Financial Data and Key Metrics Changes - Pre-tax net investment income was $34.6 million, or $0.60 per share, an increase from the previous quarter [16] - Total investment income rose to $61.4 million from $56.9 million, driven by increases in PIK income, fees, and dividend income [16][18] - Undistributed taxable income (UTI) increased to $1.02 per share, up from $0.68 per share in December 2024 [3][17] - NAV per share increased to $16.75 from $16.62 in the prior quarter [18] Business Line Data and Key Metrics Changes - Closed $244 million in total new commitments across eight new portfolio companies and 16 existing portfolio companies [4] - The weighted average spread on new commitments was approximately 6.4% [5] - The on-balance sheet credit portfolio ended at $1.8 billion, representing a 19% year-over-year growth [10] - 100% of new portfolio company debt originations were first lien senior secured [10] Market Data and Key Metrics Changes - Approximately 93% of the credit portfolio is sponsor-backed, providing strong governance and operational support [10] - The credit portfolio generated a weighted average yield of 11.3% with a weighted average leverage of 3.6x EBITDA [12] - Cash flow coverage improved to 3.4 times, up from 2.9 times during peak base rates [14] Company Strategy and Development Direction - The company announced a joint venture to enhance competitiveness in the lower middle market, allowing participation in larger, higher-quality deals [7] - The joint venture is expected to generate low to mid-teens equity returns for the company [7] - The company aims to maintain disciplined growth and create long-term value for shareholders [21][73] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the competitive position in the lower middle market despite challenges faced by peers [25] - The company is focused on executing its strategy and maintaining a conservative leverage cushion to mitigate capital market volatility [19][73] - Management noted that the lower middle market remains active, with private equity sponsors still looking for deals [32] Other Important Information - The company has a robust liquidity position with approximately $438 million in cash and undrawn leverage commitments [19] - Non-accruals represented just 1.5% of the investment portfolio at fair value [16] Q&A Session Summary Question: Can you expand on the competitive dynamics in the lower middle market? - Management noted that while regional banks have fluctuated in their lending, the competitive landscape remains stable with fewer BDCs currently trading at book value [24][25] Question: What is the outlook for spreads in the coming quarters? - Management indicated that spreads have stabilized, with expectations to remain between 7% and 7.25% over the next 12 months [26] Question: What is the breakdown of the portfolio between sponsored and non-sponsored deals? - The portfolio consists of approximately 93% sponsored and 7% non-sponsored deals [30] Question: How are sponsors behaving in the current market environment? - Sponsors are still looking for deals, although last year was considered weak for deployment [31] Question: How is AI disruption risk being evaluated in the portfolio? - The company has formed an AI committee to assess AI risks in existing and new investments, indicating a proactive approach to potential disruptions [68]

Financial Data and Key Metrics Changes - The company generated pre-tax net investment income of $0.60 per share, with total investment income increasing to $61.4 million from $56.9 million in the prior quarter [3][16] - The undistributed taxable income (UTI) balance rose from $0.68 per share in December 2024 to $1.02 per share, reflecting strong realized gains of $44.5 million from equity exits over the last 12 months [3][16] - The company declared total dividends of $0.64 per share for the March quarter, including a regular dividend of $0.58 and a supplemental dividend of $0.06 [4][17] Business Line Data and Key Metrics Changes - The company closed $244 million in total new commitments across eight new portfolio companies and 16 existing portfolio companies, with add-on financings representing 29% of total new commitments [4] - The weighted average spread on new commitments was approximately 6.4%, which is considered attractive in the current competitive environment [5] - The on-balance sheet credit portfolio ended the quarter at $1.8 billion, reflecting a 19% year-over-year growth from $1.5 billion [10] Market Data and Key Metrics Changes - The credit portfolio generated a weighted average yield of 11.3% with a weighted average leverage of 3.6x EBITDA [12] - Approximately 93% of the credit portfolio is sponsor-backed, providing strong governance and operational support [10] - Cash flow coverage improved to 3.4x, up from 2.9x during the peak of base rates, indicating strong portfolio performance [14] Company Strategy and Development Direction - The company announced a joint venture with a private credit asset manager to enhance competitiveness in the lower middle market, allowing participation in larger, higher-quality deals [7][8] - The joint venture is expected to generate low to mid-teens equity returns for the company, reinforcing its strategy of disciplined growth and long-term value creation [7][8] - The company aims to maintain a conservative leverage cushion to mitigate capital market volatility while continuing to raise secured and unsecured debt capital [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the competitive position in the lower middle market, noting a reduction in competition from peers due to dividend cuts among other BDCs [25] - The company remains focused on executing its strategy and maintaining disciplined growth, with a strong emphasis on risk management and portfolio granularity [21][22] - Management highlighted the importance of maintaining strong relationships with private equity sponsors, which continue to seek opportunities despite a challenging market environment [31][32] Other Important Information - The company raised approximately $53 million in gross equity proceeds through its Equity ATM Program at a weighted average share price of $21.11, reinforcing its ability to raise capital efficiently [6][18] - The liquidity position remains robust, with approximately $438 million in cash and undrawn leverage commitments, representing more than 1.5x coverage of unfunded commitments [19] Q&A Session Summary Question: Competitive dynamics in the lower middle market - Management noted that while regional banks have become more active, the competitive landscape remains stable, with fewer BDCs currently offering dividends [24][25] Question: Outlook for spreads - The company expects spreads to remain between 7% and 7.25% over the next 12 months, with recent deals showing spreads in the mid-sixes [26] Question: Breakdown of portfolio between sponsored and non-sponsored - The portfolio consists of approximately 93% sponsored and 7% non-sponsored deals, with sponsors still actively seeking opportunities [30] Question: Activity level in deal flow - Management expressed bullishness regarding deal flow, citing strong sponsor relationships and the recent joint venture as key factors for future growth [37][39] Question: AI disruption risk evaluation - The company has established an AI committee to assess AI risks in existing and new investments, indicating a proactive approach to potential disruptions [69]

