Stellus Capital Investment Corporation Reports Results for its Third Fiscal Quarter Ended September 30, 2023

Rhea-AI Summary

Stellus Capital Investment Corporation (NYSE:SCM) announced solid operating results for Q3 2023, with U.S. GAAP net investment income of $0.47 per share and core net investment income of $0.49 per share covering the regular dividend declared of $0.40 per share. The portfolio grew by a net $5 million to $886 million at fair value, with the loan portfolio yielding 11.5% as of September 30, 2023.

Positive

• Solid operating results for Q3 2023
• U.S. GAAP net investment income of $0.47 per share and core net investment income of $0.49 per share covering the regular dividend declared of $0.40 per share
• Portfolio grew by a net $5 million to $886 million at fair value
• Loan portfolio yielding 11.5% as of September 30, 2023

Negative

• None.

HOUSTON, Nov. 7, 2023 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus" or the "Company") today announced financial results for its third fiscal quarter ended September 30, 2023.

Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report solid operating results for the quarter ended September 30, 2023, in which U.S. GAAP net investment income of $0.47 per share and core net investment income of $0.49 per share covered the regular dividend declared of $0.40 per share. Our portfolio grew by a net $5 million to $886 million at fair value and the loan portfolio is yielding 11.5%, as of September 30, 2023."

FINANCIAL HIGHLIGHTS ($ in millions, except data relating to per share amounts and shares outstanding)
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
	Amount	Per Share		Amount	Per Share		Amount	Per Share		Amount	Per Share
Net investment income	$10.82	$0.47		$7.19	$0.37		$30.30	$1.42		$18.88	$0.97
Core net investment income(1)	11.16	0.49		6.90	0.35		30.81	1.45		18.27	0.94
Net realized gain on investments	0.60	0.03		1.55	0.08		0.32	0.01		4.66	0.24
Net realized loss on foreign currency translation	(0.02)	-		-	-		(0.07)	-		(0.01)	-
Total realized income(2)	$11.40	$0.50		$8.74	$0.45		$30.55	$1.43		$23.53	$1.21
Distributions	(9.27)	(0.41)		(6.64)	(0.34)		(25.88)	(1.22)		(18.75)	(0.96)
Net unrealized change in depreciation on investments	(13.80)	(0.61)		(4.80)	(0.25)		(24.34)	(1.14)		(12.82)	(0.66)
Net unrealized change in depreciation on foreign currency translation	-	-		(0.01)	-		(0.02)	-		(0.05)	-
Benefit (provision) for taxes on unrealized depreciation (appreciation) on investments in taxable subsidiaries	-	-		0.03	-		(0.14)	(0.01)		(0.15)	(0.01)
Net (decrease) increase in net assets resulting from operations	($2.40)	($0.11)		$3.96	$0.20		$6.05	$0.28		$10.51	$0.54
Weighted average shares outstanding		22,824,221			19,545,935			21,289,880			19,535,708

(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
		September 30, 2023		December 31, 2022
Investments at fair value		$886.3		$844.7
Total assets		$912.0		$898.2
Net assets		$318.1		$275.8
Shares outstanding		24,125,642		19,666,769
Net asset value per share		$13.19		$14.02
		Three Months Ended		Nine Months Ended
		September 30, 2023		September 30, 2023
New investments		$51.9		$139.7
Repayments of investments		(34.8)		(79.1)
Net activity		$17.1		$60.6
		As of		As of
		September 30, 2023		December 31, 2022
Number of portfolio company investments		96		85
Number of debt investments		83		73
Weighted average yield of debt and other income producing investments (3)
Cash		10.7 %		10.3 %
Payment-in-kind ("PIK")		0.4 %		0.4 %
Fee amortization		0.4 %		0.4 %
Total		11.5 %		11.1 %
Weighted average yield on total investments (4)
Cash		10.2 %		9.7 %
Payment-in-kind ("PIK")		0.3 %		0.3 %
Fee amortization		0.3 %		0.4 %
Total		10.8 %		10.4 %

(3)	The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors in the Company's common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expenses or any sales load that may be paid by investors.
(4)	The dollar-weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity.

 

Results of Operations

Investment income for the three months ended September 30, 2023 and 2022 totaled $27.2 million and $20.1 million, respectively, most of which was interest income from portfolio investments.

