Stellus Capital Investment Corporation Reports Results for its Fourth Fiscal Quarter and Year Ended December 31, 2021
HOUSTON, March 1, 2022 /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, 2021.
In describing the Company's 2021 activities, Robert T. Ladd, Chairman and Chief Executive Officer, stated, "I am pleased to report positive results in a number of areas throughout 2021. We raised our regular dividend from $0.25 per quarter to $0.28 per quarter and declared $0.09 of additional dividends all of which we covered with realized earnings. We also generated $20.8 million of realized gains after taxes from our equity portfolio. We finished 2021 with a record level of originations and we are continuing to see many quality investment opportunities. During the year we invested $395 million and since year end, we have invested an additional $42 million."
FINANCIAL HIGHLIGHTS | ||||||||||||
($ in millions, except data relating to per share amounts and shares outstanding) | ||||||||||||
Q4-21 | YTD-21 | Q4-20 | YTD-20 | |||||||||
Amount | Per Share | Amount | Per Share | Amount | Per Share | Amount | Per Share | |||||
Net investment income | $5.12 | $0.26 | $19.78 | $1.01 | $4.99 | $0.26 | $21.99 | $1.13 | ||||
Core net investment income (1) | 6.53 | 0.33 | 23.75 | 1.22 | 5.43 | 0.28 | 22.40 | 1.15 | ||||
Net realized gain (loss) on investments | 17.11 | 0.88 | 23.71 | 1.22 | (7.69) | (0.40) | (10.13) | (0.52) | ||||
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) | $19.95 | $1.02 | $40.53 | $2.08 | $(2.70) | $(0.14) | $11.86 | $0.61 | ||||
Distributions(3) | (1.18) | (0.06) | (22.22) | (1.14) | - | - | (22.40) | (1.15) | ||||
Net unrealized appreciation | ||||||||||||
(depreciation) on investments | (10.80) | (0.55) | (6.93) | (0.36) | 19.61 | 1.01 | 8.56 | 0.44 | ||||
Benefit (provision) for taxes on unrealized | ||||||||||||
depreciation (appreciation) on investments | 1.10 | 0.06 | 0.51 | 0.03 | (0.10) | (0.01) | (0.22) | (0.01) | ||||
Net increase in net assets resulting | ||||||||||||
from operations | $10.25 | $0.53 | $33.57 | $1.72 | $16.81 | $0.86 | $20.20 | $1.04 | ||||
Weighted average shares outstanding | 19,500,866 | 19,489,750 | 19,486,003 | 19,471,500 | ||||||||
(1) | Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is not a U.S. generally accepted accounting principles ("U.S. GAAP") measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S GAAP. A reconciliation of net investment income in accordance with U.S GAAP to core net investment income is presented in the table below the financial statements. |
(2) | Total realized income is the sum of net investment income and net realized gains on investments; both U.S GAAP measures. |
(3) | In 2021, fourth quarter dividends were declared in the third quarter. |
PORTFOLIO ACTIVITY | ||||||||||||
($ in millions, except data relating to per share amounts and number of portfolio companies) | ||||||||||||
As of | As of | |||||||||||
12/31/2021 | 12/31/2020 | |||||||||||
Investments at fair value | $772.9 | $653.4 | ||||||||||
Total assets | $821.3 | $674.9 | ||||||||||
Net assets | $285.1 | $273.4 | ||||||||||
Shares outstanding | 19,517,595 | 19,486,003 | ||||||||||
Net asset value per share | $14.61 | $14.03 | ||||||||||
Q4-21 | YTD-21 | Q4-20 | YTD-20 | |||||||||
New investments | $144.0 | $387.3 | $64.8 | $152.0 | ||||||||
Repayments of investments | (164.0) | (287.6) | (46.4) | (128.8) | ||||||||
Net activity | $(20.0) | $99.7 | $18.4 | $23.2 | ||||||||
As of | As of | |||||||||||
12/31/2021 | 12/31/2020 | |||||||||||
Number of portfolio company investments | 73 | 66 | ||||||||||
Number of debt investments | 55 | 51 | ||||||||||
Weighted average yield of debt and other income producing investments (1) | ||||||||||||
Cash | 7.4% | 7.8% | ||||||||||
PIK | 0.2% | 0.0% | ||||||||||
Fee amortization | 0.4% | 0.5% | ||||||||||
Total | 8.0% | 8.3% | ||||||||||
Weighted average yield on total investments (2) | ||||||||||||
Cash | 6.9% | 7.4% | ||||||||||
PIK | 0.2% | 0.0% | ||||||||||
Fee amortization | 0.4% | 0.5% | ||||||||||
Total | 7.5% | 7.9% | ||||||||||
(1) | The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt and other income producing investments, including cash, PIK interest, and 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. |
(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, 2021 and 2020 totaled $63.7 million and $56.7 million, respectively, most of which was interest income from portfolio investments.
