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01.03.2023 00:15:00
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Stellus Capital Investment Corporation Reports Results for its Fourth Fiscal Quarter and Year Ended December 31, 2022
HOUSTON, Feb. 28, 2023 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus" or the "Company") today announced financial results for its fourth fiscal quarter and year ended December 31, 2022.
Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report strong results for the quarter ended December 31, 2022, in which we more than covered our regular and additional dividends of $0.34 per share with U.S. GAAP net investment income of $0.50 per share and Core net investment income of $0.44 per share, and increased our regular dividend 43% from $0.28 per share per quarter in the fourth quarter of 2022 to $0.40 per share per quarter, payable in monthly increments beginning in the first quarter of 2023. This increase in our dividend reflects the greater earnings that we are generating in this higher interest rate environment in which our loan portfolio is over 97% floating rate and our liability structure is over 65% fixed rate."
FINANCIAL HIGHLIGHTS | |||||||||||
Three Months Ended | Three Months Ended | Year Ended | Year Ended | ||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||
Amount | Per Share | Amount | Per Share | Amount | Per Share | Amount | Per Share | ||||
Net investment income | $9.71 | $0.50 | $5.12 | $0.26 | $28.59 | $1.46 | $19.78 | $1.01 | |||
Core net investment income(1) | 8.66 | 0.44 | 6.53 | 0.33 | 26.93 | 1.38 | 23.75 | 1.22 | |||
Net realized (loss) gain on investments | (1.00) | (0.06) | 17.11 | 0.88 | 3.66 | 0.19 | 23.71 | 1.22 | |||
Net realized loss on foreign currency translation | - | - | - | - | (0.01) | - | - | - | |||
Loss on debt extinguishment | - | - | - | - | - | - | (0.54) | (0.03) | |||
Provision for taxes on realized gain on investments in taxable subsidiaries | - | - | (2.28) | (0.12) | - | - | (2.96) | (0.15) | |||
Total realized income(2) | $8.71 | $0.44 | $19.95 | $1.02 | $32.24 | $1.65 | $40.53 | $2.05 | |||
Distributions | (6.67) | (0.34) | (1.18) | (0.06) | (25.42) | (1.30) | (22.22) | (1.14) | |||
Net unrealized depreciation on investments | (4.73) | (0.24) | (10.80) | (0.55) | (17.54) | (0.90) | (6.93) | (0.36) | |||
Net unrealized appreciation on foreign currency translation | 0.06 | - | - | - | 0.01 | - | - | - | |||
Provision for taxes on unrealized appreciation on investments in taxable subsidiaries | (0.06) | - | 1.10 | 0.06 | (0.21) | (0.01) | 0.51 | 0.03 | |||
Net increase in net assets resulting from operations | $3.98 | 0.20 | $10.25 | 0.53 | $14.49 | 0.74 | $33.57 | 1.72 | |||
Weighted average shares outstanding | 19,604,040 | 19,500,866 | 19,552,931 | 19,489,750 | |||||||
(1) | Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. generally accepted accounting principles ("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 | ||||||||
As of | As of | |||||||
December 31, 2022 | December 31, 2021 | |||||||
Investments at fair value | $844.7 | $772.9 | ||||||
Total assets | $898.2 | $821.3 | ||||||
Net assets | $275.8 | $285.1 | ||||||
Shares outstanding | 19,666,769 | 19,517,595 | ||||||
Net asset value per share | $14.02 | $14.61 | ||||||
Three Months Ended | Three Months Ended | Year Ended | Year Ended | |||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||
New investments | $30.1 | $144.0 | $211.0 | $387.3 | ||||
Repayments of investments | (53.2) | (164.0) | (127.5) | (287.6) | ||||
Net activity | ($23.1) | ($20.0) | $83.5 | $99.7 | ||||
As of | As of | |||||||
December 31, 2022 | December 31, 2021 | |||||||
Number of portfolio company investments | 85 | 73 | ||||||
Number of debt investments | 73 | 58 | ||||||
Weight average yield of debt and other income producing investments (3) | ||||||||
Cash | 10.3 % | 7.4 % | ||||||
Payment-in-kind ("PIK") | 0.4 % | 0.2 % | ||||||
Fee amortization | 0.4 % | 0.4 % | ||||||
Total | 11.1 % | 8.0 % | ||||||
Weighted average yield on total investments (4) | ||||||||
Cash | 9.7 % | 6.9 % | ||||||
Payment-in-kind ("PIK") | 0.3 % | 0.2 % | ||||||
Fee amortization | 0.4 % | 0.4 % | ||||||
Total | 10.4 % | 7.5 % | ||||||
(3) | The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors of our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expense or any sales load that may be paid by investors. |
(4) | The dollar weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity. |
Results of Operations
Investment income for the years ended December 31, 2022 and 2021 totaled $75.1 million and $63.7 million, respectively, most of which was interest income from portfolio investments.
