Stellus Capital Investment Corporation (NYSE:SCM) Q3 2018 Earnings Conference Call Transcript
Nov 07, 2018 • 11:00 am ET
At this time, I would like to welcome everyone to Stellus Capital Investment Corporation's Conference Call to report Third Quarter 2018 Results. (Operator Instructions)
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.
Welcome to our conference call covering the third quarter ended September 30th, 2018. 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.
(Forward-Looking Cautionary Statements)
At this time, I would like to turn the call back over to our Chief Executive Officer, Rob Ladd.
We will begin by discussing our operating results followed by a review of the portfolio, including asset quality and then the outlook. And Todd will start with our operating results.
We had a good quarter and continue to have a good year. We cover our quarter third quarter distributions through GAAP NII of $0.35 per share. Core NII per share, which excludes the capital gains and incentive fee accrual, was $0.39 per share. Our growth in NII in the third quarter was driven by higher interest income and approximately $900,000 of fee income related to repayments.
We also generated a realized gain of $2.8 million or $0.17 per share resulting in realized income on a GAAP basis of $0.52 per share. Finally, net asset value increased $0.22 per share during the quarter from $14.07 to $14.29, due primarily to unrealized appreciation of our investment portfolio. Life-to-date through September 30th, 2018, on a combined basis, we have generated net gains both realized and unrealized of $5.9 million.
And with that, I'll turn it back over to Rob to discuss the portfolio and our outlook.
With respect to portfolio, we ended the quarter with portfolio at fair value at $478 million across 53 portfolio companies. During the quarter, we made $32 million of new investments at par, three of these were new and three were existing portfolio companies. The three new investments totaled $26.8 million at par. All are first lien and have a weighted average yield of a little over 9%, all of the loans are at floating rates. We had five repayments totaling $51.9 million and $5.1 million of amortization and other repayments.
In terms of asset quality, it is stable at 1.9 on our investment rating system or slightly better than planned. 21% of our portfolio is rated 1 or ahead of plan and only 10% of the portfolio is marked at an investment category of 3 or below. In total, we have three loans on non-accrual, which are 5.9 million combined comprising 1.3% of fair value of the total loan portfolio and there were no additions of non-accruals in the quarter.
We continue to maintain good diversification with the largest industry sector at 13% of the total. The average investment per company is still $9 million and the largest investment is $29 million,