Stellus Capital Investment Corporation Reports Results for its Fourth Fiscal Quarter and Year Ended December 31, 2020
HOUSTON, March 4, 2021 /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, 2020.
In describing the Company's 2020 activities, Robert T. Ladd, Chairman and Chief Executive Officer of the Company, stated, "I am pleased to report that our portfolio has performed well throughout the unprecedented pandemic and that our net asset value has risen back above $14.00 per share. As we have just completed our eighth full year of operations, our shareholders have received $10.99 per share of dividends life-to-date. During 2020, we paid dividends of $1.15 per share and significantly improved our liquidity and available capital position through the upsize and extension of our bank facility through September 2025, the issuance in January 2021 of $100 million of 4.875% bonds due 2026 and the continued funding of equity into our second SBIC license. For 2021, we have seen an increase in investment opportunities and as a result have funded $58 million on a cost basis since year-end 2020, increasing our investment portfolio by $43 million over the same period, net of payoffs."
FINANCIAL HIGHLIGHTS | ||||||||||||
($ in millions, except data relating to per share amounts and shares outstanding) | ||||||||||||
Q4-20 | YTD-20 | Q4-19 | YTD-19 | |||||||||
Amount | Per Share | Amount | Per Share | Amount | Per Share | Amount | Per Share | |||||
Net investment income | $4.99 | $0.26 | $21.99 | $1.13 | $6.89 | $0.36 | $22.44 | $1.23 | ||||
Core net investment income (1) | $5.43 | 0.28 | 22.40 | 1.15 | 6.08 | 0.32 | 24.14 | 1.32 | ||||
Net realized gain (loss) on investments | (7.69) | (0.39) | (10.13) | (0.52) | 0.42 | 0.02 | 19.57 | 1.07 | ||||
Total realized income(2) | (2.70) | (0.14) | 11.86 | 0.61 | 7.31 | 0.38 | 42.00 | 2.30 | ||||
Distributions(3) | - | - | (22.40) | (1.15) | (6.45) | (0.34) | (25.04) | (1.36) | ||||
Net unrealized appreciation | ||||||||||||
(depreciation) on investments | 19.61 | 1.01 | 8.56 | 0.44 | (5.45) | (0.29) | (15.50) | (0.85) | ||||
Provision for taxes on unrealized gains | ||||||||||||
on investments in taxable subsidiaries | (0.10) | (0.01) | (0.22) | (0.01) | (0.03) | (0.00) | (0.07) | 0.00 | ||||
Net increase in net assets resulting | ||||||||||||
from operations | $16.81 | 0.86 | 20.19 | 1.04 | $1.83 | 0.10 | 26.44 | 1.45 | ||||
Weighted average shares outstanding | 19,486,003 | 19,471,500 | 18,926,817 | 18,275,696 | ||||||||
(1) | Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements. |
(2) | Total realized income is the sum of net investment income and net realized gains on investments; both U.S. GAAP measures. |
(3) | In 2020, fourth quarter dividends were declared in the third quarter. |
PORTFOLIO ACTIVITY | ||||||||||||
($ in millions, except data relating to per share amounts and number of portfolio companies) | ||||||||||||
As of | As of | |||||||||||
12/31/2020 | 12/31/2019 | |||||||||||
Investments at fair value | $653.4 | $628.9 | ||||||||||
Total assets | $674.9 | $648.5 | ||||||||||
Net assets | $273.4 | $270.6 | ||||||||||
Shares outstanding | 19,486,003 | 19,131,746 | ||||||||||
Net asset value per share | $14.03 | $14.14 | ||||||||||
Q4-20 | YTD-20 | Q4-19 | YTD-19 | |||||||||
New investments | $64.8 | $152.0 | $73.6 | $246.5 | ||||||||
Repayments of investments | (46.4) | (128.8) | (26.6) | (128.2) | ||||||||
Net activity | $18.4 | $23.2 | $47.0 | $118.3 | ||||||||
As of | As of | |||||||||||
12/31/2020 | 12/31/2019 | |||||||||||
Number of portfolio company investments | 66 | 63 | ||||||||||
Number of debt investments | 51 | 51 | ||||||||||
Weight average yield of debt and other income producing investments (1) | ||||||||||||
Cash | 7.8% | 8.7% | ||||||||||
Payment-in-kind ("PIK") | 0.0% | 0.0% | ||||||||||
Fee amortization | 0.5% | 0.5% | ||||||||||
Total | 8.3% | 9.2% | ||||||||||
Weighted average yield on total investments (2) | ||||||||||||
Cash | 7.4% | 8.3% | ||||||||||
PIK | 0.0% | 0.0% | ||||||||||
Fee amortization | 0.5% | 0.5% | ||||||||||
Total | 7.9% | 8.8% | ||||||||||
(1) | 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 shares 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. |
(2) | 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 year ended December 31, 2020 and 2019 totaled $56.7 million and $58.9 million, respectively, most of which was interest income from portfolio investments.
