HOUSTON, Aug. 7, 2024
/PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM)
("Stellus" or the "Company") today announced financial results for
its second fiscal quarter ended June 30,
2024.
Robert T. Ladd, Chief Executive
Officer of Stellus, stated, "I am pleased to report solid operating
results for the quarter ended June 30,
2024, in which U.S. GAAP net investment income of
$0.48 per share and core net
investment income of $0.50 per share
covered the regular dividend declared of $0.40 per share. Our loan portfolio is yielding
11.7%, as of June 30, 2024. We have
completed over eleven years of operations, during which our
investors have received a total of $262
million in distributions, equivalent to $15.75 per share."
|
FINANCIAL
HIGHLIGHTS
($ in millions, except
data relating to per share amounts and shares
outstanding)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30, 2024
|
|
June 30, 2023
|
|
June 30, 2024
|
|
June 30, 2023
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Amount
|
Per
Share
|
|
Net investment
income
|
$11.79
|
$0.48
|
|
$10.41
|
$0.49
|
|
$22.03
|
$0.90
|
|
$19.48
|
$0.95
|
|
Core net investment
income(1)
|
12.37
|
0.50
|
|
10.79
|
0.51
|
|
22.97
|
0.94
|
|
19.66
|
0.96
|
|
Net realized gain
(loss) on investments
|
1.99
|
0.07
|
|
(0.31)
|
(0.01)
|
|
(18.39)
|
(0.75)
|
|
(0.28)
|
(0.02)
|
|
Net realized loss on
foreign currency translation
|
(0.03)
|
—
|
|
(0.01)
|
—
|
|
(0.05)
|
—
|
|
(0.05)
|
—
|
|
Total realized
income(2)
|
$13.75
|
$0.55
|
|
$10.09
|
$0.48
|
|
$3.59
|
$0.15
|
|
$19.15
|
$0.93
|
|
Distributions
|
(10.05)
|
(0.41)
|
|
(8.66)
|
(0.41)
|
|
(19.70)
|
(0.81)
|
|
(16.61)
|
(0.81)
|
|
Net unrealized change
in (depreciation) appreciation on investments
|
(5.58)
|
(0.22)
|
|
(6.30)
|
(0.31)
|
|
17.92
|
0.73
|
|
(10.54)
|
(0.51)
|
|
Net unrealized change
in depreciation on foreign currency translation
|
(0.01)
|
—
|
|
(0.01)
|
—
|
|
(0.01)
|
—
|
|
(0.02)
|
—
|
|
Benefit (provision) for
taxes on unrealized depreciation (appreciation) on investments in
taxable subsidiaries
|
0.38
|
0.02
|
|
(0.07)
|
—
|
|
0.19
|
0.01
|
|
(0.14)
|
(0.01)
|
|
Net increase in net
assets resulting from operations
|
$8.54
|
$0.35
|
|
$3.71
|
$0.17
|
|
$21.69
|
$0.89
|
|
$8.45
|
$0.41
|
|
Weighted average shares
outstanding
|
|
24,733,966
|
|
|
21,231,979
|
|
|
24,429,804
|
|
|
20,509,995
|
|
(1)
|
Core net investment
income, as presented, excludes the impact of capital gains
incentive fees (reversal) and income taxes, the majority of which
are excise taxes. The Company believes presenting core net
investment income and the related per share amount is a useful
supplemental disclosure for analyzing its financial performance.
However, core net investment income is a non-U.S. generally
accepted accounting principles ("U.S. GAAP") measure and should not
be considered as a replacement for net investment income and other
earnings measures presented in accordance with U.S. GAAP. A
reconciliation of net investment income in accordance with U.S.
GAAP to core net investment income is presented in the table below
the financial
statements.
|
|
(2)
|
Total realized income
is the sum of net investment income, net realized gains (losses) on
investments, net realized gains (losses) on foreign currency, and
loss on debt extinguishment; all U.S. GAAP measures.