Operating expenses for the years ended December 31, 2022 and 2021, totaled $46.5 million and $43.9 million, respectively. For the same respective periods, base management fees totaled $14.8 million and $13.2 million, income incentive fees totaled $3.8 and $3.0 million, capital gains incentive (reversal) fees totaled ($2.8) million and $2.9 million, fees and expenses related to our borrowings totaled $24.5 million and $18.7 million (including interest and amortization of deferred financing costs), administrative expenses totaled $1.8 million for both periods, income tax totaled $1.2 million and $1.1 million and other expenses totaled $3.2 million for both periods.
The capital gains incentive fee had a reversal of ($2.8) million for the year ended December 31, 2022 due to the increase in unrealized losses, net of realized gains over the year. Such fees, as calculated and accrued, would not necessarily be payable under the investment advisory agreement, and may never be paid based upon the computation of incentive fees in subsequent periods. The income tax expense accrual of $1.2 million for the year ended December 31, 2022 was accrued based on estimates of undistributed taxable income, which was generated largely from net income, offset by realized losses.
Net investment income was $28.6 million and $19.8 million, or $1.46 and $1.01 per common share based on weighted average common shares outstanding of 19,552,931 and 19,489,750 for the years ended December 31, 2022 and 2021, respectively. Core net investment income, which is a non-U.S. GAAP measure that excludes the capital gains incentive fee and income tax expense accruals, for the year ended December 31, 2022 was $26.9 million, or $1.38 per share; and for the year ended December 31, 2021 was $23.7 million, or $1.22 per share.
For the years ended December 31, 2022 and 2021, the Company's investment portfolio had a net change in unrealized depreciation of ($17.5) million and ($6.9) million, respectively, and the Company had realized gains of $3.7 million and $23.7 million, respectively.
Net increase in net assets resulting from operations totaled $14.5 million and $33.6 million, or $0.74 and $1.72 per common share, based on weighted average common shares outstanding of 19,552,931 and 19,489,750 for the years ended December 31, 2022 and 2021, respectively.
Liquidity and Capital Resources
As of December 31, 2022, our amended and restated senior secured revolving credit agreement with certain bank lenders and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $265.0 million on a committed basis. As of December 31, 2022 and 2021, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size to $280.0 million. As of December 31, 2022 and December 31, 2021, we had $199.2 million and $177.3 million in outstanding borrowings under the Credit Facility, respectively.
Distributions
During the three months December 31, 2022 and 2021, we declared aggregate distributions of $0.34 and $0.06 per share, respectively ($6.7 million and $1.2 million, respectively). During the years ended December 31, 2022 and 2021, we declared aggregate distributions of $1.30 per share and $1.14, respectively ($25.4 million and $22.2 million, respectively), Tax characteristics of all distributions are reported to stockholders on Form 1099-DIV. Approximately $3.8 million of the dividends declared in 2022 are expected to be characterized as long-term capital gains. 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 December 31, 2022:
Activity Type | Date | Company Name | Company Description | Investment Amount | Instrument Type | ||||||
New Investment | October 12, 2022 | NINJIO, LLC | Cybersecurity awareness and training platform | $ | 5,000,000 | Senior Secured – First Lien | |||||
$ | 100,000 | Revolver commitment | |||||||||
$ | 100,000 | Delayed draw term loan commitment | |||||||||
$ | 313,253 | Equity | |||||||||
New Investment | November 16, 2022 | Onpoint Industrial Services, LLC | Provider of safety, logistics, planning, and project management services to refineries and petrochemical plant | $ | 12,893,258 | Senior Secured – First Lien | |||||
$ | 606,742 | Equity | |||||||||
New Investment | November 22, 2022 | COPILOT Provider Support Services, LLC | End-to-end HUB software platform for the healthcare industry | $ | 5,000,000 | Senior Secured – First Lien | |||||
