HOUSTON, Nov. 7, 2023 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus" or the "Company") today announced financial results for its third fiscal quarter ended September 30, 2023.
Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report solid operating results for the quarter ended September 30, 2023, in which U.S. GAAP net investment income of $0.47 per share and core net investment income of $0.49 per share covered the regular dividend declared of $0.40 per share. Our portfolio grew by a net $5 million to $886 million at fair value and the loan portfolio is yielding 11.5%, as of September 30, 2023."
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FINANCIAL HIGHLIGHTS
($ in millions, except data relating to per share amounts and shares outstanding)
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Three Months Ended
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Three Months Ended
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Nine Months Ended
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Nine Months Ended
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September 30, 2023
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September 30, 2022
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September 30, 2023
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September 30, 2022
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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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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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$10.82
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$0.47
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$7.19
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$0.37
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$30.30
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$1.42
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$18.88
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$0.97
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Core net investment income(1)
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11.16
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0.49
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6.90
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0.35
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30.81
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1.45
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18.27
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0.94
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Net realized gain on investments
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0.60
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0.03
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1.55
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0.08
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0.32
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0.01
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4.66
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0.24
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Net realized loss on foreign currency translation
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(0.02)
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-
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-
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-
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(0.07)
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-
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(0.01)
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-
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Total realized income(2)
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$11.40
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$0.50
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$8.74
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$0.45
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$30.55
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$1.43
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$23.53
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$1.21
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Distributions
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(9.27)
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(0.41)
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(6.64)
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(0.34)
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(25.88)
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(1.22)
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(18.75)
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(0.96)
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Net unrealized change in depreciation on investments
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(13.80)
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(0.61)
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(4.80)
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(0.25)
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(24.34)
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(1.14)
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(12.82)
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(0.66)
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Net unrealized change in depreciation on foreign currency translation
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-
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-
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(0.01)
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-
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(0.02)
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-
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(0.05)
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-
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Benefit (provision) for taxes on unrealized depreciation (appreciation) on investments in taxable subsidiaries
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-
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-
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0.03
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-
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(0.14)
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(0.01)
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(0.15)
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(0.01)
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Net (decrease) increase in net assets resulting from operations
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($2.40)
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($0.11)
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$3.96
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$0.20
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$6.05
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$0.28
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$10.51
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$0.54
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Weighted average shares outstanding
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22,824,221
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19,545,935
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21,289,880
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19,535,708
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(1)
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Core net investment income, as presented, excludes the impact of capital gains incentive fees (reversal) and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S. generally accepted accounting principles ("U.S. GAAP") measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements.
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(2)
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Total realized income is the sum of net investment income, net realized gains (losses) on investments, net realized gains (losses) on foreign currency, and loss on debt extinguishment; all U.S. GAAP measures.
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PORTFOLIO ACTIVITY
($ 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, 2023
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December 31, 2022
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Investments at fair value
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$886.3
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$844.7
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Total assets
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$912.0
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$898.2
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Net assets
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$318.1
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$275.8
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Shares outstanding
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24,125,642
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19,666,769
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Net asset value per share
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$13.19
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$14.02
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Three Months Ended
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Nine Months Ended
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September 30, 2023
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September 30, 2023
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New investments
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$51.9
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$139.7
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Repayments of investments
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(34.8)
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(79.1)
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Net activity
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$17.1
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$60.6
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As of
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As of
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September 30, 2023
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December 31, 2022
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Number of portfolio company investments
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96
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85
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Number of debt investments
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83
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73
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Weighted average yield of debt and other income producing investments (3)
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Cash
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10.7 %
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10.3 %
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Payment-in-kind ("PIK")
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0.4 %
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0.4 %
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Fee amortization
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0.4 %
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0.4 %
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Total
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11.5 %
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11.1 %
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Weighted average yield on total investments (4)
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Cash
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10.2 %
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9.7 %
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Payment-in-kind ("PIK")
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0.3 %
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0.3 %
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Fee amortization
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0.3 %
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0.4 %
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Total
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10.8 %
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10.4 %
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(3)
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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 investors in the Company's common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expenses or any sales load that may be paid by investors.
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(4)
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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, 2023 and 2022 totaled $27.2 million and $20.1 million, respectively, most of which was interest income from portfolio investments.
