CSWC.NASDAQCapital Southwest CORP
10-Q: Capital Southwest Reports Strong Investment Income Growth
Sentiment:
Quarterly Report
Capital Southwest Corporation reported a significant increase in investment income for the six months ended September 30, 2025, driven by portfolio growth.
Delay expectedThe maturity date for ZIPS CAR WASH, LLC's Delayed Draw Term Loan A and B is under ongoing negotiations with the portfolio company and other lenders.
Capital raiseIssued $350.0 million in aggregate principal amount of 5.950% Notes due 2030 in September 2025.Raised $80.9 million in net proceeds through the Equity ATM Program for the six months ended September 30, 2025, with $208.0 million still available under the program.SBIC II received a license from the SBA on April 17, 2025, allowing it to obtain leverage by issuing up to $40.0 million in SBA Debentures, none of which was drawn as of September 30, 2025.
Better than expectedTotal investment income increased by 12.8% for the six months ended September 30, 2025, indicating strong revenue generation.Net investment income grew by 6.4% for the six months ended September 30, 2025, demonstrating improved profitability from core investment activities.Net increase in net assets from operations surged by 43.3% for the six months ended September 30, 2025, reflecting overall positive operational performance.The company's asset coverage ratio of 208% is robust and significantly exceeds regulatory requirements, indicating strong financial health.
Summary
- Total investment income increased by $12.8 million, or 12.8%, to $112.9 million for the six months ended September 30, 2025, compared to $100.1 million in the prior year.
- Net investment income rose by $3.8 million, or 6.4%, to $63.9 million for the six months ended September 30, 2025, up from $60.0 million in the same period last year.
- The company reported a net increase in net assets from operations of $52.6 million for the six months ended September 30, 2025, a 43.3% increase from $36.7 million in the prior year.
- Total investment portfolio fair value grew to $1,877.9 million as of September 30, 2025, from $1,785.3 million as of March 31, 2025.
- The company's asset coverage ratio stood at a strong 208% as of September 30, 2025, well above the 150% regulatory requirement.
- Debt investments at fair value bearing a floating rate constituted 96.6% of the portfolio, with 100% of these subject to contractual minimum interest rates.
- Weighted average annual effective yield on debt investments was 11.5% as of September 30, 2025.
- Weighted average leverage through CSWC security was 3.5x, indicating stable risk positioning.
- The company issued $350.0 million in aggregate principal amount of 5.950% Notes due 2030 in September 2025.
- Redeemed $150.0 million of October 2026 Notes and $71.9 million of August 2028 Notes in full on October 13, 2025, post-period end.
Sentiment
Score: 7
Explanation: The company demonstrated strong growth in investment income and net investment income, coupled with a robust asset coverage ratio. While there was net unrealized depreciation and increased interest expense, the overall operational performance and strategic capital management indicate a positive trajectory, albeit with awareness of market risks.
Positives
- Total investment income increased by 12.8% for the six months ended September 30, 2025, demonstrating strong revenue generation.
- Net investment income grew by 6.4% for the six months ended September 30, 2025, indicating improved profitability from core investment activities.
- Net increase in net assets from operations surged by 43.3% for the six months ended September 30, 2025, reflecting overall positive operational performance.
- The investment portfolio's fair value increased by $92.6 million from March 31, 2025, to September 30, 2025, showing portfolio growth.
- A high percentage (96.6%) of debt investments are floating rate, with 100% subject to interest rate floors, providing protection in a rising rate environment.
- The asset coverage ratio of 208% significantly exceeds the regulatory minimum, indicating robust financial health and capacity for future borrowings.
- Successful issuance of $350.0 million in September 2030 Notes strengthens the company's long-term capital structure.
- Active management of debt maturities through the redemption of October 2026 and August 2028 Notes post-period end.
Negatives
- Net unrealized depreciation on investments, net of tax, was $22.0 million for the six months ended September 30, 2025, compared to $13.7 million in the prior year, indicating a decline in portfolio fair value relative to cost.
- Interest expense increased by 25.0% to $31.3 million for the six months ended September 30, 2025, due to higher average borrowings, despite a slight decrease in the weighted average interest rate.
