Financial results of Capital Southwest Corporation
Financial results of Capital Southwest Corporation ("Capital Southwest" or "CSWC"), a business development company focused on providing financing solutions to middle market businesses.
1. Total Investment Portfolio: Capital Southwest's total investment portfolio reached $1.2 billion, representing a substantial growth of 29% during the fiscal year.
2. Credit Portfolio: The credit portfolio amounted to $1.0 billion, with 96% of it being invested in 1st lien senior secured debt. The weighted average yield on debt investments stood at 12.8%.
3. Equity Portfolio: Capital Southwest held an equity portfolio valued at $117.5 million, excluding the investment in I-45 Senior Loan Fund ("I-45 SLF").
4. I-45 Senior Loan Fund: Capital Southwest had an investment of $51.3 million in the I-45 SLF, which had a portfolio value of $143.7 million. The fund mainly consisted of 1st lien debt investments.
5. Pre-Tax Net Investment Income: Capital Southwest reported pre-tax net investment income of $22.8 million for the quarter, translating to $0.65 per weighted average share outstanding.
6. Dividends: The company paid a regular dividend of $0.53 per share and a supplemental dividend of $0.05 per share. The dividend coverage for the past twelve months was 113% of pre-tax NII.
7. Net Realized and Unrealized Depreciation: Capital Southwest recorded $4.2 million in net depreciation, with the credit portfolio accounting for $2.4 million, I-45 SLF for $1.2 million, and the equity portfolio for $0.6 million.
8. Balance Sheet: The company had $21.6 million in cash and cash equivalents, with total net assets amounting to $590.4 million. The net asset value per share (NAV) was $16.37.
1. Strong Portfolio Performance: Capital Southwest's investment portfolio demonstrated solid performance during the reported period, contributing to the company's pre-tax net investment income.
2. Growth and Diversification: The company's total investment portfolio showed significant growth, mainly driven by the expansion of the credit portfolio. The diversified holdings in both credit and equity investments contribute to the overall stability of the portfolio.
3. Dividend Distribution: Capital Southwest declared increased regular and supplemental dividends, reflecting the confidence in the portfolio's performance and excess earnings generated from the floating rate debt portfolio.
4. Financial Strength and Ratings: Capital Southwest maintained a strong balance sheet, with a Baa3 investment grade rating from Moody's Investors Service. The company's liquidity and capital resources remained sound, facilitating its investment activities.
Capital Southwest's financial results for the fourth fiscal quarter and fiscal year ended March 31, 2023, showcased positive growth, strong portfolio performance, and solid dividend distributions. With a focus on providing flexible financing solutions to middle market businesses, the company's diversified investment portfolio contributed to its overall financial strength.