FS KKR Capital (FSK) Q3 2024 earnings summary

Executive summary

• Net investment income for Q3 2024 was $215 million ($0.77 per share), unchanged sequentially; adjusted net investment income was $208 million ($0.74 per share), slightly down from $0.75 per share in Q2 2024.

• Net asset value per share at quarter-end was $23.82, down from $23.95 at June 30, 2024, and $24.46 at December 31, 2023.

• Portfolio comprised 217 companies, diversified across 24 industries, with 67% in senior secured securities and 68.6% in variable rate debt.

• Board declared a Q4 2024 distribution of $0.70 per share ($0.64 base, $0.06 supplemental), with total 2024 distributions expected at $2.90 per share.

• Management remains optimistic for 2025, expecting improved M&A activity and new investment opportunities.

Financial highlights

• Total investment income for Q3 2024 was $441 million, with net expenses of $226 million.

• Net realized and unrealized losses per share were ($0.20) in Q3 2024, improved from ($0.39) in Q2 2024.

• Net increase in net assets from operations was $160 million ($0.57 per share) in Q3 2024.

• Paid cash distributions totaling $0.70 per share during the quarter.

• Dividend yield on NAV per share was 12.2%; yield on market value was 14.4% as of November 1, 2024.

Outlook and guidance

• Q4 2024 GAAP net investment income is expected to be ~$0.63 per share; adjusted net investment income ~$0.68 per share.

• Recurring interest income is projected at $332 million, with joint venture dividend income at $52 million.

• Lower Q4 income is anticipated due to Fed rate cuts and reduced fee income.

• Management expects increased M&A activity and investment pipeline growth in 2025, with a continued focus on defensive credit selection.