Operating expenses for the three months ended September 30, 2023 and 2022, totaled $16.3 million and $13.0 million, respectively. For the same respective periods, base management fees totaled $3.9 million and $3.8 million, income incentive fees totaled $2.7 million and $1.6 million, capital gains incentive (reversal) fees totaled $0.0 million and ($0.6) million, fees and expenses related to our borrowings totaled $8.0 million and $6.4 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million and $0.4 million, income tax totaled $0.3 and $0.4 million and other expenses totaled $0.9 and $1.0 million.
Net investment income was $10.8 million and $7.2 million, or $0.47 and $0.37 per common share based on weighted average common shares outstanding of 22,824,221 and 19,545,935 for the three months ended September 30, 2023 and 2022, respectively. Core net investment income, which is a non-U.S. GAAP measure that excludes the capital gains incentive fee (reversal) and income tax expense accruals, for the three months ended September 30, 2023 and 2022 was $11.2 million and $6.9 million, or $0.49 and $0.35 per share, respectively.
For the three months ended September 30, 2023 and 2022, the Company's investment portfolio had a net change in unrealized depreciation of ($13.8) million and ($4.8) million, respectively, and the Company had net realized gains of $0.6 million and $1.6 million, respectively.
Net (decrease) increase in net assets resulting from operations totaled ($2.4) million and $4.0 million, or ($0.11) and $0.20 per common share, based on weighted average common shares outstanding of 22,824,221 and 19,545,935 for the three months ended September 30, 2023 and 2022, respectively.
Liquidity and Capital Resources
As of September 30, 2023, the Company's amended and restated senior secured revolving credit agreement with certain bank lenders and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $265.0 million on a committed basis. As of September 30, 2023 and December 31, 2022, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size to $280.0 million. As of September 30, 2023 and December 31, 2022, the Company had $162.3 million and $199.2 million in outstanding borrowings under the Credit Facility, respectively.
The Company issued 1,567,738 shares during the three months ended September 30, 2023 under the At-the-Market Program ("ATM Program"), for gross proceeds of $21.9 million. The average per share gross offering price of shares issued under the ATM Program during the three months ended September 30, 2023 was $13.97. For the three months ended September 30, 2023, net proceeds of $21.6 million, or $13.76 per share, exceeded net asset value per share, excluding the impact of offering expenses.
Distributions
During the three months ended September 30, 2023 and 2022, the Company declared aggregate distributions of $0.40 and $0.34 per share, respectively ($9.3 million and $6.6 million, respectively). Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year. None of these dividends are expected to include a return of capital.
Recent Portfolio Activity
The Company invested in the following portfolio companies during the three months ended September 30, 2023:
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Activity Type
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Date
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Company Name
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Company Description
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Investment Amount
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Instrument Type
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New Investment
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July 7, 2023
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Madison Logic, Inc.*
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Provider of B2B account based marketing services
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$
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394,767
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Equity
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Add-On Investment
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July 12, 2023
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EH Real Estate Services, LLC*
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Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyers and sellers
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$
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501,846
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Senior Secured – First Lien
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New Investment
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July 31, 2023
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EHI Buyer, Inc.
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Provider of design, engineering, installation, and maintenance services for building management systems
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$
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6,111,343
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Senior Secured – First Lien
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$
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3,055,671
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Delayed Draw Term Loan Commitment
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$
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100,000
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Revolver Commitment
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$
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617,801
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Equity
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New Investment
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August 2, 2023
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Compost 360 Acquisition, LLC
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Organic waste recycler and producer of compost, mulch, and engineered soils
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$
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9,595,100
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Senior Secured – First Lien
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$
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4,096,741
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Delayed Draw Term Loan Commitment
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$
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100,000
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Revolver Commitment
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$
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250,761
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Equity
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New Investment
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August 3, 2023
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Morgan Electrical Group Intermediate Holdings, Inc.
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Provider of commercial electrical services
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$
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4,439,439
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Senior Secured – First Lien
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$
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2,864,154
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Delayed Draw Term Loan Commitment
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$
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100,000
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Revolver Commitment
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$
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356,800
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Equity
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Add-On Investment
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August 4, 2023
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TradePending OpCo Aggregator, LLC*
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Provider of vehicle trade-in and merchandising intelligence solutions for auto dealerships
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$
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2,473,227
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Senior Secured – First Lien
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$
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687,007
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Delayed Draw Term Loan Commitment
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$
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325,379
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Equity
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New Investment
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August 7, 2023
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The Hardenbergh Group, Inc.
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Provider of temporary professional staffing of Medical Services Professionals, external peer review, consulting and physician leadership solutions
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$
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10,501,898
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Senior Secured – First Lien
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$
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100,000
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Revolver Commitment
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$
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434,504
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Equity
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New Investment
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August 8, 2023
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Green Intermediateco II, Inc.
