Declares Third Quarter 2024 Distribution of
$0.70 per share
PHILADELPHIA and NEW
YORK, Aug. 6, 2024 /PRNewswire/ --
FS KKR Capital Corp. (NYSE: FSK), or the Company,
today announced its financial and operating results for the quarter
ended June 30, 2024, and that its
board of directors has declared a third quarter 2024 distribution
of $0.70 per share.
Financial and Operating Highlights
for the Quarter Ended June
30, 2024(1)
- Net investment income of $0.77
per share, compared to $0.76 per
share for the quarter ended March 31,
2024
- Adjusted net investment income(2) of $0.75 per share, compared to $0.73 per share for the quarter ended
March 31, 2024
- Net asset value of $23.95 per
share, compared to $24.32 per share
as of March 31, 2024
- Total net realized and unrealized loss of $0.39 per share, compared to a total net realized
and unrealized loss of $0.14 per
share for the quarter ended March 31,
2024
- Adjusted net realized and unrealized loss(2) of
$0.37 per share, compared to adjusted
net realized and unrealized loss of $0.11 per share for the quarter ended
March 31, 2024
- Earnings per Share of $0.37,
compared to Earnings per Share of $0.62 for the quarter ended March 31, 2024
- Total purchases of $1,260 million
versus $1,336 million of sales and
repayments
- Net debt to equity ratio(3) as of June 30, 2024 was 109%, compared to 109% as of
March 31, 2024
- Paid cash distributions to stockholders totaling $0.75 per share(4)
"The second quarter represented another solid quarter for FSK,
as we generated $0.75 per share of
Adjusted Net Investment Income, our investment activity increased
year-over-year, and our workout team's efforts further reduced our
non-accrual investments," said Michael C.
Forman, Chief Executive Officer & Chairman. "Our results
enable us to continue rewarding shareholders with attractive
distributions, which we expect will equate to a minimum of
$2.90 per share during 2024."
Declaration of Distribution for Third Quarter 2024
FSK's board of directors has declared a cash distribution for
the third quarter of $0.70 per share,
consisting of a base distribution of $0.64 per share and a supplemental distribution
of $0.06 per share, which will be
paid on or about October 2, 2024 to
stockholders of record as of the close of business on September 11, 2024. FSK's board of directors
previously declared special distributions totaling $0.10 per share which were paid in two equal
installments during 2024. The first $0.05 per share special distribution was paid on
February 28, 2024 to stockholders of
record as of February 14, 2024. The
second $0.05 per share special
distribution was paid on May 29, 2024
to stockholders of record as of May 15,
2024.
Portfolio Highlights as of June
30, 2024
- Total fair value of investments was $14.1 billion of which 66% was invested in senior
secured securities.
- Weighted average annual yield on accruing debt
investments(5) was 12.3%, compared to 12.5% as of
March 31, 2024. Excluding the impact
of merger accounting, weighted average annual yield on accruing
debt investments was 12.0%, compared to 12.1% as of March 31, 2024.
- Weighted average annual yield on all debt
investments(5) was 11.5%, compared to 11.4% as of
March 31, 2024. Excluding the impact
of merger accounting, weighted average annual yield on all debt
investments was 11.1%, compared to 10.9% as of March 31, 2024.
- Exposure to the top ten largest portfolio companies by fair
value was 20%, compared to 20% as of March
31, 2024.
- As of June 30, 2024, investments
on non-accrual status represented 1.8% and 4.3% of the total
investment portfolio at fair value and amortized cost,
respectively, compared to 4.2% and 6.5% as of March 31, 2024.
|
Portfolio
Data
|
As of June 30,
2024
|
As of March 31,
2024
|
|
|
|
Total fair value of
investments
|
$14,087
|
$14,221
|
|
|
|
Asset Class (based on
fair value)
|
|
|
|
|
|
Senior
Secured Loans — First Lien
|
58.1 %
|
57.0 %
|
|
|
|
Senior
Secured Loans — Second Lien
|
6.6 %
|
7.1 %
|
|
|
|
Other
Senior Secured Debt
|
0.9 %
|
1.1 %
|
|
|
|
Subordinated Debt
|
2.5 %
|
2.3 %
|
|
|
|
Asset
Based Finance
|
14.4 %
|
14.6 %
|
|
|
|
Credit
Opportunities Partners JV, LLC
|
9.8 %
|
9.8 %
|
|
|
|
Equity/Other
|
7.7 %
|
8.1 %
|
|
|
|
Interest Rate Type
(based on fair value)
|
|
|
|
|
|
% Variable
Rate Debt Investments
|
68.8 %
|
68.0 %
|
|
|
|
% Fixed
Rate Debt Investments
|
7.8 %
|
7.5 %
|
|
|
|
% Other
Income Producing Investments
|
15.5 %
|
16.0 %
|
|
|
|
%
Non-Income Producing Investments(7)
|
6.1 %
|
4.3 %
|
|
|
|
% of
Investments on Non-Accrual(6)
|
1.8 %
|
4.2 %
|
|
|
Leverage and Liquidity as of June 30,
2024
- Net debt to equity ratio(3) of 109%, based on
$8.0 billion in total debt
outstanding, $433 million of cash and
foreign currency and $224 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 5.34%.
