[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents unaudited consolidated financial statements, detailing the investment portfolio, net assets, and operational results for the quarter [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Unaudited consolidated financial statements detail the $1.01 billion investment portfolio, $453.0 million net assets, and $2.5 million net increase from operations [Financial Statements Overview](index=3&type=section&id=Financial%20Statements%20Overview) Total assets grew to $1.05 billion, net investment income increased to $12.4 million, resulting in a $2.5 million net increase in net assets from operations | Indicator | June 30, 2022 (Unaudited) | March 31, 2022 | | :--- | :--- | :--- | | **Total Investments (Fair Value, in thousands)** | $1,006,640 | $936,614 | | **Total Assets (in thousands)** | $1,053,959 | $973,957 | | **Total Liabilities (in thousands)** | $600,974 | $553,090 | | **Total Net Assets (in thousands)** | $452,985 | $420,867 | | **Net Asset Value Per Share ($)** | $16.54 | $16.86 | | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Total Investment Income (in thousands)** | $22,543 | $18,579 | | **Net Investment Income (in thousands)** | $12,438 | $9,043 | | **Net Increase in Net Assets from Operations (in thousands)** | $2,510 | $15,142 | | **Net Investment Income Per Share ($)** | $0.49 | $0.43 | | **Net Increase in Net Assets from Operations Per Share ($)** | $0.10 | $0.71 | - For the three months ended June 30, 2022, net cash used in operating activities was **$69.8 million**, primarily due to **$135.0 million** in purchases and originations of investments[16](index=16&type=chunk) - Net cash provided by financing activities was **$77.3 million**, driven by **$46.1 million** from common stock offerings and **$39.0 million** from the issuance of SBA Debentures[16](index=16&type=chunk) [Consolidated Schedule of Investments](index=7&type=section&id=Consolidated%20Schedule%20of%20Investments) The $1.01 billion investment portfolio is 81.0% first lien loans, concentrated in Media, Marketing & Entertainment (11.3%) and the Northeast (21.0%) | Investment Type | Fair Value (in thousands) | % of Total Portfolio | | :--- | :--- | :--- | | First lien loans | $815,437 | 81.0% | | Second lien loans | $48,630 | 4.8% | | Subordinated debt | $1,365 | 0.1% | | Preferred equity | $45,994 | 4.6% | | Common equity & warrants | $43,513 | 4.3% | | I-45 SLF LLC | $51,701 | 5.2% | | **Total** | **$1,006,640** | **100.0%** | | Industry | Fair Value (in thousands) | % of Total Portfolio | | :--- | :--- | :--- | | Media, Marketing & Entertainment | $114,013 | 11.3% | | Business Services | $108,465 | 10.8% | | Consumer Products & Retail | $89,546 | 8.9% | | Consumer Services | $77,518 | 7.7% | | Healthcare Services | $72,743 | 7.2% | | **Other** | **$544,855** | **54.1%** | | Geographic Region | Fair Value (in thousands) | % of Total Portfolio | | :--- | :--- | :--- | | Northeast | $211,876 | 21.0% | | West | $209,291 | 20.8% | | Southeast | $195,293 | 19.4% | | Southwest | $190,065 | 18.9% | | Midwest | $133,325 | 13.3% | | **Other** | **$66,790** | **6.6%** | [Notes to Consolidated Financial Statements](index=35&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's BDC/RIC status, accounting policies, investment valuation, and $585 million in borrowings - The company operates as an internally managed **Business Development Company (BDC)** and has elected to be treated as a **Regulated Investment Company (RIC)** for tax purposes, specializing in financing middle-market companies in the U.S[119](index=119&type=chunk)[120](index=120&type=chunk) - As of June 30, 2022, **100%** of the investment portfolio consisted of privately held securities valued using significant unobservable **Level 3 inputs**, as determined by the Board of Directors[191](index=191&type=chunk) | Borrowing Type | Outstanding Balance (in thousands) | Recorded Value (in thousands) | | :--- | :--- | :--- | | SBA Debentures | $80,000 | $77,461 | | Credit Facility | $215,000 | $215,000 | | January 2026 Notes | $140,000 | $138,798 | | October 2026 Notes | $150,000 | $146,708 | | **Total** | **$585,000** | **$577,967** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=79&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the $1.01 billion investment portfolio, a 37.5% increase in net investment income to $12.4 million, and $9.9 million in net unrealized losses - The company's investment strategy focuses on providing customized debt and equity financing to **Lower Middle Market (LMM)** companies (EBITDA **$3M-$20M**) and debt capital to **Upper Middle Market (UMM)** companies (EBITDA **>$20M**)[332](index=332&type=chunk)[333](index=333&type=chunk) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Total