Stellus Capital Investment (SCM) Q1 2025 earnings summary

Executive summary

• Generated $0.35 per share of GAAP net investment income and $0.37 per share of core net investment income for Q1 2025, with net investment income totaling $9.8 million, down from $10.2 million in Q1 2024, due to lower interest income and higher management fees, partially offset by an income incentive fee waiver.

• Net asset value per share was $13.25 at March 31, 2025, down $0.21 from year-end 2024, reflecting company-specific loan write-downs and reduced spillover income.

• Portfolio at fair value reached $991.1 million across 110 companies, up from $953.5 million and 105 companies at year-end 2024, with 90% in first lien debt and 8% in equity investments.

• Five portfolio companies were on non-accrual status, representing 6.7% of the loan portfolio at cost and 4.0% at fair value, a decrease from the prior quarter.

• Declared Q2 2025 dividend at $0.40 per share, payable monthly, with expectations to maintain this rate in Q3, subject to board approval.

Financial highlights

• Invested $55 million in new investments and received $15 million in repayments during Q1 2025, with total investment income at $25.0 million, down from $26.0 million in Q1 2024.

• Net realized losses for Q1 2025 were $6.0 million, improved from $20.4 million year-over-year; net unrealized appreciation was $1.2 million, down from $23.5 million.

• Issued 656,085 shares for $9.3 million at an average price of $14.11, all above NAV and accretive.

• Paid $295 million in dividends since IPO, equating to $17.09 per share for IPO investors.

• Operating expenses (net of fee waivers) were $15.2 million in Q1 2025, with management fees at $4.1 million and income incentive fees at $2.1 million.

Outlook and guidance

• Portfolio expected to remain flat at approximately $985 million by end of Q2 2025, as new originations are offset by repayments.

• Regular monthly dividends of $0.1333 per share declared for April, May, and June 2025, with no return of capital expected.

• Net investment income projected to remain below the $0.40 dividend per share for the rest of 2025, with spillover income and potential equity gains used to cover the gap.

• Management expects to maintain RIC status and distribute 90–100% of taxable income to shareholders.

• Company continues to observe supply chain interruptions, labor shortages, commodity inflation, and market volatility, which may impact future results.