Stellus Private Credit BDC (“Stellus PBDC”, “we”, or the “Company”) today announced financial results for its fourth fiscal quarter ended March 31, 2025.
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Robert T. Ladd, Chief Executive Officer of Stellus PBDC, stated “We are pleased to report solid operating results in the first quarter in which we generated $0.31 per share of net investment income and maintained a stable net asset value. During the quarter, we funded $37 million of investments and received $4 million of repayments, bringing the total portfolio to $335 million at fair value.”
FINANCIAL HIGHLIGHTS($ in millions, except data relating to per share amounts and shares outstanding) Three Months Ended March31,2025 March31,2024 Amount Per Share Amount Per ShareNet investment income $3.31 $0.31 $3.55 $0.49Net unrealized appreciation included in earnings 1.19 0.10 0.33 0.04Benefit for taxes on net unrealized depreciation on investments 0.06 0.01 0.05 0.01Net increase in net assets resulting from operations $4.56 $0.42 $3.93 $0.54Distributions (3.88) (0.36) (3.61) (0.50)Other weighted average share adjustments(1) – – – 0.01Net asset value $165.48 $15.22 $112.25 $15.26Weighted average shares outstanding 10,767,600 7,227,206
_______________________(1) Includes the impact of different share amounts as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of the period end.
PORTFOLIO ACTIVITY($ in millions) As of As of March31,2025 December31,2024Investments at fair value $334.7 $300.7Total assets $339.5 $304.8Net assets $165.5 $162.4Shares outstanding 10,873,321 10,715,095Net asset value per share $15.22 $15.16 Three Months Ended March31,2025 March31,2024New investments $36.8 $16.6Repayments of investments (4.3) (9.4)Net activity $32.5 $7.2 As of As of March31,2025 December31,2024Number of portfolio company investments 65 59Number of debt investments 61 55Weight average yield of debt and other income producing investments(2)Cash 10.1% 10.2%Payment-in-kind (“PIK”) 0.1% 0.2%Fee amortization 0.4% 0.4%Total 10.6% 10.8%Weighted average yield on total investments(3)Cash 9.6% 9.8%PIK 0.1% 0.2%Fee amortization 0.3% 0.3%Total 10.0% 10.3%
_______________________(2) The dollar-weighted average annualized effective yield is computed using the effective interest rate for the Company's 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 of our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expense or any sales load that may be paid by investors.(3) 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 equity positions and debt investments on non-accrual status.
Results of Operations
Investment income for the three months ended March 31, 2025 and 2024 totaled $8.1 million and $6.4 million, respectively, most of which was interest income from portfolio investments.
Gross operating expenses for the three months ended March 31, 2025 and 2024 totaled $5.3 million and $4.1 million, respectively. For the same periods, base management fees totaled $1.0 million and $0.8 million, income incentive fees totaled $0.6 million and $0.6 million, respectively; capital gains incentive fees of $0.2 million and $0.1 million, which are not currently payable, respectively; fees and expenses related to the Company's borrowings totaled $3.0 million and $2.1 million, respectively (including interest and amortization of deferred financing costs), respectively; administrative expenses totaled $0.1 million and $0.1 million, respectively and other expenses totaled $0.4 million and $0.4 million, respectively. For the three months ended March 31, 2025 and 2024, the Company's investment advisor, Stellus Private BDC Advisor, LLC (the “Advisor”), waived $0.3 million and $0.8 million of management fees, respectively; $0.2 million of income incentive fees for both periods (waived as our shares were not listed on a national exchange), and $0.1 million and $0.2 million of expenses pursuant to expense support and conditional reimbursements from the Advisor, respectively, for net operating expenses of $4.7 million and $2.9 million, respectively.
For the three months ended March 31, 2025 and 2024, net investment income was $3.3 millionand$3.6 million, or$0.31and$0.49 per common share based on weighted average common shares outstandingof 10,767,600 and 7,227,206, respectively.
