Financial Data and Key Metrics Changes - For Q1 2025, the company generated net investment income of $0.67 per share and adjusted net investment income of $0.65 per share, slightly above public guidance of $0.66 and $0.64 per share respectively [11] - The total investment income decreased by $7 million quarter over quarter to $400 million, primarily due to two fewer days in the first quarter compared to the fourth quarter and the paydown of higher yielding investments [29] - The net asset value per share decreased from $23.64 at the end of Q4 2024 to $23.37 at the end of Q1 2025 [31] Business Line Data and Key Metrics Changes - The company originated approximately $2 billion in new investments during Q1 2025, with 45% focused on add-on financings to existing portfolio companies [19] - New investments included approximately 63% in first lien loans, 1% in other senior secured debt, 19% in asset-based finance, 15% in capital calls to the joint venture, and 2% in equity and other investments [20] - Non-accruals represented 3.5% of the portfolio on a cost basis and 2.1% on a fair value basis, showing slight improvement from 3.7% and 2.2% respectively at the end of Q4 2024 [22] Market Data and Key Metrics Changes - Approximately 8% of the portfolio could have direct exposure to tariff policies, with low to mid single-digit exposure to DOGE [14] - The weighted average yield on accruing debt investments decreased to 10.8% as of March 31, down from 11% at the end of Q4 2024 [29] - The portfolio companies reported a weighted average year-over-year EBITDA growth rate of approximately 10% [21] Company Strategy and Development Direction - The company aims to maintain a stable income for investors by keeping a healthy balance of spillover income during periods of higher interest rates [8] - The focus remains on investing in high-quality companies with strong defensive positions, particularly in the upper middle market [21] - The company is actively managing exposure to tariffs and has exited two portfolio companies deemed to have higher risks related to tariffs [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic outlook has worsened, with increased volatility in debt and equity markets and major geopolitical risks [7] - The expectation is that the macroeconomic environment will stabilize by early next year, providing clearer insights into interest rates and other economic drivers [9] - The company anticipates that the second quarter of 2025 GAAP net investment income will approximate $0.64 per share, with adjusted net investment income expected to be around $0.62 per share [32] Other Important Information - The company closed on its second middle market CLO, raising $380 million of low-cost secured debt [33] - As of March 31, 2025, the company had approximately $3.2 billion in available liquidity [34] Q&A Session Summary Question: Timing of deployments and rate changes impact - Management indicated that the origination number was satisfactory and that the declining rates have mostly flowed through as of the end of Q1 [38][39] Question: Pipeline activity and market share - Management noted that while the M&A market has slowed, they continue to benefit from a large existing book and diversified origination sources [41][42] Question: Macro group insights on recession odds - Management acknowledged that the chances of a recession are more likely than not, but it could be muted [46][48] Question: Yield compression expectations - Management confirmed that additional yield compression is expected as the portfolio churns, with new money yields lower than previous repayments [49][51] Question: Preferred leverage ranges - Management stated that the target leverage range remains unchanged, with a focus on diversified funding sources [60] Question: Asset-based financing risks - Management highlighted that consumer risk in the asset-based finance portfolio is small, with a focus on secured, higher FICO score risks [62] Question: Continued strength in ABF group - Management indicated that while ABF dividends may vary, there is continued strength in the joint venture's dividends [70] Question: Trends in portfolio leverage and interest coverage - Management explained that the divergence in trends is likely due to a lag effect in interest coverage calculations [82][84] Question: Deal activity in different market segments - Management suggested that larger company activity may be more muted due to reliance on a more active M&A market [87]

Core Insights - FS KKR Capital reported revenue of $400 million for the quarter ended March 2025, a decrease of 7.8% year-over-year, with EPS at $0.65 compared to $0.73 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $396.62 million by 0.85%, while the EPS also surpassed the consensus estimate of $0.64 by 1.56% [1] Financial Performance Metrics - Investment income from interest was reported at $240 million, below the average estimate of $262.37 million [4] - Dividend and other income amounted to $81 million, exceeding the estimated $74.59 million [4] - Fee income reached $17 million, surpassing the average estimate of $10.68 million [4] - Paid-in-kind interest income was reported at $62 million, slightly below the estimate of $65.13 million, but showed a significant year-over-year increase of 77.1% [4] Stock Performance - Over the past month, FS KKR Capital's shares returned +9%, compared to a +10.6% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

This quarterly report represents an earnings surprise of 1.56%. A quarter ago, it was expected that this business development company would post earnings of $0.67 per share when it actually produced earnings of $0.66, delivering a surprise of -1.49%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. FS KKR Capital, which belongs to the Zacks Financial - SBIC & Commercial Industry industry, posted revenues of $400 million for the quarter ended March 2025, surpassing ...