|
|
PORTFOLIO
ACTIVITY
($ in millions, except
data relating to per share amounts and number of portfolio
companies)
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
|
|
June 30, 2024
|
|
December 31, 2023
|
|
|
|
|
|
Investments at fair
value
|
|
$899.7
|
|
$874.5
|
|
|
|
|
|
Total assets
|
|
$946.5
|
|
$908.1
|
|
|
|
|
|
Net assets
|
|
$347.2
|
|
$319.9
|
|
|
|
|
|
Shares
outstanding
|
|
25,980,998
|
|
24,125,642
|
|
|
|
|
|
Net asset value per
share
|
|
$13.36
|
|
$13.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30, 2024
|
|
June 30, 2023
|
|
June 30, 2024
|
|
June 30, 2023
|
|
New
investments
|
|
$66.3
|
|
$46.5
|
|
$94.9
|
|
$87.7
|
|
Repayments of
investments
|
|
(40.7)
|
|
(38.4)
|
|
(71.8)
|
|
(44.3)
|
|
Net activity
|
|
$25.6
|
|
$8.1
|
|
$23.1
|
|
$43.4
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
|
|
June 30, 2024
|
|
December 31, 2023
|
|
|
|
|
|
Number of portfolio
company investments
|
|
100
|
|
93
|
|
|
|
|
|
Number of debt
investments
|
|
87
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield
of debt and other income producing investments
(3)
|
|
|
|
|
|
|
|
|
|
Cash
|
|
11.0 %
|
|
11.0 %
|
|
|
|
|
|
Payment-in-kind
("PIK")
|
|
0.3 %
|
|
0.5 %
|
|
|
|
|
|
Fee
amortization
|
|
0.4 %
|
|
0.4 %
|
|
|
|
|
|
Total
|
|
11.7 %
|
|
11.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield
on total investments (4)
|
|
|
|
|
|
|
|
|
|
Cash
|
|
10.2 %
|
|
10.3 %
|
|
|
|
|
|
Payment-in-kind
("PIK")
|
|
0.3 %
|
|
0.5 %
|
|
|
|
|
|
Fee
amortization
|
|
0.4 %
|
|
0.3 %
|
|
|
|
|
|
Total
|
|
10.9 %
|
|
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 both the three months ended June 30, 2024 and 2023 totaled $26.6 million most of which was interest income
from portfolio investments.
Gross operating expenses for the three months ended June 30, 2024 and 2023, totaled $16.5 million and $16.2
million, respectively. The increase was driven primarily by
increased income tax expense. For the same respective periods, base
management fees totaled $3.9 million
for both periods, income incentive fees totaled $2.5 million and $2.6
million, fees and expenses related to our borrowings totaled
$8.1 million for both periods
(including interest and amortization of deferred financing costs),
administrative expenses totaled $0.5
million for both periods, income tax totaled $0.6 million and $0.4
million and other expenses totaled $0.9 million and $0.8
million. For the three months ended June 30, 2024, the Company waived income
incentive fees totaling $1.6 million
for net operating expenses of $14.8
million. No such income incentive fees were waived for the
three months ended June 30, 2023.
Net investment income was $11.8
million and $10.4 million, or
$0.48 and $0.49 per common share based on weighted average
common shares outstanding of 24,733,966 and 21,231,979 for the
three months ended June 30, 2024 and
2023, respectively. Core net investment income, which is a non-U.S.
GAAP measure that excludes the capital gains incentive fee
(reversal) and income tax expense accruals, for the three months
ended June 30, 2024 and 2023 was
$12.4 million and $10.8 million, or $0.50 and $0.51 per
share, respectively.
For the three months ended June 30,
2024 and 2023, the Company's investment portfolio had a net
change in unrealized depreciation of $5.6
million and $6.3 million,
respectively, and the Company had net realized gains (losses) of
$2.0 million and ($0.3) million, respectively.
Net increase in net assets resulting from operations totaled
$8.5 million and $3.7 million, or $0.35 and $0.17 per
common share, based on weighted average common shares outstanding
of 24,733,966 and 21,231,979 for the three months ended
June 30, 2024 and 2023,
respectively.
Liquidity and Capital Resources
As of June 30, 2024, the Company's
amended senior secured revolving credit agreement with certain bank
lenders and Zions Bancorporation, N.A. dba Amegy Bank, as
administrative agent (as amended from time to time, the "Credit
Facility") provided for borrowings in an aggregate amount of up to
$260.0 million on a committed basis.
As of June 30, 2024 and December 31, 2023, the Credit Facility had an
accordion feature which allowed for potential future expansion of
the facility size up to $350.0
million.
As of June 30, 2024 and
December 31, 2023, the Company had
$169.4 million and $160.1 million in outstanding borrowings under
the Credit Facility, respectively.
