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Sep 30, 2023
Capital Southwest Q2 2024 Earnings Report
Announced financial results for the second fiscal quarter ended September 30, 2023 and an increase in total dividends.
Key Takeaways
Capital Southwest reported a strong quarter with $110 million of originations. Pre-tax net investment income was $0.67 per share, covering both the regular and supplemental dividends. The board declared an increased regular quarterly dividend of $0.57 per share and a supplemental dividend of $0.06 per share for the December 31, 2023 quarter.
Total Investment Portfolio was $1.4 billion, including a $1.2 billion credit portfolio and a $121.1 million equity portfolio.
Pre-Tax Net Investment Income was $26.4 million, or $0.67 per weighted average share outstanding.
Total dividends for the quarter ended September 30, 2023, were $0.62 per share.
Net Asset Value (NAV) per Share was $16.46.
Capital Southwest
Capital Southwest
Forward Guidance
The Board of Directors intends to continue distributing quarterly supplemental dividends while base rates remain materially above long-term historical averages and the company has a meaningful UTI balance. Future dividend declarations are at the discretion of the Board of Directors.
Positive Outlook
- Board of Directors declared an increase in our regular quarterly dividend to $0.57 per share for the December 31, 2023 quarter.
- Board of Directors declared a supplemental dividend of $0.06 per share for the December 31, 2023 quarter, resulting in total dividends for the December 31, 2023 quarter of $0.63 per share.
- Shareholder approval to increase the number of authorized shares from 40,000,000 to 75,000,000.
- Incremental shares provide Capital Southwest with the flexibility to continue our track record of raising accretive equity to maintain conservative balance sheet leverage while growing our asset base.
- Company intends to continue to distribute quarterly supplemental dividends for the foreseeable future while base rates remain materially above long-term historical averages and we have a meaningful UTI balance.
Challenges Ahead
- Future dividend declarations are at the discretion of the Board of Directors.
- Changes in the markets in which Capital Southwest invests.
- Changes in the financial, capital, and lending markets.
- Changes in the interest rate environment and its impact on our business and our portfolio companies.
- An economic downturn and its impact on the ability of our portfolio companies to operate and the investment opportunities available to us.