Executive Summary
Capital Southwest Corporation posted a strong quarterly bottom line in QQ2 2026, with net income of $31.98 million and earnings per share of $0.57, representing year-over-year net income growth of approximately 41% and a quarter-over-quarter EPS uptick of about 14%. Revenue for the quarter totaled $56.95 million, up 48% YoY but down 27% QoQ, reflecting the inherent seasonality and deployment cadence typical of asset-management and credit-focused businesses under the CSWC platform. Despite the top-line variability, the company delivered a solid net margin (net income as a share of revenue) of roughly 56%. Free cash flow remained negative (-$71.08 million) and operating cash flow was also negative (-$71.22 million), driven by working capital dynamics, significant non-cash items, and investing activity, underscoring that accounting profitability did not translate into positive cash generation in the period.
Key Performance Indicators
QoQ: -26.88% | YoY:48.23%
Key Insights
Revenue: $56.95M (YoY +48.23%, QoQ -26.88%)
Net Income: $31.98M (YoY +41.00%, QoQ +18.45%)
EPS: $0.57 (YoY +18.75%, QoQ +14.00%)
Free Cash Flow: -$71.08M
Operating Cash Flow: -$71.22M
Net Debt/Total Capital: ~25% (Net Debt $307.33M vs Total Equity $947.00M and Total Debt $394.76M)
Cash and Cash Equivalents: $87.43M at period end; Cash on hand after financing activities: $89.08M
Total Assets: $2.021B; Total Liabilities: $1.074B; Total Stockholders’ Equity: $0.947B
Purchases of Investments: -$23...
Financial Highlights
Revenue: $56.95M (YoY +48.23%, QoQ -26.88%)
Net Income: $31.98M (YoY +41.00%, QoQ +18.45%)
EPS: $0.57 (YoY +18.75%, QoQ +14.00%)
Free Cash Flow: -$71.08M
Operating Cash Flow: -$71.22M
Net Debt/Total Capital: ~25% (Net Debt $307.33M vs Total Equity $947.00M and Total Debt $394.76M)
Cash and Cash Equivalents: $87.43M at period end; Cash on hand after financing activities: $89.08M
Total Assets: $2.021B; Total Liabilities: $1.074B; Total Stockholders’ Equity: $0.947B
Purchases of Investments: -$237.71M; Sales/Maturities of Investments: $145.66M; Other Investing Activities: $91.83M; Net cash used for investing activities: -$0.081M
Dividends Paid: -$32.71M; Net Cash Provided By Financing Activities: $111.85M
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
56.95M |
48.23% |
-26.88% |
| Net Income |
31.98M |
41.00% |
18.45% |
| EPS |
0.57 |
18.75% |
14.00% |
Management Commentary
Transcript not provided in the supplied data. No management call quotes are available to extract themes or quotes by management. Recommendation: retrieve the earnings call transcript or press release transcript to populate this section with management commentary on strategy, execution, and market conditions.
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Forward Guidance
No explicit forward guidance was included in the provided data. Given the observed revenue volatility and negative operating cash flow in QQ2 2026, investors should monitor deployment pace and fee-related revenue contributions as CSWC continues to manage its lower-middle and middle-market credit portfolios. In a volatile rate and credit environment, key factors to watch include: (1) quarterly AUM growth and fund-raising momentum, (2) net investment income margins and realized gains/losses from portfolio exits, (3) evolution of credit quality within portfolio companies, and (4) liquidity management and financing costs. Absent formal guidance, the execution cadence of new originations, co-investments, and exits will be the primary driver of next-quarter and annual earnings trajectory.