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HOUSTON, TX --(Marketwired - May 06, 2016) -
Stellus Capital Investment Corporation SCM ("Stellus" or "the Company") today announced financial results for its first fiscal quarter ended March 31, 2016.
HIGHLIGHTS
($ in millions, except data relating to per share amounts and number of portfolio companies)
As of
Portfolio results March 31, 2016
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Total assets $ 364.3
Investment portfolio, at fair value $ 352.5
Net assets $ 162.9
Weighted average yield on debt investments 10.6%
Net asset value per share $ 13.06
Quarter Quarter
ended ended
March 31, March 31,
2016 2015
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Portfolio activity
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Total investments made, at par $ 5.6 $ 22.2
Number of new investments 3 4
Repayments of investments, including amortization $ 0.5 $ 17.3
Number of portfolio companies at
end of period 40 33
Operating results
-------------------------------------------------
Total investment income $ 9.5 $ 8.7
Net investment income $ 4.1 $ 3.8
Net investment income per share $ 0.33 $ 0.31
Regular dividends declared per share $ 0.34 $ 0.34
Net increase in net assets from operations $ 2.5 $ 5.4
Net increase in net assets from operations per
share $ 0.20 $ 0.43
"During the first quarter, our investment portfolio increased slightly with no pay-offs received," said Robert T. Ladd, Chief Executive Officer of Stellus.
Portfolio and Investment Activity
We completed the first quarter of 2016 with a portfolio of $352.5 million (at fair value) invested in 40 companies. As of March 31, 2016, our portfolio included approximately 37% of first lien debt, 39% of second lien debt, 20% of mezzanine debt and 4% of equity investments at fair value. Our debt portfolio consisted of 76% floating rate investments (subject to interest rate floors) and 24% fixed rate investments. The average size of our portfolio company investments was $8.8 million and our largest portfolio company investment was approximately $21.7 million at fair value. The weighted average yield on all of our debt investments as of March 31, 2016 was approximately 10.6%.
During the three months ended March 31, 2016, we made $5.6 million of investments (at par) in one new portfolio company and two existing portfolio companies and received $0.5 million from amortization of certain other investments.
This compares to the portfolio as of December 31, 2015, which had a fair value of $349.0 million invested in 39 companies comprising 38% of first lien debt, 38% of second lien debt, 20% of mezzanine debt and 4% of equity investments at fair value. As of December 31, 2015, our debt investments had a weighted average yield of 10.6% and consisted of 75% floating rate investments (subject to interest rate floors) and 25% fixed rate investments.
Results of Operations
Investment income for the three months ended March 31, 2016 and 2015 totaled $9.5 million and $8.7 million, respectively, most of which was interest income from portfolio investments.
Operating expenses for the three months ended March 31, 2016 and 2015, totaled $5.4 million and $4.9 million, respectively. For the same respective periods, base management fees totaled $1.5 million and $1.4 million, incentive fees totaled $1.0 million and $1.0 million, fees and expenses related to our borrowings totaled $1.9 million and $1.5 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.3 million and $0.3 million and other expenses totaled $0.7 million and $0.7 million.
Net investment income was $4.1 million and $3.8 million, or $0.33 and $0.31 per common share based on weighted average common shares outstanding for the three months ended March 31, 2016 and 2015.
The Company's investment portfolio had a net change in unrealized appreciation (depreciation) for the three months ended March 31, 2016 and 2015, of ($1.7) million and $1.6 million, respectively. For the three months ended March 31, 2016 and 2015 the Company had realized gains of $0.9 thousand and $3.2 thousand, respectively.
Our net increase in net assets resulting from operations totaled $2.5 million and $5.4 million, or $0.20 and $0.43 per common share based on weighted average common shares outstanding for the three months ended March 31, 2016 and 2015, respectively.
Liquidity and Capital Resources
As of March 31, 2016 and 2015, our credit facility provided for borrowings in an aggregate amount up to $120 million on a committed basis. As of both March 31, 2016 and December 31, 2015, we had $109.5 million in outstanding borrowings under the credit facility.
For the three months ended March 31, 2016, our operating activities used cash of $0.1 million primarily due to the purchase of new investments offset by cash interest received. For the same period, our financing activities used cash of $4.2 million, due to distributions to stockholders during the period.
For the three months ended March 31, 2015 our operating activities used cash of $0.3 million, primarily in connection with the payment of operating expenses, and our financing activities used cash of $0.5 million, primarily related to distributions to stockholders and offset by net borrowings under the credit facility.
Distributions
During the three months ended March 31, 2016 and 2015, we declared distributions of $0.34 per share ($4.2 million) for each quarter. Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year. None of these dividends are expected to include a return of capital.
