HOUSTON, Feb. 28,
2023 /PRNewswire/ -- Stellus Capital Investment
Corporation (NYSE:SCM) ("Stellus" or the "Company") today announced
financial results for its fourth fiscal quarter and year ended
December 31, 2022.
Robert T. Ladd, Chief Executive
Officer of Stellus, stated, "I am pleased to report strong results
for the quarter ended December 31,
2022, in which we more than covered our regular and
additional dividends of $0.34 per
share with U.S. GAAP net investment income of $0.50 per share and Core net investment income of
$0.44 per share, and increased our
regular dividend 43% from $0.28 per
share per quarter in the fourth quarter of 2022 to $0.40 per share per quarter, payable in monthly
increments beginning in the first quarter of 2023. This increase in
our dividend reflects the greater earnings that we are generating
in this higher interest rate environment in which our loan
portfolio is over 97% floating rate and our liability structure is
over 65% fixed rate."
|
FINANCIAL
HIGHLIGHTS
($ in millions, except data relating to per share
amounts and shares outstanding)
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
December 31, 2022
|
|
December 31, 2021
|
|
December 31, 2022
|
|
December 31, 2021
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Net investment
income
|
$9.71
|
$0.50
|
|
$5.12
|
$0.26
|
|
$28.59
|
$1.46
|
|
$19.78
|
$1.01
|
|
Core net investment
income(1)
|
8.66
|
0.44
|
|
6.53
|
0.33
|
|
26.93
|
1.38
|
|
23.75
|
1.22
|
|
Net realized (loss)
gain on investments
|
(1.00)
|
(0.06)
|
|
17.11
|
0.88
|
|
3.66
|
0.19
|
|
23.71
|
1.22
|
|
Net realized loss on
foreign currency translation
|
-
|
-
|
|
-
|
-
|
|
(0.01)
|
-
|
|
-
|
-
|
|
Loss on debt
extinguishment
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
|
(0.54)
|
(0.03)
|
|
Provision for taxes on
realized gain on investments in taxable subsidiaries
|
-
|
-
|
|
(2.28)
|
(0.12)
|
|
-
|
-
|
|
(2.96)
|
(0.15)
|
|
Total realized
income(2)
|
$8.71
|
$0.44
|
|
$19.95
|
$1.02
|
|
$32.24
|
$1.65
|
|
$40.53
|
$2.05
|
|
Distributions
|
(6.67)
|
(0.34)
|
|
(1.18)
|
(0.06)
|
|
(25.42)
|
(1.30)
|
|
(22.22)
|
(1.14)
|
|
Net unrealized
depreciation on investments
|
(4.73)
|
(0.24)
|
|
(10.80)
|
(0.55)
|
|
(17.54)
|
(0.90)
|
|
(6.93)
|
(0.36)
|
|
Net unrealized
appreciation on foreign currency translation
|
0.06
|
-
|
|
-
|
-
|
|
0.01
|
-
|
|
-
|
-
|
|
Provision for taxes on
unrealized appreciation on investments in taxable
subsidiaries
|
(0.06)
|
-
|
|
1.10
|
0.06
|
|
(0.21)
|
(0.01)
|
|
0.51
|
0.03
|
|
Net increase in net
assets resulting from operations
|
$3.98
|
0.20
|
|
$10.25
|
0.53
|
|
$14.49
|
0.74
|
|
$33.57
|
1.72
|
|
Weighted average shares
outstanding
|
|
19,604,040
|
|
|
19,500,866
|
|
|
19,552,931
|
|
|
19,489,750
|
|
|
|
(1)
|
Core net investment
income, as presented, excludes the impact of capital gains
incentive fees and income taxes, the majority of which are excise
taxes. The Company believes presenting core net investment income
and the related per share amount is a useful supplemental
disclosure for analyzing its financial performance. However, core
net investment income is a non-U.S. GAAP measure and should not be
considered as a replacement for net investment income and other
earnings measures presented in accordance with U.S. generally
accepted accounting principles ("U.S. GAAP"). A reconciliation of
net investment income in accordance with U.S. GAAP to core net
investment income is presented in the table below the financial
statements.
|
|
(2)
|
Total realized income
is the sum of net investment income, net realized gains (losses) on
investments, net realized gains (losses) on foreign currency, and
loss on debt extinguishment; all U.S. GAAP measures.
