HOUSTON, Nov. 3, 2022
/PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM)
("Stellus" or the "Company") today announced financial results for
its third fiscal quarter ended September 30,
2022.
Robert T. Ladd, Chief Executive
Officer of Stellus, stated, "I am pleased to report strong results
for the third quarter, in which we more than covered our regular
dividend with GAAP and Core net investment income, grew our
portfolio to $872 million at fair
value and maintained asset quality. Our portfolio company
performance remains stable. We are benefitting from the rising
interest rate environment as our loan portfolio's yield has now
risen 140 basis points from the end of the second quarter. In
October, in addition to our regular dividend of $0.28 per quarter in the aggregate, our Board of
Directors declared an additional dividend of $0.06 in the aggregate for the fourth quarter.
These dividends total $0.34 per share
in the aggregate, payable in monthly increments, for the fourth
quarter."
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FINANCIAL
HIGHLIGHTS
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($ in millions, except
data relating to per share amounts and shares
outstanding)
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|
|
|
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|
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Three Months
Ended
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Nine Months
Ended
|
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September 30,
2022
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September 30,
2022
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|
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Amount
|
Per
Share
|
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Amount
|
Per
Share
|
|
Net investment
income
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|
$7.19
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$0.37
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|
$18.88
|
$0.97
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|
Core net investment
income (1)
|
|
6.90
|
0.35
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|
18.27
|
0.94
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Net realized gains on
investments
|
|
1.55
|
0.08
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|
4.66
|
0.24
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Net realized loss on
foreign currency
|
|
-
|
-
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|
(0.01)
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-
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Total
realized
income (2)
|
|
8.74
|
0.45
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|
23.53
|
1.20
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Distributions
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(6.64)
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(0.34)
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(18.75)
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(0.96)
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Net unrealized
depreciation on investments
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(4.80)
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(0.25)
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(12.81)
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(0.66)
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Net unrealized
depreciation on foreign currency translation
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(0.02)
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-
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(0.05)
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-
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Provision for taxes on
unrealized appreciation on investments in taxable
subsidiaries
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|
0.03
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-
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(0.15)
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(0.01)
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Net increase in net
assets resulting from operations
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|
$3.96
|
0.20
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|
$10.51
|
0.54
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Weighted average shares
outstanding
|
|
|
19,545,935
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19,535,708
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(1)
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Core net investment
income, as presented, excludes the impact of capital gains
incentive fees and income taxes, the majority of which are excise
taxes. The Company believes presenting core net investment income
and the related per share amount is a useful supplemental
disclosure for analyzing its financial performance. However, core
net investment income is a non-U.S. GAAP measure and should not be
considered as a replacement for net investment income and other
earnings measures presented in accordance with U.S. GAAP. A
reconciliation of net investment income in accordance with U.S.
GAAP to core net investment income is presented in the table below
the financial
statements.
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(2)
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Total realized income
is the sum of net investment income, net realized gains (losses) on
investments, net realized gains (losses) on foreign currency, and
loss on debt extinguishment; all U.S. GAAP measures.
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PORTFOLIO
ACTIVITY
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($ in millions, except
data relating to per share amounts and number of portfolio
companies)
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As of
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As of
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September
30,
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December
31,
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2022
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2021
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Investments at fair
value
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$871.70
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$772.9
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Total assets
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$889.10
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$821.3
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Net assets
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$277.20
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$285.1
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Shares
outstanding
|
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19,545,935
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19,517,595
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Net asset value per
share
|
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$14.18
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$14.61
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Three Months
Ended
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Nine Months
Ended
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September
30,
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September
30,
|
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2022
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2022
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New
investments
|
|
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$56.9
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$181.0
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Repayments of
investments
|
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(34.2)
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(74.4)
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Net activity
|
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$22.7
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$106.6
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As of
|
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As of
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September
30,
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December
31,
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2022
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2021
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Number of portfolio
company investments
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89
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73
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Number of debt
investments
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74
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58
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Weight average yield of
debt and other income producing investments
(3)
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Cash
|
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9.2 %
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7.4 %
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Payment-in-kind
("PIK")
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0.1 %
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0.2 %
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Fee
amortization
|
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0.5 %
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0.4 %
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Total
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9.8 %
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8.0 %
|
|
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Weighted average yield
on total investments (4)
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Cash
|
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8.7 %
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6.9 %
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Payment-in-kind
("PIK")
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0.1 %
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0.2 %
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Fee
amortization
|
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0.4 %
|
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0.4 %
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Total
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9.2 %
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7.5 %
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(3)
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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 of our common stock would realize in a
return over the same period because the dollar-weighted average
annualized yield does not reflect the Company's expense or any
sales load that may be paid by investors.
