Stellus Capital Investment Corporation Reports Results for its Second Fiscal Quarter Ended June 30, 2021
HOUSTON, Aug. 2, 2021 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE: SCM) ("Stellus" or "the Company") today announced financial results for its second fiscal quarter ended June 30, 2021.
Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report that our second quarter net investment income of $0.28 per share covered our aggregate dividends of $0.25 per share. Additionally, core net investment income was $0.30 per share. Based on the consistency of our dividend coverage, our Board of Directors approved an increase in the regular dividend to $0.27 per quarter and declared $0.03 of supplemental dividends for the third quarter. Our portfolio at fair value grew to over $782 million, largely due to strong deployment of $92 million during the period. Year to date we have invested $185 million, and our pipeline remains strong. We continue to have available capital at favorable terms in which to grow through our SBIC licenses."
FINANCIAL HIGHLIGHTS | ||||||
($ in millions, except data relating to per share amounts and shares outstanding) | ||||||
Q2-21 | YTD-21 | |||||
Amount | Per Share | Amount | Per Share | |||
Net investment income | $5.53 | $0.28 | $10.60 | $0.54 | ||
Core net investment income (1) | 5.84 | 0.30 | 11.22 | 0.58 | ||
Net realized (loss) on investments | (1.78) | (0.09) | (1.32) | (0.07) | ||
Loss on debt extinguishment | - | - | (0.54) | (0.03) | ||
Total realized income(2) | 3.75 | 0.19 | 8.74 | 0.45 | ||
Distributions | (4.87) | (0.25) | 9.74 | (0.50) | ||
Net unrealized appreciation | ||||||
(depreciation) on investments | 1.67 | 0.09 | 1.79 | 0.09 | ||
Provision for taxes on unrealized gains | ||||||
on investments in taxable subsidiaries | 0.19 | 0.01 | 0.02 | 0.00 | ||
Net increase in net assets resulting | ||||||
from operations | $5.60 | $0.29 | $10.54 | $0.54 | ||
Weighted average shares outstanding | 19,486,003 | 19,486,003 | ||||
(1) | Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The Company believes that presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S GAAP. A reconciliation of net investment income in accordance with U.S GAAP to core net investment income is presented in the table below the financial statements. |
(2) | Total realized income is the sum of net investment income and net realized gains on investments, including debt extinguishment; both U.S GAAP measures. |
PORTFOLIO ACTIVITY | ||||||||||||
($ in millions, except data relating to per share amounts and number of portfolio companies) | ||||||||||||
As of | As of | |||||||||||
June 30, | December 31, | |||||||||||
2021 | 2020 | |||||||||||
Investments at fair value | $781.9 | $653.4 | ||||||||||
Total assets | $804.1 | $674.9 | ||||||||||
Net assets | $274.2 | $273.4 | ||||||||||
Shares outstanding | 19,486,003 | 19,486,003 | ||||||||||
Net asset value per share | $14.07 | $14.03 | ||||||||||
Quarter Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2021 | 2021 | |||||||||||
New investments | $91.5 | $185.0 | ||||||||||
Repayments of investments | (24.8) | (58.4) | ||||||||||
Net activity | $66.7 | $126.6 | ||||||||||
As of | As of | |||||||||||
June 30, | December 31, | |||||||||||
2021 | 2020 | |||||||||||
Number of portfolio company investments | 76 | 66 | ||||||||||
Number of portfolio company debt investments | 60 | 51 | ||||||||||
Weighted average yield of debt and other income producing investments (3) | ||||||||||||
Cash | 7.6% | 7.8% | ||||||||||
Payment-in-kind ("PIK") | 0.1% | 0.0% | ||||||||||
Fee amortization | 0.5% | 0.5% | ||||||||||
Total | 8.2% | 8.3% | ||||||||||
Weighted average yield on total investments (4) | ||||||||||||
Cash | 7.2% | 7.4% | ||||||||||
Payment-in-kind ("PIK") | 0.1% | 0.0% | ||||||||||
Fee amortization | 0.5% | 0.5% | ||||||||||
Total | 7.8% | 7.9% | ||||||||||
(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 expenses or any sales load that may be paid by investors. |
(4) | The dollar weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity. |
Results of Operations
Investment income for the three months ended June 30, 2021 and 2020 totaled $15.1 million and $13.8 million, respectively, most of which was interest income from portfolio investments.
