Executive Summary
Capital Southwest Corporation (CSWCZ) delivered a solid EBITDA result in QQ1 2025, supported by strong fee-driven activity and cash generation. Reported revenue of $36.254 million and EBITDA of $45.012 million culminated in a net income of $14.035 million and earnings per share of $0.31. Cash flow from operating activities totaled $31.125 million, with free cash flow of $31.000 million, underscoring the company’s ability to convert earnings into cash and support distributions. However, the quarter also highlighted some sustainability concerns: net income declined year-over-year by 41.06% despite meaningful top-line growth (revenue up 19.74% YoY and 15.10% QoQ). The company paid dividends of $29.508 million while reporting a payout ratio of 210%, indicating the reliance on financing activities to fund distributions and the potential sensitivity of the dividend to earnings volatility.
The balance sheet remains substantial with total assets of approximately $1.544 billion and a debt load of about $738.6 million (net debt around $705.3 million). Cash and cash equivalents stood at $33.3 million at period end, and equity was about $777.3 million, yielding a leverage profile that supports ongoing investment activity but requires careful monitoring of liquidity and coverage in slower or more volatile markets. Absence of an earnings call transcript in the provided data limits qualitative insights from management commentary; the quantitative results suggest a business with strong EBITDA generation but with significant emphasis needed on dividend sustainability and net income drivers going forward.
Key Performance Indicators
Key Insights
Revenue: $36.254 million; cost of revenue $1.279 million; gross profit $50.786 million; gross profit margin reported as 140.08% (ratio 1.4008). EBITDA: $45.012 million; Operating income: $28.633 million; Net income: $14.035 million; EPS: $0.31; Interest expense: $12.447 million; Depreciation & amortization: $1.279 million; Net cash provided by operating activities: $31.125 million; Free cash flow: $31.1 million; Cash at end of period: $33.299 million; Dividends paid: $29.508 million; Common ...
Financial Highlights
Revenue: $36.254 million; cost of revenue $1.279 million; gross profit $50.786 million; gross profit margin reported as 140.08% (ratio 1.4008). EBITDA: $45.012 million; Operating income: $28.633 million; Net income: $14.035 million; EPS: $0.31; Interest expense: $12.447 million; Depreciation & amortization: $1.279 million; Net cash provided by operating activities: $31.125 million; Free cash flow: $31.1 million; Cash at end of period: $33.299 million; Dividends paid: $29.508 million; Common stock issued: $37.792 million; Net cash used in financing activities: $(30.074) million; Total assets: $1.544 billion; Total liabilities: $766.701 million; Total stockholders’ equity: $777.331 million; Net debt: $705.342 million; Debt to capitalisation: 0.486; Interest coverage (approximate): about 3.6x (EBITDA $45.012m vs Interest expense $12.447m) – adjustments to reported ratio may be needed due to data presentation differences; Dividend yield: ~2.5%; Price to book: ~1.52x; P/E: ~21x; Payout ratio: 210%.
YoY metrics (where available): Revenue YoY +19.74%; Gross Profit YoY +72.17%; Operating Income YoY +16.39%; Net Income YoY -41.06%; EPS YoY -50.79%.
QoQ metrics (where available): Revenue QoQ +15.10%; Gross Profit QoQ +98.43%; Operating Income QoQ +8.91%; Net Income QoQ +4.20%; EPS QoQ +3.33%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
36.25M |
19.74% |
15.10% |
| Gross Profit |
50.79M |
72.17% |
98.43% |
| Operating Income |
28.63M |
16.39% |
8.91% |
| Net Income |
14.04M |
-41.06% |
4.20% |
| EPS |
0.31 |
-50.79% |
3.33% |
Key Financial Ratios
operatingProfitMargin
55.8%
operatingCashFlowPerShare
$0.68
freeCashFlowPerShare
$0.68
Management Commentary
transcriptHighlights: No earnings call transcript data is provided for QQ1 2025 CSWCZ. As a result, there are no management quotes or themes to synthesize into this section. If a transcript or investor presentation becomes available, this section should group insights by themes (strategy, operations, market conditions) and tie quotes to the implications for execution and outlook.
No transcript quotes available in the supplied data.
— N/A
No transcript quotes available in the supplied data.
— N/A
Forward Guidance
Forward guidance is not explicitly provided in the dataset. Given the industry context and the results, investors should monitor: (1) net investment income stability and the pace of new originations across credit and private equity strategies, (2) the sustainability of the dividend given a 210% payout ratio in the quarter, including reliance on financing activities to fund distributions, (3) leverage and liquidity dynamics in a changing rate environment, (4) deployment cadence and capital allocation through syndicated facilities and new investments, and (5) sensitivity to interest rates and credit spreads that drive fund economics. Management commentary, if available, should be used to assess targeted growth in assets under management (AUM), fee-related earnings, and any changes to capital deployment strategy. The primary factors to monitor include earnings power (net investment income), cash conversion, and the ability to maintain an appropriate balance between deploying capital and returning capital to shareholders.