Capital Southwest (CSWC) Q3 2026 earnings summary

Executive summary

• Pre-tax net investment income was $34.6 million ($0.60 per share), with total investment income of $61.4 million, reflecting strong portfolio growth and consistent dividend coverage.

• Net asset value per share increased to $16.75 as of December 31, 2025, up from $16.62 in the prior quarter.

• Total investment portfolio reached $2.0 billion, with a credit portfolio of $1.8 billion and equity portfolio of $182.7 million.

• Paid total dividends of $0.64 per share for the quarter, including regular and supplemental dividends.

• Raised $53 million through the equity ATM program at a 27% premium to NAV and redeemed $221.9 million in notes.

Financial highlights

• Weighted average yield on debt investments was 11.3%, with total investment income up from $56.9 million in the prior quarter.

• Regulatory debt to equity ratio was 0.89x at quarter end.

• Non-accruals represented 1.5% of the investment portfolio at fair value.

• Estimated undistributed taxable income was $1.02 per share at quarter end.

• LTM operating leverage ended at 1.7%, below the BDC industry average.

Outlook and guidance

• Expectation to maintain strong dividend coverage and continue distributing supplemental dividends, supported by UTI and unrealized appreciation.

• Management expects the new joint venture with a private credit asset manager to broaden investment opportunities and drive further improvements in operating leverage.

• Spreads on new originations expected to remain between 7% and 7.25% over the next 12 months.

• Bullish outlook for deal flow and net portfolio growth, aided by expanded sponsor relationships and new origination talent.