HOUSTON, May 9, 2024 /PRNewswire/ -- Stellus Capital Investment Corporation (NYSE:SCM) ("Stellus" or the "Company") today announced financial results for its first fiscal quarter ended March 31, 2024. Robert T. Ladd, Chief Executive Officer of Stellus, stated, "I am pleased to report solid operating results for the quarter ended March 31, 2024, in which net asset value grew by $0.15 per share and U.S. GAAP net investment income of $0.42 per share and core net investment income of $0.44 per share covered the regular dividend declared of $0.40 per share. Our loan portfolio is yielding 11.9%, as of March 31, 2024. We have completed over eleven years of operations, during which our investors have received a total of $252 million in distributions, equivalent to $15.35 per share." FINANCIAL HIGHLIGHTS ($ in millions, except data relating to per share amounts and shares outstanding) Three Months Ended March 31, 2024 March 31, 2023 Amount Per Share Amount Per Share Net investment income $10.24 $0.42 $9.07 $0.46 Core net investment income(1) 10.61 0.44 8.87 0.45 Net realized (loss) gain on investments (20.38) (0.85) 0.03 — Net realized loss on foreign currency translation (0.03) — (0.04) — Total realized income(2) ($10.17) ($0.43) $9.06 $0.46 Distributions (9.65) (0.40) (7.95) (0.40) Net unrealized change in appreciation (depreciation) on investments 23.52 0.98 (4.25) (0.22) Provision for taxes on unrealized appreciation on investments in taxable subsidiaries (0.20) (0.01) (0.07) — Net increase in net assets resulting from operations $13.15 $0.54 $4.74 $0.24 Weighted average shares outstanding 24,125,642 19,779,988 (1) Core net investment income, as presented, excludes the impact of capital gains incentive fees (reversal) and income taxes, the majority of which are excise taxes. The Company believes presenting core net investment income and the related per share amount is a useful supplemental disclosure for analyzing its financial performance. However, core net investment income is a non-U.S. generally accepted accounting principles ("U.S. GAAP") measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. A reconciliation of net investment income in accordance with U.S. GAAP to core net investment income is presented in the table below the financial statements.                                (2) Total realized income is the sum of net investment income, net realized gains (losses) on investments, net realized gains (losses) on foreign currency, and loss on debt extinguishment; all U.S. GAAP measures.   PORTFOLIO ACTIVITY ($ in millions, except data relating to per share amounts and number of portfolio companies) As of As of March 31, 2024 December 31, 2023 Investments at fair value $875.9 $874.5 Total assets $935.2 $908.1 Net assets $323.4 $319.9 Shares outstanding 24,125,642 24,125,642 Net asset value per share $13.41 $13.26 Three Months Ended March 31, 2024 March 31, 2023 New investments $28.5 $41.2 Repayments of investments (31.2) (5.9) Net activity ($2.7) $35.3 As of As of March 31, 2024 December 31, 2023 Number of portfolio company investments 94 93 Number of debt investments 81 81 Weighted average yield of debt and other income producing investments (3) Cash 11.0 % 11.0 % Payment-in-kind ("PIK") 0.5 % 0.5 % Fee amortization 0.4 % 0.4 % Total 11.9 % 11.9 % Weighted average yield on total investments (4) Cash 10.3 % 10.3 % Payment-in-kind ("PIK") 0.5 % 0.5 % Fee amortization 0.3 % 0.3 % Total 11.1 % 11.1 % (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 loans and equity. Results of Operations Investment income for the three months ended March 31, 2024 and 2023 totaled $26.0 million and $24.1 million, respectively, most of which was interest income from portfolio investments. Gross operating expenses for the three months ended March 31, 2024 and 2023, totaled $16.0 million and $15.0 million, respectively. The increase was driven primarily by increased incentive fees. For the same respective periods, base management fees totaled $3.9 million and $3.7 million, income incentive fees totaled $2.5 million and $2.1 million, capital gains incentive fee reversals totaled ($0.0) million and ($0.6) million, fees and expenses related to our borrowings totaled $7.8 million and $7.9 million (including interest and amortization of deferred financing costs), administrative expenses totaled $0.5 million for both periods, income tax totaled $0.4 million for both periods and other expenses totaled $0.9 million and $1.0 million. For the three months ended March 31, 2024, the Company waived income incentive fees totaling $0.2 million for net operating expenses of $15.8 million. No such income incentive fees were waived for the three months ended March 31, 2023. Net investment income was $10.2 million and $9.1 million, or $0.42 and $0.46 per common share based on weighted average common shares outstanding of 24,125,642 and 19,779,988 for the three months ended March 31, 2024 and 2023, respectively. Core net investment income, which is a non-U.S. GAAP measure that excludes the capital gains incentive fee (reversal) and income tax expense accruals, for the three months ended March 31, 2024 and 2023 was $10.6 million and $8.9 million, or $0.44 and $0.45 per