- The ratio of operating expenses to average net assets increased to 9.94% from 9.86% year-over-year.
- Net asset value per share decreased to $16.62 as of September 30, 2025, from $16.70 as of March 31, 2025.
Risks
- Exposure to interest rate risk, as net investment income is dependent on the spread between borrowing and investment rates, and changes in SOFR and Prime rates can impact earnings.
- Potential for a prolonged reduction in interest rates to reduce gross investment income, which may not be fully offset by decreases in fixed-rate debt liabilities.
- Uncertainty in the valuation process for privately held debt and equity instruments, as fair values may differ materially from values in a ready market.
- Impact of commodity inflation, financial market instability, supply chain disruptions, and geopolitical instability (e.g., war in Ukraine, Middle East conflict, U.S.-China relations) on portfolio companies and the macro-economic environment.
- Risk of deterioration in U.S. middle market companies' results if the U.S. economy enters a protracted recession.
- The company's ability to meet certain portfolio diversification requirements for RIC tax treatment in future years may not be controllable.
- Unfunded debt commitments totaling $333.5 million as of September 30, 2025, represent future cash requirements and potential liquidity risk if drawn upon unexpectedly.
- Investments on non-accrual status represented 1.0% of the total investment portfolio's fair value and 2.6% at cost as of September 30, 2025, indicating potential for impaired interest payments.
Future Outlook
Management believes that the company's cash and cash equivalents, cash available from investments, and commitments under its credit facilities are adequate to meet its needs for the next twelve months. The company anticipates continuing to fund investment activities through existing cash, operating cash flows, utilization of credit facilities, and future issuances of debt and equity. Policymakers continue to emphasize their commitment to monitoring and addressing inflationary pressures, and there is no assurance regarding the magnitude or timing of future federal funds rate adjustments. The company is closely monitoring the effect of market volatility on portfolio companies and investment activities, increasing oversight of credits in vulnerable industries to mitigate credit risk.
Management Comments
- We continue to observe commodity inflation, elements of financial market instability (including elevated interest rates), supply chain disruptions, changes to U.S. tariff and import/export regulations, and elements of geopolitical instability (including the ongoing war in Ukraine, conflict in the Middle East, and U.S. and China relations).
- Changes to trade policies, including the imposition of new tariffs, could disrupt supply chains and may negatively impact the financial condition of certain of our portfolio companies as well as the macro-economic environment.
- In the event that the U.S. economy enters into a protracted recession, it is possible that the results of certain U.S. middle market companies could experience deterioration.
- We are closely monitoring the effect of such market volatility may have on our portfolio companies and our investment activities, and we have also increased oversight of credits in vulnerable industries to mitigate any decline in loan performance and reduce credit risk.
Industry Context
The company operates in the middle market financing sector, which historically faces limited access to traditional bank financing. Its strategy of providing customized debt and equity solutions positions it to fill this gap. The current economic environment, characterized by elevated interest rates, inflationary pressures, and geopolitical instability, presents both challenges and opportunities. While higher interest rates can increase borrowing costs for portfolio companies, they can also lead to higher interest income for the company due to its predominantly floating-rate debt portfolio. The increased oversight of vulnerable industries reflects a proactive approach to managing credit risk in a volatile market, aligning with broader industry trends of cautious lending in uncertain times.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Plan Amendment | Shareholders approved an amendment to the 2021 Employee Plan to increase the total number of shares available for issuance thereunder by 1,850,000 (from 1,200,000 to 3,050,000). | 2025-07-24 | Increases the pool of shares available for employee compensation, potentially enhancing employee retention and alignment with shareholder interests. |
Legal Proceedings
- No currently pending material legal proceedings to which the company is a party or to which any of its assets are subject.
Related Party Transactions
- No management fees were received from portfolio companies during the three and six months ended September 30, 2025 and 2024.
Stakeholder Impact
- Shareholders: Positive impact from increased net investment income and net assets from operations, but diluted NAV per share and unrealized depreciation could be a concern. Equity ATM program and new debt issuances could impact share value and future returns.
- Employees: Positive impact from continued share-based compensation plans and 401(k) contributions, with an expanded share pool for the 2021 Employee Plan.
