Capital Southwest Corporation

Thank you for joining today's Capital Southwest third quarter fiscal year 2026 earnings call. Participating on the call today are Michael Sarner, Chief Executive Officer, Chris Reberger, Chief Financial Officer, Josh Weinstein, Chief Investment Officer, and Amy Baker, Executive Vice President, Accounting. I will 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 numerous risks, uncertainties, and assumptions that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see Capital Southwest's 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 Turner.

Thanks, Amy, and thank you all for joining us for our third quarter fiscal year 2026 earnings call. We are pleased to be with you today and look forward to walking you through our results for the quarter. During the third fiscal quarter, we generated pre-tax net investment income of $0.60 per share, supported by strong recurring earnings across the portfolio. Our undistributed taxable income balance remained robust at $1.02 per share, reflecting consistent realization activity. In fact, over the last 12 months, we have harvested $44.5 million in realized gains from equity exits, driving UTI growth from 68 cents per share in December 2024 to today's level. Subsequent to quarter end, we realized an additional realized gain of $6.8 million from another equity exit, which should further support our UTI balance going forward. Our board of directors has declared a total of 58 cents in regular dividends for the March quarter, payable monthly in each of January, February, and March 2026. And this also declared a quarterly dividend, supplemental dividend, of $0.06 per share, payable in March, bringing total dividends declared for the March quarter to $0.64 per share. Turning to originations, deal flow in the lower middle market remained healthy this quarter. We closed $244 million in total new commitments across eight new portfolio companies. existing portfolio companies. Add-on financing continues to be an important source of origination for us, as over the last 12 months, add-ons at the percentage of total new commitments have been 29%. These opportunities allow us to deploy capital into businesses we know well with proven management teams and sponsors. The weighted average spread on our new commitments this quarter was approximately 6.4%, which we view as very attractive given today's competitive spread environment. On the capitalization front, last quarter we strengthened our balance sheet by issuing $350 million in aggregate principal of 5.95% notes due 2030. This quarter, we used a portion of the proceeds to fully redeem our $150 million notes due 2026 and $71.9 million notes due 2028. extending our maturity profile at an attractive cost of capital. We also raised approximately $53 million in gross equity proceeds through our equity ATM program at a weighted average share price of $21.11 per share, or 127% of the prevailing NAD per share, reinforcing our ability to raise capital efficiently and accretively. Subsequent to Queren, we announced a first-out senior loan joint venture with a private credit asset manager, which I would like to spend some time discussing. We believe this new JV will enhance our competitiveness in our core lower middle market by enabling us to participate in larger, higher quality deals with tighter spreads while maintaining disciplined hold sizes. The structure also allows us to earn outsized economics due to our role as originator and administrator of the JV and higher relative yields on last out loan. which is extremely important in an environment where SOFR is declining and loan spreads on new deals remain very tight. The first-out loans within the JV are expected to be conservatively levered at approximately 1.5 times debt to EBITDA or less, and once fully ramped, we expect the JV to generate a low to mid-teens equity return for Capital Southwest. Finally, our partner in the JV is a highly regarded, well-capitalized asset manager with whom we are extremely excited to build a long-term relationship. We believe this relationship may open up other unique opportunities for co-investment in the future as we continue to expand our platform. Overall, we are pleased with our performance this quarter and enthusiastic about the prospects for this new venture. We look forward to giving further updates on the fund in the coming quarters. I will now hand the call over to Josh to review more specifics on our investment activity and the market environment.