FS KKR Capital Corp. Announces Third Quarter 2024 Results
Financial and Operating Highlights for the Quarter Ended
- Net investment income of
$0.77 per share, compared to$0.77 per share for the quarter ended June 30, 2024- Adjusted net investment income(2) of
$0.74 per share, compared to$0.75 per share for the quarter endedJune 30, 2024
- Adjusted net investment income(2) of
- Net asset value of
$23.82 per share, compared to$23.95 per share as ofJune 30, 2024 - Total net realized and unrealized loss of
$0.20 per share, compared to a total net realized and unrealized loss of$0.39 per share for the quarter ended June 30, 2024- Adjusted net realized and unrealized loss(2) of
$0.17 per share, compared to adjusted net realized and unrealized loss of$0.37 per share for the quarter endedJune 30, 2024
- Adjusted net realized and unrealized loss(2) of
- Earnings per Share of
$0.57 , compared to Earnings per Share of$0.37 for the quarter endedJune 30, 2024 - Total purchases of
$1,136 million versus$1,321 million of sales and repayments, including$370 million of sales to the Company's joint ventureCredit Opportunities Partners JV, LLC - Net debt to equity ratio(3) as of
September 30, 2024 was 109%, compared to 109% as ofJune 30, 2024 - Paid cash distributions to stockholders totaling
$0.70 per share(4)
"During the third quarter FSK outperformed its public guidance by earning
Distribution for Fourth Quarter 2024
On
Portfolio Highlights as of
- Total fair value of investments was
$13.9 billion of which 67% was invested in senior secured securities. - Weighted average annual yield on accruing debt investments(5) was 11.9%, compared to 12.3% as of
June 30, 2024 . Excluding the impact of merger accounting, weighted average annual yield on accruing debt investments was 11.5%, compared to 12.0% as ofJune 30, 2024 . - Weighted average annual yield on all debt investments(5) was 11.2%, compared to 11.5% as of
June 30, 2024 . Excluding the impact of merger accounting, weighted average annual yield on all debt investments was 10.8%, compared to 11.1% as ofJune 30, 2024 . - Exposure to the top ten largest portfolio companies by fair value was 20%, compared to 20% as of
June 30, 2024 . - As of
September 30, 2024 , investments on non-accrual status represented 1.7% and 3.8% of the total investment portfolio at fair value and amortized cost, respectively, compared to 1.8% and 4.3% as ofJune 30, 2024 .
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Portfolio Data |
As of |
As of |
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Total fair value of investments |
|
|
|
Asset Class (based on fair value) |
|
|
|
Senior Secured Loans — First Lien |
59.9 % |
58.1 % |
|
Senior Secured Loans — Second Lien |
6.2 % |
6.6 % |
|
Other Senior Secured Debt |
0.9 % |
0.9 % |
|
Subordinated Debt |
1.6 % |
2.5 % |
|
Asset Based Finance |
14.3 % |
14.4 % |
|
|
9.9 % |
9.8 % |
|
Equity/Other |
7.2 % |
7.7 % |
|
Interest Rate Type (based on fair value) |
|
|
|
% Variable Rate Debt Investments |
68.6 % |
68.8 % |
|
% Fixed Rate Debt Investments |
8.2 % |
7.8 % |
|
% Other Income Producing Investments |
15.8 % |
15.5 % |
|
% Non-Income Producing Investments(7) |
5.7 % |
6.1 % |
|
% of Investments on Non-Accrual(6) |
1.7 % |
1.8 % |
Leverage and Liquidity as of
- Net debt to equity ratio(3) of 109%, based on
$8.1 billion in total debt outstanding,$371 million of cash, cash equivalents and foreign currency and$467 million of net receivable for investments sold and repaid and stockholders' equity of$6.7 billion . FSK's weighted average effective interest rate (including the effect of non-usage fees) was 5.49%. - Cash, cash equivalents and foreign currency of
$371 million and availability under the Company's financing arrangements of$3.5 billion , subject to borrowing base and other limitations. - As of
September 30, 2024 , 66% of the Company's$8.1 billion of total debt outstanding was in unsecured debt and 34% in secured debt.
