PHILADELPHIA and NEW
YORK, Feb. 26, 2025 /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, 2024, and that its board
of directors has declared a first quarter 2025 distribution of
$0.70 per share.
Financial and Operating Highlights for the Quarter Ended
December 31,
2024(1)
- Net investment income of $0.61
per share, compared to $0.77 per
share for the quarter ended September 30,
2024
- Adjusted net investment income(2) of $0.66 per share, compared to $0.74 per share for the quarter ended
September 30, 2024
- Net asset value of $23.64 per
share, compared to $23.82 per share
as of September 30, 2024 and
$24.46 per share as of December 31, 2023
- Total net realized and unrealized loss of $0.09 per share, compared to a total net realized
and unrealized loss of $0.20 per
share for the quarter ended September 30,
2024
- Adjusted net realized and unrealized loss(2) of
$0.07 per share, compared to adjusted
net realized and unrealized loss of $0.17 per share for the quarter ended
September 30, 2024
- Earnings per Share of $0.52,
compared to Earnings per Share of $0.57 for the quarter ended September 30, 2024
- Total purchases of $891 million
versus $1,462 million of sales and
repayments
- Net debt to equity ratio(3) as of December 31, 2024 was 104%, compared to 109% as
of September 30, 2024
- Paid cash distributions to stockholders totaling $0.70 per share(4)
Financial and Operating Highlights
for the Year Ended December
31, 2024(1)
- Net investment income of $2.90
per share, compared to $3.18 per
share for the year ended December 31,
2023
- Adjusted net investment income(2) of $2.88 per share, compared to $3.11 per share for the year ended December 31, 2023
- Total net realized and unrealized loss of $0.81 per share, compared to a total net realized
and unrealized loss of $0.70 per
share for the year ended December 31,
2023
- Adjusted net realized and unrealized loss(2) of
$0.72 per share, compared to adjusted
net realized and unrealized loss of $0.56 per share for the year ended December 31, 2023
- Paid cash distributions to stockholders totaling $2.90 per share(4)
"As we conclude the fourth quarter of 2024, we are pleased with
our continued strong performance, highlighted by disciplined
capital deployment, portfolio stability, and a well-laddered,
diversified capital structure," said Michael C. Forman, Chief Executive Officer &
Chairman. "Looking ahead, our $4.8
billion of available liquidity will serve as a significant
strength as private market activity continues to build."
Declaration of Distribution for First Quarter 2025
On February 25, 2025, FSK's board
of directors declared a 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, 2025 to stockholders of record as of the
close of business on March 19,
2025.
Portfolio Highlights as of December 31, 2024
- Total fair value of investments was $13.5 billion of which 63.8% was invested in
senior secured securities.
- Weighted average annual yield on accruing debt
investments(5) was 11.3%, compared to 11.9% as of
September 30, 2024. Excluding the
impact of merger accounting, weighted average annual yield on
accruing debt investments was 11.0%, compared to 11.5% as of
September 30, 2024.
- Weighted average annual yield on all debt
investments(5) was 10.7%, compared to 11.2% as of
September 30, 2024. Excluding the
impact of merger accounting, weighted average annual yield on all
debt investments was 10.4%, compared to 10.8% as of September 30, 2024.
- Exposure to the top ten largest portfolio companies by fair
value was 21%, compared to 20% as of September 30, 2024.
