Stellus Capital Investment Corporation Reports Results for its Third Fiscal Quarter Ended September 30, 2024

Nov 07 2024 23:09 GMT

HOUSTON , Nov. 7, 2024 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus", "we", or the "Company") today announced financial results for its fiscal quarter ended September 30, 2024.

Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report solid operating results for the quarter ended September 30, 2024, in which we earned U.S. GAAP net investment income of $0.39 per share and core net investment income of $0.40 per share, which covered the regular dividend declared of $0.40 per share. Net asset value per share increased by $0.19 per share from the prior quarter end. Subsequent to the quarter end, we increased our capital base by $55 million through the upsizing of our Credit Facility to $315 million. As we celebrate the completion of twelve years of operations, I'm also pleased to report that our investors have received a total of $273 million in distributions, equivalent to $16.28 per share, since we began operations."

FINANCIAL HIGHLIGHTS
($ in millions, except data relating to per share amounts and shares outstanding)


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
	Amount	Per Share	Amount	Per Share	Amount	Per Share	Amount	Per Share
Net investment income	$10.26	$0.39	$10.82	$0.47	$32.29	$1.29	$30.30	$1.42
Core net investment income⁽¹⁾	10.62	0.40	11.16	0.49	33.59	1.34	30.81	1.45
Net realized (loss) gain on investments	(3.30)	(0.13)	0.60	0.03	(21.69)	(0.87)	0.32	0.01
Net realized loss on foreign currency translation	(0.02)	—	(0.02)	—	(0.08)	—	(0.07)	—
Total realized income⁽²⁾	$6.94	$0.26	$11.40	$0.50	$10.52	$0.42	$30.55	$1.43
Distributions	(10.63)	(0.40)	(9.27)	(0.41)	(30.32)	(1.21)	(25.88)	(1.22)
Net unrealized change in appreciation (depreciation) on investments	8.51	0.33	(13.80)	(0.61)	26.44	1.05	(24.34)	(1.14)
Net unrealized change in appreciation (depreciation) on foreign currency translation	0.01	—	—	—	—	—	(0.02)	—
Benefit (provision) for taxes on unrealized depreciation (appreciation) on investments in taxable subsidiaries	—	—	—	—	0.19	0.01	(0.14)	(0.01)
Net increase (decrease) in net assets resulting from operations	$15.46	$0.59	($2.40)	($0.11)	$37.15	$1.48	$6.05	$0.28
Weighted average shares outstanding		26,326,426		22,824,221		25,066,626		21,289,880


(1)	Core net investment income, as presented, excludes the impact of capital gains incentive fees (reversal) and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S. generally accepted accounting principles ("U.S. GAAP") measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements.
(2)	Total realized income is the sum of net investment income, net realized gains (losses) on investments, net realized gains (losses) on foreign currency, and loss on debt extinguishment; all U.S. GAAP measures.

PORTFOLIO ACTIVITY
($ in millions, except data relating to per share amounts and number of portfolio companies)

	As of	As of
	September 30, 2024	December 31, 2023
Investments at fair value	$908.7	$874.5
Total assets	$957.1	$908.1
Net assets	$366.3	$319.9
Shares outstanding	27,039,364	24,125,642
Net asset value per share	$13.55	$13.26

	Three Months Ended		Nine Months Ended
	September 30, 2024	September 30, 2023	September 30, 2024	September 30, 2023
New investments	$17.8	$51.9	$112.6	$139.7
Repayments of investments	(15.5)	(34.8)	(87.3)	(79.1)
Net activity	$2.3	$17.1	$25.3	$60.6

	As of	As of
	September 30, 2024	December 31, 2023
Number of portfolio company investments	99	93
Number of debt investments	86	81

Weighted average yield of debt and other income producing investments ⁽³⁾
Cash	10.2 %	11.0 %
Payment-in-kind ("PIK")	0.4 %	0.5 %
Fee amortization	0.4 %	0.4 %
Total	11.0 %	11.9 %

Weighted average yield on total investments ⁽⁴⁾
Cash	9.5 %	10.3 %
PIK	0.4 %	0.5 %
Fee amortization	0.4 %	0.3 %
Total	10.3 %	11.1 %


(3)	The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors in the Company's common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expenses or any sales load that may be paid by investors.
(4)	The dollar-weighted average yield on total investments takes the same yields as calculated in the footnote above but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity.

