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Sep 30, 2020
Capital Southwest Q2 2021 Earnings Report
Announced financial results for second fiscal quarter ended September 30, 2020 and total dividends of $0.51 per share for the quarter ended December 31, 2020.
Key Takeaways
Capital Southwest reported strong performance in both the Upper and Lower Middle Market portfolios, with a portfolio appreciation of $8.4 million, increasing NAV per share from $14.95 to $15.36. The company announced Pre-Tax Net Investment Income of $0.44 per share and total dividends of $0.51 per share for the quarter.
Total Investment Portfolio: $631.2 million.
Pre-Tax Net Investment Income: $8.1 million, or $0.44 per weighted average diluted share.
Dividends: Paid $0.41 per share Regular Dividend, $0.10 per share Supplemental Dividend, totaling $0.51 per share.
Net Realized and Unrealized Portfolio Appreciation: $8.4 million.
Capital Southwest
Capital Southwest
Forward Guidance
Capital Southwest is hopeful to receive formal license approval from the U.S. Small Business Administration by the end of this calendar year, which will allow access to $175 million in long term, cost effective debt capital to deploy in the lower middle market strategy.
Positive Outlook
- Potential access to $175 million in long-term, cost-effective debt capital.
- Deployment of capital in the lower middle market strategy.
- Significant earnings power for shareholders upon SBIC license approval.
- Continued focus on supporting the acquisition and growth of middle market businesses.
- Flexibility to be creative in financing solutions and support portfolio companies over long periods.
Challenges Ahead
- Uncertainty regarding the timing and ultimate issuance of the SBIC license.
- Risks related to changes in the markets in which Capital Southwest invests.
- Changes in financial, capital, and lending markets could impact performance.
- Regulatory changes and tax treatment may affect financial results.
- Economic and business conditions, including the impact of the COVID-19 pandemic, pose risks.