Stellus Capital Investment Corporation Reports Results for its Third Fiscal Quarter Ended September 30, 2022

Rhea-AI Summary

Stellus Capital Investment Corporation (NYSE: SCM) reported strong financial results for Q3 2022, with net investment income of $7.19 million ($0.37 per share) and core net investment income of $6.90 million ($0.35 per share). The company's portfolio grew to $872 million, benefiting from increased loan yields due to rising interest rates. The Board declared a total dividend of $0.34 per share for Q4, including an additional $0.06. Despite net unrealized depreciation of $4.80 million, the company maintained asset quality and a stable portfolio performance.

Positive

• Net investment income increased to $7.19 million ($0.37 per share) from $4.1 million in the previous year.
• Core net investment income rose to $6.90 million ($0.35 per share) from $6.0 million in Q3 2021.
• Portfolio value increased to $872 million at fair value.
• Dividend declared for Q4 is $0.34 per share, including an additional $0.06.

Negative

• Net unrealized depreciation on investments totaled $4.80 million.
• Net asset value per share decreased to $14.18 from $14.61 year-over-year.

HOUSTON, Nov. 3, 2022 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus" or the "Company") today announced financial results for its third fiscal quarter ended September 30, 2022.

Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report strong results for the third quarter, in which we more than covered our regular dividend with GAAP and Core net investment income, grew our portfolio to $872 million at fair value and maintained asset quality. Our portfolio company performance remains stable. We are benefitting from the rising interest rate environment as our loan portfolio's yield has now risen 140 basis points from the end of the second quarter. In October, in addition to our regular dividend of $0.28 per quarter in the aggregate, our Board of Directors declared an additional dividend of $0.06 in the aggregate for the fourth quarter. These dividends total $0.34 per share in the aggregate, payable in monthly increments, for the fourth quarter."

 

FINANCIAL HIGHLIGHTS
($ in millions, except data relating to per share amounts and shares outstanding)
		Three Months Ended			Nine Months Ended
		September 30, 2022			September 30, 2022
		Amount	Per Share		Amount	Per Share
Net investment income		$7.19	$0.37		$18.88	$0.97
Core net investment income (1)		6.90	0.35		18.27	0.94
Net realized gains on investments		1.55	0.08		4.66	0.24
Net realized loss on foreign currency		-	-		(0.01)	-
Total realized income (2)		8.74	0.45		23.53	1.20
Distributions		(6.64)	(0.34)		(18.75)	(0.96)
Net unrealized depreciation on investments		(4.80)	(0.25)		(12.81)	(0.66)
Net unrealized depreciation on foreign currency translation		(0.02)	-		(0.05)	-
Provision for taxes on unrealized appreciation on investments in taxable subsidiaries		0.03	-		(0.15)	(0.01)
Net increase in net assets resulting from operations		$3.96	0.20		$10.51	0.54
Weighted average shares outstanding			19,545,935			19,535,708

		(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. 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,		December 31,
			2022		2021
Investments at fair value			$871.70		$772.9
Total assets			$889.10		$821.3
Net assets			$277.20		$285.1
Shares outstanding			19,545,935		19,517,595
Net asset value per share			$14.18		$14.61
			Three Months Ended		Nine Months Ended
			September 30,		September 30,
			2022		2022
New investments			$56.9		$181.0
Repayments of investments			(34.2)		(74.4)
Net activity			$22.7		$106.6
			As of		As of
			September 30,		December 31,
			2022		2021
Number of portfolio company investments			89		73
Number of debt investments			74		58
Weight average yield of debt and other income producing investments (3)
Cash			9.2 %		7.4 %
Payment-in-kind ("PIK")			0.1 %		0.2 %
Fee amortization			0.5 %		0.4 %
Total			9.8 %		8.0 %
Weighted average yield on total investments (4)
Cash			8.7 %		6.9 %
Payment-in-kind ("PIK")			0.1 %		0.2 %
Fee amortization			0.4 %		0.4 %
Total			9.2 %		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 three months ended September 30, 2022 and 2021 totaled $20.1 million and $17.0 million, respectively, most of which was interest income from portfolio investments.