Recent Portfolio Activity
New investment transactions and repayments which occurred during the three months ended March 31, 2016 are summarized as follows:
-- On January 26, 2016, we made a $3.8 million follow-on investment in the
second lien loan of Stratose Intermediate Holdings, II, LLC. We also
made an additional $0.3 million equity investment.
-- On January 27, 2016, we made a $0.7 million investment in the first lien
loan of Vision Media Management & Fulfillment, LLC, a leading provider
of logistics, fulfillment, and storage services for the media and
entertainment industry.
-- On March 23, 2016, we made a $0.8 million follow-on investment in the
second lien loan of Abrasive Products & Equipment, LLC.
Events Subsequent to March 31, 2016
During the month of April 2016, we received $2.5 million of principal repayments on our first lien debtor-in-possession loan of Binder & Binder National Social Security and Disability Advocates, LLC.
Credit Facility
The outstanding balance under our credit facility as of May 5, 2016 was $109.5 million.
Conference Call Information
Stellus Capital Investment Corporation will host a conference call to discuss these results on May 6, 2016, at 10:00 a.m. Central Standard Time. The conference call will be led by Robert T. Ladd, chief executive officer, and W. Todd Huskinson, chief financial officer, chief compliance officer, treasurer, and secretary.
For those wishing to participate by telephone, please dial 888-364-3109 (domestic). Use passcode 5115564. Starting approximately twenty-four hours after the conclusion of the call, a replay will be available through May 14, 2016 by dialing (888) 203-1112 and entering passcode 5115564. The replay will also be available on the company's website.
PART I - FINANCIAL INFORMATION
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
March 31, December 31,
2016 2015
------------------------------
ASSETS
Non-controlled, non-affiliated investments,
at fair value
(amortized cost of $369,410,970 and
$364,212,459, respectively) $ 352,472,534 $ 349,017,697
Cash and cash equivalents 6,524,058 10,875,790
Receivable for sales and repayments of
investments 11,187 10,000
Interest receivable 4,612,009 4,720,031
Deferred offering costs 261,761 261,761
Accounts receivable - 7,684
Prepaid expenses 462,863 475,449
------------------------------
Total Assets $ 364,344,412 $ 365,368,412
------------------------------
LIABILITIES
Notes Payable, net of deferred financing
costs $ 24,428,292 $ 24,381,108
Credit facility payable, net of prepaid loan
structure fees 108,327,796 108,197,373
SBA Debentures, net of prepaid loan fees 63,096,947 63,015,846
Dividends payable 1,413,982 1,413,982
Base management fees payable 1,548,373 1,518,779
Incentive fees payable 1,231,235 607,956
Interest payable 370,393 570,189
Unearned revenue 33,259 36,877
Administrative services payable 469,224 397,799
Deferred tax liability 214,384 381,723
Other accrued expenses and liabilities 278,017 195,676
------------------------------
Total Liabilities $ 201,411,902 $ 200,717,308
------------------------------
Commitments and contingencies (Note 5)
Net Assets $ 162,932,510 $ 164,651,104
==============================
NET ASSETS
Common Stock, par value $0.001 per share
(100,000,000 shares authorized, 12,479,960
and 12,479,962 shares issued and
outstanding, respectively) $ 12,480 $ 12,480
Paid-in capital 180,994,752 180,994,752
Accumulated undistributed net realized gain 894 -
Distributions in excess of net investment
income (922,796) (779,643)
Net unrealized depreciation on investments
and cash equivalents, net of provision for
taxes of $214,385 and $381,723,
respectively. (17,152,820) (15,576,485)
------------------------------
Net Assets $ 162,932,510 $ 164,651,104
------------------------------
Total Liabilities and Net Assets $ 364,344,412 $ 365,368,412
==============================
Net Asset Value Per Share $ 13.06 $ 13.19
==============================
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the For the
three months three months
ended ended
March 31, March 31,
2016 2015
--------------- ---------------
INVESTMENT INCOME
Interest income $ 9,374,737 $ 8,631,296
Other income 93,096 82,795
--------------- ---------------
Total Investment Income 9,467,833 8,714,091
--------------- ---------------
OPERATING EXPENSES
Management fees $ 1,548,373 $ 1,414,134
Valuation fees 132,466 147,475
Administrative services expenses 287,300 279,200
Incentive fees 1,024,822 960,854
Professional fees 192,111 294,561
Directors' fees 92,000 89,000
Insurance expense 118,026 116,944
Interest expense and other fees 1,879,843 1,450,492
Other general and administrative expenses 93,602 118,016
--------------- ---------------
Total Operating Expenses $ 5,368,543 $ 4,870,676
--------------- ---------------
Net Investment Income $ 4,099,290 $ 3,843,415