Conference Call Information
FSK will host a conference call at
A replay of the call will be available shortly after the end of the call by visiting the Investor Relations section of FSK's website, under Events, or by using the following URL: https://edge.media-server.com/mmc/p/sf6nn9zu.
Supplemental Information
An investor presentation of financial information will be available by visiting the Investor Relations section of FSK's website at www.fskkradvisor.com, under Presentations, after the market close on
About
FSK is a leading publicly traded business development company (BDC) focused on providing customized credit solutions to private middle market
About
FS Investments is a global alternative asset manager dedicated to delivering superior performance and innovative investment and capital solutions. The firm manages over
KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR's insurance subsidiaries offer retirement, life and reinsurance products under the management of
Forward-Looking Statements and Important Disclosure Notice
This announcement may contain certain forward-looking statements, including statements with regard to future events or future performance or operations of FSK. Words such as "believes," "expects," "projects," and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in FSK's operations or the economy generally due to terrorism, geo-political risks, natural disasters or pandemics such as COVID-19, future changes in laws or regulations and conditions in FSK's operating area and the price at which shares of FSK's common stock trade on the
The press release above contains summaries of certain financial and statistical information about FSK. The information contained in this press release is summary information that is intended to be considered in the context of FSK's
Other Information
The information in this press release is summary information only and should be read in conjunction with FSK's quarterly report on Form 10-Q for the quarter ended
Certain Information About Distributions
The determination of the tax attributes of FSK's distributions is made annually as of the end of its fiscal year based upon its taxable income and distributions paid, in each case, for the full year. Therefore, a determination as to the tax attributes of the distributions made on a quarterly basis may not be representative of the actual tax attributes for a full year. FSK intends to update stockholders quarterly with an estimated percentage of its distributions that resulted from taxable ordinary income. The actual tax characteristics of distributions to stockholders will be reported to stockholders annually on Form 1099-DIV.
The timing and amount of any future distributions on FSK's shares of common stock are subject to applicable legal restrictions and the sole discretion of its board of directors. There can be no assurance as to the amount or timing of any such future distributions.
FSK may fund its cash distributions to stockholders from any sources of funds legally available to it, including net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies, proceeds from the sale of shares of FSK's common stock and borrowings. FSK has not established limits on the amount of funds it may use from available sources to make distributions. There can be no assurance that FSK will be able to pay distributions at a specific rate or at all.
Contact Information:
Investor Relations Contact
Anna.Kleinhenn@fsinvestments.com
FS Investments Media Team
Melanie.Hemmert@fsinvestments.com
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Consolidated Statements of Operations (in millions, except share and per share amounts) |
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Three Months Ended |
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Nine Months Ended |
||||
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|
|
|
||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Investment income |
|
|
|
|
|
|
|
|
|
From non-controlled/unaffiliated investments: |
|
|
|
|
|
|
|
|
|
Interest income |
|
$ 274 |
|
$ 290 |
|
$ 838 |
|
$ 886 |
|
Paid-in-kind interest income |
|
19 |
|
35 |
|
53 |
|
94 |
|
Fee income |
|
20 |
|
7 |
|
46 |
|
17 |
|
