HOUSTON , Oct. 30, 2020 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE: SCM) ("Stellus" or "the Company") today announced financial results for its third fiscal quarter ended September 30, 2020 .
"I am pleased to report that our asset quality remains stable and that our third quarter net investment income of $0.27 per share exceeded the regular third quarter distribution of $0.25 per share. In addition, during the quarter, we extended the commitment termination date of our $230 million bank facility to September 18, 2024 with a final maturity of September 18, 2025 , and amended certain covenants and conditions of the facility, including a reduction in the required asset coverage," reported Robert T. Ladd , Chief Executive Officer of Stellus Capital Investment Corporation.
Mr. Ladd further stated, "With regard to distributions, we declared distributions in an aggregate of $0.56 per share during the quarter in order to complete the distribution of spillover income from 2019 in a timely manner, consistent with maintaining our qualification for taxation as a Regulated Investment Company and to eliminate our liability for corporate-level U.S. federal income tax. The $0.56 is comprised of $0.25 per share for each of the third and fourth quarters and a special distribution of $0.06 per share. As a result, our net asset value declined to $13.17 during the quarter. Had we not been required to distribute the spillover income from prior years, net asset value would have increased to $13.48 per share. Further, these distributions, including the $0.31 payable December 29th , to shareholders of record on December 15th , constitute all remaining distributions for the year, so our fourth quarter net asset value will not be further reduced by distributions paid in the fourth quarter."
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FINANCIAL HIGHLIGHTS
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($ in millions, except data relating to per share amounts and shares outstanding)
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Q3-20
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YTD-20
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Amount
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Per Share
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Amount
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Per Share
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Net investment income
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$5.33
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$0.27
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$17.00
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$0.87
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Core net investment income (1)
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5.70
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0.29
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16.98
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0.87
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Net realized gain (loss) on investments
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0.15
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0.01
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(2.44)
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(0.13)
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Total realized income (2)
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5.48
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0.28
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14.56
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0.74
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Distributions
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Q1 Distributions
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-
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-
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(6.62)
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(0.34)
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Q2 Distributions
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-
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-
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(4.87)
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(0.25)
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Q3 Distributions
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(4.87)
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(0.25)
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(4.87)
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(0.25)
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Q4 Distributions
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(4.87)
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(0.25)
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(4.87)
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(0.25)
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Special Distribution
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(1.17)
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(0.06)
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(1.17)
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(0.06)
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Total Distributions
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(10.91)
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(0.56)
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(22.40)
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(1.15)
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Net unrealized appreciation
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(depreciation) on investments
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2.12
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0.11
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(11.05)
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(0.57)
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Provision for taxes on unrealized gains
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on investments in taxable subsidiaries
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(0.09)
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(0.00)
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(0.12)
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(0.00)
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Net increase in net assets resulting
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from operations
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$7.51
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0.39
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3.38
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0.17
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Weighted average shares outstanding
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19,486,030
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19,466,647
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(1)
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Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The Company believes that presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S GAAP. A reconciliation of net investment income in accordance with U.S GAAP to core net investment income is presented in the table below the financial statements.
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(2)
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Total realized income is the sum of net investment income and net realized gains on investments; both U.S GAAP measures.
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PORTFOLIO ACTIVITY
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($ in millions, except data relating to per share amounts and number of portfolio companies)
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As of
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As of
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September 30,
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December 31,
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2020
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2019
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Investments at fair value
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$622.4
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$628.9
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Total assets
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$663.3
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$648.5
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Net assets
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$256.5
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$270.6
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Shares outstanding
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19,486,003
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19,131,746
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Net asset value per share
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$13.17
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$14.14
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Quarter Ended
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Year Ended
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September 30,
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September 30,
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2020
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2020
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New investments
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$18.9
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$87.2
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Repayments of investments
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(40.1)
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(82.4)
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Net activity
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$(21.2)
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$4.8
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As of
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As of
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September 30,
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December 31,
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2020
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2019
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Number of portfolio company investments
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66
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63
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Number of portfolio company debt investments
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50
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51
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Weight average yield of debt and other income producing investments (1)
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Cash
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7.7%
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8.7%
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PIK
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0.0%
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0.0%
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Fee amortization
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0.4%
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0.5%
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Total
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8.1%
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9.2%
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Weighted average yield on total investments (2)
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Cash
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7.3%
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8.3%
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PIK
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0.0%
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0.0%
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Fee amortization
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0.4%
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0.5%
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Total
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7.7%
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8.8%
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(1)
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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 our stockholders would realize in 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.
