PHILADELPHIA, Nov. 9, 2020 /PRNewswire/ -- FS KKR Capital
Corp. (NYSE: FSK), a leading publicly traded business development
company focused on providing customized credit solutions to private
middle market U.S. companies, announced its financial and operating
results for the quarter ended September 30,
2020, and that its board of directors has declared a fourth
quarter 2020 distribution totaling $0.60 per share.
Financial and Operating Highlights for the Quarter Ended
September 30,
2020(1)
- Net investment income of $0.63
per share, compared to $0.89 per
share for the quarter ended September 30,
2019
- Total net realized and unrealized gain of $1.06 per share, compared to a total net realized
and unrealized loss of $0.34 per
share for the quarter ended September
30, 2019
- Paid cash distributions to stockholders totaling
$0.60 per
share(2)
- Total purchases of $174
million versus $322 million of
sales and repayments, including $91
million of sales to its joint venture Strategic Credit
Opportunities Partners, LLC, or SCJV
- Net asset value of $24.46 per
share, compared to $23.37 per share
as of June 30, 2020
"The third quarter was a positive quarter on a number of
fronts," commented Michael C.
Forman, CEO & Chairman. "Our net investment income per
share comfortably covered our quarterly dividend, our net asset
value per share increased by 4.7%, and our annualized quarterly
dividend of $2.40 per share continues
to exceed our targeted yield to investors of 9.0%. Overall,
we are pleased with the quarter and how we are positioned for
success as we plan for 2021 and beyond."
Declaration of Distribution for Fourth Quarter 2020
FSK's board of directors has declared a cash distribution for
the fourth quarter of $0.60 per
share, which will be paid on or about January 5, 2021 to stockholders of record as of
the close of business on December 16,
2020.
Summary Consolidated Results
|
Three Months
Ended
|
(dollars in
millions, except per share data)
(all per share amounts are basic and
diluted)(1)
|
September 30,
2020
|
June 30,
2020
|
September 30,
2019
|
Total investment
income
|
$147
|
$150
|
$199
|
Net investment
income
|
78
|
77
|
115
|
Net increase
(decrease) in net assets resulting from operations
|
210
|
(55)
|
71
|
|
|
|
|
Net investment income
per share
|
$0.63
|
$0.62
|
$0.89
|
Total net realized
and unrealized gain (loss) per share
|
$1.06
|
$(1.08)
|
$(0.34)
|
Net increase
(decrease) in net assets resulting from operations
(Earnings per Share)
|
$1.70
|
$(0.44)
|
$0.55
|
Stockholder
distributions per share(2)
|
$0.60
|
$0.60
|
$0.76
|
Net asset value per
share at period end
|
$24.46
|
$23.37
|
$31.43
|
Weighted average
shares outstanding
|
123,755,965
|
123,806,337
|
129,385,824
|
Shares outstanding,
end of period
|
123,755,965
|
123,755,965
|
128,065,593
|
|
(dollar amounts in
millions)
|
|
As
of September 30,
2020
|
As
of December 31,
2019
|
Total fair value of
investments
|
|
$6,649
|
$7,357
|
Total
assets
|
|
7,126
|
8,216
|
Total stockholders'
equity
|
|
3,027
|
3,866
|
Portfolio Highlights as of September 30,
2020
- Total fair value of investments was $6.6
billion of which 68% was invested in senior secured
securities.
- Weighted average annual yield on accruing debt
investments(4) was 8.6%, compared to 8.7% as of
June 30, 2020.
- Weighted average annual yield on all debt
investments(4) was 7.6%, compared to 7.4% as of
June 30, 2020.
- Exposure to the top ten largest portfolio companies by fair
value was 23% as of September 30,
2020, compared to 22% as of June 30,
2020.
Total Portfolio Activity
|
Three Months
Ended
|
|
(dollar amounts in
millions)
|
September 30,
2020
|
June 30,
2020
|
September 30,
2019
|
|
Purchases
|
$174
|
$253
|
$698
|
|
Sales and
redemptions
|
(322)
|
(470)
|
(723)
|
|
Net portfolio
activity
|
$(148)
|
$(217)
|
$(25)
|
|
Sales to
SCJV
|
91
|
126
|
274
|
|
Adjusted net
portfolio activity
|
$(57)
|
$(91)
|
$249
|
|
|
|
Portfolio
Data
|
As of
September 30, 2020
|
As of
December 31, 2019
|
|
Total fair value of
investments
|
$6,649
|
$7,357
|
|
Number of Portfolio
Companies
|
172
|
210
|
|
% of Investments on
Non-Accrual
(based on fair
value)(5)
|
2.8%
|
2.8%
|
|
|
|
|
Asset Class
(based on fair value)
|
|
|
Senior Secured Loans
— First Lien
|
53.5%
|
50.6%
|
|
Senior Secured Loans
— Second Lien
|
12.8%
|
16.3%
|
|
Other Senior Secured
Debt
|
1.2%
|
3.2%
|
|
Subordinated
Debt
|
2.5%
|
5.6%
|
|
Asset Based
Finance
|
12.9%
|
10.0%
|
|
Strategic Credit
Opportunities Partners, LLC
|
9.7%
|
6.5%
|
|
Equity/Other
|
7.4%
|
7.8%
|
|
|
|
|
|
Interest Rate
Type (based on fair value)
|
|
|
|
% Variable Rate Debt
Investments
|
65.3%
|
64.8%
|
|
% Fixed Rate Debt
Investments
|
8.6%
|
14.6%
|
|
% Other Income
Producing Investments
|
16.0%
|
11.2%
|
|
% Non-Income
Producing Investments(6)
|
7.3%
|
6.6%
|
|
% of Investments on
Non-Accrual(5)
|
2.8%
|
2.8%
|
|
|
|
|
|
Leverage and Liquidity as of September 30, 2020
- Net debt to equity ratio(7) of 120%, based on
$4.0 billion in total debt
outstanding, 136 million of cash and foreign currency and
$226 million of net receivable for
investments sold and repaid and stockholders' equity of
$3.0 billion. FSK's weighted average
effective interest rate (including the effect of non-usage fees)
was 3.65%.