investment income (M$)** | $22.5 | $18.6 | | **Net investment income (M$)** | $12.4 | $9.0 | | **Net realized/unrealized (loss) gain (M$)** | ($9.9) | $6.1 | | **Net increase in net assets from operations (M$)** | $2.5 | $15.1 | - During the quarter ended June 30, 2022, the company sold **2,262,852 shares** under its Equity ATM Program, raising **$46.1 million** in net proceeds[268](index=268&type=chunk)[269](index=269&type=chunk) - Cumulatively, the program has raised **$226.3 million** in net proceeds[410](index=410&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=94&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate sensitivity, with 97.7% floating-rate debt, potentially increasing annual net investment income by $6.8 million with a 100 basis point rate hike - The company is primarily subject to **interest rate risk**, which affects net interest income, the ability to originate loans, and the value of the investment portfolio[421](index=421&type=chunk) - As of June 30, 2022, **97.7%** of the debt investment portfolio at fair value had **floating interest rates**[423](index=423&type=chunk) - A hypothetical **100 basis point increase** in interest rates could increase annual net investment income by a maximum of **$6.8 million** (**$0.25 per share**), while a **100 basis point decrease** could reduce it by a maximum of **$6.4 million** (**$0.23 per share**)[423](index=423&type=chunk) [Item 4. Controls and Procedures](index=96&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2022, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the period, management concluded that the company's **disclosure controls and procedures were effective** as of June 30, 2022[428](index=428&type=chunk) - **No material changes in internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[429](index=429&type=chunk) [PART II OTHER INFORMATION](index=97&type=section&id=PART%20II%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, and other disclosures, confirming no material changes or events [Item 1. Legal Proceedings](index=97&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no currently pending material legal proceedings to which it or its assets are subject - The company is **not currently involved in any pending material legal proceedings**[432](index=432&type=chunk) [Item 1A. Risk Factors](index=97&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the Annual Report on Form 10-K filing - **No material changes to risk factors** have occurred since the filing of the Annual Report on Form 10-K for the fiscal year ended March 31, 2022[433](index=433&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=97&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales or share repurchases occurred under the $20 million program during the quarter - The company **did not sell any unregistered securities** during the reporting period[435](index=435&type=chunk) - Under the share repurchase program approved in July 2021, which authorizes up to **$20 million program** in repurchases, the company **did not repurchase any shares** during the three months ended June 30, 2022[437](index=437&type=chunk) [Other Items (3, 4, 5, 6)](index=97&type=section&id=Other%20Items) This section confirms no defaults on senior securities, no mine safety disclosures, and no other material information - The company reported **no defaults upon senior securities**, **no mine safety disclosures**, and **no other information requiring disclosure** under Item 5[439](index=439&type=chunk)[441](index=441&type=chunk)[443](index=443&type=chunk)

Financial Data and Key Metrics Changes - Total return to shareholders for the fiscal year was 18%, consisting of share price appreciation of 7% and total dividends paid of $2.52 [7] - NAV per share grew 5% to $16.86 from $16.01 in the prior year, driven by over $17 million in net realized and unrealized gains [8] - Pre-tax net investment income increased by 6% to $1.90 per share from $1.79 per share in the prior year [8] - The company generated pre-tax net investment income of $12 million or $0.50 per share for the quarter, covering the regular dividend of $0.48 per share [11][30] - The estimated UTI balance was $0.47 per share as of March 31, 2022 [33] Business Line Data and Key Metrics Changes - The investment portfolio grew by approximately $60 million or 6.8% to $937 million during the quarter, driven by $103 million in new commitments [13] - The on-balance sheet credit portfolio grew 7% to $794 million compared to $745 million in the prior quarter [18] - The equity co-investment portfolio consisted of 41 investments with a fair value of $85.2 million, including $25.1 million in embedded unrealized appreciation [17] Market Data and Key Metrics Changes - The company maintained a strong balance