The Company's investment portfolio had a net change in unrealized appreciation of $1.2 million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively.
For the three months ended March 31, 2025 and 2024, net increase in net assets resulting from operations totaled$4.6 millionand$3.9 million, or$0.42and$0.54per common share, based on weighted average common shares outstandingof 10,767,600 and 7,227,206, respectively.
Liquidity and Capital Resources
On September 30, 2022, the Company entered into a senior secured revolving credit agreement with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders (the “Credit Facility” and together with the Commitment Facility and SPV Facility, the “Credit Facilities”). The Credit Facility, as amended, provides for borrowings up to a maximum of $175.0 million on a committed basis with an accordion feature that allows the Company to increase the aggregate commitments up to $200.0 million, subject to new or existing lenders agreeing to participate in the increase and other customary conditions. As of March 31, 2025 and December 31, 2024, the Company had $121.8 million and $90.5 million in outstanding borrowings under the Credit Facility, respectively.
On August 1, 2024, the Company entered into a Loan Financing and Servicing Agreement (the “Loan Agreement”) for the SPV Facility by and among Stellus Private Credit BDC SPV LLC (“PBDC SPV”), as borrower, the Company, as equityholder and servicer, Deutsche Bank AG, New York Branch, as facility agent, Citibank, N.A., as collateral agent and collateral custodian, Alter Domus (US) LLC, as collateral administrator, and the lenders that are party thereto from time to time. The SPV Facility provides for $50.0 million of initial commitments with an accordion feature that allows for an additional $50.0 million of total commitments from new and existing lenders on the same terms and conditions as the existing commitments. As of both March 31, 2025 and December 31, 2024, the Company had $50.0 million in outstanding borrowings under the SPV Facility.
Distributions
During the three months ended March 31, 2025 and 2024, the Company declared aggregate distributions of $0.36 per share and $0.50, respectively (million and $3.9 million and $3.6 million in the aggregate, respectively). Tax characteristics of all distributions are reported to stockholders on Form 1099-DIV. 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 for the three months ended March 31, 2025:
Activity Type Date Company Name Company Description Investment Amount Instrument TypeAdd-On Investment January 3, 2025 Service Minds Company, LLC* Provider of residential electrical services $ 64,659 Revolver CommitmentNew Investment January 10, 2025 Pacific Shoring Products, LLC Manufacturer of trench shoring and safety equipment $ 5,327,581 Senior Secured - First Lien sold to equipment rental companies $ 2,301,368 Revolver Commitment $ 430,662 EquityNew Investment January 15, 2025 Environmental Remedies, LLC Residential asbestos abatement provider $ 3,317,957 Senior Secured - First Lien $ 2,330,762 Delayed Draw Term Loan Commitment $ 1,383,237 Revolver Commitment $ 113,419 EquityNew Investment January 16, 2025 Plus Delta Partners, Inc. Provider of fundraising training and tools for higher $ 3,955,716 Senior Secured - First Lien education institutions and other nonprofits $ 3,279,635 Delayed Draw Term Loan Commitment $ 2,561,362 Revolver Commitment $ 277,974 EquityNew Investment January 24, 2025 Strategus, LLC Provider of connected television advertising services $ 6,013,663 Senior Secured - First Lien $ 2,325,095 Delayed Draw Term Loan Commitment $ 1,513,228 Revolver Commitment $ 160,392 EquityAdd-On Investment January 31, 2025 Monitorus Holding, LLC* Provider of media monitoring and evaluation services $ 28,481 Unsecured Convertible BondAdd-On Investment January 3, 2025 Service Minds Company, LLC* Provider of residential electrical services $ 200,442 Revolver CommitmentAdd-On Investment February 10, 2025 Florachem Corporation* Distiller and supplier of natural citrus, pine, and $ 157,417 Senior Secured - First Lien specialty inputsNew Investment February 28, 2025 Identity Theft Guard Solutions, Inc. Cyber breach response and monitoring services $ 7,127,072 Senior Secured - First Lien $ 1,092,978 Revolver Commitment $ 330,747 EquityNew Investment February 28, 2025 MoboTrex, LLC Distributor and manufacturer of intelligent traffic $ 2,092,568 Senior Secured - First Lien solution equipment $ 2,000,813 Delayed Draw Term Loan Commitment $ 625,882 Revolver CommitmentAdd-On Investment March 14, 2025 The Hardenbergh Group, Inc.* Provider of temporary professional staffing of $ 695,831 Senior Secured - First Lien Medical Services Professionals, external peer review, consulting and physician leadership solutionsAdd-On Investment March 31, 2025 FairWave Holdings, LLC* Specialty coffee platform $ 559,491 Senior Secured - First Lien $ 80,357 Delayed Draw Term Loan Commitment
_______________________* Existing portfolio company
Events Subsequent to March 31, 2025
The Company's management has evaluated subsequent events through May 14, 2025. There have been no subsequent events that require recognition or disclosure except for the following described below.
