Capital Southwest Corporation (NASDAQ:CSWC) Q3 2019 Earnings Conference Call Transcript

Feb 05, 2019 • 11:00 am ET


Capital Southwest Corporation (NASDAQ:CSWC) Q3 2019 Earnings Conference Call Transcript


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Thank you for joining today's Capital Southwest Third Fiscal Quarter 2019 Earnings Call. Participating on the call today are Bowen Diehl, CEO; Michael Sarner, CFO; and Chris Rehberger, VP Finance.

I will now turn the call over to Chris Rehberger.

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 information, future events, changing circumstances or any other reason after the date of this press release except as required by law.

I will now hand the call off to our President and Chief Executive Officer, Bowen Diehl.

Bowen S. Diehl

Thanks, Chris. And thanks to everyone for joining us for our third quarter fiscal year 2019 earnings call. Throughout our prepared remarks, we will refer to various slides in our earnings presentation, which can be found on our website at We are pleased to be with you this morning to announce our results for the quarter. In summary, we had a strong quarter for net investment income growth and a solid quarter of originations as our deal teams continue to do an excellent job generating significant deal flow allowing us to exercise our conservative investment discipline in determining, which deals we want to pursue to closing.

As we have consistently stated, our focus remains on building a predominantly Lower Middle Market portfolio, consisting largely of 1st Lien Senior Secured Debt with equity co-investments across the loan portfolio where we believe significant equity upside opportunity exists. Further, we continue to execute under our shareholder friendly internally managed structure, which at its foundation closely aligns our interest with the interest of our fellow shareholders in generating sustainable long-term value through stable increasing dividends, operating cost efficiency, capital preservation and NAV per share growth.

In general, we added a different quarter. We exited one of our two remaining legacy equity assets at a modest gain. We completed the Company's first ever follow-on equity offering, raising $13.2 million from two prominent BDC investors. We completed the upsize and refinance of our ING Capital-led balance sheet credit facility and we opportunistically repurchased shares of Capital Southwest stock through our 10b5-1 program during the time of excessive market volatility that we saw in December.

Laid out on Slide 6 are some important summary points on our performance for the quarter. During the quarter, we earned $0.40 per share of pre-tax net investment income and paid a regular dividend of $0.36 per share. In addition, our Supplemental Dividend Program paid out $0.10 per share, funded from our sizable, undistributed