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 Stellar's Capital Investment Corporation's conference call to report financial results for its first fiscal quarter ended March 31, 2025. This conference is being recorded today, May 13, 2025. 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, Jenny. Good morning, everyone, and thank you for joining the call. Welcome to our conference call covering the quarter ended March 31st, 2025. Joining me as usual this morning is Todd Huskins, our Chief Financial Officer, who will cover important information about forward-looking statements as well as an overview of your financial information and portfolio. 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 differ materially 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'd like to cover our operating results for the quarter, but start first with life-to-date activity. Since our IPO in November 2012, we have invested approximately $2.7 billion in over 200 companies and received approximately $1.7 billion of repayments while maintaining stable asset quality. We have paid $295 million of dividends to our investors, which represents $17.09 per share to an investor in our IPO in November 2012, which was offered at $15 per share. Turning to operating results, in the first quarter, we generated 35 cents per share of GAAP net investment income and core net investment income of 37 cents per share, which excludes estimated excise taxes. Net asset value per share decreased 21 cents during the quarter due primarily to company-specific write-downs in our loan portfolio and a reduction of spillover income. Our ATM program was active during the quarter, and we issued 656,085 shares for $9.3 million at an average gross price of $14.11. All issuances were above net asset value. Turning to portfolio and asset quality, we ended the quarter with an investment portfolio at fair value of $991.1 million across 110 portfolio companies. up from 953.5 million across 105 companies as of December 31st, 2024. During the first quarter, we invested 46.7 million in seven new portfolio companies and had 8.7 million in other investment activity at par. We also received one full repayment totaling $8.5 million and received 6.5 million of other repayments, both at par. At March 31st, 98% of our loans were secured and 91% were priced at floating rates. The average loan per company is $9.4 million, and the largest overall investment is 21.9, both at fair value. All but one of our portfolio companies are backed by a private equity firm. Overall, our asset quality is slightly better than planned. At fair value, 52 percent of our portfolio is rated a 2 or on or ahead of plan, and 21 percent of the portfolio is marked at an investment category of 3 or below, meaning not meeting plan or expectations. Currently, we have loans to five portfolio companies on non-accrual, which comprise 6.7 percent of the total cost and 4 percent of fair value of the total loan portfolio, respectively, which represents a decrease from the prior quarter. Turning to capital, on April 1, 2025, we issued $75 million in aggregate principal amount of 7.25 percent notes due April 1, 2030. We used the proceeds to repay the bank facility. On April 24th, 2025, we received a green light letter from the Small Business Administration for Stellis Capital SBIC3. This is an important step in the process, and we therefore expect to receive a license, although it's not guaranteed. In general, as our existing debentures are repaid, we intend to draw new leverage under the SBIC3 license to continue funding qualifying portfolio company investments. And with that, I'll turn it back over to Rob to discuss the overall outlook.