Investment Portfolio
The Company invested in the following portfolio companies subsequent to March 31, 2025:
ActivityType Date CompanyName CompanyDescription InvestmentAmount InstrumentTypeAdd-On Investment April 8, 2025 TriplePoint Acquisition Holdings Provider of HVAC, plumbing, and other $ 1,406,080 Senior Secured - First Lien LLC* mechanical and industrial servicesAdd-On Investment May 5, 2025 FairWave Holdings, LLC* Specialty coffee platform $ 7,833 Equity
_______________________* Existing portfolio company
The Company realized the following portfolio company investment subsequent to March 31, 2025:
Activity Type Date Company Name Company Description Proceeds Received Realized Gain Instrument TypeFull Repayment April 8, 2025 Florachem Corporation Distiller and supplier of natural citrus, $ 1,230,052 $ – Senior Secured - First Lien pine, and specialty inputs $ 523,653 $ – Delayed Draw Term Loan Commitment $ 1,871,955 $ – Revolver Commitment $ 228,778 $ 67,495 Equity
Credit Facilities
The outstanding balance under the Credit Facility and SPV Facility as of May 14, 2025 was $119.8 million and $50.0 million, respectively.
Distributions Declared
On April 4, 2025, the Board declared a regular monthly dividend for each of April 2025, May 2025, and June 2025 as follows:
Record Payment Amount perDeclared Date Date Share4/4/2025 4/8/2025 4/30/2025 $ 0.124/4/2025 5/1/2025 5/30/2025 $ 0.124/4/2025 6/2/2025 6/30/2025 $ 0.12
Sale of Unregistered Securities
Since March 31, 2025, the Company sold 29,419 common shares of beneficial interest at a price of $15.23 per share for aggregate proceeds of $0.4 million which included less than $0.1 million of organizational expense allocation pursuant to subscription agreements entered into between the Company and investors.
Share Repurchases
On April 1, 2025, 22,609 common shares of beneficial interest were validly tendered and not withdrawn prior to the expiration of the tender offer. The Company purchased all common shares of beneficial interest validly tendered and not withdrawn at a price equal to $15.16 per Share for an aggregate purchase price of approximately $0.3 million.
About Stellus Private Credit BDC
The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private lower middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA (earnings before interest, taxes, depreciation and amortization)) through first lien (including unitranche) loans and second lien loans, with corresponding equity co-investments. The Company's investment activities are managed by its investment adviser, Stellus Private BDC Advisor, LLC.