|
|
PORTFOLIO
ACTIVITY
($ in millions, except data relating to per share
amounts and number of portfolio companies)
|
|
|
|
As of
|
|
As of
|
|
|
|
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
|
|
|
|
Investments at fair
value
|
|
$844.7
|
|
$772.9
|
|
|
|
|
|
Total assets
|
|
$898.2
|
|
$821.3
|
|
|
|
|
|
Net assets
|
|
$275.8
|
|
$285.1
|
|
|
|
|
|
Shares
outstanding
|
|
19,666,769
|
|
19,517,595
|
|
|
|
|
|
Net asset value per
share
|
|
$14.02
|
|
$14.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
December 31, 2022
|
|
December 31, 2021
|
|
New
investments
|
|
$30.1
|
|
$144.0
|
|
$211.0
|
|
$387.3
|
|
Repayments of
investments
|
|
(53.2)
|
|
(164.0)
|
|
(127.5)
|
|
(287.6)
|
|
Net activity
|
|
($23.1)
|
|
($20.0)
|
|
$83.5
|
|
$99.7
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
|
|
|
|
Number of portfolio
company investments
|
|
85
|
|
73
|
|
|
|
|
|
Number of debt
investments
|
|
73
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weight average yield of
debt and other income producing investments
(3)
|
|
|
|
|
|
Cash
|
|
10.3 %
|
|
7.4 %
|
|
|
|
|
|
Payment-in-kind
("PIK")
|
|
0.4 %
|
|
0.2 %
|
|
|
|
|
|
Fee
amortization
|
|
0.4 %
|
|
0.4 %
|
|
|
|
|
|
Total
|
|
11.1 %
|
|
8.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield
on total investments (4)
|
|
|
|
|
|
Cash
|
|
9.7 %
|
|
6.9 %
|
|
|
|
|
|
Payment-in-kind
("PIK")
|
|
0.3 %
|
|
0.2 %
|
|
|
|
|
|
Fee
amortization
|
|
0.4 %
|
|
0.4 %
|
|
|
|
|
|
Total
|
|
10.4 %
|
|
7.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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.
|
|
(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 years ended December 31, 2022 and 2021 totaled $75.1 million and $63.7
million, respectively, most of which was interest income
from portfolio investments.
Operating expenses for the years ended December 31, 2022 and 2021, totaled $46.5 million and $43.9
million, respectively. For the same respective periods, base
management fees totaled $14.8 million
and $13.2 million, income incentive
fees totaled $3.8 and $3.0 million, capital gains incentive (reversal)
fees totaled ($2.8) million and
$2.9 million, fees and expenses
related to our borrowings totaled $24.5
million and $18.7 million
(including interest and amortization of deferred financing costs),
administrative expenses totaled $1.8
million for both periods, income tax totaled $1.2 million and $1.1
million and other expenses totaled $3.2 million for both periods.
The capital gains incentive fee had a reversal of ($2.8) million for the year ended December 31, 2022 due to the increase in
unrealized losses, net of realized gains over the year. 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 $1.2 million
for the year ended December 31, 2022
was accrued based on estimates of undistributed taxable income,
which was generated largely from net income, offset by realized
losses.
Net investment income was $28.6
million and $19.8 million, or
$1.46 and $1.01 per common share based on weighted average
common shares outstanding of 19,552,931 and 19,489,750 for the
years ended December 31, 2022 and
2021, respectively. 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 year ended December 31, 2022 was $26.9 million, or $1.38 per share; and for the year ended
December 31, 2021 was $23.7 million, or $1.22 per share.
For the years ended December 31,
2022 and 2021, the Company's investment portfolio had a net
change in unrealized depreciation of ($17.5)
million and ($6.9) million,
respectively, and the Company had realized gains of $3.7 million and $23.7
million, respectively.
Net increase in net assets resulting from operations totaled
$14.5 million and $33.6 million, or $0.74 and $1.72 per
common share, based on weighted average common shares outstanding
of 19,552,931 and 19,489,750 for the years ended December 31, 2022 and 2021, respectively.
Liquidity and Capital Resources
As of December 31, 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 December 31, 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 December 31, 2022 and December 31, 2021, we had $199.2 million and $177.3
million in outstanding borrowings under the Credit Facility,
respectively.