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(4)
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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.
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Results of Operations
Investment income for the three months ended September 30, 2022 and 2021 totaled $20.1 million and $17.0
million, respectively, most of which was interest income
from portfolio investments.
Operating expenses for the three months ended September 30, 2022 and 2021, totaled $13.0 million and $13.0
million, respectively. For the same respective periods, base
management fees totaled $3.8 million
and $3.5 million, income incentive
fees totaled $1.6 and $1.5 million, capital gains incentive (reversal)
fees totaled ($0.6) million and
$1.7 million, fees and expenses
related to our borrowings totaled $6.4
million and $4.9 million
(including interest and amortization of deferred financing costs),
administrative expenses totaled $0.4
million for both periods, income tax totaled $0.4 million and $0.2
million and other expenses totaled $1.0 million and $0.8
million.
Net investment income was $7.2
million and $4.1 million, or
$0.37 and $0.21 per common share based on weighted average
common shares outstanding of 19,545,935 and 19,486,003 for the
three months ended September 30, 2022
and 2021, respectively.
The capital gains incentive fee had a reversal of ($0.6) million for the three months ended
September 30, 2022 due to the
increase in unrealized losses, net of realized gains over the
quarter. Such fees, as calculated and accrued, would not
necessarily be payable under the investment advisory agreement, and
may never be paid based upon the computation of incentive fees in
subsequent periods. The income tax expense accrual of $0.4 million for the three months ended
September 30, 2022 was accrued based
on estimates of undistributed taxable income, which was generated
largely from net income. Core net investment income, which is a
non-U.S. GAAP measure that excludes the capital gains incentive fee
and income tax expense accruals, for the three months ended
September 30, 2022 was $6.9 million, or $0.35 per share; and for the three months ended
September 30, 2021 was $6.0 million, or $0.31 per share.
For the three months ended September 30,
2022 and 2021, the Company's investment portfolio had a net
change in unrealized (depreciation) appreciation of ($4.8) million and $2.1
million, respectively and the Company had realized gains of
$1.6 million and $7.9 million, respectively.
Net increase in net assets resulting from operations totaled
$4.0 million and $12.8 million, or $0.20 and $0.66 per
common share, based on weighted average common shares outstanding
of 19,545,935 and 19,486,003 for the three months ended
September 30, 2022 and 2021.
Liquidity and Capital Resources
As of September 30, 2022, our
amended and restated 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
$265.0 million on a committed basis.
As of September 30, 2022 and 2021,
the Credit Facility had an accordion feature which allowed for
potential future expansion of the facility size to $280.0 million. As of September 30, 2022 and December 31, 2021, we had $199.0 million and $177.3
million, respectively, in outstanding borrowings under the
Credit Facility, respectively.
Distributions
During the three months ended September
30, 2022 and 2021, we declared aggregate distributions of
$0.34 per share and $0.58 per share ($6.6
million and $11.3 million,
respectively) for each quarter. 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
New and Add-on Investments
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Activity
Type
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Date
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Company
Name
|
Company
Description
|
Investment
Amount
|
Instrument
Type
|
|
New
Investment
|
July 1, 2022
|
Heat Makes Sense Shared
Services, LLC
|
Branded haircare
platform
|
$100,000
|
First lien term
loan
|
|
|
|
|
$100,000
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Revolver
commitment
|
|
|
|
|
$100,000
|
Equity
investment
|
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New
Investment
|
July 5, 2022
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Baker Manufacturing