- Cash and foreign currency of $136
million and availability under its financing arrangements of
$1,102 million, subject to borrowing
base and other limitations.
Conference Call
Information
FSK will host a conference call at 8:00
a.m. (Eastern Time) on Tuesday, November 10, 2020, to
discuss its third quarter 2020 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 1947459 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.
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 September
30, 2020. 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, Washington, DC 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
the 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 September
30, 2020, which FSK filed with the U.S. Securities and
Exchange Commission (the SEC) on November 9,
2020, 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, 2020 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
Media (FS Investments)
media@fsinvestments.com
Income Statement
($ amounts in millions, except per share
data)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Investment
income
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
93
|
|
|
$
|
153
|
|
|
$
|
327
|
|
|
$
|
451
|
|
Paid-in-kind interest
income
|
|
11
|
|
|
7
|
|
|
31
|
|
|
23
|
|
Fee income
|
|
3
|
|
|
7
|
|
|
21
|
|
|
26
|
|
Dividend and other
income
|
|
7
|
|
|
5
|
|
|
10
|
|
|
9
|
|
From
non-controlled/affiliated investments:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
3
|
|
|
7
|
|
|
8
|
|
|
18
|
|
Paid-in-kind interest
income
|
|
5
|
|
|
4
|
|
|
14
|
|
|
12
|
|
Fee income
|
|
—
|
|
|
—
|
|
|
0
|
|
|
—
|
|
Dividend
income
|
|
0
|
|
|
—
|
|
|
0
|
|
|
—
|
|
From
controlled/affiliated investments:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
2
|
|
|
3
|
|
|
6
|
|
|
8
|
|
Paid-in-kind interest
income
|
|
1
|
|
|
—
|
|
|
3
|
|
|
4
|
|
Dividend and other
income
|
|
22
|
|
|
13
|
|
|
56
|
|
|
42
|
|
Total investment
income
|
|
147
|
|
|
199
|
|
|
476
|
|
|
593
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Management
fees
|
|
24
|
|
|
28
|
|
|
80
|
|
|
85
|
|
Subordinated income
incentive fees
|
|
—
|
|
|
8
|
|
|
—
|
|
|
57
|
|
Administrative
services expenses
|
|
1
|
|
|
4
|
|
|
6
|
|
|
7
|
|
Accounting and
administrative fees
|
|
0
|
|
|
0
|
|
|
1
|
|
|
1
|
|
Interest
expense
|
|
40
|
|
|
42
|
|
|
128
|
|
|
126
|
|
Other general and
administrative expenses
|
|
4
|
|
|
2
|
|
|
8
|
|
|
6
|
|
Total operating
expenses
|
|
69
|
|
|
84
|
|
|
223
|
|
|
282
|
|
Net investment
income
|
|
78
|
|
|
115
|
|
|
253
|
|
|
311
|
|
|
|
|
|
|
|
|
|
|
Realized and
unrealized gain/loss
|
|
|
|
|
|
|
|
|
Net realized gain
(loss) on investments:
|
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
(99)
|
|
|
(17)
|
|
|
(239)
|
|
|
(83)
|
|
Non-controlled/affiliated investments
|
|
(90)
|
|
|
29
|
|
|
(129)
|
|
|
21
|
|
Controlled/affiliated
investments
|
|
(18)
|
|
|
5
|
|
|
(35)
|
|
|
2
|
|
Net realized gain
(loss) on swap contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
Net realized gain
(loss) on foreign currency forward contracts
|
|
0
|
|
|
2
|
|
|
0
|
|
|
6
|
|
Net realized gain
(loss) on foreign currency
|
|
(2)
|
|
|
2
|
|
|
(5)
|
|
|
3
|
|
Net change in
unrealized appreciation (depreciation) on investments:
|
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
261
|
|
|
(73)
|
|
|
(114)
|
|
|
(54)
|
|
Non-controlled/affiliated investments
|
|
27
|
|
|
(15)
|
|
|
(138)
|
|
|
62
|
|
Controlled/affiliated
investments
|
|
68
|
|
|
12
|
|
|
(144)
|
|
|
(7)
|
|
Net change in
unrealized appreciation (depreciation) on swap contracts
|
|
—
|
|
|
1
|
|
|
—
|
|
|
15
|
|
Net change in
unrealized appreciation (depreciation) on foreign
currency forward contracts
|
|
(1)
|
|
|
7
|
|
|
1
|
|
|
6
|
|
Net change in
unrealized gain (loss) on foreign currency
|
|
