HOUSTON, Nov. 7, 2024
/PRNewswire/ -- Stellus Capital Investment Corporation
(NYSE:SCM) ("Stellus", "we", or the "Company") today announced
financial results for its fiscal quarter ended
September 30, 2024.
Robert T. Ladd, Chief Executive
Officer of Stellus, stated, "I am pleased to report solid operating
results for the quarter ended September 30,
2024, in which we earned U.S. GAAP net investment income of
$0.39 per share and core net
investment income of $0.40 per share,
which covered the regular dividend declared of $0.40 per share. Net asset value per share
increased by $0.19 per share from the
prior quarter end. Subsequent to the quarter end, we increased our
capital base by $55 million through
the upsizing of our Credit Facility to $315
million. As we celebrate the completion of twelve years of
operations, I'm also pleased to report that our investors have
received a total of $273 million in
distributions, equivalent to $16.28
per share, since we began operations."
FINANCIAL HIGHLIGHTS
($ in millions, except data
relating to per share amounts and shares outstanding)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 30, 2024
|
|
September 30, 2023
|
|
September 30, 2024
|
|
September 30, 2023
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Net investment
income
|
$10.26
|
$0.39
|
|
$10.82
|
$0.47
|
|
$32.29
|
$1.29
|
|
$30.30
|
$1.42
|
|
Core net investment
income(1)
|
10.62
|
0.40
|
|
11.16
|
0.49
|
|
33.59
|
1.34
|
|
30.81
|
1.45
|
|
Net realized (loss)
gain on investments
|
(3.30)
|
(0.13)
|
|
0.60
|
0.03
|
|
(21.69)
|
(0.87)
|
|
0.32
|
0.01
|
|
Net realized loss on
foreign currency translation
|
(0.02)
|
—
|
|
(0.02)
|
—
|
|
(0.08)
|
—
|
|
(0.07)
|
—
|
|
Total realized
income(2)
|
$6.94
|
$0.26
|
|
$11.40
|
$0.50
|
|
$10.52
|
$0.42
|
|
$30.55
|
$1.43
|
|
Distributions
|
(10.63)
|
(0.40)
|
|
(9.27)
|
(0.41)
|
|
(30.32)
|
(1.21)
|
|
(25.88)
|
(1.22)
|
|
Net unrealized change
in appreciation (depreciation) on investments
|
8.51
|
0.33
|
|
(13.80)
|
(0.61)
|
|
26.44
|
1.05
|
|
(24.34)
|
(1.14)
|
|
Net unrealized change
in appreciation (depreciation) on foreign currency
translation
|
0.01
|
—
|
|
—
|
—
|
|
—
|
—
|
|
(0.02)
|
—
|
|
Benefit (provision) for
taxes on unrealized depreciation (appreciation) on
investments
in taxable
subsidiaries
|
—
|
—
|
|
—
|
—
|
|
0.19
|
0.01
|
|
(0.14)
|
(0.01)
|
|
Net increase (decrease)
in net assets resulting from operations
|
$15.46
|
$0.59
|
|
($2.40)
|
($0.11)
|
|
$37.15
|
$1.48
|
|
$6.05
|
$0.28
|
|
Weighted average shares
outstanding
|
|
26,326,426
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|
|
22,824,221
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|
|
25,066,626
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|
|
21,289,880
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(1)
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Core net investment
income, as presented, excludes the impact of capital gains
incentive fees (reversal) and income taxes, the majority of which
are excise taxes. The Company believes presenting core net
investment income and the related per share amount is a useful
supplemental disclosure for analyzing its financial performance.
However, core net investment income is a non-U.S. generally
accepted accounting principles ("U.S. GAAP") measure and should not
be considered as a replacement for net investment income and other
earnings measures presented in accordance with U.S. GAAP. A
reconciliation of net investment income in accordance with U.S.
GAAP to core net investment income is presented in the table below
the financial statements.
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(2)
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Total realized income
is the sum of net investment income, net realized gains (losses) on
investments, net realized gains (losses) on foreign currency, and
loss on debt extinguishment; all U.S. GAAP measures.
