Stellus Capital Investment Corporation · NYSE:SCM
Stellus Capital Investment — Stellus Private Credit BDC — Q1 2024 Earnings Presentation
20 slides from Stellus Capital Investment's earnings presentation, May 2024
Slide 1: Stellus Private Credit BDC Investor Presentation
Stellus Private Credit BDC Investor Presentation Quarter ended March 31, 2024 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: There are 50+ Private BDCs ~ What is our Competitive Advantage?
There are 50+ Private 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 $875.9 million as of • ROE since commencement o
Slide 4: Provides Flexible Financing for Middle Market Companies
Provides Flexible Financing for Middle Market Companies Investment Type & Size Investment Focus Origination Focus Investment size between $10 and $60 Private companies generating between Focus on originated loans, as opposed million per transaction. $5 and $50 million of EBITDA. to broadly syn
Slide 5: Established Private Credit Team and Institutional Platform
Established Private Credit Team and Institutional Platform • Stellus’ private credit team’s long tenure enables cohesive evaluation and efficient execution of investment opportunities Experienced Team Longevity Continuity Extensive underwriting and Senior members of the investment team have Five of
Slide 6: Diverse Sponsor Relationships and Investment Experience
Diverse Sponsor Relationships and Investment Experience All partners have significant experience in restructuring Management team has been Partners have invested investing together for over 20 approximately $9.0 billion since years 2004* Stellus Capital Management Relationship-driven team who Team H
Slide 7: Sourcing and Origination
Sourcing and Origination • The Stellus deal team is responsible for origination and sourcing utilizing a highly focused regional approach resulting in a diverse financial sponsor network. • Since 2004, the Stellus Capital team has partnered with over 190 unique sponsors1 1. Includes investments cons
Slide 8: Stellus Capital Management has 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 94 ~350 ~$9.0 Cumulative Current Active Billion Completed Investments Invested Capital Investments Select List of Investme
Slide 9: PBDC Focuses on Shareholders
PBDC Focuses on Shareholders • PBDC aligns interest with shareholders Net Investment Income Fee Rate 1 Total Return Hurdle Rate 1 20.0% <25% 14.4% 15.0% 10.0% PBDC has a total return hurdle of externally- (aka a "lookback") that can limit 10.0% the income-based incentive fee in managed private 5.0%
Slide 10: Stable Asset Quality: Portfolio is Performing in Accordance with Plan
Stable Asset Quality: Portfolio is Performing in Accordance with Plan Investment Category Definitions at fair Risk Grade Trends value (“Risk Grade” or “RG”): 7% 16% 13% 13% 17% 1 Exceeding expectations 2 Performing in accordance with plan 3 Requires closer monitoring 90% 81% 79% 85% 84% (no loss of
Slide 11: Loan Investment Portfolio
Loan Investment Portfolio Historical Return on Equity of 1st Lien Debt* Yield of 12.4% Unsecured Debt Yield of 8.0% >2.5x** Consistent Focus on Secured Investments 4% 4% 5% 5% 4% 96% 96% 95% 95% 96% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 1st Lien* Equity *Includes unitranche investments. Unitranche
Slide 12: Portfolio Construction as of March 31, 2024
Portfolio Construction as of March 31, 2024 Broad Industry Diversification 12.4% 9.6% 100% 9.3% First Lien / Senior Secured Weighted Average Yield 12.5% Debt4 8.7% $5.31 6.4% 100% Average Loan Investment Size 20.4% Sponsor Backed (in millions)1 Transactions1 5.3% 5.3% 7.5% 4.6% 4.9% 95% Largest Inve
Slide 13: Investment Portfolio Growth Since Commencement of Operations
Investment Portfolio Growth Since Commencement of Operations Historical Capital Deployment, Deal Activity, and SCIC Milestones $250,000 FV of Investment Portfolio # of Portfolio Companies 45 Increases syndicated Stellus Private Credit revolving credit facility to 40 BDC first close with $150 million
Slide 14: First Quarter 2024 Overview
First Quarter 2024 Overview $0.50 Core NII per share1 $13.6 million New investment activity during the quarter2 $216.3 million Investments at fair value as of March 31, 2024 Three New Initial Investment Fundings & Three Follow On 12.73% Investments Weighted average yield on new debt investments New
Slide 15: Cumulative Distributions Declared per share Since Commencement of Operations
Cumulative Distributions Declared per share Since Commencement of Operations $3.69 per share in Monthly dividends of Annualized indicated Current monthly cumulative $0.1666 per share dividend yield of dividend is $0.50 per distributions since declared in Q2 for ~13% while share for the commencement
Slide 16: Corporate Information
Corporate Information Executive Officers Corporate Headquarters Robert T. Ladd 4400 Post Oak Parkway, Suite 2200 Chairman, President & Chief Executive Officer Houston, TX, 77027 W. Todd Huskinson Phone: 713-292-5400 Chief Financial Officer, Chief Compliance Officer, Current Financial Information Tre
Slide 17: Income Statement Summary
Income Statement Summary Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 INVESTMENT INCOME (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Interest income $ 4,731,952 $ 5,158,773 $ 6,042,784 $ 6,827,160 $ 6,309,381 Other income 176,069 62,484 96,972 266,251 109,596 Total Investment Income $ 4,90
Slide 18: Per Share Change in Net Asset Value (NAV)
Per Share Change in Net Asset Value (NAV) Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 (1) Per Share Data: (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Net asset value at beginning of period $ 14.64 $ 14.68 $ 14.98 $ 15.10 $ 15.21 Net investment income 0.48 0.44 0.47 0.56 0.49 Change in un
Slide 19: Balance Sheet Summary
Balance Sheet Summary Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 ASSETS (unaudited) (unaudited) (unaudited) (audited) (unaudited) Investments at fair value $ 164,829,686 $ 188,323,515 $ 211,762,646 $ 208,574,078 $ 216,314,810 Cash and cash equivalents 7,690,197 750,437 1,089,671 593,685 297,635 Interes
Slide 20: Liquidity and Capitalization
Liquidity and Capitalization Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Assets Available (unaudited) (unaudited) (unaudited) (audited) (unaudited) SCM cash and cash equivalents $ 7,690,197 $ 750,437 $ 1,089,671 $ 593,685 $ 297,635 Unfunded capital commitments 151,687,500 151,687,500 141,687,500 141,687
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