Group 1 - The article does not provide any specific content related to a company or industry [1]

Financial Data and Key Metrics Changes - For Q3 2025, the company generated net investment income and adjusted net investment income of $0.57 per share, slightly below public guidance of approximately $0.58 and $0.57 per share respectively [8] - The net asset value increased to $21.99 per share from $21.93 at the end of Q2 2025 [26] - Total investment income was $373 million, a decrease of $25 million compared to Q2 2025, primarily due to lower interest income [23] Business Line Data and Key Metrics Changes - The company originated approximately $1.1 billion of new investments in Q3 2025, with 60% focused on add-on financings to existing portfolio companies [16] - New investments consisted of 65% in first lien loans, 7% in subordinated debt, 15% in asset-based finance investments, and 12% in capital calls to the joint venture [16] - The weighted average yield on accruing debt investments was 10.5%, a decrease of 10 basis points from the previous quarter [22] Market Data and Key Metrics Changes - The number of deals evaluated in Q3 increased by approximately 30% year over year, indicating a building momentum in M&A activity [12] - The portfolio companies reported a weighted average year-on-year EBITDA growth rate of approximately 4% [17] - Non-accruals represented 5% of the portfolio on a cost basis, down from 5.3% in Q2 2025 [19] Company Strategy and Development Direction - The company plans to implement a forward dividend strategy starting in Q1 2026, targeting an annualized yield of approximately 10% on net asset value [10] - The focus remains on U.S.-based direct lending and top-of-the-capital structure risk, with asset-based finance investments as a complementary part of the portfolio [14] - The company is actively monitoring tariff-related exposures and has low single-digit exposure to U.S. government-related borrowers [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the BDC industry, noting that many companies successfully navigated previous periods of volatility [5] - The expectation is that the Federal Reserve will continue to reduce rates, which will be beneficial for portfolio companies and likely generate additional M&A activity [6] - Management acknowledged pockets of weakness in economic indicators but noted a healthy labor market supported by solid corporate earnings [12] Other Important Information - The company issued $400 million of unsecured notes due 2031, which were swapped to floating rate [28] - As of September 30, available liquidity was $3.7 billion, with gross and net debt-to-equity levels at 120% and 116% respectively [28] Q&A Session Summary Question: Improvement on legacy names and exit strategy - Management noted progress in restructuring efforts and expressed optimism about monetizing certain investments [33] Question: Progress on spillover and potential special distributions - Management indicated they expect to clean out a little over $100 million of spillover by year-end and may consider a one-time distribution in the first half of next year [35] Question: Dividend policy and resilience in various economic cycles - Management confirmed confidence in the base distribution level, considering various economic factors and forward curves [52] Question: Competitive factors in asset-based finance due to recent defaults - Management stated that recent defaults have not significantly impacted their competitive position, as they have avoided heavy cyclical businesses [74]

Financial Performance - Net investment income (NII) was $159 million, or $0.57 per share, for the quarter ended September 30, 2025, compared to $173 million, or $0.62 per share, for the previous quarter[2] - Adjusted net investment income (Adjusted NII) was also $159 million, or $0.57 per share, for the same period, down from $168 million, or $0.60 per share, in the prior quarter[2] - Net asset value (NAV) per share increased slightly to $21.99 as of September 30, 2025, from $21.93 as of June 30, 2025[2] Investment Activity - New investment fundings in the third quarter totaled approximately $1.1 billion[2] - Net investment activity for the quarter was $109 million, which included $450 million in sales to Credit Opportunities Partners JV, LLC (COPJV)[2] Distribution and Dividend - A total distribution of $0.70 per share was paid for the third quarter of 2025, comprising a $0.64 per share base distribution and a $0.06 per share supplemental distribution[2] - For the first quarter of 2026, the company expects a total distribution of approximately $0.55 per share, equating to an annualized yield of approximately 10% on the company's September 30, 2025, NAV per share[2] - The dividend yield on NAV per share was 12.7%, and the dividend yield on the market value of common stock was 18.6% as of October 31, 2025[2, 3] Portfolio and Capital Structure - The portfolio is defensively positioned with 224 portfolio companies across 23 industries[2, 10] - Exposure to the top ten largest portfolio companies by fair value was 20% as of September 30, 2025[2] - 64% of drawn leverage was unsecured as of September 30, 2025, with a weighted average effective rate on borrowings of 5.3%[2] - The company issued $400 million of 6.125% unsecured notes due in 2031 during the third quarter[2]