Operating expenses for the three months ended September 30, 2022 and 2021, totaled $13.0 million and $13.0 million, respectively. For the same respective periods, base management fees totaled $3.8 million and $3.5 million, income incentive fees totaled $1.6 and $1.5 million, capital gains incentive (reversal) fees totaled ($0.6) million and $1.7 million, fees and expenses related to our borrowings totaled $6.4 million and $4.9 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.4 million for both periods, income tax totaled $0.4 million and $0.2 million and other expenses totaled $1.0 million and $0.8 million.

Net investment income was $7.2 million and $4.1 million, or $0.37 and $0.21 per common share based on weighted average common shares outstanding of 19,545,935 and 19,486,003 for the three months ended September 30, 2022 and 2021, respectively.

The capital gains incentive fee had a reversal of ($0.6) million for the three months ended September 30, 2022 due to the increase in unrealized losses, net  of realized gains over the quarter. Such fees, as calculated and accrued, would not necessarily be payable under the investment advisory agreement, and may never be paid based upon the computation of incentive fees in subsequent periods. The income tax expense accrual of $0.4 million for the three months ended September 30, 2022 was accrued based on estimates of undistributed taxable income, which was generated largely from net income. Core net investment income, which is a non-U.S. GAAP measure that excludes the capital gains incentive fee and income tax expense accruals, for the three months ended September 30, 2022 was $6.9 million, or $0.35 per share; and for the three months ended September 30, 2021 was $6.0 million, or $0.31 per share.

For the three months ended September 30, 2022 and 2021, the Company's investment portfolio had a net change in unrealized (depreciation) appreciation of ($4.8) million and $2.1 million, respectively and the Company had realized gains of $1.6 million and $7.9 million, respectively.

Net increase in net assets resulting from operations totaled $4.0 million and $12.8 million, or $0.20 and $0.66 per common share, based on weighted average common shares outstanding of 19,545,935 and 19,486,003 for the three months ended September 30, 2022 and 2021.

Liquidity and Capital Resources

As of September 30, 2022, our amended and restated senior secured revolving credit agreement with certain bank lenders and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $265.0 million on a committed basis. As of September 30, 2022 and 2021, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size to $280.0 million. As of September 30, 2022 and December 31, 2021, we had $199.0 million and $177.3 million, respectively, in outstanding borrowings under the Credit Facility, respectively.

Distributions

During the three months ended September 30, 2022 and 2021, we declared aggregate distributions of $0.34 per share and $0.58 per share ($6.6 million and $11.3 million, respectively) for each quarter. Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year. None of these dividends are expected to include a return of capital.