Distributions
During the three months December 31,
2022 and 2021, we declared aggregate distributions of
$0.34 and $0.06 per share, respectively ($6.7 million and $1.2
million, respectively). During the years ended December
31, 2022 and 2021, we declared aggregate distributions
of $1.30 per share and $1.14,
respectively ($25.4
million and $22.2 million, respectively), Tax
characteristics of all distributions are reported to stockholders
on Form 1099-DIV. Approximately $3.8 million of the
dividends declared in 2022 are expected to be characterized as
long-term capital gains. 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 December 31,
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
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
100,000
|
|
Revolver
commitment
|
|
|
|
|
|
|
|
|
$
|
100,000
|
|
Delayed draw term loan
commitment
|
|
|
|
|
|
|
|
|
$
|
313,253
|
|
Equity
|
|
New
Investment
|
|
November 16,
2022
|
|
Onpoint Industrial
Services, LLC
|
|
Provider of safety,
logistics, planning, and project management services to refineries
and petrochemical plant
|
|
$
|
12,893,258
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
606,742
|
|
Equity
|
|
New
Investment
|
|
November 22,
2022
|
|
COPILOT Provider
Support Services, LLC
|
|
End-to-end HUB software
platform for the healthcare industry
|
|
$
|
5,000,000
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
100,000
|
|
Revolver
commitment
|
|
|
|
|
|
|
|
|
$
|
285,714
|
|
Equity
|
|
Add-On
Investment
|
|
December 20,
2022
|
|
USASF Blocker V
LLC*
|
|
Leading integrated used
car retailer and subprime auto finance company
|
|
$
|
200,000
|
|
Equity
|
|
Add-On
Investment
|
|
December 22,
2022
|
|
Tower Arch Infolinks
Media, LP*
|
|
Advertising placement
partner for small to mid-sized publishers
|
|
$
|
1,093
|
|
Equity
|
|
New
Investment
|
|
December 30,
2022
|
|
Madison Logic,
Inc.
|
|
Provider of B2B account
based marketing services
|
|
$
|
4,529,217
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
100,000
|
|
Revolver
commitment
|
|
|
|
|
*
|
Existing portfolio
company
|
The Company realized investments in the following portfolio
companies during the three months ended December 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Proceeds
Received
|
|
Realized
Gain
|
|
Instrument
Type
|
|
Full
Realization
|
|
October 17,
2022
|
|
EC Defense Holdings,
LLC
|
|
$
|
$1,450,000
|
|
$
|
$950,000
|
|
Equity
|
|
Full
Repayment
|
|
November 16,
2022
|
|
Onpoint Industrial
Services, LLC
|
|
$
|
$10,342,500
|
|
$
|
—
|
|
Senior Secured – First
Lien
|
|
Full
Realization
|
|
|
|
|
|
$
|
$669,654
|
|
$
|
$170,619
|
|
Equity
|
|
Full
Realization
|
|
November 28,
2022
|
|
Colford Capital
Holdings, LLC
|
|
$
|
—
|
|
|
($195,036)
|
|
Equity
|
|
Full
Realization
|
|
December 9,
2022
|
|
Grupo HIMA San Pablo,
Inc.
|
|
$
|
—
|
|
$
|
($4,109,525)
|
|
Senior Secured – Second
Lien
|
|
Full
Repayment
|
|
December 15,
2022
|
|
Spire Power Solutions,
L.P.
|
|
$
|
$8,371,564
|
|
$
|
—
|
|
Senior Secured – First
Lien
|
|
Full
Realization
|
|
December 16,
2022
|
|
Skopos Financial Group,
LLC
|
|
$
|
—
|
|
$
|
($1,162,544)
|
|
Equity
|
|
Full
Repayment
|
|
December 22,
2022
|
|
TFH Reliability,
LLC
|
|
$
|
$10,875,000
|
|
$
|
—
|
|
Senior Secured – Second
Lien
|
|
Full
Realization
|
|
|
|
|
|
$
|
$351,797
|
|
$
|
$98,765
|
|
Equity
|
|
Full
Repayment
|
|
December 30,
2022
|
|
Madison Logic,
Inc.
|
|
$
|
$10,586,585
|
|
$
|
—
|
|
Senior Secured – First
Lien
|
|
Full
Realization
|
|
|
|
|
|
$
|
$4,128,966
|
|
$
|
$4,128,966
|
|
Equity
|
|
Full
Realization
|
|
December 30,
2022
|
|
Bromford Holdings,
L.P.
