Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Group 1: Investment Strategy - The company advocates for a diversified approach to investing, focusing on high-quality dividend stocks that provide long-term growth potential [1]. - A hybrid system is proposed, blending growth and income strategies to optimize investment returns [1]. - The total return achieved through this strategy is reported to be on par with the S&P index, indicating its effectiveness [1].

PresentationGood morning, and welcome to the Hansa Biopharma virtual KOL event. [Operator Instructions] As a reminder, this call is being recorded, and a replay will be made available on the Hansa's website following the conclusion of the event. I'd now like to turn the call over to Renee Aguiar-Lucander, Chief Executive Officer of Hansa Biopharma. Please go ahead, Renee.Renee Aguiar-LucanderChief Executive Officer Thank you very much, Tara, and welcome, everybody, and thank you for attending this webinar o ...

Financial Data and Key Metrics Changes - In Q3 2025, the company generated GAAP net investment income of $0.32 per share, realized income of $0.42 per share, and core net investment income of $0.34 per share, excluding estimated excise taxes [4][11] - Net asset value per share decreased by $0.16 during the quarter, attributed to $0.08 per share in dividend payments and $0.08 per share in net unrealized losses primarily related to two debt investments [5][11] - The investment portfolio at fair value increased to $1.01 billion across 115 portfolio companies, up from $985.9 million across 112 companies as of June 30, 2025 [5][12] Business Line Data and Key Metrics Changes - The company invested $51.3 million in five new portfolio companies during the quarter and received repayments totaling $29.8 million [6][12] - 98% of loans were secured, and 90% were priced at floating rates, with an average loan per company of $9.2 million [6][12] Market Data and Key Metrics Changes - The company has loans to five portfolio companies on non-accrual, comprising 6.7% of total cost and 3.7% of fair value of the total loan portfolio, showing a slight decrease from the prior quarter [7][13] - 99% of portfolio companies are backed by private equity firms, indicating strong support and stability within the investment portfolio [6][13] Company Strategy and Development Direction - The company amended and extended its revolving credit facility, reducing the spread over the 30-day SOFR rate from 2.6% to 2.25% and extending the maturity date to September 2030 [8][14] - The company expects to maintain a portfolio in excess of $1 billion at year-end and projects $5 million in equity realizations for Q4 and Q1 of 2026 [15] Management's Comments on Operating Environment and Future Outlook - Management noted that any credit issues are company-specific and do not indicate a broader trend of weakness across the portfolio [25][26] - The competitive market has led to a reduction in spreads, with current rates around five over SOFR, and management anticipates that spreads may eventually rise again [23][49] Other Important Information - The company has paid $318 million in dividends since its IPO, representing $17.75 per share to investors who participated in the IPO priced at $15 per share [4] - The company issued approximately 531,000 shares for $7.4 million under its ATM program during the quarter, all above net asset value [5][12] Q&A Session Summary Question: Expectations for equity realizations in Q4 and Q1 - Management projects $5 million of realizations in Q4 and a similar amount for Q1 of 2026, with expected gains of $3.8 million for Q4 and $3.3 million for Q1 [20][21] Question: Mix between new and add-on opportunities in the pipeline - Management indicated that the mix remains active, with a majority of fundings expected to be on new investments, and noted a competitive environment with some tightness in spreads [22][23] Question: Signs of concern in any segments or industries of the portfolio - Management reported no increasing weakness or concerns, stating that most companies are performing well [25][26] Question: Status on the third SBA license - Management confirmed they are awaiting the issuance of the third license, which is expected soon and would add approximately $50 million in capacity [35][38] Question: Drivers of significant repayments in Q4 - Management indicated that significant repayments are primarily driven by sales of businesses, with some refinancing occurring [47]

Core Insights - Stellus Capital Investment Corporation reported solid operating results for the fiscal quarter ended September 30, 2025, with U.S. GAAP net investment income of $0.32 per share and core net investment income of $0.34 per share [2][9] - The company funded $64 million in investments and received $39 million in repayments, resulting in a total portfolio valued at $1.01 billion [2][4] - Since inception, investors have received a total of $318 million in distributions, equating to $17.75 per share [2] Financial Highlights - For the three months ended September 30, 2025, net investment income was $9.14 million, down from $10.26 million in the same period of 2024, with a per share decrease from $0.39 to $0.32 [3][9] - Core net investment income for the same period was $9.65 million, compared to $10.62 million in 2024, with per share amounts of $0.34 and $0.40 respectively [3][9] - Total realized income for the quarter was $11.83 million, an increase from $6.94 million in the previous year [3] Portfolio Activity - As of September 30, 2025, investments at fair value totaled $1,010.2 million, up from $953.5 million at the end of 2024 [4] - The company had 115 portfolio company investments, an increase from 105 at the end of 2024 [5] - New investments for the quarter amounted to $63.8 million, significantly higher than $17.8 million in the same quarter of 2024 [5] Operating Expenses - Gross operating expenses for the quarter were $17.6 million, compared to $16.2 million in the same period of 2024 [8] - Base management fees increased to $4.4 million from $3.9 million year-over-year [8] - The company waived $0.5 million in income incentive fees due to total return limitations [8] Liquidity and Capital Resources - As of September 30, 2025, the company had $167.6 million in outstanding borrowings under its credit facility, compared to $175.4 million at the end of 2024 [13] - The credit facility allows for borrowings up to $335 million, with an accordion feature for potential expansion [12] Distributions - The company declared aggregate distributions of $0.40 per share for both the three months ended September 30, 2025, and 2024, totaling $11.4 million and $10.6 million respectively [15] - Distributions are not expected to include a return of capital [15] Recent Portfolio Activity - The company made several new investments in various sectors, including healthcare, technology, and consumer services, totaling over $50 million during the quarter [16][18] - Realized investments during the quarter included significant repayments from portfolio companies, contributing to the overall financial performance [17]