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Cyber-security focused value-added reseller and associated service provider
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$
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11,170,252
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Senior Secured – First Lien
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$
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500,000
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Delayed Draw Term Loan Commitment
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$
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271,401
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Equity
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Add-On Investment
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August 11, 2023
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Data Centrum Communications, Inc.*
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Provider of point-of-care patient engagement and marketing solutions for pharmaceutical companies.
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$
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52,919
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Equity
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Add-On Investment
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September 22, 2023
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NINJIO, LLC*
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Cybersecurity awareness and training platform
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$
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14,470
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Equity
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Add-On Investment
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September 25, 2023
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Tower Arch Infolinks Media, LP*
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Advertising placement partner for small to mid-sized publishers
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$
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1,093
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Equity
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Add-On Investment
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September 28, 2023
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TradePending OpCo Aggregator, LLC*
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Provider of vehicle trade-in and merchandising intelligence solutions for auto dealerships
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$
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53,625
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Equity
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*Existing portfolio company
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The Company realized investments in the following portfolio companies during the three months ended September 30, 2023:
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Activity Type
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Date
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Company Name
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Company Description
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Proceeds Received
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Instrument Type
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Full Repayment
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July 31, 2023
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NuSource Financial, LLC*
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Provider of technology integration and installation of Automated Teller Machines/Integrated Teller Machines, maintenance services, and security solutions
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$
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10,984,910
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Senior Secured – First Lien
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Full Repayment
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September 1, 2023
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Vortex Companies, LLC*
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Provider of trenchless services and products to restore and repair large diameter water, sewer, and industrial pipe infrastructure.
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$
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10,000,000
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Senior Secured – First Lien
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Events Subsequent to September 30, 2023
The Company's management has evaluated subsequent events through November 7, 2023. There have been no subsequent events that require recognition or disclosure except for the following described below.
Investment Portfolio
The Company invested in the following portfolio companies subsequent to September 30, 2023:
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Activity Type
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Date
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Company Name
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Company Description
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Investment Amount
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Instrument Type
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Add-On Investment
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October 3, 2023
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EH Real Estate Services, LLC*
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Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyers and sellers
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$
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2,281,116
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Revolver Commitment(a)
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Add-On Investment
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October 11, 2023
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Impact Home Services LLC*
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Residential, garage door, electrical, and plumbing services provider
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$
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539,718
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Senior Secured – First Lien
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|
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13,398
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Equity
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Add-On Investment
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October 16, 2023
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Equine Network, LLC*
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Provider of content, information, tech-enabled services, and hosts competitions for the U.S. equine industry
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$
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955,516
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Senior Secured – First Lien
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Add-On Investment
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October 19, 2023
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ArborWorks Acquisition LLC*
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A professional tree care firm
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$
|
230,769
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Senior Secured – First Lien
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Add-On Investment
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October 31, 2023
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2X LLC*
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Provider of outsourced digital B2B marketing-as-a-service
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$
|
1,448,388
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Senior Secured – First Lien
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*Existing portfolio company
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(a) The Company has full discretion to fund this revolver commitment
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The Company realized the following portfolio company subsequent to September 30, 2023:
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|
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|
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Activity Type
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Date
|
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Company Name
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Company Description
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Proceeds Received
|
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Realized Loss
|
|
Instrument Type
|
|
Full Realization
|
|
October 24, 2023
|
|
Interstate Waste Services, Inc.*
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|
Provider of non-hazardous waste management, collection, and recycling services
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|
$
|
389,496
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|
$
|
(556,629)
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Equity
|
|
*Existing portfolio company
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Credit Facility
The outstanding balance under the Credit Facility as of November 7, 2023 was $163.0 million.
Distributions Declared
On October 5, 2023, our Board of Directors declared a regular monthly distribution for each of October, November, and December 2023, as follows:
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|
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|
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|
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Ex-Dividend
|
|
Record
|
|
Payment
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|
Amount per
|
|
Declared
|
|
Date
|
|
Date
|
|
Date
|
|
Share
|
|
10/5/2023
|
|
10/30/2023
|
|
10/31/2023
|
|
11/15/2023
|
|
$
|
0.1333
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|
10/5/2023
|
|
11/29/2023
|
|
11/30/2023
|
|
12/15/2023
|
|
$
|
0.1333
|
|
10/5/2023
|
|
12/15/2023
|
|
12/18/2023
|
|
12/29/2023
|
|
$
|
0.1333
|
Conference Call Information
Stellus Capital Investment Corporation will host a conference call to discuss these results on Wednesday, November 8, 2023 at 10:00 AM, Central Time. The conference call will be led by Robert T. Ladd, Chief Executive Officer, and W. Todd Huskinson, Chief Financial Officer, Chief Compliance Officer, Treasurer, and Secretary.