- Portfolio Companies: Continued access to financing through debt and equity investments, including unfunded commitments, supporting their growth and operational needs. Increased oversight of vulnerable credits may affect some companies.
Next Steps
- Continue to monitor the effect of market volatility on portfolio companies and investment activities.
- Maintain increased oversight of credits in vulnerable industries to mitigate credit risk.
- Manage the maturity date negotiations for ZIPS CAR WASH, LLC's Delayed Draw Term Loans.
- Potentially utilize the remaining $208.0 million available under the Equity ATM Program.
- Potentially draw on the $40.0 million leverage commitment from the SBA for SBIC II.
Key Dates
| Date | Description |
|---|---|
| 2010-07-18 | Termination date for the right to grant restricted stock awards under the 2010 Plan. |
| 2015-10-01 | Effective date of the 401(k) plan. |
| 2016-08-01 | Entry into the senior secured revolving credit facility (Corporate Credit Facility). |
| 2017-08-01 | Acquisition date for ALLIANCE SPORTS GROUP, L.P membership preferred interest. |
| 2018-02-14 | Acquisition date for ITA HOLDINGS GROUP, LLC Class A Membership Interest. |
| 2018-04-10 | Acquisition date for AMERICAN NUTS OPERATIONS LLC Class C Common Units. |
| 2018-08-31 | Acquisition date for ASC ORTHO MANAGEMENT COMPANY, LLC Common Units. |
| 2018-11-09 | Acquisition date for ROSELAND MANAGEMENT, LLC First Lien and Class A Units. |
| 2018-12-13 | Acquisition date for ACE GATHERING, INC. First Lien. |
| 2019-03-04 | Establishment of the Equity ATM Program. |
| 2019-03-21 | Acquisition date for SCRIP, INC. First Lien and Shares of Common Stock. |
| 2019-03-29 | Acquisition date for ITA HOLDINGS GROUP, LLC Warrants (Expiration March 29, 2029). |
| 2019-11-01 | Acquisition date for GRAMMATECH, INC. Revolving Loan and First Lien, and Class A Units. |
| 2019-11-15 | Acquisition date for TRAFERA, LLC (FKA TRINITY 3, LLC) Class A Units. |
| 2019-12-18 | Acquisition date for NINJATRADER, LLC First Lien and Preferred Units. |
| 2020-02-04 | Increase in maximum amount for Equity ATM Program to $100.0 million and addition of two sales agents. |
| 2020-07-15 | Acquisition date for ALLIANCE SPORTS GROUP Unsecured Convertible Note. |
| 2020-09-17 | Acquisition date for SONOBI, INC. Class A Common Units. |
| 2020-09-30 | Acquisition date for TRAFERA, LLC First Lien. |
| 2020-11-04 | Issuance of $230.0 million in 5.125% convertible notes due 2029 (2029 Convertible Notes). |
| 2020-12-11 | Acquisition date for AAC NEW HOLDCO INC. First Lien, Common Units, and Warrants (Expiration December 11, 2025). |
| 2020-12-29 | Issuance of $75.0 million in 4.50% Notes due 2026 (Existing January 2026 Notes). |
| 2021-01-04 | Acquisition date for FLIP ELECTRONICS, LLC Common Units. |
| 2021-02-01 | Acquisition date for BP LOENBRO HOLDINGS INC. First Lien. |
| 2021-02-28 | Issuance of additional $65.0 million in January 2026 Notes. |
| 2021-04-20 | SBIC I received a license from the SBA. |
| 2021-04-30 | Acquisition date for SHEARWATER RESEARCH, INC. Class A Preferred Units and Class A Common Units. |
| 2021-05-26 | Increase in Equity ATM Program to $250.0 million and reduction in sales agent commission. |
| 2021-06-01 | Acquisition date for FOODPHARMA SUBSIDIARY HOLDINGS, LLC Class A Units. |