$ | 100,000 | Revolver commitment | |||||||||
$ | 285,714 | Equity | |||||||||
Add-On Investment | December 20, 2022 | USASF Blocker V LLC* | Leading integrated used car retailer and subprime auto finance company | $ | 200,000 | Equity | |||||
Add-On Investment | December 22, 2022 | Tower Arch Infolinks Media, LP* | Advertising placement partner for small to mid-sized publishers | $ | 1,093 | Equity | |||||
New Investment | December 30, 2022 | Madison Logic, Inc. | Provider of B2B account based marketing services | $ | 4,529,217 | Senior Secured – First Lien | |||||
$ | 100,000 | Revolver commitment | |||||||||
* | Existing portfolio company | ||||
The Company realized investments in the following portfolio companies during the three months ended December 31, 2022:
Activity Type | Date | Company Name | Proceeds Received | Realized Gain | Instrument Type | |||||||
Full Realization | October 17, 2022 | EC Defense Holdings, LLC | $ | $1,450,000 | $ | $950,000 | Equity | |||||
Full Repayment | November 16, 2022 | Onpoint Industrial Services, LLC | $ | $10,342,500 | $ | — | Senior Secured – First Lien | |||||
Full Realization | $ | $669,654 | $ | $170,619 | Equity | |||||||
Full Realization | November 28, 2022 | Colford Capital Holdings, LLC | $ | — | ($195,036) | Equity | ||||||
Full Realization | December 9, 2022 | Grupo HIMA San Pablo, Inc. | $ | — | $ | ($4,109,525) | Senior Secured – Second Lien | |||||
Full Repayment | December 15, 2022 | Spire Power Solutions, L.P. | $ | $8,371,564 | $ | — | Senior Secured – First Lien | |||||
Full Realization | December 16, 2022 | Skopos Financial Group, LLC | $ | — | $ | ($1,162,544) | Equity | |||||
Full Repayment | December 22, 2022 | TFH Reliability, LLC | $ | $10,875,000 | $ | — | Senior Secured – Second Lien | |||||
Full Realization | $ | $351,797 | $ | $98,765 | Equity | |||||||
Full Repayment | December 30, 2022 | Madison Logic, Inc. | $ | $10,586,585 | $ | — | Senior Secured – First Lien | |||||
Full Realization | $ | $4,128,966 | $ | $4,128,966 | Equity | |||||||
Full Realization | December 30, 2022 | Bromford Holdings, L.P. | $ | — | $ | ($1,146,706) | Equity | |||||
Events Subsequent to December 31, 2022
The Company invested in the following portfolio companies subsequent to December 31, 2022:
Activity Type | Date | Company Name | Company Description | Investment Amount | Instrument Type | ||||||
Add-On Investment | January 5, 2023 | GP ABX Holdings Partnership, L.P.* | Manufacturer of high barrier forming web films | $ | 35,308 | Equity | |||||
New Investment | January 23, 2023 | Evriholder Acquisition, Inc. | Designer and supplier of impulse products and merchandising solutions to retailers. | $ | 13,000,000 | Senior Secured – First Lien | |||||
$ | 873,333 | Equity | |||||||||
$ | 100,000 | Revolver commitment | |||||||||
New Investment | January 31, 2023 | Red's All Natural, LLC | Premium frozen food manufacturer | $ | 10,916,882 | Senior Secured – First Lien | |||||
$ | 710,600 | Equity | |||||||||
* Existing portfolio company | |||||
Credit Facility
The outstanding balance under the Credit Facility as of February 28, 2023 was $205.6 million.
SBA-guaranteed Debentures
The total balance of SBA-guaranteed debentures outstanding as of February 28, 2023 was $313.6 million.
Distributions Declared
On January 11, 2023, our Board of Directors declared a regular monthly distribution for each of January, February, and March 2023, as follows:
Ex-Dividend | Record | Payment | Amount per | ||||||
Declared | Date | Date | Date | Share | |||||
1/11/2023 | 1/30/2023 | 1/31/2023 | 2/15/2023 | $ | 0.1333 | ||||
1/11/2023 | 2/27/2023 | 2/28/2023 | 3/15/2023 | $ | 0.1333 | ||||
1/11/2023 | 3/30/2023 | 3/31/2023 | 4/14/2023 | $ | 0.1333 | ||||
Conference Call Information
Stellus Capital Investment Corporation will host a conference call to discuss these results on Wednesday, March 1, 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 265440. Starting approximately two hours after the conclusion of the call, a replay will be available through Wednesday, March 15, 2023 by dialing (877) 481-4010 and entering passcode 47767. The replay will also be available on the Company's website.
