Stellus Capital Investment (SCM) Q3 2024 earnings summary

Executive summary

• Generated $0.39 per share of GAAP net investment income and $0.40 per share of core net investment income for Q3 2024, with stable asset quality and continued dividend payments since IPO.

• Net assets increased to $366.3 million as of September 30, 2024, up from $319.9 million at year-end 2023, driven by portfolio growth and unrealized appreciation.

• Portfolio at fair value grew to $908.7 million across 99 companies, with 89% in first lien debt and 9% in equity.

• Net asset value per share increased by $0.19 due to unrealized appreciation, mainly from one equity investment.

• Net investment income for the nine months ended September 30, 2024 was $32.3 million, or $1.29 per share.

Financial highlights

• Issued $14.6 million in shares via ATM program at an average price of $13.79, all above NAV.

• Realized $2.6 million in equity proceeds and a $2.2 million realized gain.

• 98% of loans secured, 95% floating rate; average loan per company $9.5 million.

• Net realized losses on investments were $(21.7) million for the nine months, compared to $(0.3) million in the prior year.

• Net change in unrealized appreciation was $26.4 million for the nine months, versus $(24.3) million in the prior year.

Outlook and guidance

• Expect Q4 portfolio to reach $930–$950 million, with $29 million in loan repayments and $5.3 million in equity realization proceeds.

• Dividend for Q4 declared at $0.40 per share, payable monthly.

• Regular monthly dividends of $0.1333 per share were declared for October, November, and December 2024.

• Asset coverage ratio remains strong at 242%, supporting continued leverage and portfolio growth.

• Portfolio growth supported by increased bank facility to $315 million, enabling potential expansion to $1 billion.