Stellus Capital (SCM) shares rallied 7.1% in the last trading session to close at $12.52. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 15.4% loss over the past four weeks.Stellus Capital stock surged, driven by a massive jump in the broad markets. The jump was fueled by President Donald Trump’s announcement of a 90-day tariff pause for the non-retaliating nations. This cheered the investors, driving the SC ...

Group 1 - The Company declared a monthly dividend of $0.1333 for April, May, and June 2025, totaling $0.40 per share for the second quarter [1] - The regular dividend will be paid to shareholders of record in May, June, and July 2025 [1] - The ex-dividend dates are set for April 30, May 30, and June 30, 2025, with payment dates on May 15, June 13, and July 15, 2025 [2] Group 2 - Stellus Capital Investment Corporation is an externally-managed, closed-end, non-diversified investment management company regulated as a business development company under the Investment Company Act of 1940 [3] - The Company's investment objective is to maximize total return to stockholders through current income and capital appreciation by investing primarily in private middle-market companies with EBITDA between $5.0 million and $50.0 million [3] - The Company focuses on first lien loans, including unitranche loans, often with corresponding equity investments [3]

Core Viewpoint - Stellus Capital Investment Corporation has announced a public offering of $75 million in 7.25% notes due 2030, aimed at repaying part of its outstanding credit facility and potentially investing in lower middle-market companies [1][3]. Group 1: Offering Details - The public offering consists of $75 million aggregate principal amount of 7.25% notes, maturing on April 1, 2030, with interest payable semi-annually starting October 1, 2025 [1]. - The notes may be redeemed at the Company's option at par plus a "make-whole" premium [1]. - The offering is managed by Raymond James & Associates, Inc. as the lead book-running manager, with Goldman Sachs & Co. LLC and Keefe, Bruyette & Woods, Inc. as passive book-runners [2]. Group 2: Use of Proceeds - The net proceeds from the offering will be used to repay a portion of the $236.4 million outstanding under the Company's credit facility [3]. - The Company may re-borrow under its credit facility to invest in lower middle-market companies and for general corporate purposes [3]. Group 3: Company Overview - Stellus Capital Investment Corporation is an externally-managed, closed-end, non-diversified investment management company regulated as a business development company under the Investment Company Act of 1940 [7]. - The Company's investment objective is to maximize total return through current income and capital appreciation by investing primarily in private lower middle-market companies with EBITDA between $5 million and $50 million [7].

Financial Data and Key Metrics Changes - In Q4 2024, the company generated GAAP net investment income of $0.35 per share and core net investment income of $0.37 per share, excluding estimated excise taxes [8] - Net asset value per share decreased by $0.09 during the quarter due to net unrealized depreciation on the investment portfolio and reduction of spillover income, offset by net realized gains primarily related to one equity investment [9] - The investment portfolio at fair value increased to $953.5 million across 105 portfolio companies, up from $908.7 million across 99 companies as of September 30, 2024 [10] Business Line Data and Key Metrics Changes - The company invested $76.5 million in nine new and portfolio companies during Q4 2024 and had $33 million in other investment activity, all at par [10] - Three full repayments totaling $46.9 million and $15.6 million of other repayments were received, both at par [11] - 98% of loans were secured and 95% were priced at floating rates, with an average loan per company of $9.5 million [11][12] Market Data and Key Metrics Changes - The company’s portfolio includes loans to seven portfolio companies on nonaccrual, comprising 5.4% of the fair value of the total loan portfolio [13] - 24% of the portfolio is rated a one or ahead of plan, while 21% is marked category three or below plan, indicating some companies are not meeting expectations [13] Company Strategy and Development Direction - The company aims to maintain a portfolio of $1 billion, having funded an additional $47 million in the first quarter of 2025 [14] - The equity co-invest business includes investments across 92 companies with a cost basis of $59 million, with expectations of meaningful uplift over time [16] - The company declared a dividend of $0.40 per share for Q1 2025, expected to continue into the second quarter and throughout the year based on spillover earnings [17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding leverage levels and potential credit risks due to uncertainties created by government actions [24][25] - The company anticipates that the first quarter EPS will likely not fully cover the dividend, but spillover earnings from previous years will help [29][30] - Management noted a decrease in investment yields due to tightening spreads and some additional non-accruals, but overall asset quality remains on plan [34] Other Important Information - The company had $45 million of spillover at the end of Q4 2024, which will support dividends in 2025 [52] - The company is in the process of obtaining a third SBA lending license after prepaying a debenture payment of approximately $16 million [38] Q&A Session Summary Question: Thoughts on potential tariff impacts and credit quality changes - Management is operating at lower leverage levels than usual and is cautious about the uncertainty created by government actions [24][25] Question: Will first quarter EPS cover the dividend? - EPS is expected to be close but probably not fully cover the dividend, with substantial earnings from the past helping to cover it [29][30] Question: What drove the decrease in investment yields? - Decrease in spreads from sixes to fives and some impact from additional non-accruals were noted [34] Question: Thoughts on increasing leverage - Management is targeting a one-to-one leverage ratio but remains cautious about increasing leverage in the current environment [36] Question: Will the company re-up for more SBA lending capacity? - Yes, the company is moving forward with obtaining a third license for SBA lending [38] Question: Analysis of portfolio exposure to tariffs - Management estimates that up to 10% of the portfolio could be impacted by tariffs, but it is not expected to be material at this time [57][58] Question: Any additional markup from realized gains this quarter? - There was a few million dollars in additional markup from one equity position that continued to grow [60]