For those wishing to participate via Live Webcast, connect via the Public Company (SCIC) section of our website at www.stelluscapital.com, under the Events tab. A replay of the conference will be available on our website for approximately 90 days.
About Stellus Capital Investment Corporation
The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA (earnings before interest, taxes, depreciation and amortization)) through first lien (including unitranche) loans, second lien loans and unsecured debt financing, with corresponding equity co-investments. The Company's investment activities are managed by its investment adviser, Stellus Capital Management. To learn more about Stellus Capital Investment Corporation, visit www.stelluscapital.com under the "Public (SCIC)" tab.
Forward-Looking Statements
Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release 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 | ||||||
December 31, 2022 | December 31, 2021 | |||||
ASSETS | ||||||
Non-controlled, non-affiliated investments, at fair value (amortized cost of $875,823,177 | $ | 844,733,638 | $ | 772,873,326 | ||
Cash and cash equivalents | 48,043,329 | 44,174,856 | ||||
Receivable for sales and repayments of investments | 718,794 | 536,105 | ||||
Interest receivable | 3,984,409 | 2,944,599 | ||||
Other receivables | 34,245 | 54,752 | ||||
Deferred tax asset | — | 151,278 | ||||
Deferred offering costs | 1,100 | 14,888 | ||||
Prepaid expenses | 667,267 | 512,214 | ||||
Total Assets | $ | 898,182,782 | $ | 821,262,018 | ||
LIABILITIES | ||||||
Notes payable | $ | 98,549,692 | $ | 98,102,973 | ||
Credit Facility payable | 197,685,281 | 175,451,116 | ||||
SBA-guaranteed debentures | 307,895,195 | 244,615,903 | ||||
Dividends payable | — | 1,171,059 | ||||
Management fees payable | 7,150,407 | 3,454,225 | ||||
Income incentive fees payable | 2,464,408 | 1,749,130 | ||||
Capital gains incentive fees payable | 569,528 | 3,388,151 | ||||
Interest payable | 4,640,841 | 3,693,662 | ||||
Related party payable | 1,060,321 | — | ||||
Unearned revenue | 320,675 | 529,726 | ||||
Administrative services payable | 356,919 | 386,368 | ||||
Income tax payable | 1,175,373 | 3,269,514 | ||||
Deferred tax liability | 61,936 | — | ||||
Other accrued expenses and liabilities | 475,593 | 338,958 | ||||
Total Liabilities | $ | 622,406,169 | $ | 536,150,785 | ||
Commitments and contingencies (Note 7) | ||||||
Net Assets | $ | 275,776,613 | $ | 285,111,233 | ||
NET ASSETS | ||||||
Common stock, par value $0.001 per share (100,000,000 shares authorized; 19,666,769 and | $ | 19,667 | $ | 19,518 | ||
Paid-in capital | 275,114,720 | 274,559,121 | ||||
Total distributable earnings | 642,226 | 10,532,594 | ||||
Net Assets | $ | 275,776,613 | $ | 285,111,233 | ||
Total Liabilities and Net Assets | $ | 898,182,782 | $ | 821,262,018 | ||
Net Asset Value Per Share | $ | 14.02 | $ | 14.61 | ||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||||
For the years ended | |||||||||
December 31, 2022 | December 31, 2021 | December 31, 2020 | |||||||
INVESTMENT INCOME | |||||||||
Interest income | $ | 72,964,999 | $ | 61,536,686 | $ | 55,350,781 | |||
Other income | 2,147,577 | 2,142,308 | 1,307,533 | ||||||
Total Investment Income | $ | 75,112,576 | $ | 63,678,994 | $ | 56,658,314 | |||
OPERATING EXPENSES | |||||||||
Management fees | $ | 14,848,174 | $ | 13,169,606 | $ | 11,084,450 | |||
Valuation fees | 351,752 | 313,437 | 290,445 | ||||||
Administrative services expenses | 1,810,576 | 1,798,966 | 1,781,603 | ||||||
Income incentive fees | 3,782,151 | 3,043,470 | 2,527,813 | ||||||
Capital gains incentive (reversal) fee | (2,818,623) | 2,867,131 | (359,892) | ||||||
Professional fees | 1,103,693 | 1,082,917 | 950,716 | ||||||
Directors' fees | 329,000 | 315,000 | 394,816 | ||||||
