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Stellus Capital Investment Corporation Reports Results for its Third Fiscal Quarter Ended September 30, 2024

SCM

HOUSTON, Nov. 7, 2024 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus", "we", or the "Company") today announced financial results for its fiscal quarter ended September 30, 2024.

Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report solid operating results for the quarter ended September 30, 2024, in which we earned U.S. GAAP net investment income of $0.39 per share and core net investment income of $0.40 per share, which covered the regular dividend declared of $0.40 per share. Net asset value per share increased by $0.19 per share from the prior quarter end. Subsequent to the quarter end, we increased our capital base by $55 million through the upsizing of our Credit Facility to $315 million. As we celebrate the completion of twelve years of operations, I'm also pleased to report that our investors have received a total of $273 million in distributions, equivalent to $16.28 per share, since we began operations."

FINANCIAL HIGHLIGHTS
($ in millions, except data relating to per share amounts and shares outstanding)














Three Months Ended


Nine Months Ended


September 30, 2024


September 30, 2023


September 30, 2024


September 30, 2023


Amount

Per Share


Amount

Per Share


Amount

Per Share


Amount

Per Share

Net investment income

$10.26

$0.39


$10.82

$0.47


$32.29

$1.29


$30.30

$1.42

Core net investment income(1)

10.62

0.40


11.16

0.49


33.59

1.34


30.81

1.45

Net realized (loss) gain on investments

(3.30)

(0.13)


0.60

0.03


(21.69)

(0.87)


0.32

0.01

Net realized loss on foreign currency translation

(0.02)


(0.02)


(0.08)


(0.07)

Total realized income(2)

$6.94

$0.26


$11.40

$0.50


$10.52

$0.42


$30.55

$1.43

Distributions

(10.63)

(0.40)


(9.27)

(0.41)


(30.32)

(1.21)


(25.88)

(1.22)

Net unrealized change in appreciation (depreciation) on investments

8.51

0.33


(13.80)

(0.61)


26.44

1.05


(24.34)

(1.14)

Net unrealized change in appreciation (depreciation) on foreign currency translation

0.01




(0.02)

Benefit (provision) for taxes on unrealized depreciation (appreciation) on investments

in taxable subsidiaries



0.19

0.01


(0.14)

(0.01)

Net increase (decrease) in net assets resulting from operations

$15.46

$0.59


($2.40)

($0.11)


$37.15

$1.48


$6.05

$0.28

Weighted average shares outstanding


26,326,426



22,824,221



25,066,626



21,289,880



(1)

Core net investment income, as presented, excludes the impact of capital gains incentive fees (reversal) and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S. generally accepted accounting principles ("U.S. GAAP") measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements.

(2)

Total realized income is the sum of net investment income, net realized gains (losses) on investments, net realized gains (losses) on foreign currency, and loss on debt extinguishment; all U.S. GAAP measures.

PORTFOLIO ACTIVITY
($ in millions, except data relating to per share amounts and number of portfolio companies)



As of


As of







September 30, 2024


December 31, 2023





Investments at fair value


$908.7


$874.5





Total assets


$957.1


$908.1





Net assets


$366.3


$319.9





Shares outstanding


27,039,364


24,125,642





Net asset value per share


$13.55


$13.26
















Three Months Ended


Nine Months Ended



September 30, 2024


September 30, 2023


September 30, 2024


September 30, 2023

New investments


$17.8


$51.9


$112.6


$139.7

Repayments of investments


(15.5)


(34.8)


(87.3)


(79.1)

Net activity


$2.3


$17.1


$25.3


$60.6












As of


As of







September 30, 2024


December 31, 2023





Number of portfolio company investments


99


93





Number of debt investments


86


81














Weighted average yield of debt and other income

producing investments (3)









Cash


10.2 %


11.0 %





Payment-in-kind ("PIK")


0.4 %


0.5 %





Fee amortization


0.4 %


0.4 %





Total


11.0 %


11.9 %














Weighted average yield on total investments (4)









Cash


9.5 %


10.3 %





PIK


0.4 %


0.5 %





Fee amortization


0.4 %


0.3 %





Total


10.3 %


11.1 %







(3)

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

(4)

The dollar-weighted average yield on total investments takes the same yields as calculated in the footnote above but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity.

