FSK - Earnings call transcript Q4 2018

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Operator

Good morning, ladies and gentlemen. Welcome to FS KKR Capital Corp.'s Fourth Quarter and Full Year 2018 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. At this time, Robert Paun, Director of Investor Relations will proceed with the introduction. Mr. begin. may you Paun,

Robert Paun

be XX, Good Quarter welcome Earnings throughout and that Today's Corp. a Please Amanda. Replay days. fund February FSK, Capital is the or Conference FS Corp.'s note may Capital issued information KKR included Fourth Full FS in conference company to morning, release you, as to the and KKR Call. referred Thank being audio that an on Year XX and the available the of for call. press FSK replay call call recorded XXXX. will be is XXXX

unauthorized is call strictly for refer with rebroadcast SEC FSK XXXX. on FSK's today's we of and to most prohibited. any on that to a ask that containing its the addition, form A year the of in forward-looking statements conference recent website actual respect statements. includes important Today's supplemental Any could filing required this to call and to of results to webcast section financial and Relations that under a full property from so available note Presentations. performance for company's In outcomes presentation has by these posted do portfolio to cause factors its Please Investor forward-looking a materially FSK differ undertake not unless quarter does FSK. with or XX, financial update is December information statements the and is law. its presentation the website this call Events you and ended link

call non-GAAP measures. include certain this addition, will In financial

in be be in fourth GAAP. XXXX. related or on and as prepared substitute with found financial the the Non-GAAP that the XX, considered information to most SEC isolation a accordance FSK's not nature full reconciliations information was comparable quarter release in directly measures measures, should be should with supplemental such can filed GAAP for and considered For year February earnings in

reported measures similarly website. To copies be may SEC by of the obtain same latest these the FSK's named non-GAAP not measures financial visit addition, company's other In as companies. please filings,

will of the by FSK; Dan Forman, KKR. today's to joined Gerson, and Craig over Larson, for of We're Investments. Officer and of also Goebel, turn on Officer Financial Michael Michael. call now FS Brian Chief Chief call Head Chairman of for Speaking Bill be Private Pietrzak, Investment Head FSK; Investor Credit I FSK; of Chief and will Executive Officer Relations

Michael Forman

Full On forward. will Robert, over Conference you, and the everyone, to marketplace current KKR update in Fourth I Thank regarding the year, Call, first FS thoughts merger discuss strategy some going welcome, and share today's on Year call, Capital you our the Earnings position Trust. FSK's Capital and Corporate Corp.'s our past following progress XXXX Quarter with the

success. activity will Following review environment investment significant during our To made fourth Gerson transformative my positioning long-term a begin, XXXX. company quarter. Dan I'd provide was discuss our current lending our remarks, the perspective Brian results to progress which and financial moment then year to quarter. It take the a we Pietrzak review on will the for the for like for

of accomplishments key our following. the Some include

to leverage established FS KKR. We know-how. First, our and we each our and investment partnership to strengths The received complement expect scale, deliver the other's leverages to relationships institutional strong distribution shareholder which shareholders. between and combined approval networks, effective acumen, for Investments have operation, we partnership an results

of to franchise by also the $X.X the our III. and a arranged part closing scale relationships. facility year we five importance the capital revolver company's for and It to is FSIC billion collective revolver a a quality is billion of used structure omnibus that optimize largest and II plan Second, ever our advanced of credit as BDC speaks X.X

seek important business sustained to an shareholders. completed and through and as we more for diversification FSIC, value reduce CCT efficiently, milestone the drive between run we the is our which our merger greater franchise Third, risk for portfolio

benefits on of FS a began relationship origination between the and highly Investments capitalizing driving we all the collaborative Finally, our consistent KKR combined working activity, firms. through full deal platforms, flow, generating

look focused a to on a objective: by shareholders. to that a dividend remain and delivering with we that's position we handful As key BDC well and the is XXXX, preserving our earnings; competitive shareholders FSK of supported investment recurring aligned stable our as capital; best-in-class

fourth the progress not these made are objectives. we toward volatility the experienced end to immune the in While quarter, market of we've

