DALLAS, Nov. 03, 2025 (GLOBE NEWSWIRE) -- Capital Southwest Corporation (“Capital Southwest,” “CSWC” or the “Company”) (Nasdaq: CSWC), an internally managed business development company focused on providing flexible financing solutions to support the acquisition and growth of middle market businesses, today announced its financial results for the second fiscal quarter ended September 30, 2025. Second Quarter Fiscal Year 2026 Financial Highlights Total Investment Portfolio: $1.9 billion Credit Portfolio of $ ...

Financial Performance - Adjusted Net Investment Income (NII) was $0.31 per share, exceeding the regular dividend of $0.25 per share[9] - The company declared a regular dividend of $0.25 per share and a special dividend of $0.04 per share for Q2 2025[9] - The regular dividend coverage ratio in Q2 2025 was 124%[9] - The annualized adjusted NII Return on Equity (ROE) was 13.6% for the second quarter[9] Portfolio Composition - The total portfolio fair value is $1.8 billion, diversified across 153 portfolio companies[9] - 89.4% of the portfolio is invested in senior secured debt, with 82.4% in 1st lien[9] - The weighted average yield of the performing debt portfolio is 12.0%[9] - Non-accruals declined to 3.7% of the portfolio at fair value in Q2 2025[52] Leverage and Liquidity - The company has a diverse leverage program totaling $1.6 billion[9] - 63% of the outstanding leverage is unsecured as of June 30, 2025[9] - Available liquidity is $565.5 million, including $455 million of available borrowing capacity[9]

Financial Data and Key Metrics Changes - Adjusted net investment income for Q4 2024 was $6,200,000 or $0.29 per share, a slight decrease from $6,600,000 or $0.31 per share in the previous quarter [4][17] - NAV as of 12/31/2024 was $191,800,000 or $8.85 per share, down from $198,900,000 or $9.18 per share as of 09/30/2024, representing a 3.6% decline [4][18] - The weighted average effective yield on the portfolio's debt and preferred equity was 10.2%, down from 11% in the previous quarter [18] Business Line Data and Key Metrics Changes - The investment portfolio totaled $457,000,000 at year-end, a decrease from $474,300,000 at the end of the previous quarter, consisting of debt and equity investments in 91 portfolio companies, down from 94 [12] - In 2024, the company invested $30,400,000 in seven new portfolio companies and $57,600,000 in existing portfolio companies [14] - Total investment income for Q4 2024 was $14,000,000, down from $15,700,000 in Q3 2024, primarily due to a decline in interest rates [20] Market Data and Key Metrics Changes - Middle market direct lending M&A volumes in Q4 2024 were the strongest since Q4 2021, leading to an 85% year-over-year increase in sponsored direct lending volumes for 2024 [12][13] - Private credit middle market deal issuance was 2.9 times greater than syndicated deal lending in 2024, with delayed draw term loan fundings 2.4 times greater than in 2023 [13] Company Strategy and Development Direction - The company plans to focus on growing the portfolio and addressing legacy portfolio issues, indicating a shift towards more offensive strategies in 2025 [30][31] - The strategic partnership with the Wendell Group is expected to close in Q1 2025, with Wendell committing $1,000,000,000 of new seed capital to support investment strategies [9][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the favorable market outlook and the potential for a sustainable deal environment throughout 2025, driven by lower interest rates and increased M&A activity [8][9] - The company is committed to maintaining a predominantly first lien portfolio and leveraging its credit experience and rigorous underwriting standards [26] Other Important Information - The company reported a net loss on the portfolio for Q4 2024 of $7,700,000, primarily due to unrealized mark-to-market losses [23] - Total expenses for Q4 2024 were $8,000,000, down from $9,200,000 in Q3 2024, mainly due to lower interest and debt financing expenses [22] Q&A Session Summary Question: Strategy to grow earnings and portfolio given recent contractions - Management indicated plans to clean up legacy portfolio issues and is hopeful for growth in 2025 [30][31] Question: Resolution of long-standing non-accrual investments - Management is actively working on non-accrual investments and hopes to make progress in 2025 [33][34] Question: Consideration of swapping bank credit facilities for other debt structures - Management acknowledged the consideration but emphasized strong interest from financial institutions in providing capital for diversified middle market portfolios [36][40]