Capital Southwest (CSWCZ) Q3 2025 Earnings Report

Capital Southwest Corporation (CSWCZ) reported for QQ3 2025 with revenue of 41,330,000 and net income of 16,268,000, translating to earnings per share (EPS) of 0.34. Key profitability metrics display a robust gross margin of 64.39% and an operating margin of 47.53%, underscoring strong operating leverage in the portfolio. Net income margin stood at 39.36% for the quarter, with a reported net income of 16.27 million and weighted average diluted shares of 54.12 million. Year-over-year (YoY) comparisons show revenue down 14.90% and net income down 30.73%, while quarter-over-quarter (QoQ) dynamics reflect a mild sequential uptick in revenue of 7.58% but a continued erosion in gross profit and margins, highlighting mix and cost structure pressures during the period.

Cash flow and balance sheet data reveal pronounced working-capital and non-cash items shaping operating cash flow. Operating cash flow was negative at (161.68) million for the period, driven in part by non-cash items and working-capital movements, while net cash provided by financing activities was positive at 155.35 million, reflecting debt and equity financing activity to support investing and capital return. The company ends the period with 36.01 million in cash and cash equivalents and a total asset base of approximately 1.79 billion against liabilities of about 0.96 billion and stockholders’ equity of roughly 0.83 billion, implying a relatively modest liquidity buffer under the current ratio of 0.161x. The balance sheet shows total debt of 393.47 million and net debt of 357.45 million, with a dividend payout profile that aligns with a 2.53% quarterly dividend yield and a payout ratio of about 1.04x based on reported earnings, signaling a dividend policy that relies partly on non-cash or cumulative earnings.

Overall, QQ3 2025 demonstrates solid earnings execution and high operating margins within a structurally asset-light, fee-based segment of the financial services space, while cash flow and liquidity dynamics warrant close monitoring as capital deployment, leverage management, and portfolio activity evolve in a volatile macro environment.