Company, LLC
|
Manufacturer of water
well equipment, specialized
|
$13,863,087
|
Last out term
loan
|
|
|
|
filtration pumps, and
custom castings
|
$743,770
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Equity
investment
|
|
Add-On
Investment
|
July 15,
2022
|
Exacta Land Surveyors,
LLC
|
Existing portfolio
company
|
$1,000,000
|
First lien term
loan
|
|
|
|
|
$53,107
|
Equity
investment
|
|
Add-On
Investment
|
July 20,
2022
|
SIB Holdings,
LLC
|
Existing portfolio
company
|
$2,321,678
|
First lien term
loan
|
|
Add-On
Investment
|
July 28,
2022
|
USASF Blocker IV
LLC
|
Existing portfolio
company
|
$100,000
|
Equity
investment
|
|
New
Investment
|
July 29,
2022
|
Curion Holdings,
LLC
|
Provider of product
testing and consumer insights
|
$13,060,001
|
First lien term
loan
|
|
|
|
|
$100,000
|
Revolver
commitment
|
|
|
|
|
$100,000
|
Delayed draw term loan
commitment
|
|
|
|
|
$739,999
|
Equity
investment
|
|
Add-On
Investment
|
August 2,
2022
|
Inoapps Holdings,
LLC
|
Existing portfolio
company
|
$43,956
|
Equity
investment
|
|
Add-On
Investment
|
August 5,
2022
|
Credit Connection,
LLC
|
Existing portfolio
company
|
$54,384
|
Equity
investment
|
|
Add-On
Investment
|
August 8,
2022
|
International Designs
Holdings LLC
|
Existing portfolio
company
|
$100,000
|
Equity
investment
|
|
New
Investment
|
August 11,
2022
|
Archer Systems,
LLC
|
Provider of mass tort
settlement administrative
|
$1,000,000
|
First lien term
loan
|
|
|
|
solutions
|
$100,000
|
Revolver
commitment
|
|
|
|
|
$100,000
|
Equity
investment
|
|
New
Investment
|
August 26,
2022
|
Heartland Business
Systems, LLC
|
End-to-end IT solutions
provider
|
$10,000,000
|
First lien term
loan
|
|
|
|
|
$100,000
|
Delayed draw term loan
commitment
|
|
|
|
|
$286,065
|
Equity
investment
|
|
New
Investment
|
August 31,
2022
|
Pearl Media Holdings,
LLC
|
Provider of
street-level, out-of-home advertising
|
$10,000,000
|
First lien term
loan
|
|
|
|
|
$100,000
|
Revolver
commitment
|
|
|
|
|
$100,000
|
Delayed draw term loan
commitment
|
|
Add-On
Investment
|
September 1,
2022
|
Sapphire Aggregator S.a
r.l.
|
Existing portfolio
company
|
$100,000
|
Equity
investment
|
|
New
Investment
|
September 2,
2022
|
MacKenzie-Childs
Acquisition, Inc.
|
Lifestyle home décor
brand
|
$100,000
|
First lien term
loan
|
|
|
|
|
$100,000
|
Revolver
commitment
|
|
|
|
|
$100,000
|
Equity
investment
|
|
Add-On
Investment
|
September 28,
2022
|
HV GS Acquisition,
LP
|
Existing portfolio
company
|
$89,439
|
Equity
investment
|
|
Add-On
Investment
|
September 30,
2022
|
Tower Arch Infolinks
Media, LP
|
Existing portfolio
company
|
$1,093
|
Equity
investment
|
Full Repayments and Realizations
|
|
|
|
|
|
|
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Activity
Type
|
Date
|
Company
Name
|
Company
Description
|
Proceeds
Received
|
Realized
Gain
|
Instrument
Type
|
|
Full
Repayment
|
July 15,
2022
|
ASC Communications,
LLC
|
Existing portfolio
company
|
$8,250,000
|
|
First lien term
loan
|
|
Full
Realization
|
|
|
|
$1,750,487
|
$1,750,487
|
Equity
investment
|
|
Full
Repayment
|
July 15,
2022
|
International Designs
Group LLC
|
Existing portfolio
company
|
$99,750
|
|
First lien term
loan
|
|
|
|
|
$20,000
|
|
Revolver
|
|
Full
Repayment
|
August 18,
2022
|
TAC LifePort Purchaser,
LLC
|
Existing portfolio
company
|
$9,543,742
|
|
First lien term
loan
|
|
Full
Realization
|
September 16,
2022
|
PCS Software Holdings,
LLC
|
Existing portfolio
company
|
$437,920
|
$49,608
|
Equity
investment
|
Events Subsequent to September 30,
2022
|
|
|
|
|
|
|
Activity
Type
|
Date
|
Company
Name
|
Company
Description
|
Investment
Amount
|
Instrument
Type
|
|
New
Investment
|
October 12,
2022
|
NINJIO, LLC
|
Cybersecurity awareness
and training platform
|
$5,000,000
|
First lien term
loan
|
|
|
|
|
$100,000
|
Revolver
commitment
|
|
|
|
|
$100,000
|
Delayed draw term loan
commitment
|
|
|
|
|
$313,253
|
Equity
investment
|
|
|
|
|
|
|
|
|
Activity
Type
|
Date
|
Company
Name
|
Company
Description
|
Proceeds
Received
|
Realized
Gain
|
Instrument
Type
|
|
Full
Realization
|
October 17,
2022
|
EC Defense Holdings,
LLC
|
Existing portfolio
company
|
$1,159,638
|
$950,000
|
Equity
investment
|
Credit Facility
The outstanding balance under the credit facility as of
November 3, 2022 was $206.8 million.