Operating expenses for the three months ended September 30, 2023 and 2022, totaled $16.3 million and $13.0 million, respectively. For the same respective periods, base management fees totaled $3.9 million and $3.8 million, income incentive fees totaled $2.7 million and $1.6 million, capital gains incentive (reversal) fees totaled $0.0 million and ($0.6) million, fees and expenses related to our borrowings totaled $8.0 million and $6.4 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million and $0.4 million, income tax totaled $0.3 and $0.4 million and other expenses totaled $0.9 and $1.0 million.

Net investment income was $10.8 million and $7.2 million, or $0.47 and $0.37 per common share based on weighted average common shares outstanding of 22,824,221 and 19,545,935 for the three months ended September 30, 2023 and 2022, 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 September 30, 2023 and 2022 was $11.2 million and $6.9 million, or $0.49 and $0.35 per share, respectively.

For the three months ended September 30, 2023 and 2022, the Company's investment portfolio had a net change in unrealized depreciation of ($13.8) million and ($4.8) million, respectively, and the Company had net realized gains of $0.6 million and $1.6 million, respectively.

Net (decrease) increase in net assets resulting from operations totaled ($2.4) million and $4.0 million, or ($0.11) and $0.20 per common share, based on weighted average common shares outstanding of 22,824,221 and 19,545,935 for the three months ended September 30, 2023 and 2022, respectively.

Liquidity and Capital Resources

As of September 30, 2023, the Company's amended and restated senior secured revolving credit agreement with certain bank lenders and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $265.0 million on a committed basis. As of September 30, 2023 and December 31, 2022, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size to $280.0 million. As of September 30, 2023 and December 31, 2022, the Company had $162.3 million and $199.2 million in outstanding borrowings under the Credit Facility, respectively.

The Company issued 1,567,738 shares during the three months ended September 30, 2023 under the At-the-Market Program ("ATM Program"), for gross proceeds of $21.9 million. The average per share gross offering price of shares issued under the ATM Program during the three months ended September 30, 2023 was $13.97. For the three months ended September 30, 2023, net proceeds of $21.6 million, or $13.76 per share, exceeded net asset value per share, excluding the impact of offering expenses.

Distributions

During the three months ended September 30, 2023 and 2022, the Company declared aggregate distributions of $0.40 and $0.34 per share, respectively ($9.3 million and $6.6 million, 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 September 30, 2023:

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Activity Type		Date		Company Name		Company Description		Investment Amount			Instrument Type
New Investment		July 7, 2023		Madison Logic, Inc.*		Provider of B2B account based marketing services		$	394,767		Equity
Add-On Investment		July 12, 2023		EH Real Estate Services, LLC*		Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyers and sellers		$	501,846		Senior Secured – First Lien
New Investment		July 31, 2023		EHI Buyer, Inc.		Provider of design, engineering, installation, and maintenance services for building management systems		$	6,111,343		Senior Secured – First Lien
								$	3,055,671		Delayed Draw Term Loan Commitment
								$	100,000		Revolver Commitment
								$	617,801		Equity
New Investment		August 2, 2023		Compost 360 Acquisition, LLC		Organic waste recycler and producer of compost, mulch, and engineered soils		$	9,595,100		Senior Secured – First Lien
								$	4,096,741		Delayed Draw Term Loan Commitment
								$	100,000		Revolver Commitment
								$	250,761		Equity
New Investment		August 3, 2023		Morgan Electrical Group Intermediate Holdings, Inc.		Provider of commercial electrical services		$	4,439,439		Senior Secured – First Lien
								$	2,864,154		Delayed Draw Term Loan Commitment
								$	100,000		Revolver Commitment
								$	356,800		Equity
Add-On Investment		August 4, 2023		TradePending OpCo Aggregator, LLC*		Provider of vehicle trade-in and merchandising intelligence solutions for auto dealerships		$	2,473,227		Senior Secured – First Lien
								$	687,007		Delayed Draw Term Loan Commitment
								$	325,379		Equity
New Investment		August 7, 2023		The Hardenbergh Group, Inc.		Provider of temporary professional staffing of Medical Services Professionals, external peer review, consulting and physician leadership solutions		$	10,501,898		Senior Secured – First Lien
								$	100,000		Revolver Commitment
								$	434,504		Equity
New Investment		August 8, 2023		Green Intermediateco II, Inc.		Cyber-security focused value-added reseller and associated service provider		$	11,170,252		Senior Secured – First Lien
								$	500,000		Delayed Draw Term Loan Commitment
								$	271,401		Equity
Add-On Investment		August 11, 2023		Data Centrum Communications, Inc.*		Provider of point-of-care patient engagement and marketing solutions for pharmaceutical companies.		$	52,919		Equity
Add-On Investment		September 22, 2023		NINJIO, LLC*		Cybersecurity awareness and training platform		$	14,470		Equity
Add-On Investment		September 25, 2023		Tower Arch Infolinks Media, LP*		Advertising placement partner for small to mid-sized publishers		$	1,093		Equity
Add-On Investment		September 28, 2023		TradePending OpCo Aggregator, LLC*		Provider of vehicle trade-in and merchandising intelligence solutions for auto dealerships		$	53,625		Equity