Results of Operations

Investment income for the three months ended September 30, 2024 and 2023 totaled $26.5 million and $27.2 million, respectively, most of which was interest income from portfolio investments.

Gross operating expenses for the three months ended September 30, 2024 and 2023 totaled $16.2 million and $16.3 million, respectively. For the same respective periods, base management fees totaled $3.9 million for both periods, income incentive fees totaled $2.6 million and $2.7 million, fees and expenses related to our borrowings totaled $8.0 million for both periods (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million for both periods, income tax totaled $0.4 million and $0.3 million and other expenses totaled $0.8 million and $0.9 million.

Net investment income was $10.3 million and $10.8 million, or $0.39 and $0.47 per common share based on weighted average common shares outstanding of 26,326,426 and 22,824,221 for the three months ended September 30, 2024 and 2023, respectively. Core net investment income, which is a non-U.S. GAAP measure that excludes the capital gains incentive fee (reversal) and income tax expense accruals, for the three months ended September 30, 2024 and 2023 was $10.6 million and $11.2 million, or $0.40 and $0.49 per share, respectively.

For the three months ended September 30, 2024 and 2023, the Company's investment portfolio had a net change in unrealized appreciation (depreciation) of $8.5 million and ($13.8) million, respectively, and the Company had net realized (losses) gains of ($3.3) million and $0.6 million, respectively.

Net increase (decrease) in net assets resulting from operations totaled $15.5 million and ($2.4) million, or $0.59 and ($0.11) per common share, based on weighted average common shares outstanding of 26,326,426 and 22,824,221 for the three months ended September 30, 2024 and 2023, respectively.

Liquidity and Capital Resources

As of September 30, 2024, the Company's amended senior secured revolving credit agreement with certain bank lenders and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $260.0 million on a committed basis. As of September 30, 2024 and December 31, 2023, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size up to $350.0 million.

As of September 30, 2024 and December 31, 2023, the Company had $157.4 million and $160.1 million in outstanding borrowings under the Credit Facility, respectively.

The Company issued 1,058,366 shares during the three months ended September 30, 2024 under the At-the-Market Program ("ATM Program") for gross proceeds of $14.6 million. The average per share offering price of shares issued under the ATM Program during the three months ended September 30, 2024 was $13.79. Stellus Capital Management, LLC, the Company's investment adviser (the "Advisor"), agreed to reimburse the Company for underwriting fees to the extent the per share price of the shares to the public, less underwriting fees, was less then net asset value per share. For the three months ended September 30, 2024, the Advisor was not required to reimburse underwriting fees as all shares were issued at a premium to net asset value.

Distributions

For the three months ended September 30, 2024 and 2023, the Company declared aggregate distributions of $0.40 per share for both periods ($10.6 million and $9.3 million in the aggregate, respectively). Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year. None of these dividends are expected to include a return of capital.

Recent Portfolio Activity

The Company invested in the following portfolio companies during the three months ended September 30, 2024:


