Q3 2025 Stellus Capital Investment Corp Earnings Call

$1 25.

At this time all participants are in a listen only mode and a question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a note. This conference is being recorded today November 12 2025.

It is now my pleasure to turn the call over to Mr. Robert Ladd, Chief Executive Officer of <unk> Capital Investment Corporation. Mr. <unk> you may begin your conference.

Okay. Thank you Ali and good morning, everyone and thank you for joining the call welcome to our conference call covering the quarter ended September 32025.

Joining me as usual this morning is Todd <unk>, our Chief Financial Officer, who will cover important information about forward looking statements and we will start us off with a review of our financial information.

Thank you Rob.

Like to remind everyone that today's call is being recorded. Please note that this call is the property Astellas 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.

Speaker #3: 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 third fiscal quarter ended September 30th , 2025 .

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.

Speaker #3: At this time , all participants are on a listen only mode . And a question and answer session the formal will follow presentation anyone .

We will not update any forward looking statements unless required by law to.

Speaker #3: should require If operator assistance during the conference , please press Star Zero on your telephone keypad . As a note , this conference is being recorded today , November 12th , 2025 .

To obtain copies of our latest SEC filings. Please visit our website at Www Dot Astellas capital Dot com under the public investors link.

Or call Us at 703 209 to $5 400.

Speaker #3: 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 .

Now I'll cover our operating results for the quarter wed like to start with our life to date activity.

Since our IPO in November 2012, we've invested approximately $2 8 billion and over 215 companies and received approximately $1 8 billion of repayments, while maintaining stable asset quality.

Speaker #4: Okay . Thank you . And good morning , everyone , for and thank you joining the call . Welcome to our conference call the covering quarter ended September 30th , 2025 .

Speaker #4: Joining me , as usual this morning is Todd Huskinson , our chief financial officer , who will cover important information about forward looking statements and will start us off with a review of our financial information

We've paid $318 million of dividends to our investors, which represents 17 $75 per share to an investor in our IPO in November 2012, which was offered at $15 per share.

Speaker #5: you .

Speaker #5: I'd . Thank like to Rob . 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 .

In the third quarter.

We generated 32 per share of GAAP net investment income.

Realized income of 42 per share and core net investment income was <unk> 34 per share, which excludes estimated excise taxes.

Speaker #5: replay of the call will be prohibited available by using the telephone number and pen 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 Today's information .

Net asset value per share decreased 16 during the quarter, which had two components. The first was <unk> <unk> per share of dividend payments that exceeded earnings which is necessary for us to continue to pay out the spillover balance from 2024.

Speaker #5: include conference call may also forward looking statements and projections , and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these projections .

The second component was net unrealized losses of <unk> <unk> per share related primarily to two debt investments.

Speaker #5: 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 Stellus Capital Investment .

During the quarter, we had a realized gain of $2 $8 million on an equity position. The realization had no impact on net asset value because it had already been recorded as an unrealized gain which was reversed in the third quarter.

Speaker #5: Under the Public Investors link or call us at (713) 292-5400 . Now I'll cover our operating results for the quarter . We'd like to start with our life to date activity since our IPO in November 2012 , we've invested approximately $2.8 billion in over 215 companies and received approximately 1.8 billion of repayments .

Finally during the quarter, we issued approximately 531000 shares for $7 $4 million of proceeds under our ATM program year to date, we've issued approximately one 5 million shares for $26 million.

All issuances were above net asset value.

So turning now to portfolio and asset quality.

Speaker #5: While maintaining stable asset quality . We've paid $318 million of dividends to our investors , which represents $17.75 per share to an investor in our IPO .

We ended the quarter with an investment portfolio at fair value of 111 point or $1 billion across 115 portfolio companies up from $985 9 million across 112 companies as of June 32025.

Speaker #5: In November 2012 , which was offered at $15 per share in the third quarter . We generated $0.32 per share of GAAP , net investment income , realized income of $0.42 per share and core net investment income was $0.34 per share , which excludes estimated excise taxes .

During the third quarter, we invested $51 $3 million in five new portfolio companies and had $12 5 million and other investment activity at par.

We also received three repayments totaling $29 8 million, one equity realization totaling $2 8 million, which resulted in a realized gain of $2 8 million and received $6 4 million of other repayments both at par.

Speaker #5: Net asset value per share decreased $0.16 during the quarter, which had two components. The first was $0.08 per share of dividend payments that exceeded earnings, which is necessary for us to continue to pay out the spillover balance from 2024.

At September 30 was 98% of our loans were secured and 90% were priced at floating rates. The average loan per company is $9 $2 million and the largest overall investment is 22 million both at fair value.

Speaker #5: The second component was net unrealized losses of $0.08 per share . Related primarily to two debt investments . During the quarter , we had a realized gain of $2.8 million on an equity position .

99% of our portfolio companies are backed by a private equity firm.

Speaker #5: The realization had no impact on net value because it had already been recorded as an unrealized gain , which was reversed in the third quarter .

Overall, our asset quality is slightly better than planned at fair value, 82% of our portfolio is rated a one or two or on or ahead of plan and 18% of the portfolio is marked at an investment category of three or below meaning not meeting plan our expectations.

Speaker #5: Finally , during the quarter , we issued approximately 531,000 shares for $7.4 million of proceeds under our ATM program . Year to date , we've issued approximately 1.5 million shares for $20.6 million , all issuances were above net asset value .