|
PORTFOLIO ACTIVITY
($ in millions, except data
relating to per share amounts and number of portfolio
companies)
|
|
As of
|
|
As of
|
|
|
|
|
|
|
September 30, 2024
|
|
December 31, 2023
|
|
|
|
|
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Investments at fair
value
|
|
$908.7
|
|
$874.5
|
|
|
|
|
|
Total assets
|
|
$957.1
|
|
$908.1
|
|
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Net assets
|
|
$366.3
|
|
$319.9
|
|
|
|
|
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Shares
outstanding
|
|
27,039,364
|
|
24,125,642
|
|
|
|
|
|
Net asset value per
share
|
|
$13.55
|
|
$13.26
|
|
|
|
|
|
|
|
|
|
|
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Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September 30, 2024
|
|
September 30, 2023
|
|
September 30, 2024
|
|
September 30, 2023
|
|
New
investments
|
|
$17.8
|
|
$51.9
|
|
$112.6
|
|
$139.7
|
|
Repayments of
investments
|
|
(15.5)
|
|
(34.8)
|
|
(87.3)
|
|
(79.1)
|
|
Net activity
|
|
$2.3
|
|
$17.1
|
|
$25.3
|
|
$60.6
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
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September 30, 2024
|
|
December 31, 2023
|
|
|
|
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Number of portfolio
company investments
|
|
99
|
|
93
|
|
|
|
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Number of debt
investments
|
|
86
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Weighted average yield
of debt and other income
producing
investments (3)
|
|
|
|
|
|
|
|
|
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Cash
|
|
10.2 %
|
|
11.0 %
|
|
|
|
|
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Payment-in-kind
("PIK")
|
|
0.4 %
|
|
0.5 %
|
|
|
|
|
|
Fee
amortization
|
|
0.4 %
|
|
0.4 %
|
|
|
|
|
|
Total
|
|
11.0 %
|
|
11.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield
on total investments (4)
|
|
|
|
|
|
|
|
|
|
Cash
|
|
9.5 %
|
|
10.3 %
|
|
|
|
|
|
PIK
|
|
0.4 %
|
|
0.5 %
|
|
|
|
|
|
Fee
amortization
|
|
0.4 %
|
|
0.3 %
|
|
|
|
|
|
Total
|
|
10.3 %
|
|
11.1 %
|
|
|
|
|
|
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(3)
|
The dollar-weighted
average annualized effective yield is computed using the effective
interest rate for our debt investments and other income producing
investments, including cash and PIK interest, as well as the
accretion of deferred fees. The individual investment yields are
then weighted by the respective cost of the investments (as of the
date presented) in calculating the weighted average effective yield
of the portfolio. The dollar-weighted average annualized yield on
the Company's investments for a given period will generally be
higher than what investors in the Company's common stock would
realize in a return over the same period because the
dollar-weighted average annualized yield does not reflect the
Company's expenses or any sales load that may be paid by
investors.
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(4)
|
The dollar-weighted
average yield on total investments takes the same yields as
calculated in the footnote above but weights them to determine the
weighted average effective yield as a percentage of the Company's
total investments, including non-income producing loans and
equity.
|
Results of Operations
Investment income for the three months ended
September 30, 2024 and 2023 totaled $26.5 million and $27.2
million, respectively, most of which was interest income
from portfolio investments.
Gross operating expenses for the three months ended
September 30, 2024 and 2023 totaled $16.2 million and $16.3
million, respectively. For the same respective periods, base
management fees totaled $3.9 million
for both periods, income incentive fees totaled $2.6 million and $2.7
million, fees and expenses related to our borrowings totaled
$8.0 million for both periods
(including interest and amortization of deferred financing costs),
administrative expenses totaled $0.5
million for both periods, income tax totaled $0.4 million and $0.3
million and other expenses totaled $0.8 million and $0.9
million.
Net investment income was $10.3
million and $10.8 million, or
$0.39 and $0.47 per common share based on weighted average
common shares outstanding of 26,326,426 and 22,824,221 for the
three months ended September 30, 2024 and 2023,
respectively. Core net investment income, which is a non-U.S. GAAP
measure that excludes the capital gains incentive fee (reversal)
and income tax expense accruals, for the three months ended
September 30, 2024 and 2023 was $10.6 million and $11.2
million, or $0.40 and
$0.49 per share, respectively.
For the three months ended September 30, 2024 and
2023, the Company's investment portfolio had a net change in
unrealized appreciation (depreciation) of $8.5 million and ($13.8)
million, respectively, and the Company had net realized
(losses) gains of ($3.3) million and
$0.6 million, respectively.
Net increase (decrease) in net assets resulting from operations
totaled $15.5 million and
($2.4) million, or $0.59 and ($0.11)
per common share, based on weighted average common shares
outstanding of 26,326,426 and 22,824,221 for the three months ended
September 30, 2024 and 2023, respectively.
Liquidity and Capital Resources
As of September 30, 2024, the Company's amended senior
secured revolving credit agreement with certain bank lenders and
Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent
(as amended from time to time, the "Credit Facility") provided for
borrowings in an aggregate amount of up to $260.0 million on a committed basis. As of
September 30, 2024 and December 31, 2023, the
Credit Facility had an accordion feature which allowed for
potential future expansion of the facility size up to $350.0 million.
As of September 30, 2024 and
December 31, 2023, the Company had $157.4 million and $160.1
million in outstanding borrowings under the Credit Facility,
respectively.
The Company issued 1,058,366 shares during the three months
ended September 30, 2024 under the At-the-Market Program
("ATM Program") for gross proceeds of $14.6
million. The average per share offering price of shares
issued under the ATM Program during the three months ended
September 30, 2024 was $13.79. Stellus Capital Management, LLC, the
Company's investment adviser (the "Advisor"), agreed to reimburse
the Company for underwriting fees to the extent the per share price
of the shares to the public, less underwriting fees, was less then
net asset value per share. For the three months ended
September 30, 2024, the Advisor was not required to
reimburse underwriting fees as all shares were issued at a premium
to net asset value.
