Stellus Capital Investment Corporation Reports Financial Performance for Year Ended December 31, 2024

Stellus Capital Investment Corporation (SCM), a business development company (BDC), reported its financial performance for the year ended December 31, 2024, in its recent 10-K filing. Total assets reached $980.9 million, compared to $908.1 million at the end of 2023. The company's investment portfolio, valued at $953.5 million at fair value (compared to $874.5 million in 2023), consisted of 105 portfolio company investments. The portfolio comprised approximately 89.8% first lien debt (including 2% unitranche), 1.2% second lien debt, 0.7% unsecured debt, and 8.3% equity investments. The weighted-average annual yield on all investments was 9.7%, while the weighted-average yield on debt investments was 10.3%.

Significant changes compared to the previous fiscal year include a decrease in interest income from $96.9 million to $95.4 million, primarily due to falling interest rates and an increase in non-accrual loans, partially offset by portfolio growth. Operating expenses decreased slightly from $63.9 million to $62.8 million, primarily due to higher income incentive fee waivers resulting from the total return limitation, offset by higher income tax expense. Net investment income for 2024 was $41.9 million ($1.64 per share), similar to the $42.2 million ($1.92 per share) reported in 2023. Net realized losses on investments totaled $15.7 million in 2024, compared to $30.2 million in 2023. Net unrealized appreciation on investments increased from $2.8 million in 2023 to $19.6 million in 2024.

During 2024, SCM made $221.2 million in investments in 21 new and 29 existing portfolio companies, while receiving $151.8 million in proceeds from investment repayments. The company utilized its at-the-market (ATM) program to raise $46.5 million in gross proceeds from the issuance of 3,355,476 shares of common stock, primarily to repay outstanding indebtedness. As of December 31, 2024, the company had $20.1 million in cash and cash equivalents and maintained an asset coverage ratio of 234%. The company's SBIC subsidiaries had $325 million in outstanding SBA-guaranteed debentures.

The company's outlook, as stated in the filing, includes continued reliance on additional capital to finance growth, given its intention to distribute substantially all income to stockholders. The company acknowledges various risk factors, including market volatility, interest rate fluctuations, dependence on key personnel, and the inherent risks associated with investing in leveraged, lower middle-market companies. The company also notes the potential for future changes in laws and regulations impacting its operations as a BDC and RIC. As of January 9, 2025, the board declared a monthly distribution of $0.1333 per share for January, February, and March 2025.