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]

Financial Performance - Stellus Capital reported quarterly earnings of $0.40 per share, missing the Zacks Consensus Estimate of $0.46 per share, and down from $0.49 per share a year ago, representing an earnings surprise of -13.04% [1] - The company posted revenues of $26.5 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 3.14%, and down from $27.17 million year-over-year [2] - The current consensus EPS estimate for the coming quarter is $0.42 on revenues of $27.62 million, and for the current fiscal year, it is $1.84 on revenues of $107.6 million [7] Market Performance - Stellus Capital shares have increased by approximately 7.9% since the beginning of the year, while the S&P 500 has gained 24.3% [3] - The company has surpassed consensus EPS estimates two times over the last four quarters and topped consensus revenue estimates three times during the same period [2] Earnings Outlook - The estimate revisions trend for Stellus Capital is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The sustainability of the stock's immediate price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] Industry Context - Stellus Capital operates within the Financial - SBIC & Commercial Industry, which is currently ranked in the bottom 27% of over 250 Zacks industries, suggesting potential challenges ahead [8] - The performance of Stellus Capital may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Core Insights - Stellus Capital Investment Corporation reported solid operating results for the fiscal quarter ended September 30, 2024, with U.S. GAAP net investment income of $0.39 per share and core net investment income of $0.40 per share, covering the declared regular dividend of $0.40 per share [1][4] - The net asset value per share increased by $0.19 from the previous quarter, reaching $13.55 [1][12] - The company has increased its capital base by $55 million through the upsizing of its Credit Facility to $315 million [1][10] Financial Highlights - For the three months ended September 30, 2024, net investment income was $10.26 million, down from $10.82 million in the same period of 2023, with per share amounts of $0.39 and $0.47 respectively [2][4] - Core net investment income for the same period was $10.62 million, compared to $11.16 million in 2023, with per share amounts of $0.40 and $0.49 respectively [2][4] - Total realized income for the quarter was $6.94 million, down from $11.40 million in the prior year [2][4] Portfolio Activity - As of September 30, 2024, the company had investments at fair value totaling $908.7 million, an increase from $874.5 million at the end of 2023 [3] - The total assets increased to $957.1 million from $908.1 million [3] - The company made new investments totaling $17.8 million during the quarter, while repayments of investments amounted to $15.5 million, resulting in net activity of $2.3 million [3] Investment Income and Expenses - Investment income for the three months ended September 30, 2024, was $26.5 million, compared to $27.2 million in the same period of 2023 [4][13] - Gross operating expenses for the quarter were $16.2 million, slightly down from $16.3 million in the previous year [4][13] - The company declared aggregate distributions of $0.40 per share for both the current and prior year periods, totaling $10.6 million and $9.3 million respectively [4][9] Recent Developments - The company has continued to invest in various portfolio companies, with notable investments including PCS Software, Trade Education Acquisition, and Bart & Associates during the quarter [5][6] - Subsequent to September 30, 2024, the company made additional investments in Compost 360 Investments and Norplex Micarta Acquisition, totaling $13.05 million [7][10]

Core Viewpoint - Stellus Capital (SCM) reported quarterly earnings of $0.50 per share, exceeding the Zacks Consensus Estimate of $0.44 per share, but slightly down from $0.51 per share a year ago, indicating an earnings surprise of 13.64% [1] Financial Performance - The company achieved revenues of $26.63 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.83% and showing a slight increase from $26.59 million year-over-year [2] - Over the last four quarters, Stellus Capital has exceeded consensus EPS estimates three times and has also topped consensus revenue estimates three times [2] Stock Performance and Outlook - Stellus Capital shares have increased by approximately 6.2% since the beginning of the year, while the S&P 500 has gained 9.9% [3] - The future performance of the stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $0.42, with expected revenues of $27.29 million, and for the current fiscal year, the estimate is $1.73 on revenues of $107.06 million [7] Industry Context - Stellus Capital operates within the Financial - SBIC & Commercial Industry, which is currently ranked in the bottom 30% of over 250 Zacks industries, indicating potential challenges in performance compared to higher-ranked industries [8]