Activity Type	Date	Company Name	Company Description	Investment Amount		Instrument Type
Add-On Investment	July 31, 2024	PCS Software, Inc.*	Provider of integrated transportation management software for the inland trucking industry	$	9,995	Equity
Add-On Investment	August 12, 2024	Trade Education Acquisition, L.L.C.*	Online education platform for retail investors	$	80,000	Revolver Commitment
New Investment	August 16, 2024	Bart & Associates, LLC	Provides IT modernization services for federal customers	$	8,942,723	Senior Secured – First Lien
				$	1,733,387	Delayed Draw Term Loan Commitment
				$	1,046,677	Revolver Commitment
				$	418,671	Equity
Add-On Investment	August 26, 2024	Impact Home Services LLC*	Residential garage door, electrical, and plumbing services provider	$	1,571,984	Delayed Draw Term Loan Commitment
Add-On Investment	September 11, 2024	Service Minds Company, LLC*	Provider of residential electrical services	$	20,000	Revolver Commitment
Add-On Investment	September 30, 2024	The Hardenbergh Group, Inc. *	Provider of temporary professional staffing of medical services professionals, external peer review, consulting and physician leadership solutions	$	804,031	Senior Secured – First Lien
Add-On Investment	September 30, 2024	Monitorus Holding, LLC*	Provider of media monitoring and evaluation services	$	11,629	Unsecured Convertible Bond
Add-On Investment	September 30, 2024	ADS Group Opco, LLC*	Full-service manufacturer for OEMs, prime contractors, and Tier I suppliers across the defense, space, and aerospace industries	$	69,453	Revolver Commitment

*Existing portfolio company

The Company realized investments in the following portfolio companies during the three months ended September 30, 2024:

Activity Type	Date	Company Name	Company Description	Proceeds Received		Realized Gain		Instrument Type
Full Realization	August 1, 2024	ICD Holdings, LLC*	Financial company that connects corporate treasury departments with money market and short duration bond funds	$	2,599,378	$	2,192,411	Equity
Full Repayment	September 27, 2024	EHI Buyer, Inc.*	Provider of design, engineering, installation, and maintenance services for building management systems	$	6,050,229	$	—	Senior Secured – First Lien
				$	2,322,310	$	—	Delayed Draw Term Loan

*Existing portfolio company

Events Subsequent to September 30, 2024

The Company's management has evaluated subsequent events through November 7, 2024. There have been no subsequent events that require recognition or disclosure except for the following described below.

Investment Portfolio

The Company invested in the following portfolio companies subsequent to September 30, 2024:

Activity Type	Date	Company Name	Company Description	Investment Amount		Instrument Type
Add-On Investment	October 18, 2024	Compost 360 Investments, LLC*	Organic waste recycler and producer of compost, mulch, and engineered soils	$	49,280	Equity
New Investment	October 31, 2024	Norplex Micarta Acquisition, Inc.	Manufacturer of thermoset composite laminates	$	13,000,000	Senior Secured – First Lien
				$	500,000	Revolver Commitment
				$	739,804	Equity
Add-On Investment	November 7, 2024	Green Intermediateco II, Inc.*	Cyber-security focused value-added reseller and associated service provider	$	1,300,000	Senior Secured – First Lien

*Existing portfolio company

The Company realized an investment in the following portfolio company subsequent to September 30, 2024:

Activity Type

Date

Company Name

Company Description

Proceeds Received

Realized Gain

Instrument Type

Full Repayment

November 4, 2024

Baker Manufacturing Company, LLC*

Manufacturer of water well equipment, specialized

filtration pumps, and custom castings

12,738,093

—

Senior Secured – First Lien

Full Realization

November 5, 2024

Health Monitor Holdings, LLC*

Provider of point-of-care patient engagement and

marketing solutions for pharmaceutical companies

1,704,298

651,379

Equity

*Existing portfolio company

Credit Facility

On October 30, 2024, the Company entered into an Increase Agreement to the Credit Facility which, among other things, amends the Credit Facility to increase the total available commitments under the Credit Facility from $260.0 million to $315.0 million on a committed basis.

The outstanding balance under the Credit Facility as of November 7, 2024 was $158.0 million.

Distributions Declared

On October 10, 2024, our Board of Directors declared a regular monthly distribution for each of October, November, and December 2024, as follows:

	Ex-Dividend	Record	Payment	Amount per
Declared	Date	Date	Date	Share
10/10/2024	10/31/2024	10/31/2024	11/15/2024	$	0.1333
10/10/2024	11/29/2024	11/29/2024	12/13/2024	$	0.1333
10/10/2024	12/31/2024	12/31/2024	1/15/2024	$	0.1333

Conference Call Information

Stellus Capital Investment Corporation will host a conference call to discuss these results on Friday, November 8, 2024 at 11:00 AM, Central Time. The conference call will be led by Robert T. Ladd, Chief Executive Officer, and W. Todd Huskinson, Chief Financial Officer, Chief Compliance Officer, Treasurer, and Secretary.