|
|
$
|
—
|
|
$
|
($1,146,706)
|
|
Equity
|
Events Subsequent to December 31,
2022
The Company invested in the following portfolio companies
subsequent to December 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Investment
Amount
|
|
Instrument
Type
|
|
Add-On
Investment
|
|
January 5,
2023
|
|
GP ABX Holdings
Partnership, L.P.*
|
|
Manufacturer of high
barrier forming web films
|
|
$
|
35,308
|
|
Equity
|
|
New
Investment
|
|
January 23,
2023
|
|
Evriholder Acquisition,
Inc.
|
|
Designer and supplier
of impulse products and merchandising solutions to
retailers.
|
|
$
|
13,000,000
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
873,333
|
|
Equity
|
|
|
|
|
|
|
|
|
$
|
100,000
|
|
Revolver
commitment
|
|
New
Investment
|
|
January 31,
2023
|
|
Red's All Natural,
LLC
|
|
Premium frozen food
manufacturer
|
|
$
|
10,916,882
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
710,600
|
|
Equity
|
|
|
|
|
|
* Existing portfolio
company
|
|
Credit Facility
The outstanding balance under the Credit Facility as of
February 28, 2023 was $205.6 million.
SBA-guaranteed Debentures
The total balance of SBA-guaranteed debentures outstanding as of
February 28, 2023 was $313.6 million.
Distributions Declared
On January 11, 2023, our Board of
Directors declared a regular monthly distribution for each of
January, February, and March 2023, as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Ex-Dividend
|
|
Record
|
|
Payment
|
|
Amount per
|
|
Declared
|
|
Date
|
|
Date
|
|
Date
|
|
Share
|
|
1/11/2023
|
|
1/30/2023
|
|
1/31/2023
|
|
2/15/2023
|
|
$
|
0.1333
|
|
1/11/2023
|
|
2/27/2023
|
|
2/28/2023
|
|
3/15/2023
|
|
$
|
0.1333
|
|
1/11/2023
|
|
3/30/2023
|
|
3/31/2023
|
|
4/14/2023
|
|
$
|
0.1333
|
Conference Call Information
Stellus Capital Investment Corporation will host a conference
call to discuss these results on Wednesday,
March 1, 2023 at 10:00 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 265440. Starting approximately two hours
after the conclusion of the call, a replay will be available
through Wednesday, March 15, 2023 by
dialing (877) 481-4010 and entering passcode 47767. 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 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
|
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
ASSETS
|
|
|
|
|
|
|
|
Non-controlled,
non-affiliated investments, at fair value (amortized cost of
$875,823,177
and $785,005,957, respectively)
|
|
$
|
844,733,638
|
|
$
|
772,873,326
|
|
Cash and cash
equivalents
|
|
|
48,043,329
|
|
|
44,174,856
|
|
Receivable for sales
and repayments of investments
|
|
|
718,794
|
|
|
536,105
|
|
Interest
receivable
|
|
|
3,984,409
|
|
|
2,944,599
|
|
Other
receivables
|
|
|
34,245
|
|
|
54,752
|
|
Deferred tax
asset
|
|
|
—
|
|
|
151,278
|
|
Deferred offering
costs
|
|
|
1,100
|
|
|
14,888
|
|
Prepaid
expenses
|
|
|
667,267
|
|
|
512,214
|
|
Total
Assets
|
|
$
|
898,182,782
|
|
$
|
821,262,018
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Notes
payable
|
|
$
|
98,549,692
|
|
$
|
98,102,973
|
|
Credit Facility
payable
|
|
|
197,685,281
|
|
|
175,451,116
|
|
SBA-guaranteed
debentures
|
|
|
307,895,195
|
|
|
244,615,903
|
|
Dividends
payable
|
|
|
—
|
|
|
1,171,059
|
|
Management fees
payable
|
|
|
7,150,407
|
|
|
3,454,225
|
|
Income incentive fees
payable
|
|
|
2,464,408
|
|
|
1,749,130
|
|
Capital gains incentive
fees payable
|
|
|
569,528
|
|
|
3,388,151
|
|
Interest
payable
|
|
|
4,640,841
|
|
|
3,693,662
|
|
Related party
payable
|
|
|
1,060,321
|
|
|
—
|
|