| 2021-06-30 | Acquisition date for HYBRID PROMOTIONS, LLC Second Lien. |
| 2021-07-18 | Termination of the 2010 Plan. |
| 2021-07-19 | Receipt of exemptive order superseding prior order for 2010 Plan. |
| 2021-07-28 | Effective date of the 2021 Employee Plan and approval of share repurchase program. |
| 2021-08-10 | Acquisition date for MUENSTER MILLING COMPANY Revolving Loan and First Lien. |
| 2021-08-11 | Receipt of exemptive order from SEC to exclude SBIC Subsidiaries' senior securities from asset coverage requirement. |
| 2021-08-16 | Acquisition date for LLFLEX, LLC First Lien. |
| 2021-08-23 | Acquisition date for PIPELINE TECHNIQUE LTD. Revolving Loan and First Lien. |
| 2021-08-27 | Acquisition date for APPLE ROOFING ADMINISTRATIVE SERVICES, LLC Revolving Loan and First Lien Term Loan A. |
| 2021-08-31 | Entry into share repurchase agreement. |
| 2021-09-09 | Acquisition date for WELL-FOAM, INC. Revolving Loan and First Lien. |
| 2021-09-10 | Pooling date for SBA Debentures. |
| 2021-09-17 | Acquisition date for SONOBI, INC. Class A Common Units. |
| 2021-09-22 | Pooling date for SBA Debentures. |
| 2021-09-30 | Acquisition date for TRAFERA, LLC First Lien. |
| 2021-10-01 | Acquisition date for ISI ENTERPRISES, LLC Revolving Loan and First Lien, and Series A Preferred Units. |
| 2021-10-15 | Acquisition date for CATBIRD NYC, LLC Revolving Loan and First Lien, and Class A Units and Class B Units. |
| 2021-10-21 | Acquisition date for BROAD SKY NETWORKS LLC Series C Preferred Units. |
| 2021-10-29 | Acquisition date for INFOLINKS MEDIA BUYCO, LLC LP interest. |
| 2021-11-09 | Acquisition date for AIR CONDITIONING SPECIALIST INC. Revolving Loan and First Lien. |
| 2021-11-19 | Acquisition date for WINTER SERVICES OPERATIONS, LLC Revolving Loan and First Lien Term Loan A. |
| 2021-11-28 | Acquisition date for LGM PHARMA LLC Revolving Loan and First Lien Term Loan A. |
| 2021-12-06 | Acquisition date for MERCURY ACQUISITION 2021, LLC First Lien and Second Lien, and Series A Units. |
| 2021-12-08 | Acquisition date for SPOTLIGHT AR, LLC Revolving Loan and First Lien, and Common Units. |
| 2021-12-29 | Acquisition date for LASH OPCO, LLC Revolving Loan and First Lien. |
| 2021-12-31 | Acquisition date for LIGHTING RETROFIT INTERNATIONAL, LLC Revolving Loan and First Lien, and Series A Preferred units and Common units. |
| 2022-01-07 | Acquisition date for CADMIUM, LLC Revolving Loan and First Lien. |
| 2022-01-10 | Acquisition date for GRAMMATECH, INC. Class A-1 Units. |
| 2022-01-18 | Acquisition date for ATS OPERATING, LLC Revolving Loan and First Lien Term Loan A, and Preferred Units. |
| 2022-02-11 | Acquisition date for ZIPS CAR WASH, LLC Delayed Draw Term Loan A. |
| 2022-02-22 | Acquisition date for BURNING GLASS INTERMEDIATE HOLDING COMPANY, INC. Revolving Loan and First Lien. |
| 2022-03-23 | Pooling date for SBA Debentures. |
| 2022-04-04 | Acquisition date for MICROBE FORMULAS LLC Revolving Loan and First Lien. |
| 2022-05-16 | Receipt of Superseding Order covering employees and non-employee directors. |
| 2022-05-17 | Acquisition date for US COURTSCRIPT HOLDINGS, INC. First Lien and Class D-3 Units. |
| 2022-06-06 | Acquisition date for LIGHTNING INTERMEDIATE II, LLC Revolving Loan and First Lien, and LLC interest. |
| 2022-06-08 | Acquisition date for OUTERBOX, LLC Class A Common Units. |
