Capital Southwest Announces Financial Results for First Fiscal Quarter Ended June 30, 2025
Rhea-AI Summary
Capital Southwest (Nasdaq: CSWC), a business development company, reported strong financial results for Q1 FY2026 ended June 30, 2025. The company's total investment portfolio reached $1.8 billion, with a credit portfolio of $1.6 billion comprising 99% first lien senior secured debt. Key highlights include pre-tax net investment income of $32.7 million ($0.61 per share) and a weighted average yield on debt investments of 11.8%.
During the quarter, CSWC originated $115.2 million in new commitments and received $80.6 million from portfolio exits, generating $27.1 million in net realized gains. The company maintained strong portfolio quality with non-accruals at just 0.8% of the total portfolio. CSWC declared monthly dividends of $0.1934 per share for July, August, and September 2025, plus a $0.06 supplemental dividend, totaling $0.64 per share for the quarter.
Positive
- Pre-tax net investment income increased to $32.7 million from $28.5 million in prior quarter
- Strong portfolio quality with only 0.8% non-accruals at fair value
- Conservative leverage profile with regulatory debt-to-equity of 0.82x
- Generated $27.1 million in net realized gains from portfolio exits
- Increased Corporate Credit Facility commitments by $25 million to $510 million
- Received second SBIC license from SBA
- 106% LTM Pre-Tax NII Regular Dividend Coverage
Negative
- NAV per share decreased to $16.59 from $16.70 in prior quarter
- Net realized and unrealized losses of $4.9 million on investments
- $9.6 million of net depreciation in credit portfolio
News Market Reaction – CSWC
In the Aug 7 session, CSWC declined 0.57%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
AI-generated analysis. How Rhea-AI works. Not financial advice.
DALLAS, Aug. 06, 2025 (GLOBE NEWSWIRE) -- Capital Southwest Corporation (“Capital Southwest,” “CSWC” or the “Company”) (Nasdaq: CSWC), an internally managed business development company focused on providing flexible financing solutions to support the acquisition and growth of middle market businesses, today announced its financial results for the first fiscal quarter ended June 30, 2025.
First Quarter Fiscal Year 2026 Financial Highlights
- Total Investment Portfolio:
$1.8 billion - Credit Portfolio of
$1.6 billion 99% 1st Lien Senior Secured Debt$113.4 million in new committed credit investments during the quarter- Weighted Average Yield on Debt Investments:
11.8% - Current non-accruals with a fair value of
$14.7 million , representing0.8% of the total investment portfolio
- Equity Portfolio of
$166.2 million $1.8 million in new equity co-investments during the quarter
- Credit Portfolio of
- Pre-Tax Net Investment Income:
$32.7 million , or$0.61 per weighted average common share outstanding - Estimated Undistributed Taxable Income ("UTI"):
$1.00 per share as of June 30, 2025- Increase primarily due to realized gains of
$27.2 million from the exit of two equity investments during the quarter
- Increase primarily due to realized gains of
- LTM Operating Leverage:
1.7% for the quarter ended June 30, 2025 - Dividends: Paid
$0.58 per share Regular Dividend and$0.06 per share Supplemental Dividend106% LTM Pre-Tax NII Regular Dividend Coverage- Total Dividends for the quarter ended June 30, 2025 of
$0.64 per share
- Net Realized and Unrealized Depreciation:
$4.9 million , or0.3% of total investments at fair value$7.3 million of net appreciation related to the equity portfolio$9.6 million of net depreciation related to the credit portfolio$2.6 million net realized and unrealized income tax provision
- Balance Sheet:
- Cash and Cash Equivalents:
$46.9 million - Total Net Assets:
$916.5 million - Net Asset Value (“NAV”) per Share:
$16.59
- Cash and Cash Equivalents:
In commenting on the Company’s results, Michael Sarner, President and Chief Executive Officer, stated, “The June quarter saw continued strengthening of our balance sheet and a reduction in our overall risk profile. Our investment portfolio currently has a weighted average debt to EBITDA of 3.4x, non-accruals represent less than
First Quarter Fiscal Year Investment Activities
During the quarter ended June 30, 2025, the Company originated
During the quarter ended June 30, 2025, the Company received proceeds of
First Fiscal Quarter 2026 Operating Results
For the quarter ended June 30, 2025, Capital Southwest reported total investment income of
For the quarter ended June 30, 2025, total operating expenses (excluding interest expense) were
For the quarter ended June 30, 2025, interest expense remained relatively flat at