For those wishing to participate by telephone, please dial (888) 506-0062. Use passcode 122799. Starting approximately two hours after the conclusion of the call, a replay will be available through Friday, November 22, 2024 by dialing (877) 481-4010 and entering passcode 51477. The replay will also be available on the Company's website.

For those wishing to participate via Live Webcast, connect via the Public (SCIC) section of our website at www.stelluscapital.com, under the Events tab. A replay of the conference will be available on our website for approximately 90 days.

About Stellus Capital Investment Corporation

The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA (earnings before interest, taxes, depreciation and amortization)) through first lien (including unitranche) loans, second lien loans and unsecured debt financing, with corresponding equity co-investments. The Company's investment activities are managed by its investment adviser, Stellus Capital Management. To learn more about Stellus Capital Investment Corporation, visit www.stelluscapital.com under the "Public (SCIC)" tab.

Forward-Looking Statements

Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission including the final prospectus that will be filed with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

Contacts

Stellus Capital Investment Corporation
W. Todd Huskinson, Chief Financial Officer
(713) 292-5414
thuskinson@stelluscapital.com

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

	September 30, 2024
	(unaudited)		December 31, 2023
ASSETS
Controlled investments at fair value (amortized cost of $17,934,808 and $17,285,138, respectively)	$	7,749,169	$	6,175,994
Non-controlled, non-affiliated investments, at fair value (amortized cost of $891,385,080 and $884,858,412, respectively)		900,969,724		868,284,689
Cash and cash equivalents		38,580,261		26,125,741
Receivable for sales and repayments of investments		1,358,421		371,877
Interest receivable		6,272,194		4,882,338
Income tax receivable		1,817,371		1,588,708
Other receivables		67,995		42,995
Deferred offering costs		—		7,312
Prepaid expenses		256,724		606,674
Total Assets	$	957,071,859	$	908,086,328
LIABILITIES
Notes Payable	$	99,331,757	$	98,996,412
Credit Facility payable		154,578,467		156,564,776
SBA-guaranteed debentures		321,058,121		320,273,358
Dividends payable		3,604,347		—
Management fees payable		3,959,554		2,918,536
Income incentive fees payable		3,154,576		2,885,180
Interest payable		1,253,031		5,241,164
Related party payable		1,898,854		—
Unearned revenue		550,348		397,725
Administrative services payable		401,033		402,151
Deferred tax liability		—		188,893
Other accrued expenses and liabilities		996,484		278,345
Total Liabilities	$	590,786,572	$	588,146,540
Commitments and contingencies (Note 7)
Net Assets	$	366,285,287	$	319,939,788
NET ASSETS
Common stock, par value $0.001 per share (100,000,000 shares authorized; 27,039,364 and 24,125,642 issued and outstanding, respectively)	$	27,039	$	24,125
Paid-in capital		375,430,445		335,918,984
Total distributable loss		(9,172,197)		(16,003,321)
Net Assets	$	366,285,287	$	319,939,788
Total Liabilities and Net Assets	$	957,071,859	$	908,086,328
Net Asset Value Per Share	$	13.55	$	13.26