*Existing portfolio company

 

The Company realized investments in the following portfolio companies during the three months ended September 30, 2023:

Activity Type		Date		Company Name		Company Description		Proceeds Received			Instrument Type
Full Repayment		July 31, 2023		NuSource Financial, LLC*		Provider of technology integration and installation of Automated Teller Machines/Integrated Teller Machines, maintenance services, and security solutions		$	10,984,910		Senior Secured – First Lien
Full Repayment		September 1, 2023		Vortex Companies, LLC*		Provider of trenchless services and products to restore and repair large diameter water, sewer, and industrial pipe infrastructure.		$	10,000,000		Senior Secured – First Lien

 

Events Subsequent to September 30, 2023

The Company's management has evaluated subsequent events through November 7, 2023. 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 September 30, 2023:

---

Activity Type		Date		Company Name		Company Description		Investment Amount			Instrument Type
Add-On Investment		October 3, 2023		EH Real Estate Services, LLC*		Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyers and sellers		$	2,281,116		Revolver Commitment(a)
Add-On Investment		October 11, 2023		Impact Home Services LLC*		Residential, garage door, electrical, and plumbing services provider		$	539,718		Senior Secured – First Lien
									13,398		Equity
Add-On Investment		October 16, 2023		Equine Network, LLC*		Provider of content, information, tech-enabled services, and hosts competitions for the U.S. equine industry		$	955,516		Senior Secured – First Lien
Add-On Investment		October 19, 2023		ArborWorks Acquisition LLC*		A professional tree care firm		$	230,769		Senior Secured – First Lien
Add-On Investment		October 31, 2023		2X LLC*		Provider of outsourced digital B2B marketing-as-a-service		$	1,448,388		Senior Secured – First Lien

*Existing portfolio company

(a) The Company has full discretion to fund this revolver commitment

 

The Company realized the following portfolio company subsequent to September 30, 2023:

---

Activity Type

Date

Company Name

Company Description

Proceeds Received

Realized Loss

Instrument Type

Full Realization

October 24, 2023

Interstate Waste Services, Inc.*

Provider of non-hazardous waste management, collection, and recycling services

$

389,496

$

(556,629)

Equity

*Existing portfolio company

 

Credit Facility

The outstanding balance under the Credit Facility as of November 7, 2023 was $163.0 million.

Distributions Declared

On October 5, 2023, our Board of Directors declared a regular monthly distribution for each of October, November, and December 2023, as follows:

		Ex-Dividend		Record		Payment		Amount per
Declared		Date		Date		Date		Share
10/5/2023		10/30/2023		10/31/2023		11/15/2023		$	0.1333
10/5/2023		11/29/2023		11/30/2023		12/15/2023		$	0.1333
10/5/2023		12/15/2023		12/18/2023		12/29/2023		$	0.1333

 

