Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report solid operating results for the quarter ended December 31, 2025, in which we earned both U.S. GAAP net and core investment income of $0.29 per share and net realized income of $0.48 per share. During the quarter, we funded $52 million of investments and received $54 million of repayments, resulting in a total portfolio of $1.01 billion at fair value. I'm also pleased to report that our investors have received a total of $333 million in distributions, equivalent to $18.27 per share, since we began operations."
FINANCIAL HIGHLIGHTS($ in millions, except data relating to per share amounts and shares outstanding)
Three Months Ended
Years Ended
December 31, 2025
December 31, 2024
December 31, 2025
December 31, 2024
Amount
Per Share
Amount
Per Share
Amount
Per Share
Amount
Per Share
Net investment income
$8.40
$0.29
$9.64
$0.35
$36.88
$1.30
$41.93
$1.64
Core net investment income(1)
8.53
0.29
10.15
0.37
38.46
1.36
43.74
1.71
Net realized gain (loss) on investments
5.49
0.19
5.95
0.22
1.54
0.05
(15.74)
(0.62)
Net realized loss on foreign currency translation
(0.01)
—
(0.02)
—
(0.07)
—
(0.09)
—
Loss on debt extinguishment
(0.06)
-
—
—
(0.23)
(0.01)
—
—
Total realized income(2)
$13.82
$0.48
$15.57
$0.57
$38.12
$1.34
$26.10
$1.02
Distributions
(11.58)
(0.40)
(10.90)
(0.40)
(45.46)
(1.60)
(41.22)
(1.61)
Net unrealized change in (depreciation) appreciation on investments
(8.61)
(0.30)
(6.86)
(0.25)
(11.10)
(0.39)
19.57
0.76
Net unrealized change in depreciation on foreign currency translation
—
—
(0.02)
—
0.03
—
(0.02)
—
Benefit for taxes on unrealized depreciation on investments in taxable subsidiaries
—
—
—
—
—
—
0.19
0.01
Net increase in net assets resulting from operations
$5.21
$0.18
$8.69
$0.32
$27.05
$0.95
$45.84
$1.79
Weighted average shares outstanding
28,947,254
27,174,972
28,364,809
25,596,593
(1)
Core net investment income, as presented, excludes the impact of capital gains incentive fees (reversal) and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements.
(2)
Total realized income is the sum of net investment income, net realized gains (losses) on investments, net realized gains (losses) on foreign currency, and losses on debt extinguishment, all U.S. GAAP measures.
PORTFOLIO ACTIVITY($ in millions, except data relating to per share amounts, shares outstanding, and number of portfolio companies)
As of
As of
December 31, 2025
December 31, 2024
Investments at fair value
$1,007.6
$953.5
Total assets
$1,041.3
$980.9
Net assets
$371.2
$369.9
Shares outstanding
28,947,254
27,481,118
Net asset value per share
$12.82
$13.46
Three Months Ended
Years Ended
December 31, 2025
December 31, 2024
December 31, 2025
December 31, 2024
New investments
$52.1
$17.8
$194.1
$221.2
Repayments of investments
(54.0)
(15.5)
(139.7)
(151.8)
Net activity
($1.9)
$2.3
$54.4
$69.4
As of
As of
December 31, 2025
December 31, 2024
Number of portfolio company investments
115
105
Number of debt investments
100
92
Weighted average yield of debt and other income producing investments (3)
Cash
8.5 %
9.5 %
Payment-in-kind ("PIK")
0.5 %
0.4 %
Fee amortization
0.3 %
0.4 %
Total
9.3 %
10.3 %
Weighted average yield of total investments(4)
Cash
7.9 %
8.9 %
PIK
0.5 %
0.4 %
Fee amortization
0.3 %
0.4 %
Total
8.7 %
9.7 %
(3)
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 in the Company's common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expenses or any sales load that may be paid by investors.
(4)
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 equity positions and debt investments on non-accrual status.