Core Insights - FS KKR Capital reported a revenue of $373 million for the quarter ended September 2025, reflecting a year-over-year decline of 15.4% and an EPS of $0.57, down from $0.74 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $376.07 million, resulting in a surprise of -0.82% [1] - The company did not deliver an EPS surprise, as the consensus EPS estimate was also $0.57 [1] Financial Performance Metrics - Investment income from fee income was reported at $4 million, significantly below the average estimate of $9.82 million, marking an 81% year-over-year decline [4] - Investment income from dividend and other income was $84 million, exceeding the average estimate of $74.61 million, representing a year-over-year increase of 31.3% [4] - Paid-in-kind interest income was reported at $54 million, compared to the average estimate of $49.79 million, reflecting an 18.2% year-over-year decline [4] - Interest income was $231 million, slightly below the average estimate of $239.33 million, indicating a year-over-year decrease of 20.3% [4] Stock Performance - FS KKR Capital shares have returned +2.8% over the past month, outperforming the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Insights - FS KKR Capital reported quarterly earnings of $0.57 per share, matching the Zacks Consensus Estimate, but down from $0.74 per share a year ago [1] - The company posted revenues of $373 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 0.82% and down from $441 million year-over-year [2] - FS KKR Capital shares have declined approximately 31.3% year-to-date, contrasting with the S&P 500's gain of 15.1% [3] Earnings Performance - The company has surpassed consensus EPS estimates only once in the last four quarters [1] - The earnings outlook for FS KKR Capital is uncertain, with current consensus EPS estimates at $0.56 for the upcoming quarter and $2.39 for the current fiscal year [7] Market Position - The Zacks Rank for FS KKR Capital is currently 4 (Sell), indicating expected underperformance in the near future [6] - The Financial - SBIC & Commercial Industry, to which FS KKR Capital belongs, is ranked in the bottom 21% of over 250 Zacks industries, suggesting a challenging environment [8]

Investment Activity - For the three months ended September 30, 2025, total purchases amounted to $1,142 million, while sales and repayments were $1,483 million, resulting in a net portfolio activity of $(341) million[336]. - Senior secured loans accounted for 65% of new investment purchases during the three months ended September 30, 2025, totaling $742 million[336]. - The company made $75 million in subordinated debt purchases, representing 7% of total purchases for the same period[336]. - Asset-based finance investments totaled $171 million, making up 15% of new investment activity for the three months ended September 30, 2025[336]. - For the nine months ended September 30, 2025, total purchases reached $4,540 million, with sales and repayments also at $4,540 million, resulting in no net portfolio activity[336]. Investment Strategy - The company focuses on debt investments in middle-market U.S. companies, defined as those with annual EBITDA between $50 million and $150 million[323]. - The investment portfolio primarily consists of senior secured loans and second lien secured loans of private middle-market U.S. companies[324]. - The company aims to generate current income and long-term capital appreciation through its investment strategy[323]. - The average life of the debt securities in which the company invests is generally three to four years[328]. Portfolio Valuation - As of September 30, 2025, the total investment portfolio's fair value was $13,415 million, a slight decrease from $13,490 million on December 31, 2024[337]. - The number of portfolio companies increased to 224 as of September 30, 2025, up from 214 at the end of 2024[339]. - The percentage of variable rate debt investments based on fair value decreased to 63.8% from 65.8%[339]. - The fair value of investments rated 1 (performing) was $8,870 million, representing 66% of the portfolio, while investments rated 4 (underperforming) were $260 million, or 2% of the portfolio[350]. Financial Performance - Total investment income for the three months ended September 30, 2025, was $373 million, a decrease from $441 million in the same period of 2024, with interest income contributing $231 million (61.9% of total income) in 2025[351]. - Net investment income for the three months ended September 30, 2025, was $159 million ($0.57 per share), down from $215 million ($0.77 per share) in 2024[359]. - The company recorded a net realized loss on investments of $53 million for the three months ended September 30, 2025, compared to a loss of $43 million in the same period of 2024[361]. - The net change in unrealized appreciation on investments for the three months ended September 30, 2025, was $100 million, compared to $22 million in 2024[363]. Debt and Financing - The total cost of Direct Originations increased to $13,645.9 million as of September 30, 2025, from $13,494.8 million at the end of 2024[341]. - The aggregate amount of senior securities outstanding as of September 30, 2025, was $7.4 billion, with an asset coverage ratio of 184%[369]. - The company had unfunded debt investments with aggregate commitments of $1,733.4 million as of September 30, 2025[368]. - As of September 30, 2025, the total outstanding financing arrangements amount to $7.369 billion, with $3.499 billion available for borrowing[371]. Dividends and Tax Status - The company declared total dividends of $2.10 per share for the nine months ended September 30, 2025, compared to $2.20 per share for the same period in 2024[382][383]. - A regular quarterly distribution of $0.70 per share was declared on October 8, 2025, consisting of a $0.64 base distribution and a $0.06 supplemental distribution[384]. - The company intends to maintain its RIC tax status by distributing at least 90% of its investment company taxable income each tax year[379]. Interest Rate and Currency Risk - The company utilizes interest rate swap strategies to hedge against changing interest rate risks[403]. - A rise in interest rates could lead to an increase in net investment income and incentive fees payable to the Adviser, particularly for variable rate investments[401]. - The company utilizes derivative instruments such as foreign currency forward contracts and cross currency swaps to manage foreign currency exchange rate fluctuations[411]. - The company benefits from a weaker U.S. dollar for its unhedged foreign currency investments, while a stronger U.S. dollar adversely affects these investments[411]. Foreign Currency Exposure - As of September 30, 2025, the total fair value of investments denominated in foreign currencies was $921.6 million, with a potential reduction of $92.1 million if there is a 10% adverse change in exchange rates[409]. - The fair value of investments in British Pound Sterling was $406.0 million, with a potential reduction of £40.6 million under adverse exchange rate conditions[409]. - The fair value of investments in Euros was $393.2 million, with a potential reduction of €39.3 million under adverse exchange rate conditions[409]. - The fair value of investments in Swedish Krona was $115.4 million, with a potential reduction of SEK 11.5 million under adverse exchange rate conditions[409].