Operating expenses for the year ended December 31, 2020 and 2019, totaled $34.7 million and $36.5 million, respectively. For the same respective periods, base management fees totaled $11.1 million and $9.7 million, income incentive fees totaled $2.5 million and $5.8 million, capital gains incentive fees totaled ($0.4) million and $0.8 million, fees and expenses related to our borrowings totaled $16.0 million and $15.0 million (including interest and amortization of deferred financing costs), administrative expenses totaled $1.8 million and $1.7 million, income tax totaled $0.8 million and $0.9 million, and other expenses totaled $2.9 million and $2.6 million, respectively.
For the year ended December 31, 2020 and 2019, net investment income was $22.0 million and $22.4 million, or $1.13 and $1.23 per common share based on weighted average common shares outstanding of 19,471,500 and 18,275,696, respectively.
The capital gains incentive fee of ($0.4) million and $0.8 million for the year ended December 31, 2020 and 2019, respectively, was accrued for U.S. GAAP purposes due to the increase in realized and unrealized gains over the years. There can be no assurance that unrealized appreciation or depreciation will be realized in the future. Accordingly, such fees, as calculated and accrued, would not necessarily be payable under the investment advisory agreement, and may never be paid based upon the computation of incentive fees in subsequent periods. The income tax expense accrual of $0.8 million and $0.9 million for the year ended December 31, 2020 and 2019, respectively, was accrued based on estimates of undistributed taxable income, which was generated largely from capital gains. Excluding these accruals, net investment income for the year ended December 31, 2020 would be $22.4 million, or $1.15 per share; and for the year ended December 31, 2019, net investment income would have been $24.1 million, or $1.32 per share.
The Company's investment portfolio had a net change in unrealized appreciation (depreciation) for the year ended December 31, 2020 and 2019, of $8.6 million and ($15.5) million, respectively. For the year ended December 31, 2020 and 2019, the Company had realized (losses) gains of ($10.1) million and $19.6 million, respectively.
For the year ended December 31, 2020 and 2019, net increase in net assets resulting from operations totaled $20.2 million and $26.4 million, or $1.04 per common share and $1.45 per common share, based on weighted average common shares outstanding of 19,471,500 and 18,275,696, respectively.
Liquidity and Capital Resources
As of December 31, 2020 and 2019, 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 $230.0 and $220.0 million, respectively, on a committed basis. As of December 31, 2020 and 2019, our Credit Facility had an accordion feature which allowed for potential future expansion of the facility size to $280.0 and $250.0 million, respectively. As of December 31, 2020 and December 31, 2019, we had $174.0 million and $161.6 million in outstanding borrowings under the Credit Facility, respectively.
For the for the year ended December 31, 2020, our operating activities used cash of $3.5 million primarily in connection with the purchase of portfolio investments, offset by sales and repayments of portfolio investments, For the same period, our financing activities provided cash of $5.8 million, primarily from proceeds from SBA-guaranteed debentures, net borrowings on our Credit Facility and proceeds from the issuance of shares of our common stock.
For the year ended December 31, 2019, our operating activities used cash of $93.3 million, primarily in connection with the purchase of portfolio investments, offset by sales and repayments of portfolio investments. For the same period, our financing activities provided cash of $92.0 million, primarily from proceeds from the issuance of shares of our common stock, proceeds from SBA-guaranteed debentures and net borrowings on our Credit Facility.
Distributions
During the three and twelve months ended December 31, 2020, we declared aggregate distributions for of $0.00 per share and $1.15 ($0 million and $22.4 million, respectively). Our fourth quarter regular dividend of $0.25 per share, along with a special dividend of $0.06 per share, were declared in the third quarter in order to maintain our qualification for taxation as a regulated investment company and to eliminate our liability for corporate-level U.S. federal income tax. During the three and twelve months ended December 31, 2019, we declared aggregate distributions of $0.34 and $1.36 per share ($6.5 million and $25.0 million, respectively). Tax characteristics of all distributions are reported to stockholders on Form 1099-DIV. None of the dividends declared in 2020 are expected to include a return of capital.
