Stellus Capital Investment Corporation · NYSE:SCM
Stellus Capital Investment — Q3 2023 Earnings Presentation
25 slides from Stellus Capital Investment's earnings presentation, Nov 8, 2023
Slide 1: Stellus Capital Investment Corporation Investor Presentation
STELLUS CAPITAL INVESTMENT CORPORATION Investor Presentation Quarter ended September 30, 2023 HOUSTON, TX WASHINGTON D.C. CHARLOTTE, NC
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION IS FOR INFORMATIONAL PURPOSES ONLY. THE INFORMATION CONTAINED HEREIN IS NOT INTENDED TO PROVIDE, AND SHOULD NOT BE RELIED UPON FOR, ACCOUNTING, LEGAL OR TAX ADVICE OR INVESTMENT RECOMMENDATIONS. THIS PRESENTATION IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER
Slide 3: Contents
Contents Stellus Capital Investment Corp. (NYSE: “SCM”) Page 4 Stellus Capital Management’s Competitive Advantage Page 5 Company Overview Page 11 WASHINGTON D.C. AREA Portfolio Overview 4520 East West Highway, Suite 605 Bethesda, MD 20814 Performance and Dividends 301.634.3000 Page 16 CHARLOTTE, NC
Slide 4: What is our Competitive Advantage among publicly-traded BDCs?
There are 47 Publicly-Traded BDCs ~ What is our Competitive Advantage? Strong Historical Portfolio Performance and Consistent Returns to Shareholders Strong History of Underwriting Credit Favorable Performance Over Time • Fair Value of investment portfolio of $886 million as of September • ROE since
Slide 5: Company Overview: Navigating Lower Middle Market Capital Solutions
COMPANY OVERVIEW: Navigating Lower Middle Market Capital Solutions 5
Slide 6: Stable Growth with Access to Low-Cost Capital
Stable Growth with Access to Low-Cost Capital Management team focused on maintaining asset quality, proper capital allocation, and operational excellence 2012 2014 2017 2019 2020 2021 2023 $195.5 Million $316.0 Million $370.8 Million $628.9 Million $653.4 Million $772.9 Million $881.7 Million Stellu
Slide 7: SCM Provides Flexible Financing for Middle Market Companies
SCM Provides Flexible Financing for Middle Market Companies Investment Type & Size Investment Focus Origination Focus • Investment size between $10 and • Private companies generating • Focus on originated loans, as $30 million per transaction. between $5 and $50 million of opposed to broadly syndica
Slide 8: Established Team and Institutional Platform
Established Team and Institutional Platform Stellus Capital Management’s* investment committee members have backgrounds in private credit, private equity, corporate finance, restructuring, management consulting, and accounting. TOTAL YEARS PAST - - - - - - - - - - - - - - - - - 5 10 15 20 25 30 35 4
Slide 9: Diverse Sponsor Relationships and Investment Experience
Diverse Sponsor Relationships and Investment Experience All partners have significant experience in restructuring Partners have invested Management team has approximately $9.0 been investing together billion over the last 19 for over 19 years years* Stellus Capital Relationship-driven Management Tea
Slide 10: Diverse Financial Sponsor Relationships
Diverse Financial Sponsor Relationships* *Logos represent certain private equity firms that members of Stellus Capital have worked with in the past. Inclusion of a firm’s logo in this list does not imply that such firm endorses Stellus Capital, its members or advisory services or SCM. Stellus Capita
Slide 11: One of the most experienced lower middle market investment teams
Stellus Capital Management has one of the most experienced lower middle market investment teams in the marketplace with over 300 combined years of principal investing experience 96 ~360 ~$9.0 Cumulative Current Active Billion Completed Investments Invested Capital Investments Select List of Investme
Slide 12: Portfolio Statistics as of September 30, 2023
Portfolio Statistics as of September 30, 2023 Diverse Portfolio / Low Exposure to Retail and Energy No Geographic Concentration Over 25% Industry Concentration Geographic Concentration Containers, Utilities: Oil & Media: Diversified & FIRE: Real Estate Hotel, Gaming, & Idaho New York United Kingdom