Unearned
revenue
|
|
|
320,675
|
|
|
529,726
|
|
Administrative services
payable
|
|
|
356,919
|
|
|
386,368
|
|
Income tax
payable
|
|
|
1,175,373
|
|
|
3,269,514
|
|
Deferred tax
liability
|
|
|
61,936
|
|
|
—
|
|
Other accrued expenses
and liabilities
|
|
|
475,593
|
|
|
338,958
|
|
Total
Liabilities
|
|
$
|
622,406,169
|
|
$
|
536,150,785
|
|
Commitments and
contingencies (Note 7)
|
|
|
|
|
|
|
|
Net
Assets
|
|
$
|
275,776,613
|
|
$
|
285,111,233
|
|
NET
ASSETS
|
|
|
|
|
|
|
|
Common stock, par value
$0.001 per share (100,000,000 shares authorized; 19,666,769
and
19,517,595 issued and outstanding, respectively
|
|
$
|
19,667
|
|
$
|
19,518
|
|
Paid-in
capital
|
|
|
275,114,720
|
|
|
274,559,121
|
|
Total distributable
earnings
|
|
|
642,226
|
|
|
10,532,594
|
|
Net
Assets
|
|
$
|
275,776,613
|
|
$
|
285,111,233
|
|
Total Liabilities
and Net Assets
|
|
$
|
898,182,782
|
|
$
|
821,262,018
|
|
Net Asset Value Per
Share
|
|
$
|
14.02
|
|
$
|
14.61
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS
OF OPERATIONS
|
|
|
|
For the years
ended
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
December 31, 2020
|
|
INVESTMENT
INCOME
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
72,964,999
|
|
$
|
61,536,686
|
|
$
|
55,350,781
|
|
Other income
|
|
|
2,147,577
|
|
|
2,142,308
|
|
|
1,307,533
|
|
Total Investment
Income
|
|
$
|
75,112,576
|
|
$
|
63,678,994
|
|
$
|
56,658,314
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
$
|
14,848,174
|
|
$
|
13,169,606
|
|
$
|
11,084,450
|
|
Valuation
fees
|
|
|
351,752
|
|
|
313,437
|
|
|
290,445
|
|
Administrative services
expenses
|
|
|
1,810,576
|
|
|
1,798,966
|
|
|
1,781,603
|
|
Income incentive
fees
|
|
|
3,782,151
|
|
|
3,043,470
|
|
|
2,527,813
|
|
Capital gains incentive
(reversal) fee
|
|
|
(2,818,623)
|
|
|
2,867,131
|
|
|
(359,892)
|
|
Professional
fees
|
|
|
1,103,693
|
|
|
1,082,917
|
|
|
950,716
|
|
Directors'
fees
|
|
|
329,000
|
|
|
315,000
|
|
|
394,816
|
|
Insurance
expense
|
|
|
503,907
|
|
|
482,140
|
|
|
384,774
|
|
Interest expense and
other fees
|
|
|
24,469,285
|
|
|
18,721,058
|
|
|
15,950,087
|
|
Income tax
expense
|
|
|
1,161,668
|
|
|
1,102,374
|
|
|
771,134
|
|
Other general and
administrative expenses
|
|
|
984,309
|
|
|
1,006,428
|
|
|
890,465
|
|
Total Operating
Expenses
|
|
$
|
46,525,892
|
|
$
|
43,902,527
|
|
$
|
34,666,411
|
|
Net Investment
Income
|
|
$
|
28,586,684
|
|
$
|
19,776,467
|
|
$
|
21,991,903
|
|
Net realized gain
(loss) on non-controlled, non-affiliated investments
|
|
$
|
3,660,595
|
|
$
|
23,710,167
|
|
$
|
(10,129,859)
|
|
Net realized loss on
foreign currency translation
|
|
|
(6,091)
|
|
|
—
|
|
|
—
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
(539,250)
|
|
|
—
|
|
Net change in
unrealized (depreciation) appreciation on non-controlled
non-affiliated investments
|
|
|
(17,542,230)
|
|
|
(6,928,160)
|
|
|
8,555,274
|
|
Net change in
unrealized appreciation on foreign currency translation
|
|
|
6,040
|
|
|
—
|
|
|
—
|
|
(Provision) benefit
for taxes on net unrealized (appreciation) depreciation on
investments
|
|
|
(213,214)
|
|
|
510,868
|
|
|
(224,877)
|
|
Provision for taxes on
realized gain on investments
|
|
|
—
|
|
|
(2,957,220)
|
|
|
—
|
|
Net Increase in Net
Assets Resulting from Operations
|
|
$
|
14,491,784
|
|
|
33,572,872
|
|
|
20,192,441
|
|
Net Investment
Income Per Share—basic and diluted
|
|
$
|
1.46
|
|
$
|
1.01
|
|
$
|
1.13
|
|
Net Increase in Net
Assets Resulting from Operations Per Share – basic and
diluted
|
|
$
|
0.74
|