For the quarter ended June 30, 2025, total pre-tax net investment income was
For the quarter ended June 30, 2025, there was a tax provision of
During the quarter ended June 30, 2025, Capital Southwest recorded total net realized and unrealized losses on investments of
The Company’s NAV at June 30, 2025 was
Liquidity and Capital Resources
At June 30, 2025, Capital Southwest had approximately
As of June 30, 2025, Capital Southwest had the following borrowings outstanding:
$200.0 million of total debt outstanding on the Corporate Credit Facility$112.0 million of total debt outstanding on the SPV Credit Facility$149.0 million , net of unamortized debt issuance costs, of the3.375% Notes due October 2026$70.3 million , net of unamortized debt issuance costs, of the7.75% Notes due August 2028$223.5 million , net of amortized debt issuance costs, of the5.125% convertible notes due November 2029$171.1 million , net of unamortized debt issuance costs, of SBA Debentures (as defined below)
In August 2016, CSWC entered into a senior secured credit facility (the “Corporate Credit Facility”) to provide additional liquidity to support its investment and operational activities. Borrowings under the Corporate Credit Facility accrue interest on a per annum basis at a rate equal to the applicable SOFR rate plus
Capital Southwest SPV LLC ("SPV") is a wholly owned special purpose vehicle that was formed to hold investments for the SPV Credit Facility (as defined below) to support our investment and operating activities. On March 20, 2024, SPV entered into a special purpose vehicle financing credit facility (the "SPV Credit Facility"). The SPV Credit Facility included an initial commitment of
The Company has an "at-the-market" offering (the "Equity ATM Program"), pursuant to which the Company may offer and sell, from time to time through sales agents, up to
Our wholly owned subsidiaries, Capital Southwest SBIC I, LP (“SBIC I”) and Capital Southwest SBIC II, LP ("SBIC II" and together with SBIC I, the "SBIC Subsidiaries"), each received a license from the Small Business Administration (the "SBA") to operate as a Small Business Investment Company ("SBIC") under Section 301(c) of the Small Business Investment Act of 1958, as amended, on April 20, 2021 and April 17, 2025, respectively. The SBIC licenses allow the SBIC Subsidiaries to obtain leverage by issuing SBA-guaranteed debentures ("SBA Debentures"), subject to the issuance of a leverage commitment by the SBA. SBA debentures are loans issued to an SBIC that have interest payable semi-annually and a ten-year maturity. The interest rate is fixed shortly after issuance at a market-driven spread over U.S. Treasury Notes with ten-year maturities. For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed
Share Repurchase Program
On July 28, 2021, the Company's Board of Directors (the "Board") approved a share repurchase program authorizing the Company to repurchase up to
Regular Monthly Dividend of
On June 11, 2025, the Board declared monthly regular dividends of
The Company’s regular monthly dividends for the quarter ending September 30, 2025 will be payable as follows:
| Declared | Ex-Dividend Date | Record Date | Payment Date | Amount Per Share | |
| 6/11/2025 | 7/15/2025 | 7/15/2025 | 7/31/2025 | ||
| 6/11/2025 | 8/15/2025 | 8/15/2025 | 8/29/2025 | ||
| 6/11/2025 | 9/15/2025 | 9/15/2025 | 9/30/2025 | ||
The Company’s supplemental dividend for the quarter ending September 30, 2025 will be payable as follows:
| Declared | Ex-Dividend Date | Record Date | Payment Date | Amount Per Share | |
| 6/11/2025 | 9/15/2025 | 9/15/2025 | 9/30/2025 | ||
| Total Regular Dividends per Share for Quarter Ending September 30, 2025: | $0.58 | |
| Total Supplemental Dividend per Share for Quarter Ending September 30, 2025: | $0.06 | |
| Total Dividends per Share for Quarter Ending September 30, 2025: | $0.64 | |
When declaring dividends, the Board of Directors reviews estimates of taxable income available for distribution, which may differ from net investment income under generally accepted accounting principles. The final determination of taxable income for each year, as well as the tax attributes for dividends in such year, will be made after the close of the tax year.
Capital Southwest maintains a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of its registered stockholders who hold their shares with Capital Southwest’s transfer agent and registrar, Equiniti Trust Company. Under the DRIP, if the Company declares a dividend, registered stockholders who have opted into the DRIP by the dividend record date will have their dividend automatically reinvested into additional shares of Capital Southwest's common stock.