Insurance expense | 503,907 | 482,140 | 384,774 | ||||||
Interest expense and other fees | 24,469,285 | 18,721,058 | 15,950,087 | ||||||
Income tax expense | 1,161,668 | 1,102,374 | 771,134 | ||||||
Other general and administrative expenses | 984,309 | 1,006,428 | 890,465 | ||||||
Total Operating Expenses | $ | 46,525,892 | $ | 43,902,527 | $ | 34,666,411 | |||
Net Investment Income | $ | 28,586,684 | $ | 19,776,467 | $ | 21,991,903 | |||
Net realized gain (loss) on non-controlled, non-affiliated investments | $ | 3,660,595 | $ | 23,710,167 | $ | (10,129,859) | |||
Net realized loss on foreign currency translation | (6,091) | — | — | ||||||
Loss on debt extinguishment | — | (539,250) | — | ||||||
Net change in unrealized (depreciation) appreciation on non-controlled non-affiliated investments | (17,542,230) | (6,928,160) | 8,555,274 | ||||||
Net change in unrealized appreciation on foreign currency translation | 6,040 | — | — | ||||||
(Provision) benefit for taxes on net unrealized (appreciation) depreciation on investments | (213,214) | 510,868 | (224,877) | ||||||
Provision for taxes on realized gain on investments | — | (2,957,220) | — | ||||||
Net Increase in Net Assets Resulting from Operations | $ | 14,491,784 | 33,572,872 | 20,192,441 | |||||
Net Investment Income Per Share—basic and diluted | $ | 1.46 | $ | 1.01 | $ | 1.13 | |||
Net Increase in Net Assets Resulting from Operations Per Share – basic and diluted | $ | 0.74 | $ | 1.72 | $ | 1.04 | |||
Weighted Average Shares of Common Stock Outstanding—basic and diluted | 19,552,931 | 19,489,750 | 19,471,500 | ||||||
Distributions Per Share—basic and diluted | $ | 1.30 | $ | 1.14 | $ | 1.15 | |||
STELLUS CAPITAL INVESTMENT CORPORATION | ||||||||||||||
Common Stock | Total | |||||||||||||
Number | Par | Paid-in | distributable | |||||||||||
of shares | value | capital | (loss) earnings | Net Assets | ||||||||||
Balances as of December 31, 2019 | 19,131,746 | $ | 19,132 | $ | 272,117,091 | $ | (1,565,050) | $ | 270,571,173 | |||||
Net investment income | — | — | — | 21,991,903 | 21,991,903 | |||||||||
Net realized loss on non-controlled, non-affiliated investments | — | — | — | (10,129,859) | (10,129,859) | |||||||||
Net change in unrealized appreciation on non-controlled, non-affiliated investments | — | — | — | 8,555,274 | 8,555,274 | |||||||||
Provision for taxes on unrealized appreciation on investments | — | — | — | (224,877) | (224,877) | |||||||||
Return of capital and other tax related adjustments | — | — | (1,090,064) | 1,090,064 | — | |||||||||
Distributions from net investment income | — | — | — | (22,402,959) | (22,402,959) | |||||||||
Issuance of common stock, net of offering costs | 354,257 | 354 | 4,999,640 | — | 4,999,994 | |||||||||
Balances at December 31, 2020 | 19,486,003 | $ | 19,486 | $ | 276,026,667 | $ | (2,685,504) | $ | 273,360,649 | |||||
Net investment income | — | — | — | 19,776,467 | 19,776,467 | |||||||||
Net realized gain on non-controlled, non-affiliated investments | — | — | — | 23,710,167 | 23,710,167 | |||||||||
Loss on debt extinguishment | — | — | — | (539,250) | (539,250) | |||||||||
Net change in unrealized depreciation on non-controlled, non-affiliated investments | — | — | — | (6,928,160) | (6,928,160) | |||||||||
Benefit for taxes on unrealized depreciation on investments | 510,868 | 510,868 | ||||||||||||
Provision for taxes on realized gain on investments | — | — | — | (2,957,220) | (2,957,220) | |||||||||
Return of capital and other tax related adjustments | — | — | (1,861,213) | 1,861,213 | — | |||||||||
Distributions from net investment income | — | — | — | (21,201,567) | (21,201,567) | |||||||||
Distributions from net realized capital gains | — | — | — | (1,014,420) | (1,014,420) | |||||||||
Issuance of common stock, net of offering costs | 31,592 | 32 | 393,667 | — | 393,699 | |||||||||
