HOUSTON, May 9, 2024
/PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM)
("Stellus" or the "Company") today announced financial results for
its first fiscal quarter ended March 31,
2024.
Robert T. Ladd, Chief Executive
Officer of Stellus, stated, "I am pleased to report solid operating
results for the quarter ended March 31,
2024, in which net asset value grew by $0.15 per share and U.S. GAAP net investment
income of $0.42 per share and core
net investment income of $0.44 per
share covered the regular dividend declared of $0.40 per share. Our loan portfolio is yielding
11.9%, as of March 31, 2024. We have
completed over eleven years of operations, during which our
investors have received a total of $252
million in distributions, equivalent to $15.35 per share."
|
FINANCIAL
HIGHLIGHTS
|
|
($ in millions, except
data relating to per share amounts and shares
outstanding)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March 31, 2024
|
|
March 31, 2023
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Net investment
income
|
$10.24
|
$0.42
|
|
$9.07
|
$0.46
|
|
Core net investment
income(1)
|
10.61
|
0.44
|
|
8.87
|
0.45
|
|
Net realized (loss)
gain on investments
|
(20.38)
|
(0.85)
|
|
0.03
|
—
|
|
Net realized loss on
foreign currency translation
|
(0.03)
|
—
|
|
(0.04)
|
—
|
|
Total realized
income(2)
|
($10.17)
|
($0.43)
|
|
$9.06
|
$0.46
|
|
Distributions
|
(9.65)
|
(0.40)
|
|
(7.95)
|
(0.40)
|
|
Net unrealized change
in appreciation (depreciation) on investments
|
23.52
|
0.98
|
|
(4.25)
|
(0.22)
|
|
Provision for taxes on
unrealized appreciation on investments in taxable
subsidiaries
|
(0.20)
|
(0.01)
|
|
(0.07)
|
—
|
|
Net increase in net
assets resulting from operations
|
$13.15
|
$0.54
|
|
$4.74
|
$0.24
|
|
Weighted average shares
outstanding
|
|
24,125,642
|
|
|
19,779,988
|
|
(1)
|
Core net investment
income, as presented, excludes the impact of capital gains
incentive fees (reversal) and income taxes, the majority of which
are excise taxes. The Company believes presenting core net
investment income and the related per share amount is a useful
supplemental disclosure for analyzing its financial performance.
However, core net investment income is a non-U.S. generally
accepted accounting principles ("U.S. GAAP") measure and should not
be considered as a replacement for net investment income and other
earnings measures presented in accordance with U.S. GAAP. A
reconciliation of net investment income in accordance with U.S.
GAAP to core net investment income is presented in the table below
the financial
statements.
|
|
(2)
|
Total realized income
is the sum of net investment income, net realized gains (losses) on
investments, net realized gains (losses) on foreign currency, and
loss on debt extinguishment; all U.S. GAAP measures.
|
|
PORTFOLIO
ACTIVITY
|
|
($ in millions, except
data relating to per share amounts and number of portfolio
companies)
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
March 31, 2024
|
|
December 31, 2023
|
|
Investments at fair
value
|
|
$875.9
|
|
$874.5
|
|
Total assets
|
|
$935.2
|
|
$908.1
|
|
Net assets
|
|
$323.4
|
|
$319.9
|
|
Shares
outstanding
|
|
24,125,642
|
|
24,125,642
|
|
Net asset value per
share
|
|
$13.41
|
|
$13.26
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31, 2024
|
|
March 31, 2023
|
|
New
investments
|
|
$28.5
|
|
$41.2
|
|
Repayments of
investments
|
|
(31.2)
|
|
(5.9)
|
|
Net activity
|
|
($2.7)
|
|
$35.3
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
March 31, 2024
|
|
December 31, 2023
|
|
Number of portfolio
company investments
|
|
94
|
|
93
|
|
Number of debt
investments
|
|
81
|
|
81
|
|
|
|
|
|
|
Weighted average yield
of debt and other income producing investments
(3)
|
|
|
|
|
|
Cash
|
|
11.0 %
|
|
11.0 %
|
|
Payment-in-kind
("PIK")
|
|
0.5 %
|
|
0.5 %
|
|
Fee
amortization
|
|
0.4 %
|
|
0.4 %
|
|
Total
|
|
11.9 %
|
|
11.9 %
|
|
|
|
|
|
|
Weighted average yield
on total investments (4)
|
|
|
|
|
|
Cash
|
|
10.3 %
|
|
10.3 %
|
|
Payment-in-kind
("PIK")
|
|
0.5 %
|
|
0.5 %
|
|
Fee
amortization
|
|
0.3 %
|
|
0.3 %
|
|
Total
|
|
11.1 %
|
|
11.1 %
|
|
(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.
