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Capital Southwest

Capital Southwest (CSWC) Q1 2026 Earnings

Reported Aug 6, 2025 at 4:16 PM ET · SEC Source

Q1 26 EPS

$0.59

BEAT +0.77%

Est. $0.59

Q1 26 Revenue

$55.9M

BEAT +2.99%

Est. $54.3M

vs S&P Since Q1 26

-5.1%

TRAILING MARKET

CSWC +12.1% vs S&P +17.2%

Market Reaction

Did CSWC Beat Earnings? Q1 2026 Results

Capital Southwest posted a clean beat to open fiscal 2026, with first-quarter net investment income of $0.59 per share edging past the $0.59 consensus estimate while total investment income of $55.95 million topped expectations by 2.99% and surged 54… Read more Capital Southwest posted a clean beat to open fiscal 2026, with first-quarter net investment income of $0.59 per share edging past the $0.59 consensus estimate while total investment income of $55.95 million topped expectations by 2.99% and surged 54.3% year over year. The primary engine behind the revenue strength was a higher average cost basis of investments combined with a sequential uptick in weighted average yield on debt investments to 11.8%, which pushed total investment income above both the prior quarter's $52.41 million and the year-ago $51.35 million. Realized gains from the exit of two equity investments added further momentum, driving estimated undistributed taxable income to $1.00 per share. Non-accruals declined to 0.8% of the portfolio at fair value, a meaningful improvement from 1.7% last quarter, underscoring credit quality. Looking ahead, CEO Michael Sarner pointed to significantly increased deal flow and an active origination pipeline for the September quarter, with $397 million in unused credit capacity available to support deployment.

Key Takeaways

  • • Increase in cash interest income from larger average cost basis and higher weighted average yield on debt investments (11.8%)
  • • Net realized gains of $27.2 million from exit of two equity investments
  • • Non-accruals declined to 0.8% of portfolio at fair value from 1.7% prior quarter
  • • 99% first lien senior secured credit portfolio
  • • PIK interest income represents only 5.8% of total investment income
  • • Operating leverage of 1.7% driven by internally managed structure
  • • 94% of investment income from cash sources
24/7 Wall St

CSWC YoY Financials

Q1 2026 vs Q1 2025, source: SEC Filings

24/7 Wall St

CSWC Revenue by Segment

With YoY comparisons, source: SEC Filings

Q1 26 Q4 26

“The June quarter saw continued strengthening of our balance sheet and a reduction in our overall risk profile. Our investment portfolio currently has a weighted average debt to EBITDA of 3.4x, non-accruals represent less than 1% of the portfolio at fair value, and PIK interest income represents only 5.8% of our total investment income. We believe these metrics, coupled with our corporate leverage of 0.82x, a weighted average yield on debt investments of 11.8% and an undistributable taxable income balance of $1.00 per share, illustrate both our exceptional portfolio performance as well as our conservative approach to underwriting. Looking ahead, deal flow has picked up significantly in recent months and we expect to be very active on the origination front in the September quarter. Additionally, we recently announced a change to our regular dividend payment frequency from quarterly to monthly beginning in July, which we believe is a shareholder friendly initiative. On the capitalization front, we continued to efficiently raise equity capital during the quarter, raising approximately $42 million through our Equity ATM Program. Lastly, in April 2025, we increased commitments by $25 million on our Corporate Credit Facility to $510 million and received our second SBIC license from the SBA.”

— Michael Sarner, Q1 2026 Earnings Press Release

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