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(2)
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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.
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Results of Operations
Investment income for the three months ended September 30, 2020 and 2019 totaled $14.0 million and $15.5 million , respectively, most of which was interest income from portfolio investments.
Operating expenses for the three months ended September 30, 2020 and 2019 totaled $8.7 million and $9.7 million , respectively. For the same respective periods, base management fees totaled $2.8 million and $2.5 million , income incentive fees totaled $0.5 million and $1.6 million , capital gains incentive fees totaled $0.0 million and $0.5 million , fees and expenses related to our borrowings totaled $3.9 million and $3.8 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.4 million and $0.4 million , income tax totaled $0.4 million and $0.3 million , and other expenses totaled $0.7 million and $0.6 million , respectively.
For the three months ended September 30, 2020 and 2019, net investment income was $5.3 million and $5.8 million , or $0.27 and $0.31 per common share based on weighted average common shares outstanding of 19,486,030 and 18,905,959, respectively.
The Company's investment portfolio had a net change in unrealized appreciation (depreciation) for the three months ended September 30, 2020 and 2019, of $2.1 million and ($3.5) million , respectively. For the three months ended September 30, 2020 and 2019, the Company had realized gains of $0.2 million and $6.2 million , respectively.
For the three months ended September 30, 2020 and 2019, net increase in net assets resulting from operations totaled $7.5 million and $8.5 million , or $0 .39 per common share and $0.45 per common share, based on weighted average common shares outstanding of 19,486,030 and 18,905,959, respectively.
Liquidity and Capital Resources
As of September 30, 2020 and 2019, our credit facility provided for borrowings in an aggregate amount up to $230.0 and $200.0 million , respectively, on a committed basis. As of September 30, 2020 , our credit facility had an accordion feature that allowed for potential future expansion of the facility size to $280.0 million . As of September 30, 2020 and December 31, 2019 , we had $187.0 million and $161.6 million in outstanding borrowings under the credit facility, respectively. As of September 30, 2020 and December 31, 2019 , we had approximately $43.0 million and $58.4 million , respectively, of unused borrowing capacity.
For the nine months ended September 30, 2020 , our operating activities provided cash of $12.4 million primarily in connection with the repayment of portfolio investments, some of which was offset by the purchase and origination of new portfolio investments. For the same period, our financing activities provided cash of $10.1 million , due to net borrowings under our credit facility.
For the nine months ended September 30, 2019 , our operating activities used cash of $53.5 million , primarily in connection with the origination of portfolio investments, which was offset by repayments of our investments, and our financing activities provided cash of $59.1 million , due to a secondary offering during the year, offset by repayments on our credit facility.
Distributions
During the three months ended September 30, 2020 and 2019, we declared aggregate distributions of $0.56 and $0.34 per share ( $10.9 million and $6.4 million , respectively). Of the $0.56 declared during the three months ended September 30, 2020 , $0.25 relates to our regular distribution and was paid to shareholders during the third quarter, $0.25 relates to our regular distribution and will be paid to the shareholders during the fourth quarter and $0.06 relates to a special distribution and will be paid to shareholders during the fourth 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 is expected to include a return of capital.
Portfolio Activity During the Quarter
On July 2, 2020 we received $0.2 million in full realization of the investment in Specified Air Solutions, LLC, resulting in a $0.2 million gain.
On July 17, 2020 , we invested $7.1 million in the first lien term loan of Industry Dive, Inc., a provider of mobile and desktop-based newsletters containing industry-specific business analysis and news targeting executives. Additionally, we committed $0.1 million in an unfunded revolver, of which $0.04 million was funded on July 17, 2020 .
On July 17, 2020 , we received a paydown of $2.5 million on the first lien term loan of Fast Growing Trees, LLC, an existing portfolio company. On September 30, 2020 , we received an additional paydown of $1.6 million on the first lien term loan.
On July 21, 2020 , we received a paydown of $2.7 million on the revolver of GS HVAM Intermediate, LLC, an existing portfolio company. On September 22, 2020 , we invested $0.3 million in the revolver.
On July 31, 2020 , we invested $7.3 million in the first lien term loan of Ian, Evan, & Alexander Corporation, a provider of information technology (IT) services and solutions to multiple U.S. government agencies within the intelligence community. Additionally, we committed $0.5 million in the equity of the company and $0.1 million in an unfunded revolver, of which $0.05 million was funded on July 31, 2020 .
On August 7, 2020 , we received full repayment on the first lien term loan of Price for Profit LLC for total proceeds of $2.9 million .