FS KKR Capital Corp. F i n a n c i a l I n f o r m a t i o n Quarter Ended March 31, 2025 All information is as of March 31, 2025 unless otherwise noted Summary of Quarterly Results | | • | Net investment income (NII) for the quarter ended March 31, 2025 was $187 million, or $0.67 per share, as compared to $171 million, or $0.61 per share, for the quarter ended December 31, 2024. | | --- | --- | --- | | | • | Adjusted net investment income (Adjusted NII) for the quarter ended March 31, 2025 was $182 million ...

Conference Call - FS KKR Capital Corp. will host a conference call on May 8, 2025, at 9:00 a.m. (Eastern Time) to discuss its Q1 2025 results[4] - The press release announcing the conference call was dated April 10, 2025[4] Stock Information - The company is registered on the New York Stock Exchange under the trading symbol FSK[2]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q _________________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 COMMISSION FILE NUMBER: 814-00757 _________________________________________________ FS KKR Capital Corp. (Exact name of registrant as specified in its charter) _________________________________________________ 201 Rouse Boulevar ...

Company Overview - FS KKR Capital Corp. (NYSE: FSK) is a publicly traded business development company (BDC) focused on providing customized credit solutions to private middle market U.S. companies [5] - The company primarily invests in senior secured debt and, to a lesser extent, subordinated debt of private middle market companies [5] Upcoming Financial Results - FS KKR Capital Corp. plans to release its first quarter 2025 results after the close of trading on the New York Stock Exchange on May 7, 2025 [1] - A conference call to discuss the results will be hosted via live webcast on May 8, 2025, at 9:00 a.m. (Eastern Time) [2] Investor Participation - Research analysts wishing to participate in the conference call must register a day in advance or at least 15 minutes before the call [3] - A replay of the call will be available shortly after its conclusion on the Investor Relations section of FSK's website [4] Advisory and Management - FS KKR Capital Corp. is advised by FS/KKR Advisor, LLC, a partnership between FS Investments and KKR Credit [6] - FS Investments manages over $85 billion in assets and provides access to a broad suite of alternative asset classes and strategies [7] - KKR Credit, a subsidiary of KKR & Co. Inc., focuses on generating attractive investment returns through a disciplined investment approach [8]

Financial Data and Key Metrics Changes - In Q4 2024, FSK generated net investment income of $0.61 per share and adjusted net investment income of $0.66 per share, compared to guidance of approximately $0.63 and $0.68 per share respectively [16][17] - The net asset value per share decreased to $23.64 from $23.82 in Q3 2024, impacted by a decrease in the overall value of the investment portfolio and the total quarterly distribution paid [36][40] - Total investment income decreased by $34 million quarter over quarter to $407 million, primarily due to a decline in base rates and delayed closings of new investments [34][35] Business Line Data and Key Metrics Changes - In Q4, FSK originated $891 million of new investments, compared to $1.46 billion of exits, with no sales to the joint venture during the quarter [22][23] - New direct lending investments had a weighted average EBITDA of approximately $206 million and a weighted average coupon of approximately SOFR plus 516 basis points [24] - Non-accruals represented 3.7% of the portfolio on a cost basis and 2.2% on a fair value basis, a slight improvement from 3.8% and 1.7% respectively in Q3 2024 [25][26] Market Data and Key Metrics Changes - The weighted average yield on accruing debt investments decreased to 11% as of December 31, 2024, down from 11.5% in Q3 2024, primarily due to a decline in base rates and spread compression [33] - The current macroeconomic environment is characterized by a balancing act between growth desires, inflationary pressures, and interest rate adjustments, impacting M&A activity [20][21] Company Strategy and Development Direction - The company aims to improve credit quality and overall portfolio stability, having reduced non-accrual investments by 58% during 2024 [11] - FSK plans to maintain a disciplined origination strategy, entering 2025 with significant liquidity to capitalize on expected increases in M&A activity [12][15] - The company expects to provide shareholders with total distributions of at least $2.80 per share in 2025, consisting of a quarterly base distribution of $0.64 and a supplemental distribution of $0.06 [15][38] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the timing of increased M&A activity, suggesting it may take longer to materialize than some industry observers forecast [20] - The company remains optimistic about the direct lending market fundamentals, noting strong revenue and earnings growth among borrowers [21] - Management highlighted the importance of maintaining downside protection in underwriting deals, especially in a borrower-friendly market [122] Other Important Information - FSK's investment portfolio had a fair value of $13.5 billion as of December 31, 2024, consisting of 214 portfolio companies [31] - The company issued $700 million of unsecured notes due 2030 during Q4, which were swapped to floating rates [39] - Available liquidity stood at $4.8 billion, with a significant portion of the balance sheet comprised of unsecured debt [40] Q&A Session Summary Question: Dividend outlook and spillover income - Management confirmed confidence in the dividend outlook, emphasizing the importance of spillover income and maintaining a base and supplemental distribution strategy [44][46] Question: Spread trends and risk characterization - Management noted spread compression across credit markets, with current direct lending deals yielding around 10% total return, indicating a more borrower-friendly market [50][52] Question: New originations and pipeline fill - Management indicated that a few deals rolled over from Q4 to Q1, with a growing pipeline driven by private equity sponsors needing to liquidate back books [56][60] Question: M&A activity and asset-backed finance outlook - Management characterized the asset-backed finance market as having significant activity, with expectations for continued interest and unique origination opportunities [70][73] Question: Areas of weakness in the portfolio - Management acknowledged some idiosyncratic issues affecting specific issuers but maintained a generally constructive outlook on the economy and portfolio performance [75][78] Question: Fee income and repayment activity - Management indicated that fee income may fluctuate, with expectations for additional repayments in Q1, and emphasized the importance of discipline in deal-making [112][120]