First Quarter 2026 Earnings Results Conference Call and Webcast
Capital Southwest has scheduled a conference call on Thursday, August 7, 2025, at 1:00 p.m. Eastern Time to discuss the first quarter 2026 financial results. You may access the call by using the Investor Relations section of Capital Southwest's website at www.capitalsouthwest.com, or by using http://edge.media-server.com/mmc/p/z383xthy.
An audio archive of the conference call will also be available on the Investor Relations section of Capital Southwest’s website.
For a more detailed discussion of the financial and other information included in this press release, please refer to the Capital Southwest's Form 10-Q for the period ended June 30, 2025 to be filed with the Securities and Exchange Commission (the "SEC") and Capital Southwest’s First Fiscal Quarter 2026 Earnings Presentation to be posted on the Investor Relations section of Capital Southwest’s website at www.capitalsouthwest.com.
About Capital Southwest
Capital Southwest Corporation (Nasdaq: CSWC) is a Dallas, Texas-based, internally managed business development company with approximately
Forward-Looking Statements
This press release contains historical information and forward-looking statements with respect to the business and investments of Capital Southwest, including, but not limited to, the statements about Capital Southwest's future performance and financial performance and financial condition, and the timing, form and amount of any distributions or supplemental dividends in the future. Forward-looking statements are statements that are not historical statements and can often be identified by words such as "will," "believe," "expect" and similar expressions and variations or negatives of these words. These statements are based on management's current expectations, assumptions and beliefs. They are not guarantees of future results and are subject to numerous risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement. These risks include risks related to: changes in the markets in which Capital Southwest invests; changes in the financial, capital, and lending markets; changes in the interest rate environment and its impact on our business and our portfolio companies; regulatory changes; tax treatment; our ability to operate the SBIC Subsidiaries as small business investment companies; the uncertainty associated with the imposition of tariffs and trade barriers and changes in trade policy and its impact on our portfolio companies and our financial condition; an economic downturn or recession and its impact on the ability of our portfolio companies to operate and the investment opportunities available to us; the impact of supply chain constraints on our portfolio companies; and the elevated levels of inflation and its impact on our portfolio companies and the industries in which we invests.
Readers should not place undue reliance on any forward-looking statements and are encouraged to review Capital Southwest's Annual Report on Form 10-K for the year ended March 31, 2025 and any subsequent filings with the SEC, including the "Risk Factors" sections therein, for a more complete discussion of the risks and other factors that could affect any forward-looking statements. Except as required by the federal securities laws, Capital Southwest does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.
Investor Relations Contact:
Michael S. Sarner, President and Chief Executive Officer
214-884-3829
| CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | |||||||
| (In thousands, except shares and per share data) | |||||||
| June 30, | March 31, | ||||||
| 2025 | 2025 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Investments at fair value: | |||||||
| Non-control/Non-affiliate investments (Cost: | $ | 1,449,483 | $ | 1,436,316 | |||
| Affiliate investments (Cost: | 276,771 | 292,891 | |||||
| Control investments (Cost: | 53,944 | 56,092 | |||||
| Total investments (Cost: | 1,780,198 | 1,785,299 | |||||
| Cash and cash equivalents | 46,889 | 43,221 | |||||
| Restricted cash | 1,650 | 1,650 | |||||
| Receivables: | |||||||
| Dividends and interest | 30,141 | 30,303 | |||||
| Escrow | 2,003 | 1,926 | |||||
| Other | 3,705 | 2,018 | |||||
| Income tax receivable | 95 | 94 | |||||
