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Dec 31, 2022
Capital Southwest Q3 2023 Earnings Report
Announced financial results for the third fiscal quarter ended December 31, 2022, reporting pre-tax net investment income of $0.60 per share and increasing total dividends to $0.58 per share for the quarter ended March 31, 2023.
Key Takeaways
Capital Southwest Corporation reported a total investment portfolio of $1.2 billion, pre-tax net investment income of $18.7 million or $0.60 per weighted average share outstanding, and declared a total dividend of $0.58 per share for the quarter ended March 31, 2023.
Total Investment Portfolio: $1.2 billion, with a credit portfolio of $990.3 million, 96% of which is 1st Lien Senior Secured Debt.
Pre-Tax Net Investment Income: $18.7 million, or $0.60 per weighted average share outstanding.
Dividends: Paid $0.52 per share Regular Dividend and $0.05 per share Supplemental Dividend, with Undistributed Taxable Income estimated at $0.34 per share at quarter end.
Net Realized and Unrealized Depreciation: $16.4 million, including net depreciation on investments of $13.0 million or (1.1%) of total portfolio at fair value.
Capital Southwest
Capital Southwest
Forward Guidance
Capital Southwest anticipates continued growth in Pre-Tax Net Investment Income, supported by its balance sheet, liquidity, leverage profile, and the current interest rate environment, and intends to continue distributing quarterly supplemental dividends while base rates remain materially above long-term historical averages, supported by realizations in its equity co-investment portfolio.
Positive Outlook
- Portfolio is performing well, producing $0.60 of Pre-Tax Net Investment Income.
- Deal activity remained strong, closing new commitments of approximately $164 million during the quarter.
- Raised $104.3 million in gross proceeds through equity ATM program and an underwritten public equity offering.
- Reduced regulatory leverage from 1.23x to 0.91x as of the current quarter end.
- Board of Directors has declared an increase in our regular quarterly dividend to $0.53 per share.
Challenges Ahead
- Future dividend declarations are at the discretion of our Board of Directors.
- Net Realized and Unrealized Depreciation: $16.4 million.
- Net realized and unrealized depreciation on investments of $13.0 million or (1.1%) of total portfolio at fair value
- $8.5 million of net depreciation related to the credit portfolio.
- $3.3 million of net depreciation related to I-45 SLF.