The Company issued 1,855,356 shares during the three months
ended June 30, 2024 under the
At-the-Market Program ("ATM Program"), for gross proceeds of
$25.8 million. The average per share
offering price of shares issued under the ATM Program during the
three months ended June 30, 2024 was
$13.89. Stellus Capital Management,
LLC, the Company's investment adviser (the "Advisor"), agreed to
reimburse the Company for underwriting fees to the extent the per
share price of the shares to the public, less underwriting fees,
was less then net asset value per share. For the three and six
months ended June 30, 2024, the
Advisor was not required to reimburse underwriting fees as all
shares were issued at a premium to net asset value.
Distributions
During the three months ended June 30,
2024 and 2023, the Company declared aggregate distributions
of $0.40 per share for both periods
($10.0 million and $8.7 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 June 30,
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
|
|
Add-On
Investment
|
|
April 22,
2024
|
|
Exacta Land Surveyors,
LLC*
|
|
Provider of land survey
and field management services to facilitate real estate
transactions
|
|
$
|
90,773
|
|
Unsecured
|
|
|
|
|
|
|
|
|
$
|
2,164
|
|
Equity
|
|
New
Investment
|
|
May 10, 2024
|
|
Luxium Solutions,
LLC
|
|
Manufacturer and
distributor of high-performance advanced materials and
assemblies
|
|
$
|
8,293,730
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,200,250
|
|
Delayed Draw Term Loan
Commitment
|
|
Add-On
Investment
|
|
May 16, 2024
|
|
Impact Home Services
LLC*
|
|
Residential garage
door, electrical, and plumbing services provider
|
|
$
|
4,466
|
|
Equity
|
|
New
Investment
|
|
May 24, 2024
|
|
Teckrez, LLC
|
|
Distributor of
tackifier resins and acrylic monomers
|
|
$
|
4,315,846
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,442,221
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
90,139
|
|
Equity
|
|
Add-On
Investment
|
|
May 24, 2024
|
|
ADS Group Opco,
LLC*
|
|
Designer and supplier
of impulse products and merchandising
solutions to retailers.
|
|
$
|
90,582
|
|
Equity
|
|
New
Investment
|
|
May 28, 2024
|
|
FiscalNote Boards
LLC*
|
|
Facilitator of
executive-level in-person events and remote peer-to-peer industry
insights
|
|
$
|
190,382
|
|
Equity
|
|
New
Investment
|
|
May 31, 2024
|
|
TriplePoint MEP
Holdings, LLC
|
|
Provider of HVAC,
plumbing, and other mechanical and industrial services
|
|
$
|
5,356,491
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,339,123
|
|
Delayed Draw Term Loan
Commitment
|
|
|
|
|
|
|
|
|
$
|
743,957
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
557,968
|
|
Equity
|
|
New
Investment
|
|
June 6, 2024
|
|
Monarch Behavioral
Therapy, LLC
|
|
Provider of
center-based applied behavioral analysis therapy
services
|
|
$
|
6,764,635
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,084,076
|
|
Delayed Draw Term Loan
Commitment
|
|
|
|
|
|
|
|
|
$
|
722,717
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
428,571
|
|
Equity
|
|
Add-On
Investment
|
|
June 6, 2024
|
|
Infolinks Media Buyco,
LLC*
|
|
Advertising placement
partner for small to mid-sized publishers
|
|
$
|
2,558,672
|
|
Senior Secured – First
Lien
|
|
Add-On
Investment
|
|
June 6, 2024
|
|
Impact Home Services
LLC*
|
|
Residential garage
door, electrical, and plumbing services provider
|
|
$
|
2,233
|
|
Equity
|
|
Add-On
Investment
|
|
June 10,
2024
|
|
U.S. Expediters,
LLC*
|
|
Reseller of CPAP
machines and accessories
|
|
$
|
36,415
|
|
Equity
|
|
Add-On
Investment
|
|
June 12,
2024
|
|
Unicat Catalyst
Holdings, LLC*
|
|
Global formulator and
distributor of heterogeneous, consumable catalyst products
primarily serving the refinery, petrochemical, and other end
markets
|
|
$
|
10,547
|
|
Equity
|
|
New
Investment
|
|
June 13,
2024
|
|
Said Differently
Consulting, LLC
|
|
Digital transformation
consulting firm
|
|
$
|
7,480,519
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,168,831
|
|
Revolver
Commitment
|
|
|
|
|
|
|
|
|
$
|
350,649
|
|
Equity
|
|
New
Investment
|
|
June 24,
2024
|
|
AGT Robotics,
Inc.
