Q2 2026 Capital Southwest Corp Earnings Call Transcript
Key Points
- Capital Southwest Corp (CSWC) reported a pretax net investment income of $0.61 per share for the second fiscal quarter.
- The company increased its undistributed taxable income balance to $1.13 per share from $1 per share in the previous quarter.
- CSWC declared a total of $0.64 per share in dividends for the December quarter, including a supplemental dividend.
- The company successfully raised $350 million in aggregate principal of 5.95% notes due 2030, enhancing its balance sheet strength.
- Deal flow in the lower middle market was robust, with $245 million in total new commitments to new and existing portfolio companies.
- The weighted average yield of the credit portfolio decreased by 30 basis points during the quarter.
- Approximately 9% of the debt portfolio is performing below expectations, indicating some credit quality concerns.
- The competitive environment in the lower middle market has led to tight spread conditions.
- The company faces challenges in certain industries, such as healthcare, due to regulatory uncertainties.
- There is a risk of prepayment in the portfolio, which could impact yields despite the granular nature of the investments.
Thank you for joining today's Capital Southwest second quarter fiscal year 2026 earnings call. Participating on the call today are Michael Sarner, Chief Executive Officer; Chris Rehberger, Chief Financial Officer; Josh Weinstein, Chief Investment Officer; and Amy Baker, Executive Vice President, Accounting.
I will now turn the call over to Amy Baker.
Thank you. I would like to remind everyone that in the course of this call, we will be making certain forward-looking statements. These statements are based on current conditions, currently available information and management's expectations, assumptions and beliefs. They are not guarantees of future results and are subject to numerous risks, uncertainties and assumptions that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see Capital Southwest's publicly available filings with the SEC.
The company does not undertake any obligation to update or
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