In This Article:
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Net Investment Income: $0.77 per share; adjusted net investment income of $0.74 per share.
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Net Asset Value (NAV) per Share: $23.82 at the end of the third quarter.
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Third Quarter Distribution: Total of $0.70 per share, including a base distribution of $0.64 and a supplemental distribution of $0.06 per share.
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Total Investment Income: $441 million, with interest income of $356 million.
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New Investments Originated: $1.1 billion during the third quarter.
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Portfolio Fair Value: $13.9 billion, consisting of 217 portfolio companies.
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Non-Accruals: 3.8% of the portfolio on a cost basis and 1.7% on a fair value basis.
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Weighted Average Yield on Accruing Debt Investments: 11.5% as of September 30.
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Available Liquidity: Approximately $4.4 billion.
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Expected Fourth Quarter GAAP Net Investment Income: Approximately $0.63 per share.
Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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FS KKR Capital Corp (NYSE:FSK) exceeded its earnings guidance for the third quarter, generating net investment income of $0.77 per share compared to the guidance of $0.72 per share.
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The company declared a total fourth-quarter distribution of $0.70 per share, resulting in a 12.2% yield on its net asset value as of September 30, 2024.
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FSK originated approximately $1.1 billion of new investments during the third quarter, with a focus on high-quality credit and disciplined underwriting.
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The company ended the quarter with ample liquidity totaling approximately $4.4 billion, positioning it well for future opportunities.
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FSK's investment portfolio showed a decrease in non-accruals, representing 3.8% on a cost basis and 1.7% on a fair value basis, indicating improved credit quality.
Negative Points
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The fair value of FSK's investment portfolio declined slightly from $14.1 billion to $13.9 billion due to unrealized depreciation in certain investments.
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FSK experienced yield compression within its portfolio, with a decrease of 50 basis points in the weighted average yield on accruing debt investments.
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The company anticipates lower fee income in the fourth quarter, which could impact its adjusted net investment income.
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FSK's net asset value per share decreased from $23.95 to $23.82, partly due to a decrease in the overall value of its investment portfolio.
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The company faces challenges with certain underperforming investments, such as Miami Beach Medical Group, which recently filed for Chapter 11.
Q & A Highlights
Q: Can you explain the impact of yield compression within the portfolio and the guidance for lower interest income in the fourth quarter? A: Michael Forman, CEO, explained that the yield compression is due to both lower rates and spread compression. The Fed's rate cut of 50 basis points and competitive market conditions have led to tighter credit spreads. Despite this, the total return on loans remains above 10%, which is considered attractive given the quality of companies and equity checks involved.