|
|
Manufacturer of robotic
welding solutions for metal fabrication
industry
|
|
$
|
10,726,931
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
$
|
1,526,600
|
|
Revolver Commitment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Existing portfolio
company
|
|
|
|
|
|
|
|
|
|
|
|
The Company realized investments in the following portfolio
companies during the three months ended June
30, 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
|
|
Full
Realization
|
|
|
|
|
|
|
|
$
|
2,950,529
|
|
$
|
1,977,726
|
|
Equity
|
|
Full
Repayment
|
|
June 4, 2024
|
|
Jurassic Acquisition
Corp.*
|
|
Producer and
distributor of air-float
kaolin and gel-grade attapulgite clays
|
|
$
|
16,581,250
|
|
$
|
-
|
|
Senior Secured – First
Lien
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Existing portfolio
company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Events Subsequent to June 30,
2024
The Company's management has evaluated subsequent events through
August 7, 2024. There have been no
subsequent events that require recognition or disclosure except for
the following described below.
Investment Portfolio
The Company invested in the following portfolio companies
subsequent to June 30, 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Investment
Amount
|
|
Instrument
Type
|
|
Add-On
Investment
|
|
July 31,
2024
|
|
PCS Software,
Inc.*
|
|
Provider of integrated
transportation management
software for the inland trucking industry
|
|
$
|
9,995
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Existing portfolio
company
|
|
|
|
|
|
|
|
|
|
|
|
The Company realized investments in the following portfolio
company subsequent to June 30,
2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activity
Type
|
|
Date
|
|
Company
Name
|
|
Company
Description
|
|
Proceeds
Received
|
|
Realized
Gain
|
|
Instrument
Type
|
|
Full
Realization
|
|
August 1,
2024
|
|
ICD Holdings,
LLC*
|
|
Financial company that
connects
corporate treasury departments with
money market and short duration
bond funds
|
|
$
|
2,593,039
|
|
$
|
2,155,185
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Existing portfolio
company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Facility
The outstanding balance under the Credit Facility as of
August 7, 2024 was $168.7 million.
Distributions Declared
On July 10, 2024, our Board of
Directors declared a regular monthly distribution for each of July,
August, and September 2024, as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Ex-Dividend
|
|
Record
|
|
Payment
|
|
Amount per
|
|
Declared
|
|
Date
|
|
Date
|
|
Date
|
|
Share
|
|
7/10/2024
|
|
7/31/2024
|
|
7/31/2024
|
|
8/15/2024
|
|
$
|
0.1333
|
|
7/10/2024
|
|
8/30/2024
|
|
8/30/2024
|
|
9/13/2024
|
|
$
|
0.1333
|
|
7/10/2024
|
|
9/30/2024
|
|
9/30/2024
|
|
10/15/2024
|
|
$
|
0.1333
|
Conference Call Information
Stellus Capital Investment Corporation will host a conference
call to discuss these results on Thursday,
August 8, 2024 at 11:00 AM, Central
Time. The conference call will be led by Robert T. Ladd, Chief Executive Officer, and W.
Todd Huskinson, Chief Financial
Officer, Chief Compliance Officer, Treasurer, and Secretary.