today's allows a from continue selectivity generate upon we advantage to expand We platform cost will minutes. our of be a This us projected environment. and selective, lowered we've savings diversified to flow and the annual in and sourcing few portfolio. approximately million, in $XX interest and financing, a critical a expense deal believe scale We Dan of our cover broad as competitive increased credit capturing is further

conviction Board strong recent The shareholders. repurchase Finally, price alignment our to million that and opportunity. initiating share our perhaps most our buying share significant is authorized our taken with purchase demonstrate the step a program, present share reflects our we've recent view program FSK's $XXX

also and this our degree to plans. repurchase our partnership, high activity long-term portfolio Our demonstrates of in confidence

in at stated we is million NAV. In authorized million purchased we short when a the relatively shares period meaningful shares opportunity the buying we time, the $XXX out As compelling are in FSK past, a discount a believe of $XX amount. investment about of trading to

the fact, topic to bullish like purchased in $XXX March combined to lifting the committed and $XXX One CCT and to since in In future aligning up since we XXXX, final are Needless with the of address. I'd approximately XXXX. million has fully FSK ourselves November say, are franchise. entity shares on million shareholders

transformational fund continue nontraded nontraded a be it strategies and merge believe proved funds time funds FS/KKR year. sense To on will FSK create the the and do liquidity those for makes shareholders. not value platform. to for the this XXXX plans to the other We on Our at work into that for nontraded to recap, instead

benefits full portfolio the since and value that platforms. current managing remain in the capitalize We KKR. proud strong high-quality the the and behalf originations, selectivity driving and the are and for near- diversification and underperforming accomplished underwriting the believe FS scale, well discuss of on on to over to actively I of activity we formation have we portfolio will between on strategic the lending partnership turn are We quarter. all Size, long-term environment, call and credits the Dan matter, our and in to capabilities our focused new maximizing positioned Dan? shareholders. KKR we particularly FS of of and during value origination our now announcing shareholders

Dan Pietrzak

and broader we the fundamentals This shift in technical believe it markets seeing some and in start of an to receded. markets update fixed rates, provide low during The the I low our market in as was seen the year nature. leverage quarter. Post in the quarter. of markets reflected which and have are experienced Global what pressure X.X mainly QX, in you, record the loan technical throughout and Both volatility and bond relatively we equity will and default December. bank week the prices, bond sentiment of portfolio year, experienced Thank the near in Michael. and negatively deteriorated sentiment which sell-off in the last fourth few recovery funds investors significant has provide a a was stable investment corporate on historic activity outflows and despite loan declined highlights quarter. high-yield occurred income we the impacted credit mutual corporate

However, market, going demand and have forward. in loan in outflows environment result continued leverage more retail the a could which balanced supply

a volatility the we hoped, environment. overall on and capitalize Our from market positioned opportunities remains of some little competitive. did in create lending quicker and than the was and well said, market January company removed and to us That is froth market action the the expected pullback the QX for

have believe provide companies. and origination disciplined We reward. credit have to it's executing ability are believe selection transactions to a portfolio of is appropriate be we and being sponsors capabilities in that wide are highly range there critically solutions selective important can risk an focused where their to so and the on our we broad We

is X,XXX investment to far in reasons. credit private reviewed KKR number XXXX, opportunities deal this meaningfully As we in volumes, than higher believe due as approximately the We reviewed XXXX. X Credit

the the expanded team of universe. to allows us First our expand that coverage footprint is

which compared we Of the volumes. in have to lower past announcement with expand From of on done in approximately FS/KKR X%. and of our we pay-downs. and sponsors X%, sales high-market deployed is post the quarters reviewed, to is billion approximately than long-term work the transaction billion corporates the deal franchise solidify third opportunities the roughly our average is three $X.X those Second BDC total closed relationships. and And $X.X this,

the billion be we focused protections, $X.XX including flow call included pro to Across a payments cash same to which in the FSK a sweeps. protection to equity financial excluding the hard originations, deployed and paydowns, approximately period, and upper prior and new when During cushion, significant on degree have billion CCT's market, our of transaction mechanisms, middle deleveraging end high which $X.XX versus include on including of forma the amortization basis, continue covenants, sales JV. these sales structural activity merger,

