Chris Rehberger - VP, Finance and Treasurer Bowen Diehl - President and Chief Executive Officer Michael Sarner - Chief Financial Officer

Thank you for joining today's Capital Southwest fourth quarter fiscal year 2016 earnings call. Participating on the call today is Bowen Diehl, CEO; Michael Sarner, CFO; and Chris Rehberger, VP, 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 expectation, 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 off to our President and Chief Executive Officer, Bowen Diehl.

Thanks, Chris. And thanks to everyone for joining us for our fourth quarter fiscal year 2016 earnings call. Fiscal 2016 was a transformational year for Capital Southwest and one in which we were able to unlock significant shareholder value. We completed the spin-off of CSW Industrials, created a publicly traded company which allowed the market to more appropriately value the highly attractive businesses. We launched the middle market credit strategy with the goal of transforming Capital Southwest from the anomaly of an all-equity focused BDC to a middle market lending firm distributing recurring dividends to our shareholders. Our transformation began with divesting a majority of our legacy equity asset, rebuilding the investment and finance teams, and creating a thoughtful, balanced credit investment strategy drawing on the team’s decade of cumulative middle-market lending experience within the BDC industry. We are pleased with our significant progress to date and look forward to continuing down the path of driving long-term sustainable value for our shareholders through our shareholder-friendly internally managed BDC structure. Specific to the fourth quarter of our fiscal year 2016, we are pleased to report that during the quarter we continued to advance our strategy of building a robust middle-market lending firm with a granular loan portfolio with diversity among asset classes and capital sources that achieve a balance between upper middle-market and lower middle-market assets. During the quarter, we achieved continued growth in our loan portfolio. We enhanced our deal origination capabilities by adding mid and junior-level investment professionals to the team. We continue to grow I-45, the Senior Loan Fund we launched in September 2015 with Main Street Capital. We made significant progress in our capital raising efforts and we have now begun to pay regular quarterly dividends to our shareholders. We continue our migration from cash and non-yielding…

Thanks, Bowen. For the quarter, our NAV increased from $271 million to $273 million, which is primarily due to $1 million of net portfolio appreciation and an increase in the deferred tax assets of $800,000. As a reminder, as part of our quarterly internal valuation process, we engaged an independent consulting firm specializing in financial due diligence and valuations to provide a third-party valuation review of certain investments. At quarter-end, we had $96 million in cash available for investment activity and no debt outstanding. As of March 31, 2016, excluding our equity investment in I-45, our investment portfolio mix was 65% debt and 35% equity. Our mix of debt investment assets at March 31, 2016 was 42% first lien, 41% second lien and 17% subordinated debt versus 18% first lien, 64% second lien and 18% subordinated debt at December 31, 2015. The weighted average yield on our debt investments for the quarter was 10.7% versus 10.3% for the previous quarter. Overall, 90% of our portfolio currently generates a recurring cash yield and 99% of our investment income is paid in cash. Our investment portfolio produced $3.8 million in investment income with a weighted average yield on all investments of 9.5%. This represented an increase of $500,000 from the previous quarter's investment income of $3.3 million. We incurred $3.1 million in operating expenses this quarter, a decrease of $800,000 versus $3.9 million in the previous quarter. This reduction was due to spin-off expenses rolling off from the previous quarter. For the quarter, we earned pretax net investment income of $700,000 or $0.04 per share compared to a loss of $600,000 or a negative $0.04 per share in the previous period. We paid a $0.04 per share dividend for the quarter ended March 31 and declared a $0.06 per share dividend for…

Thanks, Michael. And thank you to our shareholders for giving us the opportunity to be stewards of your capital, a responsibility we take very seriously. We are pleased with the shareholder value we were able to unlock this year and we are very excited about the strategy we have put forth and its potential for creating sustainable long-term value for our shareholders. 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.

Thank you, operator. And thank you to all of you who have tuned on our call today. We look forward to keeping you appraised of our progress on future calls. Shareholder value is our absolute first priority and we intend to work hard to make that happen. Thanks very much and have a great week.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone, have a good day.