For those wishing to participate by telephone, please dial (888)
506-0062. Use passcode 302036. Starting approximately two hours
after the conclusion of the call, a replay will be available
through Thursday, August 22, 2024 by
dialing (877) 481-4010 and entering passcode 51014. 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
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024
|
|
|
|
|
|
(unaudited)
|
|
December 31, 2023
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Controlled investments
at fair value (amortized cost of $17,934,808 and $17,285,138,
respectively)
|
|
$
|
7,500,423
|
|
$
|
6,175,994
|
|
|
Non-controlled,
non-affiliated investments, at fair value (amortized cost of
$891,583,081 and $884,858,412, respectively)
|
|
|
892,178,026
|
|
|
868,284,689
|
|
|
Cash and cash
equivalents
|
|
|
35,867,781
|
|
|
26,125,741
|
|
|
Receivable for sales
and repayments of investments
|
|
|
574,015
|
|
|
371,877
|
|
|
Interest
receivable
|
|
|
7,663,147
|
|
|
4,882,338
|
|
|
Income tax
receivable
|
|
|
2,174,449
|
|
|
1,588,708
|
|
|
Other
receivables
|
|
|
135,666
|
|
|
42,995
|
|
|
Deferred offering
costs
|
|
|
—
|
|
|
7,312
|
|
|
Prepaid
expenses
|
|
|
412,737
|
|
|
606,674
|
|
|
Total
Assets
|
|
$
|
946,506,244
|
|
$
|
908,086,328
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Notes
Payable
|
|
$
|
99,219,159
|
|
$
|
98,996,412
|
|
|
Credit Facility
payable
|
|
|
166,396,015
|
|
|
156,564,776
|
|
|
SBA-guaranteed
debentures
|
|
|
320,823,417
|
|
|
320,273,358
|
|
|
Dividends
payable
|
|
|
3,463,267
|
|
|
—
|
|
|
Management fees
payable
|
|
|
852,233
|
|
|
2,918,536
|
|
|
Income incentive fees
payable
|
|
|
1,435,084
|
|
|
2,885,180
|
|
|
Interest
payable
|
|
|
5,248,420
|
|
|
5,241,164
|
|
|
Related party
payable
|
|
|
337,500
|
|
|
—
|
|
|
Unearned
revenue
|
|
|
572,243
|
|
|
397,725
|
|
|
Administrative services
payable
|
|
|
426,174
|
|
|
402,151
|
|
|
Deferred tax
liability
|
|
|
—
|
|
|
188,893
|
|
|
Other accrued expenses
and liabilities
|
|
|
547,239
|
|
|
278,345
|
|
|
Total
Liabilities
|
|
$
|
599,320,751
|
|
$
|
588,146,540
|
|
|
Commitments and
contingencies (Note 7)
|
|
|
|
|
|
|
|
|
Net
Assets
|
|
$
|
347,185,493
|
|
$
|
319,939,788
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
|
|
Common stock, par value
$0.001 per share (100,000,000 shares authorized; 25,980,998
and 24,125,642 issued and outstanding, respectively)
|
|
$
|
25,981
|
|
$
|
24,125
|
|
|
Paid-in
capital
|
|
|
361,167,004
|
|
|
335,918,984
|
|
|
Total distributable
loss
|
|
|
(14,007,492)
|
|
|
(16,003,321)
|
|
|
Net
Assets
|
|
$
|
347,185,493
|
|
$
|
319,939,788
|
|
|
Total Liabilities
and Net Assets
|
|
$
|
946,506,244
|
|
$
|
908,086,328
|
|
|
Net Asset Value Per
Share
|
|
$
|
13.36
|
|
$
|
13.26
|
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
|
June 30, 2024
|
|
June 30, 2023
|
|
June 30, 2024
|
|
June 30, 2023
|
|
|
INVESTMENT
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From controlled
investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
—
|
|
$
|
—
|
|
$
|
81,636
|
|
$
|
—
|
|
|
From non-controlled,
non-affiliated investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
25,164,944
|
|
|
25,662,895
|
|
|
50,121,795
|
|
|
49,071,499
|
|
|
Other income
|
|
|
1,461,255
|
|
|
922,122
|
|
|
2,419,517
|
|
|
1,588,865
|
|
|
Total Investment
Income
|
|
$
|
26,626,199
|
|
$
|
26,585,017
|
|
$
|
52,622,948
|
|
$
|
50,660,364
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
$
|
3,852,233
|
|
$
|
3,865,588
|
|
$
|
7,704,466
|
|
$
|
7,600,690
|
|
|
Valuation
fees
|
|
|
35,711
|
|
|
46,422
|
|
|
192,218
|
|
|
193,495
|
|
|
Administrative services
expenses
|
|
|
481,261
|
|
|
466,378
|
|
|
972,162
|
|
|
928,342
|
|
|
Income incentive
fees
|
|
|
2,542,530
|
|
|
2,603,004
|
|
|
5,051,640
|
|
|
4,727,839
|
|
|
Capital gains incentive
fee
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(569,528)