Financial Data and Key Metrics Changes - Pre-tax net investment income was $34.6 million, or $0.60 per share, an increase from the previous quarter [13] - Total investment income rose to $61.4 million, up from $56.9 million in the prior quarter, driven by increases in PIK income, fees, and dividend income [13][14] - The company's undistributed taxable income (UTI) balance increased to $1.02 per share, up from $0.68 per share in December 2024 [3] Business Line Data and Key Metrics Changes - The company closed $244 million in total new commitments across eight new portfolio companies and 16 existing portfolio companies [4] - The weighted average spread on new commitments was approximately 6.4%, considered attractive in the current competitive environment [5] - The on-balance sheet credit portfolio ended the quarter at $1.8 billion, representing a 19% year-over-year growth from $1.5 billion [8] Market Data and Key Metrics Changes - Approximately 93% of the credit portfolio is sponsor-backed, providing strong governance and operational support [8] - The credit portfolio generated a weighted average yield of 11.3% with a weighted average leverage of 3.6x EBITDA [10] - Non-accruals represented just 1.5% of the investment portfolio at fair value [14] Company Strategy and Development Direction - The company announced a joint venture with a private credit asset manager to enhance competitiveness in the lower middle market [6] - The joint venture is expected to allow participation in larger, higher-quality deals while maintaining disciplined hold sizes [6] - The company aims to maintain a conservative leverage cushion to mitigate capital market volatility [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the competitive position in the lower middle market, noting a reduction in competition from peers who have cut dividends [22] - The company anticipates continued strong deal flow and is bullish about net portfolio growth due to enhanced sponsor relationships and the new joint venture [34] - Management is actively evaluating AI disruption risks in both existing assets and new originations, indicating a proactive approach to potential market changes [67] Other Important Information - The board declared a total of $0.64 per share in dividends for the March quarter, maintaining strong dividend coverage [15] - The company's liquidity position remains robust, with approximately $438 million in cash and undrawn leverage commitments [17] - NAV per share increased to $16.75, up from $16.62 in the prior quarter, driven by the equity ATM program [16] Q&A Session Summary Question: Competitive dynamics in the lower middle market - Management noted that while regional banks have entered the market, competition has decreased as many BDCs have cut dividends, positioning the company favorably [22] Question: Outlook for spreads - Current spreads on debt have held steady, with expectations to remain between 7% and 7.25% over the next 12 months [24] Question: Breakdown of portfolio between sponsored and non-sponsored - The portfolio is currently 93% sponsored and 7% non-sponsored, with sponsors still actively seeking deals despite a challenging environment [27] Question: Activity expectations for deal flow - Management expressed bullishness for the upcoming year, citing strong sponsor relationships and the new joint venture as key drivers for growth [34] Question: AI disruption risk evaluation - The company has formed an AI committee to assess risks and opportunities related to AI in their investment process [67]

Capital Southwest Corporation Q3 2026 Earnings Presentation February 3, 2026 8333 Douglas Avenue, Suite 1100 | Dallas, Texas 75225 | 214.238.5700 | capitalsouthwest.com Important Notices Page 2 • These materials and any presentation of which they form a part are neither an offer to sell, nor a solicitation of an offer to purchase, any securities of Capital Southwest. • These materials and the presentations of which they are a part, and the summaries contained herein, do not purport to be complete and no obl ...

