Capital Southwest Corporation · NASDAQ:CSWC
Capital Southwest — Q1 2026 Earnings Presentation
35 slides from Capital Southwest's earnings presentation, August 2025
Slide 1: Capital Southwest Corporation Investor Presentation
Capital Southwest Corporation Capital Southwest Corporation Investor Presentation August 2025 8333 Douglas Avenue, Suite 1100 | Dallas, Texas 75225 | 214.238.5700 | capitalsouthwest.com
Slide 2: Important Notices
Important Notices • These materials and any presentation of which they form a part are neither an offer to sell, nor a solicitation of an offer to purchase, any securities of Capital Southwest. • These materials and the presentations of which they are a part, and the summaries contained herein, do n
Slide 3: Forward-Looking Statements
Forward-Looking Statements • This presentation contains forward-looking statements relating to, among other things, the business, market conditions, financial condition and results of operations of Capital Southwest, the anticipated investment strategies and investments of Capital Southwest, and fut
Slide 4: CSWC Company Overview
CSWC Company Overview CSWC is a middle-market lending firm focused on supporting the acquisition and growth of middle-market companies across the capital structure • CSWC was formed in 1961, and elected to be regulated as a BDC in 1988 • Publicly-traded on Nasdaq: Common Stock (“CSWC”) and 7.75% Not
Slide 5: CSWC Senior Management
CSWC Senior Management Michael S. Sarner Chris T. Rehberger President and Chief Executive Officer Chief Financial Officer, Treasurer and Secretary • Joined Capital Southwest in June 2015 • Joined Capital Southwest in September 2015 • Former SVP Treasurer at American Capital • Former VP at American C
Slide 6: Lower Middle Market Credit Strategy
Lower Middle Market Credit Strategy CSWC leads financing transactions, primarily backing private equity firms that generally fit the following parameters • Flexible financing solutions to fund growth, changes of control, or other corporate events • Investments are diverse among industries, geographi
Slide 7: Strong Investment & Capitalization Track Record
Strong Investment & Capitalization Track Record • CSWC: Invested $3.4 B in 174 middle-market portfolio companies 101 portfolio company exits generating proceeds of $1.2 B and a weighted average IRR of 13.6% • I-45 SLF: Invested $645 MM in 133 middle-market credits 100 exits generating proceeds o
Slide 8: Q1 2026 Highlights
Q1 2026 Highlights Financial Highlights • Q1 2026 Pre-Tax Net Investment Income (“NII”) of $32.7 MM or $0.61 per share • Announced change to regular dividend payment frequency from quarterly to monthly ◦ Declared monthly regular dividend of $0.1934 per share for each of July, August, and September 2
Slide 9: Track Record of Consistent Dividends Continues
Track Record of Consistent Dividends Continues • In the last twelve months ended 6/30/2025, CSWC generated $2.45 per share in Pre-Tax NII and paid out $2.32 per share in Regular Dividends ◦ LTM Pre-Tax NII Regular Dividend Coverage of 106% • Cumulative Pre-Tax NII Regular Dividend Coverage of 110% s
Slide 10: History of Value Creation
History of Value Creation Total Value (Net Asset Value + Cumulative Dividends Paid) Increase from Credit Strategy of $18.25 per share through 6/30/2025 Page 10
Slide 11: Q1 2026 Investment Activity
Q1 2026 Investment Activity Investment Activity Highlights • During the quarter, CSWC originated $115.2 MM in total new committed investments ($63.9 MM funded at close) to three new portfolio companies and twelve existing portfolio companies ◦ New committed investments consisted of $113.4 MM in firs
Slide 12: CSWC Investment Portfolio Composition
CSWC Investment Portfolio Composition Maintaining appropriate portfolio leverage while receiving attractive risk- adjusted returns Investment Portfolio - Statistics (in $000's) 3/31/2025 6/30/2025 Total CSWC Total CSWC Portfolio Portfolio Number of Portfolio Companies 121 122 Total Cost $1,779,360 $
Slide 13: Quarter-over-Quarter Investment Rating Migration
Quarter-over-Quarter Investment Rating Migration Approximately 92% of all debt investments are currently rated a "1" or "2" as credit portfolio continues to demonstrate solid performance Investment Rating 3/31/2025 6/30/2025 % of % of # of Fair Value # of Fair Value Companies ($MM) Portfolio Compani
Slide 14: Granular Credit Portfolio Heavily Weighted Towards First Lien Investments
Granular Credit Portfolio Heavily Weighted Towards First Lien Investments 99% of credit portfolio in first lien senior secured loans with an average investment hold size of 0.9% as of 6/30/2025 Credit Portfolio Heavily Weighted to First Lien 99% 99% 97% 96% 93% 92% 90% 86% 82% 64% 43% 41% 28% 10% 10
Slide 15: CSWC Portfolio Mix as of June 30, 2025 at Fair Value
CSWC Portfolio Mix as of June 30, 2025 at Fair Value Current Investment Portfolio of approximately $1.8 B continues to be heavily weighted towards first lien loans and diversified across industries Current Investment Portfolio (By Type) Current Investment Portfolio (By Industry) Note: Equity represe
Slide 16: CSWC Capitalization
CSWC Capitalization • $510 MM Credit Facility: led by ING Capital (eleven banks) • $200 MM drawn as of 6/30/25 • Matures August 2028; Adjusted Term SOFR + 215 • $200 MM SPV Credit Facility: led by Deutsche Bank • $112 MM drawn as of 6/30/25 • Matures March 2029; Term SOFR + 250 • SBIC I: $175 MM Lev
Slide 17: Significant Unused Debt Capacity with Long-Term Duration