Distributions
For the three months ended September 30, 2024 and
2023, the Company declared aggregate distributions of $0.40 per share for both periods ($10.6 million and $9.3
million in the aggregate, respectively). Tax characteristics
of all distributions will be reported to stockholders on Form
1099-DIV after the end of the calendar year. None of these
dividends are expected to include a return of capital.
Recent Portfolio Activity
The Company invested in the following portfolio companies during
the three months ended September 30, 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Investment
Amount
|
|
Instrument
Type
|
|
Add-On
Investment
|
|
July 31,
2024
|
|
PCS Software,
Inc.*
|
|
Provider of integrated
transportation management software
for the inland trucking
industry
|
|
$
|
9,995
|
|
Equity
|
|
Add-On
Investment
|
|
August 12,
2024
|
|
Trade Education
Acquisition, L.L.C.*
|
|
Online education
platform for retail investors
|
|
$
|
80,000
|
|
Revolver
Commitment
|
|
New
Investment
|
|
August 16,
2024
|
|
Bart & Associates,
LLC
|
|
Provides IT
modernization services for federal customers
|
|
$
|
8,942,723
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,733,387
|
|
Delayed Draw Term Loan
Commitment
|
|
|
|
|
|
|
|
|
$
|
1,046,677
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
418,671
|
|
Equity
|
|
Add-On
Investment
|
|
August 26,
2024
|
|
Impact Home Services
LLC*
|
|
Residential garage
door, electrical, and plumbing services provider
|
|
$
|
1,571,984
|
|
Delayed Draw Term Loan
Commitment
|
|
Add-On
Investment
|
|
September 11,
2024
|
|
Service Minds Company,
LLC*
|
|
Provider of residential
electrical services
|
|
$
|
20,000
|
|
Revolver
Commitment
|
|
Add-On
Investment
|
|
September 30,
2024
|
|
The Hardenbergh Group,
Inc. *
|
|
Provider of temporary
professional staffing of medical services
professionals, external
peer review, consulting and physician
leadership
solutions
|
|
$
|
804,031
|
|
Senior Secured – First
Lien
|
|
Add-On
Investment
|
|
September 30,
2024
|
|
Monitorus Holding,
LLC*
|
|
Provider of media
monitoring and evaluation services
|
|
$
|
11,629
|
|
Unsecured Convertible
Bond
|
|
Add-On
Investment
|
|
September 30,
2024
|
|
ADS Group Opco,
LLC*
|
|
Full-service
manufacturer for OEMs, prime contractors, and Tier I
suppliers across the
defense, space, and aerospace industries
|
|
$
|
69,453
|
|
Revolver
Commitment
|
|
|
*Existing portfolio
company
|
The Company realized investments in the following portfolio
companies during the three months ended
September 30, 2024:
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Proceeds
Received
|
|
Realized
Gain
|
|
Instrument
Type
|
|
Full
Realization
|
|
August 1,
2024
|
|
ICD Holdings,
LLC*
|
|
Financial company that
connects corporate treasury departments
with money market and
short duration bond funds
|
|
$
|
2,599,378
|
|
$
|
2,192,411
|
|
Equity
|
|
Full
Repayment
|
|
September 27,
2024
|
|
EHI Buyer,
Inc.*
|
|
Provider of design,
engineering, installation, and maintenance
services for building
management systems
|
|
$
|
6,050,229
|
|
$
|
—
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
2,322,310
|
|
$
|
—
|
|
Delayed Draw Term
Loan
|
|
|
*Existing portfolio
company
|
Events Subsequent to September 30, 2024
The Company's management has evaluated subsequent events through
November 7, 2024. There have been no
subsequent events that require recognition or disclosure except for
the following described below.
Investment Portfolio
The Company invested in the following portfolio companies
subsequent to September 30, 2024:
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Investment
Amount
|
|
Instrument
Type
|
|
Add-On
Investment
|
|
October 18,
2024
|
|
Compost 360
Investments, LLC*
|
|
Organic waste recycler
and producer of compost,
mulch, and engineered
soils
|
|
$
|
49,280
|
|
Equity
|
|
New
Investment
|
|
October 31,
2024
|
|
Norplex Micarta
Acquisition, Inc.