SBA-guaranteed Debentures
On August 12, 2022, the Company
contributed $9.5 million in capital
to its SBIC II subsidiary. To date, the Company has contributed all
of its $87.5 million regulatory
capital commitment. The total balance of SBA-guaranteed debentures
outstanding as of November 3, 2022
was $306.0 million.
Distributions Declared
On October 4, 2022, our board of
directors declared a regular monthly distribution for each of
October, November, and December 2022
as follows:
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|
|
|
|
|
|
|
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Ex-Dividend
|
|
Record
|
|
Payment
|
|
Amount per
|
|
Declared
|
|
Date
|
|
Date
|
|
Date
|
|
Share
|
|
10/04/2022
|
|
10/28/2022
|
|
10/31/2022
|
|
11/15/2022
|
|
$
|
0.0933
|
|
10/04/2022
|
|
11/29/2022
|
|
11/30/2022
|
|
12/15/2022
|
|
$
|
0.0933
|
|
10/04/2022
|
|
12/15/2022
|
|
12/16/2022
|
|
12/29/2022
|
|
$
|
0.0933
|
On October 4, 2022, our board of
directors declared an additional monthly distribution for each of
October, November, and December 2022
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Ex-Dividend
|
|
Record
|
|
Payment
|
|
Amount per
|
|
Declared
|
|
Date
|
|
Date
|
|
Date
|
|
Share
|
|
10/04/2022
|
|
10/28/2022
|
|
10/31/2022
|
|
11/15/2022
|
|
$
|
0.02
|
|
10/04/2022
|
|
11/29/2022
|
|
11/30/2022
|
|
12/15/2022
|
|
$
|
0.02
|
|
10/04/2022
|
|
12/15/2022
|
|
12/16/2022
|
|
12/29/2022
|
|
$
|
0.02
|
Conference Call Information
Stellus Capital Investment Corporation will host a conference
call to discuss these results on Friday,
November 4, 2022 at 10:00 AM, Central
Daylight 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 225613. Starting approximately
two hours after the conclusion of the call, a replay will be
available through Saturday, November 12,
2022 by dialing (877) 481-4010 and entering passcode 46954.
The replay will also be available on the company's website.
For those wishing to participate via Live Webcast, connect via
the Public Company (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, including statements about COVID-19
and its impacts, 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
STATEMENT OF ASSETS AND LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
2022
|
|
December 31,
|
|
|
|
(unaudited)
|
|
2021
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Non-controlled,
non-affiliated investments, at fair value (amortized cost of
$899,059,872 and $785,005,957, respectively)
|
|
$
|
871,733,280
|
|
$
|
772,873,326
|
|
|
Cash and cash
equivalents
|
|
|
12,419,743
|
|
|
44,174,856
|
|
|
Receivable for sales
and repayments of investments
|
|
|
562,133
|
|
|
536,105
|
|
|
Interest
receivable
|
|
|
3,852,386
|
|
|
2,944,599
|
|
|
Other
receivables
|
|
|
60,495
|
|
|
54,752
|
|
|
Deferred tax
asset
|
|
|
—
|
|
|
151,278
|
|
|
Related party
receivable
|
|
|
19,034
|
|
|
—
|
|
|
Deferred offering
costs
|
|
|
241,997
|
|
|
14,888
|
|
|
Prepaid
expenses
|
|
|
219,079
|
|
|
512,214
|
|
|
Total
Assets
|
|
$
|
889,108,147
|
|
$
|
821,262,018
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Notes
payable
|
|
$
|
98,437,095
|
|
$
|
98,102,973
|
|
|
Credit Facility
payable
|
|
|
197,371,231
|
|
|
175,451,116
|
|
|
SBA-guaranteed
debentures
|
|
|
300,157,597
|
|
|
244,615,903
|
|
|
Dividends
payable
|
|
|
2,214,557
|
|
|
1,171,059
|
|
|
Management fees
payable
|
|
|
7,032,721
|
|
|
3,454,225
|
|
|
Income incentive fees
payable
|
|
|
1,909,651
|
|
|
1,749,130
|
|
|
Capital gains incentive
fees payable
|
|
|
1,715,602
|
|
|
3,388,151
|
|
|
Interest
payable
|
|
|
885,348
|
|
|
3,693,662
|
|
|
Unearned
revenue
|
|
|
344,555
|
|
|
529,726