Results of Operations
Investment income for the three months ended December 31, 2025 and 2024 totaled $25.2 million and $25.6 million, respectively, most of which was interest income from portfolio investments.
Gross operating expenses for the three months ended December 31, 2025 and 2024 totaled $17.5 million and $16.2 million, respectively. For the same respective periods, base management fees totaled $4.5 million and $3.9 million, income incentive fees totaled $1.9 million and $2.6 million, fees and expenses related to our borrowings totaled $9.0 million and $8.0 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.6 million and $0.5 million, income tax totaled $0.2 million and $0.4 million and other expenses totaled $1.3 million and $0.8 million. The Company waived $0.7 million and $0.0 million of income incentive fees due to the total return limitation pursuant to the provisions of the Investment Advisory Agreement between the Company and the Advisor (as defined below) for the three months ended December 31, 2025 and 2024, respectively, for net operating expenses of $16.8 million and $16.2 million, respectively.
Net investment income was $8.4 million and $9.6 million, or $0.29 and $0.35 per common share based on 28,947,254 and 27,174,972 weighted average common shares outstanding for the three months ended December 31, 2025 and 2024, respectively. Core net investment income, which is a non-U.S. GAAP measure that excludes capital gains incentive fees (reversals) and income tax expense accruals, for the three months ended December 31, 2025 and 2024 was $8.5 million and $10.1 million, or $0.29 and $0.37 per share, respectively.
For the three months ended December 31, 2025 and 2024, the Company's investment portfolio had a net change in unrealized depreciation of ($8.6) million and ($6.9) million, respectively, and the Company had net realized gains of $5.5 million and $6.0 million, respectively.
Net increase in net assets resulting from operations totaled $5.2 million and $8.7 million, or $0.18 and $0.32 per common share, based on 28,947,254 and 27,174,972 weighted average common shares outstanding for the three months ended December 31, 2025 and 2024, respectively.
Liquidity and Capital Resources
As of December 31, 2025, the Company's amended senior secured revolving credit agreement with certain bank lenders and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent (as amended from time to time, the "Credit Facility") provided for borrowings in an aggregate amount of up to $335.0 million on a committed basis. As of December 31, 2025 and December 31, 2024, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size up to $365.0 million and $350.0 million, respectively.
On December 31, 2025, we prepaid the remaining $50.0 million in aggregate principal of the 4.875% fixed-rate notes due 2026 in full.
As of December 31, 2025 and December 31, 2024, the Company had $236.6 million and $175.4 million in outstanding borrowings under the Credit Facility, respectively.
Distributions
For both the three months ended December 31, 2025 and 2024, the Company declared aggregate distributions of $0.40 per share for both periods ($11.6 million and $10.9 million in the aggregate, respectively). Tax characteristics of all distributions are reported to stockholders on Form 1099-DIV. Approximately $0.0 million of the dividends declared in 2025 are expected to be characterized as long-term capital gains. None of these dividends are expected to include a return of capital.
Recent Portfolio Activity
The Company invested in the following portfolio companies during the three months ended December 31, 2025:
Activity Type
Date
Company Name
Company Description
Investment Amount
Instrument Type
Add-On Investment
October 1, 2025
The Hardenbergh Group, Inc.*
Provider of patient safety, clinical risk mitigation, and healthcare compliance solutions
$
500,000
Senior Secured – First Lien
Add-On Investment
October 2, 2025
J.R. Watkins, LLC*
Manufacturer and distributor of home and personal care products
$
225,000
Priority Revolver Commitment
Add-On Investment
October 3, 2025
EH Real Estate Services, LLC*
Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyersand sellers
$
183,470
Senior Secured – First Lien
New Investment
October 17, 2025
Fidus Systems Inc.