|
|
Manufacturer of
thermoset composite laminates
|
|
$
|
13,000,000
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
500,000
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
739,804
|
|
Equity
|
|
Add-On
Investment
|
|
November 7,
2024
|
|
Green Intermediateco
II, Inc.*
|
|
Cyber-security focused
value-added reseller and
associated service
provider
|
|
$
|
1,300,000
|
|
Senior Secured – First
Lien
|
|
|
*Existing portfolio
company
|
The Company realized an investment in the following portfolio
company subsequent to September 30, 2024:
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Proceeds
Received
|
|
Realized
Gain
|
|
Instrument
Type
|
|
Full
Repayment
|
|
November 4,
2024
|
|
Baker Manufacturing
Company, LLC*
|
|
Manufacturer of water
well equipment, specialized
filtration pumps, and
custom castings
|
|
$
|
12,738,093
|
|
$
|
—
|
|
Senior Secured – First
Lien
|
|
Full
Realization
|
|
November 5,
2024
|
|
Health Monitor
Holdings, LLC*
|
|
Provider of
point-of-care patient engagement and
marketing solutions for
pharmaceutical companies
|
|
$
|
1,704,298
|
|
$
|
651,379
|
|
Equity
|
|
|
*Existing portfolio
company
|
Credit Facility
On October 30, 2024, the Company
entered into an Increase Agreement to the Credit Facility which,
among other things, amends the Credit Facility to increase the
total available commitments under the Credit Facility from
$260.0 million to $315.0 million on a committed basis.
The outstanding balance under the Credit Facility as of
November 7, 2024 was $158.0 million.
Distributions Declared
On October 10, 2024, our Board of
Directors declared a regular monthly distribution for each of
October, November, and December 2024,
as follows:
|
|
Ex-Dividend
|
|
Record
|
|
Payment
|
|
Amount per
|
|
Declared
|
|
Date
|
|
Date
|
|
Date
|
|
Share
|
|
10/10/2024
|
|
10/31/2024
|
|
10/31/2024
|
|
11/15/2024
|
|
$
|
0.1333
|
|
10/10/2024
|
|
11/29/2024
|
|
11/29/2024
|
|
12/13/2024
|
|
$
|
0.1333
|
|
10/10/2024
|
|
12/31/2024
|
|
12/31/2024
|
|
1/15/2024
|
|
$
|
0.1333
|
Conference Call Information
Stellus Capital Investment Corporation will host a conference
call to discuss these results on Friday,
November 8, 2024 at 11:00 AM, Central
Time. The conference call will be led by Robert T. Ladd, Chief Executive Officer, and W.
Todd Huskinson, Chief Financial
Officer, Chief Compliance Officer, Treasurer, and Secretary.
For those wishing to participate by telephone, please dial (888)
506-0062. Use passcode 122799. Starting approximately two hours
after the conclusion of the call, a replay will be available
through Friday, November 22, 2024 by
dialing (877) 481-4010 and entering passcode 51477. The replay will
also be available on the Company's website.
For those wishing to participate via Live Webcast, connect via
the Public (SCIC) section of our website at www.stelluscapital.com,
under the Events tab. A replay of the conference will be available
on our website for approximately 90 days.
About Stellus Capital Investment Corporation
The Company is an externally-managed, closed-end,
non-diversified investment management company that has elected to
be regulated as a business development company under the Investment
Company Act of 1940, as amended. The Company's investment objective
is to maximize the total return to its stockholders in the form of
current income and capital appreciation by investing primarily in
private middle-market companies (typically those with $5.0 million to $50.0
million of EBITDA (earnings before interest, taxes,
depreciation and amortization)) through first lien (including
unitranche) loans, second lien loans and unsecured debt financing,
with corresponding equity co-investments. The Company's investment
activities are managed by its investment adviser, Stellus Capital
Management. To learn more about Stellus Capital Investment
Corporation, visit www.stelluscapital.com under the "Public (SCIC)"
tab.
Forward-Looking Statements
Statements included herein may contain "forward-looking
statements" which relate to future performance or financial
condition. Statements other than statements of historical facts
included in this press release may constitute forward-looking
statements and are not guarantees of future performance or results
and involve a number of assumptions, risks and uncertainties, which
change over time. Actual results may differ materially from those
anticipated in any forward-looking statements as a result of a
number of factors, including those described from time to time in
filings by the Company with the Securities and Exchange Commission
including the final prospectus that will be filed with the
Securities and Exchange Commission. The Company undertakes no duty
to update any forward-looking statement made herein. All
forward-looking statements speak only as of the date of this press
release.
