Capital Southwest(US:CSWC)2026-02-02 21:47Investment 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].