We did not add any new loans to non accrual list during the quarter and currently we have loans to five portfolio companies on nonaccrual, which comprise six 7% of the total cost and three 7% of the fair value of the <unk> of the total loan portfolio, respectively, which represents a slight decrease from the prior quarter.

Speaker #5: So turning now to portfolio and asset quality . We ended the quarter with an investment portfolio at fair value of 1.1 $1.1 billion across 115 portfolio , companies up from $985.9 million across 112 companies as of June 30th , 2025 .

Okay.

Turning to capital during the quarter, we amended and extended our revolving credit facility, which reduced the spread over the 30 day sofa rate from two 6% to two 5% and extended the maturity date by two years to September 2030.

Speaker #5: During the third quarter , we invested $51.3 million in five new portfolio companies and had $12.5 million in other investment activity at par .

We also upsized the total committed amount.

Speaker #5: We also received three repayments totaling 29.8 million , one equity realization totaling $2.8 million , which resulted in a realized gain of $2.8 million and received $6.4 million of other repayments , both par at .

Apologies, ladies and gentlemen, we have momentarily lost our speaker line one moment. Please while we tried to connect.

Speaker #5: In 30th , 98% of our loans were secured . In , 90% were priced at floating rates . The average loan per company is $9.2 million , and the largest overall investment is 22 million , both at fair value .

Speaker #5: 99% of our portfolio companies are backed by a private equity firm Overall , our . asset quality is slightly better than planned at fair value , 82% of our portfolio is rated a 1 or 2 , or on or ahead of plan , and 18% of the portfolio is marked at an investment category of three or below , meaning not meeting plan or We did not add expectations .

Once again apologies, ladies and gentlemen.

Speaker #5: Any new loans were added to our non-accrual list during the quarter. Currently, we have loans to five portfolio companies on non-accrual, which comprise 6.7% of the total cost and 3.7% of the fair value of the loan.

We are just trying to reconnect our speaker.

We'll be bright bankruptcy. Thank you.

Speaker #5: Of the total loan portfolio , respectively , which represents a slight decrease from the prior quarter . Turning to amended quarter , we and revolving credit extended our which reduced the spread over the 30 day Sofr rate from 2.6% to 2.25% and extended the maturity date by two years to September 2030 .

Speaker #5: We also upsized the total committed amount from .

Speaker #3: Apologies , ladies and gentlemen , we have momentarily lost our speaker line . One moment please , while we try to connect . Once again , apologies , ladies and gentlemen .

Hey.

And gentlemen, once again apologies for the delay.

We are just having a slight issue reconnecting our speakers sika. Please bear with US I would say some whole music in the meantime, once again apologies.

Speaker #3: We are just trying to reconnect our speaker . We'll be right back with you . Thank you . Ladies and gentlemen , once again , apologies for the delay .

Apologies he is coming three Nancy.

One moment please.

Okay everyone's still there Ali.

Yes, Sir you're glad to have you back.

Okay. Good good sorry for the technical difficulties.

I think I would suggest why don't we start from the beginning unless you know where we where we stop.

I observed the last I had heard I believe it was during your financial report for the year.

Okay, Okay, which was kind of a lengthy probably yes. So let me make a suggestion is or is it just on or everyone else on.

For our finance is still connected.

Yeah, Okay, but can the years, yes, sir.

Okay. Good yeah, so I'm going to suggest that I apologize for this one we plan to go back and we will start restart with operating results.

Speaker #3: We are just having a slight issue reconnecting our speakers . If you could please bear with us . I will play some music in the meantime .

Speaker #3: Once again , apologies . He is coming through Apologies . now . One moment please .

Okay. Todd. Please if you will okay sharp.

Yes.

In the third quarter, we generated 36 32 cents per share of GAAP net investment income realized income of 42 cents per share and core net investment income was 34 cents per share, which excludes estimated excise taxes.

Net asset value per share decreased 16 cents during the quarter, which had two components. The first was eight cents per share of dividend payments that exceeded earnings which was necessary for us to continue to pay out the spillover balance from 'twenty 'twenty four.

The second component was net unrealized losses of eight cents per share related primarily to two debt investments.

Speaker #4: everyone still Okay , there ? Ali ?

Speaker #3: sir . Yes , Glad to have you back .

During the quarter, we had a realized gain of $2 $8 million on an equity position. The realization had no impact on net asset value because it had already been recorded as an unrealized gain which was reversed in the third quarter.

Speaker #4: Okay , good , good . the technical Sorry for difficulties . You know , I think I would suggest . Why don't we start from the beginning ?

Speaker #4: Unless you know we where where we stop .

Speaker #3: And the last I had heard , I believe it was during your financial report for the

During the quarter, we issued approximately 500000 shares for $7 $4 million of proceeds under our ATM program year to date, we've issued approximately one 5 million shares for $26 million all of which were issued above net asset value.

Speaker #5: Which was

Speaker #5: kind of .

Speaker #5: lengthy , Okay , okay . probably .

Speaker #4: Yeah . So . So let me make a suggestion . If is it just on or everyone else on .

Okay.

We ended the quarter with investment portfolio at fair value of slightly over $1 billion across 115 portfolio companies up from $985 9 million across 112 companies as of June 32025.