Contacts
Stellus Capital Investment Corporation
W. Todd Huskinson, Chief Financial
Officer
(713) 292-5414
thuskinson@stelluscapital.com
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED
STATEMENTS OF ASSETS AND LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2024
|
|
|
|
|
|
(unaudited)
|
|
December 31, 2023
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Controlled investments
at fair value (amortized cost of $17,934,808 and
$17,285,138,
respectively)
|
|
$
|
7,749,169
|
|
$
|
6,175,994
|
|
|
Non-controlled,
non-affiliated investments, at fair value (amortized cost of
$891,385,080
and $884,858,412,
respectively)
|
|
|
900,969,724
|
|
|
868,284,689
|
|
|
Cash and cash
equivalents
|
|
|
38,580,261
|
|
|
26,125,741
|
|
|
Receivable for sales
and repayments of investments
|
|
|
1,358,421
|
|
|
371,877
|
|
|
Interest
receivable
|
|
|
6,272,194
|
|
|
4,882,338
|
|
|
Income tax
receivable
|
|
|
1,817,371
|
|
|
1,588,708
|
|
|
Other
receivables
|
|
|
67,995
|
|
|
42,995
|
|
|
Deferred offering
costs
|
|
|
—
|
|
|
7,312
|
|
|
Prepaid
expenses
|
|
|
256,724
|
|
|
606,674
|
|
|
Total
Assets
|
|
$
|
957,071,859
|
|
$
|
908,086,328
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Notes
Payable
|
|
$
|
99,331,757
|
|
$
|
98,996,412
|
|
|
Credit Facility
payable
|
|
|
154,578,467
|
|
|
156,564,776
|
|
|
SBA-guaranteed
debentures
|
|
|
321,058,121
|
|
|
320,273,358
|
|
|
Dividends
payable
|
|
|
3,604,347
|
|
|
—
|
|
|
Management fees
payable
|
|
|
3,959,554
|
|
|
2,918,536
|
|
|
Income incentive fees
payable
|
|
|
3,154,576
|
|
|
2,885,180
|
|
|
Interest
payable
|
|
|
1,253,031
|
|
|
5,241,164
|
|
|
Related party
payable
|
|
|
1,898,854
|
|
|
—
|
|
|
Unearned
revenue
|
|
|
550,348
|
|
|
397,725
|
|
|
Administrative services
payable
|
|
|
401,033
|
|
|
402,151
|
|
|
Deferred tax
liability
|
|
|
—
|
|
|
188,893
|
|
|
Other accrued expenses
and liabilities
|
|
|
996,484
|
|
|
278,345
|
|
|
Total
Liabilities
|
|
$
|
590,786,572
|
|
$
|
588,146,540
|
|
|
Commitments and
contingencies (Note 7)
|
|
|
|
|
|
|
|
|
Net
Assets
|
|
$
|
366,285,287
|
|
$
|
319,939,788
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
|
|
Common stock, par value
$0.001 per share (100,000,000 shares authorized;
27,039,364
and 24,125,642 issued
and outstanding, respectively)
|
|
$
|
27,039
|
|
$
|
24,125
|
|
|
Paid-in
capital
|
|
|
375,430,445
|
|
|
335,918,984
|
|
|
Total distributable
loss
|
|
|
(9,172,197)
|
|
|
(16,003,321)
|
|
|
Net
Assets
|
|
$
|
366,285,287
|
|
$
|
319,939,788
|
|
|
Total Liabilities
and Net Assets
|
|
$
|
957,071,859
|
|
$
|
908,086,328
|
|
|
Net Asset Value Per
Share
|
|
$
|
13.55
|
|
$
|
13.26
|
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the nine months
ended
|
|
|
|
September 30, 2024
|
|
September 30, 2023
|
|
September 30, 2024
|
|
September 30, 2023
|
|
|
INVESTMENT
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From controlled
investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
—
|
|
$
|
—
|
|
$
|
81,636
|
|
$
|
—
|
|
|
From non-controlled,
non-affiliated investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
25,338,361
|
|
|
26,223,986
|
|
|
75,460,156
|
|
|
75,295,485
|
|
|
Other income
|
|
|
1,159,898
|
|
|
941,040
|
|
|
3,579,415
|
|
|
2,529,905
|
|
|
Total Investment
Income
|
|
$
|
26,498,259
|
|
$
|
27,165,026
|
|
$
|
79,121,207
|
|
$
|
77,825,390
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
$
|
3,959,554
|
|
$
|
3,933,121
|
|
$
|
11,664,020
|
|
$
|
11,533,811
|
|
|
Valuation
fees
|
|
|
151,535
|
|
|
139,267
|
|
|
343,753
|
|
|
332,762
|
|
|
Administrative services
expenses
|
|
|
469,274
|
|
|
470,846
|
|
|
1,441,436
|
|
|
1,399,188
|
|
|
Income incentive
fees
|
|
|
2,564,922
|
|
|
2,705,200
|
|
|
7,616,562
|
|
|
7,433,039
|
|
|
Capital gains incentive
fee reversal
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(569,528)
|
|
|
Professional
fees
|
|
|
312,034
|
|
|
276,592
|
|
|
847,866
|
|
|
877,276
|
|
|
Directors'
fees
|
|
|
93,250
|
|
|
93,250
|
|
|
315,750
|
|
|
303,750
|
|
|
Insurance
expense
|
|
|
126,362
|
|
|
123,725
|
|
|
376,840
|
|
|
366,156
|
|
|
Interest expense and