|
|
|
Administrative services
payable
|
|
|
376,887
|
|
|
386,368
|
|
|
Income tax
payable
|
|
|
1,086,338
|
|
|
3,269,514
|
|
|
Other accrued expenses
and liabilities
|
|
|
398,581
|
|
|
338,958
|
|
|
Total
Liabilities
|
|
$
|
611,930,163
|
|
$
|
536,150,785
|
|
|
Commitments and
contingencies (Note 7)
|
|
|
|
|
|
|
|
|
Net
Assets
|
|
$
|
277,177,984
|
|
$
|
285,111,233
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
|
|
Common stock, par value
$0.001 per share (100,000,000 shares
authorized; 19,545,935 and 19,517,595 issued and outstanding,
respectively)
|
|
$
|
19,546
|
|
$
|
19,518
|
|
|
Paid-in
capital
|
|
|
274,864,296
|
|
|
274,559,121
|
|
|
Accumulated
undistributed surplus
|
|
|
2,294,142
|
|
|
10,532,594
|
|
|
Net
Assets
|
|
$
|
277,177,984
|
|
$
|
285,111,233
|
|
|
Total Liabilities
and Net Assets
|
|
$
|
889,108,147
|
|
$
|
821,262,018
|
|
|
Net Asset Value Per
Share
|
|
$
|
14.18
|
|
$
|
14.61
|
|
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the three months
ended
|
|
For the nine months
ended
|
|
For the nine months
ended
|
|
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
INVESTMENT
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
19,617,468
|
|
$
|
16,460,579
|
|
$
|
50,392,437
|
|
$
|
44,819,754
|
|
|
Other income
|
|
|
524,799
|
|
|
568,764
|
|
|
1,353,279
|
|
|
1,301,827
|
|
|
Total Investment
Income
|
|
$
|
20,142,267
|
|
$
|
17,029,343
|
|
$
|
51,745,716
|
|
$
|
46,121,581
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
$
|
3,827,669
|
|
$
|
3,473,041
|
|
$
|
11,025,435
|
|
$
|
9,715,381
|
|
|
Valuation
fees
|
|
|
145,865
|
|
|
141,012
|
|
|
315,482
|
|
|
289,447
|
|
|
Administrative services
expenses
|
|
|
447,381
|
|
|
437,804
|
|
|
1,388,602
|
|
|
1,354,295
|
|
|
Income incentive
fees
|
|
|
1,635,641
|
|
|
1,451,752
|
|
|
1,635,641
|
|
|
1,507,651
|
|
|
Capital gains incentive
(reversal) fees
|
|
|
(646,757)
|
|
|
1,742,904
|
|
|
(1,672,549)
|
|
|
1,840,572
|
|
|
Professional
fees
|
|
|
315,809
|
|
|
267,332
|
|
|
845,275
|
|
|
772,509
|
|
|
Directors'
fees
|
|
|
83,500
|
|
|
74,500
|
|
|
254,500
|
|
|
240,500
|
|
|
Insurance
expense
|
|
|
127,274
|
|
|
120,119
|
|
|
377,671
|
|
|
356,439
|
|
|
Interest expense and
other fees
|
|
|
6,448,280
|
|
|
4,854,388
|
|
|
16,864,255
|
|
|
13,869,834
|
|
|
Income tax
expense
|
|
|
361,115
|
|
|
192,612
|
|
|
1,066,768
|
|
|
718,869
|
|
|
Other general and
administrative expenses
|
|
|
207,170
|
|
|
209,779
|
|
|
766,562
|
|
|
796,338
|
|
|
Total Operating
Expenses
|
|
$
|
12,952,947
|
|
$
|
12,965,243
|
|
$
|
32,867,642
|
|
$
|
31,461,835
|
|
|
Net Investment
Income
|
|
$
|
7,189,320
|
|
$
|
4,064,100
|
|
$
|
18,878,074
|
|
$
|
14,659,746
|
|
|
Net realized gain on
non-controlled, non-affiliated investments
|
|
$
|
1,553,450
|
|
$
|
7,921,322
|
|
$
|
4,658,817
|
|
$
|
6,601,885
|
|
|
Net realized loss on
foreign currency translation
|
|
|
(676)
|
|
|
—
|
|
|
(8,026)
|
|
|
—
|
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(539,250)
|
|
|
Net change in
unrealized (depreciation) appreciation on
non-controlled, non-affiliated investments
|
|
|
(4,798,980)
|
|
|
2,080,603
|
|
|
(12,810,173)
|
|
|
3,868,463
|
|
|
Net change in
unrealized depreciation on foreign currency
translations
|
|
|
(18,120)
|
|
|
—
|
|
|
(53,874)
|
|
|
—
|
|
|
Benefit (provision)
for taxes on net unrealized depreciation
(appreciation) on investments
|
|
|
30,535
|
|
|
(606,377)
|
|
|
(151,278)
|
|
|
(586,460)
|
|
|
Provision for taxes on
realized gain on investments
|
|
|
—
|
|
|
(681,027)
|
|
|
—
|
|
|
(681,027)
|
|
|
Net Increase in Net
Assets Resulting from Operations
|
|
|
3,955,529
|
|
|
12,778,621