Core Insights - Stellus Capital (SCM) reported quarterly earnings of $0.37 per share, missing the Zacks Consensus Estimate of $0.38 per share, and down from $0.50 per share a year ago, representing an earnings surprise of -2.63% [1] - The company posted revenues of $25.62 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.14% and down from $28.02 million year-over-year [2] - Stellus Capital shares have increased by approximately 12.7% since the beginning of the year, contrasting with a -0.5% decline in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.36 on revenues of $25.67 million, and for the current fiscal year, it is $1.45 on revenues of $102.14 million [7] - The estimate revisions trend for Stellus Capital is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Financial - SBIC & Commercial Industry, to which Stellus Capital belongs, is currently in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - WhiteHorse Finance (WHF), another company in the same industry, is expected to report quarterly earnings of $0.40 per share, reflecting a year-over-year decline of 13% [9]

Core Insights - Stellus Capital Investment Corporation reported solid operating results for the fourth fiscal quarter and year ended December 31, 2024, with U.S. GAAP net investment income of $0.35 per share and core net investment income of $0.37 per share [2][9] - The company funded $109 million in investments during the quarter and received $65 million in repayments, resulting in a total portfolio value of $953 million at fair value [2][5] - Since inception, investors have received a total of $288 million in aggregate distributions, equivalent to $16.69 per share [2] Financial Highlights - For the three months ended December 31, 2024, net investment income was $9.64 million, or $0.35 per share, compared to $11.91 million, or $0.49 per share for the same period in 2023 [3][9] - Core net investment income for the same period was $10.15 million, or $0.37 per share, down from $12.16 million, or $0.50 per share in 2023 [3][9] - Total realized income for the quarter was $15.57 million, with distributions totaling $10.90 million, or $0.40 per share [3][14] Portfolio Activity - As of December 31, 2024, investments at fair value increased to $953.5 million from $874.5 million a year earlier [5] - The company had 105 portfolio company investments, up from 93 in the previous year [5] - New investments during the quarter totaled $108.5 million, while repayments amounted to $64.5 million [5] Liquidity and Capital Resources - The company's credit facility allows for borrowings up to $315 million, with an accordion feature for potential expansion to $350 million [12] - As of December 31, 2024, outstanding borrowings under the credit facility were $175.4 million, compared to $160.1 million a year earlier [13] Distributions - The company declared aggregate distributions of $0.40 per share for both the three months ended December 31, 2024, and 2023, totaling $10.9 million and $9.6 million, respectively [14] - Approximately $0.5 million of the dividends declared in 2024 are expected to be characterized as long-term capital gains [14] Recent Portfolio Activity - The company made several new investments and add-on investments in various sectors, including healthcare, cybersecurity, and digital marketing, totaling millions in investment amounts [15][16][18][19]

