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Core Insights - Capital Southwest Corporation reported strong financial results for the second fiscal quarter ended September 30, 2025, with significant origination activity and a solid increase in undistributable taxable income [3][4]. Financial Highlights - The company originated approximately $245 million in new commitments, including $165.8 million in seven new portfolio companies and $79.7 million in ten existing portfolio companies [3][4]. - The Board declared a regular monthly dividend of $0.1934 for October, November, and December 2025, along with a quarterly supplemental dividend of $0.06 to be paid in December 2025 [3][23]. - Capital Southwest successfully raised $350 million at a 5.950% interest rate through its inaugural index-eligible unsecured bond transaction [3][17]. - The total investment portfolio reached $1.9 billion, with a credit portfolio of $1.7 billion, primarily consisting of 99% first lien senior secured debt [6][29]. Investment Activities - The company generated net realized gains of $3.5 million from the exit of one equity investment, contributing to an estimated undistributed taxable income of $1.13 per share [5][6]. - The weighted average yield on debt investments was reported at 11.5% [6]. Operating Results - Total investment income for the quarter was $56.9 million, an increase from $55.9 million in the prior quarter, driven by higher cash interest income and fees [7]. - Total operating expenses (excluding interest) decreased to $6.9 million from $8.0 million in the previous quarter, mainly due to reduced employee compensation [8]. - Pre-tax net investment income was $34.0 million, compared to $32.7 million in the prior quarter [9]. Balance Sheet and Liquidity - As of September 30, 2025, the company had $87.4 million in cash and cash equivalents and $632.2 million of unused capacity under its credit facilities [13]. - The regulatory debt to equity ratio was 0.91 to 1, indicating a strong capital structure [13]. Shareholder Returns - Total dividends for the quarter ended September 30, 2025, amounted to $0.6402 per share, with a regular monthly dividend coverage of 104% based on pre-tax net investment income [6][24]. - The company did not repurchase any shares under its share repurchase program during the quarter [22]. Future Outlook - Capital Southwest has scheduled a conference call to discuss the second quarter 2026 financial results, indicating ongoing transparency and engagement with investors [26].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Capital Southwest (CSWC) despite higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - CSWC is expected to report quarterly earnings of $0.58 per share, reflecting a year-over-year decrease of 12.1%, while revenues are projected to be $55.74 million, an increase of 14.4% from the previous year [3]. - The consensus EPS estimate has been revised down by 0.84% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that CSWC has a negative Earnings ESP of -5.71%, suggesting a bearish outlook from analysts [12]. - The stock currently holds a Zacks Rank of 4, making it challenging to predict an earnings beat [12]. Historical Performance - In the last reported quarter, CSWC met the expected earnings of $0.59 per share, resulting in no surprise [13]. - Over the past four quarters, CSWC has only surpassed consensus EPS estimates once [14]. Industry Comparison - In the Zacks Financial - Investment Management industry, T. Rowe Price (TROW) is expected to report earnings of $2.49 per share, a year-over-year decline of 3.1%, with revenues anticipated at $1.86 billion, up 3.9% [18]. - T. Rowe's consensus EPS estimate has been revised up by 3.4% in the last 30 days, but it currently has an Earnings ESP of 0% [19].

Core Viewpoint - Monthly dividends are preferred over quarterly payouts due to more frequent cash flow and often higher annual yields, with examples yielding between 8% and 19.8% [2] Group 1: Monthly Dividend Stocks - Monthly dividend stocks can provide substantial annual income, with potential earnings ranging from $40,000 to $99,000 on a $500,000 investment [2] - The article discusses four specific monthly dividend payers, highlighting their unique characteristics and performance [2] Group 2: Sabine Royalty Trust (SBR) - Sabine Royalty Trust is a passive income vehicle that pays distributions from income generated by natural resources, primarily from the Permian Basin [3] - The trust has no debt and has outperformed the broader energy sector, but it is sensitive to commodity prices and has variable distributions [4][7] - SBR's asset base is fixed, and it may terminate if gross revenues fall below $2 million for two consecutive years or if unitholders vote for closure [6] Group 3: Capital Southwest Corp. (CSWC) - Capital Southwest Corp. is a business development company that provides capital to lower middle market firms, with a portfolio of 122 firms [8] - The company has a high percentage of floating-rate debt, which can be advantageous in rising rate environments, and it has outperformed its peers and the S&P 500 [10] - CSWC's dividends are well-covered, and it pays monthly, with a portion of the yield coming from supplemental dividends [10] Group 4: PennantPark Floating Rate Capital (PFLT) - PennantPark Floating Rate Capital targets midsized companies and invests primarily through first-lien floating-rate debt [12][14] - The company has faced tight dividend coverage, with the possibility of a dividend reduction, but management is optimistic about growth through joint ventures [14] Group 5: Orchid Island Capital (ORC) - Orchid Island Capital is a mortgage REIT that deals in agency residential mortgage-backed securities, currently offering a yield close to 20% [16] - The company has experienced significant price declines since its IPO, leading to a reverse stock split, and has a history of reducing dividends [18][19]

Group 1 - The article provides a market analysis covering several companies including Capital Southwest Corporation, Orchid Island Capital Inc, Sabine Royalty Trust, and PennantPark Floating Rate Capital Ltd [1] Group 2 - The analysis highlights the investment opportunities and risks associated with the mentioned companies, indicating a focus on their financial performance and market positioning [1]