| 2022-06-16 | Acquisition date for 360 QUOTE TOPCO, LLC Revolving Loan and First Lien. |
| 2022-06-21 | Acquisition date for FOODPHARMA SUBSIDIARY HOLDINGS, LLC First Lien Term Loan A. |
| 2022-07-01 | Acquisition date for STATINMED, LLC Class A Preferred Units and Class B Preferred Units. |
| 2022-07-27 | Effective date of the Non-Employee Director Plan. |
| 2022-08-02 | Increase in Equity ATM Program to $650.0 million and entry into Third Amended and Restated Senior Secured Revolving Credit Agreement. |
| 2022-09-11 | Acquisition date for STUDENT RESOURCE CENTER LLC Senior Preferred Units. |
| 2022-09-21 | Pooling date for SBA Debentures. |
| 2022-09-23 | Acquisition date for APPLE ROOFING ADMINISTRATIVE SERVICES,LLC (FKA ROOF OPCO, LLC) Class A Units. |
| 2022-09-26 | Acquisition date for ROSELAND MANAGEMENT, LLC Class A-1 Units. |
| 2022-09-30 | Acquisition date for GULF PACIFIC ACQUISITION, LLC Revolving Loan and First Lien. |
| 2022-10-31 | Acquisition date for CDC DENTAL MANAGEMENT CO., LLC Revolving Loan and First Lien Term Loan A. |
| 2022-11-25 | Acquisition date for ACACIA BUYERCO V LLC Revolver Loan and First Lien Term Loan A, and Class B-2 Units. |
| 2022-12-07 | Acquisition date for EXACT BORROWER, LLC Revolving Loan and First Lien Term Loan A, and Common Units. |
| 2022-12-15 | Acquisition date for GAINS INTERMEDIATE, LLC Revolving Loan and First Lien Term Loan A. |
| 2022-12-18 | Acquisition date for MUENSTER MILLING COMPANY, LLC Class A-2 Units. |
| 2022-12-20 | Acquisition date for DYNAMIC COMMUNITIES, LLC First Lien Term Loan A and Class A Preferred Units. |
| 2022-12-21 | Acquisition date for NEW SKINNY MIXES, LLC Revolving Loan and First Lien. |
| 2022-12-31 | Acquisition date for STUDENT RESOURCE CENTER LLC Preferred Units. |
| 2023-01-03 | Acquisition date for C&M CONVEYOR, INC. First Lien Term Loan A. |
| 2023-01-10 | Acquisition date for US COURTSCRIPT HOLDINGS, INC. Class D-5 Units. |
| 2023-01-30 | Acquisition date for GPT INDUSTRIES, LLC Revolving Loan and First Lien, and Class A Preferred Units. |
| 2023-02-10 | Acquisition date for CAVALIER BUYER, INC. First Lien and Preferred Units, and GUARDIAN FLEET SERVICES, INC. First Lien and Class A Units. |
| 2023-02-17 | Acquisition date for SPECTRUM OF HOPE, LLC Common Units. |
| 2023-02-23 | Acquisition date for ISLAND PUMP AND TANK, LLC First Lien Term Loan A. |
| 2023-03-02 | Acquisition date for ISLAND PUMP AND TANK, LLC Revolving Loan and Preferred Units. |
| 2023-03-21 | Pooling date for SBA Debentures. |
| 2023-03-31 | Acquisition date for AAC NEW HOLDCO INC. First Lien Term Loan A and Preferred Units, and ROSELAND MANAGEMENT, LLC Class A-2 Units. |
| 2023-04-03 | Acquisition date for HH-INSPIRE ACQUISITION, INC. Revolving Loan and First Lien. |
| 2023-04-12 | Acquisition date for APPLE ROOFING ADMINISTRATIVE SERVICES, LLC First Lien Term Loan B. |
| 2023-04-17 | SBIC II received a license from the SBA. |
| 2023-04-26 | Acquisition date for FS VECTOR LLC Revolving Loan and First Lien Term Loan A, and Common Units. |
| 2023-05-01 | Acquisition date for BOND BRAND LOYALTY ULC Revolving Loan and First Lien Term Loan A, and Preferred Units. |
| 2023-06-07 | Acquisition date for LKC TECHNOLOGIES, INC. Revolving Loan and First Lien, and Class A Units. |
| 2023-06-09 | Acquisition date for DELPHI LENDER HOLDCO LLC Common Units. |