Investment Portfolio - As of September 30, 2025, the company had $1,010.2 million invested in 115 portfolio companies, with approximately 89% in first lien debt[320] - The company's portfolio composition included 1% second lien debt, 1% unsecured debt, and 9% equity investments at fair value[320] - The investment portfolio primarily consists of first lien loans, including unitranche structures, which account for 2.9% of the portfolio at fair value[320] - The average portfolio company investment at fair value was approximately $8.8 million as of September 30, 2025, compared to $9.2 million as of December 31, 2024[328] - The industry concentration as of September 30, 2025, showed that Business Services accounted for 26.56% of the total fair value of $1,010.2 million, followed by High Tech Industries at 10.13%[326] Financial Performance - The net investment income (loss) is a key measure of financial performance, reflecting the difference between income from investments and operating expenses[340] - For the three months ended September 30, 2025, total investment income was $26.3 million, a slight decrease of 0.8% compared to $26.5 million for the same period in 2024[343] - For the nine months ended September 30, 2025, total investment income was $76.9 million, down 2.8% from $79.1 million in 2024[343] - Net investment income for the three months ended September 30, 2025, was $9.1 million, or $0.32 per common share, compared to $10.3 million, or $0.39 per common share in 2024[350] - Net investment income for the nine months ended September 30, 2025, was $28.5 million, or $1.01 per common share, down from $32.3 million, or $1.29 per common share in 2024[351] Operating Expenses - Operating expenses for the three months ended September 30, 2025, totaled $17.6 million, an increase of 8.6% from $16.2 million in 2024[349] - Operating expenses for the nine months ended September 30, 2025, were $51.1 million, up from $48.7 million in 2024[349] Asset Coverage and Commitments - The asset coverage ratio was 210% as of September 30, 2025, indicating a decrease from the previous requirement of 200%[316] - Unfunded commitments amounted to $54.1 million as of September 30, 2025, with sufficient liquidity to meet these commitments[322] - As of September 30, 2025, the asset coverage ratio was 210%, down from 234% on December 31, 2024, indicating compliance with the required minimum of 150%[369] Cash Flow and Financing Activities - Cash flows from operating activities used net cash of $33.5 million for the nine months ended September 30, 2025[365] - Cash flows from financing activities provided cash of $22.4 million for the nine months ended September 30, 2025, primarily from proceeds from the issuance of common stock[365] - The company plans to fund its investment portfolio growth through net proceeds from future public and private equity offerings, but may face limitations if common stock trades below net asset value per share[368] Debt and Interest Expenses - The company has a senior secured revolving credit facility with a maximum borrowing capacity of $335.0 million, which can be increased to $365.0 million under certain conditions[372] - As of September 30, 2025, $167.6 million was outstanding under the credit facility, with a weighted average interest rate of 7.4%[375] - Interest expense for the SBA-guaranteed debentures was $2.5 million for the three months ended September 30, 2025, with a weighted average interest rate of 3.2%[384] - The company incurred $11.1 million in financing costs related to the SBA-guaranteed debentures, with $3.2 million yet to be amortized as of September 30, 2025[383] - The total interest and financing expenses for the 2030 Notes Payable were $1.5 million for the three months and $3.0 million for the nine months ended September 30, 2025[391] Dividends and Share Issuance - The Board declared a regular monthly dividend of $0.1333 per share for October, November, and December 2025[408] - The company issued 531,106 shares under the ATM Program during the three months ended September 30, 2025, generating gross proceeds of $7.4 million[394] - The average per share offering price of shares issued in the ATM Program during the three months ended September 30, 2025, was $14.00[394] Economic Conditions and Market Impact - Economic conditions have shown acceleration, but challenges such as supply chain interruptions and fluctuating interest rates persist[317] - The Federal Reserve raised interest rates to a target range of 5.25% - 5.50% in July 2023, the highest since January 2001[409] - A 200 basis points increase in interest rates would result in a net income increase of $13.4 million, while a decrease of 200 basis points would lead to a net income decrease of $13.4 million[410] - The three-month SOFR rate was 398 basis points as of September 30, 2025[411] - The company did not engage in hedging activities for the three and nine months ended September 30, 2025 and 2024[412] Regulatory Compliance - The company has complied with RIC requirements as of September 30, 2025, allowing it to avoid corporate-level U.S. federal income taxes on distributed income[314] - The company intends to distribute between 90% and 100% of its taxable income to satisfy RIC requirements, potentially limiting funds for new investments[368]

