FS KKR Capital Corp. Announces Fourth Quarter and Full Year 2022 Results, Declares Total First Quarter 2023 Distribution of $0.70 per share, Increases Base Quarterly Distribution to $0.64 per share, and Guides Investors Toward Minimum Quarterly Supplemental Distributions for 2023 Totaling $0.06 per share, Equating to Minimum Total Quarterly Distributions for 2023 of $0.70 per share
FS KKR Capital Corp. (NYSE: FSK) reported its financial results for Q4 and the year ending December 31, 2022. The company declared a first quarter 2023 distribution of $0.70 per share, including a base distribution of $0.64 and a supplemental of $0.06. Net investment income for Q4 was $0.80 per share, up from $0.76 in Q3, while adjusted net investment income increased to $0.81 per share. The net asset value decreased to $24.89 per share from $25.30 in Q3. The company experienced a total net realized and unrealized loss of $0.56 per share. As of December 31, total fair value of investments stood at $15.4 billion, with a net debt to equity ratio of 118%.
- Adjusted net investment income increased to $0.81 per share, a rise of approximately 11% quarter over quarter.
- First quarter distribution declared at $0.70 per share, with a base distribution of $0.64 reflecting a 5% increase from the previous quarter.
- Net asset value decreased from $25.30 to $24.89 per share.
- Total net realized and unrealized loss of $0.56 per share, compared to a loss of $1.21 in Q3.
Financial and Operating Highlights for the Quarter Ended
- Net investment income of
$0.80 $0.76 September 30, 2022 - Adjusted net investment income(2) of
$0.81 $0.73 September 30, 2022 - Net asset value of
$24.89 $25.30 September 30, 2022 - Total net realized and unrealized loss of
$0.56 $1.21 September 30, 2022 - Adjusted net realized and unrealized loss(2) of
$0.52 $1.17 September 30, 2022 - Earnings per Share of
$0.24 $(0.45) September 30, 2022 - Total purchases of
$863 million $1,211 million $127 million Credit Opportunities Partners JV, LLC - Net debt to equity ratio(3) as
December 31, 2022 was118% , compared to119% as ofSeptember 30, 2022 - Paid cash distributions to stockholders totaling
$0.68
Financial and Operating Highlights for the Year Ended
- Net investment income of
$3.05 $2.76 December 31, 2021 - Total net realized and unrealized loss of
$2.73 $4.40 December 31, 2021 - Paid cash distributions to stockholders totaling
$2.66
"We are pleased to report fourth quarter adjusted net investment income of
Declaration of Distribution for First Quarter 2023 and Expectations for Full Year 2023
FSK's board of directors has declared a total cash distribution for the first quarter of
Portfolio Highlights as of
- Total fair value of investments was
$15.4 billion 69% was invested in senior secured securities. - Weighted average annual yield on accruing debt investments(5) was
12.0% , compared to11.1% as ofSeptember 30, 2022 . Excluding the impact of merger accounting, weighted average annual yield on accruing debt investments was11.4% , compared to10.4% as ofSeptember 30, 2022 . - Weighted average annual yield on all debt investments(5) was
11.2% , compared to10.3% as ofSeptember 30, 2022 . Excluding the impact of merger accounting, weighted average annual yield on all debt investments was10.6% , compared to9.7% as ofSeptember 30, 2022 . - Exposure to the top ten largest portfolio companies by fair value was
19% as ofDecember 31, 2022 , compared to19% as ofSeptember 30, 2022 . - As of
December 31, 2022 , investments on non-accrual status represented2.4% and4.9% of the total investment portfolio at fair value and amortized cost, respectively, compared to2.5% and5.0% as ofSeptember 30, 2022 .
Portfolio Data | As of | As of | ||
Total fair value of investments | ||||
Asset Class (based on fair value) | ||||
Senior Secured Loans — First Lien | 60.3 % | 61.9 % | ||
Senior Secured Loans — Second Lien | 7.8 % | 7.9 % | ||
Other Senior Secured Debt | 0.7 % | 0.7 % | ||
Subordinated Debt | 1.7 % | 1.6 % | ||
Asset Based Finance | 12.4 % | 11.6 % | ||
| 9.3 % | 9.3 % | ||
Equity/Other | 7.8 % | 7.0 % | ||
Interest Rate Type (based on fair value) | ||||
% Variable Rate Debt Investments | 69.6 % | 70.9 % | ||
% Fixed Rate Debt Investments | 8.6 % | 8.7 % | ||
% Other Income Producing Investments | 15.0 % | 13.5 % | ||
% Non-Income Producing Investments(7) | 4.4 % | 4.4 % | ||
% of Investments on Non-Accrual(6) | 2.4 % | 2.5 % |
Leverage and Liquidity as of
- Net debt to equity ratio(3) of
118% , based on$8.7 billion $251 million $198 million $7.0 billion 4.78% . - Cash and foreign currency of
$251 million $2,559 million - As of
December 31, 2022 ,54% of the Company's approximately$8,731 million 46% 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/mzpzszr6.
