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Introduction

Stellus Capital Investment Corporation (NYSE: SCM) has announced its financial results for the fourth fiscal quarter and year ending December 31, 2024. This report reveals impressive numbers, indicating a solid performance by the company amidst the fluctuating economic landscape.

Financial Overview

During the fourth quarter, Stellus reported U.S. GAAP net investment income of $0.35 per share and core net investment income of $0.37 per share. This is a notable result considering that the previous year, earnings were recorded at $0.49 per share for net income and $0.50 for core net income. The quarter also saw the funding of $109 million in investments while repayments amounted to $65 million, pushing the total portfolio value to $953 million on a fair value basis. The company has distributed a total of $288 million to investors since its inception, translating to $16.69 per share.

Quarterly Highlights

For the period ending December 31, 2024, net investment income reached $9.64 million, while core net income was slightly lower at $10.15 million. Highlights from the quarter included:

• - Net investments: Increased from $874.5 million to $953.5 million year-on-year.
• - Portfolio management: A total of 105 portfolio companies were actively managed as of the end of the fiscal year.
• - Realized gains: Positive outcomes were reported despite significant losses from prior investments, covering net realized gains of $6.0 million, contrasting with a loss of approximately $30.54 million in the earlier year.

Investment Activities

Stellus continued to update its investment strategy by actively engaging with a diverse range of portfolio companies. New investments made during this quarter included companies across various sectors, showing a commitment to strengthen their investment base:

• - New investments: Notable additions included Norplex Micarta Acquisition, which specializes in high-performance thermoset composite laminates, and MBH Management, a provider of staffing solutions for medical facilities.
• - Add-on investments: Existing portfolio companies also received support, reflecting Stellus’ continued belief in their growth trajectories. For example, investments were made in Ledge Lounger and Microbe Formulas, both addressing robust market demands in outdoor and health sectors respectively.

Operational Efficiency

Stellus managed to keep its operating expenses in check, amounting to $16.0 million, slightly down from $16.4 million a year prior. Management fees represented a significant portion, amounting to $4.0 million. The company showed a slight uptick in management experience benefiting from enhanced operational procedures. Overall, for the quarter, expenses were effectively managed relative to their investment income, demonstrating an efficient operational strategy.

Future Outlook

Looking forward, the company remains optimistic about its financial health. The senior secured revolving credit facility has been capped at $315 million, with potential to expand, thereby allowing Stellus to leverage future opportunities. As of March 2025, the performance of the portfolio continues to build investor confidence. The management team’s commitment to regular updates has been acknowledged positively by stakeholders, paving the way for increased transparency moving forward.

Conclusion

With solid investment income, continuous growth in the portfolio, and an ability to manage expenditures effectively, Stellus Capital Investment Corporation's financial results for 2024 showcase a resilient business model. Investors remain hopeful as the company continues to drive value and engage with profitable portfolio investments. As it heads into 2025, Stellus is well-positioned to navigate the market and capitalize on emerging opportunities while delivering substantial returns to its shareholders.