On August 14, 2020 , we received full repayment on the second lien term loan of ICD Intermediate Holdco 2, LLC for total proceeds of $10 million .
On August 14, 2020 , we invested $3.8 million in the first lien term loan of Convergence Technologies, Inc., an existing portfolio company. Additionally, we invested $0.1 million in the equity of the company.
On September 25, 2020 , we invested $0.2 million in the revolver of PCS Software, Inc, an existing portfolio company.
On September 30, 2020 , we received full repayment on the second lien term loan of Condor Borrower, LLC for total proceeds of $13.8 million .
Events Subsequent to September 30, 2020
On October 1, 2020 , we received full repayment on the first lien term loan of C.A.R.S Protection Plus, Inc. for total proceeds of $7.4 million . We also received $0.4 million in full realization on the equity of the company, resulting in a $0.3 million gain.
Unfunded Commitments
As of October 29, 2020 , we had unfunded commitments of $30.9 million , including unfunded delayed draw term loan commitments of $12.1 million . The Company maintains sufficient liquidity (through cash on hand and available borrowings under the Credit Facility) to fund such unfunded commitments should the need arise.
Credit Facility
The outstanding balance under the credit facility as of October 29, 2020 was $166.5 million .
SBA-guaranteed Debentures
The total balance of SBA-guaranteed debentures outstanding as of October 29, 2020 was $161.0 million .
Conference Call Information
Stellus Capital Investment Corporation will host a conference call to discuss these results on Friday, October 30, 2020 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 800-367-2403 (domestic). Use passcode 3758825. Starting approximately twenty-four hours after the conclusion of the call, a replay will be available through Saturday, November 7, 2020 by dialing (888) 203-1112 and entering passcode 3758825. The replay will also be available on the company's website.
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
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PART I — FINANCIAL INFORMATION
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STELLUS CAPITAL INVESTMENT CORPORATION
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CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
|
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|
|
|
|
|
|
|
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September 30,
|
|
|
|
|
|
2020
|
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December 31,
|
|
|
(Unaudited)
|
|
2019
|
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ASSETS
|
|
|
|
|
|
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Non-controlled, non-affiliated investments, at fair value
|
|
|
|
|
|
|
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(amortized cost of $647,253,034 and $642,707,824,
|
|
|
|
|
|
|
|
respectively)
|
$
|
622,438,345
|
|
$
|
628,948,077
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Cash and cash equivalents
|
|
38,617,969
|
|
|
16,133,315
|
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Receivable for sales and repayments of investments
|
|
145,359
|
|
|
123,409
|
|
Interest receivable
|
|
1,870,260
|
|
|
2,914,710
|
|
Other receivables
|
|
60,495
|
|
|
25,495
|
|
Prepaid expenses
|
|
189,760
|
|
|
368,221
|
|
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Total Assets
|
$
|
663,322,188
|
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$
|
648,513,227
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|
LIABILITIES
|
|
|
|
|
|
|
Notes payable
|
$
|
48,223,734
|
|
$
|
47,974,202
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Credit facility payable
|
|
184,611,294
|
|
|
160,510,633
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SBA-guaranteed debentures
