Stellus Private Credit BDC Reports Results for its Third Fiscal Quarter Ended September 30, 2024
HOUSTON, Nov. 12, 2024 /PRNewswire/ -- Stellus Private Credit BDC ("Stellus PBDC", "we", or the "Company") today announced financial results for its third fiscal quarter ended September 30, 2024.
Robert T. Ladd, Chief Executive Officer of Stellus PBDC, stated, "We are pleased to report strong results in the third quarter in which we generated $0.49 per share of net investment income and maintained a stable net asset value. During the quarter, we funded $9 million of investments and received $7 million of repayments, bringing the total portfolio to $257 million at fair value. On October 10, 2024, we declared our 2024 fourth quarter monthly dividend of $0.48 per share in the aggregate, which represents an annualized dividend yield of approximately 13%. Subsequent to quarter end, we increased our capital base by $25 million through the upsizing of our Credit Facility to $175 million."
FINANCIAL HIGHLIGHTS
($ in millions, except data relating to per shareamounts and shares outstanding)
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Amount
Per Share
Amount
Per Share
Amount
Per Share
Amount
Per Share
Net investment income
$4.66
$0.49
$3.08
$0.47
$12.08
$1.45
$8.41
$1.39
Net unrealized (depreciation) appreciation included in earnings
(0.40)
(0.04)
1.05
0.16
(0.49)
(0.06)
2.81
0.47
Provision for taxes on net unrealized appreciation on investments
(0.01)
—
(0.05)
(0.01)
(0.01)
—
(0.06)
(0.01)
Net increase in net assets resulting from operations
$4.25
$0.45
$4.08
$0.62
11.58
1.39
11.16
1.85
Distributions
(4.74)
(0.50)
(3.19)
(0.48)
(12.43)
(1.49)
(8.22)
(1.36)
Other weighted average share adjustments(1)
—
—
—
(0.02)
—
0.03
—
(0.03)
Net asset value
142.2
$15.14
104.7
$15.10
142.2
$15.14
104.7
$15.10
Weighted average shares outstanding
9,456,180
6,584,179
8,335,421
6,044,958
(1)
Includes the impact of different share amounts as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of the period end.
PORTFOLIO ACTIVITY
($ in millions)
As of
As of
September 30, 2024
December 31, 2023
Investments at fair value
$256.7
$208.6
Total assets
$262.5
$211.2
Net assets
$142.2
$108.0
Shares outstanding
9,394,977
7,102,136
Net asset value per share
$15.14
$15.21
Three Months Ended
September 30, 2024
September 30, 2023
New investments
$9.0
$27.1
Repayments of investments
(6.6)
(4.8)
Net activity
$2.4
$22.3
As of
As of
September 30, 2024
December 31, 2023
Number of portfolio company investments
50
39
Number of debt investments
47
37
Weight average yield of debt and other income producing investments (2)
Cash
10.8 %
11.8 %
Payment-in-kind ("PIK")
0.3 %
0.3 %
Fee amortization
0.4 %
0.4 %
Total
11.5 %
12.5 %
Weighted average yield on total investments (3)
Cash
10.3 %
11.2 %
PIK
0.3 %
0.3 %
Fee amortization
0.4 %
0.4 %
Total
11.0 %
11.9 %
(2)
The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors of our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expense or any sales load that may be paid by investors.
(3)
The dollar weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing loans and equity.
Results of Operations
Investment income for the three months ended September 30, 2024 and 2023 totaled $7.9 million and $6.1 million, respectively, most of which was interest income from portfolio investments.
Gross operating expenses for the three months ended September 30, 2024 and 2023 totaled $4.6 million and $4.1 million, respectively. For the same periods, base management fees totaled $0.9 million and $0.8 million, income incentive fees totaled $0.8 million and $0.5 million, capital gains incentive (reversal) fees of ($0.1) million and $0.1 million, which are not currently payable, fees and expenses related to our borrowings totaled $2.5 million and $2.3 million, respectively (including interest and amortization of deferred financing costs), administrative expenses totaled $0.1 million and $0.1 million, and other expenses totaled $0.4 million and $0.3 million, respectively. For the three months ended September 30, 2024 and 2023, the Company's investment advisor, Stellus Private BDC Advisor, LLC (the "Advisor"), waived $0.9 million and $0.8 million of management fees (voluntarily waived until October 1, 2024), $0.3 million and $0.2 million of income incentive fees (waived as our shares were not listed on a national exchange), and $0.1 million and $0.1 million of expenses pursuant to expense support and conditional reimbursements from the Advisor for net operating expenses of $3.3 million and $3.1 million, respectively.
