Workflow
Stellus Capital Investment (SCM)
icon
Search documents
Stellus Capital Investment (SCM) - 2023 Q3 - Earnings Call Transcript
2023-11-08 22:06
Stellus Capital Investment Corporation (NYSE:SCM) Q3 2023 Earnings Conference Call November 8, 2023 11:00 AM ET Company Participants Robert Ladd - CEO Todd Huskinson - CFO Conference Call Participants Christopher Nolan - Ladenburg Thalmann Robert Dodd - Raymond James Paul Johnson - KBW Bryce Rowe - B. Riley Operator Good morning, ladies and gentlemen, and thank you for standing by. At this time, I would like to welcome everyone to Stellus Capital Investment Corporation's Conference Call to Report Financial ...
Stellus Capital Investment (SCM) - 2023 Q3 - Quarterly Report
2023-11-07 22:24
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 1-35730 STELLUS CAPITAL INVESTMENT CORPORATION (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorpora ...
Stellus Capital Investment (SCM) - 2023 Q2 - Earnings Call Transcript
2023-08-10 20:21
Stellus Capital Investment Corporation (NYSE:SCM) Q2 2023 Earnings Conference Call August 10, 2023 11:00 AM ET Company Participants Robert Ladd - Chairman and Chief Executive Officer Todd Huskinson - Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary Conference Call Participants Christopher Nolan - Ladenburg Thalmann Erik Zwick - Hovde Group Robert Dodd - Raymond James Ryan Lynch - KBW Operator Good morning, ladies and gentlemen, and thank you for standing by. At this time, I would l ...
Stellus Capital Investment (SCM) - 2023 Q2 - Quarterly Report
2023-08-09 20:13
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (I.R.S. Employer Identification No.) 4400 Post Oak Parkway, Suite 2200 Houston, Texas 77027 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 1-35730 STELLUS CAPITAL INVESTMENT CORPORATION (Exact Na ...
Stellus Capital Investment (SCM) - 2023 Q1 - Earnings Call Transcript
2023-05-10 19:29
Stellus Capital Investment Corporation (NYSE:SCM) Q1 2023 Earnings Conference Call May 10, 2023 10:00 AM ET Company Participants Robert Ladd - Chairman, President & CEO Todd Huskinson - CFO, Treasurer, Secretary & Chief Compliance Officer Conference Call Participants Erik Zwick - Hovde Group Paul Johnson - KBW Christopher Nolan - Ladenburg Thalmann & Co. Operator Good morning, ladies and gentlemen, and thank you for standing by. At this time, I would like to welcome everyone to Stellus Capital Investment Co ...
Stellus Capital Investment (SCM) - 2023 Q1 - Quarterly Report
2023-05-09 20:56
[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section details the company's financial statements, management's analysis of operations, market risk exposures, and internal control effectiveness [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for Q1 2023 show increased total assets and net investment income, with the investment portfolio growing to $877.5 million [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) This section presents the company's financial position, showing total assets, liabilities, and net assets as of March 31, 2023 Consolidated Balance Sheet Highlights (unaudited) | Metric | March 31, 2023 (USD) | December 31, 2022 (USD) | | :--- | :--- | :--- | | **Total Assets** | $900,852,176 | $898,182,782 | | **Total Liabilities** | $620,000,131 | $622,406,169 | | **Net Assets** | $280,852,045 | $275,776,613 | | **Net Asset Value Per Share** | $13.87 | $14.02 | - Net Asset Value (NAV) per share decreased slightly to **$13.87** at the end of Q1 2023 from **$14.02** at the end of 2022[7](index=7&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section outlines the company's investment income, operating expenses, and net investment income for the first quarter of 2023 Consolidated Statements of Operations Highlights (unaudited) | Metric | Three Months Ended Mar 31, 2023 (USD) | Three Months Ended Mar 31, 2022 (USD) | | :--- | :--- | :--- | | **Total Investment Income** | $24,075,347 | $15,494,404 | | **Total Operating Expenses** | $15,007,727 | $9,980,221 | | **Net Investment Income** | $9,067,620 | $5,514,183 | | **Net Increase in Net Assets** | $4,736,147 | $5,222,164 | | **Net Investment Income Per Share** | $0.46 | $0.28 | | **Distributions Per Share** | $0.40 | $0.28 | - Net investment income increased by **64.4%** year-over-year, driven by a significant rise in total investment income which outpaced the growth in operating expenses[9](index=9&type=chunk) [Consolidated Statements of Changes in Net Assets](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) This