Speaker #3: Sir , else is everybody still connected .

Speaker #4: Yeah. Okay. But can they hear us?

Speaker #3: Yes , sir .

Speaker #4: Okay , good . Yeah . So I'm going to suggest I apologize for this . Why don't we plan to go back ? We'll start restart with operating results .

During the third quarter, we invested $51 3 million in five new portfolio companies and had $12 $5 million and other investment activity at par.

Speaker #4: Okay . Todd , please , if you will .

We also received three full repayments totaling $29 $8 million the equity realization I've mentioned previously for $2 $8 million.

Which as I mentioned earlier was a 2.8 million realized gain and also received $6 4 million of other repayments Boca Park.

At September 30 is 98% of our loans were secured around in 90% were priced at floating rates. The average loan per company is $9 $2 million and the largest overall investment is 22 million both at fair value.

99% of our portfolio companies are backed by a private equity firm.

Overall, our asset quality is slightly better than plan at fair value, 82% of our portfolio is rated a one or two are on or ahead of plan and 18% of the portfolio is marked at an investment category of three or below meaning not meeting plan our expectations.

We did not add any it add any new loans to our nonaccrual list during the quarter.

Currently we have loans to five portfolio companies on nonaccrual, which comprise six 7% of the total cost of 3.7% of the fair value of the total loan portfolio, respectively, which represents a slight decrease from the prior quarter.

Turning now to capital activity during the quarter, we amended and extended our revolving credit facility, which reduced the spread over the 30 day sofa rate from 2.6% to 2.25% and extended the maturity date by two years to September 2030.

We also upsized the total committed amount from 315 million to $335 million.

On September 25th we issued an additional $50 million of the 7.25% 2030 notes at a premium yielding 694%, bringing the total 2030 notes issued to $125 million will use the proceeds to repay the 'twenty 'twenty six notes prior to their maturity and with that I'll turn it back over to Rob to discuss the overall.

All outlook. Okay. Thank you Todd as we look ahead to the fourth quarter of 2025 I'll cover portfolio gross equity realizations in dividends is.

As Todd noted earlier, we now have an investment portfolio in excess of $1 billion across 115 companies.

We continue to be very active and although we expect meaningful payoffs in Q4 will likely have a portfolio in excess of $1 billion at year end.

For equity realizations, we expect $5 million for Q4, and possibly another $5 million in Q1 of 'twenty six.

Estimated gains associated with these realizations of $3 8 million in Q4, and $3 3 million for Q1.

And with respect to dividends, we declared as you know a 40 cent dividend for Q4.

And so with that you've probably heard some of this twice so thank you for bearing with us.

But at this point Ali, let's open it up for questions.

Yes, indeed, sir ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue and you May Press Star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

Banki.

Our first question is coming from Erik Zwick with lucid capital Your line is ice.

Good morning, Thank you and good morning, good morning, guys.

It didn't have the benefit of hearing.

The full presentation two times could you just repeat the our expectation for equity realizations.

In fourth quarter and in first quarter I missed that can type customer.

Yeah, No no no worries Eric Yeah. So so.

Projecting 5 million of realizations in Q4 of which we've already received a million one.

And a similar number of 5 million for Q1 of 'twenty six.

And if those come to pass the expected gains would be $3 8 million for Q4, and $3 3 million for Q1 of next year.

Perfect. Thank you.

And just you had a very active quarter in terms of new originations and a nice healthy mix between new and add on and I know last quarter, you mentioned that you're really starting to see a pickup in kind of about the pipelines and new activity. So just curious today as you look at that the pipeline how it looks in terms of mix.

Mix between new and add on opportunities in.

If you could maybe add some comments too just in terms of what youre seeing in terms of rate rate and structure as well.

Operator: Q4 ended 30 September 2025. At this time, all participants are on a listen-only mode, and a question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a note, this conference is being recorded today, 12 November 2025. 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.

You'll be glad to.

So with respect to.

And we have had quite a few follow ons as good glad you've noted that I'd say that.

Probably continue to see the same mix as you may know or it's identified that we have quite a few delayed draw term loans in.

Thank you.

In the portfolio that are undrawn. So those are the typically the things that are funding that are follow ons. So we would expect the pace of both to continue very active this quarter and really to ticked up meaningfully since fourth of July overall for the year.

Our first question is coming from Eric swick with Lucid Capital, your line is live.

Robert Ladd: Thank you, Ellie. Good morning, everyone, and thank you for joining the call. Welcome to our conference call covering the quarter ended 30 September 2025. Joining me, as usual this morning, is Todd Huskinson, our Chief Financial Officer, who will cover important information about forward-looking statements and will start us off with a review of our financial information.

Okay.

So I think that and expect both to occur but suddenly the majority of the fundings will be on new investments.

Good morning, Eric. Thank you. Good morning. Good morning, guys. Um, I didn't have the benefit of hearing, um, the full presentation 2 times. Could you just repeat the, uh, expectation for Equity realizations? Um, uh, in fourth quarter and first quarter? I missed that can type fast enough.

Relative to rate and structure. So we've not seen any change in this would really be for the entirety of our investing.

In terms of meaningful capital structure. So.

Typical equity check is at least 50% of the acquisition. Therefore, identive is typically 50% or less more likely in today's case, 40%, 60% equity.

Todd Huskinson: 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.

