Stellus Capital Investment Corporation Reports Results for its Third Fiscal Quarter Ended September 30, 2022
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 |
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 |
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
[email protected]
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 |
$ |
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 |
$ |
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 |
(4,798,980) |
2,080,603 |
(12,810,173) |
3,868,463 |
|||||||||
Net change in unrealized depreciation on foreign currency |
(18,120) |
— |
(53,874) |
— |
|||||||||
Benefit (provision) for taxes on net unrealized depreciation |
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 |
$ |
0.20 |
$ |
0.66 |
$ |
0.54 |
$ |
1.20 |
|||||
Weighted Average Shares of Common Stock Outstanding |
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 |
|||
SOURCE Stellus Capital Investment Corporation
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