Stellus Capital Investment (US:SCM)2025-03-04 22:13Investment 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].