Results of Operations

Investment income for the three months ended September 30, 2024 and 2023 totaled $26.5 million and $27.2 million, respectively, most of which was interest income from portfolio investments.

Gross operating expenses for the three months ended September 30, 2024 and 2023 totaled $16.2 million and $16.3 million, respectively. For the same respective periods, base management fees totaled $3.9 million for both periods, income incentive fees totaled $2.6 million and $2.7 million, fees and expenses related to our borrowings totaled $8.0 million for both periods (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million for both periods, income tax totaled $0.4 million and $0.3 million and other expenses totaled $0.8 million and $0.9 million.

Net investment income was $10.3 million and $10.8 million, or $0.39 and $0.47 per common share based on weighted average common shares outstanding of 26,326,426 and 22,824,221 for the three months ended September 30, 2024 and 2023, 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, 2024 and 2023 was $10.6 million and $11.2 million, or $0.40 and $0.49 per share, respectively.

For the three months ended September 30, 2024 and 2023, the Company's investment portfolio had a net change in unrealized appreciation (depreciation) of $8.5 million and ($13.8) million, respectively, and the Company had net realized (losses) gains of ($3.3) million and $0.6 million, respectively.

Net increase (decrease) in net assets resulting from operations totaled $15.5 million and ($2.4) million, or $0.59 and ($0.11) per common share, based on weighted average common shares outstanding of 26,326,426 and 22,824,221 for the three months ended September 30, 2024 and 2023, respectively.

Liquidity and Capital Resources

As of September 30, 2024, the Company's amended 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 $260.0 million on a committed basis. As of September 30, 2024 and December 31, 2023, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size up to $350.0 million.

As of September 30, 2024 and December 31, 2023, the Company had $157.4 million and $160.1 million in outstanding borrowings under the Credit Facility, respectively.

The Company issued 1,058,366 shares during the three months ended September 30, 2024 under the At-the-Market Program ("ATM Program") for gross proceeds of $14.6 million. The average per share offering price of shares issued under the ATM Program during the three months ended September 30, 2024 was $13.79. Stellus Capital Management, LLC, the Company's investment adviser (the "Advisor"), agreed to reimburse the Company for underwriting fees to the extent the per share price of the shares to the public, less underwriting fees, was less then net asset value per share. For the three months ended September 30, 2024, the Advisor was not required to reimburse underwriting fees as all shares were issued at a premium to net asset value.

Distributions

For the three months ended September 30, 2024 and 2023, the Company declared aggregate distributions of $0.40 per share for both periods ($10.6 million and $9.3 million in the aggregate, 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, 2024:













Activity Type


Date


Company Name


Company Description


Investment Amount


Instrument Type

Add-On Investment


July 31, 2024


PCS Software, Inc.*


Provider of integrated transportation management software

for the inland trucking industry


$

9,995


Equity

Add-On Investment


August 12,
2024


Trade Education Acquisition, L.L.C.*


Online education platform for retail investors


$

80,000


Revolver Commitment

New Investment


August 16,
2024


Bart & Associates, LLC


Provides IT modernization services for federal customers


$

8,942,723


Senior Secured – First Lien









$

1,733,387


Delayed Draw Term Loan Commitment









$

1,046,677


Revolver Commitment









$

418,671


Equity

Add-On Investment


August 26,
2024


Impact Home Services LLC*


Residential garage door, electrical, and plumbing services provider


$

1,571,984


Delayed Draw Term Loan Commitment

Add-On Investment


September 11,
2024


Service Minds Company, LLC*


Provider of residential electrical services


$

20,000


Revolver Commitment

Add-On Investment


September 30,
2024


The Hardenbergh Group, Inc. *


Provider of temporary professional staffing of medical services

professionals, external peer review, consulting and physician

leadership solutions


$

804,031


Senior Secured – First Lien

Add-On Investment


September 30,
2024


Monitorus Holding, LLC*


Provider of media monitoring and evaluation services


$

11,629


Unsecured Convertible Bond

Add-On Investment


September 30,
2024


ADS Group Opco, LLC*


Full-service manufacturer for OEMs, prime contractors, and Tier I

suppliers across the defense, space, and aerospace industries


$

69,453


Revolver Commitment


*Existing portfolio company

The Company realized investments in the following portfolio companies during the three months ended September 30, 2024:

Activity Type


Date


Company Name


Company Description


Proceeds Received


Realized Gain


Instrument Type

Full Realization


August 1, 2024


ICD Holdings, LLC*


Financial company that connects corporate treasury departments

with money market and short duration bond funds


$

2,599,378


$

2,192,411


Equity

Full Repayment


September 27, 2024


EHI Buyer, Inc.*


Provider of design, engineering, installation, and maintenance

services for building management systems


$

6,050,229


$


Senior Secured – First Lien









$

2,322,310


$


Delayed Draw Term Loan


*Existing portfolio company

Events Subsequent to September 30, 2024

The Company's management has evaluated subsequent events through November 7, 2024. 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, 2024:

Activity Type


Date


Company Name


Company Description


Investment Amount


Instrument Type

Add-On Investment


October 18, 2024


Compost 360 Investments, LLC*


Organic waste recycler and producer of compost,

mulch, and engineered soils


$

49,280


Equity

New Investment


October 31, 2024


Norplex Micarta Acquisition, Inc.


Manufacturer of thermoset composite laminates


$

13,000,000


Senior Secured – First Lien









$

500,000


Revolver Commitment









$

739,804


Equity

Add-On Investment


November 7, 2024


Green Intermediateco II, Inc.*


Cyber-security focused value-added reseller and

associated service provider


$

1,300,000


Senior Secured – First Lien


*Existing portfolio company

The Company realized an investment in the following portfolio company subsequent to September 30, 2024:

Activity Type


Date


Company Name


Company Description


Proceeds Received


Realized Gain


Instrument Type

Full Repayment


November 4, 2024


Baker Manufacturing Company, LLC*


Manufacturer of water well equipment, specialized

filtration pumps, and custom castings


$

12,738,093


$


Senior Secured – First Lien

Full Realization


November 5, 2024


Health Monitor Holdings, LLC*


Provider of point-of-care patient engagement and

marketing solutions for pharmaceutical companies


$

1,704,298


$

651,379


Equity


*Existing portfolio company

Credit Facility

On October 30, 2024, the Company entered into an Increase Agreement to the Credit Facility which, among other things, amends the Credit Facility to increase the total available commitments under the Credit Facility from $260.0 million to $315.0 million on a committed basis.

The outstanding balance under the Credit Facility as of November 7, 2024 was $158.0 million.

Distributions Declared

On October 10, 2024, our Board of Directors declared a regular monthly distribution for each of October, November, and December 2024, as follows:



Ex-Dividend


Record


Payment


Amount per

Declared


Date


Date


Date


Share

10/10/2024


10/31/2024


10/31/2024


11/15/2024


$

0.1333

10/10/2024


11/29/2024


11/29/2024


12/13/2024


$

0.1333

10/10/2024


12/31/2024


12/31/2024


1/15/2024


$

0.1333

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Friday, November 8, 2024 at 11:00 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 122799. Starting approximately two hours after the conclusion of the call, a replay will be available through Friday, November 22, 2024 by dialing (877) 481-4010 and entering passcode 51477. The replay will also be available on the Company's website.