Operating expenses for the three months ended June 30, 2021 and 2020 totaled $9.6 million and $8.4 million, respectively. For the same respective periods, base management fees totaled $3.3 million and $2.7 million, income incentive fees totaled $0.1 million and $0.2 million, capital gains incentive fees totaled $0.0 million and $0.0 million, fees and expenses related to our borrowings totaled $4.7 million and $4.1 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million and $0.4 million, income tax totaled $0.3 million and $0.3 million, and other expenses totaled $0.7 million and $0.7 million, respectively.
For the three months ended June 30, 2021 and 2020, net investment income was $5.5 million and $5.4 million, or $0.28 and $0.28 per common share based on weighted average common shares outstanding of 19,486,003 and 19,484,217, respectively.
The capital gains incentive fee of $14.4 thousand for the three months ended June 30, 2021 was accrued for GAAP purposes due to the increase in realized and unrealized gains over the quarter. 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 $0.3 million for the three months ended June 30, 2021 was accrued based on estimates of undistributed taxable income, which was generated largely from capital gains. Core net investment income, which is a non-U.S GAAP measure that excludes these accruals, for the three months ended June 30, 2021 was $5.8 million, or $0.30 per share; and for the three months ended June 30, 2020, was $5.7 million, or $0.29 per share.
The Company's investment portfolio had a net change in unrealized appreciation (depreciation) for the three months ended June 30, 2021 and 2020, of $1.7 million and $38.3 million, respectively. For the three months ended June 30, 2021 and 2020, the Company had realized losses of ($1.8) million and ($3.9) million, respectively.
For the three months ended June 30, 2021 and 2020, net increase in net assets resulting from operations totaled $5.6 million and $39.8 million, or $0.29 per common share and $2.04 per common share, based on weighted average common shares outstanding of 19,486,003 and 19,484,217, respectively.
Liquidity and Capital Resources
As of both June 30, 2021 and 2020, 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 million on a committed basis. As of June 30, 2021, our credit facility had an accordion feature that allowed for potential future expansion of the facility size to $280.0 million. As of June 30, 2021 and December 31, 2020, we had $192.6 million and $174.0 million in outstanding borrowings under the credit facility, respectively.
For the six months ended June 30, 2021, our operating activities used cash of ($114.5) million primarily in connection with the purchase and origination of new portfolio investments, some of which was offset by repayment of portfolio investments. For the same period, our financing activities provided cash of $114.7 million, due to the issuance of our 4.875% fixed-rate notes due 2026 (the "2026 Notes") offset by the repayment of our 5.75% fixed-rate notes due 2022 (the "2022 Notes"), issuance of additional SBA-guaranteed debentures, and net repayments on our Credit Facility.
For the six months ended June 30, 2020, our operating activities used cash of $12.4 million, primarily in connection with the origination of portfolio investments, which was slightly offset by repayments of our investments, and our financing activities provided cash of $19.5 million, due to net borrowings under our Credit Facility.
Distributions
During both the three months ended June 30, 2021 and 2020, we declared aggregate distributions of $0.25 per share ($4.9 million) for each quarter. Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year. None of these dividends are expected to include a return of capital.
Portfolio Activity During the Quarter
On April 20, 2021, we invested $0.1 million in the equity of Venbrook Holdings, LLC, an existing portfolio company. On June 25, 2020, we invested an additional $0.1 million in the equity of the company.
On April 22, 2021, we received full repayment on the unsecured term loan of Skopos Financial, LLC for total proceeds of $14.0 million.
On April 27, 2021, we invested $7.5 million in the first lien term loan and committed $2.0 million in the unfunded revolver of Unicat Catalyst, LLC, a global formulator and distributor of heterogeneous, consumable catalyst products primarily serving the refinery, petrochemical, and other end markets. Additionally, we invested $0.8 million in the equity of the company.
On April 28, 2021, we invested $10.8 million in the first lien term loan and committed $0.1 million in both the unfunded revolver and delayed draw term loan of an HVAC and plumbing designer, installer, and service provider for new/existing DCs, fulfilment sortation facilities, and warehouses.
On May 7, 2021, we invested $15.6 million in the first lien term loan and committed $1.3 million in the unfunded revolver of Ad.Net Holdings, Inc., a digital marketing company that targets high-conversion consumers through cost-per-click (CPC) digital media advertising. Additionally, we invested $0.8 million in the equity of the company.