|
|
(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 March 31, 2024 and 2023 totaled $26.0 million and $24.1
million, respectively, most of which was interest income
from portfolio investments.
Gross operating expenses for the three months ended March 31, 2024 and 2023, totaled $16.0 million and $15.0
million, respectively. The increase was driven primarily by
increased incentive fees. For the same respective periods, base
management fees totaled $3.9 million
and $3.7 million, income incentive
fees totaled $2.5 million and
$2.1 million, capital gains incentive
fee reversals totaled ($0.0) million
and ($0.6) million, fees and expenses
related to our borrowings totaled $7.8
million and $7.9 million
(including interest and amortization of deferred financing costs),
administrative expenses totaled $0.5
million for both periods, income tax totaled $0.4 million for both periods and other expenses
totaled $0.9 million and $1.0 million. For the three months ended
March 31, 2024, the Company waived
income incentive fees totaling $0.2
million for net operating expenses of $15.8 million. No such income incentive fees were
waived for the three months ended March 31,
2023.
Net investment income was $10.2
million and $9.1 million, or
$0.42 and $0.46 per common share based on weighted average
common shares outstanding of 24,125,642 and 19,779,988 for the
three months ended March 31, 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 March 31, 2024 and 2023 was
$10.6 million and $8.9 million, or $0.44 and $0.45 per
share, respectively.
For the three months ended March 31,
2024 and 2023, the Company's investment portfolio had a net
change in unrealized appreciation (depreciation) of $23.5 million and ($4.2)
million, respectively, and the Company had net realized
(losses) gains of ($20.4) million and
less than $0.1 million, respectively.
The full realizations for the three months ended March 31, 2024 had previously been reflected as
unrealized depreciation which were reversed during the three months
then ended and included in the $23.5
million of unrealized appreciation as of March 31, 2024.
Net increase in net assets resulting from operations totaled
$13.1 million and $4.7 million, or $0.54 and $0.24 per
common share, based on weighted average common shares outstanding
of 24,125,642 and 19,779,988 for the three months ended
March 31, 2024 and 2023,
respectively.
Liquidity and Capital Resources
As of March 31, 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 March 31, 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 March 31, 2024 and
December 31, 2023, the Company had
$184.7 million and $160.1 million in outstanding borrowings under
the Credit Facility, respectively.
