In the news release, FS KKR Capital Corp. Announces March 31, 2021 Financial Results and Declares
Second Quarter 2021 Dividend of $0.60
Per Share, issued 10-May-2021 by FS
KKR Capital Corp. over PR Newswire, the 2021 and 2020 date headings
for the table titled "Unaudited Consolidated Statements of
Operations" were erroneously transposed by PR Newswire. The
complete, corrected release follows:
FS KKR Capital Corp. Announces March 31, 2021 Financial Results and
Declares Second Quarter 2021 Dividend of $0.60 Per Share
PHILADELPHIA and NEW YORK, May 10,
2021 /PRNewswire/ -- FS KKR Capital Corp. (NYSE: FSK), today
reported net investment income of $78
million, or $0.63 per share
for the first quarter ended March 31,
2021. The Company's net asset value ("NAV") was $26.03 per share as of March 31, 2021, compared to $25.02 per share as of December 31, 2020.
Financial and Operating Highlights for the Quarter Ended
March 31, 2021(1)
- Net investment income of $0.63
per share, compared to $0.63 per
share for the quarter ended December 31,
2020
- Adjusted net investment income of $0.63 per share, compared to $0.72 per share for the quarter ended
December 31,
2020(2)
- Net asset value of $26.03 per
share, compared to $25.02 per share
as of December 31, 2020, an increase
of 4.0%
- Total net realized and unrealized gain of $0.98 per share, compared to a total net realized
and unrealized gain of $0.53 per
share for the quarter ended December
31, 2020
- Total purchases of $417
million versus $877 million of
sales and repayments, including $193
million of sales to its joint venture Strategic Credit
Opportunities Partners, LLC, or SCJV
- Net debt to equity ratio(3) as of the end of the
quarter was 100%, down from 119% as of December 31, 2020
- Paid cash distributions to stockholders totaling
$0.60 per
share(4)
"We are pleased to begin 2021 with a positive quarter,"
commented Michael C. Forman, CEO
& Chairman. "Our net investment income of $0.63 per share fully covered our $0.60 quarterly dividend, we experienced a 4.00%
increase in our net asset value, and our annualized quarterly
dividend of $2.40 per share continues
to exceed our targeted annual dividend yield of 9.00%. As we
prepare for the closing of the merger of FSK and FSKR, we are
excited by the prospects of operating a single BDC with the market
reach and balance sheet strength to be a leader in the private
credit markets for many years to come."
Declaration of Distribution for Second Quarter 2021
FSK's board of directors has declared a cash distribution for
the second quarter of $0.60 per
share, which will be paid on or about July
2, 2021 to stockholders of record as of the close of
business on June 11, 2021.
Summary
Consolidated Results
|
|
|
Three Months
Ended
|
(dollars in
millions, except per share data)
(all per share
amounts are basic and diluted)(1)
|
March 31,
2021
|
December 31,
2020
|
Total investment
income
|
$151
|
$163
|
Net investment
income
|
78
|
78
|
Net increase
(decrease) in net assets resulting from operations
|
199
|
143
|
|
|
|
Net investment income
per share
|
$0.63
|
$0.63
|
Total net realized
and unrealized gain (loss) per share
|
$0.98
|
$0.53
|
Net increase
(decrease) in net assets resulting from operations (Earnings
per Share)
|
$1.61
|
$1.16
|
Stockholder
distributions per share(4)
|
$0.60
|
$0.60
|
Net asset value per
share at period end
|
$26.03
|
$25.02
|
Weighted average
shares outstanding
|
123,755,965
|
123,755,965
|
Shares outstanding,
end of period
|
123,755,965
|
123,755,965
|
|
|
|
|
|
(dollar amounts in
millions)
|
|
|
|
As
of March 31,
2021
|
As
of December 31,
2020
|
|
|
|
|
|
|
Total fair value of
investments
|
|
|
|
$6,457
|
$6,780
|
Total
assets
|
|
|
|
6,964
|
7,237
|
Total stockholders'
equity
|
|
|
|
3,221
|
3,096
|
Portfolio Highlights as of March 31, 2021
- Total fair value of investments was $6.5
billion of which 64% was invested in senior secured
securities.
- Weighted average annual yield on accruing debt
investments(5) was 8.6%, compared to 8.8% as of
December 31, 2020.
- Weighted average annual yield on all debt
investments(5) was 7.7%, compared to 7.9% as of
December 31, 2020.