Yeah. No no, no worries. Eric. Yeah, so so uh, a projecting 5 million of realizations in Q4 of which we've already received a million 1, and a similar number of 5 million for q1 of 26.

Leverage quotient or running at four times EBITDAR less so so those structures all are really strong.

And if those come to pass the expected gains would be 3.8 million for Q4 and 3.3 million for q1 of next year.

We continue to have important covenants across all of our loans, but we are seeing some tightness in spreads.

As a new competitive market again, we have competition, but we're very active so.

Seeing some reduction in spreads as you know from a year ago.

Six over so for so and now five over so for in shortening to creep down just a little bit under five but that so that they were seeing that throughout the industry. I think you guys are observing that another.

Todd Huskinson: 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. I'd like to start with our life-to-date activity. Since our IPO in November 2012, we've invested approximately $2.8 billion in over 215 companies and received approximately $1.8 billion of repayments, while maintaining stable asset quality. We've paid $318 million of dividends to our investors, which represents $17.75 per share to an investor in our IPO in November 2012, which was offered at $15 per share. In the third quarter, we generated $0.32 per share of GAAP net investment income, realized income of $0.42 per share, and core net investment income was $0.34 per share, which excludes estimated excise taxes.

Perfect. Thank you. Um, and just you had a, you know, very active quadrant in terms of uh, new originations and I might help you mix between new and add-on. And I know last quarter, you mentioned that you really started to see a, a pickup in kind of the pipelines and new activities. So, just curious today as you look at the, the pipeline, how it looks in terms of, um, you know, mix between new and add-on opportunities and uh, if you could maybe add some comments to just in terms of what you're seeing in terms of, you know, rate rate and structure as well.

Their companies.

yeah, be glad to um, so with with respect to um,

But a meaningful amount of capital to invest very active week.

Fortunately, we continue to obtain equity co invests in many of the loans, we make and as you can tell from my earlier remarks, those continued to pay off for us.

Thank you that's very helpful and just last one for me no. We continued to see some some mixed signs in.

Maybe some mixed expectations for the economic trajectory as well as as you look through your portfolio and you noted.

And we have had quite a few follow-ons but you've noted that I'd say that um probably continue to see the same mix as as you may know or if identified that we have quite a few delayed draw term loans, um in the portfolio that are undrawn. So those are the typically the things that are funding that are follow-on. So we would expect the pace of both to continue very active, this quarter. And really it's picked up many places since Fourth of July, overall, for the year.

I think it's 82% of the portfolio is a one or two cell on or ahead of schedule and just are you seeing any.

Um, so I think that, you know, we expect both to occur, but certainly the majority of the funding will be on new investments.

Increasing weakness or even signs of concern in any.

Segments or industries of your portfolio at this point.

Um, relative to rate and structure. So we've not seen any change and this would really be for the entirety of our investing.

We're really not so the.

<unk> credit issues. We have had are really based on company specific issues subtle C. A T.

Todd Huskinson: Net asset value per share decreased $0.16 during the quarter, which had two components. The first was $0.08 per share of dividend payments that exceeded earnings, which was necessary for us to continue to pay out the spillover balance from 2024. The second component was net unrealized losses of $0.08 per share related primarily to two debt investments. During the quarter, we had a realized gain of $2.8 million on an equity position. The realization had no impact on net asset value because it had already been recorded as an unrealized gain, which was reversed in the third quarter. Finally, during the quarter, we issued approximately 531,000 shares for $7.4 million of proceeds under our ATM program. Year to date, we've issued approximately 1.5 million shares for $20.6 million. All issuances were above net asset value.

Trend in that way and.

So so more company specific and.

Fortunately most of that comes are doing well.

I appreciate the update that's all for me. Thank you.

Hey, Thank you Eric.

In terms of you know, meaningful Capital structures. So typical Equity check is at least 50% of the acquisition. Therefore our debt is is typically 50% or less more likely. In today's case, 40% a debt, 60% Equity leverage, quotients are running at 4 times CBA or less so so those structures all are are really strong.

Finally, as a reminder, ladies and gentlemen, if you do have questions or comments. Please press star one on your telephone keypad.

We continue to have important covenants across all of our loans.

Our next question is coming from Christopher Nolan with Ladenburg Thalmann. Your line is nice.

Hey, guys. Good morning, good morning, Todd on the new facility was there any change any advance rate with I'm really interested in is whether or not the banks are.

Getting increasingly concerned in terms of the private credit environment.

But we are seeing some tightness in spreads um as a competitive market. Again we have competition but we're very active so seeing some reduction in spreads as you know from a year ago 6 over so far. So and now 5 over so over and starting to be down just a little bit under 5 but that's um, that we're seeing that throughout the industry. I think you guys are observing that in other other companies.

No no not at all.

Now they were they.

There's no change in the structure of the of the credit facility in terms of advance rates.

Todd Huskinson: Turning now to portfolio and asset quality, we ended the quarter with an investment portfolio at fair value of $1.01 billion across 115 portfolio companies, up from $985.9 million across 112 companies as of 30 June 2025. During the third quarter, we invested $51.3 million in five new portfolio companies and had $12.5 million in other investment activity at par. We also received three repayments totaling $29.8 million, one equity realization totaling $2.8 million, which resulted in a realized gain of $2.8 million, and received $6.4 million of other repayments, both at par. At 30 September, 98% of our loans were secured, and 90% were priced at floating rates. The average loan per company is $9.2 million, and the largest overall investment is $22 million, both at fair value. 99% of our portfolio companies are backed by a private equity firm.