For those wishing to participate by telephone, please dial (888) 506-0062. Use passcode 468695. Starting approximately two hours after the conclusion of the call, a replay will be available through Wednesday, November 22, 2023 by dialing (877) 481-4010 and entering passcode 49413. The replay will also be available on the Company's website.
For those wishing to participate via Live Webcast, connect via the Public (SCIC) section of our website at www.stelluscapital.com, under the Events tab. A replay of the conference will be available on our website for approximately 90 days.
About Stellus Capital Investment Corporation
The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA (earnings before interest, taxes, depreciation and amortization)) through first lien (including unitranche) loans, second lien loans and unsecured debt financing, with corresponding equity co-investments. The Company's investment activities are managed by its investment adviser, Stellus Capital Management. To learn more about Stellus Capital Investment Corporation, visit www.stelluscapital.com under the "Public (SCIC)" tab.
Forward-Looking Statements
Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission including the final prospectus that will be filed with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
Contacts
Stellus Capital Investment Corporation
W. Todd Huskinson, Chief Financial Officer
(713) 292-5414
thuskinson@stelluscapital.com
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STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES (unaudited)
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|
|
|
|
|
|
|
|
September 30, 2023
|
|
|
|
|
|
(unaudited)
|
|
December 31, 2022
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Non-controlled, non-affiliated investments, at fair value (amortized cost of
$941,679,195 and $875,823,177, respectively)
|
|
$
|
886,338,148
|
|
$
|
844,733,638
|
|
|
Cash and cash equivalents
|
|
|
19,210,721
|
|
|
48,043,329
|
|
|
Receivable for sales and repayments of investments
|
|
|
594,726
|
|
|
718,794
|
|
|
Interest receivable
|
|
|
5,600,021
|
|
|
3,984,409
|
|
|
Other receivables
|
|
|
60,495
|
|
|
34,245
|
|
|
Deferred offering costs
|
|
|
—
|
|
|
1,100
|
|
|
Prepaid expenses
|
|
|
149,755
|
|
|
667,267
|
|
|
Total Assets
|
|
$
|
911,953,866
|
|
$
|
898,182,782
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Notes payable
|
|
$
|
98,883,814
|
|
$
|
98,549,692
|
|
|
Credit Facility payable
|
|
|
161,192,612
|
|
|
197,685,281
|
|
|
SBA-guaranteed debentures
|
|
|
319,955,852
|
|
|
307,895,195
|
|
|
Dividends payable
|
|
|
3,215,948
|
|
|
—
|
|
|
Management fees payable
|
|
|
3,933,121
|
|
|
7,150,407
|
|
|
Income incentive fees payable
|
|
|
3,058,550
|
|
|
2,464,408
|
|
|
Capital gains incentive fees payable
|
|
|
—
|
|
|
569,528
|
|
|
Interest payable
|
|
|
1,316,334
|
|
|
4,640,841
|
|
|
Related party payable
|
|
|
—
|
|
|
1,060,321
|
|
|
Unearned revenue
|
|
|
343,210
|
|
|
320,675
|
|
|
Administrative services payable
|
|
|
402,627
|
|
|
356,919
|
|
|
Income tax payable
|
|
|
1,116,369
|
|
|
1,175,373
|
|
|
Deferred tax liability
|
|
|
206,361
|
|
|
61,936
|
|
|
Other accrued expenses and liabilities
|
|
|
203,288
|
|
|
475,593
|
|
|
Total Liabilities
|
|
$
|
593,828,086
|
|
$
|
622,406,169
|
|
|
Commitments and contingencies (Note 7)
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
318,125,780
|
|
$
|
275,776,613
|
|
|
NET ASSETS
|
|
|
|
|
|
|
|
|
Common stock, par value $0.001 per share (100,000,000 shares authorized; 24,125,642
and 19,666,769 issued and outstanding, respectively)
|
|
$
|
24,125
|
|
$
|
19,667
|
|
|
Paid-in capital
|
|
|
337,289,265
|
|
|
275,114,720
|
|
|
Total distributable (loss) earnings