exposure in the which allows non-eligible KKR the We platform asset-based will company including risk-adjusted to finance also we which to access the investments. returns that continue our benefit both of from current more and believe have FSK transactions, increasing to believe portfolio compelling JV, Credit market, portfolio

in our the prior NAV JV the on restructuring of of and few we of debt This in fourth in speak have Brian certain had the reflects later. cyclical a was closing now the with company declines this the results closed companies credit focused negative on detail in merger, names are largest the performance Outside to continue the issues, of year are quarter. to quarters, the quarter. on of in the used which a were ThermaSys, saw end in own. The portfolio the process. as specific mark-to-market upcoming quarters. valuation our we at equity the portfolio the Michael the was mark two the in in industry inputs restructuring fourth the decline A these market a stake impact XXXX. of markets to size extending investment position as due With directly alluded to, more will Similar originated about primarily subordinated we significant and other in impact a that a volatility

by names more our our such to senior the ThermaSys. expect unsecured increasingly older forward, and opportunities, reflective on our exposure businesses FSK mezzanine EBITDA be as shown top-XX loans not Going I versus in current smaller FSIC secured concentrations focus in will the diversified, to of portfolio as

FSIC of QX, with our as And by to by investments in the Fishing. in in and the positions activity prior driven million, of repayments from third $XXX in In positions largest FSIC, across Tangoe FSK an And We the provider. software in unitranche $XX of FSK XXX. the customers XX% and across primarily refinancing Fortune million to acquisition million were services million $XXX software $XXX $XXX FSK merger, our and the the a $XXX opposed committed rest our committed and were and inclusive sales facility, activity and quarter existing adjacent acquisition company million. of and while Pure equipment, their to or of reels, funds examples up telecom when of of the the lien credit-managed platform $XXX got more rest committed services provided serving BDC committed the merger, facility inclusive and an than rods, CCT of committed provided and markets Tangoe in portfolio aerospace, Sales the quarter. the company. prior as by million million the to the the third case fourth prior Marlin finance global Sycamore Pure been finance quarter. $XX the and We've platform of Partners bait Moving capital our company KKR from has term CCT Partners with Altus balance. $XX to million wholesaler Fishing million to driven were combining new of FSK quarter. $XXX BDC Equity loan position is $XX other up to several the lack million management CCT CCT, of comfortable by paydowns balance. quarters, competitor in in of fishing facilities, of re-financings. total were Deployment $XXX provides loan is expense leading of was was at products. quarter, million cyclicality second activity fourth million deployment including in a fourth financing the The while line, paydowns the committed and and quarter, market of either

billion, had As shown X, companies. of our on XXX fair $X.X value portfolio yearend, investment Slide consisting at portfolio of a

benefits which yearend of largest at is tool. decreased value our of top XX% the At fair risk key the the companies portfolio of to our merger key end portfolio diversification, One with from of increased by XX been of portfolio CCT mitigation has portfolio a QX. the XX%

with investments loans at borrowers our end senior and of leverage of XX% now was average first the secured at from focus the at yearend. EBITDA at the of consistent times. portfolio end our end secured average of on of decreased with of X the with XX% Also senior portfolio fair addition, In the investments, middle the our our market, value at compromised on in X.X% position borrowers lien QX QX. hold financing X% is million, our median the focus was to XX upper Consistent

equity exposure investments. rotate One of within the of initiatives producing has portfolio our our reduce nonincome and out to key been

of and exited with million proceeds combined of the basis the to yearend, like the value led from this more do still exits, ultimately CCT, $XXX total These XX% be X% with to fair have as at on had front number of compromising in that the would to approximately beginning six of we down year, we positions. the to the equity lower. investments merger fully portfolio here, related We're progress impact For a making but year. of

and far slightly As This assets excluding was and end due due portfolio which at somewhat CCT, third yield gross base profile, portfolio uptick to lower the quarter, leverage with yield return XX/XX/XXXX. of a had primarily to in prior increased the at nonincome-producing was XX.X% merger XX.X% rates. the an from the down the to as