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Wednesday, November 8, 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 468695. Starting approximately two hours after the conclusion of the call, a replay will be available through Wednesday, November 22, 2023 by dialing (877) 481-4010 and entering passcode 49413. 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 STATEMENT OF ASSETS AND LIABILITIES (unaudited)
		September 30, 2023
		(unaudited)			December 31, 2022
ASSETS
Non-controlled, non-affiliated investments, at fair value (amortized cost of $941,679,195 and $875,823,177, respectively)		$	886,338,148		$	844,733,638
Cash and cash equivalents			19,210,721			48,043,329
Receivable for sales and repayments of investments			594,726			718,794
Interest receivable			5,600,021			3,984,409
Other receivables			60,495			34,245
Deferred offering costs			—			1,100
Prepaid expenses			149,755			667,267
Total Assets		$	911,953,866		$	898,182,782
LIABILITIES
Notes payable		$	98,883,814		$	98,549,692
Credit Facility payable			161,192,612			197,685,281
SBA-guaranteed debentures			319,955,852			307,895,195
Dividends payable			3,215,948			—
Management fees payable			3,933,121			7,150,407
Income incentive fees payable			3,058,550			2,464,408
Capital gains incentive fees payable			—			569,528
Interest payable			1,316,334			4,640,841
Related party payable			—			1,060,321
Unearned revenue			343,210			320,675
Administrative services payable			402,627			356,919
Income tax payable			1,116,369			1,175,373
Deferred tax liability			206,361			61,936
Other accrued expenses and liabilities			203,288			475,593
Total Liabilities		$	593,828,086		$	622,406,169
Commitments and contingencies (Note 7)
Net Assets		$	318,125,780		$	275,776,613
NET ASSETS
Common stock, par value $0.001 per share (100,000,000 shares authorized; 24,125,642 and 19,666,769 issued and outstanding, respectively)		$	24,125		$	19,667
Paid-in capital			337,289,265			275,114,720
Total distributable (loss) earnings			(19,187,610)			642,226
Net Assets		$	318,125,780		$	275,776,613
Total Liabilities and Net Assets		$	911,953,866		$	898,182,782
Net Asset Value Per Share		$	13.19		$	14.02

 

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
		For the three			For the three			For the nine			For the nine
		months ended			months ended			months ended			months ended
		September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
INVESTMENT INCOME
Interest income		$	26,223,986		$	19,617,468		$	75,295,485		$	50,392,437
Other income			941,040			524,799			2,529,905			1,353,279
Total Investment Income		$	27,165,026		$	20,142,267		$	77,825,390		$	51,745,716
OPERATING EXPENSES
Management fees		$	3,933,121		$	3,827,669		$	11,533,811		$	11,025,435
Valuation fees			139,267			145,865			332,762			315,482
Administrative services expenses			470,846			447,381			1,399,188			1,388,602
Income incentive fees			2,705,200			1,635,641			7,433,039			1,635,641
Capital gains incentive fee reversal			—			(646,757)			(569,528)			(1,672,549)
Professional fees			276,592			315,809			877,276			845,275
Directors' fees			93,250			83,500			303,750			254,500
Insurance expense			123,725			127,274			366,156			377,671
Interest expense and other fees			8,049,063			6,448,280			24,037,462			16,864,255
Income tax expense			335,508			361,115			1,082,057			1,066,768
Other general and administrative expenses			217,655			207,170			727,754			766,562
Total Operating Expenses		$	16,344,227		$	12,952,947		$	47,523,727		$	32,867,642
Net Investment Income		$	10,820,799		$	7,189,320		$	30,301,663		$	18,878,074
Net realized gain on non-controlled, non-affiliated investments		$	600,403		$	1,553,450		$	324,782		$	4,658,817
Net realized loss on foreign currency translation			(22,166)			(676)			(72,782)			(8,026)
Net change in unrealized depreciation on non-controlled, non-affiliated investments			(13,793,320)			(4,798,980)			(24,338,195)			(12,810,173)
Net change in unrealized depreciation on foreign currency translation			(2,794)			(18,120)			(21,243)			(53,874)
(Provision) benefit for taxes on net unrealized (appreciation) depreciation on investments			(312)			30,535			(144,425)			(151,278)
Net (Decrease) Increase in Net Assets Resulting from Operations			(2,397,390)			3,955,529		$	6,049,800		$	10,513,540
Net Investment Income Per Share—basic and diluted		$	0.47		$	0.37		$	1.42		$	0.97
Net (Decrease) Increase in Net Assets Resulting from Operations Per Share – basic and diluted		$	(0.11)		$	0.20		$	0.28		$	0.54
Weighted Average Shares of Common Stock Outstanding—basic and diluted			22,824,221			19,545,935			21,289,880			19,535,708
Distributions Per Share—basic and diluted		$	0.41		$	0.34		$	1.22		$	0.96