|
|
|
Professional
fees
|
|
|
196,205
|
|
|
169,836
|
|
|
535,832
|
|
|
600,684
|
|
|
Directors'
fees
|
|
|
114,250
|
|
|
93,250
|
|
|
222,500
|
|
|
210,500
|
|
|
Insurance
expense
|
|
|
125,489
|
|
|
121,885
|
|
|
250,478
|
|
|
242,431
|
|
|
Interest expense and
other fees
|
|
|
8,116,497
|
|
|
8,101,975
|
|
|
15,884,070
|
|
|
15,988,399
|
|
|
Income tax
expense
|
|
|
574,037
|
|
|
371,786
|
|
|
944,756
|
|
|
746,549
|
|
|
Other general and
administrative expenses
|
|
|
417,867
|
|
|
331,649
|
|
|
663,142
|
|
|
510,099
|
|
|
Total Operating
Expenses
|
|
$
|
16,456,080
|
|
$
|
16,171,773
|
|
$
|
32,421,264
|
|
$
|
31,179,500
|
|
|
Income incentive fee
waiver
|
|
|
(1,622,542)
|
|
|
—
|
|
|
(1,826,893)
|
|
|
—
|
|
|
Total Operating
Expenses, net of fee waivers
|
|
$
|
14,833,538
|
|
$
|
16,171,773
|
|
$
|
30,594,371
|
|
$
|
31,179,500
|
|
|
Net Investment
Income
|
|
$
|
11,792,661
|
|
$
|
10,413,244
|
|
$
|
22,028,577
|
|
$
|
19,480,864
|
|
|
Net realized gain
(loss) on non-controlled, non-affiliated investments
|
|
$
|
1,992,482
|
|
$
|
(310,588)
|
|
$
|
(18,392,249)
|
|
$
|
(275,621)
|
|
|
Net realized loss on
foreign currency translations
|
|
|
(29,789)
|
|
|
(10,704)
|
|
|
(54,895)
|
|
|
(50,616)
|
|
|
Net change in
unrealized appreciation on controlled investments
|
|
|
138,189
|
|
|
—
|
|
|
674,759
|
|
|
—
|
|
|
Net change in
unrealized (depreciation) appreciation on non-controlled,
non-affiliated investments
|
|
|
(5,724,870)
|
|
|
(6,295,233)
|
|
|
17,257,150
|
|
|
(10,544,875)
|
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
|
(5,887)
|
|
|
(20,323)
|
|
|
(9,489)
|
|
|
(18,449)
|
|
|
Benefit (provision)
for taxes on net unrealized depreciation (appreciation) on
investments
|
|
|
381,500
|
|
|
(65,353)
|
|
|
188,893
|
|
|
(144,113)
|
|
|
Net Increase in Net
Assets Resulting from Operations
|
|
$
|
8,544,286
|
|
$
|
3,711,043
|
|
$
|
21,692,746
|
|
$
|
8,447,190
|
|
|
Net Investment
Income Per Share—basic and diluted
|
|
$
|
0.48
|
|
$
|
0.49
|
|
$
|
0.90
|
|
$
|
0.95
|
|
|
Net Increase in Net
Assets Resulting from Operations Per Share – basic and
diluted
|
|
$
|
0.35
|
|
$
|
0.17
|
|
$
|
0.89
|
|
$
|
0.41
|
|
|
Weighted Average
Shares of Common Stock Outstanding—basic and diluted
|
|
|
24,733,966
|
|
|
21,231,979
|
|
|
24,429,804
|
|
|
20,509,995
|
|
|
Distributions Per
Share—basic and diluted
|
|
$
|
0.41
|
|
$
|
0.41
|
|
$
|
0.81
|
|
$
|
0.81
|
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED
STATEMENTS OF CHANGES IN NET
ASSETS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
Total
|
|
|
|
|
|
Number
|
|
Par
|
|
Paid-in
|
|
distributable
|
|
|
|
|
|
of shares
|
|
value
|
|
capital
|
|
earnings
(loss)
|
|
Net Assets
|
|
Balances at
December 31, 2022
|
|
19,666,769
|
|
$
|
19,667
|
|
$
|
275,114,720
|
|
$
|
642,226
|
|
$
|
275,776,613
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,067,620
|
|
|
9,067,620
|
|
Net realized gain on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,967
|
|
|
34,967
|
|
Net realized loss on
foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39,912)
|
|
|
(39,912)
|
|
Net change in
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,249,642)
|
|
|
(4,249,642)
|
|
Net change in
unrealized appreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,874
|
|
|
1,874
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78,760)
|
|
|
(78,760)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,951,284)
|
|
|
(7,951,284)
|
|
Issuance of common
stock, net of offering costs(1)
|
|
581,614
|
|
|
581
|
|
|
8,289,988
|
|
|
—
|
|
|
8,290,569
|
|
Balances at March
31, 2023
|
|
20,248,383
|
|
$
|
20,248
|
|
$
|
283,404,708
|
|
$
|
(2,572,911)
|
|
$
|
280,852,045
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,413,244
|
|
|
10,413,244
|
|
Net realized loss on
non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(310,588)