Financial Data and Key Metrics Changes - In 2024, the company reduced non-accrual investments by 58% to 3.7% on a cost basis and 2.2% on a fair value basis [11][25][26] - The net investment income for the fourth quarter was $0.61 per share, while adjusted net investment income was $0.66 per share, compared to guidance of approximately $0.63 and $0.68 per share respectively [16][37] - The weighted average yield on accruing debt investments decreased to 11% as of December 31, 2024, down from 11.5% as of September 30, 2024 [33] Business Line Data and Key Metrics Changes - The company originated $891 million of new investments in the fourth quarter, compared to $1.46 billion of exits [22] - New originations consisted of approximately 63% in first lien loans, 36% in asset-based finance investments, and 1% in equity or other investments [23] - The weighted average EBITDA of new direct lending investments was approximately $206 million, with a weighted average coupon of approximately SOFR plus 516 basis points [24] Market Data and Key Metrics Changes - The company reported a 12.1% yield on average net asset value for shareholders in 2024, with a total return of 23% [19] - Credit defaults remained largely contained across the industry, with borrowers continuing to generate revenue and earnings growth [21] - The company noted that the current macroeconomic environment is a balancing act between growth desires, inflationary pressures, and interest rate adjustments [20] Company Strategy and Development Direction - The company aims to improve credit quality and overall portfolio stability, maintain a strong balance sheet, and provide shareholders with an annual distribution of $2.80 per share [12][13][15] - The company plans to utilize its relationships to originate attractive investments and expects M&A activity to increase materially in 2025 and beyond [12][15] - The focus remains on senior secured investments, with approximately 58% of the portfolio in first lien loans as of December 31, 2024 [32] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the timing of increased M&A activity, suggesting it may take longer to materialize than some industry observers forecast [20] - The company remains optimistic about the direct lending market fundamentals, citing strong tailwinds and reduced interest burdens for portfolio companies [21] - Management highlighted the importance of maintaining discipline in origination, even if it means passing on certain transactions [12] Other Important Information - The company issued $700 million of unsecured notes due in 2030 during the fourth quarter, which were swapped to floating rates [39] - As of December 31, 2024, the investment portfolio had a fair value of $13.5 billion, consisting of 214 portfolio companies [31] - The company expects to provide total distributions of at least $2.80 per share in 2025, with a combination of base and supplemental distributions [38] Q&A Session Summary Question: Dividend outlook and spillover income - Management indicated confidence in the dividend outlook, noting that spillover income is a significant factor [43][44] - The base distribution is set at $0.64 per share, with a supplemental distribution of $0.06 per share [44][46] Question: Spread compression and risk - Management acknowledged spread compression across credit markets, with a current direct lending deal yielding around 5% before fees [48][49] Question: New originations and pipeline fill - Management noted that a few deals slipped from Q4 to Q1, impacting fee income, but the pipeline is filling with private equity sponsors looking to offload back books [55][60] Question: M&A activity and asset-backed finance outlook - Management characterized the asset-backed finance market as having significant activity, with a focus on proprietary origination angles [70][73] Question: Areas of concern in the portfolio - Management indicated that any issues observed have been idiosyncratic to specific issuers, with overall portfolio EBITDA growth at approximately 16% [74][76] Question: Fee income and repayment activity - Management expects a certain amount of additional repayments in Q1, with a better balance of new deals versus repayments anticipated [120]

Group 1 - FS KKR Capital (FSK) is a notable stock within the Finance group, which is currently ranked 1 in the Zacks Sector Rank, indicating strong performance relative to other sectors [2][3] - The Zacks Rank system highlights stocks with characteristics that are likely to outperform the market, and FS KKR Capital has a Zacks Rank of 2 (Buy), suggesting a positive outlook [3] - Over the past 90 days, the Zacks Consensus Estimate for FSK's full-year earnings has increased by 0.4%, indicating improved analyst sentiment and a stronger earnings outlook [4] Group 2 - Year-to-date, FS KKR Capital has gained approximately 5.4%, outperforming the average gain of 4.4% for Finance stocks [4] - FS KKR Capital is part of the Financial - SBIC & Commercial Industry, which includes 37 stocks and is currently ranked 54 in the Zacks Industry Rank, with an average gain of 3.9% year-to-date [6] - In comparison, another Finance stock, Alexander's (ALX), has returned 6.9% year-to-date and has a Zacks Rank of 1 (Strong Buy), indicating strong performance within the sector [5][7]