 

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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, 2021		19,517,595		$	19,518		$	274,559,121		$	10,532,594		$	285,111,233
Net investment income		—			—			—			5,514,183			5,514,183
Net realized gain on non-controlled, non-affiliated investments		—			—			—			3,458,090			3,458,090
Net realized loss on foreign currency translation		—			—			—			(7,350)			(7,350)
Net change in unrealized depreciation on non-controlled, non-affiliated investments		—			—			—			(3,721,602)			(3,721,602)
Provision for taxes on unrealized appreciation on investments		—			—			—			(21,157)			(21,157)
Distributions from net investment income		—			—			—			(5,464,666)			(5,464,666)
Issuance of common stock, net of offering costs(1)		14,924			15			167,655			—			167,670
Balances at March 31, 2022		19,532,519		$	19,533		$	274,726,776		$	10,290,092		$	285,036,401
Net investment income		—			—			—			6,174,571			6,174,571
Net realized loss on non-controlled, non-affiliated investments		—			—			—			(352,723)			(352,723)
Net change in unrealized depreciation on non-controlled, non-affiliated investments		—			—			—			(4,289,591)			(4,289,591)
Net change in unrealized depreciation on foreign currency translations		—			—			—			(35,754)			(35,754)
Provision for taxes on unrealized appreciation on investments		—			—			—			(160,656)			(160,656)
Distributions from net investment income		—			—			—			(6,643,663)			(6,643,663)
Issuance of common stock, net of offering costs(1)		13,416			13			137,520			—			137,533
Balances at June 30, 2022		19,545,935		$	19,546		$	274,864,296		$	4,982,276		$	279,866,118
Net investment income		—			—			—			7,189,320			7,189,320
Net realized gain on non-controlled, non-affiliated investments		—			—			—			1,553,450			1,553,450
Net realized loss on foreign currency translation		—			—			—			(676)			(676)
Net change in unrealized depreciation on non-controlled, non-affiliated investments		—			—			—			(4,798,980)			(4,798,980)
Net change in unrealized depreciation on foreign currency translations		—			—			—			(18,120)			(18,120)
Benefit for taxes on unrealized depreciation on investments		—			—			—			30,535			30,535
Distributions from net investment income		—			—			—			(6,643,663)			(6,643,663)
Balances at September 30, 2022		19,545,935		$	19,546		$	274,864,296		$	2,294,142		$	277,177,984
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 non-controlled, non-affiliated investments		—			—			—			34,967			34,967
Net realized loss on foreign currency translation		—			—			—			(39,912)			(39,912)
Net change in unrealized depreciation on non-controlled, non-affiliated 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
Net investment income		—			—			—			10,820,799			10,820,799
Net realized gain on non-controlled, non-affiliated investments		—			—			—			600,403			600,403
Net realized loss on foreign currency translation		—			—			—			(22,166)			(22,166)
Net change in unrealized depreciation on non-controlled, non-affiliated investments		—			—			—			(13,793,320)			(13,793,320)
Net change in unrealized depreciation on foreign currency translations		—			—			—			(2,794)			(2,794)
Provision for taxes on unrealized appreciation on investments		—			—			—			(312)			(312)
Distributions from net investment income		—			—			—			(9,269,208)			(9,269,208)
Issuance of common stock, net of offering costs(1)		1,567,738			1,567			21,465,783			—			21,467,350
Balances at September 30, 2023		24,125,642		$	24,125		$	337,289,265		$	(19,187,610)		$	318,125,780

(1) See Note 4 to the Consolidated Financial Statements on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2023 for more information on offering costs.

 