|
|
|
10,513,540
|
|
|
23,323,357
|
|
|
Net Investment
Income Per Share—basic and diluted
|
|
$
|
0.37
|
|
$
|
0.21
|
|
$
|
0.97
|
|
$
|
0.75
|
|
|
Net Increase in Net
Assets Resulting from Operations Per
Share—basic and diluted
|
|
$
|
0.20
|
|
$
|
0.66
|
|
$
|
0.54
|
|
$
|
1.20
|
|
|
Weighted Average
Shares of Common Stock Outstanding
—basic and diluted
|
|
|
19,545,935
|
|
|
19,486,003
|
|
|
19,535,708
|
|
|
19,486,003
|
|
|
Distributions Per
Share—basic and diluted
|
|
$
|
0.34
|
|
$
|
0.58
|
|
$
|
0.96
|
|
$
|
1.08
|
|
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
|
|
CONSOLIDATED
STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Number
|
|
Par
|
|
Paid-in
|
|
undistributed
|
|
|
|
|
|
of shares
|
|
value
|
|
capital
|
|
surplus (deficit)
|
|
Net Assets
|
|
Balances at
December 31, 2020
|
|
19,486,003
|
|
$
|
19,486
|
|
$
|
276,026,667
|
|
$
|
(2,685,504)
|
|
$
|
273,360,649
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,060,631
|
|
|
5,060,631
|
|
Net realized gain on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
462,228
|
|
|
462,228
|
|
Loss on debt
extinguishment
|
|
|
|
|
|
|
|
|
|
|
(539,250)
|
|
|
(539,250)
|
|
Net change in
unrealized appreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
121,983
|
|
|
121,983
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(167,804)
|
|
|
(167,804)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,869,552)
|
|
|
(4,869,552)
|
|
Balances at March
31, 2021
|
|
19,486,003
|
|
$
|
19,486
|
|
$
|
276,026,667
|
|
$
|
(2,617,268)
|
|
$
|
273,428,885
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,535,015
|
|
|
5,535,015
|
|
Net realized loss on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,781,665)
|
|
|
(1,781,665)
|
|
Net change in
unrealized appreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,665,877
|
|
|
1,665,877
|
|
Benefit for taxes on
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
187,721
|
|
|
187,721
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,869,552)
|
|
|
(4,869,552)
|
|
Balances at
June 30, 2021
|
|
19,486,003
|
|
$
|
19,486
|
|
$
|
276,026,667
|
|
$
|
(1,879,872)
|
|
$
|
274,166,281
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,064,100
|
|
|
4,064,100
|
|
Net realized loss on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,921,322
|
|
|
7,921,322
|
|
Net change in
unrealized appreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,080,603
|
|
|
2,080,603
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(606,377)
|
|
|
(606,377)
|
|
Provision for taxes on
realized gain on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(681,027)
|
|
|
(681,027)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,299,933)
|
|
|
(11,299,933)
|
|
Balances at
September 30, 2021
|
|
19,486,003
|
|
$
|
19,486
|
|
$
|
276,026,667
|
|
$
|
(401,184)
|
|
$
|
275,644,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at
December 31, 2021
|
|
19,517,595
|
|
$
|
19,518
|
|
$
|
274,559,121
|
|
$
|
10,532,594
|
|
$
|
285,111,233
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,514,183
|
|
|
5,514,183
|
|
Net realized gain on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,458,090
|
|
|
3,458,090
|
|
Net realized loss on
foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,350)
|
|
|
(7,350)
|
|
Net change in
unrealized depreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,721,602)
|
|
|
(3,721,602)
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,157)
|
|
|
(21,157)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,464,666)
|
|
|
(5,464,666)
|
|
Issuance of common
stock, net of offering costs
|
|
14,924
|
|
|
15
|
|
|
167,655