Slide 13: Stable Asset Quality: Portfolio Performing in Accordance with Plan
Stable Asset Quality: Portfolio is Performing in Accordance with Plan Investment Category at 09/30/2023 RG 5 RG 4 0% 2% Investment Category Definitions (“Risk Grade” or “RG”): RG 3 RG 1 1 Exceeding expectations 12% 25% 2 Performing in accordance with plan 3 Requires closer monitoring (no loss of ret
Slide 14: Debt Portfolio is 97% 1st Lien
Debt Portfolio is 97% 1st Lien Debt Investment Portfolio Fixed vs. Floating Rate Debt Investments * as of September 30, 2023 120% Fixed 2% 100% 96.6% 80% 60% 40% 20% 12.0% 14.2% Floating 5.3% 98% 2.7% <1% 0% 1st Lien Debt* 2nd Lien debt Unsecured debt % of Total Debt Portfolio Weighted Average Yield
Slide 15: Numerous Sources of Long-Term / Cost-Efficient Capital
Numerous Sources of Long-Term / Cost-Efficient Capital FUNDING SOURCES FACILITY/ISSUANCE SIZE OUTSTANDING(2) INTEREST RATE(3) MATURITY Syndicated Credit Facility led by $265 million $171.5 million SOFR + 2.6% September 18, 2025 Amegy(1) (4) SBIC I Debentures $150 million $150 million 3.41% Varied SB
Slide 16: Financial Performance and Distributions
Financial Performance and Distributions 16
Slide 17: Investment Portfolio Growth Since IPO
Investment Portfolio Growth Since IPO 17
Slide 18: Third Quarter 2023 Overview
Third Quarter 2023 Overview $0.49 Core NII per share* $44.1 million New investment activity during the quarter $886.3 Million Investments at fair value at September 30, 2023 Six New Initial Investment Fundings & Six Follow On 11.95% Investments Weighted average yield on new investments New loan fund
Slide 19: Cumulative Distributions Declared per share Since IPO
Cumulative Distributions Declared per share Since IPO $14.95 per share in cumulative distributions declared since SCM IPO in 2012* $14.95 per share in cumulative $16.00 $14.95 distributions since $14.00 $13.35 SCM IPO in 2012* $12.05 $12.00 $10.91 $9.76 $10.00 $8.40 Monthly dividends of $8.00 $7.04
Slide 20: Comparative Total Return Since Stellus IPO
Comparative Total Return Since Stellus IPO 11/07/2012 to 11/13/2023 FactSet’s total return calculation begins with the closing stock price one day after each respective BDC’s IPO Total return assumes dividends are reinvested on the ex-dividend dates RJ BDC Index consists of: ARCC, BCSF, BBDC, BKCC,
Slide 21: Corporate Information
Corporate Information Executive Officers Directors Research Coverage Share Information Robert T. Ladd J. Tim Arnoult 1 Raymond James Share Price $13.29 Chairman, President & Robert Dodd, 901-579-4560 Chief Executive Officer Bruce R. Bilger 1 Shares Outstanding 24,125,642 Keefe, Bruyette & Woods W. T
Slide 22: Stellus Capital Investment Corporation
STELLUS CAPITAL INVESTMENT CORPORATION Investor Presentation Quarter ended September 30, 2023 HOUSTON, TX WASHINGTON D.C. CHARLOTTE, NC
Slide 23: Financial Highlights
Financial Highlights ($ in millions, except data relating to per share amounts and shares outstanding) (1) Core net investment income, as presented, excludes the impact of capital gains incentive fees and income taxes, the majority of which are excise taxes. The company believes presenting core net
Slide 24: Portfolio Characteristics
Portfolio Characteristics ($ in millions, except data relating to per share amounts and number of portfolio companies) (1) The dollar-weighted average annualized effective yield is computed using the effective interest rate for our debt investments and other income producing investments, including c
Slide 25: Recent Dividends Declared
Recent Dividends Declared* On October 5, 2023, the board declared a regular dividend of $0.1333 per share for each of October, November and December 2023, for an aggregate of $0.40 per share. * Please refer to the website regarding the U.S. federal income tax characteristics of our 2022 dividends. T
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