Operating expenses for the year ended December 31, 2021 and 2020, totaled $43.9 million and $34.7 million, respectively. For the same respective periods, base management fees totaled $13.2 million and $11.1 million, income incentive fees totaled $3.0 million and $2.5 million, capital gains incentive fees totaled $2.9 million and $(0.4) million, fees and expenses related to our borrowings totaled $18.7 million and $16.0 million (including interest and amortization of deferred financing costs), administrative expenses totaled $1.8 million and $1.8 million, income tax totaled $1.1 million and $0.8 million, and other expenses totaled $3.2 million and $2.9 million, respectively.
For the year ended December 31, 2021 and 2020, net investment income was $19.8 million and $22.0 million, or $1.01 and $1.13 per common share based on weighted average common shares outstanding of 19,489,750 and 19,471,500, respectively.
The capital gains incentive fee of $2.9 million and $(0.4) million for the year ended December 31, 2021 and 2020, respectively, was accrued for 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 $1.1 million and $0.8 million for the year ended December 31, 2021 and 2020, 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, 2021 would be $ 23.75 million, or $ 1.22 per share; and for the year ended December 31, 2020, net investment income would have been $ 22.40 million, or $ 1.15 per share.
The Company's investment portfolio had a net change in unrealized (depreciation) appreciation for the year ended December 31, 2021 and 2020, of $(6.9) million and $8.6 million, respectively. For the year ended December 31, 2021 and 2020, the Company had realized gains (losses) of $23.7 million and $(10.1) million, respectively.
For the year ended December 31, 2021 and 2020, net increase in net assets resulting from operations totaled $33.6 million and $20.2 million, or $1.72 per common share and $1.04 per common share, based on weighted average common shares outstanding of 19,489,750 and 19,471,500, respectively.
Liquidity and Capital Resources
As of December 31, 2021 and 2020, our credit facility provided for borrowings in an aggregate amount up to $250.0 and $230.0 million, respectively, on a committed basis. As of December 31, 2021 and 2020, our credit facility had an accordion feature which allowed for potential future expansion of the facility size to $280.0 for both years. As of December 31, 2021 and December 31, 2020, we had $177.3 million and $174.0 million in outstanding borrowings under the credit facility, respectively.
For the for the year ended December 31, 2021, our operating activities used cash of $76.1 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 $101.8 million, primarily from proceeds from the issuance of notes payable, SBA-guaranteed debentures, net borrowings on our credit facility and proceeds from the issuance of common stock.
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 the issuance of common stock, proceeds from SBA-guaranteed debentures and net borrowings on our credit facility.
Distributions
During the three and twelve months ended December 31, 2021, we declared aggregate distributions of $0.06 per share and $1.14, respectively ($1.2 million and $22.2 million, respectively). Our fourth quarter regular dividend of an aggregate of $0.28 per share was declared in the third quarter in order to maintain our qualification for taxation as a regulated investment company ("RIC") and to eliminate our liability for corporate-level U.S. federal income tax. Additionally, in the fourth quarter, we declared a $0.06 supplemental dividend to be paid in the first quarter of 2022. During the three and twelve months ended December 31, 2020, we declared aggregate distributions of $0.00 and $1.15 per share, respectively ($0 million and $22.4 million, respectively). Tax characteristics of all distributions are reported to stockholders on Form 1099-DIV. Approximately $1.0 million of the dividends declared in 2021 are expected to be characterized as long-term capital gains.
Recent Portfolio Activity
For the quarter ended December 31, 2021, we funded $144.0 million in 9 new and 13 existing portfolio companies and received $164.0 million from 13 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 12, 2021, we invested $0.1 million in the equity of Venbrook Holdings, LLC, an existing portfolio company.
