Q4 2024 Capital Southwest Corp Earnings Call Transcript
Key Points
- Capital Southwest Corp (CSWC) grew its total investment portfolio at fair value by 22% to $1.5 billion, demonstrating strong portfolio growth.
- Pretax net investment income increased by 18% to $2.72 per share, showing improved profitability.
- Dividends paid to shareholders increased by 10% to $2.24 per share, indicating a strong return to shareholders.
- Generated a total shareholder return of 56% for the fiscal year, ranking among the top-performing public BDCs.
- Strengthened balance sheet through capital markets activities, raising over $500 million and reducing regulatory leverage to 0.82 debt to equity.
- Increased competition in the lower middle market has led to tightening spreads, which could impact future profitability.
- Portfolio company exits generated a weighted average realized IRR of 16.5%, which, while strong, reflects potential volatility in exit outcomes.
- The equity co-investment portfolio, while providing upside, represents a smaller portion of the total portfolio and may limit exposure to equity gains.
- Nonaccrual loans increased, indicating potential credit issues within the portfolio that could affect future earnings.
- Despite strong overall performance, the net asset value per share was flat compared to the prior quarter, showing no short-term growth in per-share asset value.
Thank you for joining today's Capital Southwest Fourth Quarter and Fiscal Year 2024 Earnings Call. Participating on today's call are Bowen Diehl, CEO; Michael Sarner, CFO; Josh Weinstein, CIO; and Chris Rehberger, EVP, Finance.
I will now turn the call over to Chris Rehberger.
Thank you. I would like to remind everyone that in the course of this call, we will be making certain forward-looking statements. These statements are based on current conditions, currently available information and management's expectations, assumptions and beliefs. They are not guarantees of future results, and are subject to numerous risks, uncertainties and assumptions that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see Capital Southwest's publicly available filings with the SEC.
The company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new
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