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	For the three months ended				For the nine months ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
INVESTMENT INCOME
From controlled investments:
Interest income	$	—	$	—	$	81,636	$	—
From non-controlled, non-affiliated investments
Interest income		25,338,361		26,223,986		75,460,156		75,295,485
Other income		1,159,898		941,040		3,579,415		2,529,905
Total Investment Income	$	26,498,259	$	27,165,026	$	79,121,207	$	77,825,390
OPERATING EXPENSES
Management fees	$	3,959,554	$	3,933,121	$	11,664,020	$	11,533,811
Valuation fees		151,535		139,267		343,753		332,762
Administrative services expenses		469,274		470,846		1,441,436		1,399,188
Income incentive fees		2,564,922		2,705,200		7,616,562		7,433,039
Capital gains incentive fee reversal		—		—		—		(569,528)
Professional fees		312,034		276,592		847,866		877,276
Directors' fees		93,250		93,250		315,750		303,750
Insurance expense		126,362		123,725		376,840		366,156
Interest expense and other fees		7,956,403		8,049,063		23,840,473		24,037,462
Income tax expense		360,192		335,508		1,304,948		1,082,057
Other general and administrative expenses		245,043		217,655		908,185		727,754
Total Operating Expenses	$	16,238,569	$	16,344,227	$	48,659,833	$	47,523,727
Income incentive fee waiver		—		—		(1,826,893)		—
Total Operating Expenses, net of fee waivers	$	16,238,569	$	16,344,227	$	46,832,940	$	47,523,727
Net Investment Income	$	10,259,690	$	10,820,799	$	32,288,267	$	30,301,663
Net realized (loss) gain on non-controlled, non-affiliated investments	$	(3,297,615)	$	600,403	$	(21,689,864)	$	324,782
Net realized loss on foreign currency translations		(22,095)		(22,166)		(76,990)		(72,782)
Net change in unrealized appreciation on controlled investments		248,746		—		923,505		—
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments		8,255,272		(13,793,320)		25,512,422		(24,338,195)
Net change in unrealized appreciation (depreciation) on foreign currency translations		14,588		(2,794)		5,099		(21,243)
(Provision) benefit for taxes on net unrealized (appreciation) depreciation on investments		—		(312)		188,893		(144,425)
Benefit for taxes on net realized loss on investments		2,221		—		2,221		—
Net Increase (Decrease) in Net Assets Resulting from Operations	$	15,460,807	$	(2,397,390)	$	37,153,553	$	6,049,800
Net Investment Income Per Share—basic and diluted	$	0.39	$	0.47	$	1.29	$	1.42
Net Increase (Decrease) in Net Assets Resulting from Operations Per Share – basic and diluted	$	0.59	$	(0.11)	$	1.48	$	0.28
Weighted Average Shares of Common Stock Outstanding—basic and diluted		26,326,426		22,824,221		25,066,626		21,289,880
Distributions Per Share—basic and diluted	$	0.40	$	0.41	$	1.21	$	1.22

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

	Common Stock					Total
	Number	Par		Paid-in		distributable
	of shares	value		capital		earnings (loss)		Net Assets
Balances at December 31, 2022	19,666,769	$	19,667	$	275,114,720	$	642,226	$	275,776,613
Net investment income	—		—		—		9,067,620		9,067,620
Net realized gain on investments	—		—		—		34,967		34,967
Net realized loss on foreign currency translations	—		—		—		(39,912)		(39,912)
Net change in unrealized depreciation on investments	—		—		—		(4,249,642)		(4,249,642)
Net change in unrealized appreciation on foreign currency translations	—		—		—		1,874		1,874
Provision for taxes on unrealized appreciation on investments	—		—		—		(78,760)		(78,760)
Distributions from net investment income	—		—		—		(7,951,284)		(7,951,284)
Issuance of common stock, net of offering costs⁽¹⁾	581,614		581		8,289,988		—		8,290,569
Balances at March 31, 2023	20,248,383	$	20,248	$	283,404,708	$	(2,572,911)	$	280,852,045
Net investment income	—		—		—		10,413,244		10,413,244
Net realized loss on non-controlled, non-affiliated investments	—		—		—		(310,588)		(310,588)
Net realized loss on foreign currency translation	—		—		—		(10,704)		(10,704)
Net change in unrealized depreciation on non-controlled, non-affiliated investments	—		—		—		(6,295,233)		(6,295,233)
Net change in unrealized depreciation on foreign currency translations	—		—		—		(20,323)		(20,323)
Provision for taxes on unrealized appreciation on investments	—		—		—		(65,353)		(65,353)
Distributions from net investment income	—		—		—		(8,659,144)		(8,659,144)
Issuance of common stock, net of offering costs⁽¹⁾	2,309,521		2,310		32,418,774		—		32,421,084
Balances at June 30, 2023	22,557,904	$	22,558	$	315,823,482	$	(7,521,012)	$	308,325,028
Net investment income	—		—		—		10,820,799		10,820,799
Net realized gain on investments	—		—		—		600,403		600,403
Net realized loss on foreign currency translation	—		—		—		(22,166)		(22,166)
Net change in unrealized depreciation on investments	—		—		—		(13,793,320)		(13,793,320)
Net change in unrealized depreciation on foreign currency translations	—		—		—		(2,794)		(2,794)
Provision for taxes on unrealized appreciation on investments	—		—		—		(312)		(312)
Distributions from net investment income	—		—		—		(9,269,208)		(9,269,208)
Issuance of common stock, net of offering costs⁽¹⁾	1,567,738		1,567		21,465,783		—		21,467,350
Balances at September 30, 2023	24,125,642	$	24,125	$	337,289,265	$	(19,187,610)	$	318,125,780