Recent Portfolio Activity
For the quarter ended December 31, 2020, we funded $64.8 million in five new and eight existing portfolio companies and received $46.4 million from five repayments, paydowns and amounts received from equity investments. The new investment transactions and repayments that occurred during the quarter are summarized as follows:
On October 1, 2020, we received full repayment on the first lien term loan of C.A.R.S Protection Plus, Inc. for total proceeds of $7.4 million. We also received $0.4 million in full realization on the equity of the company, resulting in a $0.3 million gain.
On October 19, 2020, we invested $40 thousand in the equity of CF Topco LLC, an existing portfolio company.
On October 29, 2020 we received full repayment on the first lien term loan of Furniture Factory Outlet, LLC for total proceeds of $4.2 million, resulting in a $8.6 million loss. In addition, on November 5, 2020, our unsecured term loan investment in Furniture Factory Holdings, LLC and our equity investment in Furniture Factory Ultimate Holding, LP were terminated, resulting in a $0.3 million loss.
On October 30, 2020, we invested $0.1 million in the equity of Legacy Parent, Inc., an existing portfolio company.
On November 12, 2020, we invested $0.1 million in the equity of PCS Software, Inc, an existing portfolio company. On December 30, 2020, we invested $0.3 million in the revolver.
On November 20, 2020, we invested $12.5 million in the first lien term loan of CommentSold, LLC, an e-commerce platform that helps independent boutique shop owners sell products through mobile phone apps. Additionally, we committed $0.1 million in an unfunded revolver of the company.
On November 25, 2020, we received $1.3 million in full realization of the investment in Condor Top Holdco Limited, resulting in a $0.8 million gain. In addition, we received $0.2 million in full realization of the investment in Condor Holdings Limited, resulting in a $0.1 million gain.
On November 30, 2020, we received full repayment on the first lien term loan and revolver of Advanced Barrier Extrusions, LLC for total proceeds of $14.4 million. On the same day, we invested $17.5 million in a first lien term loan and $0.5 million in equity in the company.
On December 9, 2020, we invested $0.1 million in the revolver of Industry Dive, Inc, an existing portfolio company.
On December 11, 2020, we invested $0.1 million in the equity of Lynx FBO Investments, LLC, an existing portfolio company.
On December 21, 2020, we invested $11.5 million in the first lien term loan of CompleteCase, LLC, a provider of online uncontested divorce solutions in the U.S. (all 50 states) and Canada, Additionally, we committed $0.5 million in the equity of the company and $0.1 million in an unfunded revolver.
On December 21, 2020, we invested $10 million in the second lien term loan of Vortex Companies LLC, a provider of trenchless services and products to restore and repair large diameter water, sewer, and industrial pipe infrastructure.
On December 24, 2020, we received full repayment on the first lien term loan of Kelleyamerit Holdings, Inc. for total proceeds of $9.8 million, including a $0.03 million prepayment fee. On the same day, we invested $11.3 million in a first lien term loan of the company.
On December 24, 2020, we invested $30 thousand in the revolver of Invincible Boat Company LLC, an existing portfolio company.
On December 29, 2020, we invested $1.3 million in the delayed draw term loan of Venbrook Buyer, LLC, an existing portfolio company. Additionally, we invested $30 thousand in equity of the company.
Events Subsequent to December 31, 2020
On January 14, 2021, we received full repayment on the first lien term loan and revolver of BFC Solmetex, LLC for total proceeds of $13.6 million. We also received full repayment on the first lien term loan of Bonded Filter Co. LLC, a subsidiary of BFC Solmetex, LLC, for total proceeds of $1.2 million.
On January 29, 2021, we invested $11.3 million in the first lien term loan of NuSource Financial, LLC, a provider of technology integration and installation of Automated Teller Machines / Integrated Teller Machines ("ATM" / "ITM"), maintenance services, and security solutions. Additionally, we invested $4.8 million in the subordinated debt and warrants of the company.
On February 1, 2021, we invested $0.4 million in the equity of Tailwind Core Investor, LLC, an existing portfolio company.
