Declares Fourth Quarter 2023 Distribution of
$0.70 per share, Which When Combined
with the Company's Previously Declared $0.05 per share Special Distribution, Results in
a Total Fourth Quarter Distribution of $0.75 per share; Declares Additional Special
Distributions Totaling $0.10 per
share to be paid in 2024
PHILADELPHIA and NEW
YORK, Nov. 6, 2023 /PRNewswire/ -- FS KKR
Capital Corp. (NYSE: FSK), or the Company, today announced its
financial and operating results for the quarter ended September 30, 2023, and that its board of
directors has declared a fourth quarter 2023 distribution of
$0.70 per share, which when combined
with the Company's previously declared $0.05 per share special distribution, results in
a total fourth quarter distribution of $0.75 per share. The Company further announced
that its board of directors has declared additional special
distributions totaling $0.10 per
share, which will be paid in two equal installments of $0.05 per share during February and May 2024.
Financial and Operating Highlights
for the Quarter Ended September
30, 2023(1)
- Net investment income of $0.84
per share, compared to $0.82 per
share for the quarter ended June 30,
2023
- Adjusted net investment income(2) of $0.80 per share, compared to $0.78 per share for the quarter ended
June 30, 2023
- Net asset value of $24.89 per
share, compared to $24.69 per share
as of June 30, 2023 and $24.89 per share as of December 31, 2022
- Total net realized and unrealized gain of $0.11 per share, compared to a total net realized
and unrealized loss of $0.31 per
share for the quarter ended June 30,
2023
- Adjusted net realized and unrealized gain(2) of
$0.14 per share, compared to adjusted
net realized and unrealized loss of $0.27 per share for the quarter ended
June 30, 2023
- Earnings per Share of $0.95,
compared to Earnings per Share of $0.51 for the quarter ended June 30, 2023
- Total purchases of $504 million
versus $675 million of sales and
repayments, including $289 million of
sales to its joint venture Credit Opportunities Partners JV,
LLC
- Net debt to equity ratio(3) as of September 30, 2023 was 110%, compared to 113% as
of June 30, 2023
- Paid cash distributions to stockholders totaling $0.75 per share(4)
"During the third quarter, we generated 9% year-over-year growth
in our adjusted net investment income and our net asset value grew
approximately 1% compared to the prior quarter," said Michael C. Forman, Chief Executive Officer &
Chairman. "Our continued strong performance enables us to reward
stockholders with an attractive $0.75
per share total distribution in the fourth quarter as well as to
provide stockholders with a continuation of our special
distributions during the first half of 2024. Looking forward, we
believe the strength of our balance sheet, our high quality
investment portfolio, and positive earnings outlook will enable us
to continue delivering strong stockholder returns."
Declaration of Distribution for Fourth Quarter 2023
FSK's board of directors has declared a cash distribution for
the fourth 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 January 3, 2024 to
stockholders of record as of the close of business on December 13, 2023. FSK's board of directors has
declared additional special distributions totaling $0.10 per share to be paid in two equal
installments during 2024. The first $0.05 per share special distribution will be paid
on or about February 28, 2024 to
stockholders of record as of February 14,
2024. The second $0.05 per
share special distribution will be paid on or about May 29, 2024 to stockholders of record as of
May 15, 2024. FSK's board of
directors previously declared special distributions totaling
$0.15 per share to be paid in three
equal installments by the end of 2023. The first $0.05 per share was paid on May 31, 2023 to stockholders of record as of the
close of business on May 17, 2023.
The second $0.05 per share was paid
on August 30, 2023 to stockholders of
record as of the close of business on August
16, 2023. The third $0.05 per
share will be paid on or about November 29,
2023 to stockholders of record as of the close of business
on November 15, 2023.
Portfolio Highlights as of September 30, 2023
- Total fair value of investments was $14.7 billion of which 68% was invested in senior
secured securities.
- Weighted average annual yield on accruing debt
investments(5) was 12.7%, compared to 12.7% as of
June 30, 2023. Excluding the impact
of merger accounting, weighted average annual yield on accruing
debt investments was 12.2%, compared to 12.1% as of June 30, 2023.
- Weighted average annual yield on all debt
investments(5) was 11.9%, compared to 11.8% as of
June 30, 2023. Excluding the impact
of merger accounting, weighted average annual yield on all debt
investments was 11.3%, compared to 11.3% as of June 30, 2023.
- Exposure to the top ten largest portfolio companies by fair
value was 20% as of September 30,
2023, compared to 19% as of June 30,
2023.
- As of September 30, 2023,
investments on non-accrual status represented 2.4% and 4.8% of the
total investment portfolio at fair value and amortized cost,
respectively, compared to 2.5% and 4.8% as of June 30, 2023.
Portfolio
Data
|
As of September 30,
2023
|
As of June 30,
2023
|
|
Total fair value of
investments
|
$14,666
|
$14,764
|
|
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 in total debt
outstanding, $176 million of cash and
foreign currency and $176 million of
net receivable for investments sold and repaid and stockholders'
equity of $7.0 billion. FSK's
weighted average effective interest rate (including the effect of
non-usage fees) was 5.31%.
- Cash and foreign currency of $176
million and availability under the Company's financing
arrangements of $3.2 billion, subject
to borrowing base and other limitations.
- As of September 30, 2023, 59% of
the Company's $8,046 million of total
debt outstanding was in unsecured debt and 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 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.
FS Investments is a global alternative asset manager dedicated
to delivering superior performance and innovative investment and
capital solutions. The firm manages over $76
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 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 U.S. Securities and
Exchange Commission (the SEC) on November 6,
2023, 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
September 30, 2023 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
|
|
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
contracts
|
|
—
|
|
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
Share)
|
|
$
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—$11,471 and $12,566, respectively)
|
|
$
11,057
|
|
$
12,026
|
Non-controlled/affiliated investments (amortized
cost—$677 and $575, respectively)
|
|
555
|
|
443
|
Controlled/affiliated
investments (amortized cost—$3,218 and $3,173,
respectively)
|
|
3,054
|
|
2,908
|
Total investments, at
fair value (amortized cost—$15,366 and $16,314,
respectively)
|
|
$
14,666
|
|
$
15,377
|
Cash
|
|
171
|
|
248
|
Foreign currency, at
fair value (cost—$5 and $3, respectively)
|
|
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 $27 and $34, respectively)
|
|
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, $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
281,731,750 shares
issued and outstanding, respectively
|
|
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
|
$0.84
|
|
$0.82
|
Accretion resulting
from merger accounting
|
($0.04)
|
|
($0.04)
|
Adjusted net investment
income per share(2)
|
$0.80
|
|
$0.78
|
GAAP Net realized and
unrealized gain (loss) per share
|
$0.11
|
|
($0.31)
|
Unrealized appreciation
from merger accounting
|
$0.04
|
|
$0.04
|
Adjusted net realized
and unrealized gain(2)
|
$0.14
|
|
($0.27)
|
|
|
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.