On May 19, 2021, we invested $16.5 million in the first lien term loan and committed $0.1 million in the unfunded revolver of MOM Enterprises, LLC, a provider of over-the-counter health and wellness products for babies, kids, and moms focusing on digestive health, wellness, and general care/remedies. Additionally, we invested $0.9 million in the equity of the company.
On May 28, 2021, we invested $1.2 million in the first lien term loan of Munch's Supply, LLC, an existing portfolio company.
On June 1, 2021, we invested $1.2 million in the first lien term loan of Invincible Boat Company, LLC, an existing portfolio company. Additionally, we invested $0.4 million in the equity of the company.
On June 4, 2021, we invested $15 million in the first lien term loan and committed $0.1 million in the unfunded revolver of ADS Group Opco, LLC, a full-service manufacturer for OEMs, prime contractors, and Tier I suppliers across the defense, space, and aerospace industries. Additionally, we invested $0.5 million in the equity of the company.
On June 11, 2021, we received a paydown on the second lien term loan of GK Holdings, Inc. for total proceeds of $1.2 million and a $2.0 million first lien term loan of Software Luxembourg Acquisitions S.À.R.L., resulting in a realized loss of $1.8 million.
On June 25, 2021, we invested $14.3 million in the first lien term loan and committed $4.7 million in the unfunded delayed draw term loan and $0.1 million in the unfunded revolver of Xanitos, Inc, a provider and manager of outsourced environmental services to hospitals, medical campuses, and medical office buildings. Additionally, we invested $0.8 million in the equity of the company.
Events Subsequent to June 30, 2021
On July 16, 2021, we received full repayment on the first lien term loan of Software Luxembourg Acquisition S.A.R.L. (GK Holdings, Inc.) for total proceeds of $2.0 million.
On July 30, 2021, we invested $10.0 million in the first lien term loan and committed $0.1 million in the unfunded revolver of a provider of software solutions to automotive dealerships. Additionally, we invested $0.8 million in the equity of the company.
Credit Facility
The outstanding balance under the credit facility as of August 2, 2021 was $187.0 million.
SBA-guaranteed Debentures
The total balance of SBA-guaranteed debentures outstanding as of August 2, 2021 was $250.0 million.
Distributions Declared
On July 20, 2021, our Board declared a regular monthly dividend of $0.09 per share for each of July, August and September for an aggregate of $0.27 per share for the quarter, which is an increase of $0.02 for the quarter as compared to the prior quarter. In addition, the board declared a supplemental dividend of $0.01 for each of the months of July, August and September.
Conference Call Information
Stellus Capital Investment Corporation will host a conference call to discuss these results on Tuesday, August 3, 2021 at 11:00 AM, Central Time. The conference call will be led by Robert T. Ladd, chief executive officer, and W. Todd Huskinson, chief financial officer, chief compliance officer, treasurer, and secretary.
For those wishing to participate by telephone, please dial 800-353-6461 (domestic). Use passcode 5908267. Starting approximately twenty-four hours after the conclusion of the call, a replay will be available through Wednesday, August 11, 2021 by dialing (888) 203-1112 and entering passcode 5908267. 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, including statements about COVID-19 and its impacts, 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
[email protected]
PART I — FINANCIAL INFORMATION | |||||||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | |||||||
June 30, | |||||||
2021 | December 31, | ||||||
(Unaudited) | 2020 | ||||||
ASSETS | |||||||
Non-controlled, non-affiliated investments, at fair value | |||||||
(amortized cost of $785,364,583 and $658,628,966, | |||||||
