Financial Data and Key Metrics Changes - The investment portfolio grew by approximately $300 million or 21% from $1.5 billion to $1.8 billion [4] - Weighted average leverage in the investment portfolio decreased to 3.5 times, with non-accruals at fair value reduced from 2.3% to 1.7% [4][27] - Pre-tax net investment income was $28.5 million or $0.56 per share, with adjusted pre-tax net investment income at $31.3 million or $0.61 per share [26] - Total investment income increased to $52.4 million from $52 million in the prior quarter [26] - The company's NAV per share increased from $16.59 to $16.70 [30] Business Line Data and Key Metrics Changes - The credit portfolio ended the quarter at $1.6 billion, representing year-over-year growth of 19% from $1.3 billion [17] - 100% of new portfolio company debt originations were first lien senior secured [17] - The equity co-investment portfolio consisted of 79 investments with a total fair value of $179 million, representing 10% of the total portfolio [19] Market Data and Key Metrics Changes - The lower middle market remains competitive, with a significant number of private equity firms represented across the investment portfolio [20] - Approximately 93% of the credit portfolio is backed by private equity firms, which provide guidance and potential junior capital support [18] Company Strategy and Development Direction - The company aims to maintain dividend sustainability, strong credit performance, and continued access to capital from multiple sources [8] - The recent approval for a second FDIC license allows for an additional $175 million in debt capital to support the lower middle market platform [6] - The company plans to methodically and opportunistically raise secured and unsecured debt capital, as well as equity capital through its ATM program [32] Management's Comments on Operating Environment and Future Outlook - The geopolitical landscape has created uncertainty, impacting the lower middle market and potentially leading to slower M&A activity [11][12] - The company has identified 7% of the debt portfolio as moderate risk due to tariff exposure, but only 1% has significant exposure with a loan-to-value above 50% [13] - Management remains optimistic about the quality of deals being underwritten, focusing on service industries less affected by macroeconomic uncertainties [36] Other Important Information - The company raised over $300 million in new debt capital commitments during the year [5] - The regular dividend increased from $2.24 per share to $2.31 per share, with an additional $0.23 per share in supplemental dividends [7][8] - The company has a robust liquidity position with approximately $384 million in cash and undrawn leverage commitments [31] Q&A Session Summary Question: How attractive is the current vintage of investments in the lower middle market? - Management believes the current deals are of high quality, particularly in service industries, while cyclical deals are being delayed or pulled from the market [36] Question: What were the main drivers of the net realized loss and markdown in the credit portfolio? - The realized and unrealized losses were primarily driven by restructurings of two portfolio companies [39] Question: When will the company start injecting capital into the new SBIC subsidiary? - Capital injection is expected to begin in the next three months, with the first draws anticipated shortly thereafter [41] Question: What is the outlook for the PIK income trend? - PIK income has increased due to a few companies electing it, but it is expected to decrease as companies return to cash payments [52] Question: What does the current pipeline look like? - The pipeline includes 3 to 5 new platform companies with expected capital commitments of $75 to $100 million, along with around $50 million in add-on activity [56]

Financial Highlights - Total balance sheet assets reached $1.9 billion as of March 31, 2025[11] - Investment portfolio at fair value was approximately $1.8 billion[16] - Q4 2025 Pre-Tax Net Investment Income ("NII") was $28.5 million, or $0.56 per share[16] - A regular dividend of $0.58 per share and a supplemental dividend of $0.06 per share were declared for the quarter ending June 30, 2025[16] - Net Asset Value per share was $16.70 as of March 31, 2025[16] Investment Activity - $149.9 million in total new committed investments were originated during the quarter, with $124.4 million funded at close[17] - New committed investments consisted of $146.1 million of first lien debt and $3.8 million of equity[17] - Proceeds of $40.6 million were generated from nine portfolio investment exits, including $24.6 million from debt investments and $16.0 million from equity investments[17] Portfolio Composition - First lien investments accounted for 88.9% of the investment portfolio at fair value as of March 31, 2025[32] - Equity investments represented 10.0% of the portfolio at fair value[32] - The weighted average yield on debt investments was 11.7%[21]

Group 1: Earnings Performance - Capital Southwest (CSWC) reported quarterly earnings of $0.54 per share, missing the Zacks Consensus Estimate of $0.62 per share, and down from $0.66 per share a year ago, representing an earnings surprise of -12.90% [1] - The company posted revenues of $52.41 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 2.43%, compared to year-ago revenues of $46.43 million [2] - Over the last four quarters, the company has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Group 2: Stock Performance and Outlook - Capital Southwest shares have lost about 3.2% since the beginning of the year, while the S&P 500 has gained 0.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.60 on revenues of $55.41 million, and $2.43 on revenues of $227.37 million for the current fiscal year [7] Group 3: Industry Context - The Financial - Investment Management industry, to which Capital Southwest belongs, is currently in the bottom 11% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions can be beneficial for investors [5] - The estimate revisions trend for Capital Southwest is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expectations of outperforming the market in the near future [6]