Balances at December 31, 2021 | 19,517,595 | $ | 19,518 | $ | 274,559,121 | $ | 10,532,594 | $ | 285,111,233 | |||||
Net investment income | — | — | — | 28,586,684 | 28,586,684 | |||||||||
Net realized gain on non-controlled, non-affiliated investments | — | — | — | 3,660,595 | 3,660,595 | |||||||||
Net realized loss on foreign currency translation | — | — | — | (6,091) | (6,091) | |||||||||
Net change in unrealized depreciation on non-controlled, non-affiliated investments | — | — | — | (17,542,230) | (17,542,230) | |||||||||
Net change in unrealized appreciation on foreign currency translations | — | — | — | 6,040 | 6,040 | |||||||||
Provision for taxes on unrealized appreciation on investments | — | — | — | (213,214) | (213,214) | |||||||||
Return of capital and other tax related adjustments | — | — | (1,040,884) | 1,040,884 | — | |||||||||
Distributions from net investment income | — | — | — | (21,633,343) | (21,633,343) | |||||||||
Distributions from net realized capital gains | — | — | — | (3,789,693) | (3,789,693) | |||||||||
Issuance of common stock, net of offering costs | 149,174 | 149 | 1,596,483 | — | 1,596,632 | |||||||||
Balances at December 31, 2022 | 19,666,769 | $ | 19,667 | $ | 275,114,720 | $ | 642,226 | $ | 275,776,613 | |||||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||||
For the years ended | |||||||||
December 31, 2022 | December 31, 2021 | December 31, 2020 | |||||||
Cash flows from operating activities | |||||||||
Net increase in net assets resulting from operations | $ | 14,491,784 | $ | 33,572,872 | $ | 20,192,441 | |||
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities: | |||||||||
Purchases of investments | (211,010,869) | (387,281,160) | (152,007,165) | ||||||
Proceeds from sales and repayments of investments | 127,548,194 | 287,639,512 | 128,627,422 | ||||||
Net change in unrealized depreciation (appreciation) on investments | 17,542,230 | 6,928,160 | (8,555,274) | ||||||
Net change in unrealized appreciation foreign currency translations | (5,897) | — | — | ||||||
Increase in investments due to PIK | (1,357,177) | (939,030) | (664,992) | ||||||
Amortization of premium and accretion of discount, net | (2,519,462) | (2,412,991) | (2,098,788) | ||||||
Deferred tax provision (benefit) | 213,214 | (510,868) | 224,877 | ||||||
Amortization of loan structure fees | 567,375 | 518,930 | 647,872 | ||||||
Amortization of deferred financing costs | 446,719 | 444,153 | 333,316 | ||||||
Amortization of loan fees on SBA-guaranteed debentures | 1,227,952 | 1,088,132 | 701,068 | ||||||
Net realized (gain) loss on investments | (3,660,595) | (23,703,499) | 10,129,859 | ||||||
Loss on debt extinguishment | — | 539,250 | — | ||||||
Changes in other assets and liabilities | |||||||||
(Increase) decrease in interest receivable | (1,039,810) | (755,151) | 725,262 | ||||||
Decrease (increase) in other receivable | 20,507 | (29,257) | — | ||||||
Increase in prepaid expenses | (155,053) | (25,026) | (118,967) | ||||||
Increase in management fees payable | 3,696,182 | 628,903 | 129,542 | ||||||
Increase (decrease) in income incentive fees payable | 715,278 | 1,067,470 | (936,849) | ||||||
(Decrease) increase in capital gains incentive fees payable | (2,818,623) | 2,867,130 | (359,892) | ||||||
Decrease in administrative services payable | (29,449) | (5,123) | (21,787) | ||||||
Increase (decrease) in interest payable | 947,179 | 1,549,577 | (178,229) | ||||||
Increase in related party payable | 1,060,321 | — | — | ||||||
(Decrease) increase in unearned revenue | (209,051) | 6,302 | (36,344) | ||||||
(Decrease) increase in income tax payable | (2,094,141) | 2,544,749 | (192,235) | ||||||
Increase (decrease) in other accrued expenses and liabilities | 136,635 | 164,227 | (28,730) | ||||||