On February 11, 2021, we invested $7.2 million in the first lien term loan of Time Manufacturing Acquisition, LLC, an existing portfolio company. Additionally, we invested $0.1 million in the equity of the company.
On February 19, 2021, we invested $13.5 million in the first lien term loan and committed $0.1 million in the unfunded revolver of CEATI International, Inc., a provider of intellectual content, technical trade programs, research groups, and conferences for utility companies. Additionally, we invested $0.3 million in the equity of the company.
On March 1, 2021, we invested $10.8 million in the first lien term loan and committed $0.1 million in the unfunded revolver of TAC LifePort Purchaser, LLC, a provider of aerospace products for the U.S. military / government, air medical, and high-end VIP aircraft end markets. Additionally, we invested $0.5 million in the equity of the company.
On March 2, 2021, we invested $10.0 million in the first lien term loan and committed $0.1 million in the unfunded revolver of TradePending, LLC, a provider of vehicle trade-in and merchandising intelligence solutions for auto dealerships, primarily flagship dealerships. Additionally, we invested $0.8 million in the equity of the company.
2026 Notes
On January 14, 2021, the Company issued $100,000,000 in aggregate principal amount of 4.875% fixed-rate notes due 2026 (the "2026 Notes"). The 2026 Notes will mature on March 30, 2026, and may be redeemed in whole or in part at any time or from time to time at our option on or after December 31, 2025 at a redemption price equal to 100% of the outstanding principal, plus accrued and unpaid interest. Interest is payable semi-annually beginning September 30, 2021. The Company used the net proceeds from this offering to fully redeem the 2022 Notes and repay a portion of the outstanding amount under the Credit Facility.
Redemption of the 2022 Notes
On February 12, 2021, the Company redeemed all $48,875,000 in aggregate principal amount of the 2022 Notes. The 2022 Notes were redeemed at 100% of their principal amount, plus the accrued and unpaid interest thereon through the redemption date.
Credit Facility
The outstanding balance under the Credit Facility as of March 3, 2021 was $164.5 million.
SBA-guaranteed debentures
The outstanding balance of SBA-guaranteed debentures as of March 3, 2021 was $210.0 million.
SBIC II subsidiary
On January 21, 2021, we contributed $15.0 million to the Stellus Capital SBIC II, L.P., bringing total contributed capital to $35.0 million. On January 25, 2021, we increased committed capital to $60.0 million.
Dividend Declared
On January 15, 2021, the Company's board of directors changed the frequency of distributions from quarterly to monthly and declared a regular monthly dividend for each of January, February and March 2021 as follows:
Declared | Ex-Dividend Date | Record Date | Payment Date | Amount per Share | |||||
1/15/2021 | 1/28/2021 | 1/29/2021 | 2/16/2021 | $ | 0.0833 | ||||
1/15/2021 | 2/25/2021 | 2/26/2021 | 3/15/2021 | $ | 0.0833 | ||||
1/15/2021 | 3/30/2021 | 3/31/2021 | 4/15/2021 | $ | 0.0833 | ||||
Please refer to the website for regarding the U.S. federal income tax characteristics of our 2020 dividends. The information is posted on the website under Tax Information" (https://www.stelluscapital.com/public-investors/tax-information/).
Conference Call Information
Stellus Capital Investment Corporation will host a conference call to discuss these results on Friday, March 5, 2021 at 10:00 AM, Central Standard 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 phone, please dial 800-437-2398 (domestic). Use passcode 9096014. Starting approximately twenty-four hours after the conclusion of the call, a replay will be available through Saturday, March 13, 2021 by dialing (888) 203-1112 and entering passcode 9096014. 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.