sheet liquidity with approximately $178 million in cash and undrawn leverage commitments [37] - The weighted average yield on all investments was 9%, with the credit portfolio yielding 9.3% for the quarter [34] Company Strategy and Development Direction - The company continues to focus on its core lower middle market lending strategy while opportunistically investing in the upper middle market [16] - The investment pipeline remains robust, with expectations for strong originations in the June quarter [21][22] - The company aims to maintain and grow both NAV per share and shareholder dividends as part of its long-term investment objective [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's ability to withstand potential economic downturns, citing a conservative underwriting approach [47] - The company is well-positioned for a rising interest rate environment, with 98% of debt assets in floating rate securities [7] - Management noted that the market for acquisition and refinancing capital remains strong, with a healthy pipeline of investment opportunities [21][22] Other Important Information - The company raised $25.2 million of equity through its ATM program at an average price of $24.27 per share [14] - A special dividend of $0.15 per share was declared for the June quarter, in addition to the regular dividend of $0.48 per share [12][30] Q&A Session Summary Question: Concerns about defaults and non-accruals in the current macro environment - Management acknowledged the difficulty in predicting defaults but emphasized their conservative underwriting approach, which has prepared the portfolio for potential economic downturns [47][48] Question: Impact of rising LIBOR on borrowers' appetite for capital - Management indicated that while rising rates could affect borrowers, the portfolio's weighted average fixed charge coverage remains solid, providing confidence in borrowers' ability to service debt [50][51] Question: Drivers of realized and unrealized gains in the quarter - Management noted that gains were primarily driven by strong performance in the equity portfolio, with several companies showing significant increases despite broader market challenges [54][55] Question: Future access to SBA draws and leverage commitments - Management confirmed that they have access to $80 million in SBA commitments and expect to seek additional leverage in the near future [75] Question: Observations on margin compression across the portfolio - Management highlighted that labor and material costs have increased, impacting margins, but noted that many companies have successfully passed on costs to customers [81][82]

Capital Southwest Corporation | --- | --- | |------------------------------------------------------------------------------------------------|-------| | | | | Q4 2022 Earnings Presentation | | | May 23, 2022 | | | 8333 Douglas Avenue, Suite 1100 \| Dallas, Texas 75225 \| 214.238.5700 \| capitalsouthwest.com | | Important Notices • 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. • The ...

Financial Position and Debt - As of March 31, 2022, the company had $205.0 million, $140.0 million, and $150.0 million in total aggregate principal amount of debt outstanding under its Credit Facility, the January 2026 Notes, and the October 2026 Notes, respectively[99]. - The company's asset coverage for borrowed amounts was 193% as of March 31, 2022[99]. - The company is required to maintain a minimum asset coverage ratio of 150% for its senior securities, which was approved by the Board of Directors[88]. - The company received an exemptive order from the SEC to exclude certain senior securities from the definition of senior securities in the asset coverage requirement[88]. - The Credit Facility provides a revolving credit line of up to $335.0 million, with $205.0 million drawn as of March 31, 2022[181]. - The January 2026 Notes have a carrying amount of $138.7 million and bear interest at a rate of 4.50% per year, maturing on January 31, 2026[187]. - The October 2026 Notes have a carrying amount of $146.5 million and bear interest at a rate of 3.375% per year, maturing on October 1, 2026[191]. - The company had $205.0 million in debt outstanding under the Credit Facility, which bears interest at LIBOR plus 2.15%[186]. - Non-compliance with covenants in the Credit Facility could accelerate repayment obligations, adversely affecting liquidity and financial condition[180]. - The asset coverage requirement for the company was reduced from 200% to 150%, increasing the risk associated with investments[243]. Investment and Regulatory Compliance - The company is regulated as a Business Development Company (BDC) under the 1940 Act, which imposes specific operational requirements and restrictions[90]. - The company must