Balances at December 31, 2023	24,125,642	$	24,125	$	335,918,984	$	(16,003,321)	$	319,939,788
Net investment income	—		—		—		10,235,916		10,235,916
Net realized loss on investments	—		—		—		(20,384,731)		(20,384,731)
Net realized loss on foreign currency translations	—		—		—		(25,106)		(25,106)
Net change in unrealized appreciation on investments	—		—		—		23,518,590		23,518,590
Net change in unrealized depreciation on foreign currency translations	—		—		—		(3,602)		(3,602)
Provision for taxes on unrealized appreciation on investments	—		—		—		(192,607)		(192,607)
Distributions from net investment income	—		—		—		(9,647,844)		(9,647,844)
Balances at March 31, 2024	24,125,642	$	24,125	$	335,918,984	$	(12,502,705)	$	323,440,404
Net investment income	—		—		—		11,792,661		11,792,661
Net realized gain on investments	—		—		—		1,992,482		1,992,482
Net realized loss on foreign currency translations	—		—		—		(29,789)		(29,789)
Net change in unrealized depreciation on investments	—		—		—		(5,586,681)		(5,586,681)
Net change in unrealized depreciation on foreign currency translations	—		—		—		(5,887)		(5,887)
Benefit for taxes on unrealized depreciation on investments	—		—		—		381,500		381,500
Distributions from net investment income	—		—		—		(10,049,073)		(10,049,073)
Issuance of common stock, net of offering costs⁽¹⁾	1,855,356		1,856		25,248,020		—		25,249,876
Balances at June 30, 2024	25,980,998	$	25,981	$	361,167,004	$	(14,007,492)	$	347,185,493
Net investment income	—		—		—		10,259,690		10,259,690
Net realized loss on investments	—		—		—		(3,297,615)		(3,297,615)
Net realized loss on foreign currency translation	—		—		—		(22,095)		(22,095)
Net change in unrealized appreciation on investments	—		—		—		8,504,018		8,504,018
Net change in unrealized appreciation on foreign currency translations	—		—		—		14,588		14,588
Benefit for taxes on net realized loss on investments	—		—		—		2,221		2,221
Distributions from net investment income	—		—		—		(10,625,512)		(10,625,512)
Issuance of common stock, net of offering costs⁽¹⁾	1,058,366		1,058		14,263,441		—		14,264,499
Balances at September 30, 2024	27,039,364	$	27,039	$	375,430,445	$	(9,172,197)	$	366,285,287


(1)	See Note 4 to the Consolidated Financial Statements on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2024 for more information on offering costs.