| Debt issuance costs (net of accumulated amortization of | 8,981 | 9,266 | |||||
| Other assets | 8,750 | 9,063 | |||||
| Total assets | $ | 1,882,412 | $ | 1,882,840 | |||
| Liabilities | |||||||
| SBA Debentures (net of | $ | 171,115 | $ | 170,918 | |||
| October 2026 Notes (net of | 149,038 | 148,846 | |||||
| August 2028 Notes (net of | 70,320 | 70,194 | |||||
| 2029 Convertible Notes (net of | 223,477 | 223,107 | |||||
| Credit Facilities | 312,000 | 343,000 | |||||
| Other liabilities | 19,136 | 23,038 | |||||
| Accrued restoration plan liability | 550 | 555 | |||||
| Income tax payable | 7,383 | 2,769 | |||||
| Deferred tax liability | 12,919 | 16,780 | |||||
| Total liabilities | 965,938 | 999,207 | |||||
| Commitments and contingencies (Note 11) | |||||||
| Net Assets | |||||||
| Common stock, | 13,807 | 13,228 | |||||
| Additional paid-in capital | 999,728 | 959,123 | |||||
| Total distributable (loss) earnings | (97,061 | ) | (88,718 | ) | |||
| Total net assets | 916,474 | 883,633 | |||||
| Total liabilities and net assets | $ | 1,882,412 | $ | 1,882,840 | |||
| Net asset value per share (55,227,370 shares outstanding at June 30, 2025 and 52,912,796 shares outstanding at March 31, 2025) | $ | 16.59 | $ | 16.70 | |||
| CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| (In thousands, except shares and per share data) | |||||||
| Three Months Ended | |||||||
| June 30, | |||||||
| 2025 | 2024 | ||||||
| Investment income: | |||||||
| Interest income: | |||||||
| Non-control/Non-affiliate investments | $ | 41,238 | $ | 37,936 | |||
| Affiliate investments | 5,256 | 4,759 | |||||
| Control investments | 621 | 292 | |||||
| Payment-in-kind interest income: | |||||||
| Non-control/Non-affiliate investments | 2,076 | 2,473 | |||||
| Affiliate investments | 953 | 578 | |||||
| Control investments | 231 | — | |||||
| Dividend income: | |||||||
| Non-control/Non-affiliate investments | 1,608 | 2,367 | |||||
| Affiliate investments | 2,045 | 51 | |||||
| Control investments | 24 | — | |||||
| Fee income: | |||||||
| Non-control/Non-affiliate investments | 1,396 | 1,964 | |||||
| Affiliate investments | 189 | 334 | |||||
| Control investments | 23 | 58 | |||||
| Other income | 287 | 542 | |||||
| Total investment income | 55,947 | 51,354 | |||||
| Operating expenses: | |||||||
| Compensation | 3,956 | 3,466 | |||||
| Share-based compensation | 1,143 | 1,224 | |||||
| Interest | 15,264 | 12,447 | |||||
| Professional fees | 1,210 | 1,357 | |||||
| General and administrative | 1,657 | 1,574 | |||||
| Total operating expenses | 23,230 | 20,068 | |||||
| Income before taxes | 32,717 | 31,286 | |||||
| Federal income, excise and other taxes | 1,099 | 217 | |||||
| Deferred taxes | (271 | ) | 2,210 | ||||
| Total income tax provision | 828 | 2,427 | |||||
| Net investment income | $ | 31,889 | $ | 28,859 | |||
| Realized gain (loss) | |||||||
| Non-control/Non-affiliate investments | $ | 17,846 | $ | 804 | |||
| Affiliate investments | 4,087 | 167 | |||||
| Control investments | — | (260 | ) | ||||
| Income tax (provision) benefit | (6,229 | ) | — | ||||
| Total net realized gain (loss) on investments, net of tax | 15,704 | 711 | |||||
| Net unrealized (depreciation) appreciation on investments | |||||||
| Non-control/Non-affiliate investments | (22,062 | ) | (12,360 | ) | |||
| Affiliate investments | 1,058 | (4,221 | ) | ||||
| Control investments | (3,176 | ) | 770 | ||||
| Income tax benefit | 3,588 | 276 | |||||
| Total net unrealized (depreciation) appreciation on investments, net of tax | (20,592 | ) | (15,535 | ) | |||
| Net realized and unrealized (losses) gains on investments | (4,888 | ) | (14,824 | ) | |||
| Net increase in net assets from operations | $ | 27,001 | $ | 14,035 | |||
| Pre-tax net investment income per share - basic | $ | 0.61 | $ | 0.69 | |||
| Net investment income per share – basic | $ | 0.59 | $ | 0.63 | |||
| Net increase in net assets from operations – basic | $ | 0.50 | $ | 0.31 | |||
| Net increase in net assets from operations - diluted | $ | 0.48 | $ | 0.31 | |||
| Weighted average common shares outstanding – basic | 53,516,995 | 45,665,387 | |||||
| Weighted average common shares outstanding – diluted | 62,777,430 | 45,665,387 | |||||