Distributions
During the three months ended March 31,
2024 and 2023, the Company declared aggregate distributions
of $0.40 per share for both periods
($9.6 million and $8.0 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 March 31,
2024:
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Investment
Amount
|
|
Instrument
Type
|
|
Add-On
Investment
|
|
January 5,
2024
|
|
Whisps Holdings
LP*
|
|
Manufacturer of
cheese-based snacks
|
|
$
|
75,192
|
|
Equity
|
|
Add-On
Investment
|
|
January 8,
2024
|
|
EH Real Estate
Services, LLC*
|
|
Offers residential
property brokerage, title & settlement, and
property and casualty insurance brokerage services to home
buyers
and sellers
|
|
$
|
475,233
|
|
Senior Secured – First
Lien
|
|
Add-On
Investment
|
|
January 9,
2024
|
|
Morgan Electrical Group
Intermediate Holdings, Inc.*
|
|
Provider of commercial
electrical services
|
|
$
|
23,531
|
|
Equity
|
|
Add-On
Investment
|
|
January 12,
2024
|
|
Impact Home Services
LLC*
|
|
Residential garage
door, electrical, and plumbing services provider
|
|
$
|
50,914
|
|
Equity
|
|
Add-On
Investment
|
|
January 31,
2024
|
|
Impact Home Services
LLC*
|
|
Residential garage
door, electrical, and plumbing services provider
|
|
$
|
22,331
|
|
Equity
|
|
Add-On
Investment
|
|
February 7,
2024
|
|
Unicat Catalyst
Holdings, LLC*
|
|
Manufacturer and
distributor of catalysts and other industrial products
|
|
$
|
7,032
|
|
Equity
|
|
Add-On
Investment
|
|
March 1,
2024
|
|
Monitorus Holding,
LLC*
|
|
Provider of media
monitoring and evaluation services
|
|
$
|
13,290
|
|
Unsecured Convertible
Bond
|
|
New
Investment
|
|
March 11,
2024
|
|
Exec Connect
Intermediate LLC
|
|
Facilitator of
executive-level in-person events and remote peer-to-peer industry
insights
|
|
$
|
4,311,584
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
627,139
|
|
Delayed Draw Term Loan
Commitment
|
|
|
|
|
|
|
|
|
$
|
391,962
|
|
Revolver
Commitment
|
|
New
Investment
|
|
March 11,
2024
|
|
Titan Meter Bidco
Corp.
|
|
Provider of liquid
metering products and integrated solutions to the energy
infrastructure sector
|
|
$
|
10,029,219
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,055,707
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
515,578
|
|
Equity
|
|
Add-On
Investment
|
|
March 20,
2024
|
|
Advanced Barrier
Extrusions, LLC*
|
|
Manufacturer of high
barrier forming web films
|
|
$
|
32,489
|
|
Equity
|
|
New
Investment
|
|
March 26,
2024
|
|
Med Learning Group,
LLC
|
|
Provider of continuing
medical education services
|
|
$
|
8,977,710
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
2,445,188
|
|
Delayed Draw Term Loan
Commitment
|
|
Add-On
Investment
|
|
March 28,
2024
|
|
Rogers Mechanical
Contractors, LLC*
|
|
HVAC and plumbing
designer, installer, and service provider for
new/existing DCs, fulfilment sortation facilities, and
warehouses.
|
|
$
|
45,212
|
|
Senior Secured – First
Lien
|
|
______________________________
|
|
|
|
|
|
|
|
|
*Existing portfolio
company
|
|
|
|
|
|
The Company realized investments in the following portfolio
companies during the three months ended March 31, 2024:
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Proceeds
Received
|
|
Instrument
Type
|
|
Full
Repayment
|
|
January 8,
2024
|
|
Peltram Plumbing
Holdings, LLC*
|
|
Provider of plumbing
solutions
|
|
$
|
16,160,003
|
|
Senior Secured – First
Lien
|
|
Full
Realization
|
|
March 4,
2024
|
|
NuMet Machining