On October 28, 2021, we invested $5.0 million in the first lien term loan of Nutritional Medicinals, LLC, an existing portfolio company.
On October 29, 2021, we invested $13.0 million in the first lien term loan and committed $2.9 million in the unfunded delayed draw term loan and $0.1 million in the unfunded revolver of SIB Holdings, LLC a provider of fixed cost reduction services. Additionally, we invested $0.5 million in the equity of the company.
On November 1, 2021, we invested $8.5 million in the first lien term loan and committed $2.5 million in the unfunded delayed draw term loan of Infolinks Media Buyco, LLC an advertising placement partner for small to mid-sized publishers. Additionally, we invested $0.4 million in the equity of the company.
On November 1, 2021, we invested $1.1 million in the first lien term loan of Integrated Oncology Network, LLC, an existing portfolio company.
On November 1, 2021, we received full repayment on the first lien term loan and delayed draw term loan of Adams Publishing Group, LLC for total proceeds of $4.3 million.
On November 3, 2021, we received full repayment on the first lien term loan of Premiere Digital Services, Inc. for total proceeds of $12.4 million. We also received $0.4 million in full realization on the preferred equity of the company, resulting in a $0.1 million gain. On the same day, we invested $14.4 million in the first lien term loan and $0.6 million in the unfunded revolver of the company.
On November 9, 2021, we invested $7.6 million in the first lien term loan and committed $0.1 million in the unfunded revolver of Ledge Lounger, Inc. a provider of premium in-pool and backyard furniture. Additionally, we invested $0.4 million in the equity of the company.
On November 10, 2021, we received full repayment on the first lien term loan of TechInsights, Inc. for total proceeds of $21.5 million.
On November 18, 2021, we committed $2.0 million in the unfunded revolver of CompleteCase, LLC, an existing portfolio company.
On November 19, 2021, we received full repayment on the first lien term loan of BW DME Acquisition, LLC for total proceeds of $16.7 million. We also received full repayment on the unsecured term loan of BW DME Holdings, LLC for total proceeds of $0.4 million and $7.9 million in full realization on the equity of the company, resulting in a $6.0 million gain.
On November 22, 2021, we invested $6.9 million in the first lien term loan and committed $0.5 million in the unfunded revolver of Madison Logic, Inc., an existing portfolio company. On the same day, we received $0.7 million in realization on the preferred equity of the company, resulting in a $0.2 million gain.
On November 23, 2021, we invested $15.0 million in the first lien term loan and committed $3.5 million in the unfunded revolver of ArborWorks Acquisition LLC a professional tree care firm. Additionally, we invested $0.1 million in the equity of the company.
On November 23, 2021, we received full repayment on the first lien term loan and revolver of Lynx FBO Operating, LLC for total proceeds of $14.2 million. We also received $1.8 million in full realization on the equity of the company, resulting in a $1.2 million gain.
On November 24, 2021, we invested $0.6 million in the first lien term loan and committed $0.2 million in the unfunded delayed draw term loan of Grupo HIMA San Pablo, Inc., an existing portfolio company.
On November 30, 2021, we invested $1.0 million in the first lien term loan of Munch's Supply LLC, an existing portfolio company.
On December 1, 2021, we received full repayment on the unsecured term loan Time Manufacturing Acquisitions, LLC for total proceeds of $13.6 million. We also received $2.7 million in full realization on the equity of the company, resulting in a $2.1 million gain.
On December 13, 2021, we received full repayment on the first lien term loan and delayed draw term loan of Convergence Technologies, Inc. for total proceeds of $17.2 million. We also received $2.2 million in full realization on the equity of the company, resulting in a $1.6 million gain.
On December 15, 2021, we received full repayment on the first lien last out term loan and last out delayed draw term loan of FB Topco, Inc. for total proceeds of $21.5 million.
On December 17, 2021, we invested $13.4 million in the first lien term loan and committed $2.9 million in the unfunded delayed draw term loan and $0.1 million in the unfunded revolver of HV Watterson Holdings, LLC a provider of emergency & disaster response, facility management, and environmental services to corporate clients. Additionally, we invested $1.1 million in the equity of the company.