|
|
|
—
|
|
|
167,670
|
|
Balances at March
31, 2022
|
|
19,532,519
|
|
$
|
19,533
|
|
$
|
274,726,776
|
|
$
|
10,290,092
|
|
$
|
285,036,401
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,174,571
|
|
|
6,174,571
|
|
Net realized loss on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(352,723)
|
|
|
(352,723)
|
|
Net change in
unrealized depreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,289,591)
|
|
|
(4,289,591)
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,754)
|
|
|
(35,754)
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(160,656)
|
|
|
(160,656)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,643,663)
|
|
|
(6,643,663)
|
|
Issuance of common
stock, net of offering costs
|
|
13,416
|
|
|
13
|
|
|
137,520
|
|
|
—
|
|
|
137,533
|
|
Balances at
June 30, 2022
|
|
19,545,935
|
|
$
|
19,546
|
|
$
|
274,864,296
|
|
$
|
4,982,276
|
|
$
|
279,866,118
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,189,320
|
|
|
7,189,320
|
|
Net realized gain on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,553,450
|
|
|
1,553,450
|
|
Net realized loss on
foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(676)
|
|
|
(676)
|
|
Net change in
unrealized depreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,798,980)
|
|
|
(4,798,980)
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,120)
|
|
|
(18,120)
|
|
Benefit for taxes on
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,535
|
|
|
30,535
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,643,663)
|
|
|
(6,643,663)
|
|
Balances at
September 30, 2022
|
|
19,545,935
|
|
$
|
19,546
|
|
$
|
274,864,296
|
|
$
|
2,294,142
|
|
$
|
277,177,984
|
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the
|
|
For the
|
|
|
|
nine months
ended
|
|
nine months
ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2022
|
|
2021
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net increase in net
assets resulting from operations
|
|
$
|
10,513,540
|
|
$
|
23,323,357
|
|
|
Adjustments to
reconcile net increase in net assets from operations to net cash
used in operating activities:
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(180,956,810)
|
|
|
(243,298,147)
|
|
|
Proceeds from sales
and repayments of investments
|
|
|
74,385,466
|
|
|
123,617,259
|
|
|
Net change in
unrealized depreciation (appreciation) on investments
|
|
|
12,810,173
|
|
|
(3,868,463)
|
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
|
28,405
|
|
|
—
|
|
|
Increase in
investments due to PIK
|
|
|
(1,010,061)
|
|
|
(607,393)
|
|
|
Amortization of
premium and accretion of discount, net
|
|
|
(1,839,720)
|
|
|
(1,747,423)
|
|
|
Deferred tax
provision
|
|
|
151,278
|
|
|
586,460
|
|
|
Amortization of loan
structure fees
|
|
|
420,356
|
|
|
390,298
|
|
|
Amortization of
deferred financing costs
|
|
|
334,122
|
|
|
346,123
|
|
|
Amortization of loan
fees on SBA-guaranteed debentures
|
|
|
905,294
|
|
|
801,259
|
|
|
Net realized gain on
investments
|
|
|
(4,658,817)
|
|
|
(6,595,217)
|
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
539,250
|
|
|
Changes in other assets
and liabilities
|
|
|
|
|
|
|
|
|
Increase in interest
receivable
|
|
|
(907,787)
|
|
|
(614,133)
|
|
|
Increase in other
receivables
|
|
|
(5,743)
|
|
|
(110,000)
|
|
|
Increase in related
party receivable
|
|
|
(19,034)
|
|
|
—
|
|
|
Increase in prepaid
expenses
|
|
|
293,135
|
|
|
300,867
|
|
|
Increase in management
fees payable
|
|
|
3,578,496
|
|
|
2,426,198
|
|
|
Increase in income
incentive fees payable
|
|
|
160,521
|
|
|
948,489
|
|
|
(Decrease) increase in
capital gains incentive fees payable
|
|
|
(1,672,549)
|
|
|
1,840,572