- Exposure to the top ten largest portfolio companies by fair
value was 23% as of March 31, 2021,
compared to 22% as of December 31,
2020.
- As of March 31, 2021, investments
on non-accrual status represented 3.6% and 6.8% of the total
investment portfolio at fair value and amortized cost,
respectively, compared to 2.5% and 6.6%, respectively, as of
December 31, 2020.
Total Portfolio
Activity
|
|
|
Three Months
Ended
|
(dollar amounts in
millions)
|
March 31,
2021
|
December 31,
2020
|
Purchases
|
$417
|
$613
|
Sales and
redemptions
|
(877)
|
(595)
|
Net portfolio
activity
|
$(460)
|
$18
|
Sales to
SCJV
|
193
|
97
|
Adjusted net
portfolio activity
|
$(267)
|
$115
|
Summary of investment activity for the three months ended March,
31, 2021 was as follows:
|
Purchases
|
Sales and
Repayments
|
Asset
Class
(dollar amounts in
millions)
|
Amount
|
Percentage
|
Amount
|
Percentage
|
Senior Secured Loans
— First Lien
|
$300
|
72%
|
471
|
54%
|
Senior Secured Loans
— Second Lien
|
73
|
17%
|
245
|
28%
|
Other Senior Secured
Debt
|
—
|
—
|
5
|
0%
|
Subordinated
Debt
|
4
|
1%
|
93
|
11%
|
Asset Based
Finance
|
40
|
10%
|
55
|
6%
|
Strategic Credit
Opportunities Partners, LLC
|
—
|
—
|
—
|
—
|
Equity/Other
|
—
|
—
|
8
|
1%
|
Total
|
417
|
100%
|
877
|
100%
|
Portfolio
Data
|
As of March
31, 2021
|
As of
December 31, 2020
|
Total fair value of
investments
|
$6,457
|
$6,780
|
Number of Portfolio
Companies
|
152
|
164
|
% of Investments on
Non-Accrual
(based on fair
value)(6)
|
3.6%
|
2.5%
|
|
|
|
Asset Class
(based on fair value)
|
|
|
Senior Secured Loans
— First Lien
|
51.2%
|
50.9%
|
Senior Secured Loans
— Second Lien
|
11.0%
|
13.0%
|
Other Senior Secured
Debt
|
1.3%
|
1.3%
|
Subordinated
Debt
|
1.2%
|
2.5%
|
Asset Based
Finance
|
14.7%
|
14.0%
|
Strategic Credit
Opportunities Partners, LLC
|
11.3%
|
10.5%
|
Equity/Other
|
9.3%
|
7.8%
|
|
|
|
Interest Rate
Type (based on fair value)
|
|
|
% Variable Rate Debt
Investments
|
60.1%
|
63.5%
|
% Fixed Rate Debt
Investments
|
8.7%
|
9.0%
|
% Other Income
Producing Investments
|
17.5%
|
16.9%
|
% Non-Income
Producing Investments(7)
|
10.1%
|
8.1%
|
% of Investments on
Non-Accrual(6)
|
3.6%
|
2.5%
|
|
|
|
|
|
Leverage and Liquidity as of March 31, 2021
- Net debt to equity ratio(3) of 100%, based on
$3.6 billion in total debt
outstanding, $149 million of cash and
foreign currency and $263 million of
net receivable for investments sold and repaid and stockholders'
equity of $3.2 billion. FSK's
weighted average effective interest rate (including the effect of
non-usage fees) was 4.17%.
- Cash and foreign currency of $149
million and availability under its financing arrangements of
$1,449 million, subject to borrowing
base and other limitations.
- As of March 31, 2021, 77% of the
Company's approximately $3,633
million of total debt outstanding was in unsecured debt and
23% in secured debt.
Conference Call Information
FSK will host a conference call at 8:00 a.m.
(Eastern Time) on Tuesday, May 11, 2021, to discuss its
first quarter 2021 financial and operating results. All interested
parties are welcome to participate. Interested parties can access
the conference call by dialing (833) 818-6808 and using the
conference ID 2577152 approximately 10 minutes prior to the call.
The conference call also will be webcast, which can be accessed
from the Investor Relations section of FSK's website at
www.fskkradvisor.com/fsk under Events + presentations.
A replay of the call will be available shortly after the end of
the call for a period of 30 days following the call by visiting the
Investor Relations section of FSK's website at
www.fskkradvisor.com/fsk under Events + presentations or by
dialing (855) 859-2056 and using conference ID 2577152.