On December 22, 2021, we invested $16 million in the first lien term loan and committed $0.1 million in the unfunded revolver of U.S. Expediters, LLC, a reseller of CPAP machines and accessories. Additionally, we invested $1.4 million in the equity of the company.
On December 27, 2021, we received $0.6 million in full realization on the equity of Wise Parent Company, LLC, resulting in a $0.6 million gain.
On December 28, 2021, we invested $10.6 million in first lien term loan and committed $0.1 million in the unfunded revolver of Trade Education Acquisition, L.L.C., an online education platform for retail investors. Additionally, we invested $0.7 million in the equity of the company.
On December 28, 2021, we invested $0.1 million in the equity of Xanitos, Inc., an existing portfolio company.
On December 30, 2021, we invested $16.7 million in the first lien term loan and committed $0.1 million in the unfunded revolver of Peltram Plumbing Holdings, LLC, a provider of plumbing solutions. Additionally, we invested $0.5 million in the equity of the company.
On December 31, 2021, we received full repayment on the first lien term loans and delayed draw term loan of Munch's Supply LLC for total proceeds of $15.4 million. In addition, we received $3.0 million in full realization on the equity of the company, resulting in a $2.5 million gain.
Events Subsequent to December 31, 2021
On February 1, 2022, we invested $6.2 million in the first lien term loan and committed $0.1 million in the unfunded revolver of BLP Buyer, Inc., a distributor of lifting solutions. Additionally, we invested $0.8 million in the equity of the company.
On February 7, 2022, we invested $5.4 million in the first lien term loan and committed $0.1 million in the unfunded revolver and $0.1 million in the unfunded delayed draw term loan of Service Minds Company, LLC, a provider of residential electrical services.
On February 10, 2022, we invested $1.0 million in the first lien term loan of NuSource Financial, LLC, an existing portfolio company.
On February 15, 2022, we invested £10.0 million pounds sterling ($13.5 million dollars) in the first lien term loan and committed $0.1 million in the unfunded delayed draw term loan and $0.1 million in the unfunded revolver of a provider of Oracle-focused IT services. Additionally, we invested $0.8 million in the equity of the company.
On February 24, 2022, we invested $13.5 million in the first lien term loan and committed $0.1 million in the unfunded revolver of BDS Solutions, a leading provider of outsourced marketing services.
Credit Facility
The outstanding balance under the credit facility as of March 1, 2022 was $202.3 million.
SBA-guaranteed Debentures
The outstanding balance of SBA-guaranteed Debentures as of March 1, 2022 was $260.0 million.
Dividend Declared
On January 13, 2022, the Company's Board declared a monthly dividend of $0.0933 per share for each of January, February, and March, totaling $0.28 per share in the aggregate for the first quarter of 2022.
Declared | Ex-Dividend Date | Record Date | Payment Date | Amount per Share | |||||
1/13/2022 | 1/27/2022 | 1/28/2022 | 2/15/2022 | $ | 0.0933 | ||||
1/13/2022 | 2/24/2022 | 2/25/2022 | 3/15/2022 | $ | 0.0933 | ||||
1/13/2022 | 3/30/2022 | 3/31/2022 | 4/15/2022 | $ | 0.0933 | ||||
Please refer to the website for regarding the U.S. federal income tax characteristics of our 2021 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 Wednesday, March 2, 2022 at 9:00 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 telephone, please dial 888-394-8218 (domestic). Use passcode 9879227. Starting approximately twenty-four hours after the conclusion of the call, a replay will be available through Thursday, March 11, 2022 by dialing (888) 203-1112 and entering passcode 9879227. 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, | ||||||