Techniques, LLC*
|
|
Supplier of complex,
mission critical
engine components, fabrications and
assemblies for the global aerospace and
power generation industries
|
|
$
|
(12,675,000)
|
|
Senior Secured – Second
Lien
|
|
|
|
|
Bromford Industries
Limited*
|
|
|
|
$
|
(7,800,000)
|
|
Senior Secured – Second
Lien
|
|
Full
Repayment
|
|
March 5,
2024
|
|
Dresser Utility
Solutions, LLC*
|
|
Manufacturer of rotary
meters, pipeline
distribution repair/upgrade products,
electric actuators and chemical pumps to
natural gas utilities and energy/industrial
distributors
|
|
$
|
10,000,000
|
|
Senior Secured – Second
Lien
|
|
______________________________
|
|
|
|
|
|
|
*Existing portfolio
company
|
|
|
|
|
|
Events Subsequent to March 31,
2024
The Company's management has evaluated subsequent events through
May 9, 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 March 31, 2024:
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Investment
Amount
|
|
Instrument
Type
|
|
New
Investment
|
|
April 1,
2024
|
|
FairWave Holdings,
LLC
|
|
Specialty coffee
platform
|
|
$
|
7,615,265
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
2,665,343
|
|
Delayed Draw Term Loan
Commitment
|
|
|
|
|
|
|
|
|
$
|
1,142,290
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
285,572
|
|
Equity
|
|
New
Investment
|
|
April 11,
2024
|
|
WER Holdings,
LLC
|
|
Regional provider of
commercial landscaping services
|
|
$
|
2,704,164
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,338,695
|
|
Delayed Draw Term Loan
Commitment
|
|
|
|
|
|
|
|
|
$
|
401,609
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
180,300
|
|
Equity
|
|
Add-On
Investment
|
|
April 16,
2024
|
|
Impact Home Services
LLC*
|
|
Residential garage
door, electrical, and plumbing
services provider
|
|
$
|
8,932
|
|
Equity
|
|
|
|
|
|
|
|
|
$
|
90,773
|
|
Senior Secured – First
Lien
|
|
Add-On
Investment
|
|
April 22,
2024
|
|
Exacta Land Surveyors,
LLC*
|
|
Provider of land survey
and field management services
to facilitate real estate transactions
|
|
$
|
2,164
|
|
Equity
|
|
______________________________
|
|
|
|
|
|
|
*Existing portfolio
company
|
|
|
|
|
|
The Company realized investments in the following portfolio
company subsequent to March 31,
2024:
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Proceeds
Received
|
|
Realized
Gain
|
|
Instrument
Type
|
|
Full
Repayment
|
|
May 1, 2024
|
|
Nutritional Medicinals,
LLC*
|
|
Manufacturer and
distributor of
organic whole food, plant-based
feeding tube formulas and meal
replacement kits.
|
|
$
|
11,421,291
|
|
$
|
-
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
2,950,929
|
|
$
|
1,978,126
|
|
Equity
|
|
______________________________
|
|
|
|
|
|
|
|
|
|
*Existing portfolio
company
|
|
|
|
|
|
|
|
|
Credit Facility
The outstanding balance under the Credit Facility as of
May 9, 2024 was $172.5 million.
Distributions Declared
On April 3, 2024, our Board of
Directors declared a regular monthly distribution for each of
April, May, and June 2024, as
follows:
|
|
Ex-Dividend
|
|
Record
|
|
Payment
|
|
Amount per
|
|
Declared
|
|
Date
|
|
Date
|
|
Date
|
|
Share
|
|
4/3/2024
|
|
4/29/2024
|
|
4/30/2024
|
|
5/15/2024
|
|
$
|
0.1333
|
|
4/3/2024
|
|
5/31/2024
|
|
5/31/2024
|
|
6/14/2024
|
|
$
|
0.1333
|
|
4/3/2024
|
|
6/28/2024
|
|
6/28/2024
|
|
7/15/2024
|
|
$
|
0.1333
|
Conference Call Information
Stellus Capital Investment Corporation will host a conference
call to discuss these results on Friday, May
