell. I would say some of the things that we look at is for some of our assets, they've been in sponsor ownership for a period of time. So, at some point, even if they feel like they're not going to optimize the valuation relative to what they would have gotten 18 months ago or a couple of years ago, let's say, they're going to be inclined to exit. So, we think that at some point, that will turn, and probably we'll start to see some redemptions within our portfolio. At the same time that, that starts to occur, we would expect, and this is just naturally how it tends to work, the deal volume in general will pick up. And so, we'll be a little bit back on that typical cadence that we have where we're getting redemptions and then our origination activity has to outstrip that, which it has comfortably for a long time now. But right now, we're in a position where deal volume and originations are skewing more towards supporting our portfolio of companies, which we're delighted by, and we're not getting much redemption. So, our portfolio growth -- even though our new platforms are not increasing, our portfolio growth is still solid. But hard to say on the redemptions. We -- I can't tell you that, hey, we see that on the horizon and there's going to be a big wave this year, although that could occur, it's just hard to say.

Okay. I appreciate that. Thanks for taking the questions.

Thanks, Bryce.

Thank you. This concludes the question-and-answer session. I'd now like to turn it back to Chris Oberbeck for closing remarks.

Well, we want to thank all of you, all our shareholders and everyone on this call for listening, for considering Saratoga. And we look forward to speaking to you next quarter. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.