Recent Portfolio Activity

New and Add-on Investments

Activity Type	Date	Company Name	Company Description	Investment Amount	Instrument Type
New Investment	July 1, 2022	Heat Makes Sense Shared Services, LLC	Branded haircare platform	$100,000	First lien term loan
				$100,000	Revolver commitment
				$100,000	Equity investment
New Investment	July 5, 2022	Baker Manufacturing Company, LLC	Manufacturer of water well equipment, specialized	$13,863,087	Last out term loan
			filtration pumps, and custom castings	$743,770	Equity investment
Add-On Investment	July 15, 2022	Exacta Land Surveyors, LLC	Existing portfolio company	$1,000,000	First lien term loan
				$53,107	Equity investment
Add-On Investment	July 20, 2022	SIB Holdings, LLC	Existing portfolio company	$2,321,678	First lien term loan
Add-On Investment	July 28, 2022	USASF Blocker IV LLC	Existing portfolio company	$100,000	Equity investment
New Investment	July 29, 2022	Curion Holdings, LLC	Provider of product testing and consumer insights	$13,060,001	First lien term loan
				$100,000	Revolver commitment
				$100,000	Delayed draw term loan commitment
				$739,999	Equity investment
Add-On Investment	August 2, 2022	Inoapps Holdings, LLC	Existing portfolio company	$43,956	Equity investment
Add-On Investment	August 5, 2022	Credit Connection, LLC	Existing portfolio company	$54,384	Equity investment
Add-On Investment	August 8, 2022	International Designs Holdings LLC	Existing portfolio company	$100,000	Equity investment
New Investment	August 11, 2022	Archer Systems, LLC	Provider of mass tort settlement administrative	$1,000,000	First lien term loan
			solutions	$100,000	Revolver commitment
				$100,000	Equity investment
New Investment	August 26, 2022	Heartland Business Systems, LLC	End-to-end IT solutions provider	$10,000,000	First lien term loan
				$100,000	Delayed draw term loan commitment
				$286,065	Equity investment
New Investment	August 31, 2022	Pearl Media Holdings, LLC	Provider of street-level, out-of-home advertising	$10,000,000	First lien term loan
				$100,000	Revolver commitment
				$100,000	Delayed draw term loan commitment
Add-On Investment	September 1, 2022	Sapphire Aggregator S.a r.l.	Existing portfolio company	$100,000	Equity investment
New Investment	September 2, 2022	MacKenzie-Childs Acquisition, Inc.	Lifestyle home décor brand	$100,000	First lien term loan
				$100,000	Revolver commitment
				$100,000	Equity investment
Add-On Investment	September 28, 2022	HV GS Acquisition, LP	Existing portfolio company	$89,439	Equity investment
Add-On Investment	September 30, 2022	Tower Arch Infolinks Media, LP	Existing portfolio company	$1,093	Equity investment

 

Full Repayments and Realizations

Activity Type	Date	Company Name	Company Description	Proceeds Received	Realized Gain	Instrument Type
Full Repayment	July 15, 2022	ASC Communications, LLC	Existing portfolio company	$8,250,000		First lien term loan
Full Realization				$1,750,487	$1,750,487	Equity investment
Full Repayment	July 15, 2022	International Designs Group LLC	Existing portfolio company	$99,750		First lien term loan
				$20,000		Revolver
Full Repayment	August 18, 2022	TAC LifePort Purchaser, LLC	Existing portfolio company	$9,543,742		First lien term loan
Full Realization	September 16, 2022	PCS Software Holdings, LLC	Existing portfolio company	$437,920	$49,608	Equity investment

 

Events Subsequent to September 30, 2022

Activity Type	Date	Company Name	Company Description	Investment Amount	Instrument Type
New Investment	October 12, 2022	NINJIO, LLC	Cybersecurity awareness and training platform	$5,000,000	First lien term loan
				$100,000	Revolver commitment
				$100,000	Delayed draw term loan commitment
				$313,253	Equity investment

Activity Type	Date	Company Name	Company Description	Proceeds Received	Realized Gain	Instrument Type
Full Realization	October 17, 2022	EC Defense Holdings, LLC	Existing portfolio company	$1,159,638	$950,000	Equity investment

 

Credit Facility

The outstanding balance under the credit facility as of November 3, 2022 was $206.8 million.

SBA-guaranteed Debentures

On August 12, 2022, the Company contributed $9.5 million in capital to its SBIC II subsidiary. To date, the Company has contributed all of its $87.5 million regulatory capital commitment. The total balance of SBA-guaranteed debentures outstanding as of November 3, 2022 was $306.0 million.

Distributions Declared

On October 4, 2022, our board of directors declared a regular monthly distribution for each of October, November, and December 2022 as follows:

		Ex-Dividend		Record		Payment		Amount per
Declared		Date		Date		Date		Share
10/04/2022		10/28/2022		10/31/2022		11/15/2022		$	0.0933
10/04/2022		11/29/2022		11/30/2022		12/15/2022		$	0.0933
10/04/2022		12/15/2022		12/16/2022		12/29/2022		$	0.0933

 

On October 4, 2022, our board of directors declared an additional monthly distribution for each of October, November, and December 2022 as follows:

		Ex-Dividend		Record		Payment		Amount per
Declared		Date		Date		Date		Share
10/04/2022		10/28/2022		10/31/2022		11/15/2022		$	0.02
10/04/2022		11/29/2022		11/30/2022		12/15/2022		$	0.02
10/04/2022		12/15/2022		12/16/2022		12/29/2022		$	0.02

 

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Friday, November 4, 2022 at 10:00 AM, Central Daylight Time.  The conference call will be led by Robert T. Ladd, chief executive officer, and W. Todd Huskinson, chief financial officer, chief compliance officer, treasurer, and secretary.

