Accessibility StatementSkip Navigation PHILADELPHIA and NEW YORK, Sept. 19, 2025 /PRNewswire/ -- FS KKR Capital Corp. (NYSE: FSK) announced that it has priced an underwritten public offering of $400,000,000 in aggregate principal amount of its 6.125% unsecured notes due 2031 (the "Notes"). The Notes will mature on January 15, 2031 and may be redeemed in whole or in part at FSK's option at any time at par plus a "make-whole" premium, provided that the Notes may be redeemed at par one month prior to their mat ...

Group 1 - The recent weaker jobs report indicates a likelihood of multiple rate cuts by the end of the year [1] Group 2 - The article emphasizes the importance of due diligence for investors and encourages building portfolios of high-quality, dividend-paying companies [2] - The author expresses a long-term investment strategy focused on quality over quantity, aiming to supplement retirement income through dividends [2]

FS KKR Capital (NYSE: FSK ) is trading at a substantial discount to its net asset value ("NAV") per share while paying out a double-digit base dividend yield from a credit portfolio seeing elevated stress. The Philadelphia-based BDCThe equity market is a powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend ti ...

FS KKR Capital (NYSE: FSK ) is trading at a substantial discount to its net asset value ("NAV") per share while paying out a double-digit base dividend yield from a credit portfolio seeing elevated stress. The Philadelphia-based BDCThe equity market is a powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend ti ...

Group 1 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [1] - Significant efforts have been made to institutionalize the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [1] - Development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing stock has been a focus [1] - Roberts is a CFA Charterholder and holds an ESG investing certificate, with experience from an internship at the Chicago Board of Trade [1] - Active involvement in "thought-leadership" activities supports the development of pan-Baltic capital markets [1]

Financial Data and Key Metrics Changes - In Q2 2025, the company generated net investment income of $0.62 per share and adjusted net investment income of $0.60 per share, compared to public guidance of approximately $0.64 and $0.62 per share respectively [9] - The net asset value (NAV) per share declined by 6.2% from $23.37 to $21.93 during the quarter [9] - Total investment income was $398 million for the second quarter, a decrease of $2 million compared to the first quarter [25] - Total expenses increased to $225 million during the second quarter, up by $12 million compared to the first quarter [26] Business Line Data and Key Metrics Changes - The company originated $3.4 billion of investments in 2025, with $1.4 billion originated in Q2 [10] - Approximately 72% of new investments were focused on add-on financings to existing portfolio companies and long-term KKR relationships [21] - New investments consisted of approximately 83% in first lien loans, 5% in subordinated debt, and 12% in asset-based finance investments [21] Market Data and Key Metrics Changes - Global M&A volume is down close to 10% year over year, but the company evaluated more opportunities in Q2 than in any of the previous eight quarters [13] - The company estimates that direct tariff exposure has declined to the low to mid-single digit range [14] Company Strategy and Development Direction - The company continues to focus on upper middle market companies with EBITDA in the $50 million to $150 million range across diverse industries [21] - The distribution strategy for 2025 is designed to provide shareholders with additional distributions from accumulated spillover income, with a total expected distribution of $2.80 per share [11] - The company plans to provide additional details regarding its 2026 dividend strategy in the third quarter earnings call [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant work needed regarding four companies that were placed on non-accrual status [31] - There is cautious optimism for an increase in M&A activity later this year and into next year [13] - The company remains focused on maintaining strong liquidity to support funding needs, ending the quarter with $3.1 billion of availability [11] Other Important Information - Non-accruals represented 5.3% of the portfolio on a cost basis and 3% on a fair value basis as of the end of Q2 [22] - The weighted average yield on accruing debt investments was 10.6% as of June 30, a decrease of 20 basis points compared to the previous quarter [25] Q&A Session Summary Question: What are you seeing in terms of originations in the second half? - Management noted that there has been increased activity and deal count, with more deals evaluated in Q2 than in the prior eight quarters [34][35] Question: Are there any other companies on your watch list? - Management indicated that approximately 7% of the portfolio is in risk ratings that are concerning, with some names showing positive momentum [39] Question: Can you provide insight into the joint venture's earnings situation? - The anticipated dividend from the joint venture for Q3 is lower due to timing issues with certain dividends [44][45] Question: What is the company's view on buybacks? - Management stated that buybacks will be balanced with market opportunities and target leverage ratios [49] Question: How many troubled assets are currently being monitored? - Management confirmed that the workout team is actively engaged with companies on the watch list, with a focus on maximizing outcomes [56] Question: What is the outlook for the dividend policy? - Management indicated that the dividend policy will be tied to net investment income and will consider market conditions [76][95]