And and in fact, you know we have we have.

The relationships with these with the banks and other things in and had some additional banks come into this facility as it is in and so not what we really were pleased with the.

But a meaningful amount of capital to invest very active. We fortunately, we continue to obtain equity co-invests in many of the loans we make. And as you could tell, from my earlier remarks, those continue to pay off for us.

With the Bank group and their response to the changes show reduction no change at all we did we didn't sense any issues great.

Thank you. That's, that's a very helpful. Um, and just last 1 for me, you know, we continue to see some some mixed signs and

Great.

And what's the current status on the.

Third SBA license please.

So as we reported last quarter, we received a green light letter.

And are kind of in a spot where we're waiting for the third license to be issued.

maybe some mixed expectations for the the economic trajectory, as well as as you look through your portfolio and you noted um, you know, I think it's 82% of the portfolio is 1 or 2. So on or ahead of schedule and just are you seeing any increasing weakness or even signs of concern in in any um segments or industries of of your portfolio at this point?

Which.

We don't know exactly when it happens.

We would expect it relatively soon yeah. So so we can we don't have any new news on it though.

And how much capacity would that add.

We're really not. So the uh any credit issues. We have had are really based on company specific issues. So so don't see a, a trend in that way and

Levered well so today, we have $295 million of debentures outstanding and the total filings family.

So, so most companies are doing well. Unfortunately, most of the companies are doing well.

Todd Huskinson: Overall, our asset quality is slightly better than planned. At fair value, 82% of our portfolio is rated a one or two, or on or ahead of plan, and 18% of the portfolio is marked in an investment category of three or below, meaning not meeting plan or expectations. We did not add any new loans to our non-accrual list during the quarter, and currently, we have loans to five portfolio companies on non-accrual, which comprise 6.7% of the total cost and 3.7% of the fair value of the total loan portfolio, respectively, which represents a slight decrease from the prior quarter. Turning to capital, during the quarter, we amended and extended our revolving credit facility, which reduced the spread over the 30-day SOFR rate from 2.6% to 2.25% and extended the maturity date by two years to September 2030. We also upsized the total committed amount from.

Is that maximum is $350 million of debentures, so think of it as another.

I appreciate the update. That's all for me. Thank you. Hey, thank you Eric.

Another 50, or so of the liver 50.

Which of course is dependent upon those those those loans qualifying for SP IC.

Thank you. As a reminder, ladies and gentlemen, if you do have questions or comments, please press *1 on your telephone keypad.

Capital, but but it would add it would add additional capital to US and you know we also have to cut the fund that license with some equity from the parent, which we would do through through to payoffs of the existing debentures and other sources.

And in summary, 50 50 million more of capacity that's right.

Hey guys, good morning. Um, good morning Todd on the new facility. Um, was there any change in the advance rate? What I'm really interested in is whether or not the banks are getting increasingly concerned in terms of the private credit environment.

And then final question, if I recall about half of your.

Deal origination is S. P. I C compliant is that correct.

No, no not at all. Um, know they were, uh, they there's no change in the structure of the of the credit facility in terms of advanced rates. Um,

That's correct.

Okay. That's it for me thank you.

Great. Thank you Chris.

Banking.

As we have no further questions on the lines at this time I would like to turn it back over to management for any closing remarks. They may have I apologize, hoping for the late question come in.

Operator: Apologies, ladies and gentlemen. We have momentarily lost our speaker line. One moment, please, while we try to connect. Once again, apologies, ladies and gentlemen. We are just trying to reconnect our speaker. We'll be right back with you. Thank you. Ladies and gentlemen, once again, apologies for the delay. We are just having a slight issue reconnecting our speakers. If you could please bear with us, I will play some hall music in the meantime. Once again, apologies. Apologies. He's coming through now. One moment, please.

and and in fact, you know, we have we have other relationships with these with the banks and other things and and you know, had some additional Banks come into this facility as it as it is. And and so not we really were pleased with the with the bank group and and, you know, their response to the, to the changes. So, no change no change at all. We didn't we didn't sense any issues.

I do apologize from Robert Dodd with Raymond James Your line is light.

Great. And, um, what is the current status on the, um,

I am very well competitively.

Third SBA license, please.

There's a little slow on the buttons that for me.

So, as we reported last quarter, we received a green light letter.

Are you at all.

In your prepared remarks, you mentioned potentially significant repayments in Q4.

I mean is that going to generate like any one time income accelerated prepayment fees are Catholics admin is profitable, but can you also confirm what's what's the drive obviously some of the equity realizations is it re pricings.

And or kind of in the spot where we're waiting for the third license to be issued which um, you know, we don't know exactly when it happens but but you know, we would expect it relatively soon. Yeah. So so we can we don't have any new news on it though.

And how much capacity would that add?

Can you give us an idea of like what's.

<unk>.

What's the daily underpinning.

Levered. Well, so today we have 295 million of debentures outstanding and, you know, the total funds family. Um,

Significant repayments in Q4.

Is the maximum is 350 million of the ventures. So think of it as another

Sure, it's a I'd say, mostly the sales of businesses.