Contacts
Stellus Capital Investment Corporation
W. Todd Huskinson, (713) 292-5414
Chief Financial Officer
[email protected]
PART I — FINANCIAL INFORMATION | |||||||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | |||||||
December 31, | December 31, | ||||||
2020 | 2019 | ||||||
ASSETS | |||||||
Non-controlled, non-affiliated investments, at fair value | |||||||
(amortized cost of $658,628,966 and $642,707,824, | |||||||
respectively) | $ | 653,424,495 | $ | 628,948,077 | |||
Cash and cash equivalents | 18,477,602 | 16,133,315 | |||||
Receivable for sales and repayments of investments | 215,929 | 123,409 | |||||
Interest receivable | 2,189,448 | 2,914,710 | |||||
Other receivables | 25,495 | 25,495 | |||||
Deferred offering costs | 90,000 | — | |||||
Prepaid expenses | 487,188 | 368,221 | |||||
Total Assets | $ | 674,910,157 | $ | 648,513,227 | |||
LIABILITIES | |||||||
Notes payable | $ | 48,307,518 | $ | 47,974,202 | |||
Credit facility payable | 171,728,405 | 160,510,633 | |||||
SBA-guaranteed debentures | 173,167,496 | 157,543,853 | |||||
Dividends payable | — | 2,167,630 | |||||
Management fees payable | 2,825,322 | 2,695,780 | |||||
Income incentive fees payable | 681,660 | 1,618,509 | |||||
Capital gains incentive fees payable | 521,021 | 880,913 | |||||
Interest payable | 2,144,085 | 2,322,314 | |||||
Unearned revenue | 523,424 | 559,768 | |||||
Administrative services payable | 391,491 | 413,278 | |||||
Deferred tax liability | 359,590 | 134,713 | |||||
Income tax payable | 724,765 | 917,000 | |||||
Other accrued expenses and liabilities | 174,731 | 203,461 | |||||
Total Liabilities | $ | 401,549,508 | $ | 377,942,054 | |||
Commitments and contingencies (Note 7) | |||||||
Net Assets | $ | 273,360,649 | $ | 270,571,173 | |||
NET ASSETS | |||||||
Common stock, par value $0.001 per share (100,000,000 shares | |||||||
authorized; 19,486,003 and 19,131,746 issued and outstanding, | |||||||
respectively) | $ | 19,486 | $ | 19,132 | |||
Paid-in capital | 276,026,667 | 272,117,091 | |||||
Accumulated undistributed deficit | (2,685,504) | (1,565,050) | |||||
Net Assets | $ | 273,360,649 | $ | 270,571,173 | |||
Total Liabilities and Net Assets | $ | 674,910,157 | $ | 648,513,227 | |||
Net Asset Value Per Share | $ | 14.03 | $ | 14.14 | |||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
For the | For the | For the | |||||||||
year | year | year | |||||||||
ended | ended | ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2020 | 2019 | 2018 | |||||||||
INVESTMENT INCOME | |||||||||||
Interest income | $ | 55,350,781 | $ | 56,895,990 | $ | 51,463,033 | |||||
Other income | 1,307,533 | 2,015,899 | 1,803,305 | ||||||||
Total Investment Income | $ | 56,658,314 | $ | 58,911,889 | $ | 53,266,338 | |||||
OPERATING EXPENSES | |||||||||||
Management fees | $ | 11,084,450 | $ | 9,703,706 | $ | 8,154,842 | |||||
Valuation fees | 290,445 | 265,103 | 307,838 | ||||||||
Administrative services expenses | 1,781,603 | 1,691,764 | 1,390,375 | ||||||||
Income incentive fees | 2,527,813 | 5,809,672 | 5,529,376 | ||||||||
Capital gains incentive (reversal) fees | (359,892) | 799,876 | 81,038 | ||||||||
Professional fees | 950,716 | 1,040,011 | 1,189,071 | ||||||||
Directors' fees | 394,816 | 383,000 | 317,000 | ||||||||
Insurance expense | 384,774 | 352,382 | 348,500 | ||||||||
Interest expense and other fees | 15,950,087 | 14,976,024 | 12,338,755 | ||||||||
Income tax expense | 771,134 | 903,905 | 275,106 | ||||||||
Other general and administrative expenses | 890,465 | 547,637 | 697,900 | ||||||||
Total Operating Expenses | $ | 34,666,411 | $ | 36,473,080 | $ | 30,629,801 | |||||
Net Investment Income | $ | 21,991,903 | $ | 22,438,809 | $ | 22,636,537 | |||||
Net realized (loss) gain on non-controlled, non-affiliated | |||||||||||
investments | $ | (10,129,859) | $ | 19,565,903 | $ | 5,540,518 | |||||
Tax provision on realized gain on investment | $ | $ | — | $ | (267,975) | ||||||
