Executive Summary
Capital Southwest Corporation (CSWCZ) reported QQ1 2026 results with strong profitability and a sizable investment base, underscored by an EBITDA margin of 58.7% and a net income margin of 34.7%. Revenue of $77.88 million reflected a 114.8% year-over-year increase, while quarterly figures showed a sequential revenue decline of 11.9% versus the prior quarter. Net income rose 92.4% year over year but declined sharply QoQ due to seasonal/portfolio factors and non-operating items, posting $27.00 million and basic/diluted EPS of $0.50/$0.59 respectively. The company’s balance sheet shows substantial invested assets (~$1.78 billion) and a solid equity base ($916.5 million), with total assets at $1.882 billion and total liabilities of $965.9 million. Cash and cash equivalents stood at $46.9 million, while total debt was $394.6 million and net debt $347.7 million. The current ratio is modest at roughly 0.20, suggesting near-term liquidity dynamics that may reflect portfolio deployment and financing structure typical for asset managers operating with asset-backed financing and interval liquidity needs. Overall, CSWCZ demonstrates durable profitability and capital deployment capacity in a challenging rate environment, though QoQ volatility and balance-sheet liquidity warrants monitoring for near-term risk management.
Key Performance Indicators
QoQ: -11.94% | YoY:114.82%
QoQ: 168.02% | YoY:53.35%
QoQ: 155.51% | YoY:59.72%
QoQ: -55.74% | YoY:92.38%
QoQ: -62.41% | YoY:61.29%
Key Insights
Revenue: 77.88M (YoY +114.8%; QoQ -11.94%); Gross Profit: 77.88M (YoY +53.35%; QoQ +168.02%); Operating Income: 45.73M (YoY +59.72%; QoQ +155.51%); Net Income: 27.00M (YoY +92.38%; QoQ -55.74%); EPS (basic/diluted): 0.50 / 0.59 (YoY EPS +61.29%; QoQ EPS -62.41%); EBITDA: 45.73M; EBITDA Margin: 58.72%; Net Margin: 34.67%; Weight avg shares (outstanding): 53.52M (basic) / 62.78M (diluted). Balance sheet highlights include Cash and Equivalents: 46.89M; Total Assets: 1.882B; Total Liabilities: 0.966...
Financial Highlights
Revenue: 77.88M (YoY +114.8%; QoQ -11.94%); Gross Profit: 77.88M (YoY +53.35%; QoQ +168.02%); Operating Income: 45.73M (YoY +59.72%; QoQ +155.51%); Net Income: 27.00M (YoY +92.38%; QoQ -55.74%); EPS (basic/diluted): 0.50 / 0.59 (YoY EPS +61.29%; QoQ EPS -62.41%); EBITDA: 45.73M; EBITDA Margin: 58.72%; Net Margin: 34.67%; Weight avg shares (outstanding): 53.52M (basic) / 62.78M (diluted). Balance sheet highlights include Cash and Equivalents: 46.89M; Total Assets: 1.882B; Total Liabilities: 0.966B; Total Equity: 0.916B; Total Debt: 394.59M; Net Debt: 347.70M; Current Assets: 46.89M; Current Liabilities: 230.86M; Short-Term Debt: 223.48M; Long-Term Debt: 171.12M; Investments: 1.780B; Equity Ratio: ~48.7%; Current Ratio: ~0.20.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
77.88M |
114.82% |
-11.94% |
| Gross Profit |
77.88M |
53.35% |
168.02% |
| Operating Income |
45.73M |
59.72% |
155.51% |
| Net Income |
27.00M |
92.38% |
-55.74% |
| EPS |
0.50 |
61.29% |
-62.41% |
Management Commentary
No earnings call transcript data provided in the supplied materials. As a result, there are no management quotes to anchor the discussion within this report. The following themes are typical for CSWCZ in this sector and are used to frame qualitative considerations absent direct transcript quotes:
- Strategy & portfolio deployment: The sizable invested assets base (~$1.78B) supports continued fee generation and yield stability through private credit and venture-like strategies in the middle market.
- Portfolio quality & risk management: Given elevated net debt and a small current asset base, credit discipline and diversification across industries remain critical to maintain earnings resilience.
- Capital deployment & liquidity: With current liquidity constrained (high short-term debt vs cash), ongoing deployment pace and access to market financing are pivotal to sustaining growth and fee income.
Forward Guidance
There is no explicit forward guidance disclosed in the provided data. Given the environment for financial services and asset managers, the key near-term factors to watch include: (1) continued portfolio origination and mix between debt and equity co-investments, (2) credit quality and realized vs. unrealized returns on portfolio companies, (3) ability to roll financing and manage liquidity given the elevated short-term debt load, and (4) fee-related earnings growth from asset management activity and ongoing fund deployment. Investors should monitor quarterly diversification in the investment portfolio, changes in weighted average yield on new investments, and any shifts in leverage or capital structure that could affect liquidity and earnings volatility. A constructive longer-term thesis rests on disciplined deployment in the mid-market segment, prudent risk controls, and stable or growing fee income aligned with AUM growth.