| 2023-06-12 | Acquisition date for HEAT TRAK, LLC First Lien Term Loan A. |
| 2023-06-14 | Issuance of $71.9 million in 7.75% notes due 2028 (August 2028 Notes). |
| 2023-06-19 | Increase in SPV Credit Facility commitments from $150.0 million to $200.0 million. |
| 2023-06-21 | Acquisition date for ITA HOLDINGS GROUP, LLC Revolving Loan and First Lien Term Loan A, and Warrants (Expiration June 21, 2033). |
| 2023-06-24 | Acquisition date for SUREKAP, LLC First Lien Term Loan A and Common Units. |
| 2023-07-07 | Acquisition date for DAMOTECH INC. Revolving Loan and First Lien Term Loan A, and Preferred Units. |
| 2023-07-23 | Acquisition date for VTX HOLDINGS, INC. Series A Preferred Units. |
| 2023-08-02 | Entry into Third Amended and Restated Senior Secured Revolving Credit Agreement. |
| 2023-09-06 | Acquisition date for CITYVET INC. First Lien. |
| 2023-09-14 | Acquisition date for JACKSON HEWITT TAX SERVICE INC. First Lien. |
| 2023-09-20 | Pooling date for SBA Debentures. |
| 2023-09-27 | Acquisition date for SWENSONS DRIVE-IN RESTAURANTS, LLC Revolving Loan and First Lien Term Loan A. |
| 2023-09-29 | Acquisition date for INSTITUTES OF HEALTH, LLC Revolving Loan and First Lien Term Loan A. |
| 2023-10-27 | Acquisition date for NEUROPSYCHIATRIC HOSPITALS, LLC First Lien Term Loan D. |
| 2023-10-28 | Acquisition date for CUMBRIA CAPITAL MSO, LLC Revolving Loan and First Lien. |
| 2023-10-29 | Acquisition date for MUSIKER DISCOVERY PROGRAMS, INC. Revolving Loan and First Lien Term Loan A, and THE GOBEL GROUP, LLC Revolving Loan and First Lien. |
| 2023-11-06 | Acquisition date for ARBORWORKS, LLC Revolving Loan and First Lien. |
| 2023-11-30 | Acquisition date for MAMMOTH BORROWCO, INC. Revolving Loan and First Lien Term Loan A, and Class A Preferred Units. |
| 2023-12-01 | Acquisition date for IGNITE VISIBILITY LLC Revolving Loan and First Lien Term Loan A, and Preferred Units. |
| 2023-12-11 | Acquisition date for MID-FLORIDA ENDODONTICS MANAGEMENT COMPANY, LLC Revolving Loan and First Lien Term Loan A. |
| 2023-12-20 | Acquisition date for POOL SERVICE PARTNERS, INC. Revolving Loan and First Lien, and Common Units. |
| 2023-12-26 | Acquisition date for SUPERIOR HEALTH PARENT LLC Revolving Loan and First Lien. |
| 2023-12-31 | FASB issued ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures'. |
| 2024-01-24 | Acquisition date for GUARDIAN FLEET SERVICES, INC. Warrants (Expiration January 24, 2034). |
| 2024-02-09 | Acquisition date for BP LOENBRO HOLDINGS INC. Revolving Loan and First Lien. |
| 2024-02-15 | Acquisition date for COMMAND GROUP ACQUISITION, LLC First Lien and Preferred Units. |
| 2024-02-21 | Acquisition date for REVO BRANDS, INC. Revolving Loan and First Lien Term Loan A. |
| 2024-02-22 | Acquisition date for ONE GROUP, LLC First Lien. |
| 2024-02-29 | Acquisition date for VEREGY CONSOLIDATED, INC. First Lien. |
| 2024-03-01 | Entry into Amendment No. 1 to the Credit Agreement. |
| 2024-03-06 | Acquisition date for SOCIALSEO, LLC Revolving Loan and First Lien Term Loan A. |
| 2024-03-07 | Acquisition date for TMT BHC BUYER, INC. Revolving Loan and First Lien. |
| 2024-03-11 | Acquisition date for LOGIX HOLDING COMPANY, LLC First Lien. |
| 2024-03-12 | Acquisition date for EMERALD TECHNOLOGIES (U.S.) ACQUISITIONCO, INC. First Lien Term B Loan. |