Core Insights - Stellus Capital Investment Corporation reported solid operating results for Q2 2024, with U.S. GAAP net investment income of $0.48 per share and core net investment income of $0.50 per share, covering the declared dividend of $0.40 per share [1][4] - The loan portfolio yielded 11.7% as of June 30, 2024, with total distributions to investors amounting to $262 million over the company's 11 years of operation [1][4] Financial Highlights - Net investment income for Q2 2024 was $11.79 million, compared to $10.41 million in Q2 2023, with per share amounts of $0.48 and $0.49 respectively [2][4] - Core net investment income for Q2 2024 was $12.37 million, or $0.50 per share, down from $10.79 million, or $0.51 per share in Q2 2023 [2][4] - Total realized income for Q2 2024 was $13.75 million, with a per share amount of $0.55, compared to $10.09 million and $0.48 per share in Q2 2023 [2] - The company declared distributions of $0.40 per share for both Q2 2024 and Q2 2023, totaling $10.0 million and $8.7 million respectively [4] Portfolio Activity - As of June 30, 2024, investments at fair value totaled $899.7 million, up from $874.5 million at the end of 2023 [3] - The company made new investments totaling $66.3 million in Q2 2024, compared to $46.5 million in Q2 2023 [3] - The number of portfolio company investments increased to 100 from 93, with debt investments rising to 87 from 81 [3] Liquidity and Capital Resources - As of June 30, 2024, the company had $169.4 million in outstanding borrowings under its credit facility, compared to $160.1 million at the end of 2023 [4] - The company issued 1,855,356 shares under its At-the-Market Program during Q2 2024, raising gross proceeds of $25.8 million at an average price of $13.89 per share [4] Recent Developments - The company declared regular monthly distributions of $0.1333 per share for July, August, and September 2024 [9] - Subsequent to June 30, 2024, the company made an add-on investment of $9,995 in PCS Software, Inc. on July 31, 2024 [8]

Core Viewpoint - Stellus Capital Investment Corporation is set to release its financial results for Q2 2024 on August 7, 2024, after market close [1] Financial Results Announcement - The financial results will be discussed in a conference call on August 8, 2024, at 11:00 AM Central Time, led by the CEO and CFO [2] - A replay of the conference call will be available for a limited time after the event [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 focuses on maximizing total return through investments in private middle-market companies, typically with EBITDA between $5 million and $50 million, using various debt financing and equity investments [4]

Core Points - Stellus Capital Investment Corporation has declared a monthly dividend of $0.1333 for July, August, and September 2024, totaling $0.40 per share for the third quarter [1][4] - The regular dividend will be paid to shareholders of record in August, September, and October 2024 [1][4] Dividend Summary - Declared Ex-Dividend Date: July 31, 2024; Record Date: July 31, 2024; Payment Date: August 15, 2024; Amount per Share: $0.1333 [4] - Declared Ex-Dividend Date: August 30, 2024; Record Date: August 30, 2024; Payment Date: September 13, 2024; Amount per Share: $0.1333 [4] - Declared Ex-Dividend Date: September 30, 2024; Record Date: September 30, 2024; Payment Date: October 15, 2024; Amount per Share: $0.1333 [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 [4] - 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 [4] - Investment strategies include first lien, second lien, unitranche, and mezzanine debt financing, along with corresponding equity investments [4]

Core Viewpoint - Stellus Capital Investment Corporation (NYSE: SCM) is considered a solid buy for passive income following a recent stock price pullback, with a reasonable dividend safety in a moderate inflation environment [1][2][15] Financial Performance - In 1Q24, Stellus Capital Investment covered its dividend with net investment income of $0.44 per share, resulting in a dividend pay-out ratio of 91% [9] - Total investment income for 1Q24 was reported at $26.0 million, an increase of 8% year-over-year, while net investment income rose by 13% year-over-year to $10.2 million [6][10] Investment Portfolio - As of March 31, 2024, Stellus Capital Investment's portfolio was valued at $875.9 million, with 91% consisting of Senior Secured Loans [3][4] - The company is heavily positioned in floating-rate loans, with 98% of its portfolio benefiting from interest rate hikes, which is expected to enhance net investment income [4][7] Market Conditions - The central bank is unlikely to cut interest rates in 2024, which would favorably impact Stellus Capital Investment's net investment income growth [5][10] - The stock is currently trading at a moderate premium of 3% to net asset value, making it an attractive option for passive income investors [11][15] Valuation and Outlook - The intrinsic value of Stellus Capital Investment is estimated at $14.75 based on a 1.10x NAV multiple, suggesting a potential upside of 6% from the current stock price of $13.88 [11] - The recent pullback in stock price is viewed as a buying opportunity, with the company maintaining a solid dividend coverage and healthy fundamentals [11][15]

Stellus Capital Investment Corporation (NYSE:SCM) Q1 2024 Earnings Conference Call May 10, 2024 12:00 PM 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 Bryce Rowe - B. Riley Erik Zwick - Hovde Group Operator Good afternoon, ladies and gentlemen, and thank you for standing by. At this time, I would like to welcome everyone ...