分组1 - Capital Southwest (CSWC) reported quarterly earnings of $0.64 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.63 per share a year ago [1] - The company posted revenues of $61.45 million for the quarter ended December 2025, exceeding the Zacks Consensus Estimate by 6.83%, compared to $51.97 million in the same quarter last year [2] - Over the last four quarters, Capital Southwest has surpassed consensus revenue estimates three times [2] 分组2 - The stock has gained approximately 5.8% since the beginning of the year, outperforming the S&P 500's gain of 1.4% [3] - The current consensus EPS estimate for the upcoming quarter is $0.56 on revenues of $57.9 million, and for the current fiscal year, it is $2.29 on revenues of $228.24 million [7] - The Zacks Industry Rank for Financial - Investment Management is currently in the bottom 34% of over 250 Zacks industries, indicating potential challenges for stocks in this sector [8]

Investment Portfolio - The total fair value of the investment portfolio increased to $2,013.2 million as of December 31, 2025, up from $1,785.3 million as of March 31, 2025[314]. - The company had investments in 132 portfolio companies with an aggregate cost of $2,031.2 million as of December 31, 2025, compared to 121 companies with a cost of $1,779.4 million as of March 31, 2025[314]. - Debt investments at fair value bearing a floating rate were $1,739.7 million, representing 95.0% of total debt investments as of December 31, 2025[314]. - Investments on non-accrual status represented approximately 1.5% of the total investment portfolio's fair value as of December 31, 2025, compared to 1.7% as of March 31, 2025[310]. - The percentage of portfolio at fair value secured by first lien increased to 90.0% as of December 31, 2025, from 88.9% as of March 31, 2025[315]. Financial Performance - Total investment income for the three months ended December 31, 2025, was $61,447,000, an increase of 18.2% compared to $51,973,000 in 2024[326]. - Net investment income for the three months ended December 31, 2025, was $36,985,000, reflecting a 22.0% increase from $30,316,000 in the same period of 2024[326]. - Total investment income for the nine months ended December 31, 2025, was approximately $174.3 million, a $22.3 million, or 14.7%, increase compared to the same period in 2024[340]. - Net investment income for the nine months ended December 31, 2025, was $100.9 million, an increase of $10.5 million, or 11.6%, compared to the same period in 2024[339]. - The net increase in net assets from operations for the three months ended December 31, 2025, was $32,896,000, a 102.2% increase from $16,268,000 in 2024[326]. Debt and Interest - The weighted average annual effective yield on debt investments was 11.3% as of December 31, 2025, down from 11.7% as of March 31, 2025[315]. - Total interest expense for the three months ended December 31, 2025, was $18.0 million, an increase of $3.3 million from $14.7 million in the same period of 2024[330]. - Interest income for the three months ended December 31, 2025, totaled $53.4 million, up from $46.1 million in the prior year, driven by a 22.5% increase in the average monthly cost basis of debt investments[328]. - Interest expense for the nine months ended December 31, 2025, was $49.3 million, an increase of $9.6 million from $39.7 million in the prior year[343]. - A hypothetical 75 basis point increase in interest rates could increase net investment income by $11.1 million[379]. Operational Metrics - The ratio of last twelve months (LTM) operating expenses, excluding interest expense, as a percentage of LTM average total assets was 1.67% as of December 31, 2025, compared to 1.61% as of December 31, 2024[305]. - The weighted average EBITDA of portfolio companies was $16,065 as of December 31, 2025, down from $18,499 as of March 31, 2025[315]. - The weighted average leverage of portfolio companies was not disclosed, but 14 companies were excluded from calculations due to non-meaningful debt to adjusted EBITDA ratios as of December 31, 2025[320]. Cash and Liquidity - As of December 31, 2025, the company had $42.6 million in cash and cash equivalents and $395.2 million of unused capacity under its credit facilities[355]. - The company had $210.0 million in borrowings outstanding under its Corporate Credit Facility as of December 31, 2025[356]. - The company anticipates continuing to fund its investment activities through existing cash, cash flows from operations, and future issuances of debt and equity[351]. Equity and Commitments - The Company established an Equity ATM Program with a maximum offering price increased to $1.0 billion as of May 21, 2024, from $650.0 million[366]. - As of December 31, 2025, the Company sold a total of 39,333,069 shares under the Equity ATM Program, raising $844.6 million in gross proceeds[367]. - The Company had approximately $284.6 million in currently unfunded commitments as of December 31, 2025[370]. - Total contractual obligations amounted to $1,365.5 million as of December 31, 2025, with significant payments due in 1-3 years totaling $327.5 million[372]. Market and Economic Conditions - The company is closely monitoring macro-economic risks, including commodity inflation and geopolitical instability, which may impact portfolio companies[318]. - The Federal Reserve decreased interest rates by 0.25% in September, October, and December of 2025, affecting the Company's gross investment income[377]. Joint Ventures and New Initiatives - The Company formed a joint venture on January 22, 2026, with a private credit asset manager, focusing on first out senior secured debt opportunities[374].

