Stellus Capital Investment Corporation reported a net increase in net assets resulting from operations of $1.7 million, or $0.06 per share, for the three months ended March 31, 2026. This marks a decrease from the $5.0 million, or $0.18 per share, reported for the same period in 2025. The company's net investment income for the first quarter of 2026 was $7.5 million, down from $9.8 million in the prior year, primarily due to a decline in interest income and an increase in operating expenses. Total investment income for the quarter was $23.3 million, compared to $25.0 million in the previous year, reflecting a decrease in interest income from debt investments.
The company's total assets decreased to $1.0 billion as of March 31, 2026, down from $1.04 billion at the end of 2025. This decline was attributed to a reduction in cash and cash equivalents, which fell to $3.4 million from $25.1 million. Stellus Capital's liabilities also decreased, totaling $638.3 million, compared to $670.1 million at the end of the previous fiscal year. The net asset value per share decreased to $12.54 from $12.82, reflecting the overall decline in asset values and increased unrealized depreciation on investments.
During the first quarter of 2026, Stellus Capital made investments totaling $27.7 million across three new and nine existing portfolio companies. The company received $41.7 million in proceeds from repayments of investments, a significant increase from the $15.0 million received in the same quarter of 2025. The portfolio consisted of 116 companies, with approximately 90% of investments in first lien debt, 1% in second lien debt, and 9% in equity. The company reported that 9.2% of its total investments were on non-accrual status, indicating a slight increase in credit risk.
Looking ahead, Stellus Capital remains focused on maximizing total returns through its investment strategy in lower middle-market companies. The company has sufficient liquidity to meet its unfunded commitments, which totaled $47.2 million as of March 31, 2026. The management noted ongoing macroeconomic uncertainties, including labor shortages and fluctuating interest rates, which could impact future performance. The company plans to continue monitoring market conditions and adjust its investment strategies accordingly.
About Stellus Capital Investment Corp
Stellus Capital Investment Corporation is a Maryland-based business development company (BDC) that invests in private lower middle-market companies through debt and equity financing. Its core activities include originating, structuring, and monitoring senior secured, unsecured, and subordinated loans, often with equity co-investments. Managed by Stellus Capital Management, the firm focuses on industries like healthcare, software, and industrials, providing tailored financing solutions to creditworthy, growth-oriented businesses.
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