Stellus Capital Investment (SCM) Q2 2024 earnings summary

Executive summary

• Net investment income for Q2 2024 was $11.8 million ($0.48 per share GAAP, $0.50 per share core), both exceeding the $0.40 per share dividend, driven by a larger portfolio and incentive fee waivers.

• Net increase in net assets from operations for Q2 2024 was $8.5 million ($0.35 per share), reflecting lower unrealized depreciation and higher realized gains.

• Investment portfolio reached $900 million (fair value) across 100 companies, with 90% in first lien debt and 8% in equity.

• Realized a $2 million gain on an equity investment during the quarter and a $2.2 million gain on the full exit of ICD Holdings, LLC after quarter-end.

• Declared monthly dividends of $0.1333 per share for July, August, and September 2024.

Financial highlights

• Total investment income for Q2 2024 was $26.6 million, flat year-over-year; net investment income for the first half of 2024 was $22 million ($0.90 per share).

• Issued 1,855,356 shares under the ATM program in Q2 2024, raising $25.8 million at a premium to NAV.

• Net asset value per share was $13.36 at June 30, 2024, up from $13.26 at year-end 2023.

• Investment portfolio grew to $900 million across 100 companies, up from $876 million and 94 companies at March 31, 2024.

• Five loans on non-accrual, representing 2.9% of total loan portfolio fair value and 4.9% at cost.

Outlook and guidance

• Portfolio expected to end Q3 between $900 million and $940 million, with no known loan repayments but a $2.6 million equity realization.

• Q4 likely to see two repayments totaling $17 million; new fundings expected to exceed repayments.

• Dividend guidance maintained at $0.40 per share per quarter, payable monthly, supported by earnings and spillover income.

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

• Asset coverage ratio remains strong at 229%, supporting leverage capacity.