branded and back approximately products. H.I.G. over investment strategy we financing net the fundings brief update investment XX, almost originated our million FSK store distributor with the committed the quarter provide other Brian, with perimeter we the $XXX food Lipari $XXX Before a our $XXX and to entirely on had sources, closed investments, retail funds specifically, grocery More January Foods, totaling From I of that of let million. to call KKR through balance. acquisition Capital's turn me a manufactures in facilities, post million, deployment activity. February new recently $XXX Credit-managed specialty the into market a platform on emphasis U.S. BDC and financing committed an distributes of while million of X

software results rest private credit our other financial Brian and financing FSK committed our us now discuss Advisors scale provider power while the healthcare, $XXX our was financing committed we the plus approximately Veritas $XXX IT backing during and revenue space, turn deal acquisition A the management solutions and of another which of the platform. speaks quarter. hospital I'll This another cloud-based the $X and and also player large addition, ambulatory Athenahealth. Credit-managed closed Capital electronic of Elliott record in services In the to recently of with of platform KKR of billion customers. and facilities, to including to million cycle, over essentially a million. club funds BDC call the the to

Brian Gerson

the summary the for provide and year. financial I'll quarter the Dan. results a fourth full of Thanks,

reminder, we closed December CCT and FSIC a XX, on between XXXX. As merger the

FSK's shows FSIC-only While remaining December entity combined fully the XXXX, and year-end year. the sheet XX, the quarter financial results amounts of up reflect balance the the until the for days XX combined for FSK entity,

stock value issued, record the the back fair their Trust. written the traded with a down Upon issued on million to each standards then the received values cost provide values. NAV. CCT's In stock shareholders were of discount initially common of a fair to of wanted of shares. and we respective upon respective merger investments shares to terms shares agreement, value the the the were CCT required a the CCT of acquisition based written for accordance the share based reflect asset related to entity to of investments market up the merger, of total Capital the highlights each merger few XXX.X us the as or FSIC Corporate confirmation technical net of Accounting CCT First, with which X.XXXX to

the posted the XX, impact slides. sheet as you'll value earnings accounting accrued the or fair transaction. we for in made that on an filing and at X-K unrealized these XXXX, further of by not to result, XX-K. removed as part see with on Please to adjustments December of XX, December On the valued depreciation were a balance performance As our Important merger refer fees note, assets have of from an all in been the $XXX FSK million and incentive will and/or details. paid reported has presentation the FSK adjustments

of information, quarter on fourth find X the the to results, beginning you can earnings financial our Slide presentation. Turning

the quarter net per was our which $X.XX share, in income guidance the impact income, preliminary of $X.XX line and For fourth quarter XXXX quarter of for to was investment incentive Net share the net the of fourth per the decline and investment fourth XXXX. the third to to to the compared excise in per in $X.XX quarter. mid-January declined share compares income higher compared The third investment in Approximately losses quarter $XX fourth fees taxes investments in of year, quarter with $XXX prepayment fee to and activity certain restructuring discussed sales previously income. unrealized the in or repayment increased the $X.XX last were primarily was to the QX XXXX attributable million and attributed the Net to of loss was net on higher is leading ThermaSys. and on million placement and net of quarter of nonaccrual Also, activity realized and year. during per realized fourth the share. unrealized assets due

out on for combination valuation at primarily forma metrics. across a portfolio. changes declines by $XX were approximately the pro At our the Non-accruals the basis, on year-end mark-to-market the net value down combined million ThermaSys market-based the $XX while portfolio quarter-over-quarter positions, in were CCT spread of remaining related driven of X.X% addition, were decreased to and X% of from energy million the generally In XXXX. losses nonaccrual to FSK's the approximately restructuring September XX, fair portfolio was with and entity of due

was per range of at income per year our share, our looking the mid-January share. year net $X.XX results, we to $X.XX $X.XX line in full full estimated investment Now shared that for in with preliminary

dividends. to Turning

our distribution. supported of full provide competitive to One $X.XX our earnings and is dividend per net for a fully is share that our objectives income the investment stable and by covered recurring investment core year