Forward-Looking Statements
Statements included herein may contain “forward-looking statements” which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission including the final prospectus that will be filed with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
Contacts
Stellus Private Credit BDC W. Todd Huskinson, Chief Financial Officer (713) 292-5414 thuskinson@stelluscapital.com
STELLUS PRIVATE CREDIT BDCCONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES March31,2025 (unaudited) December31,2024ASSETSNon-controlled, non-affiliated investments, at fair value (amortized cost of $ 334,655,126 $ 300,732,065$330,520,503 and $297,791,269, respectively)Cash and cash equivalents 2,490,153 2,144,116Other receivable – 4,340Interest receivable 1,842,791 1,367,849Expense reimbursement receivable from the Advisor (Note 2) 84,377 161,473Deferred offering costs 119,101 127,983Related party receivable 57,344 2,004Prepaid expenses 136,647 164,350Receivable for sales and repayments of investments 131,476 86,896Total Assets $ 339,517,015 $ 304,791,076LIABILITIESCredit Facilities payable $ 170,165,227 $ 138,692,860Unearned revenue 1,119,474 921,629Management fees payable 690,553 648,149Income incentive fee payable 453,470 452,186Capital gains incentive fee payable 469,368 306,229Interest payable 663,718 613,821Administrative services payable 125,432 109,027Income tax payable 33,776 51,427Deferred tax liability 197,596 259,455Other accrued expenses and liabilities 120,475 348,413Total Liabilities $ 174,039,089 $ 142,403,196Commitments and contingencies (Note 7)Net Assets $ 165,477,926 $ 162,387,880NET ASSETSCommon shares of beneficial interest, par value $0.01 per share (unlimited shares $ 108,733 $ 107,151authorized; 10,873,321 and 10,715,095 issued and outstanding, respectively)Paid-in capital 161,889,683 159,483,435Total distributable earnings 3,479,510 2,797,294Net Assets $ 165,477,926 $ 162,387,880Total Liabilities and Net Assets $ 339,517,015 $ 304,791,076Net Asset Value Per Share $ 15.22 $ 15.16
STELLUS PRIVATE CREDIT BDCCONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended March31,2025 March31,2024INVESTMENT INCOMEInterest income $ 7,903,158 $ 6,309,381Other income 147,701 109,596Total Investment Income $ 8,050,859 $ 6,418,977OPERATING EXPENSESManagement fees $ 1,035,829 $ 800,654Income incentive fees 578,315 598,401Capital gains incentive fee 163,139 37,891Professional fees 180,049 196,911Amortization of deferred offering costs 69,834 46,728Administrative services expenses 142,999 121,777Trustees' fees 40,000 40,000Insurance expense 21,884 20,196Valuation fees 38,705 27,159Interest expense and other fees 3,016,561 2,110,119Income tax expense 2,349 21,589Other general and administrative expenses 76,870 42,933Total Operating Expenses $ 5,366,534 $ 4,064,358Expenses reimbursed/fees waived by Investment Advisor (Note 2) $ (622,426) $ (1,197,896)Net Operating Expenses $ 4,744,108 $ 2,866,462Net Investment Income $ 3,306,751 $ 3,552,515Net realized gain on foreign currency translation $ 1,621 $ 8,442Net change in unrealized appreciation on non-controlled, non-affiliated investments 1,180,792 333,461Net change in unrealized appreciation (depreciation) on foreign currency translations 13,034 (8,881)Benefit for taxes on net unrealized loss on investments 61,859 45,885Net Increase in Net Assets Resulting from Operations $ 4,564,057 $ 3,931,422Net Investment Income Per Share - basic and diluted $ 0.31 $ 0.49Net Increase in Net Assets Resulting from Operations Per Share - basic and $ 0.42 $ 0.54dilutedWeighted Average Common Shares of Beneficial Interest Outstanding - basic 10,767,600 7,227,206and dilutedDistributions Per Share - basic and diluted $ 0.36 $ 0.50
