Declares First Quarter 2024 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 First Quarter Distribution of $0.75 per share
PHILADELPHIA and NEW
YORK, Feb. 26, 2024 /PRNewswire/ --
FS KKR Capital Corp. (NYSE: FSK), or the
Company, today announced its financial and
operating results for the quarter and year
ended December 31, 2023, and that its board
of directors has declared a first
quarter 2024 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 first quarter distribution of $0.75 per share.
Financial and Operating Highlights
for the Quarter Ended December
31, 2023(1)
- Net investment income of $0.71
per share, compared to $0.84 per
share for the quarter ended September 30,
2023
- Adjusted net investment income(2) of $0.75 per share, compared to $0.80 per share for the quarter ended
September 30, 2023
- Net asset value of $24.46 per
share, compared to $24.89 per share
as of September 30, 2023 and
$24.89 per share as of December 31, 2022
- Total net realized and unrealized loss of $0.39 per share, compared to a total net realized
and unrealized gain of $0.11 per
share for the quarter ended September 30,
2023
- Adjusted net realized and unrealized loss(2) of
$0.36 per share, compared to adjusted
net realized and unrealized gain of $0.14 per share for the quarter ended
September 30, 2023
- Earnings per Share of $0.32,
compared to Earnings per Share of $0.95 for the quarter ended September 30, 2023
- Total purchases of $680 million
versus $664 million of sales and
repayments, including $146 million of
sales to its joint venture Credit Opportunities Partners JV,
LLC
- Net debt to equity ratio(3) as December 31, 2023 was 113%, compared to 110% as
of September 30, 2023
- Paid cash distributions to stockholders totaling $0.75 per share(4)
Financial and Operating Highlights
for the Year Ended December
31, 2023(1)
- Net investment income of $3.18
per share, compared to $3.05 per
share for the year ended December 31,
2022
- Adjusted net investment income(2) of $3.11 per share, compared to $2.93 per share for the year ended December 31, 2022
- Total net realized and unrealized loss of $0.70 per share, compared to a total net realized
and unrealized loss of $2.73 per
share for the year ended December 31,
2022
- Adjusted net realized and unrealized loss(2) of
$0.56 per share, compared to adjusted
net realized and unrealized loss of $2.54 per share for the year ended December 31, 2022
- Paid cash distributions to stockholders totaling $2.95 per share(4)
"2023 was another successful year for FSK as we generated an
annual return on equity of 10% and provided shareholders with
$2.95 per share of total
distributions," said Michael C.
Forman, Chief Executive Officer & Chairman. "These solid
results reflect the portfolio rotation work we have accomplished
over the last few years. Focusing on 2024, we expect to see an
increase in private market transaction activity and FSK currently
expects distributions to total a minimum of $2.90 per share. While a few of our portfolio
companies experienced challenges during the quarter primarily
relating to inflationary pressures and the higher interest rate
environment, we believe KKR's experienced workout team is well
prepared to handle these investments and generate a positive
outcome."
Declaration of Distribution for First Quarter 2024
FSK's board of directors has declared a cash distribution for
the first 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 April 2, 2024 to
stockholders of record as of the close of business on March 13, 2024. FSK's board of directors
previously declared 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.
Portfolio Highlights as of December 31, 2023
- Total fair value of investments was $14.6 billion of which 66% was invested in senior
secured securities.
- Weighted average annual yield on accruing debt
investments(5) was 12.7%, compared to 12.7% as of
September 30, 2023. Excluding the
impact of merger accounting, weighted average annual yield on
accruing debt investments was 12.2%, compared to 12.2% as of
September 30, 2023.
- Weighted average annual yield on all debt
investments(5) was 11.2%, compared to 11.9% as of
September 30, 2023. Excluding the
impact of merger accounting, weighted average annual yield on all
debt investments was 10.7%, compared to 11.3% as of September 30, 2023.
- Exposure to the top ten largest portfolio companies by fair
value was 19%, compared to 20% as of September 30, 2023.
- As of December 31, 2023,
investments on non-accrual status represented 5.5% and 8.9% of the
total investment portfolio at fair value and amortized cost,
respectively, compared to 2.4% and 4.8% as of September 30, 2023.
