FS KKR Capital Corp. Announces First Quarter 2024 Results
FS KKR Capital Corp. announced its financial results for the quarter ended March 31, 2024, with a second-quarter distribution of $0.70 per share, totaling $0.75 per share including a special distribution. The company reported net investment income of $0.76 per share, net asset value of $24.32 per share, and earnings per share of $0.62. FSK's board declared a cash distribution for the second quarter and highlighted a total fair value of investments at $14.2 billion as of March 31, 2024.
FS KKR Capital Corp. declared a second-quarter distribution of $0.70 per share, combined with a special distribution totaling $0.75 per share, rewarding shareholders.
The company reported an increase in net investment income to $0.76 per share and earnings per share of $0.62 for the quarter ended March 31, 2024.
FSK highlighted a total fair value of investments at $14.2 billion as of March 31, 2024, with a strong liquidity position and progress in restructuring investments.
Adjusted net investment income decreased to $0.73 per share compared to the previous quarter.
Total net realized and unrealized loss per share also increased, impacting the financial performance of the company.
FSK reported a decrease in net asset value to $24.32 per share compared to December 31, 2023.
Declares Second Quarter 2024 Distribution of
Financial and Operating Highlights for the Quarter Ended March 31, 2024(1)
- Net investment income of
$0.76 $0.71 - Adjusted net investment income(2) of
$0.73 $0.75
- Adjusted net investment income(2) of
- Net asset value of
$24.32 $24.46 - Total net realized and unrealized loss of
$0.14 $0.39 - Adjusted net realized and unrealized loss(2) of
$0.11 $0.36
- Adjusted net realized and unrealized loss(2) of
- Earnings per Share of
$0.62 $0.32 - Total purchases of
$1,444 million $1,855 million $190 million - Net debt to equity ratio(3) as December 31, 2023 was
109% , compared to113% as of December 31, 2023 - Paid cash distributions to stockholders totaling
$0.75
"We had an active start to 2024, as FSK generated
Declaration of Distribution for Second Quarter 2024
FSK's board of directors has declared a cash distribution for the second quarter of
Portfolio Highlights as of March 31, 2024
- Total fair value of investments was
$14.2 billion 65% was invested in senior secured securities. - Weighted average annual yield on accruing debt investments(5) was
12.5% , compared to12.7% as of December 31, 2023. Excluding the impact of merger accounting, weighted average annual yield on accruing debt investments was12.1% , compared to12.2% as of December 31, 2023. - Weighted average annual yield on all debt investments(5) was
11.4% , compared to11.2% as of December 31, 2023. Excluding the impact of merger accounting, weighted average annual yield on all debt investments was10.9% , compared to10.7% as of December 31, 2023. - Exposure to the top ten largest portfolio companies by fair value was
20% , compared to19% as of December 31, 2023. - As of March 31, 2024, investments on non-accrual status represented
4.2% and6.5% of the total investment portfolio at fair value and amortized cost, respectively, compared to5.5% and8.9% as of December 31, 2023.
Portfolio Data | As of March 31, 2024 | As of December 31, 2023 | ||
Total fair value of investments | ||||
Asset Class (based on fair value) | ||||
Senior Secured Loans — First Lien | 57.0 % | 58.2 % | ||
Senior Secured Loans — Second Lien | 7.1 % | 7.5 % | ||
Other Senior Secured Debt | 1.1 % | 0.7 % | ||
Subordinated Debt | 2.3 % | 2.2 % | ||
Asset Based Finance | 14.6 % | 14.2 % | ||
Credit Opportunities Partners JV, LLC | 9.8 % | 9.5 % | ||
Equity/Other | 8.1 % | 7.7 % | ||
Interest Rate Type (based on fair value) | ||||
% Variable Rate Debt Investments | 68.0 % | 66.0 % | ||
% Fixed Rate Debt Investments | 7.5 % | 7.9 % | ||
% Other Income Producing Investments | 16.0 % | 15.2 % | ||
% Non-Income Producing Investments(7) | 4.3 % | 5.4 % | ||
% of Investments on Non-Accrual(6) | 4.2 % | 5.5 % |
Leverage and Liquidity as of March 31, 2024
- Net debt to equity ratio(3) of
109% , based on$8.0 billion $242 million $329 million $6.8 billion 5.35% . - Cash and foreign currency of
$242 million $3.6 billion - As of March 31, 2024,
65% of the Company's$7,968 million 35% in secured debt.
Conference Call Information
FSK will host a conference call at 9:00 a.m. (Eastern Time) on Thursday, May 9, 2024, to discuss its first 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/BI8601374284864feab0b87119f13f1f4b. 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/yic9kctw.