DALLAS, Feb. 02, 2026 (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 third fiscal quarter ended December 31, 2025. Third Quarter Fiscal Year 2026 Financial Highlights Total Investment Portfolio: $2.0 billion Credit Portfolio of $1.8 ...

Core Viewpoint - Capital Southwest Corporation announced the U.S. federal income tax treatment of its 2025 dividends, which totaled $2.56 per share, consisting entirely of ordinary income, including net short-term capital gains [2][3]. Dividend Tax Treatment - The 2025 dividends are classified as 100% ordinary income, with 73.89% taxed as ordinary income and 26.11% as qualified dividends [2][4]. - The final classification of the dividends includes specific amounts per share for each payment date, with a total of $2.5604 per share, broken down into ordinary dividends of $1.8918 and qualified dividends of $0.6686 [3][4]. Non-U.S. Shareholders - Approximately 82.55% of the dividends are classified as interest-related and short-term capital gains dividends, which are exempt from U.S. withholding tax for Non-U.S. residents and foreign corporation shareholders [5][6]. - Non-U.S. shareholders in a regulated investment company like Capital Southwest are exempt from U.S. withholding tax on both interest-related dividends and short-term capital gains [6][7]. Company Overview - Capital Southwest Corporation is a Dallas-based business development company with approximately $1.9 billion in investments at fair value as of September 30, 2025 [8]. - The company focuses on providing financing solutions for middle market businesses, making investments ranging from $5 million to $50 million across various capital structures [8].

Core Viewpoint - Capital Southwest Corporation has formed a joint venture with another private credit asset manager to create an off-balance sheet private fund focused on first out senior secured debt opportunities in the lower middle market [1][2]. Group 1: Joint Venture Details - The joint venture will be equally owned by Capital Southwest and its partner, with each holding a 50% equity interest [2]. - Investment and operational decisions will be made by a board of managers with equal representation from both partners [2]. Group 2: Strategic Implications - The joint venture is expected to enhance Capital Southwest's competitiveness in securing high-quality lower middle market opportunities by providing more flexible capital solutions [3]. - It will allow the company to allocate portions of larger transactions to the joint venture, maintaining portfolio granularity while broadening the range of platform companies pursued [3]. Group 3: Company Overview - Capital Southwest Corporation is a Dallas-based business development company with approximately $1.9 billion in investments at fair value as of September 30, 2025 [4]. - The company focuses on supporting the acquisition and growth of middle market businesses with investments ranging from $5 million to $50 million across various capital structures [4].

Core Insights - Capital Southwest Corporation has announced the hiring of Ryan Mullins as Managing Director, enhancing its investment team with his extensive experience in direct lending and a strong network [1][2] Company Overview - Capital Southwest Corporation is a Dallas-based business development company with approximately $1.9 billion in investments at fair value as of September 30, 2025 [3] - The company focuses on providing flexible financing solutions to support the acquisition and growth of middle market businesses, specifically targeting investments between $5 million and $50 million across various capital structures [3] Leadership and Experience - Ryan Mullins brings over 15 years of experience in the industry, including more than 10 years in private credit, having previously held positions at Peak Rock Capital, Atalaya Capital Management, and Elm Park Capital [2] - His addition is expected to significantly contribute to Capital Southwest's ability to source attractive lower middle market opportunities [2]