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/fsk under Events +
Presentations.
About FS KKR Capital Corp.
FS KKR Capital Corp. (NYSE:
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/fsk.
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 BDCs with approximately $15 billion in assets under management as of
March 31, 2021. The BDCs managed by
FS/KKR are FSK and FS KKR Capital Corp. II (NYSE: FSKR).
FS Investments is a leading asset manager dedicated to helping
individuals, financial professionals and institutions design better
portfolios. The firm provides access to alternative sources of
income and growth, and focuses on setting industry standards for
investor protection, education and transparency. FS Investments is
headquartered in Philadelphia, PA
with offices in New York, NY,
Orlando, FL and Leawood, KS. Visit www.fsinvestments.com to
learn more.
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, 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 March 31, 2021, which
FSK filed with the U.S. Securities and Exchange Commission (the
SEC) on May 10, 2021, 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 March 31, 2021 and FSK's other reports filed with
the SEC can be found on FSK's website at
www.fskkradvisor.com/fsk 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
FS KKR Capital
Corp. Unaudited Consolidated Statements of
Operations (in millions, except share and per share
amounts)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
2021
|
|
2020
|
Investment
income
|
|
|
|
|
Interest
income
|
|
$
|
87
|
|
|
$
|
125
|
|
Paid-in-kind interest
income
|
|
10
|
|
|
11
|
|
Fee income
|
|
11
|
|
|
12
|
|
Dividend and other
income
|
|
4
|
|
|
2
|
|
From
non-controlled/affiliated investments:
|
|
|
|
|
Interest
income
|
|
3
|
|
|
3
|
|
Paid-in-kind interest
income
|
|
6
|
|
|
5
|
|
Fee income
|
|
—
|
|
|
0
|
|
Dividend
income
|
|
0
|
|
|
—
|
|
From
controlled/affiliated investments:
|
|
|
|
|
Interest
income
|
|
2
|
|
|
3
|
|
Paid-in-kind interest
income
|
|
1
|
|
|
—
|
|
Dividend and other
income
|
|
27
|
|
|
18
|
|
Total investment
income
|
|
151
|
|
|
179
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Management
fees
|
|
25
|
|
|
30
|
|
Subordinated income
incentive fees
|
|
—
|
|
|
—
|
|
Administrative
services expenses
|
|
2
|
|
|
2
|
|
Accounting and
administrative fees
|
|
1
|
|
|
1
|
|
Interest
expense
|
|
42
|
|
|
46
|
|
Other general and
administrative expenses
|
|
3
|
|
|
2
|
|
Total operating
expenses
|
|
73
|
|
|
81
|
|
Net investment
income
|
|
78
|
|
|
98
|
|
|
|
|
|
|
Realized and
unrealized gain/loss
|
|
|
|
|
Net realized gain
(loss) on investments:
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
(83)
|
|
|
(92)
|
|
Non-controlled/affiliated investments
|
|
—
|
|
|
(34)
|
|
Controlled/affiliated
investments
|
|
(43)
|
|
|
—
|
|
Net realized gain
(loss) on foreign currency forward contracts
|
|
—
|
|
|
—
|
|
Net realized gain
(loss) on foreign currency
|
|
(2)
|
|
|
(4)
|
|
Net change in
unrealized appreciation (depreciation) on investments:
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
109
|
|
|
(367)
|
|
Non-controlled/affiliated investments
|
|
27
|
|
|
(137)
|
|
Controlled/affiliated
investments
|
|
106
|
|
|
(191)
|
|
Net change in
unrealized appreciation (depreciation) on foreign currency forward
contracts
|
|
1
|
|
|
2
|
|
Net change in
unrealized gain (loss) on foreign currency
|
|
6
|
|
|
22
|
|
Total net realized and
unrealized gain (loss)
|
|
$
|
121
|
|
|
$
|
(801)
|
|
Net increase
(decrease) in net assets resulting from operations
|
|
$
|
199
|
|
|
$
|
(703)
|
|
|
|
|
|
|
Per share
information—basic and diluted
|
|
|
|
|
Net increase
(decrease) in net assets resulting from operations (Earnings per
Share)
|
|
$
|
1.61
|
|
|
$
|
(5.59)
|
|
Weighted average
shares outstanding(1)
|
|
123,755,965
|
|
|
125,855,913
|
|
FS KKR Capital
Corp. Consolidated Balance Sheets (in millions,
except share and per share amounts)
|
|
|
|
|
|
|
|
|
March 31, 2021
(Unaudited)
|
|
December 31,
2020