10, 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 292372. Starting approximately two hours
after the conclusion of the call, a replay will be available
through Friday, May 24, 2024 by
dialing (877) 481-4010 and entering passcode 50586. 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
|
|
|
|
|
|
|
|
|
|
|
March 31, 2024
|
|
|
|
|
|
(unaudited)
|
|
December 31, 2023
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Controlled investments
at fair value (amortized cost of $17,934,808 and $17,285,138,
respectively)
|
|
$
|
7,362,234
|
|
$
|
6,175,994
|
|
|
Non-controlled,
non-affiliated investments, at fair value (amortized cost of
$862,218,903 and $884,858,412, respectively)
|
|
|
868,521,912
|
|
|
868,284,689
|
|
|
Cash and cash
equivalents
|
|
|
48,761,721
|
|
|
26,125,741
|
|
|
Receivable for sales
and repayments of investments
|
|
|
776,417
|
|
|
371,877
|
|
|
Interest
receivable
|
|
|
6,484,400
|
|
|
4,882,338
|
|
|
Income tax
receivable
|
|
|
2,673,730
|
|
|
1,588,708
|
|
|
Other
receivables
|
|
|
42,995
|
|
|
42,995
|
|
|
Deferred offering
costs
|
|
|
12,521
|
|
|
7,312
|
|
|
Prepaid
expenses
|
|
|
585,418
|
|
|
606,674
|
|
|
Total
Assets
|
|
$
|
935,221,348
|
|
$
|
908,086,328
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Notes
Payable
|
|
$
|
99,107,786
|
|
$
|
98,996,412
|
|
|
Credit Facility
payable
|
|
|
181,343,929
|
|
|
156,564,776
|
|
|
SBA-guaranteed
debentures
|
|
|
320,587,412
|
|
|
320,273,358
|
|
|
Dividends
payable
|
|
|
3,215,948
|
|
|
—
|
|
|
Management fees
payable
|
|
|
1,852,233
|
|
|
2,918,536
|
|
|
Income incentive fees
payable
|
|
|
2,745,073
|
|
|
2,885,180
|
|
|
Interest
payable
|
|
|
1,493,044
|
|
|
5,241,164
|
|
|
Unearned
revenue
|
|
|
412,314
|
|
|
397,725
|
|
|
Administrative services
payable
|
|
|
425,048
|
|
|
402,151
|
|
|
Deferred tax
liability
|
|
|
381,500
|
|
|
188,893
|
|
|
Other accrued expenses
and liabilities
|
|
|
216,657
|
|
|
278,345
|
|
|
Total
Liabilities
|
|
$
|
611,780,944
|
|
$
|
588,146,540
|
|
|
Commitments and
contingencies (Note 7)
|
|
|
|
|
|
|
|
|
Net
Assets
|
|
$
|
323,440,404
|
|
$
|
319,939,788
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
|
|
Common stock, par value
$0.001 per share (100,000,000 shares authorized; 24,125,642
issued and outstanding for both periods)
|
|
$
|
24,125
|
|
$
|
24,125
|
|
|
Paid-in
capital
|
|
|
335,918,984
|
|
|
335,918,984
|
|
|
Total distributable
loss
|
|
|
(12,502,705)
|
|
|
(16,003,321)
|
|
|
Net
Assets
|
|
$
|
323,440,404
|
|
$
|
319,939,788
|
|
|
Total Liabilities
and Net Assets
|
|
$
|
935,221,348
|
|
$
|
908,086,328
|
|
|
Net Asset Value Per
Share
|
|
$
|
13.41
|
|
$
|
13.26
|
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
|
|
|
|
For the three months
ended
|
|
|
|
March 31, 2024
|
|
March 31, 2023
|
|
|
INVESTMENT
INCOME
|
|
|
|
|
|
|
|
|
From controlled
investments:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
81,636
|
|
$
|
—
|
|
|
From non-controlled,
non-affiliated investments
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
24,956,851
|
|
|
23,408,604
|
|
|
Other income
|
|
|
958,262
|
|
|
666,743
|
|
|
Total Investment
Income
|
|
$
|
25,996,749
|
|
$
|
24,075,347
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Management
fees
|
|
$
|
3,852,233
|
|
$
|
3,735,102
|
|
|
Valuation
fees
|
|
|
156,507
|
|
|
147,073
|
|
|
Administrative services
expenses
|
|
|
490,901
|
|
|
461,964
|
|
|
Income incentive
fees