For those wishing to participate by telephone, please dial (888) 506-0062.  Use passcode 225613.  Starting approximately two hours after the conclusion of the call, a replay will be available through Saturday, November 12, 2022 by dialing (877) 481-4010 and entering passcode 46954. The replay will also be available on the company's website.

For those wishing to participate via Live Webcast, connect via the Public Company (SCIC) section of our website at www.stelluscapital.com, under the Events tab. A replay of the conference will be available on our website for approximately 90 days.

About Stellus Capital Investment Corporation

The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA (earnings before interest, taxes, depreciation and amortization)) through first lien (including unitranche) loans, second lien loans and unsecured debt financing, with corresponding equity co-investments. The Company's investment activities are managed by its investment adviser, Stellus Capital Management. To learn more about Stellus Capital Investment Corporation, visit www.stelluscapital.com under the "Public (SCIC)" tab.

Forward-Looking Statements

Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release, including statements about COVID-19 and its impacts, may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission including the final prospectus that will be filed with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

Contacts

Stellus Capital Investment Corporation
W. Todd Huskinson, Chief Financial Officer
(713) 292-5414
thuskinson@stelluscapital.com

 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
		September 30,
		2022			December 31,
		(unaudited)			2021
ASSETS
Non-controlled, non-affiliated investments, at fair value (amortized cost of $899,059,872 and $785,005,957, respectively)		$	871,733,280		$	772,873,326
Cash and cash equivalents			12,419,743			44,174,856
Receivable for sales and repayments of investments			562,133			536,105
Interest receivable			3,852,386			2,944,599
Other receivables			60,495			54,752
Deferred tax asset			—			151,278
Related party receivable			19,034			—
Deferred offering costs			241,997			14,888
Prepaid expenses			219,079			512,214
Total Assets		$	889,108,147		$	821,262,018
LIABILITIES
Notes payable		$	98,437,095		$	98,102,973
Credit Facility payable			197,371,231			175,451,116
SBA-guaranteed debentures			300,157,597			244,615,903
Dividends payable			2,214,557			1,171,059
Management fees payable			7,032,721			3,454,225
Income incentive fees payable			1,909,651			1,749,130
Capital gains incentive fees payable			1,715,602			3,388,151
Interest payable			885,348			3,693,662
Unearned revenue			344,555			529,726
Administrative services payable			376,887			386,368
Income tax payable			1,086,338			3,269,514
Other accrued expenses and liabilities			398,581			338,958
Total Liabilities		$	611,930,163		$	536,150,785
Commitments and contingencies (Note 7)
Net Assets		$	277,177,984		$	285,111,233
NET ASSETS
Common stock, par value $0.001 per share (100,000,000 shares  authorized; 19,545,935 and 19,517,595 issued and outstanding, respectively)		$	19,546		$	19,518
Paid-in capital			274,864,296			274,559,121
Accumulated undistributed surplus			2,294,142			10,532,594
Net Assets		$	277,177,984		$	285,111,233
Total Liabilities and Net Assets		$	889,108,147		$	821,262,018
Net Asset Value Per Share		$	14.18		$	14.61