|
Assets
|
|
|
|
|
Investments, at fair
value
|
|
|
|
|
Non-controlled/unaffiliated investments (amortized
cost—$4,756 and $5,314, respectively)
|
|
$
|
4,537
|
|
|
$
|
4,986
|
|
Non-controlled/affiliated investments (amortized
cost—$679 and $629, respectively)
|
|
611
|
|
|
534
|
|
Controlled/affiliated
investments (amortized cost—$1,453 and $1,510,
respectively)
|
|
1,309
|
|
|
1,260
|
|
Total investments, at
fair value (amortized cost—$6,888 and $7,453,
respectively)
|
|
6,457
|
|
|
6,780
|
|
Cash
|
|
144
|
|
|
182
|
|
Foreign currency, at
fair value (cost—$5 and $8, respectively)
|
|
5
|
|
|
9
|
|
Receivable for
investments sold and repaid
|
|
263
|
|
|
173
|
|
Income
receivable
|
|
72
|
|
|
72
|
|
Unrealized
appreciation on foreign currency forward contracts
|
|
1
|
|
|
1
|
|
Deferred financing
costs
|
|
14
|
|
|
15
|
|
Deferred merger
costs
|
|
2
|
|
|
1
|
|
Prepaid expenses and
other assets
|
|
6
|
|
|
4
|
|
Total
assets
|
|
$
|
6,964
|
|
|
$
|
7,237
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Payable for
investments purchased
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt (net of deferred
financing costs of $22 and $23, respectively)
|
|
3,590
|
|
|
3,997
|
|
Unrealized
depreciation on foreign currency forward contracts
|
|
2
|
|
|
3
|
|
Stockholder
distributions payable
|
|
74
|
|
|
74
|
|
Management fees
payable
|
|
25
|
|
|
25
|
|
Subordinated income
incentive fees payable
|
|
—
|
|
|
—
|
|
Administrative
services expense payable
|
|
3
|
|
|
2
|
|
Interest
payable
|
|
41
|
|
|
25
|
|
Other accrued
expenses and liabilities
|
|
8
|
|
|
15
|
|
Total
liabilities
|
|
3,743
|
|
|
4,141
|
|
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, 123,755,965 and
123,755,965 shares
issued and outstanding,
respectively
|
|
0
|
|
|
0
|
|
Capital in excess of
par value
|
|
3,866
|
|
|
3,866
|
|
Retained earnings
(accumulated deficit)
|
|
(645)
|
|
|
(770)
|
|
Total
stockholders' equity
|
|
3,221
|
|
|
3,096
|
|
Total
liabilities and stockholders' equity
|
|
$
|
6,964
|
|
|
$
|
7,237
|
|
Net asset value per
share of common stock at period end
|
|
$
|
26.03
|
|
|
$
|
25.02
|
|
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
|
|
March 31,
2021
|
December 31,
2020
|
GAAP net investment
income per share
|
$0.63
|
$0.63
|
Plus capital gains
incentive fees per share
|
—
|
—
|
Plus excise taxes per
share
|
—
|
0.08
|
Plus one-time
expenses per share(8)
|
—
|
0.01
|
Adjusted net
investment income per share(2)
|
$0.63
|
$0.72
|
|
|
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.
Share and per share amounts have been adjusted on a retroactive
basis to reflect FSK's 4 to
1 reverse split of its shares of common stock (the Reverse Stock
Split), which became effective
on June 15, 2020.
|
|
|
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; and (iii)
certain non-recurring operating expenses that are one-time in
nature and are not representative
of ongoing operating expenses incurred during FSK's normal course
of business (referred to
herein as one-time expenses). FSK uses this non-GAAP financial
measure internally in analyzing
financial results and believes that the use of this non-GAAP
financial measure is useful to
investors as an additional tool to evaluate ongoing results and
trends and in comparing its
financial results with other business development companies. 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 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 three months ended March 31, 2021 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
three months ended March 31, 2021 for a description of FSK's
revenue recognition policy.
|
|
|
7)
|
Does not include
investments on non-accrual status.
|
|
|
8)
|
FSK's one-time
expenses for the three months ended December 31, 2020 were $1
million resulting
from the acceleration of the remaining unamortized deferred
financing costs associated with the closing
of the Locust Street Credit Facility.
|
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SOURCE FS KKR Capital Corp.