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Stellus Capital Investment Corporation Reports Results for Its Third Fiscal Quarter Ended September 30, 2014
HIGHLIGHTS | |||||||
($ in millions, except data relating to per share amounts and number of portfolio companies) | |||||||
Portfolio results | As of |
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Total assets | $ | 296.4 | |||||
Investment portfolio, at fair value | $ | 284.1 | |||||
Net assets | $ | 177.1 | |||||
Weighted average yield on debt investments | 11.0 | % | |||||
Net asset value per share | $ | 14.20 | |||||
Quarter ended |
Quarter ended |
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Portfolio activity | |||||||
Total investments made, at cost | $ | 6.9 | $ | 16.8 | |||
Number of new investments | 3 | 2 | |||||
Repayments of investments, including amortization | $ | 1.2 | $ | 35.4 | |||
Number of portfolio companies at end of period | 28 | 23 | |||||
Operating results | |||||||
Total investment income | $ | 7.8 | $ | 7.9 | |||
Net investment income | $ | 5.3 (1 | ) | $ | 4.1 | ||
Net investment income per share | $ | 0.42 (1 | ) | $ | 0.34 | ||
Regular dividends declared per share | $ | 0.34 | $ | 0.34 | |||
Net increase in net assets from operations | $ | 2.1 | $ | 3.8 | |||
Net increase in net assets from operations per share | $ | 0.17 | $ | 0.32 | |||
Weighted average shares outstanding during the period | 12,404,485 | 12,066,548 | |||||
- Includes waiver of
$1.4 million of incentive fees for the period fromJanuary 1, 2014 throughSeptember 30, 2014 .
"Although we had a modest level of originations during the third quarter, since quarter-end we have made investments totaling
Portfolio and Investment Activity
We completed the third quarter of 2014 with a portfolio of
During the three months ended
This compares to the portfolio as of
Results of Operations
Investment income for the three months ended
During the current quarter, while under no obligation to do so, we waived
Net investment income was
The Company's investment portfolio had a net change in unrealized appreciation (depreciation) for the three months ended
Our net increase in net assets resulting from operations totaled
Liquidity and Capital Resources
Our liquidity and capital resources are derived from our committed credit facility, bonds, SBA guaranteed debentures, and cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and other operating expenses we incur, as well as the payment of dividends to the holders of our common stock. We used, and expect to continue to use, these capital resources as well as proceeds from any future public and private offerings of securities to finance our investment activities.
As of
On
On
For the nine months ended
Distributions
During the three months ended
Recent Portfolio Activity
During the three months ended
- On
July 31, 2014 , we invested an additional$2.0 million in the unsecured term loan ofSQAD, LLC . In addition, we invested$12,485 in the company's common equity and$112,368 in Series A Preferred equity. - On
September 5, 2014 , we made a$4.4 million investment in the second lien term loan ofAbrasive Products & Equipment . We also invested$0.4 million in the company's equity. - On
September 5, 2014 , we received repayment of$0.7 million of the revolving term loan ofRefac Optical Group at par. - On
September 8, 2014 , we invested$33,333 in the equity ofSkopos Financial, LLC .
Events Subsequent to
Since
- On
October 3, 2014 , we invested$2.5 million in the unsecured debt ofSkopos Financial, LLC . We invested an additional$66,667 in the equity of the Company onOctober 30, 2014 . - On
October 21, 2014 , we invested$7.5 million in the first lien debt ofHollander Sleep Products, LLC and$250,000 in the common stock ofDream II Holdings, LLC . - On
October 22, 2014 , we invested$15.6 million in the first lien debt and committed$1.75 million in the unfunded revolver ofHuf Worldwide, LLC and invested$500,000 in the preferred stock ofHuf Holdings LLC . - On
October 23, 2014 , we invested$4.0 million in the second lien debt of and$250,000 in the common and preferred stock ofZemax Software Holdings, LLC .