During the $X.XX year-end a share yield dividend, X.X% our quarter, based NAV. annualized we representing paid on a regular per

a in paid of a total also in $X.XX We of dividend year special XXXX. distribution for per share share December $X.XX full per

net Board a of as our drivers $X.XX gains XXXX. in and paid fourth at be paid XX, September unrealized to business about share discussed. fourth as Our losses was declared XX, of range the January time of quarter of with a Directors during per was to This which first of the at or March preliminary the of $X.XX and per were record the on dividend share, X, of $X.XX The XXXX, quarter quarter, XX, line dividend of $X.XX per merger close The fund's on $X.XX XXXX, the stockholders of realized share the per main in December estimated to $X.XX share. and previously asset as share, $X.XX NAV XXXX, compares per value April X, XXXX. on will which of net change and

of ended the and value year at investments billion, total assets total $X.X sheet. fair $XXX balance Turning $X.X total of billion. to cash million We with the of

of debt Moving committed side debt billion, of total billion with diversified lenders. sheet, right-hand $X.X balance to total the the across $X.X was

XX%. to at quarter debt was of net equity the end the Our

flat approximately relatively to quarter. the of Our weighted compared average third cost of was at end year-end, debt the X.X%

maturity. July. for we'd we bond, back flexibility We $XXX the had us unsecured capacity And call note under existing have alternative revolving million turn credit but which of year-end, in financing, evaluating a in the billion I'll which now are X Michael. to that dealing our at provides we $X.X with facility undrawn this currently matures XXXX

Michael Forman

With for we open everyone time you our you support. Brian, your XXXX we throughout the Thanks, questions. will on call forward as make updating for your that, and We progress looking to now We're to today. thank objectives. core appreciate

Operator

first Our Wells of Instructions] O’Shea from comes [Operator line Securities. question Fin Fargo

Your line is open.

Fin O’Shea

Just non-traded. first the one on the

of the help of is this a came bit as Is philosophy So those you that vehicles color appreciating the of time? markets accepting to conditions you for your to that, just Or in changed market a and objective you? far have for wouldn't, clarify, desire back kind the so period this merge public there. your if longer

Michael Forman

could evolved We're Fin, would our the months. FSIC plan and recognized FS/KKR our try be with FSIC to script a announce view we III coming that I the a as not as we've little investors combination say to II and bit. we're not our about public at and intentions. to this we today concerns. to the has specifically ready Talking And so clear contemplating II vehicles in those the but CCT vehicle. nontraded, point, yet of And expect and with do on analysts,

Fin O’Shea

move to originations. just I'll

maybe us if the the the me understanding wide? second BDCs forgive levered. that here million Just of or XXX of they Credit on merged. second FS/KKR the KKR what you just of give direct I were pretty platform million to wide misreading, give fully million, Can lending And after couple quarter last weeks context means allocated, idea were your really quarter XXX they I'm fourth if us an the XXX FSK half platform you will, activity, think already then

Brian Gerson

paydowns. FSK is inclusive CCT, bit know confusing Fin. quarter, a in because, been we're Sure, of Happy that the franchise of excluding million. numbers activity I billion XXX XXX rehash, would XX. originations versus X.XX number X.X right, FSK billion. sure would for of total are then have you're just And in to the CCT And the X.XX BDC billion But to specifically, And number, I have the totality, been of in billion X mean versus the quarters our kind three the it. million pre-December billion X or last the do

would with XXX that the you would then of been the of that. XXX terms sort all inclusive the when million have CCT And think in number million. activity, XXX paydowns, add of been have million deployment I

see we of activity. QX, think those were long call, the a happy We of those handful In of the amount a paydowns. did sort fair of were I a we mentioned lot with a works. time our in portfolio on

the KKR of going question, the I to you works. the your exemptive kind Credit overall of platform, mean, way know our terms In relief

BDCs lack Our private our so have a part but don't it of meaningful a specific word, majority. been a are credit better for of I activity, would have number,

Fin O’Shea

No, thank you. And just one more, if I may.

