FS KKR Capital Posts Steady Q2 Performance with $0.77 Net Investment Income

Mark Eisenberg
Photo: Finoracle.net

FS KKR Capital Reports Robust Q2 Performance

FS KKR Capital Corp (NYSE: FSK) has reported a net investment income of $0.77 per share for the second quarter of 2024. The company also reported an adjusted net investment income of $0.75 per share. These figures underscore a steady performance, supported by a total investment income increase of $5 million, reaching $439 million for the quarter.

Key Financial Metrics

  • Net Investment Income: $0.77 per share
  • Adjusted Net Investment Income: $0.75 per share
  • Total Investment Income for Q2 2024: $439 million
  • Third-Quarter Distribution: $0.70 per share
  • Total Expected Distribution for 2024: At least $2.90 per share
  • Available Liquidity: Approximately $4.7 billion
  • Investment Portfolio Fair Value: $14.1 billion
  • Weighted Average Yield on Debt Investments: 12%
  • Non-Accruals: 4.3% of the portfolio on a cost basis, 1.8% on a fair value basis

Company Outlook

FSK has expressed confidence in its future opportunities, given its robust liquidity position of around $4.7 billion. The company anticipates that the elevated rate environment and spillover income will continue to drive earnings. For the third quarter, GAAP net investment income is projected to be around $0.72 per share, with adjusted net investment income estimated at $0.70 per share.

Investment Highlights

  • The investment team originated $2.7 billion of investments in the first half of 2024.
  • The top 10 portfolio companies make up 20% of the investment portfolio's fair value.
  • FSK's joint venture represents 9.8% of the portfolio's fair value and is performing well.
  • Global Jet Capital, a key investment, maintains a stable and competitive position with solid returns.

Bearish Highlights

  • The company acknowledges earnings pressure in a downward rate environment.
  • Non-accruals remain in the portfolio but have decreased in fair value terms.

Bullish Highlights

  • FSK is satisfied with the quality of new investments and the performance of portfolio companies.
  • The company is considering simplifying the capital structure of JW Aluminum for potential monetization.
  • Management is focused on rotating out of legacy investments into more defensive industries.

Misses and Concerns

  • Concerns were raised about spread compression due to competitive pressure.
  • Average EBITDA on new originations decreased in the quarter.

Q&A Highlights

  • The company intends to pay out what they earn, maintaining a focus on earnings growth.
  • Management is working on a value creation plan for Kellermeyer after a 50% equity write-down.
  • FSK is open to reducing non-income producing assets to drive earnings growth.

In conclusion, FS KKR Capital Corp closed the second quarter of 2024 with a strong performance. The company's focus on high-quality investments and effective liquidity management positions it well to navigate the competitive market and continue delivering value to its investors.

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Mark Eisenberg is a financial analyst and writer with over 15 years of experience in the finance industry. A graduate of the Wharton School of the University of Pennsylvania, Mark specializes in investment strategies, market analysis, and personal finance. His work has been featured in prominent publications like The Wall Street Journal, Bloomberg, and Forbes. Mark’s articles are known for their in-depth research, clear presentation, and actionable insights, making them highly valuable to readers seeking reliable financial advice. He stays updated on the latest trends and developments in the financial sector, regularly attending industry conferences and seminars. With a reputation for expertise, authoritativeness, and trustworthiness, Mark Eisenberg continues to contribute high-quality content that helps individuals and businesses make informed financial decisions.​⬤