section details the changes in the company's net assets, reflecting investment income, distributions, and equity transactions - Net assets increased from **$275.8 million** at the end of 2022 to **$280.9 million** at March 31, 2023. The increase was primarily driven by **$9.1 million** in net investment income and **$8.3 million** from the net issuance of common stock, partially offset by **$8.0 million** in distributions and a **$4.2 million** net change in unrealized depreciation on investments[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash flows from operating, investing, and financing activities for the period ended March 31, 2023 Cash Flow Summary (unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2023 (USD) | Three Months Ended Mar 31, 2022 (USD) | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | $(32,043,024) | $(62,924,974) | | **Net Cash Provided by Financing Activities** | $1,851,795 | $43,380,901 | | **Net Decrease in Cash** | $(30,191,229) | $(19,544,073) | - Cash and cash equivalents decreased by **$30.2 million** during the quarter, ending at **$17.9 million**. The decrease was primarily due to **$41.2 million** in investment purchases, partially offset by proceeds from stock issuance and investment repayments[14](index=14&type=chunk) [Consolidated Schedules of Investments](index=7&type=section&id=Consolidated%20Schedules%20of%20Investments) This section details the company's investment portfolio, including composition by type, fair value, and number of portfolio companies Portfolio Composition by Investment Type | Investment Type | Fair Value (Mar 31, 2023, USD) | % of Total | Fair Value (Dec 31, 2022, USD) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Senior Secured – First Lien | $767,818,131 | 87% | $735,555,508 | 87% | | Senior Secured – Second Lien | $43,780,075 | 5% | $45,304,300 | 5% | | Unsecured Debt | $5,428,810 | 1% | $4,823,898 | 1% | | Equity | $60,466,765 | 7% | $59,049,932 | 7% | | **Total Investments** | **$877,493,781** | **100%** | **$844,733,638** | **100%** | - As of March 31, 2023, the total fair value of the investment portfolio was **$877.5 million**, spread across **88** portfolio companies, an increase from **$844.7 million** in **85** companies at year-end 2022[180](index=180&type=chunk)[183](index=183&type=chunk) [Notes to Unaudited Financial Statements](index=28&type=section&id=Notes%20to%20Unaudited%20Financial%20Statements) These notes detail the company's accounting policies, related-party transactions, equity offerings, debt facilities, and subsequent investment activities Advisory Fees Incurred (Q1 2023 vs Q1 2022) | Fee Type | Three Months Ended Mar 31, 2023 (USD) | Three Months Ended Mar 31, 2022 (USD) | | :--- | :--- | :--- | | Base Management Fees | $3,735,102 | $3,492,713 | | Income Incentive Fees | $2,124,835 | $0 | | Capital Gains Incentive Fee Reversal | $(569,528) | $(42,217) | - During Q1 2023, the company issued **581,614** shares under its At-The-Market (ATM) program, raising gross proceeds of **$8.4 million** and net proceeds of **$8.3 million** after fees and reimbursements from the Advisor[172](index=172&type=chunk) Debt Outstanding as of March 31, 2023 | Debt Facility | Outstanding Principal (USD) | Weighted Avg. Interest Rate (%) | | :--- | :--- | :--- | | Credit Facility | $198,277,831 | 7.3% | | SBA-guaranteed debentures | $313,600,000 | 3.1% | | 2026 Notes | $100,000,000 | 4.9% | - Subsequent to quarter-end, the company invested in two new and five existing portfolio companies, issued an additional **587,363** shares under its ATM program, and declared monthly dividends of **$0.1333** per share for April, May, and June 2023[240](index=240&type=chunk)[241](index=241&type=chunk)[245](index=245&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, portfolio growth, asset quality, and liquidity position, highlighting increased net investment income [Portfolio Composition and Investment Activity](index=59&type=section&id=Portfolio%20Composition%20and%20Investment%20Activity) This section details the investment portfolio's fair value, composition by type and geography, and quarterly investment activity - The weighted average yield on all debt investments increased to **11.4%** as of March 31, 2023, from **11.1%** at the end of 2022, reflecting the impact of rising interest rates on its predominantly floating-rate portfolio[269](index=269&type=chunk) - During Q1 2023, the company invested **$41.2 million** in four new and four existing portfolio companies