2021 | 2020 | ||||||
ASSETS | |||||||
Non-controlled, non-affiliated investments, at fair value | |||||||
(amortized cost of $785,005,957 and $658,628,966, respectively) | $ | 772,873,326 | $ | 653,424,495 | |||
Cash and cash equivalents | 44,174,856 | 18,477,602 | |||||
Receivable for sales and repayments of investments | 536,105 | 215,929 | |||||
Interest receivable | 2,944,599 | 2,189,448 | |||||
Other receivables | 54,752 | 25,495 | |||||
Deferred tax asset | 151,278 | — | |||||
Deferred offering costs | 14,888 | 90,000 | |||||
Prepaid expenses | 512,214 | 487,188 | |||||
Total Assets | $ | 821,262,018 | $ | 674,910,157 | |||
LIABILITIES | |||||||
Notes payable | $ | 98,102,973 | $ | 48,307,518 | |||
Credit Facility payable | 175,451,116 | 171,728,405 | |||||
SBA-guaranteed debentures | 244,615,903 | 173,167,496 | |||||
Dividends payable | 1,171,059 | — | |||||
Management fees payable | 3,454,225 | 2,825,322 | |||||
Income incentive fees payable | 1,749,130 | 681,660 | |||||
Capital gains incentive fees payable | 3,388,151 | 521,021 | |||||
Interest payable | 3,693,662 | 2,144,085 | |||||
Unearned revenue | 529,726 | 523,424 | |||||
Administrative services payable | 386,368 | 391,491 | |||||
Deferred tax liability | — | 359,590 | |||||
Income tax payable | 3,269,514 | 724,765 | |||||
Other accrued expenses and liabilities | 338,958 | 174,731 | |||||
Total Liabilities | $ | 536,150,785 | $ | 401,549,508 | |||
Commitments and contingencies (Note 7) | |||||||
Net Assets | $ | 285,111,233 | $ | 273,360,649 | |||
NET ASSETS | |||||||
Common stock, par value $0.001 per share (100,000,000 shares | |||||||
authorized; 19,517,595 and 19,486,003 issued and outstanding, | |||||||
respectively) | $ | 19,518 | $ | 19,486 | |||
Paid-in capital | 274,559,121 | 276,026,667 | |||||
Accumulated undistributed surplus (deficit) | 10,532,594 | (2,685,504) | |||||
Net Assets | $ | 285,111,233 | $ | 273,360,649 | |||
Total Liabilities and Net Assets | $ | 821,262,018 | $ | 674,910,157 | |||
Net Asset Value Per Share | $ | 14.61 | $ | 14.03 | |||
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, | |||||||||
2021 | 2020 | 2019 | |||||||||
INVESTMENT INCOME | |||||||||||
Interest income | $ | 61,536,686 | $ | 55,350,781 | $ | 56,895,990 | |||||
Other income | 2,142,308 | 1,307,533 | 2,015,899 | ||||||||
Total Investment Income | $ | 63,678,994 | $ | 56,658,314 | $ | 58,911,889 | |||||
OPERATING EXPENSES | |||||||||||
Management fees | $ | 13,169,606 | $ | 11,084,450 | $ | 9,703,706 | |||||
Valuation fees | 313,437 | 290,445 | 265,103 | ||||||||
Administrative services expenses | 1,798,966 | 1,781,603 | 1,691,764 | ||||||||
Income incentive fees | 3,043,470 | 2,527,813 | 5,809,672 | ||||||||
Capital gains incentive fees | 2,867,131 | (359,892) | 799,876 | ||||||||
Professional fees | 1,082,917 | 950,716 | 1,040,011 | ||||||||
Directors' fees | 315,000 | 394,816 | 383,000 | ||||||||
Insurance expense | 482,140 | 384,774 | 352,382 | ||||||||
Interest expense and other fees | 18,721,058 | 15,950,087 | 14,976,024 | ||||||||
Income tax expense | 1,102,374 | 771,134 | 903,905 | ||||||||
Other general and administrative expenses | 1,006,428 | 890,465 | 547,637 | ||||||||
Total Operating Expenses | $ | 43,902,527 | $ | 34,666,411 | $ | 36,473,080 | |||||
Net Investment Income | $ | 19,776,467 | $ | 21,991,903 | $ | 22,438,809 | |||||
Net realized gain (loss) on non-controlled, non-affiliated | |||||||||||
investments | $ | 23,710,167 | $ | (10,129,859) | $ | 19,565,903 | |||||
Loss on debt extinguishment | $ | (539,250) | $ | — | $ | — | |||||
Net change in unrealized (depreciation) appreciation | |||||||||||
on non-controlled, non-affiliated investments | $ | (6,928,160) | $ | 8,555,274 | $ | (15,501,951) | |||||