|
|
|
(19,187,610)
|
|
|
642,226
|
|
|
Net Assets
|
|
$
|
318,125,780
|
|
$
|
275,776,613
|
|
|
Total Liabilities and Net Assets
|
|
$
|
911,953,866
|
|
$
|
898,182,782
|
|
|
Net Asset Value Per Share
|
|
$
|
13.19
|
|
$
|
14.02
|
|
|
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
For the three
|
|
For the nine
|
|
For the nine
|
|
|
|
months ended
|
|
months ended
|
|
months ended
|
|
months ended
|
|
|
|
September 30, 2023
|
|
September 30, 2022
|
|
September 30, 2023
|
|
September 30, 2022
|
|
|
INVESTMENT INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
26,223,986
|
|
$
|
19,617,468
|
|
$
|
75,295,485
|
|
$
|
50,392,437
|
|
|
Other income
|
|
|
941,040
|
|
|
524,799
|
|
|
2,529,905
|
|
|
1,353,279
|
|
|
Total Investment Income
|
|
$
|
27,165,026
|
|
$
|
20,142,267
|
|
$
|
77,825,390
|
|
$
|
51,745,716
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees
|
|
$
|
3,933,121
|
|
$
|
3,827,669
|
|
$
|
11,533,811
|
|
$
|
11,025,435
|
|
|
Valuation fees
|
|
|
139,267
|
|
|
145,865
|
|
|
332,762
|
|
|
315,482
|
|
|
Administrative services expenses
|
|
|
470,846
|
|
|
447,381
|
|
|
1,399,188
|
|
|
1,388,602
|
|
|
Income incentive fees
|
|
|
2,705,200
|
|
|
1,635,641
|
|
|
7,433,039
|
|
|
1,635,641
|
|
|
Capital gains incentive fee reversal
|
|
|
—
|
|
|
(646,757)
|
|
|
(569,528)
|
|
|
(1,672,549)
|
|
|
Professional fees
|
|
|
276,592
|
|
|
315,809
|
|
|
877,276
|
|
|
845,275
|
|
|
Directors' fees
|
|
|
93,250
|
|
|
83,500
|
|
|
303,750
|
|
|
254,500
|
|
|
Insurance expense
|
|
|
123,725
|
|
|
127,274
|
|
|
366,156
|
|
|
377,671
|
|
|
Interest expense and other fees
|
|
|
8,049,063
|
|
|
6,448,280
|
|
|
24,037,462
|
|
|
16,864,255
|
|
|
Income tax expense
|
|
|
335,508
|
|
|
361,115
|
|
|
1,082,057
|
|
|
1,066,768
|
|
|
Other general and administrative expenses
|
|
|
217,655
|
|
|
207,170
|
|
|
727,754
|
|
|
766,562
|
|
|
Total Operating Expenses
|
|
$
|
16,344,227
|
|
$
|
12,952,947
|
|
$
|
47,523,727
|
|
$
|
32,867,642
|
|
|
Net Investment Income
|
|
$
|
10,820,799
|
|
$
|
7,189,320
|
|
$
|
30,301,663
|
|
$
|
18,878,074
|
|
|
Net realized gain on non-controlled, non-affiliated investments
|
|
$
|
600,403
|
|
$
|
1,553,450
|
|
$
|
324,782
|
|
$
|
4,658,817
|
|
|
Net realized loss on foreign currency translation
|
|
|
(22,166)
|
|
|
(676)
|
|
|
(72,782)
|
|
|
(8,026)
|
|
|
Net change in unrealized depreciation on non-controlled, non-affiliated investments
|
|
|
(13,793,320)
|
|
|
(4,798,980)
|
|
|
(24,338,195)
|
|
|
(12,810,173)
|
|
|
Net change in unrealized depreciation on foreign currency translation
|
|
|
(2,794)
|
|
|
(18,120)
|
|
|
(21,243)
|
|
|
(53,874)
|
|
|
(Provision) benefit for taxes on net unrealized (appreciation) depreciation on investments
|
|
|
(312)
|
|
|
30,535
|
|
|
(144,425)
|
|
|
(151,278)
|
|
|
Net (Decrease) Increase in Net Assets Resulting from Operations
|
|
|
(2,397,390)
|
|
|
3,955,529
|
|
$
|
6,049,800
|
|
$
|
10,513,540
|
|
|
Net Investment Income Per Share—basic and diluted
|
|
$
|
0.47
|
|
$
|
0.37
|
|
$
|
1.42
|
|
$
|
0.97
|
|
|
Net (Decrease) Increase in Net Assets Resulting from Operations Per Share – basic and diluted
|
|
$
|
(0.11)
|
|
$
|
0.20
|
|
$
|
0.28
|
|
$
|
0.54
|
|
|
Weighted Average Shares of Common Stock Outstanding—basic and diluted
|
|
|
22,824,221
|
|
|
19,545,935
|
|
|
21,289,880
|
|
|
19,535,708
|
|
|
Distributions Per Share—basic and diluted
|
|
$
|
0.41
|
|
$
|
0.34
|
|
$
|
1.22
|
|
$
|
0.96
|
|
|
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
Total
|
|
|
|
|
|
Number
|
|
Par
|
|
Paid-in
|
|
distributable
|
|
|
|
|
|
of shares
|
|
value
|
|
capital
|
|
earnings (loss)
|
|
Net Assets
|
|
Balances at December 31, 2021
|
|
19,517,595
|
|
$
|
19,518
|
|
$