Financial Data and Key Metrics Changes - FSK generated net investment income of $0.62 per share and adjusted net investment income of $0.60 per share, compared to public guidance of approximately $0.64 and $0.62 per share respectively [8] - Net asset value per share declined 6.2% from $23.37 to $21.93 during the quarter [8] - Total investment income was $398 million for the second quarter, a decrease of $2 million compared to the first quarter [25] - Total expenses were $225 million during the second quarter, an increase of $12 million compared to the first quarter [26] Business Line Data and Key Metrics Changes - New investment activity remained strong with $3.4 billion of investments originated in 2025, of which $1.4 billion were originated during the second quarter [9] - Approximately 72% of new investments were focused on add-on financings to existing portfolio companies and long-term KKR relationships [21] - Non-accruals represented 5.3% of the portfolio on a cost basis and 3% on a fair value basis as of the end of the second quarter [22] Market Data and Key Metrics Changes - Global M&A volume is down close to 10% year over year, but the team evaluated more opportunities in Q2 than in any of the previous eight quarters [12] - Direct tariff exposure has declined and now falls within the low to mid single-digit range [13] Company Strategy and Development Direction - The company continues to focus on senior secured investments, with approximately 59% of the portfolio in first lien loans and 64% in senior secured debt as of June 30 [24] - The 2025 distribution strategy aims to provide shareholders with additional distributions from accumulated spillover income, with a total expected distribution of $2.80 per share [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for an increase in M&A activity later this year and into next year, despite current market volatility [12] - The company is focused on stabilizing operations and realizing meaningful cost efficiencies in response to headwinds from tariffs and softer consumer demand [19] Other Important Information - The weighted average yield on accruing debt investments was 10.6% as of June 30, a decrease of 20 basis points compared to the previous quarter [25] - The company plans to provide additional details regarding its 2026 dividend strategy on the third quarter earnings call [11] Q&A Session Summary Question: What are you seeing in terms of originations in the second half? - Management noted increased activity and deal count, with more deals evaluated in Q2 than in the previous eight quarters, indicating a busier environment [36] Question: Do you have any other companies on a watch list beyond the four mentioned? - Management indicated that approximately 7% of the portfolio is in risk ratings QAR bucket three and four, with some names showing positive momentum [39] Question: Can you explain the anticipated dividend from the joint venture for Q3? - The anticipated dividend for Q3 is lower due to the timing of certain ABF dividends, which tend to be lumpy [45] Question: What is the company's view on buybacks given the current portfolio conditions? - Management stated that they have historically been active in buybacks but will balance that with market opportunities and target leverage ratios [50] Question: Are there any themes leading to re-defaults in the portfolio? - Management clarified that each situation is unique, and while some companies are facing challenges, proactive restructuring efforts are ongoing [60] Question: How does the company plan to manage inflow and outflow of investments? - Management emphasized the correlation between new deal flow and repayments, indicating that they have levers to manage growth within their target leverage band [78] Question: What is the current status of spillover income? - Spillover income has been reduced to the mid-400 million range, with a target of aligning it to approximately two quarters' worth of dividends [100]

Financial Performance - Net investment income (NII) was $173 million, or $0.62 per share, down from $187 million, or $0.67 per share in the previous quarter[2] - Adjusted net investment income (Adjusted NII) was $168 million, or $0.60 per share, compared to $182 million, or $0.65 per share for the quarter ended March 31, 2025[2] - Net asset value (NAV) per share decreased to $21.93 as of June 30, 2025, from $23.37 as of March 31, 2025[2] - Adjusted NII coverage of the base dividend was 94%, and total dividend coverage was 86% for the quarter ended June 30, 2025[2] Investment Activity & Portfolio - New investment fundings totaled approximately $1.4 billion in the second quarter[2] - Net investment activity for the second quarter was $311 million, including $561 million of sales to Credit Opportunities Partners JV, LLC (COPJV)[2] - The portfolio is diversified across 218 companies in 23 industries[2,10] - Exposure to the top ten largest portfolio companies was 19% of the total portfolio fair value[2,10] - Senior secured investments represent 64.1% of the portfolio fair value, or 73.4% when looking through to COPJV investments[10,16] Capital Structure & Liquidity - The company has $3.1 billion of liquidity, including undrawn debt, cash, and unsettled trades[2,26] - 54% of drawn leverage was unsecured as of June 30, 2025, and the weighted average effective rate on borrowings was 5.34%[2,28] - 90% of liabilities mature in 2027 and beyond[2,26]

Core Insights - FS KKR Capital reported revenue of $398 million for the quarter ended June 2025, a decrease of 9.3% year-over-year [1] - The company's EPS was -$0.60, down from $0.75 in the same quarter last year, indicating a significant decline [1] - Revenue fell short of the Zacks Consensus Estimate of $401.13 million, resulting in a surprise of -0.78% [1] - The EPS surprise was -195.24%, with the consensus estimate being $0.63 [1] Financial Performance Metrics - Investment income from fee income was $9 million, below the average estimate of $15.41 million from four analysts [4] - Dividend and other income amounted to $91 million, exceeding the average estimate of $81.05 million based on four analysts [4] - Paid-in-kind interest income was reported at $53 million, lower than the estimated $61.66 million, but showed a year-over-year increase of 23.3% [4] - Interest income reached $245 million, slightly above the average estimate of $241.38 million from three analysts [4] Stock Performance - FS KKR Capital's shares have returned -5% over the past month, contrasting with the Zacks S&P 500 composite's +0.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - FS KKR Capital reported a quarterly loss of $0.6 per share, missing the Zacks Consensus Estimate of $0.63, and a decline from earnings of $0.75 per share a year ago, indicating a significant earnings surprise of -195.24% [1] Financial Performance - The company posted revenues of $398 million for the quarter ended June 2025, which was below the Zacks Consensus Estimate by 0.78% and a decrease from $439 million in the same quarter last year [2] - Over the last four quarters, FS KKR Capital has surpassed consensus EPS estimates two times and topped consensus revenue estimates twice [2] Stock Performance - FS KKR Capital shares have declined approximately 7.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] - The current status of estimate revisions has resulted in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.63 on revenues of $402.16 million, while for the current fiscal year, the estimate is $2.54 on revenues of $1.6 billion [7] - The outlook for the industry, specifically the Financial - SBIC & Commercial Industry, is currently in the top 41% of Zacks industries, indicating a favorable environment for stock performance [8] Industry Comparison - Main Street Capital, another company in the same industry, is expected to report quarterly earnings of $0.99 per share, reflecting a year-over-year change of -2%, with revenues anticipated to be $137.23 million, up 3.8% from the previous year [9][10]