Net change in unrealized appreciation | |||||||||||
on non-controlled, affiliated investments | $ | - | $ | - | $ | 2,185 | |||||
Benefit (provision) for taxes on net unrealized depreciation | |||||||||||
(appreciation) on investments | $ | 510,868 | $ | (224,877) | $ | (66,760) | |||||
Provision for taxes on realized gain on investments | $ | (2,957,220) | $ | — | $ | — | |||||
Net Increase in Net Assets | |||||||||||
Resulting from Operations | $ | 33,572,872 | $ | 20,192,441 | $ | 26,436,001 | |||||
Net Investment Income Per Share—basic and diluted | $ | 1.01 | $ | 1.13 | $ | 1.23 | |||||
Net Increase in Net Assets Resulting | |||||||||||
from Operations Per Share—basic and diluted | $ | 1.72 | $ | 1.04 | $ | 1.45 | |||||
Weighted Average Shares of Common Stock | |||||||||||
Outstanding—basic and diluted | 19,489,750 | 19,471,500 | 18,275,696 | ||||||||
Distributions Per Share—basic and diluted | $ | 1.14 | $ | 1.15 | $ | 1.36 | |||||
STELLUS CAPITAL INVESTMENT CORPORATION | ||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS | ||||||||||||||
Common Stock | Accumulated | |||||||||||||
Number | Par | Paid-in | undistributed | |||||||||||
of shares | value | capital | surplus (deficit) | Net Assets | ||||||||||
Balances at December 31, 2018 | 15,953,810 | $ | 15,954 | $ | 228,160,491 | $ | (3,331,438) | $ | 224,845,007 | |||||
Net investment income | - | - | - | 22,438,809 | 22,438,809 | |||||||||
Net realized gain on non-controlled, | ||||||||||||||
non-affiliated investments | - | - | - | 19,565,903 | 19,565,903 | |||||||||
Net change in unrealized depreciation on | ||||||||||||||
non-controlled, non-affiliated investments | - | - | - | (15,501,951) | (15,501,951) | |||||||||
Net change in unrealized appreciation on | ||||||||||||||
non-controlled, affiliated investments | - | - | - | 2,185 | 2,185 | |||||||||
Provision for taxes on unrealized appreciation | ||||||||||||||
on investments | - | - | - | (66,760) | (66,760) | |||||||||
Return of capital and other tax related adjustments | (366,375) | 366,375 | - | |||||||||||
Distributions from net investment income | - | - | - | (10,000,000) | (10,000,000) | |||||||||
Distributions from net realized capital gains | - | - | - | (15,038,173) | (15,038,173) | |||||||||
Issuance of common stock, net of offering costs | 3,177,936 | 3,178 | 44,322,975 | - | 44,326,153 | |||||||||
Balances at 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 | |||||
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, | |||||||||
2021 | 2020 | 2019 | |||||||||
Cash flows from operating activities | |||||||||||
Net increase in net assets resulting from operations | $ | 33,572,872 | $ | 20,192,441 | $ | 26,438,186 | |||||
Adjustments to reconcile net increase in net assets | |||||||||||
from operations to net cash used in operating activities: | |||||||||||
Purchases of investments | (387,281,160) | (152,007,165) | (246,438,384) | ||||||||
Proceeds from sales and repayments of investments | 287,639,512 | 128,627,422 | 128,206,318 | ||||||||
Net change in unrealized depreciation (appreciation) on investments | 6,928,160 | (8,555,274) | 15,499,766 | ||||||||
Increase in investments due to PIK | (939,030) | (664,992) | (415,933) | ||||||||
Amortization of premium and accretion of discount, net | (2,412,991) | (2,098,788) | (1,774,469) | ||||||||
Deferred tax (benefit) provision | (510,868) | 224,877 | 66,760 | ||||||||
Amortization of loan structure fees | 518,930 | 647,872 | 519,995 | ||||||||
Amortization of deferred financing costs | 444,153 | 333,316 | 332,407 | ||||||||
Amortization of loan fees on SBA-guaranteed debentures | 1,088,132 | 701,068 | 623,900 | ||||||||
Net realized (gain) loss on investments | (23,703,499) | 10,129,859 | (19,565,903) | ||||||||
Loss on debt extinguishment | 539,250 | - | - | ||||||||