other fees
|
|
|
7,956,403
|
|
|
8,049,063
|
|
|
23,840,473
|
|
|
24,037,462
|
|
|
Income tax
expense
|
|
|
360,192
|
|
|
335,508
|
|
|
1,304,948
|
|
|
1,082,057
|
|
|
Other general and
administrative expenses
|
|
|
245,043
|
|
|
217,655
|
|
|
908,185
|
|
|
727,754
|
|
|
Total Operating
Expenses
|
|
$
|
16,238,569
|
|
$
|
16,344,227
|
|
$
|
48,659,833
|
|
$
|
47,523,727
|
|
|
Income incentive fee
waiver
|
|
|
—
|
|
|
—
|
|
|
(1,826,893)
|
|
|
—
|
|
|
Total Operating
Expenses, net of fee waivers
|
|
$
|
16,238,569
|
|
$
|
16,344,227
|
|
$
|
46,832,940
|
|
$
|
47,523,727
|
|
|
Net Investment
Income
|
|
$
|
10,259,690
|
|
$
|
10,820,799
|
|
$
|
32,288,267
|
|
$
|
30,301,663
|
|
|
Net realized (loss)
gain on non-controlled, non-affiliated investments
|
|
$
|
(3,297,615)
|
|
$
|
600,403
|
|
$
|
(21,689,864)
|
|
$
|
324,782
|
|
|
Net realized loss on
foreign currency translations
|
|
|
(22,095)
|
|
|
(22,166)
|
|
|
(76,990)
|
|
|
(72,782)
|
|
|
Net change in
unrealized appreciation on controlled investments
|
|
|
248,746
|
|
|
—
|
|
|
923,505
|
|
|
—
|
|
|
Net change in
unrealized appreciation (depreciation) on
non-controlled,
non-affiliated
investments
|
|
|
8,255,272
|
|
|
(13,793,320)
|
|
|
25,512,422
|
|
|
(24,338,195)
|
|
|
Net change in
unrealized appreciation (depreciation) on foreign
currency
translations
|
|
|
14,588
|
|
|
(2,794)
|
|
|
5,099
|
|
|
(21,243)
|
|
|
(Provision) benefit
for taxes on net unrealized (appreciation) depreciation
on
investments
|
|
|
—
|
|
|
(312)
|
|
|
188,893
|
|
|
(144,425)
|
|
|
Benefit for taxes on
net realized loss on investments
|
|
|
2,221
|
|
|
—
|
|
|
2,221
|
|
|
—
|
|
|
Net Increase
(Decrease) in Net Assets Resulting from Operations
|
|
$
|
15,460,807
|
|
$
|
(2,397,390)
|
|
$
|
37,153,553
|
|
$
|
6,049,800
|
|
|
Net Investment
Income Per Share—basic and diluted
|
|
$
|
0.39
|
|
$
|
0.47
|
|
$
|
1.29
|
|
$
|
1.42
|
|
|
Net Increase
(Decrease) in Net Assets Resulting from Operations
Per
Share – basic and
diluted
|
|
$
|
0.59
|
|
$
|
(0.11)
|
|
$
|
1.48
|
|
$
|
0.28
|
|
|
Weighted Average
Shares of Common Stock Outstanding—basic and
diluted
|
|
|
26,326,426
|
|
|
22,824,221
|
|
|
25,066,626
|
|
|
21,289,880
|
|
|
Distributions Per
Share—basic and diluted
|
|
$
|
0.40
|
|
$
|
0.41
|
|
$
|
1.21
|
|
$
|
1.22
|
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED
STATEMENTS OF CHANGES IN NET
ASSETS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
Total
|
|
|
|
|
|
Number
|
|
Par
|
|
Paid-in
|
|
distributable
|
|
|
|
|
|
of shares
|
|
value
|
|
capital
|
|
earnings
(loss)
|
|
Net Assets
|
|
Balances at
December 31, 2022
|
|
19,666,769
|
|
$
|
19,667
|
|
$
|
275,114,720
|
|
$
|
642,226
|
|
$
|
275,776,613
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,067,620
|
|
|
9,067,620
|
|
Net realized gain on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,967
|
|
|
34,967
|
|
Net realized loss on
foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39,912)
|
|
|
(39,912)
|
|
Net change in
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,249,642)
|
|
|
(4,249,642)
|
|
Net change in
unrealized appreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,874
|
|
|
1,874
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78,760)
|
|
|
(78,760)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,951,284)
|
|
|
(7,951,284)
|
|
Issuance of common
stock, net of offering costs(1)
|
|
581,614
|
|
|
581
|
|
|
8,289,988
|
|
|
—
|
|
|
8,290,569
|
|
Balances at March
31, 2023
|
|
20,248,383
|
|
$
|
20,248
|
|
$
|
283,404,708
|
|
$
|
(2,572,911)
|
|
$
|
280,852,045
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,413,244
|
|
|
10,413,244
|
|
Net realized loss on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(310,588)
|
|
|
(310,588)
|
|
Net realized loss on
foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,704)
|
|
|
(10,704)
|
|
Net change in
unrealized depreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,295,233)
|
|
|
(6,295,233)
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,323)
|
|
|
(20,323)
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65,353)