|
274,559,121
|
|
$
|
10,532,594
|
|
$
|
285,111,233
|
|
Net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,514,183
|
|
|
5,514,183
|
|
Net realized gain on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,458,090
|
|
|
3,458,090
|
|
Net realized loss on foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,350)
|
|
|
(7,350)
|
|
Net change in unrealized depreciation on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,721,602)
|
|
|
(3,721,602)
|
|
Provision for taxes on unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,157)
|
|
|
(21,157)
|
|
Distributions from net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,464,666)
|
|
|
(5,464,666)
|
|
Issuance of common stock, net of offering costs(1)
|
|
14,924
|
|
|
15
|
|
|
167,655
|
|
|
—
|
|
|
167,670
|
|
Balances at March 31, 2022
|
|
19,532,519
|
|
$
|
19,533
|
|
$
|
274,726,776
|
|
$
|
10,290,092
|
|
$
|
285,036,401
|
|
Net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,174,571
|
|
|
6,174,571
|
|
Net realized loss on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(352,723)
|
|
|
(352,723)
|
|
Net change in unrealized depreciation on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,289,591)
|
|
|
(4,289,591)
|
|
Net change in unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,754)
|
|
|
(35,754)
|
|
Provision for taxes on unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(160,656)
|
|
|
(160,656)
|
|
Distributions from net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,643,663)
|
|
|
(6,643,663)
|
|
Issuance of common stock, net of offering costs(1)
|
|
13,416
|
|
|
13
|
|
|
137,520
|
|
|
—
|
|
|
137,533
|
|
Balances at June 30, 2022
|
|
19,545,935
|
|
$
|
19,546
|
|
$
|
274,864,296
|
|
$
|
4,982,276
|
|
$
|
279,866,118
|
|
Net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,189,320
|
|
|
7,189,320
|
|
Net realized gain on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,553,450
|
|
|
1,553,450
|
|
Net realized loss on foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(676)
|
|
|
(676)
|
|
Net change in unrealized depreciation on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,798,980)
|
|
|
(4,798,980)
|
|
Net change in unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,120)
|
|
|
(18,120)
|
|
Benefit for taxes on unrealized depreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,535
|
|
|
30,535
|
|
Distributions from net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,643,663)
|
|
|
(6,643,663)
|
|
Balances at September 30, 2022
|
|
19,545,935
|
|
$
|
19,546
|
|
$
|
274,864,296
|
|
$
|
2,294,142
|
|
$
|
277,177,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2022
|
|
19,666,769
|
|
$
|
19,667
|
|
$
|
275,114,720
|
|
$
|
642,226
|
|
$
|
275,776,613
|
|
Net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,067,620
|
|
|
9,067,620
|
|
Net realized gain on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,967
|
|
|
34,967
|
|
Net realized loss on foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39,912)
|
|
|
(39,912)
|
|
Net change in unrealized depreciation on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,249,642)
|
|
|
(4,249,642)
|
|
Net change in unrealized appreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,874
|
|
|
1,874
|
|
Provision for taxes on unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78,760)
|
|
|
(78,760)
|
|
Distributions from net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,951,284)
|
|
|
(7,951,284)
|
|
Issuance of common stock, net of offering costs(1)
|
|
581,614
|
|
|
581
|
|
|
8,289,988
|
|
|
—
|
|
|
8,290,569
|
|
Balances at March 31, 2023
|
|
20,248,383
|
|
$
|
20,248
|
|
$
|
283,404,708
|
|
$
|
(2,572,911)
|
|
$
|
280,852,045
|
|