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

About Stellus Capital Investment Corporation

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

Forward-Looking Statements

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

Contacts

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

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES












September 30, 2024






(unaudited)


December 31, 2023


ASSETS








Controlled investments at fair value (amortized cost of $17,934,808 and $17,285,138,

respectively)


$

7,749,169


$

6,175,994


Non-controlled, non-affiliated investments, at fair value (amortized cost of $891,385,080

and $884,858,412, respectively)



900,969,724



868,284,689


Cash and cash equivalents



38,580,261



26,125,741


Receivable for sales and repayments of investments



1,358,421



371,877


Interest receivable



6,272,194



4,882,338


Income tax receivable



1,817,371



1,588,708


Other receivables



67,995



42,995


Deferred offering costs





7,312


Prepaid expenses



256,724



606,674


Total Assets


$

957,071,859


$

908,086,328


LIABILITIES








Notes Payable


$

99,331,757


$

98,996,412


Credit Facility payable



154,578,467



156,564,776


SBA-guaranteed debentures



321,058,121



320,273,358


Dividends payable



3,604,347




Management fees payable



3,959,554



2,918,536


Income incentive fees payable



3,154,576



2,885,180


Interest payable



1,253,031



5,241,164


Related party payable



1,898,854




Unearned revenue



550,348



397,725


Administrative services payable



401,033



402,151


Deferred tax liability





188,893


Other accrued expenses and liabilities



996,484



278,345


Total Liabilities


$

590,786,572


$

588,146,540


Commitments and contingencies (Note 7)








Net Assets


$

366,285,287


$

319,939,788


NET ASSETS








Common stock, par value $0.001 per share (100,000,000 shares authorized; 27,039,364

and 24,125,642 issued and outstanding, respectively)


$

27,039


$

24,125


Paid-in capital



375,430,445



335,918,984


Total distributable loss



(9,172,197)



(16,003,321)


Net Assets


$

366,285,287


$

319,939,788


Total Liabilities and Net Assets


$

957,071,859


$

908,086,328


Net Asset Value Per Share


$

13.55


$

13.26


STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)


















For the three months ended


For the nine months ended




September 30, 2024


September 30, 2023


September 30, 2024


September 30, 2023


INVESTMENT INCOME














From controlled investments:














Interest income


$


$


$

81,636


$


From non-controlled, non-affiliated investments














Interest income



25,338,361



26,223,986



75,460,156



75,295,485


Other income



1,159,898



941,040



3,579,415



2,529,905


Total Investment Income


$

26,498,259


$

27,165,026


$

79,121,207


$

77,825,390


OPERATING EXPENSES














Management fees


$

3,959,554


$

3,933,121


$

11,664,020


$

11,533,811


Valuation fees



151,535



139,267



343,753



332,762


Administrative services expenses



469,274



470,846



1,441,436



1,399,188


Income incentive fees



2,564,922



2,705,200



7,616,562



7,433,039


Capital gains incentive fee reversal









(569,528)


Professional fees



312,034



276,592



847,866



877,276


Directors' fees



93,250



93,250



315,750



303,750


Insurance expense



126,362



123,725



376,840



366,156


Interest expense and other fees



7,956,403



8,049,063



23,840,473



24,037,462


Income tax expense



360,192



335,508



1,304,948



1,082,057


Other general and administrative expenses



245,043



217,655



908,185



727,754


Total Operating Expenses


$

16,238,569


$

16,344,227


$

48,659,833


$

47,523,727


Income incentive fee waiver







(1,826,893)




Total Operating Expenses, net of fee waivers


$

16,238,569


$

16,344,227


$

46,832,940


$

47,523,727


Net Investment Income


$

10,259,690


$

10,820,799


$

32,288,267


$

30,301,663


Net realized (loss) gain on non-controlled, non-affiliated investments


$

(3,297,615)


$

600,403


$

(21,689,864)


$

324,782


Net realized loss on foreign currency translations



(22,095)



(22,166)



(76,990)