(14)
|
|
|
3
|
|
|
2
|
|
|
1
|
|
Total net realized and
unrealized gain (loss)
|
|
|
132
|
|
|
|
(44)
|
|
|
|
(801)
|
|
|
|
(38)
|
|
Net increase
(decrease) in net assets resulting from operations
|
|
$
|
210
|
|
|
$
|
71
|
|
|
$
|
(548)
|
|
|
$
|
273
|
|
|
|
|
|
|
|
|
|
|
Per share
information—basic and diluted
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in net assets resulting from operations
(Earnings
per Share)(1)
|
|
$
|
1.70
|
|
|
$
|
0.55
|
|
|
$
|
(4.40)
|
|
|
$
|
2.09
|
|
Weighted average
shares outstanding(1)
|
|
123,755,965
|
|
|
129,385,824
|
|
|
124,470,122
|
|
|
130,595,052
|
|
Balance Sheet
($ amounts in millions, except per share
data)
|
|
September 30,
2020
|
|
|
|
|
(Unaudited)
|
|
December 31,
2019
|
Assets
|
|
|
|
|
Investments, at fair
value
|
|
|
|
|
Non-controlled/unaffiliated investments (amortized
cost—$5,474 and $6,006, respectively)
|
|
$
|
5,015
|
|
|
$
|
5,661
|
|
Non-controlled/affiliated investments (amortized
cost—$623 and $686, respectively)
|
|
516
|
|
|
717
|
|
Controlled/affiliated
investments (amortized cost—$1,400 and $1,117,
respectively)
|
|
1,118
|
|
|
979
|
|
Total investments, at
fair value (amortized cost—$7,497 and $7,809,
respectively)
|
|
6,649
|
|
|
7,357
|
|
Cash
|
|
129
|
|
|
93
|
|
Foreign currency, at
fair value (cost—$7 and $13, respectively)
|
|
7
|
|
|
13
|
|
Receivable for
investments sold and repaid
|
|
231
|
|
|
657
|
|
Income
receivable
|
|
93
|
|
|
82
|
|
Unrealized
appreciation on foreign currency forward contracts
|
|
2
|
|
|
1
|
|
Deferred financing
costs
|
|
12
|
|
|
10
|
|
Prepaid expenses and
other assets
|
|
3
|
|
|
3
|
|
Total
assets
|
|
$
|
7,126
|
|
|
$
|
8,216
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Payable for
investments purchased
|
|
$
|
5
|
|
|
$
|
15
|
|
Debt (net of deferred
financing costs of $12 and $9, respectively)
|
|
3,957
|
|
|
4,173
|
|
Unrealized
depreciation on foreign currency forward contracts
|
|
0
|
|
|
0
|
|
Stockholder
distributions payable
|
|
74
|
|
|
96
|
|
Management fees
payable
|
|
24
|
|
|
30
|
|
Subordinated income
incentive fees payable
|
|
—
|
|
|
—
|
|
Administrative
services expense payable
|
|
3
|
|
|
3
|
|
Interest
payable
|
|
33
|
|
|
23
|
|
Other accrued
expenses and liabilities
|
|
3
|
|
|
10
|
|
Total
liabilities
|
|
4,099
|
|
|
4,350
|
|
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
126,581,766 shares
issued and outstanding,
respectively
|
|
—
|
|
|
1
|
|
Capital in excess of
par value
|
|
3,995
|
|
|
4,041
|
|
Retained earnings
(accumulated deficit)
|
|
(968)
|
|
|
(176)
|
|
Total
stockholders' equity
|
|
3,027
|
|
|
3,866
|
|
Total
liabilities and stockholders' equity
|
|
$
|
7,126
|
|
|
$
|
8,216
|
|
Net asset value per
share of common stock at period end(1)
|
|
$
|
24.46
|
|
|
$
|
30.54
|
|
|
|
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. 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)
|
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. The amount of each per share distribution has
been retroactively adjusted to reflect the Reverse Stock
Split.
|
3)
|
See FSK's quarterly
report on Form 10-Q for the three months ended September 30, 2020
for a description of FSK's investment strategies,
including its definition of "direct originations."
|
4)
|
See FSK's quarterly
report on Form 10-Q for the three months ended September 30, 2020
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.
|
5)
|
Interest income is
recorded on an accrual basis. See FSK's quarterly report on Form
10-Q for the three months ended September 30, 2020 for a
description of FSK's revenue recognition policy.
|
6)
|
Does not include
investments on non-accrual status.
|
7)
|
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.
|
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SOURCE FS KKR Capital Corp.