provide significant managerial assistance to portfolio companies to count their securities as qualifying assets[96]. - The company may not make investments in non-qualifying assets unless at least 70% of the value of its total assets consists of qualifying assets[95]. - The company must invest 25% of its investment capital in "smaller enterprises," defined as businesses with a tangible net worth not exceeding $6.0 million and average net income not exceeding $2.0 million[145]. - The company is subject to oversight by the SBA, including maintaining minimum financial ratios and undergoing periodic examinations[150]. - The company is subject to SBA regulations due to its SBIC I subsidiary, which could limit investment opportunities and affect operations[254]. - Compliance with SBA regulations may hinder the ability to take advantage of SBIC I's access to SBA-guaranteed debentures[256]. - The company must adhere to the reporting and disclosure requirements of the Exchange Act, including certifications by the CEO and CFO regarding financial statement accuracy[152]. - The company is required to comply with NASDAQ corporate governance listing standards to remain listed[151]. Dividend and Income Distribution - The company has adopted a dividend reinvestment plan (DRIP) that allows registered shareholders to reinvest dividends into additional shares of common stock[82]. - The company intends to distribute substantially all of its income to shareholders, which may include deemed distributions of retained net long-term capital gains[86]. - The company must distribute at least 90% of its investment company taxable income to qualify as a Regulated Investment Company (RIC) and avoid federal income tax[117]. - The company may distribute taxable dividends payable in cash or shares, with a temporary reduction of the cash distribution limit from 20% to 10% for certain periods[136]. - If the company fails to meet the RIC requirements for more than two consecutive years, it may face U.S. federal income tax on built-in gains recognized during the following five-year period[139]. - The company intends to qualify as a Regulated Investment Company (RIC) and must distribute at least 90% of its net ordinary income and realized short-term capital gains annually to maintain this status[200]. - To meet the income source requirement, at least 90% of the company's gross income must come from dividends, interest, and other specified sources[203]. - Failure to maintain RIC status could lead to significant corporate-level taxes, reducing net assets and available income for distribution[205]. Market and Economic Conditions - The company operates in a highly competitive market for investment opportunities, impacting its ability to attract and retain qualified personnel[162]. - Economic disruptions and capital market conditions may materially affect the company's financial condition and results of operations[161]. - The company is currently facing capital market disruptions and economic uncertainty, which may adversely affect its financial condition and results of operations[211]. - The COVID-19 pandemic has caused significant disruptions in the capital markets, leading to increased volatility and potential economic downturns[212]. - Portfolio companies may experience financial distress due to the pandemic, impacting their ability to meet financial obligations and potentially leading to defaults[221]. - Inflation may adversely affect the business and financial condition of portfolio companies, impacting their ability to pay interest and principal on loans[222]. - The Federal Reserve raised interest rates by 0.25% in March 2022 and by 0.50% in May 2022, indicating further increases in 2022, which may affect the cost of capital and net investment income[224]. - Political, social, and economic uncertainties, including the COVID-19 pandemic, create significant risks that could adversely impact issuers and financial markets[225]. - The COVID-19 pandemic has disrupted U.S. credit markets, particularly for middle market loans, potentially affecting the ability of borrowers to meet loan covenants[228]. - Changes in U.S. federal policy and regulations following elections could lead to increased oversight and changes in tax rates affecting the financial services industry[227]. - The U.S. debt ceiling and budget deficit concerns have raised the possibility of credit-rating downgrades, which could negatively impact liquidity and borrowing costs[235]. - The company may need to access alternative markets for capital if current market conditions persist, which could have a material adverse effect on its operations[215]. - The valuation of the company's investments may be negatively impacted by significant changes in capital markets, leading to potential