On the Conway JV, can you give an update.

are platforms. both and very guys You large diverse

Just seeing understanding us in upon be of Can give origination-based terms of of nuanced where on you we'll that can two how more what and color origination you forward? complex. partnerships are be today, kind there form you going some agree

Brian Gerson

good over it's when about We Arguably, JV make The have an of we the sheet. an the today question. JV do to undersized part in totality. clear important No, CCT's time. intention of I think on try growing think was balance FSK we call,

there in joint relationship had partners we've kind good with deals making a relates investments of as is to very go to constantly, that We our there. think decision I date. talk and it

overall the used date. has page to roughly that and I XX%. think KKR how on least on of way more to IRR credit good. we The from the of that. But us it we've grow is with the platform, date it at been coming We that. access performance think the our The in what think to were does see goals same to expand regards give come you'll with I to inception we've to kind intend broader quarters been

to we've think been with I it and we'll press forward. So continue happy

Operator

question next Barclays. Our of from the line Terry comes of Ma

Terry Ma

grow the how wanted you on time? a JV. follow-up portfolio. target over you of big percentage want a to have As I Do of just to that

Brian Gerson

I think question. very a fair no, -- it's yes,

that's of stone, nothing I think to would I like necessarily but to portfolio. the XX% written grow roughly we it in think

Terry Ma

Okay. how baseline? we in terms about kind And a $X.X Got of run good should think quarterly a million of the like of dividend the quarters? that Is over couple it it. next rate,

Brian Gerson

levers January, think feel I think when in I we market But remains of about clearly we've kind back mix some of as as Brian But pulled to assumption. will Yes. with kind the the other think allow sold things the we grow competitive. got December. activity-wise, in including regards good the But market the that as well us of JV. It's said, flow to off deal

Terry Ma

you you you then just And strategy What in talk find there? about it. the type asset can expect attractive Got returns and generate? of the terms to financing, of Okay. base

Brian Gerson

Sure, do. that sort first to think make is we clear happy not to to want the to point right? I that's mean, try that, activity, I we products' be think structured I -- point upfront. of

classes. the largest assets that underserved today inside example terms providers give, which will finding asset are probably ways up, down We one in generally falling play that of We're or find FSK of the We like risk and capital away. classes or banks in the asset pulling so is is of reward. the secured those Toorak. back have on I something, been by to either We

for LTV. Hedge residential years. Trading Wall So loans there. that away, XX% up they're a that banks, LTV We've billion insurance they're about to reward, has given over XX% Wall risk $X.X earning that's as loans Does be a capital by Street Fund acquired where We space companies They lending well meaningfully. XX% successful. mid-teens dedicated type when play Toorak The acquiring United individuals against to lending need them from to capital We've there fairly return. in business. housing to And and renovate of financed you sitting U.S. business. as fell real States. Toorak think who are given is Big and of been used was residential Desk in sense? it sell a end These to loans housing excess roughly granular are a That mortgage date. doing like risk. several bridge used that the Street and last to to make quite the

Operator

you. Thank

Our Testa National of line of Securities. question the from next comes Christopher

open. Your is line

Christopher Testa

give how could million nonaccrual are an vintages is outside how of Just nonaccruals, not us And the much remaining? below book pre-XXXX wondering on on the of you currently? if marked or $XX much the indication, again, also,

Brian Gerson

XXXX it not of CCT. a to a take I point number firm the relates as and at might combination I'll stab FSIC as a FSK kind have to sort vintage. -- age and obviously, But of just of

already you've half. out So of kind knocked

probably sort that book think looking of plus in you're at percent the kind sub-XX bucket. of of vintage I

bigger value everything doing we've amount course of the maximize year by loan spent possible as kind tremendous always over a the the of think do. I to point time, of we loan is last would

got very sit firmly our now. we've arms think around I we where

you'll I of see would been and kind of of risk K. of that Xs ratings think the inside the kind published have Xs

spent we We So a made do, very to position options. but the we ThermaSys through. some money that in we've tried, unfortunate. our at end wise of the not with many is. That think the work so Things new possible was like the real just progress were everything a work day to ways, as proceeded of lot of over do, we time sort got still decided, for I We good that 'XX. that, restructuring to considering things was investors really

sort to think assets, it million under So then And XX%. but a is your decision, $XX I was of about the going your that was decision. roughly right tough question