Provider of outsourced electronic product development and engineering services
$
4,759,099
Senior Secured – First Lien
$
3,172,733
Delayed Draw Term Loan Commitment
$
100,000
Revolver Commitment
$
267,728
Equity
Add-On Investment
October 22, 2025
Recharged Opco, LLC*
Provider of residential electrical services
$
120,000
Priority Revolver Commitment
Add-On Investment
October 27, 2025
Channel Partners Intermediateco, LLC*
Provider of outsourced marketing services
$
35,175
Revolver Commitment
Add-On Investment
November 6, 2025
Mobotrex Acquisition, LLC*
Distributor and manufacturer of intelligent traffic solution equipment
$
3,523,787
Senior Secured – First Lien
$
1,549,698
Delayed Draw Term Loan Commitment
$
73,776
Revolver Commitment
Add-On Investment
November 6, 2025
Ad.Net Acquisition, LLC*
A digital marketing company that targets high-conversion consumers through cost-per-click digital media advertising
$
1,896,568
Senior Secured – First Lien
$
85,027
Equity
Add-On Investment
November 12, 2025
EH Real Estate Services, LLC*
Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyersand sellers
$
228,112
Senior Secured – First Lien
Add-On Investment
November 19, 2025
SP L2 Holdings LLC*
Provider of premium in-pool and backyard furniture
$
14,832
Equity
Add-On Investment
December 3, 2025
BC Partners Glengarry Co-Investment LP*
Provider of business-to-business account based marketing services
$
10,197
Equity
New Investment
December 3, 2025
Pure Upper Holdco LLC
Environmental and ambulatory cleaning services for healthcare facilities
$
10,000,000
Senior Secured – First Lien
$
1,000,000
Delayed Draw Term Loan Commitment
$
100,000
Revolver Commitment
$
246,667
Equity
Add-On Investment
December 5, 2025
Venbrook Buyer, LLC*
An independent insurance services broker
$
471,156
Senior Secured – First Lien
Add-On Investment
December 15, 2025
SP CS Holdings LLC*
Provider of product testing and consumer insights
$
127,174
Equity
Add-On Investment
December 15, 2025
Recharged Opco, LLC*
Provider of residential electrical services
$
42,500
Priority Revolver Commitment
Add-On Investment
December 17, 2025
Carolina Topco Holdings, LP*
National commercial surface care and restoration company
$
116,033
Equity
New Investment
December 18, 2025
Pilot Power Group Acquisition, Inc.
Managed energy procurement and energy advisory services
$
12,000,000
Senior Secured – First Lien
$
366,868
Equity
Add-On Investment
December 22, 2025
Solid Surface Holdco, LLC*
National commercial surface care and restoration company
$
38,000
Revolver Commitment
New Investment
December 23, 2025
Valor Buyco, LLC
Provider of dispatched road services
$
6,000,000
Senior Secured – First Lien
$
100,000
Delayed Draw Term Loan Commitment
$
100,000
Revolver Commitment
$
430,556
Equity
Add-On Investment
December 31, 2025
Venbrook Buyer, LLC*
An independent insurance services broker
$
942,301
Senior Secured – First Lien
Add-On Investment
December 31, 2025
FairWave Holdings, LLC*
Specialty coffee platform
$
103,720
Senior Secured – First Lien
$
579,226
Delayed Draw Term Loan Commitment
*Existing portfolio company
The Company realized investments in the following portfolio companies during the three months ended December 31, 2025:
Activity Type
Date
Company Name
Company Description
Proceeds Received
Realized Gain (Loss)
Instrument Type
Full Repayment
October 25, 2025
Heartland Business Systems, LLC
End-to-end information technologies solutions provider
$
9,725,000
$
—
Senior Secured – First Lien
$
48,875
$
—
Delayed Draw Term Loan
$
824,743
$
656,088
Equity
Full Repayment
November 3, 2025
NuSource Financial Acquisition, Inc.
Provider of technology integration and installation of teller machines, maintenance services, and security solutions
$
7,009,391
$
—
Unsecured
Full Realization
$
1,066,715
$
1,066,715
Warrants
Full Repayment
December 3, 2025
Xanitos, Inc.