|
$
|
1.72
|
|
$
|
1.04
|
|
Weighted Average
Shares of Common Stock Outstanding—basic and diluted
|
|
|
19,552,931
|
|
|
19,489,750
|
|
|
19,471,500
|
|
Distributions Per
Share—basic and diluted
|
|
$
|
1.30
|
|
$
|
1.14
|
|
$
|
1.15
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS
OF CHANGES IN NET ASSETS
|
|
|
|
Common Stock
|
|
|
|
|
Total
|
|
|
|
|
|
Number
|
|
Par
|
|
Paid-in
|
|
distributable
|
|
|
|
|
|
of shares
|
|
value
|
|
capital
|
|
(loss)
earnings
|
|
Net Assets
|
|
Balances as of
December 31, 2019
|
|
19,131,746
|
|
$
|
19,132
|
|
$
|
272,117,091
|
|
$
|
(1,565,050)
|
|
$
|
270,571,173
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,991,903
|
|
|
21,991,903
|
|
Net realized loss on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,129,859)
|
|
|
(10,129,859)
|
|
Net change in
unrealized appreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,555,274
|
|
|
8,555,274
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(224,877)
|
|
|
(224,877)
|
|
Return of capital and
other tax related adjustments
|
|
—
|
|
|
—
|
|
|
(1,090,064)
|
|
|
1,090,064
|
|
|
—
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,402,959)
|
|
|
(22,402,959)
|
|
Issuance of common
stock, net of offering costs
|
|
354,257
|
|
|
354
|
|
|
4,999,640
|
|
|
—
|
|
|
4,999,994
|
|
Balances at
December 31, 2020
|
|
19,486,003
|
|
$
|
19,486
|
|
$
|
276,026,667
|
|
$
|
(2,685,504)
|
|
$
|
273,360,649
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,776,467
|
|
|
19,776,467
|
|
Net realized gain on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,710,167
|
|
|
23,710,167
|
|
Loss on debt
extinguishment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(539,250)
|
|
|
(539,250)
|
|
Net change in
unrealized depreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,928,160)
|
|
|
(6,928,160)
|
|
Benefit for taxes on
unrealized depreciation on investments
|
|
|
|
|
|
|
|
|
|
|
510,868
|
|
|
510,868
|
|
Provision for taxes on
realized gain on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,957,220)
|
|
|
(2,957,220)
|
|
Return of capital and
other tax related adjustments
|
|
—
|
|
|
—
|
|
|
(1,861,213)
|
|
|
1,861,213
|
|
|
—
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,201,567)
|
|
|
(21,201,567)
|
|
Distributions from net
realized capital gains
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,014,420)
|
|
|
(1,014,420)
|
|
Issuance of common
stock, net of offering costs
|
|
31,592
|
|
|
32
|
|
|
393,667
|
|
|
—
|
|
|
393,699
|
|
Balances at
December 31, 2021
|
|
19,517,595
|
|
$
|
19,518
|
|
$
|
274,559,121
|
|
$
|
10,532,594
|
|
$
|
285,111,233
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,586,684
|
|
|
28,586,684
|
|
Net realized gain on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,660,595
|
|
|
3,660,595
|
|
Net realized loss on
foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,091)
|
|
|
(6,091)
|
|
Net change in
unrealized depreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,542,230)
|
|
|
(17,542,230)
|
|
Net change in
unrealized appreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,040
|
|
|
6,040
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(213,214)
|
|
|
(213,214)
|
|
Return of capital and
other tax related adjustments
|
|
—
|
|
|
—
|
|
|
(1,040,884)
|
|
|
1,040,884
|
|
|
—
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,633,343)
|
|
|
(21,633,343)
|
|
Distributions from net
realized capital gains
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,789,693)
|
|
|