And then it could be a case, where someone is refinancing, but getting down to like bank pricing, where it fits for a bank, but I think it's mostly sales of companies.

Got it thank you.

One the one on the <unk>.

The spread environment I mean, you I mean, it's kind of across the market.

What do you think within your your segment, which I'll, let Michelle smaller.

Another 50 or so, a little over 50, um, which of course is dependent upon those, those, uh, those loans qualifying for sbic Capital, but but it would add it would add additional Capital to us. And, you know, we also have to cut the fund that license with some Equity from the parent, which, you know, we would do through through uh, through payoffs of the existing debentures and and other sources, but I think in summary 5050 million more of capacity. Yeah, that's right.

Elegant tool companies.

The upper market, what's what's the primary driver here I mean, I've heard that it's not.

Okay. And then final question. As I recall about half of your, uh, deal origination is sbic compliant, is that correct? That's correct.

Okay, that's it for me. Thank you, great. Thank you Chris.

Not necessarily the large large players coming down market for this new new capital formation as well I mean, what what do you think the overall driver.

Thank you.

Pushing down.

As Fred said he said now in some cases below 500, <unk> do you think.

Do you think they ever go back.

Yes. So so great question, so certainly a competitive market and.

As we have no further questions on the lines at this time, I would like to turn it back over to management for any closing remarks they may have. Oh, I apologize, sir. We've had a late question come in. I do apologize from Robert Dodd with Raymond James. Your line is live.

Some credit providers are willing to lend at lower rates. So I think that that drives if you will it.

I yeah, they're very welcome, little slow on the buttons there for me. Um,

Will it go back up.

It likely will.

We've seen as you know we've been in business for over 20 years, we've seen a number of cycles and.

And you can see it go the other way, but the good news is that a lot of good capital in the system. Both at the private equity firms, who are supporting and in private credits a healthy financial system around private credit.

In your prepared marks. I mean, you mentioned potential for significant repayments in in Q4. I mean. So I mean is that going to generate like any 1-time income accelerated prepayment fees except for 7? That's my problem. But can you also tell me like what's? What's the driver, obviously? 7 Equity realizations, is it replacing, um, you know, it can be you as an idea. Like what's

What's?

But I can certainly go the other way.

The, the the underpinning for for significantly payments before.

Got it thank you.

Okay. Thank you Robert.

On key I am going to be very cautious here and see if we have any further questions come into queue.

Robert Ladd: Okay. Everyone still there? Ellie?

Operator: Yes, sir. Glad to have you back.

Robert Ladd: Okay. Good, good. Sorry for the technical difficulties. You know, I think I would suggest, why don't we start from the beginning unless you know where we stop?

Sure it's uh I'd say mostly a sales of businesses uh and then it could be a case where someone is refinancing but all getting down to like Bank pricing where it fits for a bank but I think it's a mo mostly sales of companies.

Okay gentlemen, it appears we have no further questions at this time, so I'll hand, it back to management for closing remarks.

Operator: Sir, the last I had heard, I believe it was during your financial report for the year.

Okay very good well thanks, everyone for joining us. Thank you for the support of our company and we look forward to give you an update in the spring I believe it'll be in early March all reporting the results of the fourth quarter and the 10-K as well.

Robert Ladd: Okay.

Todd Huskinson: Okay. Which was kind of lengthy, probably, so.

Robert Ladd: Yeah. Let me make a suggestion. Is it just on or everyone else on?

Many thanks.

Thank you. Thank you ladies and gentlemen. This does conclude today's conference you may disconnect. Your lines at this time and we thank you for your participation.

Operator: Everybody else is still connected.

Robert Ladd: Yeah. Okay, can they hear us?

Operator: Yes, sir.

Robert Ladd: Okay. Good. I'm going to suggest—I apologize for this—why don't we plan to go back? We'll restart with operating results. Okay. Todd, please, if you will.

Got it. Thank you. And then on on, on the um, the spread environment I mean, yeah. I mean it's it's, it's kind of across the the market. Um, what do you think within your your segment, which I'll see our our smaller, um, relatively small companies and the upper amount. What's what's the primary driver here? I mean I've heard that it's it's you know, it's not necessarily the large large players coming down market for this new um New Capital formation as well. I mean, what what do you think? Is the overall?

Driver.

Um, pushing down their spread. So he said, now, in some cases below 500 and you think

Todd Huskinson: Okay. Sure. In the third quarter, we generated $0.32 per share of GAAP net investment income, realized income of $0.42 per share, and core net investment income is $0.34 per share, which excludes estimated excise taxes. Net asset value per share decreased $0.16 during the quarter, which had two components. The first was $0.08 per share of dividend payments that exceeded earnings, which was necessary for us to continue to pay out the spillover balance from 2024. The second component was net unrealized losses of $0.08 per share related primarily to two debt investments. During the quarter, we had a realized gain of $2.8 million on an equity position. The realization had no impact on net asset value because it had already been recorded as an unrealized gain, which was reversed in the third quarter.

Do you think they ever go back?

Yes, so so so great question. So certainly a competitive market and, and, um, some credit providers are willing to lend at lower rate. So I think that that drives it, you know, will it? Um, will it go back up? Uh, it it likely will, you know, we've seen that, as you know, we've been in business for over 20 years, we've seen a number of cycles and

Sure.