| 2024-03-18 | Acquisition date for U.S. TELEPACIFIC CORP. Third Lien. |
| 2024-03-19 | Acquisition date for U.S. TELEPACIFIC CORP. First Lien. |
| 2024-03-20 | SPV entered into a Loan Financing and Servicing Agreement for the SPV Credit Facility. |
| 2024-03-22 | Acquisition date for TRU FRAGRANCE & BEAUTY LLC Revolving Loan and First Lien Term Loan A. |
| 2024-03-28 | Acquisition date for AMERICAN NUTS OPERATIONS LLC First Lien Term Loan A and Class A Preferred Units. |
| 2024-04-02 | Acquisition date for LIFT BRANDS, INC. Shares of Class A Common Stock. |
| 2024-04-15 | Acquisition date for BRANDNER DESIGN, LLC Revolving Loan and First Lien, and Class A Units. |
| 2024-04-19 | Acquisition date for BROAD SKY NETWORKS LLC Series D Preferred Units. |
| 2024-04-29 | Acquisition date for LEHR UPFITTERS, LLC Delayed Draw Term Loan. |
| 2024-04-30 | Acquisition date for WASH & WAX SYSTEMS LLC Revolving Loan and First Lien, and Class A Common Units. |
| 2024-05-15 | Acquisition date for MAIN LINE BRANDS LLC Revolving Loan and First Lien. |
| 2024-05-21 | Increase in Equity ATM Program to $1.0 billion and amendment of 'Settlement Date' term. |
| 2024-05-24 | Acquisition date for INFOGAIN CORPORATION First Lien. |
| 2024-05-30 | Acquisition date for APPLE ROOFING ADMINISTRATIVE SERVICES,LLC (FKA ROOF OPCO, LLC) Class A-1 Units. |
| 2024-06-14 | Acquisition date for TALKNY MANAGEMENT HOLDINGS, LLC First Lien and Class A-1 Preferred Units. |
| 2024-07-03 | Acquisition date for LOCAL WEB LEADS, LLC Revolving Loan and First Lien Term Loan A, and Common Units. |
| 2024-07-15 | Acquisition date for RESEARCH NOW GROUP, LLC Warrants (Expiration July 15, 2029). |
| 2024-07-26 | Acquisition date for CAMPANY ROOF MAINTENANCE, LLC Revolving Loan and First Lien, and Class A Units. |
| 2024-07-31 | Acquisition date for UPS INTERMEDIATE, LLC First Lien. |
| 2024-08-01 | Acquisition date for WHITE PLAINS LINEN LLC Revolving Loan and First Lien Term Loan A, and LP Interest, and PRECISION SPRAY & COATINGS, LLC First Lien and Class A-2 Units. |
| 2024-08-05 | Acquisition date for BROAD SKY NETWORKS LLC Series F Preferred Units. |
| 2024-08-08 | Acquisition date for BETTER THAN HOME, INC. Revolving Loan and First Lien. |
| 2024-09-05 | Acquisition date for WELL LABS PLUS, LLC Revolving Loan and First Lien. |
| 2024-09-18 | Issuance of $350.0 million in 5.950% Notes due 2030 (September 2030 Notes). |
| 2024-09-19 | Acquisition date for LEHR UPFITTERS, LLC Revolving Loan and First Lien. |
| 2024-09-25 | Pooling date for SBA Debentures. |
| 2024-09-30 | Acquisition date for UNWIRED BROADBAND, LLC First Lien. |
| 2024-10-01 | Unfunded term loan commitment to unWired Broadband, LLC was funded. |
| 2024-10-13 | Redemption of October 2026 Notes and August 2028 Notes in full. |
| 2024-10-31 | Expiration date for unfunded term loan commitment to Ignite Visibility LLC. |
| 2024-11-15 | Acquisition date for KINDRED PET SERVICE, LLC Revolving Loan and First Lien, and Class A Units. |
| 2024-11-20 | Acquisition date for CRAFTY APES, LLC First Lien and Class A Common Units. |
| 2024-12-09 | Redemption of $140.0 million in January 2026 Notes in full. |
| 2024-12-16 | Acquisition date for DRIVE LINE SERVICE OF PORTLAND, LLC Revolving Loan and First Lien, and Class A Units. |
| 2024-12-18 | Acquisition date for GUARDIAN FLEET SERVICES, INC. Warrants (Expiration December 18, 2034). |