share, respectively. For the three months ended March 31, 2024 and 2023, the Company's investment portfolio had a net change in unrealized appreciation (depreciation) of $23.5 million and ($4.2) million, respectively, and the Company had net realized (losses) gains of ($20.4) million and less than $0.1 million, respectively. The full realizations for the three months ended March 31, 2024 had previously been reflected as unrealized depreciation which were reversed during the three months then ended and included in the $23.5 million of unrealized appreciation as of March 31, 2024. Net increase in net assets resulting from operations totaled $13.1 million and $4.7 million, or $0.54 and $0.24 per common share, based on weighted average common shares outstanding of 24,125,642 and 19,779,988 for the three months ended March 31, 2024 and 2023, respectively. Liquidity and Capital Resources As of March 31, 2024, 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 $260.0 million on a committed basis. As of March 31, 2024 and December 31, 2023, the Credit Facility had an accordion feature which allowed for potential future expansion of the facility size up to $350.0 million. As of March 31, 2024 and December 31, 2023, the Company had $184.7 million and $160.1 million in outstanding borrowings under the Credit Facility, respectively. Distributions During the three months ended March 31, 2024 and 2023, the Company declared aggregate distributions of $0.40 per share for both periods ($9.6 million and $8.0 million in the aggregate, respectively). 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 The Company invested in the following portfolio companies during the three months ended March 31, 2024: Activity Type Date Company Name Company Description Investment Amount  Instrument Type Add-On Investment                January 5, 2024 Whisps Holdings LP* Manufacturer of cheese-based snacks $ 75,192 Equity Add-On Investment                January 8, 2024 EH Real Estate Services, LLC* Offers residential property brokerage, title & settlement, and property and casualty insurance brokerage services to home buyers and sellers $ 475,233 Senior Secured – First Lien Add-On Investment                January 9, 2024 Morgan Electrical Group Intermediate Holdings, Inc.* Provider of commercial electrical services $ 23,531 Equity Add-On Investment                January 12, 2024 Impact Home Services LLC* Residential garage door, electrical, and plumbing services provider $ 50,914 Equity Add-On Investment                January 31, 2024 Impact Home Services LLC* Residential garage door, electrical, and plumbing services provider $ 22,331 Equity Add-On Investment                February 7, 2024 Unicat Catalyst Holdings, LLC* Manufacturer and distributor of catalysts and other industrial products $ 7,032 Equity Add-On Investment                March 1, 2024 Monitorus Holding, LLC* Provider of media monitoring and evaluation services $ 13,290 Unsecured Convertible Bond New Investment March 11, 2024 Exec Connect Intermediate LLC Facilitator of executive-level in-person events and remote peer-to-peer industry insights $ 4,311,584 Senior Secured – First Lien $ 627,139 Delayed Draw Term Loan Commitment $ 391,962 Revolver Commitment New Investment March 11, 2024 Titan Meter Bidco Corp. Provider of liquid metering products and integrated solutions to the energy infrastructure sector $ 10,029,219 Senior Secured – First Lien $ 1,055,707 Revolver Commitment $ 515,578 Equity Add-On Investment                March 20, 2024 Advanced Barrier Extrusions, LLC* Manufacturer of high barrier forming web films $ 32,489 Equity New Investment March 26, 2024 Med Learning Group, LLC Provider of continuing medical education services $ 8,977,710 Senior Secured – First Lien $ 2,445,188 Delayed Draw Term Loan Commitment Add-On Investment                March 28, 2024 Rogers Mechanical Contractors, LLC* HVAC and plumbing designer, installer, and service provider for new/existing DCs, fulfilment sortation facilities, and warehouses. $ 45,212 Senior Secured – First Lien ______________________________ *Existing portfolio company The Company realized investments in the following portfolio companies during the three months ended March 31, 2024: Activity Type Date Company Name Company Description Proceeds Received  Instrument Type Full Repayment January 8, 2024 Peltram Plumbing Holdings, LLC* Provider of plumbing solutions $ 16,160,003 Senior Secured – First Lien Full Realization March 4, 2024 NuMet Machining Techniques, LLC* Supplier of complex, mission critical engine components, fabrications and assemblies for the global aerospace andpower generation industries $ (12,675,000) Senior Secured – Second Lien Bromford Industries Limited* $ (7,800,000) Senior Secured – Second Lien Full Repayment March 5, 2024 Dresser Utility Solutions, LLC* Manufacturer of rotary meters, pipeline distribution repair/upgrade products, electric actuators and chemical pumps tonatural gas utilities and energy/industrial distributors $ 10,000,000 Senior Secured – Second Lien ______________________________ *Existing portfolio company Events Subsequent to March 31, 2024 The Company's management has evaluated subsequent events through ...