- Cash and foreign currency of $433
million and availability under the Company's financing
arrangements of $4.1 billion, subject
to borrowing base and other limitations.
- As of June 30, 2024, 72% of the
Company's $8,001 million of total
debt outstanding was in unsecured debt and 28% in secured
debt.
Conference Call Information
FSK will host a conference call at 9:00
a.m. (Eastern Time) on Wednesday, August 7, 2024, to discuss
its second quarter 2024 results. All interested parties are welcome
to participate and can access the live conference call by
registering using the following URL:
https://register.vevent.com/register/BIaed1729748414ed8b297fc52d4052671.
Participants are requested to register a day in advance or at a
minimum 15 minutes before the start of the call. Once registered,
they will receive the dial-in numbers and their unique PIN number.
When they dial in, they will input their PIN and be placed into the
call. The conference call will also be webcast, which can be
accessed from the Investor Relations section of FSK's website
at www.fskkradvisor.com under Events.
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/7x2i479y.
Supplemental Information
An investor presentation containing financial and operating
information will be made available prior to the call in the
Investor Relations section of FSK's website at www.fskkradvisor.com
under Earnings presentations.
About FS KKR Capital Corp.
FSK is a leading publicly traded business development company
(BDC) focused on providing customized credit solutions to private
middle market U.S. companies. FSK seeks to invest primarily in the
senior secured debt and, to a lesser extent, the subordinated debt
of private middle market companies. FSK is advised by FS/KKR
Advisor, LLC. For more information, please
visit www.fskkradvisor.com.
About FS/KKR Advisor, LLC
FS/KKR Advisor, LLC (FS/KKR) is a partnership between FS
Investments and KKR Credit that serves as the investment adviser to
FSK and other business development companies.
FS Investments is a global alternative asset manager dedicated
to delivering superior performance and innovative investment and
capital solutions. The firm manages over $82
billion in assets for a wide range of clients, including
institutional investors, financial professionals and individual
investors. FS Investments provides access to a broad suite of
alternative asset classes and strategies through its best-in-class
investment teams and partners. With its diversified platform and
flexible capital solutions, the firm is a valued partner to general
partners, asset owners and portfolio companies. FS Investments is
grounded in its high-performance culture and guided by its
commitment to building value for its clients, investing in its
colleagues and giving back to its communities. The firm has more
than 500 employees across offices in the U.S., Europe and Asia and is headquartered in Philadelphia.
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 Global Atlantic Financial Group. References to KKR's
investments may include the activities of its sponsored funds and
insurance subsidiaries. For additional information about KKR &
Co. Inc. (NYSE: KKR), please visit KKR's website at www.kkr.com.
For additional information about Global Atlantic Financial Group,
please visit Global Atlantic Financial Group's website at
www.globalatlantic.com.
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 New York Stock Exchange. Some of these factors are enumerated
in the filings FSK makes with the SEC. FSK undertakes no obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
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 SEC filings and other public
announcements that FSK may make, by press release or otherwise,
from time to time. FSK undertakes no duty or obligation to update
or revise the information contained in this press release. In
addition, information related to past performance, while helpful as
an evaluative tool, is not necessarily indicative of future
results, the achievement of which cannot be assured. Investors
should not view the past performance of FSK, or information about
the market, as indicative of FSK's future results.
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 June 30,
2024, which FSK filed with the U.S. Securities and Exchange
Commission (the SEC) on August 6,
2024, as well as FSK's other reports filed with the SEC. A
copy of FSK's quarterly report on Form 10-Q for the quarter ended
June 30, 2024 and FSK's other reports
filed with the SEC can be found on FSK's website at
www.fskkradvisor.com and the SEC's website at www.sec.gov.
