Stellus Capital Investment Corporation Reports Results for its Fourth Fiscal Quarter and Year Ended December 31, 2022

Rhea-AI Summary

Stellus Capital Investment Corporation (NYSE:SCM) reported strong financial results for Q4 and FY 2022, achieving U.S. GAAP net investment income of $0.50 per share and core net investment income of $0.44 per share, covering a regular dividend of $0.34. The company increased its dividend by 43% to $0.40, reflecting robust earnings in a high-interest rate environment. Total assets rose to $898.2 million, with investments at fair value of $844.7 million, while net assets slightly decreased to $275.8 million. Notably, Stellus has 85 portfolio investments, with a weighted average yield of 11.1% for debt investments.

Positive

• Q4 2022 U.S. GAAP net investment income of $9.71 million, or $0.50 per share.
• 43% increase in regular dividend from $0.28 to $0.40 per share.
• Robust investment income growth from $63.7 million in 2021 to $75.1 million in 2022.
• Portfolio value increased to $844.7 million with a weighted average yield of 11.1%.

Negative

• Net assets decreased from $285.1 million in 2021 to $275.8 million in 2022.
• Net unrealized depreciation on investments was $17.5 million in 2022, up from $6.9 million in 2021.

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

 

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SOURCE Stellus Capital Investment Corporation

FAQ

What were Stellus Capital's Q4 2022 earnings results?

Stellus Capital reported U.S. GAAP net investment income of $9.71 million ($0.50 per share) for Q4 2022.

How much did Stellus Capital increase its dividend in 2023?

Stellus Capital increased its regular dividend by 43% to $0.40 per share, payable in monthly increments starting Q1 2023.

What is the current asset value of Stellus Capital?

As of December 31, 2022, Stellus Capital reported total assets of $898.2 million.

What was the weighted average yield on Stellus Capital's debt investments?

The weighted average yield on debt investments was 11.1% as of December 31, 2022.

What were Stellus Capital's total investment gains in 2022?

Stellus Capital's total investment income in 2022 was $75.1 million.