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
		For the nine			For the nine
		months ended			months ended
		September 30, 2023			September 30, 2022
Cash flows from operating activities
Net increase in net assets resulting from operations		$	6,049,800		$	10,513,540
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchases of investments			(139,650,422)			(180,956,810)
Proceeds from sales and repayments of investments			79,053,967			74,385,466
Net change in unrealized depreciation on investments			24,338,195			12,810,173
Net change in unrealized depreciation on foreign currency translations			21,087			28,405
Increase in investments due to PIK			(2,732,530)			(1,010,061)
Amortization of premium and accretion of discount, net			(2,078,183)			(1,839,720)
Deferred tax provision			144,425			151,278
Amortization of loan structure fees			436,257			420,356
Amortization of deferred financing costs			334,122			334,122
Amortization of loan fees on SBA-guaranteed debentures			938,247			905,294
Net realized gain on investments			(324,782)			(4,658,817)
Changes in other assets and liabilities
Increase in interest receivable			(1,615,612)			(907,787)
Increase in other receivables			(26,250)			(5,743)
Increase in related party receivables			—			(19,034)
Decrease in prepaid expenses			517,512			293,135
(Decrease) increase in management fees payable			(3,217,286)			3,578,496
Increase in income incentive fees payable			594,142			160,521
Decrease in capital gains incentive fees payable			(569,528)			(1,672,549)
Increase (decrease) in administrative services payable			45,708			(9,481)
Decrease in interest payable			(3,324,507)			(2,808,314)
Decrease in related party payable			(1,060,321)			—
Increase (decrease) in unearned revenue			22,535			(185,171)
Decrease in income tax payable			(59,004)			(2,183,176)
(Decrease) increase in other accrued expenses and liabilities			(272,305)			59,623
Net Cash Used in Operating Activities		$	(42,434,733)		$	(92,616,254)
Cash flows from Financing Activities
Proceeds from the issuance of common stock		$	63,348,436		$	420,004
Sales load for common stock issued			(943,248)			(5,957)
Offering costs paid for common stock issued			(225,085)			(335,953)
Stockholder distributions paid			(22,663,688)			(17,708,494)
Proceeds from SBA-guaranteed debentures			11,400,000			56,000,000
Financing costs paid on SBA-guaranteed debentures			(277,590)			(1,363,600)
Financing costs paid on Credit facility			(35,000)			(193,659)
Borrowings under Credit Facility			79,700,000			121,608,702
Repayments of Credit Facility			(116,701,700)			(97,559,902)
Net Cash Provided by Financing Activities		$	13,602,125		$	60,861,141
Net Decrease in Cash and Cash Equivalents		$	(28,832,608)		$	(31,755,113)
Cash and Cash Equivalents Balance at Beginning of Period		$	48,043,329		$	44,174,856
Cash and Cash Equivalents Balance at End of Period		$	19,210,721		$	12,419,743
Supplemental and Non-Cash Activities
Cash paid for interest expense		$	25,653,343		$	18,012,797
Income and excise tax paid			1,141,061			3,249,944
Increase in dividends payable			3,215,948			1,043,498
(Decrease) increase in deferred offering costs			(1,100)			227,109

 

Reconciliation of Core Net Investment Income (1) (Unaudited)
		Three Months Ended		Three Months Ended
		September 30, 2023		September 30, 2022
Net investment income		$10,820,799		$7,189,320
Capital gains incentive reversal		-		(646,757)
Income tax expense		335,508		361,115
Core net investment income		$11,156,307		$6,903,678
Per share amounts:
Net investment income per share		$0.47		$0.37
Core net investment income per share		$0.49		$0.35

                                                               

Reconciliation of Realized Net Investment Income (2) (Unaudited)
		Three Months Ended		Three Months Ended
		September 30, 2023		September 30, 2022
Net investment income		$10,820,799		$7,189,320
Net realized gain on investments		600,403		1,553,450
Net realized loss on foreign currency translation		(22,166)		(676)
Total Realized Net Investment Income		$11,399,036		$8,742,094
Per share amounts:
Net investment income per share		$0.47		$0.37
Realized net investment income per share		$0.50		$0.45

 

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SOURCE Stellus Capital Investment Corporation

FAQ

What were the U.S. GAAP net investment income and core net investment income for Q3 2023?

The U.S. GAAP net investment income was $10.82 million, or $0.47 per share, and the core net investment income was $11.16 million, or $0.49 per share.

What was the yield of the loan portfolio as of September 30, 2023?

The loan portfolio was yielding 11.5% as of September 30, 2023.

What was the net change in unrealized depreciation for the three months ended September 30, 2023?

The net change in unrealized depreciation for the three months ended September 30, 2023, was ($13.8) million.

What was the total investment income for the three months ended September 30, 2023?

The total investment income for the three months ended September 30, 2023 was $27.2 million.

What was the outstanding balance under the Credit Facility as of November 7, 2023?

The outstanding balance under the Credit Facility as of November 7, 2023 was $163.0 million.