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
Anna.Kleinhenn@fsinvestments.com
FS Investments Media Team
Melanie Hemmert
Melanie.Hemmert@fsinvestments.com
|
Unaudited
Consolidated Statements of
Operations
(in millions,
except share and per share amounts)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Investment
income
|
|
|
|
|
|
|
|
|
|
From
non-controlled/unaffiliated investments:
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
276
|
|
$
291
|
|
$
564
|
|
$
596
|
|
Paid-in-kind interest
income
|
|
17
|
|
36
|
|
34
|
|
59
|
|
Fee income
|
|
9
|
|
5
|
|
26
|
|
10
|
|
Dividend and other
income
|
|
7
|
|
17
|
|
13
|
|
36
|
|
From
non-controlled/affiliated investments:
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
7
|
|
10
|
|
13
|
|
13
|
|
Paid-in-kind interest
income
|
|
10
|
|
9
|
|
20
|
|
18
|
|
Fee income
|
|
—
|
|
1
|
|
—
|
|
1
|
|
Dividend and other
income
|
|
5
|
|
—
|
|
9
|
|
—
|
|
From
controlled/affiliated investments:
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
27
|
|
19
|
|
48
|
|
38
|
|
Paid-in-kind interest
income
|
|
16
|
|
11
|
|
24
|
|
21
|
|
Fee income
|
|
9
|
|
—
|
|
9
|
|
—
|
|
Dividend and other
income
|
|
56
|
|
63
|
|
113
|
|
126
|
|
Total investment
income
|
|
439
|
|
462
|
|
873
|
|
918
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
54
|
|
56
|
|
109
|
|
114
|
|
Subordinated income
incentive fees
|
|
45
|
|
47
|
|
88
|
|
93
|
|
Administrative services
expenses
|
|
2
|
|
4
|
|
5
|
|
7
|
|
Accounting and
administrative fees
|
|
1
|
|
1
|
|
2
|
|
2
|
|
Interest
expense
|
|
115
|
|
118
|
|
231
|
|
232
|
|
Other general and
administrative expenses
|
|
7
|
|
7
|
|
11
|
|
12
|
|
Total operating
expenses
|
|
224
|
|
233
|
|
446
|
|
460
|
|
Net investment
income
|
|
215
|
|
229
|
|
427
|
|
458
|
|
|
|
|
|
|
|
|
|
|
Realized and
unrealized gain/loss
|
|
|
|
|
|
|
|
|
|
Net realized gain
(loss) on investments:
|
|
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
(65)
|
|
(39)
|
|
(290)
|
|
(97)
|
|
Non-controlled/affiliated investments
|
|
2
|
|
(3)
|
|
(8)
|
|
(3)
|
|
Controlled/affiliated
investments
|
|
(1)
|
|
(172)
|
|
(9)
|
|
(172)
|
|
Net realized gain
(loss) on foreign currency forward contracts
|
|
19
|
|
1
|
|
19
|
|
4
|
|
Net realized gain
(loss) on foreign currency
|
|
—
|
|
2
|
|
(3)
|
|
3
|
|
Net change in
unrealized appreciation (depreciation) on investments:
|
|
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
(5)
|
|
26
|
|
167
|
|
31
|
|
Non-controlled/affiliated investments
|
|
—
|
|
(27)
|
|
20
|
|
(11)
|
|
Controlled/affiliated
investments
|
|
(43)
|
|
128
|
|
(49)
|
|
138
|
|
Net change in
unrealized appreciation (depreciation) on foreign currency forward
contracts
|
|
(21)
|
|
1
|
|
(13)
|
|
(3)
|
|
Net change in
unrealized gain (loss) on foreign currency
|
|
4
|
|
(4)
|
|
17
|
|
(7)
|
|
Total net realized and
unrealized gain (loss)
|
|
(110)
|
|
(87)
|
|
(149)
|
|
(117)
|
|
Net increase
(decrease) in net assets resulting from operations
|
|
$
105
|
|
$
142
|
|
$
278
|
|
$
341
|
|
|
|
|
|
|
|
|
|
|
Per share
information—basic and diluted
|
|
|
|
|
|
|
|
|
|
Net increase (decrease)
in net assets resulting from operations (Earnings
(Losses) per Share)
|
|
$
0.37
|
|
$
0.51
|
|
$
0.99
|
|
$
1.22
|
|
Weighted average shares
outstanding
|
|
280,066,433
|
|
280,066,433
|
|
280,066,433
|
|
280,490,590
|
|
Consolidated Balance Sheets
(in millions,
except share and per share amounts)
|
|
|
|
|
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
|
Investments, at fair
value
|
|
|
|
|
|
Non-controlled/unaffiliated investments (amortized
cost—$9,897 and $11,078, respectively)
|
|
$
9,553
|
|
$
10,568
|
|
Non-controlled/affiliated investments (amortized