Changes in other assets and liabilities | |||||||||||
(Increase) decrease in interest receivable | (755,151) | 725,262 | 873,974 | ||||||||
(Increase) decrease in other receivables | (29,257) | — | 59,751 | ||||||||
Increase in prepaid expenses | (25,026) | (118,967) | (23,600) | ||||||||
Increase in management fees payable | 628,903 | 129,542 | 511,805 | ||||||||
Increase (decrease) in income incentive fees payable | 1,067,470 | (936,849) | (318,029) | ||||||||
Increase (decrease) in capital gains incentive fees payable | 2,867,130 | (359,892) | 799,875 | ||||||||
(Decrease) increase in administrative services payable | (5,123) | (21,787) | 21,087 | ||||||||
Increase (decrease) in interest payable | 1,549,577 | (178,229) | 458,748 | ||||||||
Increase (decrease) in unearned revenue | 6,302 | (36,344) | 149,175 | ||||||||
Increase (decrease) in income tax payable | 2,544,749 | (192,235) | 600,908 | ||||||||
Increase (decrease) in other accrued expenses and liabilities | 164,227 | (28,730) | 87,559 | ||||||||
Net Cash Used In Operating Activities | $ | (76,102,738) | $ | (3,487,593) | $ | (93,286,104) | |||||
Cash flows from Financing Activities | |||||||||||
Proceeds from the issuance of common stock | $ | 449,515 | $ | 4,794,994 | $ | 45,862,239 | |||||
Sales load for commons stock issued | (2,489) | (18,169) | (1,015,127) | ||||||||
Offering costs paid for common stock issued | (53,327) | (95,681) | (503,042) | ||||||||
Stockholder distributions paid | (21,044,928) | (24,341,646) | (24,678,113) | ||||||||
Repayment of notes payable | (48,875,000) | - | - | ||||||||
Proceeds from issuance of notes payable | 100,000,000 | - | - | ||||||||
Financing costs paid on notes payable | (2,237,835) | - | - | ||||||||
Proceeds from SBA-guaranteed debentures | 73,500,000 | 15,500,000 | 11,000,000 | ||||||||
Financing costs paid on SBA-guaranteed debentures | (3,139,725) | (577,425) | (467,850) | ||||||||
Financing costs paid on Credit facility | (136,219) | (1,880,099) | (246,589) | ||||||||
Borrowings under Credit Facility | 268,700,000 | 120,950,000 | 245,750,000 | ||||||||
Repayments of Credit Facility | (265,360,000) | (108,500,000) | (183,750,000) | ||||||||
Partial share redemption | - | (94) | 755 | ||||||||
Net Cash Provided by Financing Activities | $ | 101,799,992 | $ | 5,831,880 | $ | 91,952,273 | |||||
Net Increase (Decrease) in Cash and Cash Equivalents | $ | 25,697,254 | $ | 2,344,287 | $ | (1,333,831) | |||||
Cash and Cash Equivalents balance at beginning of period | 18,477,602 | 16,133,315 | 17,467,146 | ||||||||
Cash and Cash Equivalents Balance at End of Period | $ | 44,174,856 | $ | 18,477,602 | $ | 16,133,315 | |||||
Supplemental and Non-Cash Activities | |||||||||||
Cash paid for interest expense | $ | 15,099,656 | $ | 14,441,061 | $ | 13,035,976 | |||||
Income and excise tax paid | 1,445,000 | 940,000 | 280,000 | ||||||||
Shares issued pursuant to Dividend Reinvestment Plan | - | 228,943 | - | ||||||||
Increase (decrease) in dividends payable | 1,171,059 | (2,167,630) | 360,060 | ||||||||
(Decrease) increase in deferred offering costs | (75,112) | 90,000 | (18,673) | ||||||||
Gain on conversion of equity investment | 6,668 | - | - | ||||||||
Reconciliation of Core Net Investment Income | ||||
(Unaudited) | ||||
Year | Quarter | |||
ended | ended | |||
December 31, 2021 | December 31, 2021 | |||
Net investment income | $19,776,467 | $5,116,721 | ||
Capital gains incentive fee | $2,867,131 | $1,026,559 | ||
Income tax expense | $1,102,374 | $383,505 | ||
Core net investment income(1) | $23,745,972 | $6,526,785 | ||
Per share amounts: | ||||
Net investment income per share | $1.01 | $0.26 | ||
Core net investment income per share(1) | $1.22 | $0.33 | ||
SOURCE Stellus Capital Investment Corporation
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