STELLUS PRIVATE CREDIT BDCCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited) CommonSharesof BeneficialInterest Total Numberof Par Paid-in distributable shares value capital gain NetAssetsBalances at December31,2023 7,102,136 $ 71,021 $ 104,810,048 $ 3,140,953 $ 108,022,022Net investment income – – – 3,552,515 3,552,515Net realized gain on foreign currency translation – – – 8,442 8,442Net change in unrealized appreciation on non-controlled, non-affiliated – – – 333,461 333,461investmentsNet change in unrealized depreciation on foreign currency translations – – – (8,881) (8,881)Benefit for taxes on net unrealized loss on investments – – – 45,885 45,885Distributions from net investment income – – – (3,610,362) (3,610,362)Issuance of common shares of beneficial interest 255,902 2,559 3,901,680 – 3,904,239Balances at March 31, 2024 7,358,038 $ 73,580 $ 108,711,728 $ 3,462,013 $ 112,247,321Balances at December31,2024 10,715,095 $ 107,151 $ 159,483,435 $ 2,797,294 $ 162,387,880Net investment income – – – 3,306,751 3,306,751Net realized gain on foreign currency translation – – – 1,621 1,621Net change in unrealized appreciation on non-controlled, non-affiliated – – – 1,180,792 1,180,792investmentsNet change in unrealized appreciation on foreign currency translations – – – 13,034 13,034Provision for taxes on net unrealized gain on investments – – – 61,859 61,859Distributions from net investment income – – – (3,881,841) (3,881,841)Issuance of common shares of beneficial interest 158,226 1,582 2,406,248 – 2,407,830Balances at March31,2025 10,873,321 $ 108,733 $ 161,889,683 $ 3,479,510 $ 165,477,926
STELLUS PRIVATE CREDIT BDCCONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended March31,2025 March31,2024Cash Flows from Operating ActivitiesNet increase in net assets resulting from operations $ 4,564,057 $ 3,931,422Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:Purchases of investments (36,779,535) (16,534,629)Proceeds from sales and repayments of investments 4,303,492 9,368,480Net change in unrealized appreciation on investments (1,180,792) (333,461)Net change in unrealized (appreciation) depreciation foreign currency translations (13,034) 8,881Increase in investments due to PIK (67,674) (159,943)Amortization of premium and accretion of discount, net (230,098) (140,131)Deferred tax benefit (61,859) (45,885)Amortization of loan structure fees 128,346 94,108Amortization of deferred offering costs 69,834 46,728Changes in other assets and liabilitiesIncrease in interest receivable (474,942) (360,655)Decrease in other receivable 4,340 -(Increase) decrease in related party receivable (55,340) 125,830Decrease (increase) in expense reimbursements receivable from the Advisor 77,096 (71,236)Decrease (increase) in prepaid expenses 27,703 (5,386)Increase (decrease) in administrative services payable 16,405 (6,953)Increase (decrease) in interest payable 49,897 (18,453)Increase in income management fees payable 42,404 -Increase (decrease) in income incentive fees payable 1,284 (32,847)Increase in capital gains incentive fees payable 163,139 37,890Increase (decrease) in unearned revenue 197,845 (113,054)Decrease in income tax payable (17,651) (33,404)Decrease in other accrued expenses and liabilities (227,938) (49,432)Net Cash Used in Operating Activities $ (29,463,021) $ (4,292,130)Cash Flows from Financing ActivitiesProceeds from issuance of common shares of beneficial interest $ 2,407,830 $ 3,904,239Offering costs paid for common shares of beneficial interest issued (60,952) (46,729)Stockholder distributions paid (3,881,841) (7,161,430)Borrowings under Credit Facilities 36,500,000 20,400,000Repayments of Credit Facilities (5,150,000) (13,100,000)Financing costs paid on Credit Facilities (5,979) -Net Cash Provided by Financing Activities $ 29,809,058 $ 3,996,080Net Increase (Decrease) in Cash and Cash Equivalents $ 346,037 $ (296,050)Cash and Cash Equivalents Balance at Beginning of Period 2,144,116 593,685Cash and Cash Equivalents Balance at End of Period $ 2,490,153 $ 297,635Supplemental and Non-Cash ActivitiesCash paid for interest expense $ 2,838,318 $ 2,034,464Income and excise tax paid 20,000 54,993Value of common shares of beneficial interest issued pursuant to Dividend Reinvestment Plan 1,185,787 354,239Decrease in dividends payable – (3,551,068)
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