|
|
|
2,509,110
|
|
|
2,124,835
|
|
|
Capital gains incentive
fee
|
|
|
—
|
|
|
(569,528)
|
|
|
Professional
fees
|
|
|
339,627
|
|
|
430,848
|
|
|
Directors'
fees
|
|
|
108,250
|
|
|
117,250
|
|
|
Insurance
expense
|
|
|
124,989
|
|
|
120,546
|
|
|
Interest expense and
other fees
|
|
|
7,767,573
|
|
|
7,886,424
|
|
|
Income tax
expense
|
|
|
370,719
|
|
|
374,763
|
|
|
Other general and
administrative expenses
|
|
|
245,275
|
|
|
178,450
|
|
|
Total Operating
Expenses
|
|
$
|
15,965,184
|
|
$
|
15,007,727
|
|
|
Income incentive fee
waiver
|
|
|
(204,351)
|
|
|
—
|
|
|
Total Operating
Expenses, net of fee waivers
|
|
$
|
15,760,833
|
|
$
|
15,007,727
|
|
|
Net Investment
Income
|
|
$
|
10,235,916
|
|
$
|
9,067,620
|
|
|
Net realized (loss)
gain on non-controlled, non-affiliated investments
|
|
$
|
(20,384,731)
|
|
$
|
34,967
|
|
|
Net realized loss on
foreign currency translation
|
|
|
(25,106)
|
|
|
(39,912)
|
|
|
Net change in
unrealized appreciation on controlled investments
|
|
|
536,570
|
|
|
—
|
|
|
Net change in
unrealized appreciation (depreciation) on non-controlled,
non-affiliated investments
|
|
|
22,982,020
|
|
|
(4,249,642)
|
|
|
Net change in
unrealized (depreciation) appreciation on foreign currency
translations
|
|
|
(3,602)
|
|
|
1,874
|
|
|
Provision for taxes on
net unrealized appreciation on investments
|
|
|
(192,607)
|
|
|
(78,760)
|
|
|
Net Increase in Net
Assets Resulting from Operations
|
|
$
|
13,148,460
|
|
$
|
4,736,147
|
|
|
Net Investment
Income Per Share—basic and diluted
|
|
$
|
0.42
|
|
$
|
0.46
|
|
|
Net Increase in Net
Assets Resulting from Operations Per Share – basic and
diluted
|
|
$
|
0.54
|
|
$
|
0.24
|
|
|
Weighted Average
Shares of Common Stock Outstanding—basic and diluted
|
|
|
24,125,642
|
|
|
19,779,988
|
|
|
Distributions Per
Share—basic and diluted
|
|
$
|
0.40
|
|
$
|
0.40
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
______________________________
|
|
(1)
|
See Note 4 to the
Consolidated Financial Statements on Form 10-Q filed with the
Securities and Exchange Commission on May 9, 2024 for more
information on offering costs.
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
|
|
|
|
|
|
|
For three months
ended
|
|
|
March 31, 2024
|
|
March 31, 2023
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net increase in net
assets resulting from operations
|
|
$
|
13,148,460
|
|
$
|
4,736,147
|
|
Adjustments to
reconcile net increase in net assets from operations to net cash
used in operating activities:
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(28,516,430)
|
|
|
(41,237,273)
|
|
Proceeds from sales
and repayments of investments
|
|
|
31,169,595
|
|
|
5,890,813
|
|
Net change in
unrealized (appreciation) depreciation on investments
|
|
|
(23,518,590)
|
|
|
4,249,642
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
|
3,602
|
|
|
10,126
|
|
Increase in
investments due to PIK
|
|
|
(750,054)
|
|
|
(769,954)
|
|
Amortization of
premium and accretion of discount, net
|
|
|
(702,543)
|
|
|
(665,998)
|
|
Deferred tax
provision
|
|
|
192,607
|
|
|
78,760
|
|
Amortization of loan
structure fees
|
|
|
264,707
|
|
|
143,822
|
|
Amortization of
deferred financing costs
|
|
|
111,374
|
|
|
110,150
|
|
Amortization of loan
fees on SBA-guaranteed debentures
|
|
|
314,055
|
|
|
317,508
|
|
Net realized loss
(gain) on investments
|
|
|
20,384,731
|
|
|
(34,967)
|
|
Changes in other assets
and liabilities
|
|
|
|
|
|
|
|