(72,782)


Net change in unrealized appreciation on controlled investments



248,746





923,505




Net change in unrealized appreciation (depreciation) on non-controlled,

non-affiliated investments



8,255,272



(13,793,320)



25,512,422



(24,338,195)


Net change in unrealized appreciation (depreciation) on foreign currency

translations



14,588



(2,794)



5,099



(21,243)


(Provision) benefit for taxes on net unrealized (appreciation) depreciation

on investments





(312)



188,893



(144,425)


Benefit for taxes on net realized loss on investments



2,221





2,221




Net Increase (Decrease) in Net Assets Resulting from Operations


$

15,460,807


$

(2,397,390)


$

37,153,553


$

6,049,800


Net Investment Income Per Share—basic and diluted


$

0.39


$

0.47


$

1.29


$

1.42


Net Increase (Decrease) in Net Assets Resulting from Operations Per

Share – basic and diluted


$

0.59


$

(0.11)


$

1.48


$

0.28


Weighted Average Shares of Common Stock Outstanding—basic and

diluted



26,326,426



22,824,221



25,066,626



21,289,880


Distributions Per Share—basic and diluted


$

0.40


$

0.41


$

1.21


$

1.22


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, 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 investments








34,967



34,967

Net realized loss on foreign currency translations








(39,912)



(39,912)

Net change in unrealized depreciation on 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 investments








600,403



600,403

Net realized loss on foreign currency translation








(22,166)



(22,166)

Net change in unrealized depreciation on 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
















Balances at December 31, 2023


24,125,642


$

24,125


$

335,918,984


$

(16,003,321)


$

319,939,788

Net investment income








10,235,916



10,235,916

Net realized loss on investments








(20,384,731)



(20,384,731)

Net realized loss on foreign currency translations








(25,106)



(25,106)

Net change in unrealized appreciation on investments








23,518,590



23,518,590

Net change in unrealized depreciation on foreign currency translations








(3,602)



(3,602)

Provision for taxes on unrealized appreciation on investments








(192,607)



(192,607)

Distributions from net investment income








(9,647,844)



(9,647,844)

Balances at March 31, 2024


24,125,642


$

24,125


$

335,918,984


$

(12,502,705)


$

323,440,404

Net investment income








11,792,661



11,792,661

Net realized gain on investments








1,992,482



1,992,482

Net realized loss on foreign currency translations








(29,789)



(29,789)

Net change in unrealized depreciation on investments








(5,586,681)



(5,586,681)

Net change in unrealized depreciation on foreign currency translations








(5,887)



(5,887)

Benefit for taxes on unrealized depreciation on investments








381,500



381,500

Distributions from net investment income








(10,049,073)



(10,049,073)

Issuance of common stock, net of offering costs(1)


1,855,356



1,856



25,248,020





25,249,876

Balances at June 30, 2024


25,980,998


$

25,981


$

361,167,004


$

(14,007,492)


$

347,185,493

Net investment income








10,259,690



10,259,690

Net realized loss on investments








(3,297,615)



(3,297,615)

Net realized loss on foreign currency translation








(22,095)



(22,095)

Net change in unrealized appreciation on investments








8,504,018



8,504,018

Net change in unrealized appreciation on foreign currency translations








14,588



14,588

Benefit for taxes on net realized loss on investments








2,221



2,221

Distributions from net investment income








(10,625,512)



(10,625,512)

Issuance of common stock, net of offering costs(1)


1,058,366



1,058



14,263,441





14,264,499

Balances at September 30, 2024


27,039,364


$

27,039


$

375,430,445


$

(9,172,197)


$

366,285,287









(1)

See Note 4 to the Consolidated Financial Statements on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2024 for more information on offering costs.