|
|
|
(65,353)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,659,144)
|
|
|
(8,659,144)
|
|
Issuance of common
stock, net of offering costs(1)
|
|
2,309,521
|
|
|
2,310
|
|
|
32,418,774
|
|
|
—
|
|
|
32,421,084
|
|
Balances at
June 30, 2023
|
|
22,557,904
|
|
$
|
22,558
|
|
$
|
315,823,482
|
|
$
|
(7,521,012)
|
|
$
|
308,325,028
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,820,799
|
|
|
10,820,799
|
|
Net realized gain on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
600,403
|
|
|
600,403
|
|
Net realized loss on
foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,166)
|
|
|
(22,166)
|
|
Net change in
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,793,320)
|
|
|
(13,793,320)
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,794)
|
|
|
(2,794)
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(312)
|
|
|
(312)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,269,208)
|
|
|
(9,269,208)
|
|
Issuance of common
stock, net of offering costs(1)
|
|
1,567,738
|
|
|
1,567
|
|
|
21,465,783
|
|
|
—
|
|
|
21,467,350
|
|
Balances at
September 30, 2023
|
|
24,125,642
|
|
$
|
24,125
|
|
$
|
337,289,265
|
|
$
|
(19,187,610)
|
|
$
|
318,125,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at
December 31, 2023
|
|
24,125,642
|
|
$
|
24,125
|
|
$
|
335,918,984
|
|
$
|
(16,003,321)
|
|
$
|
319,939,788
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,235,916
|
|
|
10,235,916
|
|
Net realized loss on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,384,731)
|
|
|
(20,384,731)
|
|
Net realized loss on
foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,106)
|
|
|
(25,106)
|
|
Net change in
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,518,590
|
|
|
23,518,590
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,602)
|
|
|
(3,602)
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(192,607)
|
|
|
(192,607)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,647,844)
|
|
|
(9,647,844)
|
|
Balances at March
31, 2024
|
|
24,125,642
|
|
$
|
24,125
|
|
$
|
335,918,984
|
|
$
|
(12,502,705)
|
|
$
|
323,440,404
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,792,661
|
|
|
11,792,661
|
|
Net realized gain on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,992,482
|
|
|
1,992,482
|
|
Net realized loss on
foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,789)
|
|
|
(29,789)
|
|
Net change in
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,586,681)
|
|
|
(5,586,681)
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,887)
|
|
|
(5,887)
|
|
Benefit for taxes on
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
381,500
|
|
|
381,500
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,049,073)
|
|
|
(10,049,073)
|
|
Issuance of common
stock, net of offering costs(1)
|
|
1,855,356
|
|
|
1,856
|
|
|
25,248,020
|
|
|
—
|
|
|
25,249,876
|
|
Balances at
June 30, 2024
|
|
25,980,998
|
|
$
|
25,981
|
|
$
|
361,167,004
|
|
$
|
(14,007,492)
|
|
$
|
347,185,493
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,259,690
|
|
|
10,259,690
|
|
Net realized loss on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,297,615)
|
|
|
(3,297,615)
|
|
Net realized loss on
foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,095)
|
|
|
(22,095)
|
|
Net change in
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,504,018
|
|
|
8,504,018
|
|
Net change in
unrealized appreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,588
|
|
|
14,588
|
|
Benefit for taxes on
net realized loss on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,221
|
|
|
2,221
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,625,512)
|
|
|
(10,625,512)
|
|
Issuance of common
stock, net of offering costs(1)
|
|
1,058,366
|
|
|
1,058
|
|
|
14,263,441
|
|
|
—
|
|
|
14,264,499
|
|
Balances at
September 30, 2024
|
|
27,039,364
|
|
$
|
27,039
|
|
$
|
375,430,445
|
|
$
|
(9,172,197)
|
|
$
|
366,285,287
|
|
|
|
|
|
|
|
|
|
(1)
|
See Note 4 to the
Consolidated Financial Statements on Form 10-Q filed with the
Securities and Exchange Commission on November 7, 2024 for more
information on offering costs.