Net change in unrealized appreciation (depreciation) | |||||||||||
on non-controlled, non-affiliated investments | $ | 8,555,274 | $ | (15,501,951) | $ | (1,706,549) | |||||
Net change in unrealized appreciation | |||||||||||
on non-controlled, affiliated investments | $ | - | $ | 2,185 | $ | 60,000 | |||||
Provision for taxes on net unrealized gain | |||||||||||
on investments | $ | (224,877) | $ | (66,760) | $ | (67,953) | |||||
Net Increase in Net Assets | |||||||||||
Resulting from Operations | $ | 20,192,441 | $ | 26,438,186 | $ | 26,194,578 | |||||
Net Investment Income Per Share | $ | 1.13 | $ | 1.23 | $ | 1.42 | |||||
Net Increase in Net Assets Resulting | |||||||||||
from Operations Per Share | $ | 1.04 | $ | 1.45 | $ | 1.64 | |||||
Weighted Average Shares of Common Stock Outstanding | 19,471,500 | 18,275,696 | 15,953,571 | ||||||||
Distributions Per Share | $ | 1.15 | $ | 1.36 | $ | 1.36 | |||||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS | |||||||||
For the year | For the year | For the year | |||||||
ended | ended | ended | |||||||
December 31, | December 31, | December 31, | |||||||
2020 | 2019 | 2018 | |||||||
Increase in Net Assets Resulting from | |||||||||
Operations | |||||||||
Net investment income | $ | 21,991,903 | $ | 22,438,809 | $ | 22,636,537 | |||
Net realized (loss) gain on non-controlled, | |||||||||
non-affiliated investments | (10,129,859) | 19,565,903 | 5,540,518 | ||||||
Tax provision on realized gain on investments | — | (267,975) | |||||||
Net change in unrealized appreciation (depreciation) on | |||||||||
non-controlled, non-affiliated investments | 8,555,274 | (15,501,951) | (1,706,549) | ||||||
Net change in unrealized appreciation on | |||||||||
non-controlled, affiliated investments | — | 2,185 | 60,000 | ||||||
Provision for taxes on unrealized appreciation | |||||||||
on investments | (224,877) | (66,760) | (67,953) | ||||||
Net Increase in Net Assets Resulting | |||||||||
from Operations | $ | 20,192,441 | $ | 26,438,186 | $ | 26,194,578 | |||
Stockholder Distributions From: | |||||||||
Net investment income | $ | (22,402,959) | $ | (10,000,000) | $ | (16,418,007) | |||
Net realized capital gains | — | (15,038,173) | (5,272,543) | ||||||
Total Distributions | $ | (22,402,959) | $ | (25,038,173) | $ | (21,690,550) | |||
Capital Share Transactions | |||||||||
Issuance of common stock | $ | 5,023,937 | $ | 45,862,239 | $ | 94,788 | |||
Sales load | (18,169) | (1,015,127) | — | ||||||
Offering costs | (5,681) | (521,715) | — | ||||||
Partial share transactions | (94) | 755 | (1,051) | ||||||
Net Increase in Net Assets Resulting From | |||||||||
Capital Share Transactions | $ | 4,999,993 | $ | 44,326,153 | $ | 93,737 | |||
Total Increase in Net Assets | $ | 2,789,476 | $ | 45,726,166 | $ | 4,597,765 | |||
Net Assets at Beginning of Period | $ | 270,571,173 | $ | 224,845,007 | $ | 220,247,242 | |||
Net Assets at End of Period | $ | 273,360,649 | $ | 270,571,173 | $ | 224,845,007 | |||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
For the year | For the year | For the year | |||||||||
ended | ended | ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2020 | 2019 | 2018 | |||||||||
Cash flows from operating activities | |||||||||||
Net increase in net assets resulting from operations | $ | 20,192,441 | $ | 26,438,186 | $ | 26,194,578 | |||||
Adjustments to reconcile net increase in net assets | |||||||||||
from operations to net cash used in operating activities: | |||||||||||
Purchases of investments | (152,007,165) | (246,438,384) | (272,927,459) | ||||||||
Proceeds from sales and repayments of investments | 128,627,422 | 128,206,318 | 147,528,448 | ||||||||
Net change in unrealized (appreciation) depreciation on investments | (8,555,274) | 15,499,766 | 1,646,549 | ||||||||
Increase in investments due to PIK | (664,992) | (415,933) | (1,869,905) | ||||||||
Amortization of premium and accretion of discount, net | (2,098,788) | (1,774,469) | (1,553,333) | ||||||||