Dividends
On
Credit Facility
The outstanding balance under the Credit Facility as of
SBA Debentures
On each of
Conference Call Information
For those wishing to participate by telephone, please dial (888) 455-2260 (domestic). Use passcode 8257325. Starting approximately twenty-four hours after the conclusion of the call, a replay will be available through
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Consolidated Statements of Assets and Liabilities | ||||||||||
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2014 | 2013 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
Non-controlled, non-affiliated investments, at fair value (amortized cost of |
$ | 284,105,102 | $ | 277,504,510 | ||||||
Cash and cash equivalents | 4,164,063 | 13,663,542 | ||||||||
Receivable for sales and repayments of investments | 38,021 | - | ||||||||
Interest receivable | 5,357,554 | 4,713,912 | ||||||||
Deferred offering costs | 261,760 | 205,165 | ||||||||
Deferred financing costs | 844,606 | - | ||||||||
Accounts receivable | 31,013 | - | ||||||||
Receivable for affiliated transaction | - | 43,450 | ||||||||
Prepaid loan structure fees | 1,212,098 | 1,586,405 | ||||||||
Prepaid expenses | 381,799 | 411,321 | ||||||||
Total Assets | $ | 296,396,016 | $ | 298,128,305 | ||||||
LIABILITIES | ||||||||||
Notes Payable | 25,000,000 | - | ||||||||
Credit facility payable | 90,000,000 | 110,000,000 | ||||||||
Short-term loan | - | 9,000,000 | ||||||||
Dividends payable | 1,413,224 | - | ||||||||
Base management fees payable | 1,281,231 | 1,176,730 | ||||||||
Incentive fees payable | 215,887 | 1,056,942 | ||||||||
Accrued offering costs | 4,752 | - | ||||||||
Interest payable | 336,275 | 234,051 | ||||||||
Directors' fees payable | 86,000 | 96,000 | ||||||||
Unearned revenue | 129,548 | 146,965 | ||||||||
Administrative services payable | 551,383 | 263,226 | ||||||||
Deferred Tax Liability | 185,888 | - | ||||||||
Other accrued expenses and liabilities | 96,567 | 262,877 | ||||||||
Total Liabilities | 119,300,755 | 122,236,791 | ||||||||
Net Assets | $ | 177,095,261 | $ | 175,891,514 | ||||||
NET ASSETS | ||||||||||
Common Stock, par value |
$ | 12,473 | $ | 12,099 | ||||||
Paid-in capital | 180,909,398 | 175,614,738 | ||||||||
Accumulated undistributed net realized gain | 682,320 | 1,027,392 | ||||||||
Distributions in excess of net investment income | (1,019,866 | ) | (1,262,659 | ) | ||||||
Net Unrealized appreciation (depreciation) on investments and cash equivalents, net of provision for taxes of |
(3,489,064 | ) | 499,944 | |||||||
Net Assets | 177,095,261 | 175,891,514 | ||||||||
Total Liabilities and Net Assets | $ | 296,396,016 | $ | 298,128,305 | ||||||
Net Asset Value Per Share | $ | 14.20 | $ | 14.54 | ||||||
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Consolidated Statement of Operations (unaudited) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
INVESTMENT INCOME | |||||||||||||||||
Interest income | $ | 7,766,986 | $ | 7,604,636 | $ | 23,126,699 | $ | 20,640,265 | |||||||||
Other income | 55,511 | 312,995 | 557,753 | 1,065,033 | |||||||||||||
Total Investment Income | 7,822,497 | 7,917,631 | 23,684,452 | 21,705,298 | |||||||||||||
OPERATING EXPENSES | |||||||||||||||||
Management fees | 1,281,231 | 1,140,675 | 3,842,971 | 3,065,877 | |||||||||||||
Valuation fees | 128,815 | 154,785 | 344,952 | 358,495 | |||||||||||||
Administrative services expenses | 312,870 | 220,249 | 856,804 | 619,825 | |||||||||||||