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
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 leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth, and focuses on setting industry standards for investor protection, education and transparency. FS Investments is headquartered in
KKR Credit is a subsidiary 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 annual report on Form 10-K for the year 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
Robert.Paun@fsinvestments.com
FS Investments Media Team
Melanie.Hemmert@fsinvestments.com
Consolidated Statements of Operations (in millions, except share and per share amounts) | ||||||
Year Ended | ||||||
2022 | 2021 | 2020 | ||||
Investment income | ||||||
From non-controlled/unaffiliated investments: | ||||||
Interest income | ||||||
Paid-in-kind interest income | 72 | 52 | 43 | |||
Fee income | 74 | 88 | 33 | |||
Dividend and other income | 50 | 30 | 16 | |||
From non-controlled/affiliated investments: | ||||||
Interest income | 28 | 21 | 10 | |||
Paid-in-kind interest income | 48 | 19 | 19 | |||
Fee income | 6 | 2 | — | |||
Dividend and other income | 7 | — | — | |||
From controlled/affiliated investments: | ||||||
Interest income | 58 | 25 | 7 | |||
Paid-in-kind interest income | 43 | 36 | 4 | |||
Fee income | — | 1 | — | |||
Dividend and other income | 229 | 166 | 80 | |||
Total investment income | 1,635 | 1,081 | 639 | |||
Operating expenses | ||||||
Management fees | 245 | 173 | 106 | |||
Subordinated income incentive fees | 159 | 77 | — | |||
Administrative services expenses | 15 | 12 | 7 | |||
Accounting and administrative fees | 5 | 3 | 2 | |||
Interest expense | 365 | 231 | 170 | |||
Other general and administrative expenses | 22 | 19 | 13 | |||
Total operating expenses | 811 | 515 | 298 | |||
Incentive fee waiver | (60) | (30) | — | |||
Net expenses | 751 | 485 | 298 | |||
Net investment income before taxes | 884 | 596 | 341 | |||
Excise taxes | 19 | 12 | 10 | |||
Net investment income | 865 | 584 | 331 | |||
Realized and unrealized gain/loss | ||||||
Net realized gain (loss) on investments: | ||||||
Non-controlled/unaffiliated investments | 136 | 28 | (323) | |||
Non-controlled/affiliated investments | 84 | 192 | (132) | |||
Controlled/affiliated investments | (71) | (49) | (35) | |||
Net realized gain (loss) on foreign currency forward contracts | 10 | 0 | 0 | |||
Net realized gain (loss) on foreign currency | 23 | (7) | (6) | |||
Net change in unrealized appreciation (depreciation) on investments: | ||||||
Non-controlled/unaffiliated investments | (679) | 478 | 17 | |||
Non-controlled/affiliated investments | (131) | 94 | (126) | |||
Controlled/affiliated investments | (171) | 156 | (112) | |||
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts | 16 | 12 | (3) | |||
Net change in unrealized gain (loss) on foreign currency | 15 | 30 | (16) | |||
Total net realized and unrealized gain (loss) | (768) | 934 | (736) | |||
Provision for taxes on realized and unrealized gains on investments | (5) | — | — | |||
Realized loss on extinguishment of debt | — | (3) | — | |||
Net increase (decrease) in net assets resulting from operations | ||||||
Per share information—basic and diluted | ||||||
Net increase (decrease) in net assets resulting from operations (Earnings per Share) | ||||||
Weighted average shares outstanding | 283,508,494 | 211,670,361 | 124,290,607 | |||
Consolidated Balance Sheets (in millions, except share and per share amounts) | ||||
2022 | 2021 | |||
Assets | ||||
Investments, at fair value | ||||
Non-controlled/unaffiliated investments (amortized cost— | ||||
Non-controlled/affiliated investments (amortized cost— | 443 | 859 | ||
Controlled/affiliated investments (amortized cost— | 2,908 | 2,684 | ||
Total investments, at fair value (amortized cost— | 15,377 | 16,101 | ||
Cash | 248 | 258 | ||
Foreign currency, at fair value (cost— | 3 | 119 | ||
Receivable for investments sold and repaid | 212 | 567 | ||
Income receivable | 227 | 153 | ||
Unrealized appreciation on foreign currency forward contracts | 25 | 9 | ||
Deferred financing costs | 23 | 16 | ||
Prepaid expenses and other assets | 9 | 5 | ||
Total assets | ||||
Liabilities | ||||
Payable for investments purchased | ||||
Debt (net of deferred financing costs of | 8,694 | 9,142 | ||
Unrealized depreciation on foreign currency forward contracts | 1 | 1 | ||
Stockholder distributions payable | 192 | 176 | ||
Management and investment adviser fees payable | 59 | 60 | ||
Subordinated income incentive fees payable | 27 | 19 | ||
Administrative services expense payable | 6 | 5 | ||
Interest payable | 90 | 70 | ||
Other accrued expenses and liabilities | 29 | 23 | ||
Total liabilities | 9,112 | 9,498 | ||
Commitments and contingencies | ||||
Stockholders' equity | ||||
Preferred stock, | — | — | ||
Common stock, | 0 | 0 | ||
Capital in excess of par value | 9,610 | 9,658 | ||
Retained earnings (accumulated deficit) | (2,598) | (1,928) | ||
Total stockholders' equity | 7,012 | 7,730 | ||
Total liabilities and stockholders' equity | ||||
Net asset value per share of common stock at year end | ||||
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.
Reconciliation of Non-GAAP Financial Measures(1) | |||
Three Months Ended | |||
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 (referred to herein as one-time expenses). 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 annual report on Form 10-K for the year ended |
6) | Interest income is recorded on an accrual basis. See FSK's annual report on Form 10-K for the year ended |
7) | Does not include investments on non-accrual status. |
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