and received **$5.9 million** in proceeds from investment repayments[271](index=271&type=chunk) Investment Rating of Portfolio | Investment Category | Fair Value (Mar 31, 2023, USD) | % of Total Portfolio | | :--- | :--- | :--- | | 1 - Performing above expectations | $153.0 million | 17% | | 2 - Performing within expectations | $573.4 million | 66% | | 3 - Performing below expectations | $130.8 million | 15% | | 4 - Substantially below, loss of return expected | $20.3 million | 2% | | 5 - Substantially below, loss of principal expected | $0 | 0% | - As of March 31, 2023, loans to four portfolio companies were on non-accrual status, representing **2.5%** of the loan portfolio at fair value, a slight increase from **2.3%** at year-end 2022[275](index=275&type=chunk) [Results of Operations](index=65&type=section&id=Results%20of%20Operations) This section analyzes the company's Q1 2023 financial performance, highlighting growth in investment income and net investment income despite increased operating expenses Comparison of Results of Operations (in millions) | Metric | Q1 2023 (USD Millions) | Q1 2022 (USD Millions) | | :--- | :--- | :--- | | Total Investment Income | $24.1 | $15.5 | | Total Operating Expenses | $15.0 | $10.0 | | **Net Investment Income** | **$9.1** | **$5.5** | | Net Realized Gain | $0.0 | $3.5 | | Net Unrealized Depreciation | $(4.2) | $(3.7) | | **Net Increase in Net Assets** | **$4.7** | **$5.2** | [Financial condition, liquidity and capital resources](index=68&type=section&id=Financial%20condition%2C%20liquidity%20and%20capital%20resources) This section assesses the company's financial condition, liquidity sources, capital resources, and compliance with regulatory asset coverage requirements - The company's asset coverage ratio was **194%** as of March 31, 2023, an increase from **192%** at year-end 2022 and well above the regulatory requirement of **150%**[302](index=302&type=chunk) - As of March 31, 2023, the company had **$198.3 million** outstanding on its **$265.0 million** Credit Facility[308](index=308&type=chunk) - The company had a total of **$313.6 million** in SBA-guaranteed debentures outstanding across its two SBIC subsidiaries as of March 31, 2023[311](index=311&type=chunk)[312](index=312&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's primary exposure to interest rate risk, with a sensitivity analysis on net interest income from rate changes - As of March 31, 2023, **97%** of the company's debt investments bore interest at floating rates, making its income sensitive to changes in benchmark rates like SOFR and LIBOR[340](index=340&type=chunk) Annual Impact on Net Income from Interest Rate Changes (in millions) | Change in Basis Points | Impact on Net Interest Income (USD Millions) | | :--- | :--- | | Up 200 bps | $12.0 | | Up 100 bps | $6.0 | | Up 50 bps | $3.0 | | Down 50 bps | $(3.0) | | Down 100 bps | $(6.0) | | Down 200 bps | $(12.0) | [Item 4. Controls and Procedures](index=74&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[343](index=343&type=chunk) - No changes in the company's internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[344](index=344&type=chunk) [PART II. OTHER INFORMATION](index=75&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section addresses legal proceedings, updated risk factors, unregistered equity sales, and other required disclosures [Item 1. Legal Proceedings](index=75&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings, nor is it aware of any threatened actions - The company reports no material legal proceedings as of the filing date[347](index=347&type=chunk) [Item 1A. Risk Factors](index=75&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor was added concerning the potential impact of bank impairments or failures on the company's portfolio companies - A new risk factor was added concerning the potential impact of bank impairments or failures on the company's portfolio companies. The failures of Silicon Valley Bank, Signature Bank, and First Republic Bank are cited as examples that could inhibit portfolio companies' access to capital and ability to meet debt obligations[350](index=350&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were issued under the company's distribution reinvestment program during Q1 2023 or the comparable prior period - The company did not issue any shares through its distribution reinvestment program in Q1 2023 or Q1 2022[351](index=351&type=chunk) [Other Items](index=75&type=section&id=Other%20Items) This section notes no defaults on senior securities, no mine safety disclosures, and lists the exhibits filed with the report - The company reported no defaults upon senior securities (Item 3), no mine safety disclosures (Item 4), and no other information (Item 5) for the period[352](index=352&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk)
