Capital Southwest Q3 2026 Earnings Call Transcript

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Tuesday, Feb. 3, 2026 astatine 11 a.m. ET

• Chief Executive Officer — Michael Sarner

• Chief Investment Officer — Josh Weinstein

• Chief Financial Officer — Chris Rehberger

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Michael Sarner: Thanks, Amy. And convey you each for joining america for our 3rd 4th fiscal twelvemonth 2026 net call. We are pleased to beryllium with you contiguous and look guardant to walking you done our results for the quarter. During the 3rd fiscal quarter, we generated pretax nett concern income of 60¢ per share, supported by beardown recurring net crossed the portfolio. Our undistributed taxable income equilibrium remained robust, astatine $1.02 per stock reflecting accordant realization activity. In fact, implicit the past 12 months, we person harvested $44.5 cardinal successful realized gains from equity access, driving UTI maturation from 68¢ per stock successful December 2024 to today's level.

Subsequent to 4th end, we realized an further realized summation of $6.8 cardinal from different equity exit, which should further enactment our UTI equilibrium going forward. Our committee of directors has declared a full of 58¢ successful regular dividends for January, February, and March 2026, and has besides declared a quarterly supplemental dividend of 6¢ per stock payable successful March, bringing full dividends declared for March to 64¢ per share. Turning to originations, woody travel successful the little mediate marketplace remained steadfast this quarter. We closed $244 cardinal successful full caller commitments crossed 8 caller portfolio companies, and 16 existing portfolio companies. Add-on financings proceed to beryllium an important root of originations for us.

As implicit the past 12 months, add-ons arsenic a percent of full caller committedness person been 29%. These opportunities let america to deploy superior into businesses we cognize good with proven absorption teams and sponsors. The weighted mean dispersed connected our caller commitments this 4th was astir 6.4%, which we presumption arsenic precise charismatic fixed today's competitory dispersed environment. On the capitalization front, past 4th we strengthened our equilibrium expanse by issuing $350 cardinal successful aggregate main of 5.95% notes owed 2030. This quarter, we utilized a information of the proceeds to afloat redeem our $150 cardinal notes owed 2026 and $71.9 cardinal notes owed 2028, extending our maturity illustration astatine an charismatic outgo of capital.

We besides raised astir $53 cardinal successful gross equity proceeds done our equity ATM programme astatine a weighted mean stock terms of $21.11 per stock oregon 127% of the prevailing NAV per share, reinforcing our quality to rise superior efficiently and accretively. Subsequent to 4th end, we announced a first-out elder indebtedness associated task with a backstage recognition plus manager, which I would similar to walk immoderate clip discussing. We judge this caller JV volition heighten our competitiveness successful our halfway little mediate marketplace by enabling america to enactment successful larger, higher prime deals with tighter spreads portion maintaining disciplined clasp sizes.