For the three months ended September 30, 2024 and 2023, net investment income was $4.7 million and $3.1 million, or $0.49 and $0.47 per common share based on weighted average common shares outstanding of 9,456,180 and 6,584,179, respectively.
The Company's investment portfolio had a net change in unrealized (depreciation) appreciation of ($0.4) million and $1.0 million for the three months ended September 30, 2024 and 2023, respectively.
For the three months ended September 30, 2024 and 2023, net increase in net assets resulting from operations totaled $4.2 million and $4.1 million, or $0.45 and $0.62 per common share, based on weighted average common shares outstanding of 9,456,180 and 6,584,179, respectively.
Liquidity and Capital Resources
On September 30, 2022, the Company entered into a senior secured revolving credit agreement with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders (the "Credit Facility"). The Credit Facility, as amended, provides for borrowings up to a maximum of $150.0 million on a committed basis with an accordion feature that allows the Company to increase the aggregate commitments up to $200.0 million, subject to new or existing lenders agreeing to participate in the increase and other customary conditions. As of September 30, 2024 and December 31, 2023, the Company had $68.6 million and $98.0 million in outstanding borrowings under the Credit Facility.
Recent Portfolio Activity
The Company invested in the following portfolio companies for the three months ended September 30, 2024:
Activity Type
Date
Company Name
Company Description
Investment Amount
Instrument Type
New Investment
August 16, 2024
Bart & Associates, LLC
Provides IT modernization services for federal customers
$
3,390,671
Senior Secured – First Lien
$
4,624,972
Delayed Draw Term Loan Commitment
$
785,847
Revolver Commitment
$
314,339
Equity
Add-On Investment
August 26, 2024
Impact Home Services LLC*
Residential garage door, electrical, and plumbing services provider
$
869,871
Delayed Draw Term Loan Commitment
Add-On Investment
September 11, 2024
Service Minds Company, LLC*
Provider of residential electrical services
$
129,317
Revolver Commitment
Add-On Investment
September 30, 2024
The Hardenbergh Group, Inc. *
Provider of temporary professional staffing ofMedical Services Professionals, external peer review,consulting and physician leadership solutions
$
366,253
Senior Secured – First Lien
Add-On Investment
September 30, 2024
Monitorus Holding, LLC*
Provider of media monitoring and evaluation services
$
34,111
Unsecured Convertible Bond
*
Existing portfolio company
The Company realized investments in the following portfolio company during the three months ended September 30, 2024:
Activity Type
Date
Company Name
Company Description
Proceeds Received
Instrument Type
Full Repayment
September 27, 2024
EHI Buyer, Inc.*
Provider of design, engineering, installation, and maintenance services for building management systems
$
2,792,479
Senior Secured – First Lien
$
1,071,860
Delayed Draw Term Loan
*
Existing portfolio company
Events Subsequent to September 30, 2024
The Company's management has evaluated subsequent events through November 8, 2024. There have been no subsequent events that require recognition or disclosure except for the following described below.
Investment Portfolio
The Company invested in the following portfolio companies subsequent to September 30, 2024:
Activity Type
Date
Company Name
Company Description
Investment Amount
Instrument Type
Add-On Investment
October 18, 2024
Compost 360 Acquisition, LLC*
Organic waste recycler and producer of compost,mulch, and engineered soils
$
40,880
Equity
New Investment
October 31, 2024
Norplex Micarta Acquisition, Inc.
Manufacturer of thermoset composite laminates
$
5,972,094
Senior Secured – First Lien
$
1,822,665
Revolver Commitment
$
427,155
Equity
Add-On Investment
November 7, 2024
Green Intermediateco II, Inc.*
Cyber-security focused value-added reseller andassociated service provider
$
3,607,117
Senior Secured – First Lien
*
Existing portfolio company
The Company realized investments in the following portfolio company subsequent to September 30, 2024:
Activity Type
Date
Company Name
Company Description
Proceeds Received
Instrument Type
Full Repayment
November 4, 2024
Baker ManufacturingCompany, LLC*
Manufacturer of water well equipment, specialized filtration pumps, and custom castings
5,668,459
Senior Secured – First Lien
*
Existing portfolio company
Credit Facilities
On October 30, 2024, we entered into an Increase Agreement to the Credit Facility which, among other things, amends the Credit Facility to increase the total ...