 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
		For the three months ended			For the three months ended			For the nine months ended			For the nine months ended
		September 30,			September 30,			September 30,			September 30,
		2022			2021			2022			2021
INVESTMENT INCOME
Interest income		$	19,617,468		$	16,460,579		$	50,392,437		$	44,819,754
Other income			524,799			568,764			1,353,279			1,301,827
Total Investment Income		$	20,142,267		$	17,029,343		$	51,745,716		$	46,121,581
OPERATING EXPENSES
Management fees		$	3,827,669		$	3,473,041		$	11,025,435		$	9,715,381
Valuation fees			145,865			141,012			315,482			289,447
Administrative services expenses			447,381			437,804			1,388,602			1,354,295
Income incentive fees			1,635,641			1,451,752			1,635,641			1,507,651
Capital gains incentive (reversal) fees			(646,757)			1,742,904			(1,672,549)			1,840,572
Professional fees			315,809			267,332			845,275			772,509
Directors' fees			83,500			74,500			254,500			240,500
Insurance expense			127,274			120,119			377,671			356,439
Interest expense and other fees			6,448,280			4,854,388			16,864,255			13,869,834
Income tax expense			361,115			192,612			1,066,768			718,869
Other general and administrative expenses			207,170			209,779			766,562			796,338
Total Operating Expenses		$	12,952,947		$	12,965,243		$	32,867,642		$	31,461,835
Net Investment Income		$	7,189,320		$	4,064,100		$	18,878,074		$	14,659,746
Net realized gain on non-controlled, non-affiliated investments		$	1,553,450		$	7,921,322		$	4,658,817		$	6,601,885
Net realized loss on foreign currency translation			(676)			—			(8,026)			—
Loss on debt extinguishment			—			—			—			(539,250)
Net change in unrealized (depreciation) appreciation on non-controlled, non-affiliated investments			(4,798,980)			2,080,603			(12,810,173)			3,868,463
Net change in unrealized depreciation on foreign currency translations			(18,120)			—			(53,874)			—
Benefit (provision) for taxes on net unrealized depreciation (appreciation) on investments			30,535			(606,377)			(151,278)			(586,460)
Provision for taxes on realized gain on investments			—			(681,027)			—			(681,027)
Net Increase in Net Assets Resulting from Operations			3,955,529			12,778,621			10,513,540			23,323,357
Net Investment Income Per Share—basic and diluted		$	0.37		$	0.21		$	0.97		$	0.75
Net Increase in Net Assets Resulting from Operations Per Share—basic and diluted		$	0.20		$	0.66		$	0.54		$	1.20
Weighted Average Shares of Common Stock Outstanding —basic and diluted			19,545,935			19,486,003			19,535,708			19,486,003
Distributions Per Share—basic and diluted		$	0.34		$	0.58		$	0.96		$	1.08

 

STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
		Common Stock								Accumulated
		Number		Par			Paid-in			undistributed
		of shares		value			capital			surplus (deficit)			Net Assets
Balances at December 31, 2020		19,486,003		$	19,486		$	276,026,667		$	(2,685,504)		$	273,360,649
Net investment income		—			—			—			5,060,631			5,060,631
Net realized gain on non-controlled, non-affiliated investments		—			—			—			462,228			462,228
Loss on debt extinguishment											(539,250)			(539,250)
Net change in unrealized appreciation on non-controlled, non-affiliated investments		—			—			—			121,983			121,983
Provision for taxes on unrealized appreciation on investments		—			—			—			(167,804)			(167,804)
Distributions from net investment income		—			—			—			(4,869,552)			(4,869,552)
Balances at March 31, 2021		19,486,003		$	19,486		$	276,026,667		$	(2,617,268)		$	273,428,885
Net investment income		—			—			—			5,535,015			5,535,015
Net realized loss on non-controlled, non-affiliated investments		—			—			—			(1,781,665)			(1,781,665)
Net change in unrealized appreciation on non-controlled, non-affiliated investments		—			—			—			1,665,877			1,665,877
Benefit for taxes on unrealized depreciation on investments		—			—			—			187,721			187,721
Distributions from net investment income		—			—			—			(4,869,552)			(4,869,552)
Balances at June 30, 2021		19,486,003		$	19,486		$	276,026,667		$	(1,879,872)		$	274,166,281
Net investment income		—			—			—			4,064,100			4,064,100
Net realized loss on non-controlled, non-affiliated investments		—			—			—			7,921,322			7,921,322
Net change in unrealized appreciation on non-controlled, non-affiliated investments		—			—			—			2,080,603			2,080,603
Provision for taxes on unrealized appreciation on investments		—			—			—			(606,377)			(606,377)
Provision for taxes on realized gain on investments		—			—			—			(681,027)			(681,027)
Distributions from net investment income		—			—			—			(11,299,933)			(11,299,933)
Balances at September 30, 2021		19,486,003		$	19,486		$	276,026,667		$	(401,184)		$	275,644,969
Balances at December 31, 2021		19,517,595		$	19,518		$	274,559,121		$	10,532,594		$	285,111,233
Net investment income		—			—			—			5,514,183			5,514,183
Net realized gain on non-controlled, non-affiliated investments		—			—			—			3,458,090			3,458,090
Net realized loss on foreign currency translation		—			—			—			(7,350)			(7,350)
Net change in unrealized depreciation on non-controlled, non-affiliated investments		—			—			—			(3,721,602)			(3,721,602)
Provision for taxes on unrealized appreciation on investments		—			—			—			(21,157)			(21,157)
Distributions from net investment income		—			—			—			(5,464,666)			(5,464,666)
Issuance of common stock, net of offering costs		14,924			15			167,655			—			167,670
Balances at March 31, 2022		19,532,519		$	19,533		$	274,726,776		$	10,290,092		$	285,036,401
Net investment income		—			—			—			6,174,571			6,174,571
Net realized loss on non-controlled, non-affiliated investments		—			—			—			(352,723)			(352,723)
Net change in unrealized depreciation on non-controlled, non-affiliated investments		—			—			—			(4,289,591)			(4,289,591)
Net change in unrealized depreciation on foreign currency translations		—			—			—			(35,754)			(35,754)
Provision for taxes on unrealized appreciation on investments		—			—			—			(160,656)			(160,656)
Distributions from net investment income		—			—			—			(6,643,663)			(6,643,663)
Issuance of common stock, net of offering costs		13,416			13			137,520			—			137,533
Balances at June 30, 2022		19,545,935		$	19,546		$	274,864,296		$	4,982,276		$	279,866,118
Net investment income		—			—			—			7,189,320			7,189,320
Net realized gain on non-controlled, non-affiliated investments		—			—			—			1,553,450			1,553,450
Net realized loss on foreign currency translation		—			—			—			(676)			(676)
Net change in unrealized depreciation on non-controlled, non-affiliated investments		—			—			—			(4,798,980)			(4,798,980)
Net change in unrealized depreciation on foreign currency translations		—			—			—			(18,120)			(18,120)
Benefit for taxes on unrealized depreciation on investments		—			—			—			30,535			30,535
Distributions from net investment income		—			—			—			(6,643,663)			(6,643,663)
Balances at September 30, 2022		19,545,935		$	19,546		$	274,864,296		$	2,294,142		$	277,177,984

 

STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
		For the			For the
		nine months ended			nine months ended
		September 30,			September 30,
		2022			2021
Cash flows from operating activities
Net increase in net assets resulting from operations		$	10,513,540		$	23,323,357
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchases of investments			(180,956,810)			(243,298,147)
Proceeds from sales and repayments of investments			74,385,466			123,617,259
Net change in unrealized depreciation (appreciation) on investments			12,810,173			(3,868,463)
Net change in unrealized depreciation on foreign currency translations			28,405			—
Increase in investments due to PIK			(1,010,061)			(607,393)
Amortization of premium and accretion of discount, net			(1,839,720)			(1,747,423)
Deferred tax provision			151,278			586,460
Amortization of loan structure fees			420,356			390,298
Amortization of deferred financing costs			334,122			346,123
Amortization of loan fees on SBA-guaranteed debentures			905,294			801,259
Net realized gain on investments			(4,658,817)			(6,595,217)
Loss on debt extinguishment			—			539,250
Changes in other assets and liabilities
Increase in interest receivable			(907,787)			(614,133)
Increase in other receivables			(5,743)			(110,000)
Increase in related party receivable			(19,034)			—
Increase in prepaid expenses			293,135			300,867
Increase in management fees payable			3,578,496			2,426,198
Increase in income incentive fees payable			160,521			948,489
(Decrease) increase in capital gains incentive fees payable			(1,672,549)			1,840,572
(Decrease) increase in administrative services payable			(9,481)			371,745
Decrease in interest payable			(2,808,314)			(1,406,381)
Decrease (increase) in unearned revenue			(185,171)			7,847
(Decrease) increase in income tax payable			(2,183,176)			511,851
Increase in other accrued expenses and liabilities			59,623			140,302
Net Cash Used In Operating Activities		$	(92,616,254)		$	(102,095,280)
Cash flows from Financing Activities
Proceeds from the issuance of common stock		$	420,004		$	—
Sales load for commons stock issued			(5,957)			—
Offering costs paid for common stock issued			(335,953)			—
Stockholder distributions paid			(17,708,494)			(13,636,301)
Repayment of Notes			—			(48,875,000)
Proceeds from issuance of Notes			—			100,000,000
Financing costs paid on Notes			—			(2,237,835)
Proceeds from SBA-guaranteed debentures			56,000,000			73,500,000
Financing costs paid on SBA-guaranteed debentures			(1,363,600)			(3,139,725)
Financing costs paid on Credit facility			(193,659)			(39,843)
Borrowings under Credit Facility			121,608,702			191,200,000
Repayments of Credit Facility			(97,559,902)			(175,400,000)
Net Cash Provided by Financing Activities		$	60,861,141		$	121,371,296
Net (Decrease) Increase in Cash and Cash Equivalents		$	(31,755,113)		$	19,276,016
Cash and Cash Equivalents balance at beginning of period			44,174,856			18,477,602
Cash and Cash Equivalents Balance at End of Period		$	12,419,743		$	37,753,618
Supplemental and Non-Cash Activities
Cash paid for interest expense		$	18,012,797		$	13,733,216
Income and excise tax paid			3,249,944			870,000
Increase in dividends payable			1,043,498			7,402,736
Increase (decrease) in deferred offering costs			227,109			(90,000)
Gain on conversion of equity investment			—			6,668

 

Reconciliation of Core Net Investment Income (1)
(Unaudited)
			Quarter		Quarter
			ended		ended
			September 30, 2022		September 30, 2021
Net investment income			$7,189,320		$4,064,100
Capital gains incentive fee			(646,757)		1,742,904
Income tax expense			361,115		192,612
Core net investment income			$6,903,678		$5,999,616
Per share amounts:
Net investment income per share			$0.37		$0.21
Core net investment income per share			$0.35		$0.31

 

Reconciliation of Realized Net Investment Income (2)
(Unaudited)
			Quarter		Quarter
			ended		ended
			September 30, 2022		September 30, 2021
Net investment income			$7,189,320		$4,064,100
Net realized gain on investments			1,553,450		7,921,322
Net realized gain on foreign currency translation			(676)		—
Provision for taxes on realized gain on investments			—		(681,027)
Total Realized Net Investment Income			$8,742,094		$11,304,395
Per share amounts:
Net investment income per share			$0.37		$0.21
Realized net investment income per share			$0.45		$0.58

 

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SOURCE Stellus Capital Investment Corporation

FAQ

What were Stellus Capital's earnings for Q3 2022?

Stellus Capital reported a net investment income of $7.19 million, or $0.37 per share, for Q3 2022.

How much did Stellus Capital declare in dividends for Q4 2022?

The company declared a total dividend of $0.34 per share for Q4 2022.

What is the portfolio value of Stellus Capital as of September 30, 2022?

As of September 30, 2022, Stellus Capital's portfolio value was $872 million.

What was the net unrealized depreciation for Stellus Capital in Q3 2022?

The net unrealized depreciation on investments for Q3 2022 was $4.80 million.

How has the interest rate environment impacted Stellus Capital's portfolio?

Stellus Capital benefitted from rising interest rates, which increased the yield on its loan portfolio by 140 basis points from the prior quarter.