|
|
|
(310,588)
|
|
Net realized loss on
foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,704)
|
|
|
(10,704)
|
|
Net change in
unrealized depreciation on non-controlled, non-affiliated
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,295,233)
|
|
|
(6,295,233)
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,323)
|
|
|
(20,323)
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65,353)
|
|
|
(65,353)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,659,144)
|
|
|
(8,659,144)
|
|
Issuance of common
stock, net of offering costs(1)
|
|
2,309,521
|
|
|
2,310
|
|
|
32,418,774
|
|
|
—
|
|
|
32,421,084
|
|
Balances at
June 30, 2023
|
|
22,557,904
|
|
$
|
22,558
|
|
$
|
315,823,482
|
|
$
|
(7,521,012)
|
|
$
|
308,325,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at
December 31, 2023
|
|
24,125,642
|
|
$
|
24,125
|
|
$
|
335,918,984
|
|
$
|
(16,003,321)
|
|
$
|
319,939,788
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,235,916
|
|
|
10,235,916
|
|
Net realized loss on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,384,731)
|
|
|
(20,384,731)
|
|
Net realized loss on
foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,106)
|
|
|
(25,106)
|
|
Net change in
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,518,590
|
|
|
23,518,590
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,602)
|
|
|
(3,602)
|
|
Provision for taxes on
unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(192,607)
|
|
|
(192,607)
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,647,844)
|
|
|
(9,647,844)
|
|
Balances at March
31, 2024
|
|
24,125,642
|
|
$
|
24,125
|
|
$
|
335,918,984
|
|
$
|
(12,502,705)
|
|
$
|
323,440,404
|
|
Net investment
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,792,661
|
|
|
11,792,661
|
|
Net realized gain on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,992,482
|
|
|
1,992,482
|
|
Net realized loss on
foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,789)
|
|
|
(29,789)
|
|
Net change in
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,586,681)
|
|
|
(5,586,681)
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,887)
|
|
|
(5,887)
|
|
Benefit for taxes on
unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
381,500
|
|
|
381,500
|
|
Distributions from net
investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,049,073)
|
|
|
(10,049,073)
|
|
Issuance of common
stock, net of offering costs(1)
|
|
1,855,356
|
|
|
1,856
|
|
|
25,248,020
|
|
|
—
|
|
|
25,249,876
|
|
Balances at
June 30, 2024
|
|
25,980,998
|
|
$
|
25,981
|
|
$
|
361,167,004
|
|
$
|
(14,007,492)
|
|
$
|
347,185,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See Note 4 to the
Consolidated Financial Statements on Form 10-Q filed with the
Securities and Exchange Commission on August 7, 2024 for more
information on offering costs.
|
|
STELLUS CAPITAL
INVESTMENT CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
|
|
|
|
|
|
|
For six months
ended
|
|
|
June 30, 2024
|
|
June 30, 2023
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net increase in net
assets resulting from operations
|
|
$
|
21,692,746
|
|
$
|
8,447,190
|
|
Adjustments to
reconcile net increase in net assets from operations to net cash
used in operating activities:
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(94,854,139)
|
|
|
(87,741,479)
|
|
Proceeds from sales
and repayments of investments
|
|
|
71,824,905
|
|
|
44,269,661
|
|
Net change in
unrealized (appreciation) depreciation on investments
|
|
|
(17,931,909)
|
|
|
10,544,875
|
|
Net change in
unrealized depreciation on foreign currency translations
|
|
|
9,490
|
|
|
18,306
|
|
Increase in
investments due to PIK
|
|
|
(1,555,868)
|
|
|
(1,904,853)
|
|
Amortization of
premium and accretion of discount, net
|
|
|
(1,383,624)
|
|
|
(1,360,629)
|
|
Deferred tax (benefit)
provision
|
|
|
(188,893)
|
|
|
144,113
|
|