Portfolio
Data
|
As of December 31,
2023
|
As of September 30,
2023
|
|
|
Total fair value of
investments
|
$14,649
|
$14,666
|
|
Asset Class (based on
fair value)
|
|
|
|
Senior
Secured Loans — First Lien
|
58.2 %
|
59.8 %
|
|
Senior
Secured Loans — Second Lien
|
7.5 %
|
7.5 %
|
|
Other
Senior Secured Debt
|
0.7 %
|
0.9 %
|
|
Subordinated Debt
|
2.2 %
|
2.0 %
|
|
Asset
Based Finance
|
14.2 %
|
11.8 %
|
|
Credit
Opportunities Partners JV, LLC
|
9.5 %
|
9.6 %
|
|
Equity/Other
|
7.7 %
|
8.4 %
|
|
Interest Rate Type
(based on fair value)
|
|
|
|
% Variable
Rate Debt Investments
|
66.0 %
|
68.6 %
|
|
% Fixed
Rate Debt Investments
|
7.9 %
|
8.9 %
|
|
% Other
Income Producing Investments
|
15.2 %
|
15.6 %
|
|
%
Non-Income Producing Investments(7)
|
5.4 %
|
4.5 %
|
|
% of
Investments on Non-Accrual(6)
|
5.5 %
|
2.4 %
|
|
Leverage and Liquidity as of December
31, 2023
- Net debt to equity ratio(3) of 113%, based on
$8.2 billion in total debt
outstanding, $231 million of cash and
foreign currency and $246 million of
net receivable for investments sold and repaid and stockholders'
equity of $6.8 billion. FSK's
weighted average effective interest rate (including the effect of
non-usage fees) was 5.42%.
- Cash and foreign currency of $231
million and availability under the Company's financing
arrangements of $3.4 billion, subject
to borrowing base and other limitations.
- As of December 31, 2023, 63% of
the Company's $8,223 million of total
debt outstanding was in unsecured debt and 37% in secured
debt.
Conference Call Information
FSK will host a conference call at 9:00 a.m. (Eastern
Time) on Tuesday, February
27, 2024, to discuss its fourth
quarter and full year 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/BI663dbca9cfed4412a7a519e4424faafe.
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/h5cgrv26/
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 $79
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 annual report on
Form 10-K for the year ended December 31,
2023, which FSK filed with the U.S. Securities and Exchange
Commission (the SEC) on February 26,
2024, as well as FSK's other reports filed with the SEC. A
copy of FSK's annual report on Form 10-K for the year ended
December 31, 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)
|
|
|
|
|
|
Year Ended December
31,
|
|
|
2023
|
|
2022
|
|
2021
|
Investment
income
|
|
|
|
|
|
|
From
non-controlled/unaffiliated investments:
|
|
|
|
|
|
|
Interest
income
|
|
$
1,183
|
|
$
1,020
|
|
$
641
|
Paid-in-kind interest
income
|
|
108
|
|
72
|
|
52
|
Fee income
|
|
30
|
|
74
|
|
88
|
Dividend and other
income
|
|
14
|
|
50
|
|
30
|
From
non-controlled/affiliated investments:
|
|
|
|
|
|
|
Interest
income
|
|
25
|
|
28
|
|
21
|
Paid-in-kind interest
income
|
|
39
|
|
48
|
|
19
|
Fee income
|
|
1
|
|
6
|
|
2
|
Dividend and other
income
|
|
28
|
|
7
|
|
—
|
From
controlled/affiliated investments:
|
|
|
|
|
|
|
Interest
income
|
|
87
|
|
58
|
|
25
|
Paid-in-kind interest
income
|
|
45
|
|
43
|
|
36
|
Fee income
|
|
4
|
|
—
|
|
1
|
Dividend and other
income
|
|
266
|
|
229
|
|
166
|
Total investment
income
|
|
1,830
|
|
1,635
|
|
1,081
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
Management
fees
|
|
226
|
|
245
|
|
173
|
Subordinated income
incentive fees
|
|
181
|
|
159
|
|
77
|
Administrative services
expenses
|
|
12
|
|
15
|
|
12
|
Accounting and
administrative fees
|
|
4
|
|
5
|
|
3
|
Interest
expense
|
|
467
|
|
365
|
|
231
|
Other general and
administrative expenses
|
|
26
|
|
22
|
|
19
|
Total operating
expenses
|
|
916
|
|
811
|
|
515
|
Incentive fee
waiver
|
|
—
|
|
(60)
|
|
(30)
|
Net expenses
|
|
916
|
|
751
|
|
485
|
Net investment income
before taxes
|
|
914
|
|
884
|
|
596
|
Excise
taxes
|
|
22
|
|
19
|
|
12
|
Net investment
income
|
|
892
|
|
865
|
|
584
|
|
|
|
|
|
|
|
Realized and
unrealized gain/loss
|
|
|
|
|
|
|
Net realized gain
(loss) on investments:
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
(147)
|
|
136
|
|
28
|
Non-controlled/affiliated investments
|
|
(21)
|
|
84
|
|
192
|
Controlled/affiliated
investments
|
|
(175)
|
|
(71)
|
|
(49)
|
Net realized gain
(loss) on foreign currency forward contracts
|
|
8
|
|
10
|
|
0
|
Net realized gain
(loss) on foreign currency
|
|
12
|
|
23
|
|
(7)
|
Net change in
unrealized appreciation (depreciation) on investments:
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
30
|
|
(679)
|
|
478
|
Non-controlled/affiliated investments
|
|
9
|
|
(131)
|
|
94
|
Controlled/affiliated
investments
|
|
127
|
|
(171)
|
|
156
|
Net change in
unrealized appreciation (depreciation) on foreign currency
forward
contracts
|
|
(15)
|
|
16
|
|
12
|
Net change in
unrealized gain (loss) on foreign currency
|
|
(21)
|
|
15
|
|
30
|
Total net realized and
unrealized gain (loss)
|
|
(193)
|
|
(768)
|
|
934
|
Provision for taxes on
realized and unrealized gains on investments
|
|
(3)
|
|
(5)
|
|
—
|
Realized loss on
extinguishment of debt
|
|
—
|
|
—
|
|
(3)
|
Net increase
(decrease) in net assets resulting from operations
|
|
$
696
|
|
$
92
|
|
$
1,515
|
|
|
|
|
|
|
|
Per share
information—basic and diluted
|
|
|
|
|
|
|
Net increase (decrease)
in net assets resulting from operations (Earnings per
Share)
|
|
$
2.48
|
|
$
0.32
|
|
$
7.16
|
Weighted average shares
outstanding
|
|
280,276,768
|
|
283,508,494
|
|
211,670,361
|
Consolidated Balance
Sheets
(in millions,
except share and per share amounts)
|
|
|
|
|
|
December
31,
|
|
|
2023
|
|
2022
|
Assets
|
|
|
|
|
Investments, at fair
value
|
|
|
|
|
Non-controlled/unaffiliated investments (amortized
cost—$11,078 and 12,566, respectively)
|
|
$
10,568
|
|
$
12,026
|
Non-controlled/affiliated investments (amortized
cost—$868 and $575, respectively)
|
|
745
|
|
443
|
Controlled/affiliated
investments (amortized cost—$3,474 and $3,173,
respectively)
|
|
3,336
|
|
2,908
|
Total investments, at
fair value (amortized cost—$15,420 and $16,314,
respectively)
|
|
14,649
|
|
15,377
|
Cash
|
|
223
|
|
248
|
Foreign currency, at
fair value (cost—$8 and $3, respectively)
|
|
8
|
|
3
|
Receivable for
investments sold and repaid
|
|
246
|
|
212
|
Income
receivable
|
|
290
|
|
227
|
Unrealized appreciation
on foreign currency forward contracts
|
|
13
|
|
25
|
Deferred financing
costs
|
|
32
|
|
23
|
Prepaid expenses and
other assets
|
|
8
|
|
9
|
Total
assets
|
|
$
15,469
|
|
$
16,124
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Payable for investments
purchased
|
|
$
—
|
|
$
14
|
Debt (net of deferred
financing costs and discount of $36 and $37,
respectively)
|
|
8,187
|
|
8,694
|
Unrealized depreciation
on foreign currency forward contracts
|
|
4
|
|
1
|
Stockholder
distributions payable
|
|
196
|
|
192
|
Management and
investment adviser fees payable
|
|
56
|
|
59
|
Subordinated income
incentive fees payable
|
|
41
|
|
27
|
Administrative services
expense payable
|
|
5
|
|
6
|
Interest
payable
|
|
98
|
|
90
|
Other accrued expenses
and liabilities
|
|
33
|
|
29
|
Total
liabilities
|
|
8,620
|
|
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
|
|
9,437
|
|
9,610
|
Retained earnings
(accumulated deficit)
|
|
(2,588)
|
|
(2,598)
|
Total
stockholders' equity
|
|
6,849
|
|
7,012
|
Total
liabilities and stockholders' equity
|
|
$
15,469
|
|
$
16,124
|
Net asset value per
share of common stock at year end
|
|
$
24.46
|
|
$
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
|
|
December 31,
2023
|
|
September 30,
2023
|
GAAP net investment
income per share
|
$0.71
|
|
$0.84
|
Accretion resulting
from merger accounting
|
($0.03)
|
|
($0.04)
|
Excise Taxes
|
$0.07
|
|
—
|
Adjusted net investment
income per share(2)
|
$0.75
|
|
$0.80
|
GAAP Net realized and
unrealized gain (loss) per share
|
($0.39)
|
|
$0.11
|
Unrealized appreciation
from merger accounting
|
$0.03
|
|
$0.04
|
Adjusted net realized
and unrealized gain(2)
|
($0.36)
|
|
$0.14
|
|
Year
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
GAAP net investment
income per share
|
$3.18
|
|
$3.05
|
Accretion resulting
from merger accounting
|
($0.14)
|
|
($0.19)
|
Excise Taxes
|
$0.07
|
|
$0.07
|
Adjusted net investment
income per share(2)
|
$3.11
|
|
$2.93
|
GAAP Net realized and
unrealized gain (loss) per share
|
($0.70)
|
|
($2.73)
|
Unrealized appreciation
from merger accounting
|
$0.14
|
|
$0.19
|
Adjusted net realized
and unrealized gain(2)
|
($0.56)
|
|
($2.54)
|
|
|
|
|
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 annual report
on Form 10-K for the year ended December 31, 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 annual report on Form 10-K for the year
ended December 31, 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 Investments