discrepancies in net asset value (NAV)[216]. - The company faces competition for investment opportunities from larger financial institutions, which may limit access to attractive investments[240]. - Attracting and retaining qualified personnel is critical for the company's success, and competitive pressures may necessitate changes in compensation packages[241]. - Compliance with public company requirements diverts management's time and resources, potentially impacting business operations[248]. Risk Factors - The potential for gain or loss on investments is magnified due to the company's use of leverage, increasing investment risk[184]. - The company may face challenges in meeting the Annual Distribution Requirement due to original issue discount or other non-cash income[125]. - The company may need to restructure investments in portfolio companies facing financial difficulties, which could result in non-qualifying income[126]. - Investments in non-U.S. securities may be subject to non-U.S. taxes, potentially reducing yield on such investments[128]. - The company is exposed to risks associated with global economic instability[277]. - The impact of military or security operations on the economy remains uncertain[277]. - The overall financial condition may be affected by external disruptive events[277]. - Cybersecurity risks and system failures could significantly disrupt business operations and negatively impact financial results and stock price[264]. - The company relies heavily on information systems, and any failure could lead to operational delays and financial losses[265]. - Legislative changes regarding taxes could adversely affect the company's ability to qualify for tax treatment as a RIC and impact shareholders[263]. - Environmental, social, and governance (ESG) factors may adversely affect the company's business and require changes to business practices[233]. - The company is restricted from entering into transactions with affiliates without prior approval from independent directors and, in some cases, the SEC[249]. - Future terrorist activities or natural disasters could weaken the domestic or global economy[277]. - Losses from terrorist attacks and natural disasters are generally uninsurable[277]. - These events could negatively affect the businesses in which the company invests directly or indirectly[277].

Capital Southwest (NASDAQ:CSWC) Q3 2022 Results Conference Call February 1, 2022 11:00 AM ET Company Participants Bowen Diehl - CEO Michael Sarner - CFO Chris Rehberger - VP, Finance Conference Call Participants Kevin Fultz - JMP Securities Mickey Schleien - Ladenburg Bryce Rowe - Hovde Robert Dodd - Raymond James Sarkis Sherbetchyan - B. Riley Securities Operator Thank you for joining today's Capital Southwest Third Quarter Fiscal Year 2022 Earnings Call. Participating on the call today are Bowen Diehl, CE ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2021 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ……………..to …………….. Commission File Number: 814-00061 | --- | --- | |------------------------------------------------------------------------------------ ...

Capital Southwest (NASDAQ:CSWC) Q2 2022 Results Conference Call November 2, 2021 11:00 AM ET Company Participants Bowen Diehl - CEO Michael Sarner - CFO Chris Rehberger - VP, Finance Conference Call Participants Kevin Fultz - JMP Securities Mickey Schleien - Ladenburg Bryce Rowe - Hovde Robert Dodd - Raymond James Sarkis Sherbetchyan - B. Riley Securities Operator Thank you for joining today’s Capital Southwest Second Quarter Fiscal Year 2022 Earnings Call. Participating on the call today are Bowen Diehl, C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ……………..to …………….. Commission File Number: 814-00061 | --- | --- | |----------------------------------------------------------------------------------- ...

Capital Southwest Corporation | --- | --- | |-----------------------------------------------------------------------------------------------------------|-------| | | | | Q1 2022 Earnings Presentation August 3, 2021 | | | 5400 Lyndon B. Johnson Freeway, Suite 1300 \| Dallas, Texas 75240 \| 214.238.5700 \| capitalsouthwest.com | | Important Notices • 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 Capita ...

Capital Southwest (NASDAQ:CSWC) Q1 2022 Earnings Conference Call August 3, 2021 11:00 AM ET Company Participants Chris Rehberger - Vice President-Finance Bowen Diehl - Chief Executive Officer Michael Sarner - Chief Financial Officer Conference Call Participants Kevin Fultz - JMP Securities Kyle Joseph - Jefferies Bryce Rowe - Hovde Group Sarkis Sherbetchyan - B. Riley Securities Matt Tjaden - Raymond James Operator Thank you for joining today’s Capital Southwest First Quarter Fiscal Year 2022 Earnings Call. ...