Dividend and other income |
|
7 |
|
16 |
|
20 |
|
52 |
|
From non-controlled/affiliated investments: |
|
|
|
|
|
|
|
|
|
Interest income |
|
6 |
|
6 |
|
19 |
|
19 |
|
Paid-in-kind interest income |
|
11 |
|
9 |
|
31 |
|
27 |
|
Fee income |
|
1 |
|
0 |
|
1 |
|
1 |
|
Dividend and other income |
|
3 |
|
— |
|
12 |
|
— |
|
From controlled/affiliated investments: |
|
|
|
|
|
|
|
|
|
Interest income |
|
10 |
|
20 |
|
58 |
|
58 |
|
Paid-in-kind interest income |
|
36 |
|
14 |
|
60 |
|
35 |
|
Fee income |
|
— |
|
5 |
|
9 |
|
5 |
|
Dividend and other income |
|
54 |
|
63 |
|
167 |
|
189 |
|
Total investment income |
|
441 |
|
465 |
|
1,314 |
|
1,383 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
Management fees |
|
54 |
|
56 |
|
163 |
|
170 |
|
Subordinated income incentive fees |
|
44 |
|
47 |
|
132 |
|
140 |
|
Administrative services expenses |
|
2 |
|
3 |
|
7 |
|
10 |
|
Accounting and administrative fees |
|
1 |
|
1 |
|
3 |
|
3 |
|
Interest expense |
|
118 |
|
117 |
|
349 |
|
349 |
|
Other general and administrative expenses |
|
7 |
|
7 |
|
18 |
|
19 |
|
Total operating expenses |
|
226 |
|
231 |
|
672 |
|
691 |
|
Net investment income |
|
215 |
|
234 |
|
642 |
|
692 |
|
|
|
|
|
|
|
|
|
|
|
Realized and unrealized gain/loss |
|
|
|
|
|
|
|
|
|
Net realized gain (loss) on investments: |
|
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments |
|
(24) |
|
(50) |
|
(314) |
|
(147) |
|
Non-controlled/affiliated investments |
|
(26) |
|
(14) |
|
(34) |
|
(17) |
|
Controlled/affiliated investments |
|
7 |
|
(2) |
|
(2) |
|
(174) |
|
Net realized gain (loss) on foreign currency forward contracts |
|
1 |
|
3 |
|
20 |
|
7 |
|
Net realized gain (loss) on foreign currency |
|
(2) |
|
1 |
|
(5) |
|
4 |
|
Net change in unrealized appreciation (depreciation) on investments: |
|
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments |
|
(3) |
|
94 |
|
164 |
|
125 |
|
Non-controlled/affiliated investments |
|
78 |
|
22 |
|
98 |
|
11 |
|
Controlled/affiliated investments |
|
(53) |
|
(37) |
|
(102) |
|
101 |
|
Net change in unrealized appreciation (depreciation) on foreign currency |
|
(6) |
|
— |
|
(19) |
|
(3) |
|
Net change in unrealized gain (loss) on foreign currency |
|
(27) |
|
14 |
|
(10) |
|
7 |
|
Total net realized and unrealized gain (loss) |
|
(55) |
|
31 |
|
(204) |
|
(86) |
|
Net increase (decrease) in net assets resulting from operations |
|
$ 160 |
|
$ 265 |
|
$ 438 |
|
$ 606 |
|
|
|
|
|
|
|
|
|
|
|
Per share information—basic and diluted |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from operations (Earnings |
|
$ 0.57 |
|
$ 0.95 |
|
$ 1.56 |
|
$ 2.16 |
|
Weighted average shares outstanding |
|
280,066,433 |
|
280,066,433 |
|
280,066,433 |
|
280,347,651 |
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Consolidated Balance Sheets (in millions, except share and per share amounts) |
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|
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(Unaudited) |
|
|
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Assets |
|
|
|
|
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Investments, at fair value |
|
|
|
|
|
Non-controlled/unaffiliated investments (amortized cost—$9,753 and |
|
$ 9,407 |
|
$ 10,568 |
|
Non-controlled/affiliated investments (amortized cost—$862 and |
|
838 |
|
745 |
|
Controlled/affiliated investments (amortized cost—$3,939 and |
|
3,698 |
|
3,336 |
|
Total investments, at fair value (amortized cost—$14,554 and |
|
13,943 |
|
14,649 |
|
Cash and cash equivalents |
|
366 |
|
223 |
|
Foreign currency, at fair value (cost—$5 and |
|
5 |
|
8 |
|
Receivable for investments sold and repaid |
|
468 |
|
246 |
|
Income receivable |
|
313 |
|
290 |
|
Unrealized appreciation on foreign currency forward contracts |
|
0 |
|
13 |
|
Deferred financing costs |
|
27 |
|
32 |
|
Prepaid expenses and other assets |
|
27 |
|
8 |
|
Total assets |
|
$ 15,149 |
|
$ 15,469 |
|
Liabilities |
|
|
|
|
|
Payable for investments purchased |
|
$ 1 |
|
$ — |
|
Debt (net of deferred financing costs and discount of |
|
8,060 |
|
8,187 |
|
Unrealized depreciation on foreign currency forward contracts |
|
10 |
|
4 |
|
Stockholder distributions payable |
|
196 |
|
196 |
|