Net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,413,244
|
|
|
10,413,244
|
|
Net realized loss on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(310,588)
|
|
|
(310,588)
|
|
Net realized loss on foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,704)
|
|
|
(10,704)
|
|
Net change in unrealized depreciation on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,295,233)
|
|
|
(6,295,233)
|
|
Net change in unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,323)
|
|
|
(20,323)
|
|
Provision for taxes on unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65,353)
|
|
|
(65,353)
|
|
Distributions from net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,659,144)
|
|
|
(8,659,144)
|
|
Issuance of common stock, net of offering costs(1)
|
|
2,309,521
|
|
|
2,310
|
|
|
32,418,774
|
|
|
—
|
|
|
32,421,084
|
|
Balances at June 30, 2023
|
|
22,557,904
|
|
$
|
22,558
|
|
$
|
315,823,482
|
|
$
|
(7,521,012)
|
|
$
|
308,325,028
|
|
Net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,820,799
|
|
|
10,820,799
|
|
Net realized gain on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
600,403
|
|
|
600,403
|
|
Net realized loss on foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,166)
|
|
|
(22,166)
|
|
Net change in unrealized depreciation on non-controlled, non-affiliated investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,793,320)
|
|
|
(13,793,320)
|
|
Net change in unrealized depreciation on foreign currency translations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,794)
|
|
|
(2,794)
|
|
Provision for taxes on unrealized appreciation on investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(312)
|
|
|
(312)
|
|
Distributions from net investment income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,269,208)
|
|
|
(9,269,208)
|
|
Issuance of common stock, net of offering costs(1)
|
|
1,567,738
|
|
|
1,567
|
|
|
21,465,783
|
|
|
—
|
|
|
21,467,350
|
|
Balances at September 30, 2023
|
|
24,125,642
|
|
$
|
24,125
|
|
$
|
337,289,265
|
|
$
|
(19,187,610)
|
|
$
|
318,125,780
|
|
|
(1) See Note 4 to the Consolidated Financial Statements on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2023 for more information on offering costs.
|
|
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the nine
|
|
For the nine
|
|
|
|
months ended
|
|
months ended
|
|
|
|
September 30, 2023
|
|
September 30, 2022
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
6,049,800
|
|
$
|
10,513,540
|
|
|
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Purchases of investments
|
|
|
(139,650,422)
|
|
|
(180,956,810)
|
|
|
Proceeds from sales and repayments of investments
|
|
|
79,053,967
|
|
|
74,385,466
|
|
|
Net change in unrealized depreciation on investments
|
|
|
24,338,195
|
|
|
12,810,173
|
|
|
Net change in unrealized depreciation on foreign currency translations
|
|
|
21,087
|
|
|
28,405
|
|
|
Increase in investments due to PIK
|
|
|
(2,732,530)
|
|
|
(1,010,061)
|
|
|
Amortization of premium and accretion of discount, net
|
|
|
(2,078,183)
|
|
|
(1,839,720)
|
|
|
Deferred tax provision
|
|
|
144,425
|
|
|
151,278
|
|
|
Amortization of loan structure fees
|
|
|
436,257
|
|
|
420,356
|
|
|
Amortization of deferred financing costs
|
|
|
334,122
|
|
|
334,122
|
|
|
Amortization of loan fees on SBA-guaranteed debentures
|
|
|
938,247
|
|
|
905,294
|
|
|
Net realized gain on investments
|
|
|
(324,782)
|
|
|
(4,658,817)
|
|
|
Changes in other assets and liabilities
|
|
|
|
|
|
|
|
|
Increase in interest receivable
|
|
|
(1,615,612)
|
|
|
(907,787)
|
|
|
Increase in other receivables
|
|
|
(26,250)
|
|
|
(5,743)
|
|
|
Increase in related party receivables
|
|
|
—
|
|
|
(19,034)
|
|
|