--------------- ---------------
Net Realized Gain on Investments and
Cash Equivalents $ 894 $ 3,169
--------------- ---------------
Net Change in Unrealized Appreciation
(Depreciation) on Investments and Cash
Equivalents $ (1,743,674) $ 1,613,068
--------------- ---------------
Benefit (provision) for taxes on
unrealized gain on investments $ 167,339 $ (66,278)
--------------- ---------------
Net Increase in Net Assets Resulting
from Operations $ 2,523,849 $ 5,393,374
=============== ===============
Net Investment Income Per Share $ 0.33 $ 0.31
=============== ===============
Net Increase in Net Assets Resulting
from Operations Per Share $ 0.20 $ 0.43
=============== ===============
Weighted Average Shares of Common Stock
Outstanding 12,479,960 12,479,962
--------------- ---------------
Distributions Per Share $ 0.34 $ 0.34
=============== ===============
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
For the For the
three months three months
ended ended
March 31, March 31,
2016 2015
----------------------------------
Increase in Net Assets Resulting from
Operations
Net investment income $ 4,099,290 $ 3,843,415
Net realized gain on investments and cash
equivalents 894 3,169
Net change in unrealized appreciation
(depreciation) on investments and cash (1,743,674) 1,613,068
equivalents
Benefit (provision) for taxes on
unrealized appreciation (depreciation) on
investments 167,339 (66,278)
----------------------------------
Net Increase in Net Assets Resulting from
Operations $ 2,523,849 $ 5,393,374
Stockholder distributions
Net investment income (4,242,443) (4,242,264)
---------------------------------
Total Distributions $ (4,242,443) $ (4,242,264)
----------------------------------
Total increase (decrease) in net assets $ (1,718,594) $ 1,151,110
----------------------------------
Net assets at beginning of period $ 164,651,104 $ 173,949,452
----------------------------------
Net assets at end of period (includes
$922,796 and $1,178,472 of distributions
in excess of net investment income,
respectively) $ 162,932,510 $ 175,100,562
==================================
STELLUS CAPITAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the For the
three months three months
ended ended
March 31, March 31,
2016 2015
--------------- ---------------
Cash flows from operating activities
Net increase in net assets resulting from
operations $ 2,523,849 $ 5,393,374
Adjustments to reconcile net increase in
net assets resultingfrom operations to
net cash used in operating activities:
Purchases of investments (5,367,633) (21,712,544)
Proceeds from sales and repayments of
investments 513,365 17,342,354
Net change in unrealized depreciation
(appreciation) on investments 1,743,674 (1,613,068)
Deferred tax provision (benefit) (167,339) 66,278
Increase in investments due to PIK (54,729) (178,581)
Amortization of premium and accretion of
discount, net (289,807) (211,463)
Amortization of loan structure fees 130,423 129,329
Amortization of deferred financing costs 81,101 76,232
Amortization of loan fees on SBIC
debentures 47,184 28,690
Net realized gain on investments (894) (3,169)
Changes in other assets and liabilities
Decrease in interest receivable 108,022 54,545
Increase in receivable for affiliated
transaction - (40,000)
Decrease in accounts receivable 7,684 -
Decrease in prepaid expenses and fees 12,586 -
Increase in payable for investments
purchased - 76,074
Increase in management fees payable 29,594 54,115
Increase in directors' fees payable - 89,000
Increase in incentive fees payable 623,279 45,277
Increase in administrative services
payable 71,425 50,290
Decrease in interest payable (199,796) (27,347)
Decrease in unearned revenue (3,618) (125,380)
Increase in holdback liability - 110,000
Increase in other accrued expenses and
liabilities 82,341 52,050
--------------- ---------------
Net cash used by operating activities $ (109,289) $ (343,944)
--------------- ---------------
Cash flows from financing activities
Stockholder distributions paid (4,242,443) (4,242,264)
Borrowings under credit facility - 22,750,000
Repayments of credit facility - (19,000,000)
--------------- ---------------
Net cash used in financing activities $ (4,242,443) $ (492,264)
--------------- ---------------
Net decrease in cash and cash equivalents (4,351,732) (836,208)
Cash and cash equivalents balance at
beginning of period 10,875,790 2,046,563
--------------- ---------------
Cash and cash equivalents balance at end of
period $ 6,524,058 $ 1,210,355
=============== ===============
Supplemental and non-cash financing
activities
Interest expense paid $ 1,820,930 $ 1,243,588
FOR FURTHER INFORMATION PLEASE CONTACT:
Contacts
Stellus Capital Investment Corporation
W. Todd Huskinson
(713) 292-5414
Chief Financial Officer
thuskinson@stelluscapital.com
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