Incentive fees | 410,134 | 914,412 | 2,173,966 | 2,969,855 | |||||||||||||
Professional fees | 115,463 | 254,533 | 399,490 | 477,995 | |||||||||||||
Directors' fees | 86,000 | 76,000 | 290,000 | 254,000 | |||||||||||||
Insurance expense | 121,730 | 119,695 | 361,220 | 354,933 | |||||||||||||
Interest expense and other fees | 1,409,565 | 968,674 | 3,841,487 | 2,253,433 | |||||||||||||
Other general and administrative expenses | 105,418 | 102,388 | 256,385 | 229,832 | |||||||||||||
Total Operating Expenses | 3,971,226 | 3,951,411 | 12,367,275 | 10,584,245 | |||||||||||||
Waiver of Incentive Fees | (1,399,226 | ) | (167,775 | ) | (1,399,226 | ) | (672,982 | ) | |||||||||
Total operating expenses, net of fees waivers | 2,572,000 | 3,783,636 | 10,968,049 | 9,911,263 | |||||||||||||
Net Investment Income | 5,250,497 | 4,133,995 | 12,716,403 | 11,794,035 | |||||||||||||
Net Realized Gain on Investments and Cash Equivalents | 3,907 | 5,061 | 441,364 | 1,007,978 | |||||||||||||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Cash Equivalents | (2,955,085 | ) | (313,635 | ) | (3,803,120 | ) | 1,033,121 | ||||||||||
Benefit/(Provision) for taxes on unrealized gain on investments | (185,888 | ) | 0 | (185,888 | ) | 0 | |||||||||||
Net Increase in Net Assets Resulting from Operations | $ | 2,113,431 | $ | 3,825,421 | $ | 9,168,759 | $ | 13,853,134 | |||||||||
Net Investment Income Per Share | $ | 0.42 | $ | 0.34 | $ | 1.04 | $ | 0.98 | |||||||||
Net Increase in Net Assets Resulting from Operations Per Share | $ | 0.17 | $ | 0.32 | $ | 0.75 | $ | 1.15 | |||||||||
Weighted Average Shares of Common Stock Outstanding | 12,404,485 | 12,066,548 | 12,214,875 | 12,051,013 | |||||||||||||
Distributions Per Share | $ | 0.34 | $ | 0.34 | $ | 1.09 | $ | 1.02 | |||||||||
STELLUS CAPITAL INVESTMENT CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited) | ||||||||
For the nine months ended |
For the nine months ended |
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Increase in Net Assets Resulting from Operations | ||||||||
Net investment income | $ | 12,716,403 | $ | 11,794,035 | ||||
Net realized gain on investments and cash equivalents | 441,364 | 1,007,978 | ||||||
Net change in unrealized appreciation (depreciation) on investments and cash equivalents | (3,803,120 | ) | 1,033,121 | |||||
Benefits/(Provision) for taxes on unrealized gain on investments | (185,888 | ) | - | |||||
Net Increase in Net Assets Resulting from Operations | 9,168,759 | 13,835,134 | ||||||
Stockholder distributions | (13,260,046 | ) | (12,291,447 | ) | ||||
Capital share transactions | ||||||||
Issuance of common stock | 5,087,335 | - | ||||||
Reinvestments of stockholder distributions | 313,113 | 669,803 | ||||||
Sales load | (75,510 | ) | - | |||||
Offering costs | (29,904 | ) | - | |||||
Net increase in net assets resulting from capital share transactions | 5,295,034 | 669,803 | ||||||
Total increase in net assets | 1,203,747 | 2,213,490 | ||||||
Net assets at beginning of period | 175,891,514 | 173,845,955 | ||||||
Net assets at end of period (includes |
$ | 177,095,261 | $ | 176,059,445 | ||||
STELLUS CAPITAL INVESTMENT CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | ||||||||
For the nine months ended |
For the nine months ended |
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Cash flows from operating activities | ||||||||
Net increase in net assets resulting from operations | $ | 9,168,759 | $ | 13,835,134 | ||||