Core Insights - Capital Southwest Corporation reported strong financial results for the fourth fiscal quarter and the year ended March 31, 2025, with significant new originations and income generation for shareholders [1][4]. Financial Highlights - For the fourth quarter, the company achieved approximately $150 million in new committed originations, with adjusted pre-tax net investment income of $0.61 per share [4][5]. - The total investment portfolio reached $1.8 billion, with a credit portfolio of $1.6 billion, primarily consisting of 99% first lien senior secured debt [5][6]. - The company declared a regular dividend of $0.58 per share and a supplemental dividend of $0.06 per share for the quarter ending June 30, 2025, totaling $0.64 per share [4][29]. Yearly Performance - For the fiscal year 2025, total investment income was $204.4 million, a 15% increase from the previous year, driven by higher average debt investments [14][17]. - Total operating expenses for the year were $29.0 million, up from $24.1 million, primarily due to one-time expenses related to the departure of the former CEO [15][16]. - The net asset value (NAV) per share decreased slightly to $16.70 from $16.77 in the previous year, attributed to net realized and unrealized losses on investments [19][41]. Investment Activities - During the fourth quarter, the company originated $149.9 million in new commitments, including $146.1 million in first lien senior secured debt and $3.8 million in equity [7][8]. - The company recorded total net realized and unrealized losses on investments of $10.3 million for the quarter, compared to $13.7 million in the prior quarter [12][18]. Capital Resources - As of March 31, 2025, Capital Southwest had approximately $43.2 million in cash and cash equivalents, with a regulatory debt to equity ratio of 0.89 to 1 [20][21]. - The company raised over $68 million through its Equity ATM Program during the quarter, selling nearly 3 million shares at a weighted average price of $22.91 [6][25]. Future Outlook - The company received a license from the U.S. Small Business Administration to operate a second SBIC subsidiary, allowing access to an additional $175 million in cost-effective debt capital [6][26].

Technical Analysis - Capital Southwest (CSWC) has reached an important support level and surpassed resistance at the 50-day moving average, indicating a potential short-term bullish trend [1] - The 50-day simple moving average is a key indicator for traders and analysts to determine support or resistance levels, and its significance lies in marking the initial direction of a trend [1] Stock Performance - CSWC shares have increased by 6.9% over the past four weeks, reflecting positive momentum [2] - The company holds a Zacks Rank 2 (Buy), suggesting that CSWC may continue to experience upward movement [2] Earnings Estimates - There have been positive revisions in earnings estimates for CSWC, with no estimates decreasing in the past two months and one estimate increasing, leading to a rise in the consensus estimate [2][3] - The combination of positive earnings estimate revisions and favorable technical indicators positions CSWC as a stock to watch for potential gains in the near future [3]

Capital Southwest (CSWC) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, CSWC crossed above the 20-day moving average, suggesting a short-term bullish trend.The 20-day simple moving average is a well-liked trading tool because it provides a look back at a stock's price over a 20-day period. Additionally, short-term traders find this SMA very beneficial, as it smooths out short-term price trends and shows more trend reversal signals t ...

Core Insights - The article emphasizes the importance of dividend investing as a pathway to financial freedom, highlighting its accessibility and potential for steady income [1] Group 1: Investment Philosophy - The company combines financial expertise with value investing principles to create a strong financial foundation through dividend investing [1] - Dividend investing is presented as a straightforward method for individuals to work towards long-term wealth accumulation [1] Group 2: Professional Background - The company has extensive experience in mergers and acquisitions (M&A) and business valuation, having evaluated numerous businesses and participated in both sell-side and buy-side transactions [1] - Daily activities include financial modeling, conducting commercial and financial due diligence, negotiating deal terms, and engaging in numerous meetings [1] Group 3: Sector Focus - The company focuses on various sectors including technology, real estate, software, finance, and consumer staples, which are also the core of its investment portfolio [1]

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 - The upcoming earnings report is expected to show quarterly earnings of $0.62 per share, reflecting a -6.1% change year-over-year, while revenues are projected at $53.71 million, a 15.7% increase from the previous year [3]. - A positive earnings surprise could lead to a stock price increase, while a miss may result in a decline [2]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4]. - The Most Accurate Estimate for Capital Southwest is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +3.23%, suggesting a bullish outlook from analysts [10]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [8]. - Capital Southwest currently holds a Zacks Rank of 2, reinforcing the likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Capital Southwest exceeded the expected earnings of $0.62 per share by posting $0.63, resulting in a +1.61% surprise [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Conclusion - While the potential for an earnings beat exists, other factors may influence stock movement, making it essential to consider the broader context beyond just earnings results [14][16].

Core Viewpoint - Capital Southwest Corporation has declared a regular dividend of $0.58 per share and a supplemental dividend of $0.06 per share for the quarter ending June 30, 2025 [1][2]. Dividend Details - Regular Dividend Amount Per Share: $0.58 [2] - Supplemental Dividend Amount Per Share: $0.06 [2] - Ex-Dividend Date for both dividends: June 13, 2025 [2] - Record Date for both dividends: June 13, 2025 [2] - Payment Date for both dividends: June 30, 2025 [2] Dividend Reinvestment Plan - Capital Southwest offers a Dividend Reinvestment Plan (DRIP) for registered stockholders, allowing dividends to be automatically reinvested into additional shares of common stock [3]. Company Overview - Capital Southwest Corporation is based in Dallas, Texas, and is an internally managed business development company with approximately $1.7 billion in investments at fair value as of December 31, 2024 [4]. - The company focuses on middle market lending, supporting acquisitions and growth of businesses with investments ranging from $5 million to $50 million across various capital structures [4]. - As a public company with a permanent capital base, Capital Southwest has the flexibility to provide creative financing solutions and support the long-term growth of its portfolio companies [4].

Core Points - Capital Southwest Corporation has announced that its subsidiary, Capital Southwest SBIC II, LP, has received a license from the U.S. Small Business Administration to operate as a Small Business Investment Company [1] - The SBIC license allows SBIC II to issue SBA-guaranteed debentures, enabling it to borrow up to $175 million, which increases Capital Southwest's total borrowing capacity through the SBIC program to $350 million [2] - The SBA program has been integral to Capital Southwest's investment strategy in the lower middle market since it first obtained an SBIC license in April 2021 [3] - As of December 31, 2024, Capital Southwest has approximately $1.7 billion in investments at fair value and focuses on middle market businesses with investments ranging from $5 million to $50 million [4]