Core Viewpoint - FS KKR Capital (FSK) is expected to report a quarterly earnings per share (EPS) of $0.57, reflecting a 23% decline year-over-year, with revenues projected at $376.07 million, a decrease of 14.7% compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised upward by 0.4% in the last 30 days, indicating a reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Key Metrics Forecast - Analysts predict 'Investment income- Fee income' to be $9.82 million, down 53.2% year-over-year [5]. - The estimate for 'Investment income- Dividend and other income' is $74.61 million, indicating a 16.6% increase from the previous year [5]. - 'Investment income- Paid-in-kind interest income' is expected to reach $49.79 million, reflecting a 24.6% decline year-over-year [5]. - 'Investment income- Interest income' is forecasted at $239.33 million, down 17.5% from the prior-year quarter [6]. Stock Performance - Over the past month, FS KKR Capital shares have returned -1.6%, while the Zacks S&P 500 composite has increased by 2.1% [6]. - Currently, FS KKR Capital holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the overall market in the near future [6].

Core Viewpoint - FS KKR Capital Inc. is currently experiencing a price of $15.00, reflecting a 1.08% increase in the current market session, but has seen a decline of 1.98% over the past month and 28.04% over the past year, raising questions about its valuation despite current performance [1] Group 1: Stock Performance - The stock price of FS KKR Capital Inc. is $15.00, with a recent increase of 1.08% [1] - Over the past month, the stock has decreased by 1.98% [1] - In the past year, the stock has declined by 28.04% [1] Group 2: P/E Ratio Analysis - The P/E ratio of FS KKR Capital Inc. is 19.03, which is lower than the aggregate P/E ratio of 74.15 in the Capital Markets industry [6] - A lower P/E ratio may suggest that shareholders expect the stock to perform worse than its industry peers or indicate that the stock is undervalued [6] - The P/E ratio is a critical metric for long-term shareholders to evaluate market performance against historical earnings and industry standards [5] Group 3: Investment Considerations - While a low P/E ratio can indicate undervaluation, it may also reflect weak growth prospects or financial instability [8] - The P/E ratio should be considered alongside other financial ratios, industry trends, and qualitative factors for a comprehensive analysis [8] - A thorough approach to evaluating a company's financial health can lead to more informed investment decisions [8]

Core Insights - The article highlights the extensive experience of Roberts Berzins in financial management, particularly in shaping financial strategies for top-tier corporates and executing large-scale financings [1] - It emphasizes Berzins' contributions to institutionalizing the REIT framework in Latvia, aimed at enhancing the liquidity of pan-Baltic capital markets [1] - The article also notes Berzins' involvement in developing national SOE financing guidelines and frameworks to channel private capital into affordable housing [1] Group 1 - Roberts Berzins has over a decade of experience in financial management, assisting corporates with financial strategies and large-scale financings [1] - Significant efforts have been made by Berzins to institutionalize the REIT framework in Latvia, which is expected to boost liquidity in the pan-Baltic capital markets [1] - Berzins has contributed to policy-level work, including the development of national SOE financing guidelines and frameworks for private capital in affordable housing [1] Group 2 - Berzins is a CFA Charterholder and holds an ESG investing certificate, indicating a strong foundation in investment principles and sustainable investing [1] - He has experience from an internship at the Chicago Board of Trade, despite being based in Latvia, showcasing a diverse background in financial markets [1] - Berzins is actively engaged in thought-leadership activities to support the development of pan-Baltic capital markets [1]

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]