- As of December 31, 2024,
investments on non-accrual status represented 2.2% and 3.7% of the
total investment portfolio at fair value and amortized cost,
respectively, compared to 1.7% and 3.8% as of September 30, 2024.
|
Portfolio
Data
|
As of December 31,
2024
|
As of September 30,
2024
|
|
Total fair value of
investments
|
$13,490
|
$13,943
|
|
Asset Class (based on
fair value)
|
|
|
|
Senior
Secured Loans — First Lien
|
57.8 %
|
59.9 %
|
|
Senior
Secured Loans — Second Lien
|
5.1 %
|
6.2 %
|
|
Other
Senior Secured Debt
|
0.9 %
|
0.9 %
|
|
Subordinated Debt
|
1.7 %
|
1.6 %
|
|
Asset
Based Finance
|
15.6 %
|
14.3 %
|
|
Credit
Opportunities Partners JV, LLC
|
10.1 %
|
9.9 %
|
|
Equity/Other
|
8.8 %
|
7.2 %
|
|
Interest Rate Type
(based on fair value)
|
|
|
|
% Variable
Rate Debt Investments
|
65.8 %
|
68.6 %
|
|
% Fixed
Rate Debt Investments
|
9.5 %
|
8.2 %
|
|
% Other
Income Producing Investments
|
16.4 %
|
15.8 %
|
|
%
Non-Income Producing Investments(7)
|
6.1 %
|
5.7 %
|
|
% of
Investments on Non-Accrual(6)
|
2.2 %
|
1.7 %
|
Leverage and Liquidity as of December
31, 2024
- Net debt to equity ratio(3) of 104%, based on
$7.4 billion in total debt
outstanding, $296 million of cash,
cash equivalents and foreign currency and $184 million of net receivable for investments
sold and repaid and stockholders' equity of $6.6 billion. FSK's weighted average effective
interest rate (including the effect of non-usage fees) was
5.45%.
- Cash, cash equivalents and foreign currency of $296 million and availability under the Company's
financing arrangements of $4.4
billion, subject to borrowing base and other
limitations.
- As of December 31, 2024, 75% of
the Company's $7.4 billion of total
debt outstanding was in unsecured debt and 25% in secured
debt.
Conference Call Information
FSK will host its fourth quarter and full year 2024 results
conference call via live webcast on Thursday, February 27, 2025 at 9:00 a.m. (Eastern Time). All interested parties
are welcome to participate and can access the live webcast from the
Investor Relations section of FSK's website
at www.fskkradvisor.com under Events or through the
following URL: https://edge.media-server.com/mmc/p/y6c8i927.
Research analysts who wish to participate in the conference call
are requested to register a day in advance or at a minimum 15
minutes before the start of the call using the following URL:
https://register.vevent.com/register/BI285768b6c23c42fbb6b961100d310f8e.
Upon registration, all telephone participants will receive a
confirmation email detailing how to join the conference call,
including the dial-in number along with a unique PIN number that
can be used to access the call.
An investor presentation of financial information will be
available by visiting the Investor Relations section of FSK's
website, under Presentations after the market close on
Wednesday, February 26, 2025.
A replay of the call will be available beginning shortly after
the end of the call by visiting the Investor Relations section of
FSK's website, under Events.
Supplemental Information
An investor presentation of financial information will be
available by visiting the Investor Relations section of FSK's
website at www.fskkradvisor.com, under Presentations, after the
market close on Wednesday, February 26,
2025.