[FORM 8-K Filing Details](index=1&type=section&id=FORM%208-K%20Filing%20Details) This section outlines fundamental Form 8-K filing information, including registrant details and report date [Registrant and Filing Information](index=1&type=section&id=Registrant%20and%20Filing%20Information) This section provides the foundational details of the Form 8-K filing, identifying Capital Southwest Corporation as the registrant, its incorporation state, address, and the date of the report - Registrant: **CAPITAL SOUTHWEST CORPORATION**[1](index=1&type=chunk) - Date of report (Date of earliest event reported): **October 15, 2025**[1](index=1&type=chunk) - Jurisdiction of Incorporation: **Texas**[1](index=1&type=chunk) [Securities Information](index=1&type=section&id=Securities%20Information) This part details the securities registered by the company, specifically its Common Stock, and confirms its status regarding emerging growth company provisions Registered Securities | Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, $0.25 par value per share | CSWC | The Nasdaq Global Select Market | - The registrant is **not an emerging growth company**[3](index=3&type=chunk) [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) This section details the announcement of preliminary financial results for the fiscal quarter ended September 30, 2025 [Announcement of Preliminary Financial Results](index=2&type=section&id=Announcement%20of%20Preliminary%20Financial%20Results) Capital Southwest Corporation announced preliminary estimates for its financial condition and results of operations for the fiscal quarter ended September 30, 2025, through a press release issued on October 15, 2025, which is incorporated by reference - On **October 15, 2025**, Capital Southwest Corporation issued a press release announcing certain preliminary estimates of its financial condition and results of operations[4](index=4&type=chunk) - The preliminary estimates are for the fiscal quarter ended **September 30, 2025**[4](index=4&type=chunk) - A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference[4](index=4&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section lists all exhibits accompanying the Form 8-K filing, including the press release and interactive data file [Exhibits Filed](index=2&type=section&id=Exhibits%20Filed) This section lists the exhibits included with the Form 8-K filing, which primarily consist of the press release detailing the preliminary financial results and the interactive data file List of Exhibits | Exhibit No. | Description | | :------------ | :---------------------------------------------------------- | | 99.1 | Press Release issued by Capital Southwest Corporation on October 15, 2025 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [SIGNATURES](index=3&type=section&id=SIGNATURES) This section confirms the official signing and authorization of the Form 8-K report by the designated officer [Authorization and Signatory](index=3&type=section&id=Authorization%20and%20Signatory) The report confirms that it was duly signed on behalf of the registrant by an authorized officer, Michael S. Sarner, President and Chief Executive Officer, on October 15, 2025 - The report was signed on **October 15, 2025**[9](index=9&type=chunk) - Signed by **Michael S. Sarner, President and Chief Executive Officer**[9](index=9&type=chunk)

Core Insights - Capital Southwest Corporation has announced preliminary operating results for the second quarter of its 2026 fiscal year, indicating a focus on providing flexible financing solutions for middle market businesses [1][6] Financial Performance - The preliminary estimate of pre-tax net investment income for the second quarter of 2026 is projected to be between $0.60 and $0.61 per share [2] - The estimated net investment income for the same period is expected to be in the range of $0.56 to $0.57 per share [2] - The preliminary estimate of net asset value per share as of September 30, 2025, is between $16.60 and $16.64 [3] - Non-accruals as a percentage of the total investment portfolio are estimated at 2.6% at cost and 1.0% at fair value [3] Upcoming Events - Capital Southwest will release finalized second quarter 2026 results on November 3, 2025, after market close [4] - A live webcast is scheduled for November 4, 2025, at 11:00 a.m. Eastern Time for investors to participate [4][5] Company Overview - Capital Southwest is an internally managed business development company based in Dallas, Texas, with approximately $1.8 billion in investments at fair value as of June 30, 2025 [6] - The company focuses on middle market lending, supporting acquisitions and growth with investments ranging from $5 million to $50 million across various capital structures [6]

Core Insights - The equity market serves as a significant mechanism for wealth creation or destruction over the long term through daily price fluctuations [1] Group 1: Investment Focus - Pacifica Yield aims to create long-term wealth by focusing on undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Group 1 - Crude Value Insights provides an investment service and community focused on the oil and natural gas sectors, emphasizing cash flow and companies that generate it [1] - The service offers subscribers access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [1] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas market [2]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgency to invest in AI technologies now [1][13] - The energy demands of AI technologies are highlighted, with data centers consuming as much energy as small cities, leading to concerns about power grid strain and rising electricity prices [2][3] Investment Opportunity - A specific company is presented as a unique investment opportunity, positioned to benefit from the increasing energy demands of AI, owning critical energy infrastructure assets [3][6][7] - This company is described as a "toll booth" operator in the AI energy boom, collecting fees from energy exports and poised to capitalize on the onshoring trend driven by tariffs [5][6] Financial Position - The company is noted for being debt-free and holding a significant cash reserve, equating to nearly one-third of its market capitalization, which positions it favorably compared to other energy firms burdened with debt [8][10] - It also has a substantial equity stake in another AI-related company, providing indirect exposure to multiple growth engines in the AI sector [9][10] Market Trends - The article discusses the broader trends of AI infrastructure supercycles, the onshoring boom, and a surge in U.S. LNG exports, indicating a favorable environment for the company's growth [14] - The influx of talent into the AI sector is expected to drive continuous innovation and advancements, reinforcing the potential for investment in AI-related companies [12] Conclusion - The narrative concludes with a strong call to action for investors to engage in the AI market, emphasizing the potential for significant returns within a 12 to 24-month timeframe [15][19]