Q2 2026 FS KKR Capital Corp Earnings Call Transcript
Key Points
- FS KKR Capital Corp (FSK) generated net investment income of $0.44 per share, exceeding its guidance of 8% to 9% annualized yield, with an actual yield of 9.6%.
- The company successfully completed KKR's $150 million tender offer and closed a $150 million convertible preferred stock issuance, enhancing liquidity.
- FS KKR Capital Corp (FSK) reduced its net debt-to-equity ratio to 122% from 131%, returning to its target range of 1.0x to 1.25x.
- Non-accruals decreased to 7.1% of the portfolio on a cost basis and 3.8% on a fair value basis, down from 8.1% and 4.2% respectively.
- The KKR fee waiver positively impacted Q2 net investment income by $11 million, and the company repurchased $40 million of shares at an attractive average price of $10.73 per share.
- FS KKR Capital Corp (FSK)'s net asset value per share declined 2.8% to $18.30, driven by a $0.56 per share decrease in portfolio value.
- The company added two investments to non-accrual status during the quarter, totaling $104 million in cost and $91 million in fair value.
- Total investment income decreased by $14 million quarter-over-quarter, primarily due to a smaller portfolio and non-accruals.
- The company expects to become a smaller fund as it continues share repurchases and reduces new originations, which may limit growth.
- Repayment and sales activity is expected to remain light in Q3 due to muted M&A and geopolitical uncertainty, potentially slowing portfolio rotation.
Good morning, ladies and gentlemen. Welcome to FS KKR Capital Corp.'s second quarter 2026 earnings conference call. (Operator Instructions) Please note that this conference call is being recorded.
At this time, Anna Kleinhenn, Head of Investor Relations, will proceed with the introduction. Ms. Kleinhenn, you may begin.
Thank you. Good morning, and welcome to FS KKR Capital Corp.'s second quarter 2026 earnings conference call. Please note that FS KKR Capital Corp. may be referred to as FSK, the fund or the company throughout the call.
Today's conference call is being recorded, and an audio replay of the call will be available for 30 days. Replay information is included in a press release that FSK issued this morning. In addition, FSK has posted on its website a presentation containing supplemental financial information with respect to its portfolio and financial performance for the quarter ended June 30, 2026. A link to today's webcast and the presentation is available on the For
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