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 $83
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 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 annual report on
Form 10-K for the year ended December 31, 2024, which FSK
filed with the U.S. Securities and Exchange Commission (the SEC) on
February 26th, 2025, 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, 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
Anna Kleinhenn
Anna.Kleinhenn@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,
|
|
|
2024
|
|
2023
|
|
2022
|
|
Investment
income
|
|
|
|
|
|
|
|
From
non-controlled/unaffiliated investments:
|
|
|
|
|
|
|
|
Interest
income
|
|
$
1,059
|
|
$
1,183
|
|
$
1,020
|
|
Paid-in-kind interest
income
|
|
67
|
|
108
|
|
72
|
|
Fee income
|
|
53
|
|
30
|
|
74
|
|
Dividend and other
income
|
|
26
|
|
14
|
|
50
|
|
From
non-controlled/affiliated investments:
|
|
|
|
|
|
|
|
Interest
income
|
|
42
|
|
25
|
|
28
|
|
Paid-in-kind interest
income
|
|
50
|
|
39
|
|
48
|
|
Fee income
|
|
1
|
|
1
|
|
6
|
|
Dividend and other
income
|
|
16
|
|
28
|
|
7
|
|
From
controlled/affiliated investments:
|
|
|
|
|
|
|
|
Interest
income
|
|
71
|
|
87
|
|
58
|
|
Paid-in-kind interest
income
|
|
94
|
|
45
|
|
43
|
|
Fee income
|
|
9
|
|
4
|
|
—
|
|
Dividend and other
income
|
|
233
|
|
266
|
|
229
|
|
Total investment
income
|
|
1,721
|
|
1,830
|
|
1,635
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Management
fees
|
|
216
|
|
226
|
|
245
|
|
Subordinated income
incentive fees
|
|
167
|
|
181
|
|
159
|
|
Administrative services
expenses
|
|
10
|
|
12
|
|
15
|
|
Accounting and
administrative fees
|
|
4
|
|
4
|
|
5
|
|
Interest
expense
|
|
465
|
|
467
|
|
365
|
|
Other general and
administrative expenses
|
|
23
|
|
26
|
|
22
|
|
Total operating
expenses
|
|
885
|
|
916
|
|
811
|
|
Incentive fee
waiver
|
|
—
|
|
—
|
|
(60)
|
|
Net expenses
|
|
885
|
|
916
|
|
751
|
|
Net investment income
before taxes
|
|
836
|
|
914
|
|
884
|
|
Excise
taxes
|
|
23
|
|
22
|
|
19
|
|
Net investment
income
|
|
813
|
|
892
|
|
865
|
|
|
|
|
|
|
|
|
Realized and
unrealized gain/loss
|
|
|
|
|
|
|
|
Net realized gain
(loss) on investments:
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
(448)
|
|
(147)
|
|
136
|
|
Non-controlled/affiliated investments
|
|
(61)
|
|
(21)
|
|
84
|
|
Controlled/affiliated
investments
|
|
23
|
|
(175)
|
|
(71)
|
|
Net realized gain
(loss) on foreign currency forward contracts
|
|
19
|
|
8
|
|
10
|
|
Net realized gain
(loss) on foreign currency
|
|
(9)
|
|
12
|
|
23
|
|
Net change in
unrealized appreciation (depreciation) on investments:
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
255
|
|
30
|
|
(679)
|
|
Non-controlled/affiliated investments
|
|
134
|
|
9
|
|
(131)
|
|
Controlled/affiliated
investments
|
|
(172)
|
|
127
|
|
(171)
|
|
Net change in
unrealized appreciation (depreciation) on foreign currency forward
contracts
|
|
(7)
|
|
(15)
|
|
16
|
|
Net change in
unrealized gain (loss) on foreign currency
|
|
38
|
|
(21)
|
|
15
|
|
Total net realized and
unrealized gain (loss)
|
|
(228)
|
|
(193)
|
|
(768)
|
|
Provision for taxes on
realized and unrealized gains on investments
|
|
—
|
|
(3)
|
|
(5)
|
|
Net increase
(decrease) in net assets resulting from operations
|
|
$
585
|
|
$
696
|
|
$
92
|
|
Per share
information—basic and diluted
|
|
|
|
|
|
|
|
Net increase (decrease)
in net assets resulting from operations (Earnings per
Share)
|
|
$
2.09
|
|
$
2.48
|
|
$
0.32
|
|
Weighted average shares