Deferred tax provision | 224,877 | 66,760 | 67,953 | ||||||||
Amortization of loan structure fees | 647,872 | 519,995 | 456,151 | ||||||||
Amortization of deferred financing costs | 333,316 | 332,407 | 335,309 | ||||||||
Amortization of loan fees on SBA-guaranteed debentures | 701,068 | 623,900 | 623,989 | ||||||||
Net realized loss (gain) on investments | 10,129,859 | (19,565,903) | (5,540,518) | ||||||||
Changes in other assets and liabilities | |||||||||||
Decrease (increase) in interest receivable | 725,262 | 873,974 | (866,480) | ||||||||
Decrease (increase) in other receivable | - | 59,751 | (85,246) | ||||||||
(Increase) decrease in prepaid expenses | (118,967) | (23,600) | 16,649 | ||||||||
Increase in management fees payable | 129,542 | 511,805 | 562,383 | ||||||||
(Decrease) increase in incentive fees payable | (936,849) | (318,029) | 1,564,891 | ||||||||
(Decrease) increase in capital gains incentive fees payable | (359,892) | 799,875 | 81,038 | ||||||||
(Decrease) increase in administrative services payable | (21,787) | 21,087 | 65,158 | ||||||||
(Decrease) increase in interest payable | (178,229) | 458,748 | 842,393 | ||||||||
(Decrease) Increase in unearned revenue | (36,344) | 149,175 | 271,289 | ||||||||
(Decrease) increase in income tax payable | (192,235) | 600,908 | 316,092 | ||||||||
(Decrease) increase in other accrued expenses and liabilities | (28,730) | 87,559 | (152,511) | ||||||||
Net Cash Used In Operating Activities | $ | (3,487,593) | $ | (93,286,104) | $ | (102,422,582) | |||||
Cash flows from Financing Activities | |||||||||||
Proceeds from the issuance of common stock | $ | 4,794,994 | $ | 45,862,239 | $ | - | |||||
Sales load for common stock issued | (18,169) | (1,015,127) | - | ||||||||
Offering costs paid for common stock | (95,681) | (503,042) | (18,673) | ||||||||
Stockholder distributions paid | (24,341,646) | (24,678,113) | (21,594,863) | ||||||||
Proceeds from SBA Debentures | 15,500,000 | 11,000,000 | 60,000,000 | ||||||||
Financing costs paid on SBA Debentures | (577,425) | (467,850) | (2,055,000) | ||||||||
Borrowings under Credit Facility | 120,950,000 | 245,750,000 | 246,300,000 | ||||||||
Repayments of Credit Facility | (108,500,000) | (183,750,000) | (187,500,000) | ||||||||
Financing costs paid on Credit facility | (1,880,099) | (246,589) | (351,403) | ||||||||
Partial share transactions | (94) | 755 | (1,051) | ||||||||
Net Cash Provided by Financing Activities | $ | 5,831,880 | $ | 91,952,273 | $ | 94,779,010 | |||||
Net Increase in Cash and Cash Equivalents | $ | 2,344,287 | $ | (1,333,831) | $ | (7,643,572) | |||||
Cash and cash equivalents balance at beginning of period | 16,133,315 | 17,467,146 | 25,110,718 | ||||||||
Cash and Cash Equivalents Balance at End of Period | $ | 18,477,602 | $ | 16,133,315 | $ | 17,467,146 | |||||
Supplemental and Non-Cash Activities | |||||||||||
Cash paid for interest expense | $ | 14,441,061 | $ | 13,035,976 | $ | 10,075,913 | |||||
Excise tax paid | 940,000 | 280,000 | 27,717 | ||||||||
Shares issued pursuant to Dividend Reinvestment Plan | 228,943 | - | 94,788 | ||||||||
(Decrease) increase in dividends payable | (2,167,630) | 360,060 | 899 | ||||||||
Increase (decrease) in deferred offering costs | 90,000 | (18,673) | 18,673 | ||||||||
Reconciliation of Core Net Investment Income | ||||
(Unaudited) | ||||
Year | Quarter | |||
ended | ended | |||
December 31, 2020 | December 31, 2020 | |||
Net investment income | $21,991,903 | $4,987,881 | ||
Capital gains incentive fee | $(359,892) | $521,021 | ||
Income tax expense | $771,134 | $(82,497) | ||
Core net investment income(1) | $22,403,145 | $5,426,405 | ||
Per share amounts: | ||||
Net investment income per share | $1.13 | $0.26 | ||
Core net investment income per share(1) | $1.15 | $0.28 | ||
SOURCE Stellus Capital Investment Corporation
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