|
|
|
(Decrease) increase in
administrative services payable
|
|
|
(9,481)
|
|
|
371,745
|
|
|
Decrease in interest
payable
|
|
|
(2,808,314)
|
|
|
(1,406,381)
|
|
|
Decrease (increase) in
unearned revenue
|
|
|
(185,171)
|
|
|
7,847
|
|
|
(Decrease) increase in
income tax payable
|
|
|
(2,183,176)
|
|
|
511,851
|
|
|
Increase in other
accrued expenses and liabilities
|
|
|
59,623
|
|
|
140,302
|
|
|
Net Cash Used In
Operating Activities
|
|
$
|
(92,616,254)
|
|
$
|
(102,095,280)
|
|
|
Cash flows from
Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from the
issuance of common stock
|
|
$
|
420,004
|
|
$
|
—
|
|
|
Sales load for commons
stock issued
|
|
|
(5,957)
|
|
|
—
|
|
|
Offering costs paid
for common stock issued
|
|
|
(335,953)
|
|
|
—
|
|
|
Stockholder
distributions paid
|
|
|
(17,708,494)
|
|
|
(13,636,301)
|
|
|
Repayment of
Notes
|
|
|
—
|
|
|
(48,875,000)
|
|
|
Proceeds from issuance
of Notes
|
|
|
—
|
|
|
100,000,000
|
|
|
Financing costs paid
on Notes
|
|
|
—
|
|
|
(2,237,835)
|
|
|
Proceeds from
SBA-guaranteed debentures
|
|
|
56,000,000
|
|
|
73,500,000
|
|
|
Financing costs paid
on SBA-guaranteed debentures
|
|
|
(1,363,600)
|
|
|
(3,139,725)
|
|
|
Financing costs paid
on Credit facility
|
|
|
(193,659)
|
|
|
(39,843)
|
|
|
Borrowings under
Credit Facility
|
|
|
121,608,702
|
|
|
191,200,000
|
|
|
Repayments of Credit
Facility
|
|
|
(97,559,902)
|
|
|
(175,400,000)
|
|
|
Net Cash Provided by
Financing Activities
|
|
$
|
60,861,141
|
|
$
|
121,371,296
|
|
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
|
$
|
(31,755,113)
|
|
$
|
19,276,016
|
|
|
Cash and Cash
Equivalents balance at beginning of period
|
|
|
44,174,856
|
|
|
18,477,602
|
|
|
Cash and Cash
Equivalents Balance at End of Period
|
|
$
|
12,419,743
|
|
$
|
37,753,618
|
|
|
Supplemental and
Non-Cash Activities
|
|
|
|
|
|
|
|
|
Cash paid for interest
expense
|
|
$
|
18,012,797
|
|
$
|
13,733,216
|
|
|
Income and excise tax
paid
|
|
|
3,249,944
|
|
|
870,000
|
|
|
Increase in dividends
payable
|
|
|
1,043,498
|
|
|
7,402,736
|
|
|
Increase (decrease) in
deferred offering costs
|
|
|
227,109
|
|
|
(90,000)
|
|
|
Gain on conversion of
equity investment
|
|
|
—
|
|
|
6,668
|
|
|
|
Reconciliation of
Core Net Investment
Income (1)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Quarter
|
|
|
|
ended
|
|
ended
|
|
|
|
September 30,
2022
|
|
September 30,
2021
|
|
Net investment
income
|
|
|
$7,189,320
|
|
$4,064,100
|
|
Capital gains
incentive fee
|
|
|
(646,757)
|
|
1,742,904
|
|
Income tax
expense
|
|
|
361,115
|
|
192,612
|
|
Core net investment
income
|
|
|
$6,903,678
|
|
$5,999,616
|
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
|
Net investment income
per share
|
|
|
$0.37
|
|
$0.21
|
|
Core net investment
income per share
|
|
|
$0.35
|
|
$0.31
|
|
|
|
|
|
|
|
|
Reconciliation of
Realized Net Investment
Income (2)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Quarter
|
|
|
|
ended
|
|
ended
|
|
|
|
September 30,
2022
|
|
September 30,
2021
|
|
Net investment
income
|
|
|
$7,189,320
|
|
$4,064,100
|
|
Net realized gain on
investments
|
|
|
1,553,450
|
|
7,921,322
|
|
Net realized gain on
foreign currency translation
|
|
|
(676)
|
|
—
|
|
Provision for taxes on
realized gain on investments
|
|
|
—
|
|
(681,027)
|
|
Total Realized Net
Investment Income
|
|
|
$8,742,094
|
|
$11,304,395
|
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
|
Net investment income
per share
|
|
|
$0.37
|
|
$0.21
|
|
Realized net investment
income per share
|
|
|
$0.45
|
|
$0.58
|
|
|
|
|
|
|
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SOURCE Stellus Capital Investment Corporation