respectively) | $ | 781,947,972 | $ | 653,424,495 | |||
Cash and cash equivalents | 18,602,775 | 18,477,602 | |||||
Receivable for sales and repayments of investments | 480,552 | 215,929 | |||||
Interest receivable | 2,712,220 | 2,189,448 | |||||
Other receivables | 25,495 | 25,495 | |||||
Deferred offering costs | — | 90,000 | |||||
Prepaid expenses | 301,016 | 487,188 | |||||
Total Assets | $ | 804,070,030 | $ | 674,910,157 | |||
LIABILITIES | |||||||
Notes payable | $ | 97,877,778 | $ | 48,307,518 | |||
Credit facility payable | 190,563,263 | 171,728,405 | |||||
SBA-guaranteed debentures | 228,969,256 | 173,167,496 | |||||
Dividends payable | 1,623,187 | — | |||||
Management fees payable | 2,278,479 | 2,825,322 | |||||
Income incentive fees payable | 178,398 | 681,660 | |||||
Capital gains incentive fees payable | 618,689 | 521,021 | |||||
Interest payable | 4,534,509 | 2,144,085 | |||||
Unearned revenue | 513,798 | 523,424 | |||||
Administrative services payable | 394,075 | 391,491 | |||||
Deferred tax liability | 339,673 | 359,590 | |||||
Income tax payable | 362,977 | 724,765 | |||||
Other accrued expenses and liabilities | 1,649,667 | 174,731 | |||||
Total Liabilities | $ | 529,903,749 | $ | 401,549,508 | |||
Commitments and contingencies (Note 7) | |||||||
Net Assets | $ | 274,166,281 | $ | 273,360,649 | |||
NET ASSETS | |||||||
Common stock, par value $0.001 per share (100,000,000 shares | |||||||
authorized; 19,486,003 and 19,486,003 issued and outstanding, | |||||||
respectively) | $ | 19,486 | $ | 19,486 | |||
Paid-in capital | 276,026,667 | 276,026,667 | |||||
Accumulated undistributed deficit | (1,879,872) | (2,685,504) | |||||
Net Assets | $ | 274,166,281 | $ | 273,360,649 | |||
Total Liabilities and Net Assets | $ | 804,070,030 | $ | 674,910,157 | |||
Net Asset Value Per Share | $ | 14.07 | $ | 14.03 | |||
STELLUS CAPITAL INVESTMENT CORPORATION | ||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||||
For the | For the | For the | For the | |||||||||||
three | three | six | six | |||||||||||
months ended | months ended | months ended | months ended | |||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
INVESTMENT INCOME | ||||||||||||||
Interest income | $ | 14,846,398 | $ | 13,635,480 | $ | 28,359,175 | $ | 28,485,068 | ||||||
Other income | 257,976 | 205,798 | 733,063 | 617,255 | ||||||||||
Total Investment Income | $ | 15,104,374 | $ | 13,841,278 | $ | 29,092,238 | $ | 29,102,323 | ||||||
OPERATING EXPENSES | ||||||||||||||
Management fees | $ | 3,278,479 | $ | 2,743,195 | $ | 6,242,340 | $ | 5,462,249 | ||||||
Valuation fees | 20,082 | 19,001 | 148,435 | 128,834 | ||||||||||
Administrative services expenses | 463,102 | 436,594 | 916,491 | 903,529 | ||||||||||
Income incentive fees | 55,899 | 168,749 | 55,899 | 1,508,386 | ||||||||||
Capital gains incentive fees (reversal) | 14,387 | - | 97,668 | (880,913) | ||||||||||
Professional fees | 236,212 | 150,514 | 505,177 | 537,228 | ||||||||||
Directors' fees | 74,500 | 110,566 | 166,000 | 242,816 | ||||||||||
Insurance expense | 118,813 | 93,071 | 236,320 | 186,142 | ||||||||||
Interest expense and other fees | 4,691,968 | 4,092,594 | 9,015,446 | 8,384,798 | ||||||||||
Income tax expense | 286,276 | 289,000 | 526,257 | 485,795 | ||||||||||
Other general and administrative expenses | 329,641 | 302,379 | 586,559 | 468,382 | ||||||||||
Total Operating Expenses | $ | 9,569,359 | $ | 8,405,663 | $ | 18,496,592 | $ | 17,427,246 | ||||||
Net Investment Income | $ | 5,535,015 | $ | 5,435,615 | $ | 10,595,646 | $ | 11,675,077 | ||||||
Net realized loss on non-controlled, non-affiliated | ||||||||||||||
investments | $ | (1,781,665) | $ | (3,893,249) | $ | (1,319,437) | $ | (2,596,456) | ||||||
Loss on debt extinguishment | $ | - | $ | - | $ | (539,250) | $ | - | ||||||
Net change in unrealized appreciation (depreciation) | ||||||||||||||
on non-controlled, non-affiliated investments | $ | 1,665,877 | $ | 38,329,217 | $ | 1,787,860 | $ | (13,175,729) | ||||||