Investment Portfolio - As of December 31, 2024, the company had $953.5 million invested in 105 companies, with approximately 90% in first lien debt[419]. - The investment portfolio composition included 1% second lien debt, 1% unsecured debt, and 8% equity investments at fair value[419]. - The total investments at fair value as of December 31, 2024, were $953.5 million, compared to $874.5 million for the same period in 2023, reflecting a growth of approximately 9%[420]. - The geographical concentration of investments showed Texas and California as the top states, accounting for 16.15% and 16.00% of total investments at fair value, respectively[422]. - The investment strategy focuses on lower middle-market companies with EBITDA between $5 million and $50 million[418]. - The portfolio included unitranche investments, which accounted for 2% of the total portfolio at fair value as of December 31, 2024[419]. - The overall investment strategy focuses on sectors such as media, healthcare, and environmental industries, indicating a diversified portfolio approach[548]. - The overall investment portfolio reflects a diverse range of industries, including consumer goods, energy, aerospace, and environmental services[594]. - The company continues to focus on strategic investments to enhance its portfolio and drive future growth[595]. Financial Performance - The total investment income for the year ended December 31, 2024, was $104.7 million, a slight decrease from $105.8 million in 2023[444]. - Net investment income for the year ended December 31, 2024 was $41.9 million, or $1.64 per common share, compared to $42.2 million, or $1.92 per common share in 2023[450]. - Net realized losses on investments for the year ended December 31, 2024 totaled ($15.7) million, with proceeds from repayments of investments amounting to $151.8 million[454]. - The net change in unrealized appreciation for the year ended December 31, 2024 was $19.6 million, a significant increase from $2.8 million in 2023[456]. - The net increase in net assets resulting from operations for the year ended December 31, 2024 was $45.8 million, or $1.79 per common share, compared to $17.5 million, or $0.80 per common share in 2023[462]. - Total operating expenses were $64.6 million, an increase from $63.9 million in 2023 and $46.5 million in 2022[449]. - The company recognized $2.5 million of non-recurring income in 2024, related to early repayments and amendments to specific loan positions[444]. Cash and Liquidity - The company had cash and cash equivalents of $20.1 million as of December 31, 2024, down from $26.1 million in 2023[432]. - Cash flows from operating activities used net cash of $28.6 million for the year ended December 31, 2024, primarily for portfolio investments[465]. - The net decrease in cash and cash equivalents for the year was $(6,067,147) in 2024, compared to $(21,917,588) in 2023[541]. - The company had $45.4 million of undistributed taxable income as of December 31, 2024, to be carried forward for distributions in 2025[496]. Debt and Financing - The company had unfunded commitments of $41.3 million as of December 31, 2024, up from $37.0 million in 2023, indicating an increase in potential future investments[421]. - The Credit Facility allows borrowings up to a maximum of $315.0 million, with an accordion feature to increase commitments to $350.0 million[472]. - As of December 31, 2024, the outstanding balance under the Credit Facility was $175.4 million, up from $160.1 million in 2023[475]. - Interest expense for the Credit Facility was $13.6 million in 2024, compared to $14.7 million in 2023, with a weighted average interest rate of 8.3%[476]. - The company has a total of $1,325,032 in revolver commitments for ArborWorks, LLC, maturing on November 6, 2028, with a 0.00% interest rate[574]. - Total unfunded debt commitments amount to $40,989,533[576]. Asset Quality and Coverage - The asset coverage ratio as of December 31, 2024, was 234%, which is above the regulatory requirement of 150%[415]. - The asset quality ratings showed that 24% of the portfolio was in Investment Category 1 as of December 31, 2024, consistent with the previous year[437]. - As of December 31, 2024, the investment portfolio at fair value represented approximately 97.2% of total assets[504]. - The company has maintained compliance with RIC requirements as of December 31, 2024, allowing it to avoid U.S. federal income taxes on distributed income[413]. Shareholder Distributions - The company intends to distribute between 90% and 100% of its taxable income to satisfy RIC requirements under Subchapter M of the Code[469]. - The company declared a regular monthly distribution of $0.1333 per share for January, February, and March 2025[511]. - Stockholder distributions paid were $37,560,442 in 2024, compared to $35,527,480 in 2023[541]. - Distributions Per Share remained stable at $1.61 for both 2024 and 2023, up from $1.30 in 2022[536]. Changes in Investments - The company made $221.2 million in investments across 21 new portfolio companies and 29 existing portfolio companies during the year ended December 31, 2024, compared to $190.9 million in investments in 2023[433][434]. - Loans to seven portfolio companies were on non-accrual status as of December 31, 2024, representing approximately 8.3% of the loan portfolio at cost, an increase from 4.2% in 2023[439]. - The company did not engage in interest rate hedging activities for the years ended December 31, 2024, and 2023[515]. Changes in Assets and Liabilities - As of December 31, 2024, total assets amounted to $980.90 million, an increase from $908.09 million as of December 31, 2023, representing a growth of approximately 7.99%[534]. - Total liabilities increased to $610.98 million from $588.15 million, which is an increase of about 3.09%[534]. - Net assets grew to $369.92 million from $319.94 million, indicating a significant increase of approximately 15.61%[534]. - The net asset value per share increased to $13.46 from $13.26, reflecting a growth of about 1.51%[534].

HOUSTON, Feb. 25, 2025 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE: SCM) will release its financial results for the fourth quarter and year ended December 31, 2024 on Tuesday, March 4, 2025 after the close of the stock market.Stellus Capital Investment Corporation will host a conference call to discuss these results on Wednesday, March 5, 2025 at 10:00 AM, Central Time. The conference call will be led by Robert T. Ladd, Chief Executive Officer, and W. Todd Huskinson, Chief Financial Officer ...

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Dividend Announcement - Stellus Capital Investment Corporation declared a monthly dividend of $0 1333 per share for January, February, and March 2025, totaling $0 40 per share for the first quarter [1] - The dividends will be paid to shareholders of record in February, March, and April 2025 [1] - The ex-dividend dates are January 31, 2025, February 28, 2025, and March 31, 2025, with payment dates on February 14, 2025, March 14, 2025, and April 15, 2025, respectively [2] Company Overview - Stellus Capital Investment Corporation is an externally-managed, closed-end, non-diversified investment management company regulated as a business development company under the Investment Company Act of 1940 [3] - The company's investment objective is to maximize total return to stockholders through current income and capital appreciation by investing primarily in private middle-market companies with EBITDA between $5 0 million and $50 0 million [3] - The company focuses on first lien, second lien, unitranche, and mezzanine debt financing, as well as corresponding equity investments [3] - Investment activities are managed by Stellus Capital Management [3]