Capital Southwest Corporation

Thank you for joining today's Capital Southwest first quarter fiscal year 2026 earnings call. Participating on today's call are Michael Cerner, Chief Executive Officer, Chris Reberger, Chief Financial Officer, Josh Weinstein, Chief Investment Officer, and Amy Baker, Executive Vice President, Accounting. I'll now turn the call over to Amy Baker.

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 numeric risks, uncertainties, and assumptions that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, The Capital Southwest 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 over to our President and Chief Executive Officer, Michael Sarner.

Thank you. And thank you, everyone, for joining us for our first quarter fiscal year 2026 earnings call. We are pleased to be with you today to discuss our first fiscal quarter. The June quarter was another productive quarter for the company as we continued to strengthen both sides of our balance sheet. During the quarter, we reduced the investment portfolio weighted average debt to EBITDA from 3.5 times to 3.4 of the investment portfolio at fair value. These metrics, coupled with corporate leverage of 0.82 times and a weighted average yield on debt investments of 11.8%, provide shareholders with an attractive risk return profile to support both our regular and supplemental dividend looking forward to the future. During the first fiscal quarter, we generated pre-tax net investment income of $0.61 per share. Additionally, as a result of harvesting $27.2 million In realized gains from two equity investment exits during the quarter, we were able to increase our undistributed taxable income balance to $1 per share from $0.79 per share as of the end of the prior quarter. Furthermore, as previously announced, we transitioned our regular dividend payment frequency from quarterly to monthly. We believe that transitioning to a monthly regular dividend is a shareholder-friendly initiative On the capitalization front, we received final approval from the SBA for our second SBIC license during the quarter, which allows us to access up to $175 million in additional SBA ventures over time. Additionally, we increased our existing ING-led corporate credit facility by $25 million, bringing total commitments to $510 million. Finally, we raised $42 million in gross equity proceeds during the quarter, through our equity ATM program at a weighted average share price of $20.50 per share, or 123% of the prevailing NAD per share. We are pleased with the progress we have made on the capitalization front and will continue to take measures to further improve our balance sheet as we look ahead. From an originations perspective, we took a conservative approach to underwriting this quarter due to the noise and uncertainty deal flow in the lower middle market remained solid this quarter, with $115 million in total new commitments to three new portfolio companies and 12 existing portfolio companies. Add-on financing continues to be an important source of origination for us, as approximately 55% of the total capital commitments during the quarter were follow-on offerings in performing portfolio companies. Over the last 12 months, add-ons as a percentage of total new commitments have been 38%, so clearly a strong source of origination volume in deals we know well and have experience with the management team and sponsor. Looking ahead, we have seen a distinct pickup in the volume and quality of deals in the past six weeks. As such, we are anticipating significant activity in terms of new platform company originations as well as add-on activity in the existing portfolio. Finally, from a BDC perspective, there has been some long-awaited progress on the ASFP rule for affiliating fund fees and expenses. On June 23, 2025, there was a unanimous house passage of the Access to Small Business Investor Capital Act, which corrects the misleading SEC disclosure requirement that overstates the actual cost of investment in BDCs. The bill will exempt funds that invest in BDCs from including the acquired fund fees and expenses calculation in the prospectus fee table, providing more accurate information for investors. If BDCs are exempt from the AFFE rule, it could significantly increase trading volumes in the sector, especially through mutual funds and ETFs. If you recall, the onset of this rule in 2014 precipitated the Russell and S&T to remove BDCs from their industry. So we believe the impact of this corrective legislation could be meaningful. I will now hand the call over to Josh to review more specifics on our investment activity and the market environment.