And uh you can see it go the other way, but but the good news is that a lot of good capital in the system, both at the private Equity firms who were supporting and in private credit. So a healthy Financial system around private credit

Uh, but but they can certainly go the other way.

Got it. Thank you.

Thank you, Robert.

Todd Huskinson: During the quarter, we issued approximately 500,000 shares for $7.4 million of proceeds under our ATM program. Year to date, we've issued approximately 1.5 million shares for $20.6 million, all of which were issued above net asset value. We ended the quarter with an investment portfolio at fair value of slightly over $1 billion across 115 portfolio companies, up from $985.9 million across 112 companies as of 30 June 2025. During the third quarter, we invested $51.3 million in five new portfolio companies and had $12.5 million in other investment activity at par. We also received three full repayments totaling $29.8 million, the equity realization I mentioned previously for $2.8 million, which, as I mentioned earlier, was a $2.8 million realized gain, and also received $6.4 million of other repayments, both at par. At 30 September, 98% of our loans were secured, and 90% were priced at floating rates.

Thank you. I am going to be very cautious here and see if we have any further questions coming to Q.

Okay, gentlemen it appears. We have no further questions at this time so I'll hand it back to management for closing remarks.

Okay, very good. Well, thanks everyone for joining us. Thank you for the support of our company and we look forward to giving you an update in the spring. I believe it'll be an early March. We'll be reporting the results of the fourth quarter and the 10K as well.

Many thanks.

Thank you. Thank you. Ladies and gentlemen, this does conclude today's conference, you may disconnect your lines at this time and we thank you for your participation.

Todd Huskinson: The average loan per company is $9.2 million, and the largest overall investment is $22 million, both at fair value. 99% of our portfolio companies are backed by a private equity firm. Overall, our asset quality is slightly better than planned. At fair value, 82% of our portfolio is rated a one or a two, or on or ahead of plan, and 18% of the portfolio is marked in an investment category of three or below, meaning not meeting plan or expectations. We did not add any new loans to our non-accrual list during the quarter. Currently, we have loans to five portfolio companies on non-accrual, which comprise 6.7% of the total cost and 3.7% of the fair value of the total loan portfolio, respectively, which represents a slight decrease from the prior quarter. Turning now to capital activity.

Todd Huskinson: During the quarter, we amended and extended our revolving credit facility, which reduced the spread over the 30-day SOFR rate from 2.6% to 2.25% and extended the maturity date by two years to September 2030. We also upsized the total committed amount from $315 million to $335 million. On 25 September 2023, we issued an additional $50 million of the 7.25% 2030 notes at a premium yielding 6.94%, bringing the total 2030 notes issued to $125 million. We'll use the proceeds to repay the 2026 notes prior to their maturity. With that, I'll turn it back over to Rob to discuss the overall outlook.

Robert Ladd: Thank you, Todd. As we look ahead to the fourth quarter of 2025, I'll cover portfolio growth, equity realizations, and dividends. As Todd noted earlier, we now have an investment portfolio in excess of $1 billion across 115 companies. We continue to be very active, and although we expect meaningful payoffs in Q4, we'll likely have a portfolio in excess of $1 billion at year-end. For equity realizations, we expect $5 million for Q4 and possibly another $5 million in Q1 of 2026. Estimated gains associated with these realizations are $3.8 million in Q4 and $3.3 million for Q1. With respect to dividends, we declared, as you know, a $0.40 dividend for Q4. You've probably heard some of this twice, so thank you for bearing with us. At this point, Ellie, let's open it up for questions.

Operator: Yes, indeed, sir. Ladies and gentlemen, at this time, we will be conducting our question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and you may press Star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we pull for questions. Thank you. Our first question is coming from Eric Swick with Lucid Capital. Your line is live.

Robert Ladd: Good morning, Eric.

Todd Huskinson: Thank you. Good morning, guys. I didn't have the benefit of hearing the full presentation two times. Could you just repeat the expectation for equity realizations in Q4, and in first quarter? I missed that. I couldn't type fast enough.

Robert Ladd: Yeah. No worries, Eric. Projecting $5 million of realizations in Q4, of which we've already received $1.1 million, and a similar number of $5 million for Q1 of 2026. If those come to pass, the expected gains would be $3.8 million for Q4 and $3.3 million for Q1 of next year.

Todd Huskinson: Perfect. Thank you. You had a very active quarter in terms of new originations and a nice, healthy mix between new and add-on. I know last quarter you mentioned that you really started to see a pickup in kind of the pipelines and new activity. Just curious today, as you look at the pipeline, how it looks in terms of a mix between new and add-on opportunities. If you could maybe add some comments too, just in terms of what you're seeing in terms of rate and structure as well.

Robert Ladd: Yeah. I'll be glad to. With respect to—and we have had quite a few follow-ons. I'm glad you've noted that. I'd say that probably continue to see the same mix as you may know or have identified that we have quite a few delayed-draw term loans in the portfolio that are undrawn. Those are typically the things that are funding that are follow-ons. We would expect the pace of both to continue very active this quarter and really to pick up meaningfully since 4 July overall for the year. I think that expect both to occur, but certainly the majority of the fundings will be on new investments. Relative to rate and structure, we've not seen any change, and this would really be for the entirety of our investing in terms of meaningful capital structures.