Net Cash Used in Operating Activities | $ | (56,286,557) | $ | (76,102,738) | $ | (3,487,593) | |||
Cash flows from Financing Activities | |||||||||
Proceeds from the issuance of common stock | $ | 2,158,540 | $ | 449,515 | $ | 4,794,994 | |||
Sales load for common stock issued | (31,066) | (2,489) | (18,169) | ||||||
Offering costs paid for common stock issued | (517,054) | (53,327) | (95,681) | ||||||
Stockholder distributions paid | (26,594,095) | (21,044,928) | (24,341,646) | ||||||
Repayment of Notes | — | (48,875,000) | — | ||||||
Proceeds from issuance of Notes | — | 100,000,000 | — | ||||||
Financing costs paid on Notes | — | (2,237,835) | — | ||||||
Proceeds from SBA-guaranteed debentures | 63,600,000 | 73,500,000 | 15,500,000 | ||||||
Financing costs paid on SBA-guaranteed debentures | (1,548,660) | (3,139,725) | (577,425) | ||||||
Financing costs paid on Credit facility | (193,635) | (136,219) | (1,880,099) | ||||||
Borrowings under Credit Facility | 149,888,800 | 268,700,000 | 120,950,000 | ||||||
Repayments of Credit Facility | (126,607,800) | (265,360,000) | (108,500,000) | ||||||
Partial share redemption | — | — | (94) | ||||||
Net Cash Provided by Financing Activities | $ | 60,155,030 | $ | 101,799,992 | $ | 5,831,880 | |||
Net Increase in Cash and Cash Equivalents | $ | 3,868,473 | $ | 25,697,254 | $ | 2,344,287 | |||
Cash and Cash Equivalents Balance at Beginning of Period | 44,174,856 | 18,477,602 | 16,133,315 | ||||||
Cash and Cash Equivalents Balance at End of Period | $ | 48,043,329 | $ | 44,174,856 | $ | 18,477,602 | |||
Supplemental and Non-Cash Activities | |||||||||
Cash paid for interest expense | $ | 21,280,060 | $ | 15,099,656 | $ | 14,441,061 | |||
Income and excise tax paid | 3,255,809 | 1,445,000 | 940,000 | ||||||
Shares issued pursuant to Dividend Reinvestment Plan | — | — | 228,943 | ||||||
(Decrease) increase in dividends payable | (1,171,059) | 1,171,059 | (2,167,630) | ||||||
(Decrease) increase in deferred offering costs | (13,788) | (75,112) | 90,000 | ||||||
Gain on conversion of equity investment | — | 6,668 | — | ||||||
Reconciliation of Core Net Investment Income (Unaudited) | ||||||||
Three Months Ended | Three Months Ended | Year Ended | Year Ended | |||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||
Net investment income | $9,708,610 | $5,116,721 | $28,586,684 | $19,776,467 | ||||
Capital gains incentive fee | (1,146,074) | 1,026,559 | (2,818,623) | 2,867,131 | ||||
Income tax expense | 94,900 | 383,505 | 1,161,668 | 1,102,374 | ||||
Core net investment income | $8,657,436 | $6,526,785 | $26,929,729 | $23,745,972 | ||||
Per share amounts: | ||||||||
Net investment income per share | $0.50 | $0.26 | $1.46 | $1.01 | ||||
Core net investment income per share | $0.44 | $0.33 | $1.38 | $1.22 | ||||
Reconciliation of Realized Net Investment Income (Unaudited) | ||||||||
Three Months Ended | Three Months Ended | Year Ended | Year Ended | |||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||
Net investment income | $9,708,610 | $5,116,721 | $28,586,684 | $19,776,467 | ||||
Net realized (loss) gain on investments | (998,222) | 17,108,282 | 3,660,595 | 23,710,167 | ||||
Net realized gain (loss) on foreign currency translation | 1,935 | — | (6,091) | — | ||||
Loss on debt extinguishment | — | — | — | (539,250) | ||||
Provision for taxes on realized gain on investments | — | (2,276,193) | — | (2,957,220) | ||||
Total Realized Net Investment Income | $8,712,323 | $19,948,810 | $32,241,188 | $39,990,164 | ||||
Per share amounts: | ||||||||
Net investment income per share | $0.50 | $0.26 | $1.46 | $1.01 | ||||
Realized net investment income per share | $0.44 | $1.02 | $1.65 | $2.05 | ||||
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SOURCE Stellus Capital Investment Corporation
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