Benefit (provision) for taxes on net unrealized gain | ||||||||||||||
on investments | $ | 187,721 | $ | (58,909) | $ | 19,917 | $ | (29,950) | ||||||
Net Increase (Decrease) in Net Assets | ||||||||||||||
Resulting from Operations | $ | 5,606,948 | $ | 39,812,674 | $ | 10,544,736 | $ | (4,127,058) | ||||||
Net Investment Income Per Share | $ | 0.28 | $ | 0.28 | $ | 0.54 | $ | 0.60 | ||||||
Net Increase (Decrease) in Net Assets Resulting | ||||||||||||||
from Operations Per Share | $ | 0.29 | $ | 2.04 | $ | 0.54 | $ | (0.21) | ||||||
Weighted Average Shares of Common Stock Outstanding | 19,486,003 | 19,484,217 | 19,486,003 | 19,456,849 | ||||||||||
Distributions Per Share | $ | 0.25 | $ | 0.25 | $ | 0.50 | $ | 0.59 | ||||||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited) | |||||||||||||
For the | For the | For the | For the | ||||||||||
three | three | six | six | ||||||||||
months ended | months ended | months ended | months ended | ||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||
Increase (Decrease) in Net Assets Resulting from Operations | |||||||||||||
Net investment income | $ | 5,535,015 | $ | 5,435,615 | $ | 10,595,646 | $ | 11,675,077 | |||||
Net realized loss on non-controlled, | |||||||||||||
non-affiliated investments | (1,781,665) | (3,893,249) | (1,319,437) | (2,596,456) | |||||||||
Loss on debt extinguishment | — | — | (539,250) | ||||||||||
Net change in unrealized appreciation (depreciation) on | |||||||||||||
non-controlled, non-affiliated investments | 1,665,877 | 38,329,217 | 1,787,860 | (13,175,729) | |||||||||
Benefit (provision) for taxes on unrealized appreciation | |||||||||||||
on investments | 187,721 | (58,909) | 19,917 | (29,950) | |||||||||
Net Increase (Decrease) in Net Assets Resulting | |||||||||||||
from Operations | $ | 5,606,948 | $ | 39,812,674 | $ | 10,544,736 | $ | (4,127,058) | |||||
Stockholder Distributions From: | |||||||||||||
Net investment income | $ | (4,869,552) | $ | (4,871,501) | $ | (9,739,104) | $ | (11,490,798) | |||||
Total Distributions | $ | (4,869,552) | $ | (4,871,501) | $ | (9,739,104) | $ | (11,490,798) | |||||
Capital Share Transactions | |||||||||||||
Issuance of common stock | $ | — | $ | 93,470 | $ | — | $ | 5,023,937 | |||||
Sales load | — | — | — | (5,681) | |||||||||
Offering costs | — | — | — | (18,169) | |||||||||
Partial share transactions | — | — | — | (96) | |||||||||
Net Increase in Net Assets Resulting From | |||||||||||||
Capital Share Transactions | $ | — | $ | 93,470 | $ | — | $ | 4,999,991 | |||||
Total Increase (Decrease) in Net Assets | $ | 737,396 | $ | 35,034,643 | $ | 805,632 | $ | (10,617,865) | |||||
Net Assets at Beginning of Period | $ | 273,428,885 | $ | 224,918,665 | $ | 273,360,649 | $ | 270,571,173 | |||||
Net Assets at End of Period | $ | 274,166,281 | $ | 259,953,308 | $ | 274,166,281 | $ | 259,953,308 | |||||
STELLUS CAPITAL INVESTMENT CORPORATION | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | |||||||
For the | For the | ||||||
six | six | ||||||
months ended | months ended | ||||||
June 30, | June 30, | ||||||
2,021 | 2,020 | ||||||
Cash flows from operating activities | |||||||
Net increase (decrease) in net assets resulting from operations | $ | 10,544,736 | $ | (4,127,058) | |||
Adjustments to reconcile net increase (decrease) in net assets | |||||||
from operations to net cash used in operating activities: | |||||||
Purchases of investments | (182,822,853) | (68,247,468) | |||||
Proceeds from sales and repayments of investments | 55,963,858 | 42,341,340 | |||||
Net change in unrealized (appreciation) depreciation on investments | (1,787,860) | 13,175,729 | |||||
Increase in investments due to PIK | (360,003) | (552,245) | |||||
Amortization of premium and accretion of discount, net | (1,107,347) | (1,069,969) | |||||
Deferred tax (benefit) provision | (19,917) | 29,951 | |||||