Amortization of loan
structure fees
|
|
|
544,379
|
|
|
289,243
|
|
Amortization of
deferred financing costs
|
|
|
222,747
|
|
|
221,524
|
|
Amortization of loan
fees on SBA-guaranteed debentures
|
|
|
550,059
|
|
|
624,358
|
|
Net realized loss on
investments
|
|
|
18,392,249
|
|
|
275,621
|
|
Changes in other assets
and liabilities
|
|
|
|
|
|
|
|
Increase in interest
receivable
|
|
|
(2,780,809)
|
|
|
(654,240)
|
|
Increase in income tax
receivable
|
|
|
(585,741)
|
|
|
—
|
|
(Increase) decrease in
other receivables
|
|
|
(92,671)
|
|
|
8,876
|
|
Increase in related
party receivables
|
|
|
—
|
|
|
(883)
|
|
Decrease in prepaid
expenses
|
|
|
193,937
|
|
|
357,520
|
|
Decrease in management
fees payable
|
|
|
(2,066,303)
|
|
|
(5,284,818)
|
|
(Decrease) increase in
income incentive fees payable
|
|
|
(1,450,096)
|
|
|
711,987
|
|
Decrease in capital
gains incentive fees payable
|
|
|
—
|
|
|
(569,528)
|
|
Increase in
administrative services payable
|
|
|
24,023
|
|
|
50,346
|
|
Increase in interest
payable
|
|
|
7,256
|
|
|
142,257
|
|
Increase (decrease) in
related party payable
|
|
|
337,500
|
|
|
(284,527)
|
|
Increase (decrease) in
unearned revenue
|
|
|
174,518
|
|
|
(98,964)
|
|
Decrease in income tax
payable
|
|
|
—
|
|
|
(393,015)
|
|
Increase in other
accrued expenses and liabilities
|
|
|
268,894
|
|
|
226,618
|
|
Net Cash Used in
Operating Activities
|
|
$
|
(8,647,350)
|
|
$
|
(31,960,441)
|
|
Cash flows from
Financing Activities
|
|
|
|
|
|
|
|
Proceeds from the
issuance of common stock
|
|
$
|
25,777,185
|
|
$
|
41,448,945
|
|
Sales load for common
stock issued
|
|
|
(386,987)
|
|
|
(614,721)
|
|
Offering costs paid
for common stock issued
|
|
|
(133,010)
|
|
|
(121,471)
|
|
Stockholder
distributions paid
|
|
|
(16,233,650)
|
|
|
(13,603,459)
|
|
Financing costs paid
on Credit Facility
|
|
|
(66,348)
|
|
|
—
|
|
Borrowings under
Credit Facility
|
|
|
104,400,000
|
|
|
37,000,000
|
|
Repayments of Credit
Facility
|
|
|
(94,967,800)
|
|
|
(65,267,800)
|
|
Net Cash Provided
(Used) by Financing Activities
|
|
$
|
18,389,390
|
|
$
|
(1,158,506)
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
$
|
9,742,040
|
|
$
|
(33,118,947)
|
|
Cash and Cash
Equivalents Balance at Beginning of Period
|
|
$
|
26,125,741
|
|
$
|
48,043,329
|
|
Cash and Cash
Equivalents Balance at End of Period
|
|
$
|
35,867,781
|
|
$
|
14,924,382
|
|
Supplemental and
Non-Cash Activities
|
|
|
|
|
|
|
|
Cash paid for interest
expense
|
|
$
|
14,559,629
|
|
$
|
14,711,017
|
|
Income and excise tax
paid
|
|
|
1,530,497
|
|
|
1,139,564
|
|
Increase in
distributions payable
|
|
|
3,463,267
|
|
|
3,006,969
|
|
Decrease in deferred
offering costs
|
|
|
(7,312)
|
|
|
(1,100)
|
|
Reconciliation of
Core Net Investment Income (1)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
June 30, 2024
|
|
June 30, 2023
|
|
Net investment
income
|
|
$11,792,661
|
|
$10,413,244
|
|
Income tax
expense
|
|
574,037
|
|
371,786
|
|
Core net investment
income
|
|
$12,366,698
|
|
$10,785,030
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
Net investment income
per share
|
|
$0.48
|
|
$0.49
|
|
Core net investment
income per share
|
|
$0.50
|
|
$0.51
|
|
|
|
|
|
|
Reconciliation of
Realized Net Investment Income (2)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
June 30, 2024
|
|
June 30, 2023
|
|
Net investment
income
|
|
$11,792,661
|
|
$10,413,244
|
|
Net realized gain
(loss) on investments
|
|
1,992,482
|
|
(310,588)
|
|
Net realized loss on
foreign currency translation
|
|
(29,789)
|
|
(10,704)
|
|
Total Realized Net
Investment Income
|
|
$13,755,354
|
|
$10,091,952
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
Net investment income
per share
|
|
$0.48
|
|
$0.49
|
|
Realized net investment
income per share
|
|
$0.55
|
|
$0.48
|
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SOURCE Stellus Capital Investment Corporation
