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
thuskinson@stelluscapital.com
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
|
|
|
|
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/stellus-capital-investment-corporation-reports-results-for-its-fourth-fiscal-quarter-and-year-ended-december-31-2020-301241195.html
SOURCE Stellus Capital Investment Corporation