|
|
158,059,560
|
|
|
157,543,853
|
|
Dividends payable
|
|
6,040,664
|
|
|
2,167,630
|
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Management fees payable
|
|
5,540,073
|
|
|
2,695,780
|
|
Income incentive fees payable
|
|
584,881
|
|
|
1,618,509
|
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Capital gains incentive fees payable
|
|
—
|
|
|
880,913
|
|
Interest payable
|
|
838,077
|
|
|
2,322,314
|
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Unearned revenue
|
|
594,066
|
|
|
559,768
|
|
Administrative services payable
|
|
776,884
|
|
|
413,278
|
|
Deferred tax liability
|
|
257,412
|
|
|
134,713
|
|
Income tax payable
|
|
806,000
|
|
|
917,000
|
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Other accrued expenses and liabilities
|
|
439,716
|
|
|
203,461
|
|
Total Liabilities
|
$
|
406,772,361
|
|
$
|
377,942,054
|
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Commitments and contingencies (Note 7)
|
|
|
|
|
|
|
|
Net Assets
|
$
|
256,549,827
|
|
$
|
270,571,173
|
|
NET ASSETS
|
|
|
|
|
|
|
Common stock, par value $0.001 per share (100,000,000 shares
|
|
|
|
|
|
|
|
authorized; 19,486,003 and 19,131,746 issued and outstanding,
|
|
|
|
|
|
|
|
respectively)
|
$
|
19,486
|
|
$
|
19,132
|
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Paid-in capital
|
|
277,116,729
|
|
|
272,117,091
|
|
Accumulated undistributed deficit
|
|
(20,586,388)
|
|
|
(1,565,050)
|
|
|
Net Assets
|
$
|
256,549,827
|
|
$
|
270,571,173
|
|
|
Total Liabilities and Net Assets
|
$
|
663,322,188
|
|
$
|
648,513,227
|
|
|
Net Asset Value Per Share
|
$
|
13.17
|
|
$
|
14.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
STELLUS CAPITAL INVESTMENT CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
|
|
For the
|
|
For the
|
|
For the
|
|
|
|
three
|
three
|
nine
|
nine
|
|
|
|
months ended
|
months ended
|
months ended
|
months ended
|
|
|
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|
|
|
2020
|
2019
|
2020
|
2019
|
|
INVESTMENT INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
$
|
13,707,343
|
|
$
|
15,134,874
|
|
$
|
42,192,411
|
|
$
|
42,366,134
|
|
Other income
|
|
309,406
|
|
|
380,353
|
|
|
926,661
|
|
|
1,154,277
|
|
|
Total Investment Income
|
$
|
14,016,749
|
|
$
|
15,515,227
|
|
$
|
43,119,072
|
|
$
|
43,520,411
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees
|
$
|
2,796,878
|
|
$
|
2,480,918
|
|
$
|
8,259,127
|
|
$
|
7,007,925
|
|
Valuation fees
|
|
134,246
|
|
|
109,296
|
|
|
263,080
|
|
|
238,246
|
|
Administrative services expenses
|
|
431,894
|
|
|
425,849
|
|
|
1,335,423
|
|
|
1,246,754
|
|
Income incentive fees
|
|
461,590
|
|
|
1,583,145
|
|
|
1,969,976
|
|
|
4,339,813
|
|
Capital gains incentive (reversal) fees
|
|
-
|
|
|
533,920
|
|
|
(880,913)
|
|
|
1,811,533
|
|
Professional fees
|
|
224,517
|
|
|
166,802
|
|
|
761,745
|
|
|
840,683
|
|
Directors' fees
|
|
77,500
|
|
|
83,000
|
|
|
320,316
|
|
|
300,000
|
|
Insurance expense
|
|
94,094
|
|
|
87,601
|
|
|
280,236
|
|
|
259,947
|
|
Interest expense and other fees
|
|
3,861,072
|
|
|
3,774,316
|
|
|
12,245,870
|
|
|
10,808,373
|
|
Income tax expense
|
|
367,836
|
|
|
350,549
|
|
|
853,631
|
|
|
705,677
|
|
Other general and administrative expenses
|
|
238,177
|
|
|
121,172
|
|
|
706,559
|
|
|
413,742
|
|
|
Total Operating Expenses
|
$
|
8,687,804
|
|
$
|
9,716,568
|
|
$
|
26,115,050
|
|
$
|
27,972,693
|
|
|
Net Investment Income
|
$
|
5,328,945
|
|
$
|
5,798,659
|
|
$
|
17,004,022
|
|
$
|
15,547,718
|
|
|
Net realized gain (loss) on non-controlled, non-affiliated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investments
|
$
|
151,697
|
|
$
|
6,200,367
|
|
$
|
(2,444,759)
|
|
$
|
19,142,603
|
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on non-controlled, non-affiliated investments
|
$