Management fees payable |
|
54 |
|
56 |
|
Subordinated income incentive fees payable |
|
44 |
|
41 |
|
Administrative services expense payable |
|
5 |
|
5 |
|
Interest payable |
|
99 |
|
98 |
|
Other accrued expenses and liabilities |
|
9 |
|
33 |
|
Total liabilities |
|
8,478 |
|
8,620 |
|
Commitments and contingencies |
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
Preferred stock, |
|
— |
|
— |
|
Common stock, |
|
0 |
|
0 |
|
Capital in excess of par value |
|
9,437 |
|
9,437 |
|
Retained earnings (accumulated deficit) |
|
(2,766) |
|
(2,588) |
|
Total stockholders' equity |
|
6,671 |
|
6,849 |
|
Total liabilities and stockholders' equity |
|
$ 15,149 |
|
$ 15,469 |
|
Net asset value per share of common stock at period end |
|
$ 23.82 |
|
$ 24.46 |
Non-GAAP Financial Measures
This press release contains certain financial measures that have not been prepared in accordance with generally accepted accounting principles in
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with FSK's consolidated financial statements prepared in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures has been provided in this press release, and investors are encouraged to review the reconciliation.
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Reconciliation of Non-GAAP Financial Measures (1) |
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Three Months Ended |
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GAAP net investment income per share |
|
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Accretion resulting from merger accounting |
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Adjusted net investment income per share(2) |
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GAAP Net realized and unrealized gain (loss) per share |
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Unrealized appreciation from merger accounting |
|
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Adjusted net realized and unrealized gain(2) |
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1) |
Per share data was derived by using the weighted average shares of FSK's common stock outstanding during the applicable period. Per share numbers may not sum due to rounding. |
|
2) |
Adjusted net investment income is a non-GAAP financial measure. Adjusted net investment income is presented for all periods as GAAP net investment income excluding (i) the accrual for the capital gains incentive fee for realized and unrealized gains; (ii) excise taxes (iii) the impact of accretion resulting from merger accounting; and (iv) certain non-recurring operating expenses that are one-time in nature and are not representative of ongoing operating expenses incurred during FSK's normal course of business. FSK uses this non-GAAP financial measure internally in analyzing financial results and believes that the use of this non-GAAP financial measure is useful to investors as an additional tool to evaluate ongoing results and trends and in comparing its financial results with other business development companies. Adjusted net realized and unrealized gain is a non-GAAP financial measure. Adjusted net realized and unrealized gain is presented for all periods as GAAP realized and unrealized gains to exclude the impact of the merger accounting. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. A reconciliation of GAAP net investment income to adjusted net investment income and GAAP net realized and unrealized gain to adjusted net realized and unrealized gain can be found above. |
|
3) |
Net debt to equity ratio is debt outstanding, net of cash and foreign currency and net payable/receivable for investments purchased/sold and repaid, divided by net assets. |
|
4) |
The per share data for distributions reflects the amount of distributions paid per share of our common stock to stockholders of record during each applicable period. |
|
5) |
See FSK's quarterly report on Form 10-Q for the quarter ended |
|
6) |
Interest income is recorded on an accrual basis. See FSK's quarterly report on Form 10-Q for the quarter ended |
|
7) |
Does not include investments on non-accrual status. |
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SOURCE FS Investments