cost—$913 and $868, respectively)
|
|
811
|
|
745
|
|
Controlled/affiliated
investments (amortized cost—$3,910 and $3,474,
respectively)
|
|
3,723
|
|
3,336
|
|
Total investments, at
fair value (amortized cost—$14,720 and $15,420,
respectively)
|
|
$
14,087
|
|
$
14,649
|
|
Cash
|
|
408
|
|
223
|
|
Foreign currency, at
fair value (cost—$25 and $8, respectively)
|
|
25
|
|
8
|
|
Receivable for
investments sold and repaid
|
|
225
|
|
246
|
|
Income
receivable
|
|
317
|
|
290
|
|
Unrealized appreciation
on foreign currency forward contracts
|
|
—
|
|
13
|
|
Deferred financing
costs
|
|
29
|
|
32
|
|
Prepaid expenses and
other assets
|
|
10
|
|
8
|
|
Total
assets
|
|
$
15,101
|
|
$
15,469
|
|
Liabilities
|
|
|
|
|
|
Payable for investments
purchased
|
|
$
1
|
|
$
—
|
|
Debt (net of deferred
financing costs and discount of $45 and $36,
respectively)
|
|
7,956
|
|
8,187
|
|
Unrealized depreciation
on foreign currency forward contracts
|
|
4
|
|
4
|
|
Stockholder
distributions payable
|
|
196
|
|
196
|
|
Management fees
payable
|
|
54
|
|
56
|
|
Subordinated income
incentive fees payable
|
|
44
|
|
41
|
|
Administrative services
expense payable
|
|
7
|
|
5
|
|
Interest
payable
|
|
117
|
|
98
|
|
Other accrued expenses
and liabilities
|
|
15
|
|
33
|
|
Total
liabilities
|
|
$
8,394
|
|
$
8,620
|
|
Commitments and
contingencies
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Preferred stock, $0.001
par value, 50,000,000 shares authorized, none issued and
outstanding
|
|
$
—
|
|
$
—
|
|
Common stock, $0.001
par value, 750,000,000 shares authorized, 280,066,433 and
280,066,433 shares
issued and outstanding, respectively
|
|
0
|
|
0
|
|
Capital in excess of
par value
|
|
9,437
|
|
9,437
|
|
Retained earnings
(accumulated deficit)
|
|
(2,730)
|
|
(2,588)
|
|
Total
stockholders' equity
|
|
$
6,707
|
|
$
6,849
|
|
Total
liabilities and stockholders' equity
|
|
$
15,101
|
|
$
15,469
|
|
Net asset value per
share of common stock at period end
|
|
$
23.95
|
|
$
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 the United States (GAAP). FSK uses
these non-GAAP financial measures internally in analyzing financial
results and believes that the use of these non-GAAP financial
measures is useful to investors as an additional tool to evaluate
ongoing results and trends and in comparing FSK's financial
results with other BDCs.
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.
Reconciliation of Non-GAAP Financial
Measures(1)
|
Three Months
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
GAAP net investment
income per share
|
$0.77
|
|
$0.76
|
|
Accretion resulting
from merger accounting
|
($0.02)
|
|
($0.03)
|
|
Adjusted net investment
income per share(2)
|
$0.75
|
|
$0.73
|
|
GAAP Net realized and
unrealized gain (loss) per share
|
($0.39)
|
|
($0.14)
|
|
Unrealized appreciation
from merger accounting
|
$0.02
|
|
$0.03
|
|
Adjusted net realized
and unrealized gain(2)
|
($0.37)
|
|
($0.11)
|
|
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 June 30, 2024 for
important information, including information related to the
calculation and definition of weighted average annual yield on
accruing debt investments, weighted average annual yield on all
debt investments, variable rate debt investments, fixed rate debt
investments, other income producing investments and non-income
producing investments.
|
|
6)
|
Interest income is
recorded on an accrual basis. See FSK's quarterly report on Form
10-Q for the quarter ended June 30, 2024 for a description of FSK's
revenue recognition policy.
|
|
7)
|
Does not include
investments on non-accrual status.
|
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SOURCE FS Investments