STELLUS CAPITAL INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)










For nine months ended



September 30, 2024


September 30, 2023

Cash flows from operating activities







Net increase in net assets resulting from operations


$

37,153,553


$

6,049,800

Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:







Purchases of investments



(112,624,812)



(139,650,422)

Proceeds from sales and repayments of investments



87,308,914



79,053,967

Net change in unrealized (appreciation) depreciation on investments



(26,435,927)



24,338,195

Net change in unrealized (appreciation) depreciation on foreign currency translations



(5,099)



21,087

Increase in investments due to PIK



(2,490,856)



(2,732,530)

Amortization of premium and accretion of discount, net



(2,045,992)



(2,078,183)

Deferred tax (benefit) provision



(188,893)



144,425

Amortization of loan structure fees



825,891



436,257

Amortization of deferred financing costs



335,345



334,122

Amortization of loan fees on SBA-guaranteed debentures



784,763



938,247

Net realized loss (gain) on investments



21,689,864



(324,782)

Changes in other assets and liabilities







Increase in interest receivable



(1,389,856)



(1,615,612)

Increase in income tax receivable



(228,663)



Increase in other receivables



(25,000)



(26,250)

Decrease in prepaid expenses



349,950



517,512

Increase (decrease) in management fees payable



1,041,018



(3,217,286)

Increase in income incentive fees payable



269,396



594,142

Decrease in capital gains incentive fees payable





(569,528)

(Decrease) increase in administrative services payable



(1,118)



45,708

Decrease in interest payable



(3,988,133)



(3,324,507)

Increase (decrease) in related party payable



1,898,854



(1,060,321)

Increase in unearned revenue



152,623



22,535

Decrease in income tax payable





(59,004)

Increase (decrease) in other accrued expenses and liabilities



718,139



(272,305)

Net Cash Provided (Used) in Operating Activities


$

3,103,961


$

(42,434,733)

Cash flows from Financing Activities







Proceeds from the issuance of common stock


$

40,370,901


$

63,348,436

Sales load for common stock issued



(606,145)



(943,248)

Offering costs paid for common stock issued



(243,067)



(225,085)

Stockholder distributions paid



(26,718,082)



(22,663,688)

Proceeds from SBA-guaranteed debentures





11,400,000

Financing costs paid on SBA-guaranteed debentures





(277,590)

Financing costs paid on Credit Facility



(101,348)



(35,000)

Borrowings under Credit Facility



122,400,000



79,700,000

Repayments of Credit Facility



(125,751,700)



(116,701,700)

Net Cash Provided by Financing Activities


$

9,350,559


$

13,602,125

Net Increase (Decrease) in Cash and Cash Equivalents


$

12,454,520


$

(28,832,608)

Cash and Cash Equivalents Balance at Beginning of Period


$

26,125,741


$

48,043,329

Cash and Cash Equivalents Balance at End of Period


$

38,580,261


$

19,210,721

Supplemental and Non-Cash Activities







Cash paid for interest expense


$

25,882,607


$

25,653,343

Income and excise tax paid



1,533,611



1,141,061

Increase in distributions payable



3,604,347



3,215,948

Decrease in deferred offering costs



(7,312)



(1,100)

Reconciliation of Core Net Investment Income (1)

(Unaudited)








Three Months Ended



September 30, 2024


September 30, 2023

Net investment income


$10,259,690


$10,820,799

Income tax expense


360,192


335,508

Core net investment income


$10,619,882


$11,156,307






Per share amounts:





Net investment income per share


$0.39


$0.47

Core net investment income per share


$0.40


$0.49

Reconciliation of Realized Net Investment Income (2)

(Unaudited)








Three Months Ended



September 30, 2024


September 30, 2023

Net investment income


$10,259,690


$10,820,799

Net realized loss on investments


(3,297,615)


600,403

Net realized loss on foreign currency translation


(22,095)


(22,166)

Total Realized Net Investment Income


$6,939,980


$11,399,036






Per share amounts:





Net investment income per share


$0.39


$0.47

Realized net investment income per share


$0.25


$0.50

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SOURCE Stellus Capital Investment Corporation