Stellus Capital Investment Corporation

Good morning ladies and gentlemen and thank you for standing by. At this time I would like to welcome everyone to Stellis Capital Investment Corporation's conference call to report financial results for its second fiscal quarter ended June 30th, 2024. There will be an opportunity to ask questions after today's presentation. Please press star one on your phone if you wish to ask a question today. This conference is being recorded August 8th, 2024. It is now my pleasure to turn the call over to Mr. Robert Ladd, Chief Executive Officer of Stellis Capital Investment Corporation. Mr. Ladd, you may begin your conference.

Okay, thank you, Paul. And good morning, everyone. And thank you for joining our conference call today covering the quarter ended June 30, 2024. Joining me this morning is Todd Huskinson, our Chief Financial Officer, who will cover important information about forward-looking statements, as well as an overview of our financial information.

Thank you, Rob. I'd like to remind everyone that today's call is being recorded. Please note that this call is the property of Stellis Capital Investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone number and PIN provided in our press release announcing this call. I'd also like to call your attention to the customary safe harbor disclosure in our press release regarding forward-looking information. Today's conference call may also include forward-looking statements and projections And we ask that you refer to our most recent filing with the SEC for important factors that could cause actual results to materially differ from these projections. We will not update any forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.steluscapital.com under the Public Investors link or call us at 713-292-5400. Now I'll cover our operating results for the quarter, but would like to start with our life-to-date activity. Since our IPO in November 2012, we've invested approximately $2.5 billion in over 195 companies and received approximately $1.6 billion of repayments while maintaining stable asset quality. We've paid over $262 million of dividends to our investors, which represents $15.75 per share, to an investor in our IPO in November 2012, which was offered at $15 per share. Turned to operating results. In the second quarter, we more than covered the declared dividend of 40 cents per share with GAAP net investment income of 48 cents per share. Core net investment income was 50 cents per share, which excludes estimated excise taxes. Net investment income per share was benefited by increased fee income from a variety of sources, and the waiver of $1.6 million, or 6 cents per share, of incentive fees during the quarter due to a limitation from the total return test. Net asset value per share decreased 5 cents during the quarter due to net unrealized depreciation on our investment portfolio, offset by the generation of net investment income in excess of the dividend. We also realized a gain of $2 million, or 8 cents per share, on an equity investment during the quarter. Our ATM program was active during the quarter, and we issued $25.2 million in shares at an average gross price of $13.89 per share. All issuances were above net asset value. We ended the quarter with an investment portfolio at fair value of $900 million across 100 portfolio companies, up from $876 million across 94 companies as of March 31st, 24. During the second quarter, we invested $53 million in eight new portfolio companies and had $13.3 million in other investment activity at par. We also received two full repayments totaling $31 million and $9.7 million of other repayments both at par resulting in net portfolio growth of $23.8 million at fair value. At June 30th, 99% of our loans were secured and 98% were priced at floating rates. Our average loan per company is $9.5 million, and the largest overall investment is $19.6 million, both at fair value. All but one portfolio company of our portfolio companies are backed by private equity firms. Overall, our asset quality is slightly better than planned. At fair value, 23% of our portfolio is rated a 1 or ahead of plan, and 15% of the portfolio is marked at an investment category of 3 or below, meaning not meeting plan or expectations. Currently, we have five loans on non-accrual, which comprise 2.9% of the fair value of the total loan portfolio. With that, I'll turn it back over to Rob to discuss the overall outlook.