Significant Unused Debt Capacity with Long-Term Duration Earliest debt maturity occurs in October 2026 Facility Total Commitments Interest Rate Maturity Principal Drawn Undrawn Commitment October 2026 Notes (1) $150.0 MM 3.375% October 2026 $150.0 MM N/A Corporate Credit Facility $510.0 MM Term SOFR
Slide 18: Internally Managed BDC Advantages
Internally Managed BDC Advantages • We operate under a shareholder friendly Internally Managed structure which: • Aligns management incentives with long term sustainable shareholder value creation • Historically has rewarded performing Internally Managed BDCs with price to book premiums of 0.5x vers
Slide 19: Operating Leverage Trend
Operating Leverage Trend Driving exceptional Operating Leverage through benefits of internally-managed structure Total Assets Operating Expenses as % of Average Total Assets Note: Operating Leverage calculated as last twelve months operating expenses (excluding interest expense) divided by average a
Slide 20: NAV per Share Bridge for Quarter Ended 6/30/25
NAV per Share Bridge for Quarter Ended 6/30/25 Investment Portfolio Earnings / Dividends Performance Other Corporate $(0.03) per Share $(0.09) per Share $0.01 per Share Page 20
Slide 21: Interest Rate Sensitivity
Interest Rate Sensitivity Fixed vs. Floating Credit Portfolio Exposure Illustrative Annual Illustrative Annual NII Change in Base Interest Rates NII Change ($'s) Change ($ Per Share) (200 bps) (25,548,443) (0.46) (150 bps) (19,210,309) (0.35) (100 bps) (12,806,873) (0.23) (50 bps) (6,403,436) (0.12)
Slide 22: Appendix A: Investment Team
Appendix A: Investment Team Page 22
Slide 23: Investment Team with Strong Credit Experience
Investment Team with Strong Credit Experience Years Year Joined Name Title Experience CSWC Relevant Experience Michael Sarner President / Chief 30 2015 - Senior Vice President of Treasury at American Capital Executive Officer - Investment Committee Member since 2015 Josh Weinstein Senior Managing 24
Slide 24: Appendix B: Underwriting & Portfolio Management
Appendix B: Underwriting & Portfolio Management Page 24
Slide 25: Disciplined Investment Process: Investment Criteria
Disciplined Investment Process: Investment Criteria Experienced Management • Relevant experience and track record of success Team with Meaningful • Significant economic interest in the future success of the company Equity Ownership • Differentiated product and/or service that gives company a sustain
Slide 26: Disciplined Process: Focus on Capital Preservation
Disciplined Process: Focus on Capital Preservation Due Diligence Documentation Initial Portfolio Sourcing & & Evaluation Management Underwriting Closing • Extensive network • Review deal tear- • Continuous testing • Emphasis on • Monthly meeting of long standing sheets outlining of investment covena
Slide 27: Portfolio Monitoring Process
Portfolio Monitoring Process • Team-based approach with objectives to: Example Monthly Portfolio Tracker • Continually evaluate portfolio • Identify potential problems early • Prompt deal teams to proactively address issues • Monitoring mechanisms • Monthly/quarterly financials • Regular communicati
Slide 28: Valuation Process Overview
Valuation Process Overview Final Valuation Audit Update Models Begin Valuing Valuation Review 1 3rd Party Review Valuation Meeting Committee Committee/ Sign-offs Board of Directors Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Portfolio Valuation Team Valuation Team 3rd Party Valuation Final Revi
Slide 29: Appendix C: Financial Statements
Appendix C: Financial Statements Page 29
Slide 30: Balance Sheet
Balance Sheet Quarter Ended Quarter Ended Quarter Ended Quarter Ended (In Thousands, except per share amounts) 9/30/2024 12/31/2024 3/31/2025 6/30/2025 Assets Portfolio Investments $1,508,507 $1,701,286 $1,785,299 $1,780,198 Cash & Cash Equivalents 47,237 36,013 43,221 46,889 Restricted Cash — — 1,6
Slide 31: Income Statement
Income Statement Quarter Ended Quarter Ended Quarter Ended Quarter Ended (In Thousands, except per share amounts) 9/30/2024 12/31/2024 3/31/2025 6/30/2025 Investment Income Interest Income $43,698 $42,889 $44,619 $47,115 PIK Interest Income 2,398 3,246 3,982 3,260 Dividend Income 572 586 970 3,677 F
Slide 32: Portfolio Statistics
Portfolio Statistics Continuing to build a well performing credit portfolio Quarter Ended Quarter Ended Quarter Ended Quarter Ended (In Thousands) 9/30/2024 12/31/2024 3/31/2025 6/30/2025 Portfolio Statistics Fair Value of Debt Investments $1,374,041 $1,542,524 $1,605,906 $1,613,985 Average Debt Inv
Slide 33: Investment Income Detail
Investment Income Detail Constructing a portfolio of investments with recurring cash yield Quarter Ended Quarter Ended Quarter Ended Quarter Ended (In Thousands) 9/30/2024 12/31/2024 3/31/2025 6/30/2025 Investment Income Breakdown Cash Interest $42,629 $42,294 $42,985 $44,689 Cash Dividends 572 586
Slide 34: Key Financial Metrics
Key Financial Metrics Strong Pre-Tax Net Investment Income and Dividend Yield driven by net portfolio growth and investment performance Quarter Ended Quarter Ended Quarter Ended Quarter Ended 9/30/2024 12/31/2024 3/31/2025 6/30/2025 Key Financial Metrics Pre-Tax Net Investment Income Per Wtd Avg Bas
Slide 35: Corporate Information
Corporate Information Board of Directors Senior Management Fiscal Year End Inside Director Michael S. Sarner March 31 Michael S. Sarner President & Chief Executive Officer Independent Directors Independent Auditor David R. Brooks Chris T. Rehberger Christine S. Battist Chief Financial Officer, Secre