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
|
|
|
|
|
|
|
For nine months
ended
|
|
|
September 30, 2024
|
|
September 30, 2023
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net increase in net
assets resulting from operations
|
|
$
|
37,153,553
|
|
$
|
6,049,800
|
|
Adjustments to
reconcile net increase in net assets from operations to net cash
used in operating activities:
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(112,624,812)
|
|
|
(139,650,422)
|
|
Proceeds from
sales and repayments of investments
|
|
|
87,308,914
|
|
|
79,053,967
|
|
Net change in
unrealized (appreciation) depreciation on investments
|
|
|
(26,435,927)
|
|
|
24,338,195
|
|
Net change in
unrealized (appreciation) depreciation on foreign currency
translations
|
|
|
(5,099)
|
|
|
21,087
|
|
Increase in
investments due to PIK
|
|
|
(2,490,856)
|
|
|
(2,732,530)
|
|
Amortization of
premium and accretion of discount, net
|
|
|
(2,045,992)
|
|
|
(2,078,183)
|
|
Deferred tax
(benefit) provision
|
|
|
(188,893)
|
|
|
144,425
|
|
Amortization of
loan structure fees
|
|
|
825,891
|
|
|
436,257
|
|
Amortization of
deferred financing costs
|
|
|
335,345
|
|
|
334,122
|
|
Amortization of
loan fees on SBA-guaranteed debentures
|
|
|
784,763
|
|
|
938,247
|
|
Net realized
loss (gain) on investments
|
|
|
21,689,864
|
|
|
(324,782)
|
|
Changes in other assets
and liabilities
|
|
|
|
|
|
|
|
Increase in
interest receivable
|
|
|
(1,389,856)
|
|
|
(1,615,612)
|
|
Increase in
income tax receivable
|
|
|
(228,663)
|
|
|
—
|
|
Increase in
other receivables
|
|
|
(25,000)
|
|
|
(26,250)
|
|
Decrease in
prepaid expenses
|
|
|
349,950
|
|
|
517,512
|
|
Increase
(decrease) in management fees payable
|
|
|
1,041,018
|
|
|
(3,217,286)
|
|
Increase in
income incentive fees payable
|
|
|
269,396
|
|
|
594,142
|
|
Decrease in
capital gains incentive fees payable
|
|
|
—
|
|
|
(569,528)
|
|
(Decrease)
increase in administrative services payable
|
|
|
(1,118)
|
|
|
45,708
|
|
Decrease in
interest payable
|
|
|
(3,988,133)
|
|
|
(3,324,507)
|
|
Increase
(decrease) in related party payable
|
|
|
1,898,854
|
|
|
(1,060,321)
|
|
Increase in
unearned revenue
|
|
|
152,623
|
|
|
22,535
|
|
Decrease in
income tax payable
|
|
|
—
|
|
|
(59,004)
|
|
Increase
(decrease) in other accrued expenses and liabilities
|
|
|
718,139
|
|
|
(272,305)
|
|
Net Cash Provided
(Used) in Operating Activities
|
|
$
|
3,103,961
|
|
$
|
(42,434,733)
|
|
Cash flows from
Financing Activities
|
|
|
|
|
|
|
|
Proceeds from
the issuance of common stock
|
|
$
|
40,370,901
|
|
$
|
63,348,436
|
|
Sales load for
common stock issued
|
|
|
(606,145)
|
|
|
(943,248)
|
|
Offering costs
paid for common stock issued
|
|
|
(243,067)
|
|
|
(225,085)
|
|
Stockholder
distributions paid
|
|
|
(26,718,082)
|
|
|
(22,663,688)
|
|
Proceeds from
SBA-guaranteed debentures
|
|
|
—
|
|
|
11,400,000
|
|
Financing costs
paid on SBA-guaranteed debentures
|
|
|
—
|
|
|
(277,590)
|
|
Financing costs
paid on Credit Facility
|
|
|
(101,348)
|
|
|
(35,000)
|
|
Borrowings
under Credit Facility
|
|
|
122,400,000
|
|
|
79,700,000
|
|
Repayments of
Credit Facility
|
|
|
(125,751,700)
|
|
|
(116,701,700)
|
|
Net Cash Provided by
Financing Activities
|
|
$
|
9,350,559
|
|
$
|
13,602,125
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
$
|
12,454,520
|
|
$
|
(28,832,608)
|
|
Cash and Cash
Equivalents Balance at Beginning of Period
|
|
$
|
26,125,741
|
|
$
|
48,043,329
|
|
Cash and Cash
Equivalents Balance at End of Period
|
|
$
|
38,580,261
|
|
$
|
19,210,721
|
|
Supplemental and
Non-Cash Activities
|
|
|
|
|
|
|
|
Cash paid for interest
expense
|
|
$
|
25,882,607
|
|
$
|
25,653,343
|
|
Income and excise tax
paid
|
|
|
1,533,611
|
|
|
1,141,061
|
|
Increase in
distributions payable
|
|
|
3,604,347
|
|
|
3,215,948
|
|
Decrease in deferred
offering costs
|
|
|
(7,312)
|
|
|
(1,100)
|
|
Reconciliation of
Core Net Investment Income (1)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30, 2024
|
|
September 30, 2023
|
|
Net investment
income
|
|
$10,259,690
|
|
$10,820,799
|
|
Income tax
expense
|
|
360,192
|
|
335,508
|
|
Core net investment
income
|
|
$10,619,882
|
|
$11,156,307
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
Net investment income
per share
|
|
$0.39
|
|
$0.47
|
|
Core net investment
income per share
|
|
$0.40
|
|
$0.49
|
|
Reconciliation of
Realized Net Investment Income (2)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30, 2024
|
|
September 30, 2023
|
|
Net investment
income
|
|
$10,259,690
|
|
$10,820,799
|
|
Net realized loss on
investments
|
|
(3,297,615)
|
|
600,403
|
|
Net realized loss on
foreign currency translation
|
|
(22,095)
|
|
(22,166)
|
|
Total Realized Net
Investment Income
|
|
$6,939,980
|
|
$11,399,036
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
Net investment income
per share
|
|
$0.39
|
|
$0.47
|
|
Realized net investment
income per share
|
|
$0.25
|
|
$0.50
|
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SOURCE Stellus Capital Investment Corporation