Stellus Capital Investment (SCM) - 2022 Q4 - Earnings Call Transcript
2023-03-01 19:49
Financial Data and Key Metrics Changes - Core net investment income was $1.38 per share and GAAP net investment income was $1.46 per share for Q4 2022, with total distributions of $0.34 per share covered through core net investment income of $0.44 per share [5][22] - For fiscal year 2022, realized income was $1.65 per share, exceeding the dividend of $1.30 per share [21] - Net asset value decreased by $9.3 million year-over-year, primarily due to portfolio company-specific issues [5] Business Line Data and Key Metrics Changes - The investment portfolio at fair value increased to $845 million across 85 portfolio companies, up from $773 million across 73 companies as of December 31, 2021 [6] - The average loan per company is $10.8 million, with 83 of the 85 portfolio companies backed by a private equity firm [7] - 99% of loans were secured and 97% were priced at floating rates, with first lien loans comprising 87% of the loan portfolio [24] Market Data and Key Metrics Changes - The company invested $211 million in 22 new and 28 existing portfolio companies during 2022, with repayments of $90 million resulting in net portfolio growth of $90.8 million [6] - The company expects to maintain its investment portfolio between $850 million and $900 million throughout 2023 [9] Company Strategy and Development Direction - The strategy includes modest investments in the equity of portfolio companies to generate realized gains sufficient to offset losses over time [8] - The company aims to remain active in the market and invest in larger transactions, supported by total assets under management of approximately $2.8 billion [26] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are headwinds in the economy, there has not been a significant downturn, and they expect to remain active in M&A activities [68] - The company anticipates higher earnings in the first and second quarters due to rising interest rates, with LIBOR expected to exceed 5% [41][68] Other Important Information - The regular dividend was increased by 43% from $0.28 per share to $0.40 per share, reflecting greater earnings in the higher interest rate environment [25] - The company has a spillover income of over $28 million, which supports the current dividend level [31] Q&A Session Summary Question: Any increase in amendment requests from portfolio companies? - Management indicated that there has not been a significant increase in amendment requests, and they believe they have a good way to run before higher rates impact portfolio companies [30] Question: Expectations for realized gains and dividend sustainability? - Management expects realized gains to be modest but meaningful, covering potential losses and supporting dividends [35][36] Question: Broader economic view guiding investment decisions? - Management expressed caution regarding inflation and interest rates but remains positive about M&A activity and investment opportunities [68][80]
Stellus Capital Investment (SCM) - 2022 Q4 - Annual Report
2023-02-28 22:07
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 001-35730 STELLUS CAPITAL INVESTMENT CORPORATION (Exact name of registrant as specified in its charter) | Maryland | 46-0937320 | | --- | --- | | (State or other j ...
Stellus Capital Investment (SCM) - 2022 Q3 - Earnings Call Transcript
2022-11-04 17:13
Stellus Capital Investment Corporation (NYSE:SCM) Q3 2022 Earnings Conference Call November 4, 2022 11:00 AM ET Company Participants Robert Ladd - Chairman and Chief Executive Officer Todd Huskinson - Chief Financial Officer, Chief Compliance Officer and Treasurer Conference Call Participants Paul Johnson - Keefe, Bruyette, & Woods, Inc. Christopher Nolan - Ladenburg Thalmann & Co. Inc. Sean-Paul Adams - Raymond James Operator Good morning, ladies and gentlemen, and thank you for standing by. At this time, ...
Stellus Capital Investment (SCM) - 2022 Q3 - Quarterly Report
2022-11-03 21:31
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 1-35730 STELLUS CAPITAL INVESTMENT CORPORATION (Exact Name of Registrant as Specified in Its Charter) (State or other Jurisdiction of Incorpora ...