FS KKR Capital Corp. Announces Third Quarter 2023 Results
- None.
- None.
Declares Fourth Quarter 2023 Distribution of
Financial and Operating Highlights for the Quarter Ended September 30, 2023(1)
- Net investment income of
$0.84 $0.82 - Adjusted net investment income(2) of
$0.80 $0.78
- Adjusted net investment income(2) of
- Net asset value of
$24.89 $24.69 $24.89 - Total net realized and unrealized gain of
$0.11 $0.31 - Adjusted net realized and unrealized gain(2) of
$0.14 $0.27
- Adjusted net realized and unrealized gain(2) of
- Earnings per Share of
$0.95 $0.51 - Total purchases of
$504 million $675 million $289 million - Net debt to equity ratio(3) as of September 30, 2023 was
110% , compared to113% as of June 30, 2023 - Paid cash distributions to stockholders totaling
$0.75
"During the third quarter, we generated
Declaration of Distribution for Fourth Quarter 2023
FSK's board of directors has declared a cash distribution for the fourth quarter of
Portfolio Highlights as of September 30, 2023
- Total fair value of investments was
$14.7 billion 68% was invested in senior secured securities. - Weighted average annual yield on accruing debt investments(5) was
12.7% , compared to12.7% as of June 30, 2023. Excluding the impact of merger accounting, weighted average annual yield on accruing debt investments was12.2% , compared to12.1% as of June 30, 2023. - Weighted average annual yield on all debt investments(5) was
11.9% , compared to11.8% as of June 30, 2023. Excluding the impact of merger accounting, weighted average annual yield on all debt investments was11.3% , compared to11.3% as of June 30, 2023. - Exposure to the top ten largest portfolio companies by fair value was
20% as of September 30, 2023, compared to19% as of June 30, 2023. - As of September 30, 2023, investments on non-accrual status represented
2.4% and4.8% of the total investment portfolio at fair value and amortized cost, respectively, compared to2.5% and4.8% as of June 30, 2023.
Portfolio Data | As of September 30, 2023 | As of June 30, 2023 | |
Total fair value of investments | |||
Asset Class (based on fair value) | |||
Senior Secured Loans — First Lien | 59.8 % | 59.5 % | |
Senior Secured Loans — Second Lien | 7.5 % | 7.9 % | |
Other Senior Secured Debt | 0.9 % | 0.9 % | |
Subordinated Debt | 2.0 % | 1.9 % | |
Asset Based Finance | 11.8 % | 12.0 % | |
Credit Opportunities Partners JV, LLC | 9.6 % | 9.4 % | |
Equity/Other | 8.4 % | 8.4 % | |
Interest Rate Type (based on fair value) | |||
% Variable Rate Debt Investments | 68.6 % | 68.9 % | |
% Fixed Rate Debt Investments | 8.9 % | 8.9 % | |
% Other Income Producing Investments | 15.6 % | 15.1 % | |
% Non-Income Producing Investments(7) | 4.5 % | 4.6 % | |
% of Investments on Non-Accrual(6) | 2.4 % | 2.5 % |
Leverage and Liquidity as of September 30, 2023
- Net debt to equity ratio(3) of
110% , based on$8.0 billion $176 million $176 million $7.0 billion 5.31% . - Cash and foreign currency of
$176 million $3.2 billion - As of September 30, 2023,
59% of the Company's$8,046 million 41% in secured debt.
Conference Call Information
FSK will host a conference call at 9:00 a.m. (Eastern Time) on Tuesday, November 7, 2023, to discuss its third quarter 2023 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/BI7f9108c51d8747ba8f63a33decd0fe4e. 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/dmumr4si.
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.
FS Investments is a global alternative asset manager dedicated to delivering superior performance and innovative investment and capital solutions. The firm manages over
KKR Credit is a subsidiary of KKR & Co. Inc., a leading global investment firm that manages multiple alternative asset classes, including private equity, credit and real assets, with strategic manager partnerships that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR's investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.