| 2024-12-31 | FASB issued ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures' is effective for annual periods beginning after this date. |
| 2025-01-02 | Acquisition date for TRU FRAGRANCE & BEAUTY LLC First Lien and BP LOENBRO HOLDINGS INC. First Lien. |
| 2025-01-17 | Acquisition date for GRAVITIQ LLC Revolving Loan and First Lien Term Loan A, and Warrants (Expiration January 17, 2032). |
| 2025-02-03 | Acquisition date for IVUEIT, LLC Revolving Loan and First Lien, and Preferred Units, and VP MOVE PURCHASER, INC. Revolving Loan and First Lien Term Loan A, and Class A Preferred Units. |
| 2025-02-10 | Acquisition date for KMS, LLC First Lien and Delayed Draw Term Loan, and Series A Preferred Units. |
| 2025-02-25 | Acquisition date for NATIONAL CREDIT CARE, LLC Warrants (Expiration February 25, 2035). |
| 2025-03-06 | Acquisition date for SOCIALSEO, LLC Revolving Loan and First Lien Term Loan A. |
| 2025-03-26 | Pooling date for SBA Debentures. |
| 2025-03-28 | Acquisition date for HEAT TRAK, LLC First Lien Term Loan E. |
| 2025-03-31 | Acquisition date for AAC NEW HOLDCO INC. First Lien Term Loan A and Preferred Units. |
| 2025-04-01 | Acquisition date for AAC NEW HOLDCO INC. Delayed Draw Term Loan. |
| 2025-04-02 | Acquisition date for GUARDIAN FLEET SERVICES, INC. Warrants (Expiration April 2, 2035). |
| 2025-05-01 | Acquisition date for ENSTOA, INC. First Lien and Class A Units, and PAYWARD, INC. Rollover Units. |
| 2025-07-24 | Shareholders approved an amendment to the 2021 Employee Plan to increase total shares available for issuance. |
| 2025-07-29 | Acquisition date for DWS BUYER LLC Revolving Loan and First Lien, and Series A Units. |
| 2025-07-30 | Acquisition date for GUARDIAN FLEET SERVICES, INC. Warrants (Expiration July 30, 2035). |
| 2025-09-30 | End of the quarterly period covered by this report. |
| 2025-11-03 | Filing date of the Form 10-Q. |
| 2026-12-15 | FASB issued ASU 2024-03, 'Disaggregation of Income Statement Expenses' is effective for annual periods beginning after this date. |
| 2027-12-15 | FASB issued ASU 2024-03, 'Disaggregation of Income Statement Expenses' is effective for interim periods within fiscal years beginning after this date. |
Recommendation
holdThe company demonstrates solid growth in investment income and net investment income, reflecting effective portfolio management in a challenging economic environment. The strong asset coverage ratio provides financial stability. However, the slight decrease in NAV per share and the net unrealized depreciation on investments warrant caution. While the capital raises and debt redemptions are strategic, the ongoing market volatility and potential for a protracted recession introduce uncertainties. A 'hold' recommendation is appropriate, suggesting investors monitor the company's ability to sustain income growth and manage portfolio valuations amidst macroeconomic headwinds.
Keywords
Business Development Company, BDC, Middle Market Financing, Debt Investments, Equity Investments, SEC Filing, Financial Reporting, Investment Portfolio, Asset Coverage, Interest Income, Net Investment Income, Unrealized Depreciation, Capital Raise, Credit Facilities, SBA Debentures, Floating Rate Loans, Fixed Rate Notes
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