Thank you for joining today's Capital Southwest third fiscal quarter earnings call. Participating on the call today is Bowen Diehl, CEO; Michael Sarner, CFO; Douglas Kelley, Managing Director; and Chris Rehberger, VP of Finance. I will now turn the call over to Chris Rehberger.

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 the result of new information, future events, changing circumstances or any other reason after the date of the press release except as required by law. I will now hand the call off to our President and Chief Executive Officer, Bowen Diehl.

Thanks, Chris and thanks to everyone for joining us for our third quarter fiscal year 2016 earnings call. 2015 was a watershed year for Capital Southwest, as we completed an exciting transformation that began 18 months ago during the summer of 2014. We set out to unlock what at the time was a substantial 35%-plus discount to NAV per share. Capital Southwest, from its original IPO in 1961, had a long history of successful equity investing, but in more recent history had become an anomaly in the market. We were a BDC with a portfolio consisting of 100% equity with extreme asset concentration in a few high-quality companies. In fact, over half our portfolio at the time was in two 100%-owned high-performing businesses that had grown significantly over the years, resulting in large embedded capital gains and associated deferred tax liability. Additionally, our ability to invest in either of these 100%-owned businesses or in new investments was greatly hindered by RIC and BDC's regulatory restrictions associated with the high level of portfolio concentration. Further, unlike most other BDCs, we paid no meaningful dividend to our shareholders. As a result of all these factors, the market applied a significant discount to our share price versus net asset value. On September 30, 2015, Capital Southwest successfully spun out these large, 100%-owned businesses tax-free to our shareholders, unlocking almost $300 million in shareholder value and establishing CSW Industrials as a new publicly-traded industrial growth company. CSW Industrials trades on the NASDAQ under the ticker CSWI and is led by Joe Armes, former CEO of Capital Southwest and the original leader and visionary of the Capital Southwest transformation. Joe Armes remains the chairman of our Board today. During the summer of 2014, we began the process of rotating the legacy investment portfolio from equity…

Thanks, Bowen. During the quarter we grew our investment portfolio from $93 million to $135 million at fair value. Our debt portfolio grew from $45 million to $61 million at fair value. All of our debt investments are currently performing on plan and we have no non-accruals. At quarter end we had $144 million in cash available for investment activity and zero dollars in debt outstanding. For the quarter, our NAV declined from $276 million to $271 million which was primarily due to a $2.9 million tax payment for deemed distributions for the 2015 tax year and $1.1 million of net portfolio depreciation. The $1.1 million reduction is due to depreciation of approximately $400,000 from the I-45 Senior Loan Fund portfolio and $700,000 on the legacy equity portfolio. As part of our quarterly internal valuation process, we engaged an independent consulting firm specializing in financial due diligence and valuations to provide third-party valuation review of certain investments. As Bowen indicated earlier, the past year we have made significant progress towards divesting targeted legacy assets. As part of that process, this quarter we exited three legacy equity portfolio companies which resulted in proceeds of $3.2 million and a realized loss of $8.2 million. As a reminder, Capital Southwest has a GAAP fiscal year-end of March 31 and a December 31 year-end for tax purposes. Thus, part of the rationale for liquidating these investments during the quarter was due to year-end 2015 tax planning. As of December 31, 2015, excluding our equity investment in the I-45 Senior Loan Fund, our investment portfolio mix was 57% debt and 43% equity. The weighted average yield on our debt investments was 10.3% versus 10.1% the previous quarter. Overall, 89% of our portfolio currently generates a recurring cash yield and 99% of our investment income was…

Thanks, Michael. We're off to a nice start, but we have a lot of work left to do. We consider every day where we might be in the credit cycle and so we remain diligent and highly selective in our credit decision process. We're heavily biased towards high-quality companies with strong management teams in either not cyclical businesses or businesses in which we can analyze in detail the performance during the Great Recession. We use the lessons we learned from the previous cycle to ensure that the capital structure is appropriate and can withstand such a reoccurrence. We're excited about the team that we have built and remain highly focused on creating shareholder value. Consistent with that mindset, on January 25 we announced that our Board approved a $10 million share repurchase program which will allow us to enhance shareholder value in times of extreme market volatility when we believe our stock is significantly undervalued. Our focus as a management team is to deliver value to our shareholders, both through dividends and stock appreciation and thus we will continually be assessing the optimal use of capital to achieve that goal. This concludes our prepared remarks. I would now like to turn the call over to the operator to open up the lines for Q&A.

[Operator Instructions]. And our first question comes from John Deysher of Pinnacle. Your line is now open.

I was just curious, in terms of the expectation of positive net investment income in the next quarter which would be your fourth quarter, does that imply that there will be a dividend forthcoming either in fourth quarter or early in Q1?

Our taxable year ends 12/31 and our GAAP year ends 3/31, so our first quarter that will have investment income where we're possibly projecting positive investment income would be this following quarter of 3/31. That's based on where our balance sheet is today, the investment activity at I-45 and our expense load being reduced with the spinoff being complete.

Okay, so that would be for the quarter March 31. Do you anticipate paying a dividend in that quarter?

We won't generally provide projections, but, yes, the answer to that question is that we will pay out our undistributable cash taxable income each quarter. And so if we do have positive net investment income, you should expect to see a dividend being paid.

Okay. How does it work timing wise? Do you pay it at the end of the quarter for that quarter or would it be paid early in the subsequent quarter?

No, it would be paid at the end of the quarter for that current quarter.

And did I hear you correctly in saying that 99% of your income is cash, not paid in kind?

That is correct.

[Operator Instructions]. And our next question comes from Ron Davis of Morgan Stanley. Your line is now open.

The question is mine as an individual investor, not for the firm I work for. The ongoing dividend at your annual meeting last year, Bowen, I think you said you thought you could sustain an 8% yield. Is that still a goal for you today? Also, the secondary part of that question, it sounds like you might have a variable payout going forward depending on how the quarter goes. Can you comment on that as well?

Generally I would say, as Michael said, we're going to distribute our taxable income and we're in a position now where we have generated a bunch of liquidity through exiting equity investments and we've started to build a credit portfolio. So as that income off the portfolio increases, the dividend will increase. And so your 8% number, I would say that we think of our future dividend as the 8% to 10% kind of number and so I think that's probably fair. But I think you will see this build; as we've got largely cash and we build the credit portfolio thoughtfully and carefully, you will see that dividend build.

Thank you, I'm showing no further questions at this time. I would like to turn the conference back over to Mr. Diehl for closing remarks.

Thank you, operator and thank you all for participating in our call today. This is the first of many quarterly calls. We look forward to keeping you apprised of the progress of our business. Shareholder value is our absolute first priority and we intend to work hard to make that happen. We hope everybody has a great week. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Have a great day, everyone.