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities: | ||||||||
Purchases of investments | (58,454,022 | ) | (129,073,679 | ) | ||||
Proceeds from sales and repayments of investments | 49,485,710 | 84,105,057 | ||||||
Net change in unrealized (appreciation) depreciation on investments | 3,803,220 | (1,031,604 | ) | |||||
Increase in investments due to PIK | (538,457 | ) | (854,644 | ) | ||||
Amortization of premium and accretion of discount, net | (488,829 | ) | (308,299 | ) | ||||
Amortization of loan structure fees | 452,054 | 419,927 | ||||||
Amortization of deferred financing costs | 74,964 | - | ||||||
Net realized gain on investments | (446,239 | ) | (1,010,884 | ) | ||||
Changes in other assets and liabilities | ||||||||
Increase in interest receivable | (643,642 | ) | (1,576,787 | ) | ||||
Decrease in receivable for affiliated transaction | 43,450 | - | ||||||
Increase in accounts receivable | (31,013 | ) | - | |||||
Decrease in prepaid expenses and fees | 29,522 | 384,904 | ||||||
Increase (decrease) in payable for investments purchased | - | (4,750,000 | ) | |||||
Increase in management fees payable | 104,501 | 613,642 | ||||||
Increase (decrease) in directors' fees payable | (10,000 | ) | 46,548 | |||||
Increase (decrease) in incentive fees payable | (841,055 | ) | 1,262,914 | |||||
Increase in administrative services payable | 288,157 | - | ||||||
Increase in interest payable | 102,224 | 225,682 | ||||||
Decrease in unearned revenue | (17,417 | ) | - | |||||
Increase in deferred tax liability | 185,888 | - | ||||||
Increase (decrease) in other accrued expenses and liabilities | (161,558 | ) | 91,632 | |||||
Net cash provided by (used in) operating activities | 2,106,217 | (37,620,457 | ) | |||||
Cash flows from financing activities | ||||||||
Proceeds from notes issued | 25,000,000 | - | ||||||
Financing costs paid for credit facility and notes issued | (997,317 | ) | (156,672 | ) | ||||
Proceeds from the issuance of common stock | 5,116,989 | - | ||||||
Sales load for common stock issued | (75,510 | ) | - | |||||
Offering costs paid for common stock issued | (116,149 | ) | (147,123 | ) | ||||
Stockholder distributions paid | (11,533,709 | ) | (11,621,644 | ) | ||||
Borrowings under credit facility | 78,000,000 | 105,000,000 | ||||||
Repayments of credit facility | (98,000,000 | ) | (58,000,000 | ) | ||||
Repayments of short-term loan | (9,000,000 | ) | (76,000,643 | ) | ||||
Borrowings on short-term loan | - | 39,999,633 | ||||||
Net cash used in financing activities | (11,605,696 | ) | (926,449 | ) | ||||
Net decrease in cash and cash equivalents | (9,499,479 | ) | (38,545,906 | ) | ||||
Cash and cash equivalents balance at beginning of period | 13,663,542 | 62,131,686 | ||||||
Cash and cash equivalents balance at end of period | $ | 4,164,063 | $ | 23,585,780 | ||||
Supplemental and non-cash financing activities | ||||||||
Accrued deferred offering costs | $ | 4,752 | $ | - | ||||
Value of shares issued pursuant to Dividend Reinvestment Plan | $ | 313,113 | $ | 669,803 | ||||
Interest expense paid | $ | 3,206,081 | $ | 1,559,812 | ||||
About
The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private middle-market companies (typically those with
Forward Looking Statements
Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the
Available Information
Stellus' filings with the
Contacts
(713) 292-5414
Chief Financial Officer
thuskinson@stelluscapital.com
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