(3,789,693)
|
|
Issuance of common
stock, net of offering costs
|
|
149,174
|
|
|
149
|
|
|
1,596,483
|
|
|
—
|
|
|
1,596,632
|
|
Balances at
December 31, 2022
|
|
19,666,769
|
|
$
|
19,667
|
|
$
|
275,114,720
|
|
$
|
642,226
|
|
$
|
275,776,613
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
|
|
|
For the years
ended
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
December 31, 2020
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
|
|
Net increase in net
assets resulting from operations
|
|
$
|
14,491,784
|
|
$
|
33,572,872
|
|
$
|
20,192,441
|
|
Adjustments to
reconcile net increase in net assets from operations to net cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(211,010,869)
|
|
|
(387,281,160)
|
|
|
(152,007,165)
|
|
Proceeds from sales
and repayments of investments
|
|
|
127,548,194
|
|
|
287,639,512
|
|
|
128,627,422
|
|
Net change in
unrealized depreciation (appreciation) on investments
|
|
|
17,542,230
|
|
|
6,928,160
|
|
|
(8,555,274)
|
|
Net change in
unrealized appreciation foreign currency translations
|
|
|
(5,897)
|
|
|
—
|
|
|
—
|
|
Increase in
investments due to PIK
|
|
|
(1,357,177)
|
|
|
(939,030)
|
|
|
(664,992)
|
|
Amortization of
premium and accretion of discount, net
|
|
|
(2,519,462)
|
|
|
(2,412,991)
|
|
|
(2,098,788)
|
|
Deferred tax provision
(benefit)
|
|
|
213,214
|
|
|
(510,868)
|
|
|
224,877
|
|
Amortization of loan
structure fees
|
|
|
567,375
|
|
|
518,930
|
|
|
647,872
|
|
Amortization of
deferred financing costs
|
|
|
446,719
|
|
|
444,153
|
|
|
333,316
|
|
Amortization of loan
fees on SBA-guaranteed debentures
|
|
|
1,227,952
|
|
|
1,088,132
|
|
|
701,068
|
|
Net realized (gain)
loss on investments
|
|
|
(3,660,595)
|
|
|
(23,703,499)
|
|
|
10,129,859
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
539,250
|
|
|
—
|
|
Changes in other assets
and liabilities
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in
interest receivable
|
|
|
(1,039,810)
|
|
|
(755,151)
|
|
|
725,262
|
|
Decrease (increase) in
other receivable
|
|
|
20,507
|
|
|
(29,257)
|
|
|
—
|
|
Increase in prepaid
expenses
|
|
|
(155,053)
|
|
|
(25,026)
|
|
|
(118,967)
|
|
Increase in management
fees payable
|
|
|
3,696,182
|
|
|
628,903
|
|
|
129,542
|
|
Increase (decrease) in
income incentive fees payable
|
|
|
715,278
|
|
|
1,067,470
|
|
|
(936,849)
|
|
(Decrease) increase in
capital gains incentive fees payable
|
|
|
(2,818,623)
|
|
|
2,867,130
|
|
|
(359,892)
|
|
Decrease in
administrative services payable
|
|
|
(29,449)
|
|
|
(5,123)
|
|
|
(21,787)
|
|
Increase (decrease) in
interest payable
|
|
|
947,179
|
|
|
1,549,577
|
|
|
(178,229)
|
|
Increase in related
party payable
|
|
|
1,060,321
|
|
|
—
|
|
|
—
|
|
(Decrease) increase in
unearned revenue
|
|
|
(209,051)
|
|
|
6,302
|
|
|
(36,344)
|
|
(Decrease) increase in
income tax payable
|
|
|
(2,094,141)
|
|
|
2,544,749
|
|
|
(192,235)
|
|
Increase (decrease) in
other accrued expenses and liabilities
|
|
|
136,635
|
|
|
164,227
|
|
|
(28,730)
|
|
Net Cash Used in
Operating Activities
|
|
$
|
(56,286,557)
|
|
$
|
(76,102,738)
|
|
$
|
(3,487,593)
|
|
Cash flows from
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the
issuance of common stock
|
|
$
|
2,158,540
|
|
$
|
449,515
|
|
$
|
4,794,994
|
|
Sales load for common
stock issued
|
|
|
(31,066)
|
|
|
(2,489)
|
|
|
(18,169)
|
|
Offering costs paid
for common stock issued
|
|
|
(517,054)
|
|
|
(53,327)
|
|
|
(95,681)
|
|
Stockholder
distributions paid
|
|
|
(26,594,095)
|
|
|
(21,044,928)
|
|
|
(24,341,646)
|
|