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 September 30, 2023, which FSK filed with the
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 | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Investment income | ||||||||
From non-controlled/unaffiliated investments: | ||||||||
Interest income | $ 290 | $ 255 | $ 886 | $ 725 | ||||
Paid-in-kind interest income | 35 | 18 | 94 | 51 | ||||
Fee income | 7 | 23 | 17 | 63 | ||||
Dividend and other income | 16 | 9 | 52 | 34 | ||||
From non-controlled/affiliated investments: | ||||||||
Interest income | 6 | 8 | 19 | 25 | ||||
Paid-in-kind interest income | 9 | 12 | 27 | 37 | ||||
Fee income | 0 | 3 | 1 | 5 | ||||
Dividend and other income | — | — | — | 7 | ||||
From controlled/affiliated investments: | ||||||||
Interest income | 20 | 16 | 58 | 37 | ||||
Paid-in-kind interest income | 14 | 9 | 35 | 34 | ||||
Fee income | 5 | — | 5 | — | ||||
Dividend and other income | 63 | 58 | 189 | 168 | ||||
Total investment income | 465 | 411 | 1,383 | 1,186 | ||||
Operating expenses | ||||||||
Management fees | 56 | 61 | 170 | 186 | ||||
Subordinated income incentive fees | 47 | 40 | 140 | 117 | ||||
Administrative services expenses | 3 | 4 | 10 | 12 | ||||
Accounting and administrative fees | 1 | 2 | 3 | 4 | ||||
Interest expense | 117 | 96 | 349 | 256 | ||||
Other general and administrative expenses | 7 | 6 | 19 | 16 | ||||
Total operating expenses | 231 | 209 | 691 | 591 | ||||
Incentive fee waiver | — | (15) | — | (45) | ||||
Net expenses | 231 | 194 | 691 | 546 | ||||
Net investment income before taxes | 234 | 217 | 692 | 640 | ||||
Excise taxes | — | 1 | — | 1 | ||||
Net investment income | 234 | 216 | 692 | 639 | ||||
Realized and unrealized gain/loss | ||||||||
Net realized gain (loss) on investments: | ||||||||
Non-controlled/unaffiliated investments | (50) | 16 | (147) | 167 | ||||
Non-controlled/affiliated investments | (14) | 51 | (17) | 90 | ||||
Controlled/affiliated investments | (2) | (4) | (174) | (43) | ||||
Net realized gain (loss) on foreign currency forward contracts | 3 | 2 | 7 | 9 | ||||
Net realized gain (loss) on foreign currency | 1 | 5 | 4 | 12 | ||||
Net change in unrealized appreciation (depreciation) on investments: | ||||||||
Non-controlled/unaffiliated investments | $ 94 | $ (283) | $ 125 | $ (574) | ||||
Non-controlled/affiliated investments | 22 | (99) | 11 | (140) | ||||
Controlled/affiliated investments | (37) | (69) | 101 | (216) | ||||
Net change in unrealized appreciation (depreciation) on foreign currency forward | — | 15 | (3) | 31 | ||||
Net change in unrealized gain (loss) on foreign currency | 14 | 23 | 7 | 53 | ||||
Total net realized and unrealized gain (loss) | 31 | (343) | (86) | (611) | ||||
Provision for taxes on realized gains on investments | — | — | — | (3) | ||||
Net increase (decrease) in net assets resulting from operations | $ 265 | $ (127) | $ 606 | $ 25 | ||||
Per share information—basic and diluted | ||||||||
Net increase (decrease) in net assets resulting from operations (Earnings (Losses) per | $ 0.95 | $ (0.45) | $ 2.16 | $ 0.09 | ||||
Weighted average shares outstanding | 280,066,433 | 283,175,526 | 280,347,651 | 283,787,605 | ||||
Consolidated Balance Sheets | ||||
(in millions, except share and per share amounts) | ||||
September 30, 2023 | December 31, 2022 | |||
(Unaudited) | ||||
Assets | ||||
Investments, at fair value | ||||
Non-controlled/unaffiliated investments (amortized cost— | $ 11,057 | $ 12,026 | ||
Non-controlled/affiliated investments (amortized cost— | 555 | 443 | ||
Controlled/affiliated investments (amortized cost— | 3,054 | 2,908 | ||
Total investments, at fair value (amortized cost— | $ 14,666 | $ 15,377 | ||
Cash | 171 | 248 | ||
Foreign currency, at fair value (cost— | 5 | 3 | ||
Receivable for investments sold and repaid | 176 | 212 | ||
Income receivable | 317 | 227 | ||
Unrealized appreciation on foreign currency forward contracts | 21 | 25 | ||
Deferred financing costs | 25 | 23 | ||
Prepaid expenses and other assets | 3 | 9 | ||
Total assets | $ 15,384 | $ 16,124 | ||
Liabilities | ||||
Payable for investments purchased | $ — | $ 14 | ||
Debt (net of deferred financing costs of | 8,016 | 8,694 | ||
Unrealized depreciation on foreign currency forward contracts | 0 | 1 | ||
Stockholder distributions payable | 196 | 192 | ||
Management fees payable | 56 | 59 | ||
Subordinated income incentive fees payable | 47 | 27 | ||
Administrative services expense payable | 6 | 6 | ||
Interest payable | 79 | 90 | ||
Other accrued expenses and liabilities | 14 | 29 | ||
Total liabilities | $ 8,414 | $ 9,112 | ||
Commitments and contingencies | ||||
Stockholders' equity | ||||
Preferred stock, | $ — | $ — | ||
Common stock, | 0 | 0 | ||
Capital in excess of par value | 9,578 | 9,610 | ||
Retained earnings (accumulated deficit) | (2,608) | (2,598) | ||
Total stockholders' equity | $ 6,970 | $ 7,012 | ||
Total liabilities and stockholders' equity | $ 15,384 | $ 16,124 | ||
Net asset value per share of common stock at period end | $ 24.89 | $ 24.89 | ||
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 | |||
September 30, 2023 | June 30, 2023 | ||
GAAP net investment income per share | |||
Accretion resulting from merger accounting | ( | ( | |
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 September 30, 2023 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 September 30, 2023 for a description of FSK's revenue recognition policy. |
7) | Does not include investments on non-accrual status. |
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SOURCE FS KKR Capital Corp.
FAQ
What is the distribution declared by FS KKR Capital Corp. for the fourth quarter of 2023?
What is the total fourth quarter distribution per share when combined with the previously declared special distribution?
Are there any additional special distributions declared by FS KKR Capital Corp.?
When will the additional special distributions be paid?