Robert Ladd: Typical equity check is at least 50% of the acquisition. Therefore, our debt is typically 50% or less. More likely, in today's case, 40% debt, 60% equity. Leverage quotients are running at 4x EBITDA or less. Those structures all are really strong. We continue to have important covenants across all of our loans. We are seeing some tightness in spreads. As a competitive market, again, we have competition, but we're very active. Seeing some reduction in spreads, as you know, from a year ago, 6 over SOFR or so, and now 5 over SOFR, and starting to creep down just a little bit under 5. We're seeing that throughout the industry. I think you guys are observing that in other companies. A meaningful amount of capital to invest, very active.

Robert Ladd: Fortunately, we continue to obtain equity co-investments in many of the loans we make. As you could tell from my earlier remarks, those continue to pay off for us.

Todd Huskinson: Thank you. That's very helpful. Just last one for me. We continue to see some mixed signs, and maybe some mixed expectations for the economic trajectory as well. As you look through your portfolio, and you noted, I think it's 82% of the portfolio is one or two or so on or ahead of schedule. Just are you seeing any increasing weakness or even signs of concern in any segments or industries of your portfolio at this point?

Robert Ladd: We're really not. Any credit issues we have had are really based on company-specific issues. I don't see a trend in that way, so more company-specific. Fortunately, most of the companies are doing well.

Todd Huskinson: I appreciate the update. That's all for me. Thank you.

Robert Ladd: Thank you, Eric.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have questions or comments, please press Star 1 on your telephone keypad. Our next question is coming from Christopher Nolan with Ladenburg Thalmann. Your line is live.

Christopher Nolan: Hey, guys.

Robert Ladd: Good morning.

Christopher Nolan: Good morning.

Operator: Todd, on the new facility, was there any change in the advance rate? What I'm really interested in is whether or not the banks are getting increasingly concerned in terms of the private credit environment.

Robert Ladd: No, not at all. No, there's no change in the structure of the credit facility in terms of advance rates. In fact, we have other relationships with the banks and other things, and had some additional banks come into this facility as it is. We really were pleased with the bank group and their response to the changes. No change at all. We didn't sense any issues.

Operator: Great. What's the current status on the third SBA license, please?

Robert Ladd: As we reported last quarter, we received a green light letter and are kind of in the spot where we're waiting for the third license to be issued, which we don't know exactly when it happens, but we would expect it relatively soon. We don't have any new news on it, though.

Operator: How much capacity would that add, levered?

Robert Ladd: Well, today we have $295 million of debentures outstanding, and the total funds family maximum is $350 million of debentures. Think of it as another $50 million or so, a little over $50 million, which, of course, is dependent upon those loans qualifying for SBIC capital. It would add additional capital to us. We also have to fund that license with some equity from the parent, which we would do through payoffs of the existing debentures and other sources. I think in summary, $50 million more of capacity. Yeah, that's right.

Operator: Okay. Final question. As I recall, about half of your deal origination is SBIC compliant. Is that correct?

Robert Ladd: That's correct.

Operator: Okay. That's it for me. Thank you.

Robert Ladd: Great. Thank you, Chris.

Operator: Thank you. As we have no further questions on the lines at this time, I would like to turn it back over to management for any closing remarks they may have. Oh, I apologize, sir. We've had a late question come in. I do apologize from Robert Dodd with Raymond James. Your line is live.

Robert Ladd: You're very welcome.

Operator: A little slow on the buttons there for me. In your prepared remarks, I mean, you mentioned potential for significant repayments in Q4. I mean, is that going to generate any one-time income, accelerated repayment fees, etc., etc.? That's one problem. Could you also tell us, I mean, what's the driver? Obviously, some of the equity realizations. Is it repricings? Can you give us an idea of what's the underpinning for significant repayments in Q4?

Robert Ladd: Sure. I'd say mostly sales of businesses. It could be a case where someone is refinancing, getting down to bank pricing where it fits for a bank. I think it's mostly sales of companies.

Operator: Got it. Thank you. On the spread environment, I mean, yeah, it's kind of across the market. What do you think within your segment, which are obviously smaller, relatively smaller companies than the upper market, what's the primary driver here? I mean, I've heard that it's not necessarily the large players coming down market, but there's new capital formation as well. I mean, what do you think is the overall driver pushing down their spreads? You said now in some cases below 500. Do you think they ever go back?

Robert Ladd: Yeah. Great question. Certainly a competitive market, and some credit providers are willing to lend at lower rates. I think that drives it. Will it go back up? It likely will. We've seen that, as you know, we've been in business for over 20 years. We've seen a number of cycles, and you can see it go the other way. The good news is that a lot of good capital is in the system, both at the private equity firms who are supporting, and in private credit, so a healthy financial system around private credit, but they can certainly go the other way.

Operator: Got it. Thank you.

Robert Ladd: Okay. Thank you, Robert.

Operator: Thank you. I am going to be very cautious here and see if we have any further questions come into queue. Okay, gentlemen, it appears we have no further questions at this time, so I'll hand it back to management for closing remarks.

Robert Ladd: Okay. Very good. Well, thanks, everyone, for joining us. Thank you for the support of our company. We look forward to giving you an update in the spring. I believe it'll be in early March. We'll be reporting the results of the fourth quarter and the 10K as well. Many thanks.

Operator: Thank you. Thank you, ladies and gentlemen. This does conclude today's conference. You may disconnect your lines at this time, and we thank you for your participation.