Stellus Capital Investment (SCM) Q3 2025 earnings summary

Executive summary

• Investment portfolio grew to $1.01 billion at fair value across 115 companies as of September 30, 2025, with 89% in first lien debt and 9% in equity investments.

• Net investment income for Q3 2025 was $0.32 per share, with core net investment income at $0.34 per share and net realized income at $0.42 per share.

• Net investment income for the nine months ended September 30, 2025 was $28.5 million ($1.01 per share), down from $32.3 million ($1.29 per share) year-over-year.

• Net asset value per share was $13.05 at September 30, 2025, down from $13.46 at December 31, 2024, reflecting dividend payments exceeding earnings and net unrealized losses.

• Five portfolio companies were on non-accrual status, representing 6.7% of the loan portfolio at cost and 3.7% at fair value.

Financial highlights

• $64 million invested in new portfolio companies and $39 million received in repayments during Q3 2025, with total investment income for the nine months at $76.9 million.

• Net realized losses for the nine months were $4.0 million, a significant improvement from $21.7 million in the prior year.

• Net change in unrealized depreciation for the nine months was $2.5 million, compared to unrealized appreciation of $26.4 million in the prior year.

• Distributions declared for the nine months were $1.20 per share.

• Weighted average yield on debt investments was 10.0% as of September 30, 2025.

Outlook and guidance

• Portfolio expected to remain above $1 billion at year-end despite anticipated payoffs in Q4.

• Regular monthly dividends of $0.1333 per share declared for October, November, and December 2025.

• Projected $5 million in equity realizations for both Q4 2025 and Q1 2026, with expected gains of $3.8 million and $3.3 million, respectively.

• Management remains focused on maximizing total return through current income and capital appreciation in lower middle-market companies.

• The company expects to fund growth through equity offerings, debt issuance, and portfolio turnover, but notes potential limitations if shares trade below NAV.