|
2,120,787
|
|
$
|
(3,534,972)
|
|
$
|
(11,054,942)
|
|
$
|
(10,049,241)
|
|
|
(Provision) benefit for taxes on net unrealized gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on investments
|
$
|
(92,749)
|
|
$
|
4,200
|
|
$
|
(122,699)
|
|
$
|
(35,701)
|
|
|
Net Increase in Net Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resulting from Operations
|
$
|
7,508,680
|
|
$
|
8,468,254
|
|
$
|
3,381,622
|
|
$
|
24,605,379
|
|
|
Net Investment Income Per Share
|
$
|
0.27
|
|
$
|
0.31
|
|
$
|
0.87
|
|
$
|
0.86
|
|
|
Net Increase in Net Assets Resulting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from Operations Per Share
|
$
|
0.39
|
|
$
|
0.45
|
|
$
|
0.17
|
|
$
|
1.36
|
|
|
Weighted Average Shares of Common Stock Outstanding
|
|
19,486,030
|
|
|
18,905,959
|
|
|
19,466,647
|
|
|
18,056,271
|
|
|
Distributions Per Share
|
$
|
0.56
|
|
$
|
0.34
|
|
$
|
1.15
|
|
$
|
1.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STELLUS CAPITAL INVESTMENT CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
|
|
For the
|
|
For the
|
|
For the
|
|
|
|
three
|
three
|
|
nine
|
nine
|
|
|
|
months ended
|
months ended
|
|
months ended
|
months ended
|
|
|
|
September 30,
|
September 30,
|
|
September 30,
|
September 30,
|
|
|
|
2020
|
2019
|
|
2020
|
2019
|
|
Increase in Net Assets Resulting from
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
$
|
5,328,945
|
|
$
|
5,798,659
|
|
$
|
17,004,022
|
|
$
|
15,547,718
|
|
Net realized gain (loss) on non-controlled,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-affiliated investments
|
|
151,697
|
|
|
6,200,367
|
|
|
(2,444,759)
|
|
|
19,142,603
|
|
Net change in unrealized appreciation (depreciation) on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlled, non-affiliated investments
|
|
2,120,787
|
|
|
(3,534,972)
|
|
|
(11,054,942)
|
|
|
(10,049,241)
|
|
(Provision) benefit for taxes on unrealized appreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on investments
|
|
(92,749)
|
|
|
4,200
|
|
|
(122,699)
|
|
|
(35,701)
|
|
Net Increase in Net Assets Resulting
|
|
|
|
|
|
|
|
|
|
|
|
|
from Operations
|
$
|
7,508,680
|
|
$
|
8,468,254
|
|
$
|
3,381,622
|
|
$
|
24,605,379
|
|
Stockholder Distributions From:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
$
|
(10,912,161)
|
|
$
|
(6,426,113)
|
|
$
|
(22,402,959)
|
|
$
|
(18,586,471)
|
|
Total Distributions
|
$
|
(10,912,161)
|
|
$
|
(6,426,113)
|
|
$
|
(22,402,959)
|
|
$
|
(18,586,471)
|
|
Capital Share Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
$
|
—
|
|
$
|
—
|
|
$
|
5,023,937
|
|
$
|
42,599,510
|
|
Sales load
|
|
—
|
|
|
—
|
|
|
(5,681)
|
|
|
(1,003,731)
|
|
Offering costs
|
|
—
|
|
|
—
|
|
|
(18,169)
|
|
|
(293,072)
|
|
Partial share transactions
|
|
—
|
|
|
(237)
|
|
|
(96)
|
|
|
945
|
|
Net Increase (Decrease) in Net Assets Resulting From
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Share Transactions
|
$
|
—
|
|
$
|
(237)
|
|
$
|
4,999,991
|
|
$
|
41,303,652
|
|
Total (Decrease) Increase in Net Assets
|
$
|
(3,403,481)
|
|
$
|
2,041,904
|
|
$
|
(14,021,346)
|
|
$
|
47,322,560
|
|
Net Assets at Beginning of Period
|
$
|
259,953,308
|
|
$
|
270,125,663
|
|
$
|
270,571,173
|
|
$
|
224,845,007
|
|
Net Assets at End of Period
|
$
|
256,549,827
|
|
$
|
272,167,567
|
|
$
|
256,549,827
|
|
$
|
272,167,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STELLUS CAPITAL INVESTMENT CORPORATION
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the
|
|
For the
|
|
|
|
|
nine
|
nine
|
|
|
|
|
months ended
|
months ended
|
|
|
|
|
September 30,
|
September 30,
|
|
|
|
|
2020
|
2019
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
3,381,622
|
|
$
|
24,605,379
|
|
Adjustments to reconcile net increase in net assets
|
|
|
|
|
|
|
|
|
from operations to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Purchases of investments