outstanding
|
|
280,066,433
|
|
280,276,768
|
|
283,508,494
|
|
Consolidated Balance Sheets
(in millions, except share and per share amounts)
|
|
|
|
December
31,
|
|
|
2024
|
|
2023
|
|
Assets
|
|
|
|
|
|
Investments, at fair
value
|
|
|
|
|
|
Non-controlled/unaffiliated investments (amortized
cost—$8,830 and 11,078, respectively)
|
|
$
8,573
|
|
$
10,568
|
|
Non-controlled/affiliated investments (amortized
cost—$1,128 and $868, respectively)
|
|
1,140
|
|
745
|
|
Controlled/affiliated
investments (amortized cost—$4,086 and $3,474,
respectively)
|
|
3,777
|
|
3,336
|
|
Total investments, at
fair value (amortized cost—$14,044 and $15,420,
respectively)
|
|
13,490
|
|
14,649
|
|
Cash
|
|
278
|
|
223
|
|
Foreign currency, at
fair value (cost—$17 and $8, respectively)
|
|
18
|
|
8
|
|
Receivable for
investments sold and repaid
|
|
186
|
|
246
|
|
Income
receivable
|
|
187
|
|
290
|
|
Unrealized appreciation
on foreign currency forward contracts
|
|
3
|
|
13
|
|
Deferred financing
costs
|
|
26
|
|
32
|
|
Prepaid expenses and
other assets
|
|
31
|
|
8
|
|
Total
assets
|
|
$
14,219
|
|
$
15,469
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Payable for investments
purchased
|
|
$
2
|
|
$
—
|
|
Debt (net of deferred
financing costs and discount of $49 and $36,
respectively)
|
|
7,351
|
|
8,187
|
|
Unrealized depreciation
on foreign currency forward contracts
|
|
1
|
|
4
|
|
Stockholder
distributions payable
|
|
—
|
|
196
|
|
Management and
investment adviser fees payable
|
|
53
|
|
56
|
|
Subordinated income
incentive fees payable
|
|
35
|
|
41
|
|
Administrative services
expense payable
|
|
3
|
|
5
|
|
Interest
payable
|
|
108
|
|
98
|
|
Other accrued expenses
and liabilities
|
|
44
|
|
33
|
|
Total
liabilities
|
|
7,597
|
|
8,620
|
|
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
280,066,433 shares
issued and outstanding, respectively
|
|
0
|
|
0
|
|
Capital in excess of
par value
|
|
9,284
|
|
9,437
|
|
Retained earnings
(accumulated deficit)
|
|
(2,662)
|
|
(2,588)
|
|
Total
stockholders' equity
|
|
6,622
|
|
6,849
|
|
Total
liabilities and stockholders' equity
|
|
$
14,219
|
|
$
15,469
|
|
Net asset value per
share of common stock at year end
|
|
$
23.64
|
|
$
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
|
|
December 31,
2024
|
|
September 30,
2024
|
|
GAAP net investment
income per share
|
$0.61
|
|
$0.77
|
|
Accretion resulting
from merger accounting
|
$(0.02)
|
|
$(0.03)
|
|
Excise taxes
|
$0.07
|
|
-
|
|
Adjusted net investment
income per share(2)
|
$0.66
|
|
$0.74
|
|
GAAP Net realized and
unrealized gain (loss) per share
|
$(0.09)
|
|
$(0.20)
|
|
Unrealized appreciation
from merger accounting
|
$0.02
|
|
$0.03
|
|
Adjusted net realized
and unrealized gain(2)
|
$(0.07)
|
|
$(0.17)
|
|
|
|
|
|
Year
Ended
|
|
December 31,
2024
|
|
December 31,
2023
|
|
GAAP net investment
income per share
|
2.90
|
|
$3.18
|
|
Accretion resulting
from merger accounting
|
(0.09)
|
|
($0.14)
|
|
Excise taxes
|
$0.07
|
|
$0.07
|
|
Adjusted net investment
income per share(2)
|
2.88
|
|
$3.11
|
|
GAAP Net realized and
unrealized gain (loss) per share
|
(0.81)
|
|
($0.70)
|
|
Unrealized appreciation
from merger accounting
|
0.09
|
|
$0.14
|
|
Adjusted net realized
and unrealized gain(2)
|
(0.72)
|
|
($0.56)
|
|
|
|
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, 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 annual report on Form 10-K
for the year ended December 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
