Capital Southwest Q2 2024 Earnings Report
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.