Decrease in prepaid expenses
|
|
|
517,512
|
|
|
293,135
|
|
|
(Decrease) increase in management fees payable
|
|
|
(3,217,286)
|
|
|
3,578,496
|
|
|
Increase in income incentive fees payable
|
|
|
594,142
|
|
|
160,521
|
|
|
Decrease in capital gains incentive fees payable
|
|
|
(569,528)
|
|
|
(1,672,549)
|
|
|
Increase (decrease) in administrative services payable
|
|
|
45,708
|
|
|
(9,481)
|
|
|
Decrease in interest payable
|
|
|
(3,324,507)
|
|
|
(2,808,314)
|
|
|
Decrease in related party payable
|
|
|
(1,060,321)
|
|
|
—
|
|
|
Increase (decrease) in unearned revenue
|
|
|
22,535
|
|
|
(185,171)
|
|
|
Decrease in income tax payable
|
|
|
(59,004)
|
|
|
(2,183,176)
|
|
|
(Decrease) increase in other accrued expenses and liabilities
|
|
|
(272,305)
|
|
|
59,623
|
|
|
Net Cash Used in Operating Activities
|
|
$
|
(42,434,733)
|
|
$
|
(92,616,254)
|
|
|
Cash flows from Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of common stock
|
|
$
|
63,348,436
|
|
$
|
420,004
|
|
|
Sales load for common stock issued
|
|
|
(943,248)
|
|
|
(5,957)
|
|
|
Offering costs paid for common stock issued
|
|
|
(225,085)
|
|
|
(335,953)
|
|
|
Stockholder distributions paid
|
|
|
(22,663,688)
|
|
|
(17,708,494)
|
|
|
Proceeds from SBA-guaranteed debentures
|
|
|
11,400,000
|
|
|
56,000,000
|
|
|
Financing costs paid on SBA-guaranteed debentures
|
|
|
(277,590)
|
|
|
(1,363,600)
|
|
|
Financing costs paid on Credit facility
|
|
|
(35,000)
|
|
|
(193,659)
|
|
|
Borrowings under Credit Facility
|
|
|
79,700,000
|
|
|
121,608,702
|
|
|
Repayments of Credit Facility
|
|
|
(116,701,700)
|
|
|
(97,559,902)
|
|
|
Net Cash Provided by Financing Activities
|
|
$
|
13,602,125
|
|
$
|
60,861,141
|
|
|
Net Decrease in Cash and Cash Equivalents
|
|
$
|
(28,832,608)
|
|
$
|
(31,755,113)
|
|
|
Cash and Cash Equivalents Balance at Beginning of Period
|
|
$
|
48,043,329
|
|
$
|
44,174,856
|
|
|
Cash and Cash Equivalents Balance at End of Period
|
|
$
|
19,210,721
|
|
$
|
12,419,743
|
|
|
Supplemental and Non-Cash Activities
|
|
|
|
|
|
|
|
|
Cash paid for interest expense
|
|
$
|
25,653,343
|
|
$
|
18,012,797
|
|
|
Income and excise tax paid
|
|
|
1,141,061
|
|
|
3,249,944
|
|
|
Increase in dividends payable
|
|
|
3,215,948
|
|
|
1,043,498
|
|
|
(Decrease) increase in deferred offering costs
|
|
|
(1,100)
|
|
|
227,109
|
|
|
Reconciliation of Core Net Investment Income (1)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
|
September 30, 2023
|
|
September 30, 2022
|
|
Net investment income
|
|
$10,820,799
|
|
$7,189,320
|
|
Capital gains incentive reversal
|
|
-
|
|
(646,757)
|
|
Income tax expense
|
|
335,508
|
|
361,115
|
|
Core net investment income
|
|
$11,156,307
|
|
$6,903,678
|
|
|
|
|
|
|
Per share amounts:
|
|
|
|
|
|
Net investment income per share
|
|
$0.47
|
|
$0.37
|
|
Core net investment income per share
|
|
$0.49
|
|
$0.35
|
|
Reconciliation of Realized Net Investment Income (2)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
|
September 30, 2023
|
|
September 30, 2022
|
|
Net investment income
|
|
$10,820,799
|
|
$7,189,320
|
|
Net realized gain on investments
|
|
600,403
|
|
1,553,450
|
|
Net realized loss on foreign currency translation
|
|
(22,166)
|
|
(676)
|
|
Total Realized Net Investment Income
|
|
$11,399,036
|
|
$8,742,094
|
|
|
|
|
|
|
Per share amounts:
|
|
|
|
|
|
Net investment income per share
|
|
$0.47
|
|
$0.37
|
|
Realized net investment income per share
|
|
$0.50
|
|
$0.45
|
|
|
|
|
|
|
|
|
|
|
View original content to download multimedia:https://www.prnewswire.com/news-releases/stellus-capital-investment-corporation-reports-results-for-its-third-fiscal-quarter-ended-september-30-2023-301980791.html
SOURCE Stellus Capital Investment Corporation