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
|
|
|
63,600,000
|
|
|
73,500,000
|
|
|
15,500,000
|
|
Financing costs paid
on SBA-guaranteed debentures
|
|
|
(1,548,660)
|
|
|
(3,139,725)
|
|
|
(577,425)
|
|
Financing costs paid
on Credit facility
|
|
|
(193,635)
|
|
|
(136,219)
|
|
|
(1,880,099)
|
|
Borrowings under
Credit Facility
|
|
|
149,888,800
|
|
|
268,700,000
|
|
|
120,950,000
|
|
Repayments of Credit
Facility
|
|
|
(126,607,800)
|
|
|
(265,360,000)
|
|
|
(108,500,000)
|
|
Partial share
redemption
|
|
|
—
|
|
|
—
|
|
|
(94)
|
|
Net Cash Provided by
Financing Activities
|
|
$
|
60,155,030
|
|
$
|
101,799,992
|
|
$
|
5,831,880
|
|
Net Increase in Cash
and Cash Equivalents
|
|
$
|
3,868,473
|
|
$
|
25,697,254
|
|
$
|
2,344,287
|
|
Cash and Cash
Equivalents Balance at Beginning of Period
|
|
|
44,174,856
|
|
|
18,477,602
|
|
|
16,133,315
|
|
Cash and Cash
Equivalents Balance at End of Period
|
|
$
|
48,043,329
|
|
$
|
44,174,856
|
|
$
|
18,477,602
|
|
Supplemental and
Non-Cash Activities
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
expense
|
|
$
|
21,280,060
|
|
$
|
15,099,656
|
|
$
|
14,441,061
|
|
Income and excise tax
paid
|
|
|
3,255,809
|
|
|
1,445,000
|
|
|
940,000
|
|
Shares issued pursuant
to Dividend Reinvestment Plan
|
|
|
—
|
|
|
—
|
|
|
228,943
|
|
(Decrease) increase in
dividends payable
|
|
|
(1,171,059)
|
|
|
1,171,059
|
|
|
(2,167,630)
|
|
(Decrease) increase in
deferred offering costs
|
|
|
(13,788)
|
|
|
(75,112)
|
|
|
90,000
|
|
Gain on conversion of
equity investment
|
|
|
—
|
|
|
6,668
|
|
|
—
|
|
Reconciliation of
Core Net Investment Income (Unaudited)
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
December 31, 2022
|
|
December 31, 2021
|
|
Net investment
income
|
|
$9,708,610
|
|
$5,116,721
|
|
$28,586,684
|
|
$19,776,467
|
|
Capital gains incentive
fee
|
|
(1,146,074)
|
|
1,026,559
|
|
(2,818,623)
|
|
2,867,131
|
|
Income tax
expense
|
|
94,900
|
|
383,505
|
|
1,161,668
|
|
1,102,374
|
|
Core net investment
income
|
|
$8,657,436
|
|
$6,526,785
|
|
$26,929,729
|
|
$23,745,972
|
|
|
|
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
|
|
|
|
Net investment income
per share
|
|
$0.50
|
|
$0.26
|
|
$1.46
|
|
$1.01
|
|
Core net investment
income per share
|
|
$0.44
|
|
$0.33
|
|
$1.38
|
|
$1.22
|
|
Reconciliation of
Realized Net Investment Income (Unaudited)
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Year
Ended
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
December 31, 2022
|
|
December 31, 2021
|
|
Net investment
income
|
|
$9,708,610
|
|
$5,116,721
|
|
$28,586,684
|
|
$19,776,467
|
|
Net realized (loss)
gain on investments
|
|
(998,222)
|
|
17,108,282
|
|
3,660,595
|
|
23,710,167
|
|
Net realized gain
(loss) on foreign currency translation
|
|
1,935
|
|
—
|
|
(6,091)
|
|
—
|
|
Loss on debt
extinguishment
|
|
—
|
|
—
|
|
—
|
|
(539,250)
|
|
Provision for taxes on
realized gain on investments
|
|
—
|
|
(2,276,193)
|
|
—
|
|
(2,957,220)
|
|
Total Realized Net
Investment Income
|
|
$8,712,323
|
|
$19,948,810
|
|
$32,241,188
|
|
$39,990,164
|
|
|
|
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
|
|
|
|
Net investment income
per share
|
|
$0.50
|
|
$0.26
|
|
$1.46
|
|
$1.01
|
|
Realized net investment
income per share
|
|
$0.44
|
|
$1.02
|
|
$1.65
|
|
$2.05
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/stellus-capital-investment-corporation-reports-results-for-its-fourth-fiscal-quarter-and-year-ended-december-31-2022-301758816.html
SOURCE Stellus Capital Investment Corporation