|
|
(87,193,368)
|
|
|
(172,852,479)
|
|
|
Proceeds from sales and repayments of investments
|
|
82,360,666
|
|
|
101,491,694
|
|
|
Net change in unrealized appreciation on investments
|
|
11,054,942
|
|
|
10,049,241
|
|
|
Increase in investments due to PIK
|
|
(568,028)
|
|
|
(378,119)
|
|
|
Amortization of premium and accretion of discount, net
|
|
(1,611,189)
|
|
|
(1,273,680)
|
|
|
Deferred tax provision
|
|
122,699
|
|
|
35,701
|
|
|
Amortization of loan structure fees
|
|
500,495
|
|
|
377,741
|
|
|
Amortization of deferred financing costs
|
|
249,532
|
|
|
248,621
|
|
|
Amortization of loan fees on SBA-guaranteed debentures
|
|
515,707
|
|
|
452,804
|
|
|
Net realized loss (gain) on investments
|
|
2,444,759
|
|
|
(19,142,603)
|
|
Changes in other assets and liabilities
|
|
|
|
|
|
|
|
Decrease in interest receivable
|
|
1,044,450
|
|
|
969,165
|
|
|
(Increase) decrease in other receivable
|
|
(35,000)
|
|
|
59,751
|
|
|
Decrease in prepaid expenses
|
|
178,461
|
|
|
257,265
|
|
|
Increase in management fees payable
|
|
2,844,293
|
|
|
296,943
|
|
|
Decrease in incentive fees payable
|
|
(1,033,628)
|
|
|
(134,195)
|
|
|
(Decrease) increase in capital gains incentive fees payable
|
|
(880,913)
|
|
|
1,811,532
|
|
|
Increase in administrative services payable
|
|
363,606
|
|
|
10,169
|
|
|
Decrease in interest payable
|
|
(1,484,237)
|
|
|
(1,011,486)
|
|
|
Increase in unearned revenue
|
|
34,298
|
|
|
102,157
|
|
|
(Decrease) increase in income tax payable
|
|
(111,000)
|
|
|
400,908
|
|
|
Increase in other accrued expenses and liabilities
|
|
236,255
|
|
|
99,798
|
|
|
Net Cash Provided by (Used in) Operating Activities
|
$
|
12,414,422
|
|
$
|
(53,523,693)
|
|
Cash flows from Financing Activities
|
|
|
|
|
|
|
|
Proceeds from the issuance of common stock
|
$
|
4,794,994
|
|
$
|
42,599,510
|
|
|
Sales load for common stock issued
|
|
(5,681)
|
|
|
(1,003,731)
|
|
|
Offering costs paid for common stock
|
|
(18,169)
|
|
|
(485,209)
|
|
|
Stockholder distributions paid
|
|
(18,300,982)
|
|
|
(18,251,993)
|
|
|
Financing costs paid on SBA Debentures
|
|
—
|
|
|
(200,000)
|
|
|
Borrowings under Credit Facility
|
|
97,450,000
|
|
|
173,000,000
|
|
|
Repayments of Credit Facility
|
|
(72,000,000)
|
|
|
(136,500,000)
|
|
|
Financing costs paid on Credit facility
|
|
(1,849,834)
|
|
|
(92,500)
|
|
|
Partial share transactions
|
|
(96)
|
|
|
945
|
|
Net Cash Provided by Financing Activities
|
$
|
10,070,232
|
|
$
|
59,067,022
|
|
Net Increase in Cash and Cash Equivalents
|
$
|
22,484,654
|
|
$
|
5,543,329
|
|
|
Cash and cash equivalents balance at beginning of period
|
|
16,133,315
|
|
|
17,467,146
|
|
Cash and Cash Equivalents Balance at End of Period
|
$
|
38,617,969
|
|
$
|
23,010,475
|
|
Supplemental and Non-Cash Activities
|
|
|
|
|
|
|
|
Cash paid for interest expense
|
$
|
12,433,551
|
|
$
|
10,735,379
|
|
|
Excise tax paid
|
|
940,000
|
|
|
280,000
|
|
|
Shares issued pursuant to Dividend Reinvestment Plan
|
|
228,943
|
|
|
—
|
|
|
Increase in dividends payable
|
|
3,873,034
|
|
|
334,478
|
|
|
Increase in deferred offering costs
|
|
—
|
|
|
192,137
|
|
|
|
|
|
|
|
|
|
Reconciliation of Core Net Investment Income
|
|
(Unaudited)
|
|
|
|
|
Quarter
|
|
Quarter
|
|
|
ended
|
|
ended
|
|
|
September 30,
2020
|
|
September 30,
2019
|
|
Net investment income
|
$5,328,945
|
|
$5,798,659
|
|
Capital gains incentive fee
|
$-
|
|
$533,920
|
|
Income tax expense
|
$367,836
|
|
$350,549
|
|
Core net investment income
|
$5,696,781
|
|
$6,683,128
|
|
|
|
|
|
|
Per share amounts:
|
|
|
|
|
Net investment income per share
|
$0.27
|
|
$0.31
|
|
Core net investment income per share
|
$0.29
|
|
$0.35
|
|
|
|
|
|
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SOURCE Stellus Capital Investment Corporation