Increase in interest
receivable
|
|
|
(1,602,062)
|
|
|
(187,420)
|
|
Increase in income tax
receivable
|
|
|
(1,085,022)
|
|
|
—
|
|
Decrease in prepaid
expenses
|
|
|
21,256
|
|
|
148,414
|
|
Decrease in management
fees payable
|
|
|
(1,066,303)
|
|
|
(2,592,566)
|
|
(Decrease) increase in
income incentive fees payable
|
|
|
(140,107)
|
|
|
2,124,835
|
|
Decrease in capital
gains incentive fees payable
|
|
|
—
|
|
|
(569,528)
|
|
Increase in
administrative services payable
|
|
|
22,897
|
|
|
39,951
|
|
Decrease in interest
payable
|
|
|
(3,748,120)
|
|
|
(3,437,073)
|
|
Decrease in related
party payable
|
|
|
—
|
|
|
(646,393)
|
|
Increase (decrease) in
unearned revenue
|
|
|
14,589
|
|
|
(47,573)
|
|
Increase in income tax
payable
|
|
|
—
|
|
|
374,460
|
|
Decrease in other
accrued expenses and liabilities
|
|
|
(61,688)
|
|
|
(78,907)
|
|
Net Cash Provided
(Used) in Operating Activities
|
|
$
|
4,456,954
|
|
$
|
(32,043,024)
|
|
Cash flows from
Financing Activities
|
|
|
|
|
|
|
|
Proceeds from the
issuance of common stock
|
|
$
|
—
|
|
$
|
8,487,127
|
|
Sales load for common
stock issued
|
|
|
—
|
|
|
(126,303)
|
|
Offering costs paid
for common stock issued
|
|
|
(5,209)
|
|
|
(72,955)
|
|
Stockholder
distributions paid
|
|
|
(6,431,896)
|
|
|
(5,252,174)
|
|
Financing costs paid
on Credit Facility
|
|
|
(49,969)
|
|
|
—
|
|
Borrowings under
Credit Facility
|
|
|
50,000,000
|
|
|
13,300,000
|
|
Repayments of Credit
Facility
|
|
|
(25,333,900)
|
|
|
(14,483,900)
|
|
Net Cash Provided by
Financing Activities
|
|
$
|
18,179,026
|
|
$
|
1,851,795
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
$
|
22,635,980
|
|
$
|
(30,191,229)
|
|
Cash and Cash
Equivalents Balance at Beginning of Period
|
|
$
|
26,125,741
|
|
$
|
48,043,329
|
|
Cash and Cash
Equivalents Balance at End of Period
|
|
$
|
48,761,721
|
|
$
|
17,852,100
|
|
Supplemental and
Non-Cash Activities
|
|
|
|
|
|
|
|
Cash paid for interest
expense
|
|
$
|
10,825,557
|
|
$
|
10,752,017
|
|
Income and excise tax
paid
|
|
|
1,455,741
|
|
|
303
|
|
Increase in
distributions payable
|
|
|
3,215,948
|
|
|
2,699,110
|
|
Increase in deferred
offering costs
|
|
|
5,209
|
|
|
2,700
|
|
Exchange of
investments
|
|
|
8,256,411
|
|
|
—
|
|
Reconciliation of
Core Net Investment Income (1)
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March 31, 2024
|
|
March 31, 2023
|
|
Net investment
income
|
|
$10,235,916
|
|
$9,067,620
|
|
Capital gains incentive
fee reversal
|
|
—
|
|
(569,528)
|
|
Income tax
expense
|
|
370,719
|
|
374,763
|
|
Core net investment
income
|
|
$10,606,635
|
|
$8,872,855
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
Net investment income
per share
|
|
$0.42
|
|
$0.46
|
|
Core net investment
income per share
|
|
$0.44
|
|
$0.45
|
|
|
Reconciliation of
Realized Net Investment Income (2)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31, 2024
|
|
March 31, 2023
|
|
Net investment
income
|
|
$10,235,916
|
|
$9,067,620
|
|
Net realized loss on
investments
|
|
(20,384,731)
|
|
34,967
|
|
Net realized loss on
foreign currency translation
|
|
(25,106)
|
|
(39,912)
|
|
Total Realized Net
Investment Income
|
|
($10,173,921)
|
|
$9,062,675
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
Net investment income
per share
|
|
$0.42
|
|
$0.46
|
|
Realized net investment
income per share
|
|
($0.43)
|
|
$0.46
|
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SOURCE Stellus Capital Investment Corporation