Stellus Capital Investment (SCM) Q1 2026 earnings summary

Executive summary

• Net investment income for Q1 2026 was $7.5 million ($0.26 per share), with core net investment income at $0.27 per share and net realized income at $0.29 per share.

• Portfolio at fair value was $990 million across 116 companies, with 90% in first lien debt and 9% in equity investments.

• Net asset value per share was $12.54 at March 31, 2026, down from $12.82 at year-end 2025, driven by dividend payments exceeding earnings and net realized/unrealized losses.

• Distributions declared for Q1 2026 totaled $0.34 per share, with regular monthly dividends declared for Q2 2026.

• Funded $28 million in new investments and received $42 million in repayments during Q1 2026.

Financial highlights

• Total investment income for Q1 2026 was $23.3 million, primarily from interest on portfolio investments.

• Operating expenses (net of fee waivers) were $15.8 million, with management fees at $4.4 million and borrowing-related fees at $8.9 million.

• Net realized gains were $0.8 million, compared to net realized losses of $6.0 million in Q1 2025.

• Net change in unrealized depreciation was $(6.5) million, compared to $1.2 million appreciation in Q1 2025.

• Six loans on non-accrual, representing 9.2% of total cost and 5.2% of fair value, a slight increase from the prior quarter.

Outlook and guidance

• Portfolio expected to remain around $970 million for Q2 2026, with repayments matching new fundings.

• Regular monthly dividends of $0.1133 per share declared for April, May, and June 2026.

• Dividend expected to align with net investment income plus realized gains over time, likely at a lower level than current dividends.

• Non-accrual levels expected to improve toward year-end 2026 or early 2027, with resolutions typically taking 12–24 months.

• Management continues to observe macroeconomic uncertainty due to labor shortages, inflation, fluctuating rates, and geopolitical instability.