STELLUS CAPITAL INVESTMENT CORPORATION 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Stellus Capital Investment Corporation reported financial results for the second fiscal quarter ended June 30th, 2026.
- The company generated $0.26 per share of GAAP net investment income and core net investment income for the quarter.
- Net asset value increased by $0.26 per share, or 2%, sequentially, driven by net realized and unrealized gains, share repurchases, and dividend payments.
- The investment portfolio at fair value was $968 million across 116 portfolio companies, down from $990 million at March 31st, 2026.
- During the quarter, Stellus invested $18 million and received $38.7 million in full repayments plus other repayments.
- All loans were secured and 92% priced at floating rates, with an average loan per company of $8.9 million and weighted average EBITDA of $15.6 million for performing loans.
- Asset quality showed 74% of the portfolio rated 1 or 2 (on or ahead of plan) and 26% rated 3 or below (not meeting plan).
- Five loans were on non-accrual status, comprising 8.5% of cost and 5.4% of fair value of the portfolio, a decrease in cost but slight increase in fair value from the prior quarter.
- Since IPO in November 2012, Stellus has invested approximately $2.9 billion in over 225 companies and paid $349 million in dividends, with a life-to-date return on equity of 9.5% including realized and unrealized gains and losses.
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Transcript
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Good morning, ladies and gentlemen, and thank you for standing by. At this time, I would like to welcome everyone to Stellus Capital Investment Corporation's conference call to report financial results for its second fiscal quarter ended June 30, 2026. This conference is being recorded today, August 11, 2026. It is now my pleasure to turn the call over to Mr. Robert Ladd, Chief Executive Officer of Stellus Capital Investment Corporation. Mr. Ladd, you may begin your conference.
Okay. Thank you, Jenny, and good morning, everyone. Thank you for joining the call. Welcome to our conference call covering the quarter ended June 30, 2026. We have six topics to cover this morning. First, the financial results for the second quarter, portfolio and asset quality, the outlook for Q3 and beyond, an update on our advisor joining Ridgepost Capital, our $20 million share buyback program, and opportunities for growth. Joining me this morning is Todd Huskinson, our Chief Financial Officer, who will cover important information about forward-looking statements. Todd, I'll turn it over to you.
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 Stellus 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.stelluscapital.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 of 2012, we've invested approximately $2.9 billion in more than 225 portfolio companies while navigating multiple market and credit cycles. Over this time, we've received approximately $1.9 billion of repayments while maintaining disciplined credit performance. We believe our track record, our underwriting process, and deep sponsor relationships provide us with meaningful competitive advantages, reflecting more than 20 years of working together as an investment team and nearly 14 years of operating as a public BDC. Our focus remains on preserving capital while generating attractive risk-adjusted returns for our shareholders.
We think our long-term credit performance, as well as our 14-year track record of return on equity, demonstrates the effectiveness of our underwriting process and our portfolio management approach. To that point, we've generated a life to date return on equity of 9.5%, which includes all realized and unrealized gains and losses across the portfolio to date. We've also paid $349 million of dividends to our investors since our IPO, representing $18.83 per share over this period. Turning to operating results. In the second quarter, we generated $0.26 per share of GAAP net investment income and core net investment income, which excludes estimated excise taxes, was also $0.26 per share. Overall, for the quarter, net asset value increased by $0.26 per share or 2% sequentially, driven by three primary factors.
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