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
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
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 March 31, 2024, which FSK filed with the U.S. Securities and Exchange Commission (the SEC) on May 8, 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 March 31, 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
Robert Paun
Robert.Paun@fsinvestments.com
FS Investments Media Team
Melanie Hemmert
Melanie.Hemmert@fsinvestments.com
Consolidated Statements of Operations (in millions, except share and per share amounts) | ||||
Three Months Ended | ||||
March 31, | ||||
2024 | 2023 | |||
Investment income | ||||
From non-controlled/unaffiliated investments: | ||||
Interest income | $ 288 | $ 305 | ||
Paid-in-kind interest income | 17 | 23 | ||
Fee income | 17 | 5 | ||
Dividend and other income | 6 | 19 | ||
From non-controlled/affiliated investments: | ||||
Interest income | 6 | 3 | ||
Paid-in-kind interest income | 10 | 9 | ||
Fee income | — | — | ||
Dividend and other income | 4 | — | ||
From controlled/affiliated investments: | ||||
Interest income | 21 | 19 | ||
Paid-in-kind interest income | 8 | 10 | ||
Fee income | — | — | ||
Dividend and other income | 57 | 63 | ||
Total investment income | 434 | 456 | ||
Operating expenses | ||||
Management fees | 55 | 58 | ||
Subordinated income incentive fees | 43 | 46 | ||
Administrative services expenses | 3 | 3 | ||
Accounting and administrative fees | 1 | 1 | ||
Interest expense | 116 | 114 | ||
Other general and administrative expenses | 4 | 5 | ||
Total operating expenses | 222 | 227 | ||
Net investment income | 212 | 229 | ||
Realized and unrealized gain/loss | ||||
Net realized gain (loss) on investments: | ||||
Non-controlled/unaffiliated investments | (225) | (58) | ||
Non-controlled/affiliated investments | (10) | 0 | ||
Controlled/affiliated investments | (8) | — | ||
Net realized gain (loss) on foreign currency forward contracts | (0) | 3 | ||
Net realized gain (loss) on foreign currency | (3) | 1 | ||
Net change in unrealized appreciation (depreciation) on investments: | ||||
Non-controlled/unaffiliated investments | 172 | 5 | ||
Non-controlled/affiliated investments | 20 | 16 | ||
Controlled/affiliated investments | (6) | 10 | ||
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts | 8 | (4) | ||
Net change in unrealized gain (loss) on foreign currency | 13 | (3) | ||
Total net realized and unrealized gain (loss) | (39) | (30) | ||
Net increase (decrease) in net assets resulting from operations | $ 173 | $ 199 | ||
Per share information—basic and diluted | ||||
Net increase (decrease) in net assets resulting from operations (Earnings (Losses) per Share) | $ 0.62 | $ 0.71 | ||
Weighted average shares outstanding | 280,066,433 | 280,919,460 | ||
Consolidated Balance Sheets (in millions, except share and per share amounts) | |||||
March 31, 2024 | December 31, 2023 | ||||
(Unaudited) | |||||
Assets | |||||
Investments, at fair value | |||||
Non-controlled/unaffiliated investments (amortized cost— | $ 9,763 | $ 10,568 | |||
Non-controlled/affiliated investments (amortized cost— | 752 | 745 | |||
Controlled/affiliated investments (amortized cost— | 3,706 | 3,336 | |||
Total investments, at fair value (amortized cost— | $ 14,221 | $ 14,649 | |||
Cash | 234 | 223 | |||
Foreign currency, at fair value (cost— | 8 | 8 | |||
Receivable for investments sold and repaid | 329 | 246 | |||
Income receivable | 300 | 290 | |||
Unrealized appreciation on foreign currency forward contracts | 19 | 13 | |||
Deferred financing costs | 31 | 32 | |||
Prepaid expenses and other assets | 10 | 8 | |||
Total assets | $ 15,152 | $ 15,469 | |||
Liabilities | |||||
Payable for investments purchased | $ 0 | $ — | |||
Debt (net of deferred financing costs and discount of | 7,934 | 8,187 | |||
Unrealized depreciation on foreign currency forward contracts | 2 | 4 | |||
Stockholder distributions payable | 196 | 196 | |||
Management fees payable | 55 | 56 | |||
Subordinated income incentive fees payable | 43 | 41 | |||
Administrative services expense payable | 6 | 5 | |||
Interest payable | 91 | 98 | |||
Other accrued expenses and liabilities | 13 | 33 | |||
Total liabilities | $ 8,340 | $ 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) | (2,625) | (2,588) | |||
Total stockholders' equity | $ 6,812 | $ 6,849 | |||
Total liabilities and stockholders' equity | $ 15,152 | $ 15,469 | |||
Net asset value per share of common stock at period end | $ 24.32 | $ 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 | |||
March 31, 2024 | December 31, 2023 | ||
GAAP net investment income per share | |||
Accretion resulting from merger accounting | ( | ( | |
Excise Taxes | — | ||
Adjusted net investment income per share(2) | |||
GAAP Net realized and unrealized gain (loss) per share | ( | ( | |
Unrealized appreciation from merger accounting | |||
Adjusted net realized and unrealized gain(2) | ( | ( | |
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 March 31, 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 March 31, 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
FAQ
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