Core Viewpoint - Stellus Capital Investment Corporation will release its financial results for Q3 2025 on November 10, 2025, and will host a conference call to discuss these results on November 12, 2025 [1][2]. Financial Results Announcement - The financial results for the third quarter ended September 30, 2025, will be released after the market closes on November 10, 2025 [1]. - A conference call to discuss these results will take place on November 12, 2025, at 10:00 AM Central Time, led by the CEO and CFO [2]. Conference Call Details - The conference call can be accessed via phone by dialing 877-545-0523 with passcode 118871, and a replay will be available until November 26, 2025 [3]. - A live webcast will also be available on the company's website, with a replay accessible for approximately 90 days [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 [4]. - The company's investment objective is to maximize total return to stockholders through current income and capital appreciation, primarily by investing in private middle-market companies with EBITDA between $5 million and $50 million [4]. - The investment strategy focuses on first lien loans, including unitranche loans, often accompanied by equity investments [4].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Stellus Capital (SCM) due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Company Summary - Stellus Capital is expected to report quarterly earnings of $0.30 per share, reflecting a year-over-year decrease of 25% [3]. - Revenues are projected to be $25.71 million, down 3% from the same quarter last year [3]. - The consensus EPS estimate has been revised 2.22% lower in the last 30 days, indicating a reassessment by analysts [4]. Earnings Prediction Insights - The Zacks Earnings ESP model indicates that Stellus Capital has an Earnings ESP of 0%, suggesting no recent analyst revisions differing from the consensus estimate [12]. - The company currently holds a Zacks Rank of 4 (Sell), complicating predictions of an earnings beat [12]. - Historical performance shows that Stellus Capital has not surpassed consensus EPS estimates in the last four quarters [14]. Industry Context - In the broader industry context, Sixth Street (TSLX) is expected to report earnings of $0.52 per share, indicating a year-over-year decline of 8.8% [18]. - Sixth Street's revenues are anticipated to be $110.14 million, down 7.6% from the previous year [18]. - The consensus EPS estimate for Sixth Street has been revised down by 0.8% over the last 30 days, and it also holds a Zacks Rank of 4 (Sell) [19][20].

Group 1 - The article does not provide any specific content related to a company or industry [1]

Core Points - Stellus Capital Investment Corporation has declared a monthly dividend of $0.1333 for October, November, and December 2025, totaling $0.40 per share for the fourth quarter of 2025 [1] - The regular dividend will be paid to shareholders of record in November and December 2025, and January 2026 [1] Dividend Summary - The ex-dividend date for the October dividend is October 8, 2025, with a record date of October 31, 2025, and a payment date of November 14, 2025 [2] - The ex-dividend date for the November dividend is October 8, 2025, with a record date of November 28, 2025, and a payment date of December 15, 2025 [2] - The ex-dividend date for the December dividend is October 8, 2025, with a record date of December 31, 2025, and a payment date of January 15, 2026 [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 investing through first lien loans, including unitranche loans, often with corresponding equity investments [3]

Core Viewpoint - Stellus Capital Investment Corporation has announced a public offering of $50.0 million aggregate principal amount of 7.25% notes due 2030, which will increase the total outstanding amount of these notes to $125.0 million [1][2]. Group 1: Offering Details - The new notes are an additional issuance of the 7.25% notes due 2030, which were initially issued on April 1, 2025, in an aggregate principal amount of $75.0 million [2]. - The new notes will be treated as a single series with the existing notes and will have the same terms, CUSIP number, and ranking [2]. - The closing of the transaction is subject to customary closing conditions, with expected delivery on or about September 25, 2025 [2]. Group 2: Use of Proceeds - The net proceeds from this offering are intended to repay a portion of the company's 4.875% notes due 2026, of which $100.0 million aggregate principal amount was outstanding as of September 19, 2025 [4]. Group 3: Management and Advisors - Raymond James & Associates, Inc. is acting as the lead book-running manager for this offering, with Goldman Sachs & Co. LLC, Keefe, Bruyette & Woods, Inc., and Oppenheimer & Co. Inc. serving as lead managers [3]. - Additional co-managers include Ladenburg Thalmann & Co. Inc., Academy Securities Inc., East West Markets, LLC, and TCBI Securities, Inc. [3]. Group 4: 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 [8]. - The company's investment objective is to maximize total return to stockholders through current income and capital appreciation by investing primarily in private lower middle-market companies [8].