Amortization of loan structure fees | 239,700 | 318,039 | |||||
Amortization of deferred financing costs | 233,846 | 165,748 | |||||
Amortization of loan fees on SBA-guaranteed debentures | 501,885 | 342,550 | |||||
Net realized loss on investments | 1,326,105 | 2,596,456 | |||||
Loss on debt extinguishment | 539,250 | — | |||||
Changes in other assets and liabilities | |||||||
(Increase) decrease in interest receivable | (522,772) | 588,854 | |||||
Decrease in prepaid expenses | 186,172 | 101,378 | |||||
(Decrease) increase in management fees payable | (546,843) | 2,766,468 | |||||
(Decrease) increase in incentive fees payable | (503,262) | 42,353 | |||||
Increase (decrease) in capital gains incentive fees payable | 97,668 | (880,913) | |||||
Increase in administrative services payable | 2,584 | 383,490 | |||||
Increase (decrease) in interest payable | 2,390,424 | (155,230) | |||||
Increase in director fees payable | — | 9,000 | |||||
(Decrease) increase in unearned revenue | (9,626) | 86,232 | |||||
Decrease in income tax payable | (361,788) | (461,000) | |||||
Increase in other accrued expenses and liabilities | 1,474,936 | 163,207 | |||||
Net Cash Used in Operating Activities | $ | (114,541,107) | $ | (12,383,088) | |||
Cash flows from Financing Activities | |||||||
Proceeds from the issuance of common stock | $ | — | $ | 4,794,994 | |||
Sales load for commons stock issued | — | (5,681) | |||||
Offering costs paid for common stock issued | — | (18,169) | |||||
Stockholder distributions paid | (8,115,917) | (8,557,981) | |||||
Repayment of Notes Payable | (48,875,000) | — | |||||
Proceeds from issuance of Notes | 100,000,000 | — | |||||
Financing costs from bond issuance | (2,237,835) | — | |||||
Proceeds from SBA Debentures | 57,500,000 | — | |||||
Financing costs paid on SBA Debentures | (2,200,125) | — | |||||
Financing costs paid on Credit facility | (4,843) | (203,353) | |||||
Borrowings under Credit Facility | 161,800,000 | 86,450,000 | |||||
Repayments of Credit Facility | (143,200,000) | (63,000,000) | |||||
Partial Share Redemption | — | (96) | |||||
Net Cash Provided by Financing Activities | $ | 114,666,280 | $ | 19,459,714 | |||
Net Increase in Cash and Cash Equivalents | $ | 125,173 | $ | 7,076,626 | |||
Cash and cash equivalents balance at beginning of period | 18,477,602 | 16,133,315 | |||||
Cash and Cash Equivalents Balance at End of Period | $ | 18,602,775 | $ | 23,209,941 | |||
Supplemental and Non-Cash Activities | |||||||
Cash paid for interest expense | $ | 5,649,592 | $ | 7,713,693 | |||
Excise tax paid | 870,000 | 940,000 | |||||
Shares issued pursuant to Dividend Reinvestment Plan | — | 228,943 | |||||
Increase in dividends payable | 1,623,187 | 2,703,874 | |||||
Decrease in deferred offering costs for Notes Payable offering | (90,000) | — | |||||
Gain on conversion of equity investment | 6,668 | — | |||||
Reconciliation of Core Net Investment Income (1) | ||||
(Unaudited) | ||||
Quarter | Quarter | |||
ended | ended | |||
June 30, 2021 | June 30, 2020 | |||
Net investment income | $5,535,015 | $5,435,615 | ||
Capital gains incentive fee | $14,387 | $- | ||
Income tax expense | $286,276 | $289,000 | ||
Core net investment income | $5,835,678 | $5,724,615 | ||
Per share amounts: | ||||
Net investment income per share | $0.28 | $0.28 | ||
Core net investment income per share | $0.30 | $0.29 | ||
Reconciliation of Realized Net Investment Income (2) | ||||
(Unaudited) | ||||
Quarter | Quarter | |||
ended | ended | |||
June 30, 2021 | June 30, 2020 | |||
Net investment income | $5,535,015 | $5,435,615 | ||
Net Realized Gain | $(1,781,665) | $(3,893,249) | ||
Total Realized Net Investment Income | $3,753,350 | $1,542,366 | ||
Per share amounts: | ||||
Net investment income per share | $0.28 | $0.28 | ||
Realized net investment income per share | $0.19 | $0.08 | ||
SOURCE Stellus Capital Investment Corporation
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