STELLUS CAPITAL INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	For nine months ended
	September 30, 2024		September 30, 2023
Cash flows from operating activities
Net increase in net assets resulting from operations	$	37,153,553	$	6,049,800
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchases of investments		(112,624,812)		(139,650,422)
Proceeds from sales and repayments of investments		87,308,914		79,053,967
Net change in unrealized (appreciation) depreciation on investments		(26,435,927)		24,338,195
Net change in unrealized (appreciation) depreciation on foreign currency translations		(5,099)		21,087
Increase in investments due to PIK		(2,490,856)		(2,732,530)
Amortization of premium and accretion of discount, net		(2,045,992)		(2,078,183)
Deferred tax (benefit) provision		(188,893)		144,425
Amortization of loan structure fees		825,891		436,257
Amortization of deferred financing costs		335,345		334,122
Amortization of loan fees on SBA-guaranteed debentures		784,763		938,247
Net realized loss (gain) on investments		21,689,864		(324,782)
Changes in other assets and liabilities
Increase in interest receivable		(1,389,856)		(1,615,612)
Increase in income tax receivable		(228,663)		—
Increase in other receivables		(25,000)		(26,250)
Decrease in prepaid expenses		349,950		517,512
Increase (decrease) in management fees payable		1,041,018		(3,217,286)
Increase in income incentive fees payable		269,396		594,142
Decrease in capital gains incentive fees payable		—		(569,528)
(Decrease) increase in administrative services payable		(1,118)		45,708
Decrease in interest payable		(3,988,133)		(3,324,507)
Increase (decrease) in related party payable		1,898,854		(1,060,321)
Increase in unearned revenue		152,623		22,535
Decrease in income tax payable		—		(59,004)
Increase (decrease) in other accrued expenses and liabilities		718,139		(272,305)
Net Cash Provided (Used) in Operating Activities	$	3,103,961	$	(42,434,733)
Cash flows from Financing Activities
Proceeds from the issuance of common stock	$	40,370,901	$	63,348,436
Sales load for common stock issued		(606,145)		(943,248)
Offering costs paid for common stock issued		(243,067)		(225,085)
Stockholder distributions paid		(26,718,082)		(22,663,688)
Proceeds from SBA-guaranteed debentures		—		11,400,000
Financing costs paid on SBA-guaranteed debentures		—		(277,590)
Financing costs paid on Credit Facility		(101,348)		(35,000)
Borrowings under Credit Facility		122,400,000		79,700,000
Repayments of Credit Facility		(125,751,700)		(116,701,700)
Net Cash Provided by Financing Activities	$	9,350,559	$	13,602,125
Net Increase (Decrease) in Cash and Cash Equivalents	$	12,454,520	$	(28,832,608)
Cash and Cash Equivalents Balance at Beginning of Period	$	26,125,741	$	48,043,329
Cash and Cash Equivalents Balance at End of Period	$	38,580,261	$	19,210,721
Supplemental and Non-Cash Activities
Cash paid for interest expense	$	25,882,607	$	25,653,343
Income and excise tax paid		1,533,611		1,141,061
Increase in distributions payable		3,604,347		3,215,948
Decrease in deferred offering costs		(7,312)		(1,100)

Reconciliation of Core Net Investment Income ⁽¹⁾ (Unaudited)

	Three Months Ended
	September 30, 2024	September 30, 2023
Net investment income	$10,259,690	$10,820,799
Income tax expense	360,192	335,508
Core net investment income	$10,619,882	$11,156,307

Per share amounts:
Net investment income per share	$0.39	$0.47
Core net investment income per share	$0.40	$0.49

Reconciliation of Realized Net Investment Income ⁽²⁾ (Unaudited)

	Three Months Ended
	September 30, 2024	September 30, 2023
Net investment income	$10,259,690	$10,820,799
Net realized loss on investments	(3,297,615)	600,403
Net realized loss on foreign currency translation	(22,095)	(22,166)
Total Realized Net Investment Income	$6,939,980	$11,399,036

Per share amounts:
Net investment income per share	$0.39	$0.47
Realized net investment income per share	$0.25	$0.50

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SOURCE Stellus Capital Investment Corporation