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 ...

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines high-quality dividend stocks with other investment vehicles such as Business Development Companies, REITs, and Closed End Funds to enhance income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on creating a balanced portfolio that captures both growth and income, aiming for a total return that aligns with the performance of the S&P 500 [1]. - The author highlights the effectiveness of utilizing classic dividend growth stocks as a foundational element in the investment strategy [1]. Personal Experience - The author shares their journey from sharing investment knowledge on social media to expanding insights through written articles, indicating a commitment to educating others about investment opportunities [1].

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]

Core Points - Stellus Capital Investment Corporation has declared a monthly dividend of $0.1333 for January, February, and March 2025, totaling $0.40 per share for the first quarter [1] - The regular dividend will be paid to shareholders of record in February, March, and April 2025 [1] Dividend Summary - The ex-dividend date for the January dividend is January 31, 2025, with a payment date of February 14, 2025 [2] - The ex-dividend date for the February dividend is February 28, 2025, with a payment date of March 14, 2025 [2] - The ex-dividend date for the March dividend is March 31, 2025, with a payment date of April 15, 2025 [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] - Investment strategies include first lien, second lien, unitranche, and mezzanine debt financing, along with corresponding equity investments [3]

Core Insights - The article emphasizes the importance of innovation and disruption in the financial sector, particularly focusing on high-tech and early growth companies [1] Company and Industry Summary - The financial researcher highlights a beneficial long position in SCM shares, indicating confidence in the company's future performance [2] - The article aims to provide insights into current events and significant news within the industry, suggesting a proactive approach to identifying investment opportunities [1]

Financial Data and Key Metrics Changes - In Q3 2024, the company generated GAAP net investment income of $0.39 per share and core net investment income of $0.40 per share, which excludes estimated excise taxes [7] - Net asset value per share increased by $0.19 during the quarter, primarily due to net unrealized depreciation on the investment portfolio [7] - The investment portfolio at fair value was $908.7 million, up from $899.7 million as of June 30, 2024 [8] Business Line Data and Key Metrics Changes - The company invested $9.4 million in one new portfolio company and had $8.4 million in other investment activity at par during the third quarter [8] - The company received one full repayment totaling $8.4 million and $5.5 million of other repayments, both at par [8] - 98% of loans were secured and 95% were priced at floating rates, with an average loan per company of $9.5 million [8] Market Data and Key Metrics Changes - The company expects to end Q4 with a portfolio between $930 million and $950 million, with anticipated loan repayments of approximately $29 million [10] - The average yield is projected to decrease from 11.7% in the prior quarter to 11% for Q4 due to lower SOFR rates [15] Company Strategy and Development Direction - The company plans to grow its portfolio to over $1 billion, supported by an increased bank facility from $260 million to $315 million [11] - The company declared a dividend for Q4 at a rate of $0.40 per quarter, payable monthly [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the lower SOFR rate impacted net investment income, and they expect investment activity to pick up in Q4 [13][14] - The company is confident in reaching the $930 million to $950 million portfolio target by year-end, citing 10 to 15 active deals [25] Other Important Information - The company has paid over $273 million in dividends since its IPO, representing $16.28 per share to an investor in the IPO [6] - Spillover income stands at $42 million as of the end of Q3 [22] Q&A Session Summary Question: Was there any temporary driver for NII being below the dividend this quarter? - Management indicated that a lower SOFR rate and lighter investment activity contributed to the lower NII, but nothing unusual was noted [13] Question: Is the current EPS run rate sustainable? - Management suggested that the EPS run rate would depend on other income in Q4, with a reminder that SOFR rates have dropped [15] Question: What is the status of the fee waiver? - Management indicated that a fee waiver might occur in Q2 2025, depending on future performance [19] Question: What is the spillover income? - Spillover income currently stands at $42 million [20] Question: Will the appreciation tied to a potential transaction occur in Q4? - Management confirmed that the expected appreciation is anticipated to occur in Q4 [21] Question: How confident is the company in reaching the $930 million to $950 million target? - Management expressed confidence, citing 10 to 15 active deals [25]