Christopher Testa

of most are overlapped And vintages? the Okay. having with those also pre-XXXX

Dan Pietrzak

decent amount, a think I yes.

try some number. the but but I names, specifically that of probably to retail kind half probably think have up can that that as of we smaller been follow pain there number, more in taken environment's some specific changed has with

Christopher Testa

Okay. right. All

far, want agencies wondering your of if sit debt. with guys room given better. date. point little lowering gives and amounts same markets And comes at asset keep you where it so the rally give looking fully that'll same. to where greater you And obviously, repurchases bond therefore, guys, more repurchases, equity putting at Now you're that to accretive leverage, come to why the it bit are you rating you the of the that WACC relatively and should the that's take you understand marginally increases for your lot do to in an time, I in done reduced massive actually coverage. to such so still be down out program And very if But cost cost but room. happy, well-known inflection of guys not of a and quarter kudos going year-to-date even you getting I'm wiggle a your you're just the at a repurchase

So I'm was the rationale what wondering there. just

Brian Gerson

we time Well plans as we've we've certainly, puts mean, each the look executed, announced at just if we of million different November did I share million class approximately our million in of since us stock XXX new XXXX, XXXX. some done peers. XXX We've of I purchase a done purchases the announced and we've repurchases purchase. other numbers, in XX of since of think March and you that

this issue. a that price, in we'll and at believe continue move be our that, So investment We grade is vigilant we'll continue to thing on to with strategy. current its FSK, forward

Dan Pietrzak

today, times X.X talk very so we're is think bit buyback end kind one. to be this at spending now. about We maybe -- then we'll the take liability on beneficial sit And We've that, of just time leverage mean where And side. the little merger, share say did effective But we're more then increased in, obviously I will to call the with leverage balance more observation on that. rating are just I plan. with We're that about detailed dialogue It's used now do can with it time we're We mindful as think on that stakeholders. being to we side prudently we're just the clearly, got point. agency we to that point because real spending I leverage shareholders, net. trying quarter your done a your the good relates the a understand further, all something the we to of

We have payments, have an than thing, been cash all busy one these deals bigger give on the X some hard of origination book. billion side. The flow your sweeps flavor have amortization Almost or either even do normal X%. some them we on though, to just

six quarters. and paydowns, a we of let's of to we the five the months coming have active down projection of in handful amount fair portfolio do expect that get call or a pretty names terms in a get do or paid within You names,

on, a of fairly understand So process, think point. lot something your but spend we I time we a dynamic it's

Christopher Testa

right? to referring protections repay, you're you're And those on to expecting call names

Dan Pietrzak

protection. just we call mean didn't think I No, as I mean, about...

Christopher Testa

I mean, covenants. the and cash flow sweeps

Okay. Got it.

Dan Pietrzak

so assets we vehicle, getting if some we're some agencies additional flow of in sweeps, the reductions process that repaid. get rating from get mean, amortization, amortization sold, at think about in the Yes, but know cash you deals you normal you I we from just the amortization some know just are or being either

Christopher Testa

if And sense. makes more, Now that I may. one

bit question. on a Terry's Just

things the would of You guys be would target, be a XX% JV remainder XX% the well? as maybe foreign and basket opportunistic more so platform across lending KKR said, roughly some the

Dan Pietrzak

to Yes that's prudent be that to XX% want bucket. think way fair with I it. We think a about

one the entity I capacity. of as got least additional here, merged it at to CCT's benefits related of think the we've

and we be I use think there want But that things all time investors about. U.S. what think public can we've to able to two kind name, access kind we see been examples that's And have bucket. time, to a smaller but -- way make of probably do we of that -- do would would a the percentage. regular your from I

Operator

Your next Compass of line question from Point. Casey Alexander the of comes

Casey Alexander

the Can do you sensitivity repurchase share repurchase discretional? you discuss sort off, Or the the think program, price XXbX-X? And all it that's through first how the, portion a is about structure automatic program? of the share is in of

Brian Gerson

it way discretionary program, so the pursuant be -- works. light none in is of to it of is is all XXbX It it could XXbX-X nor a

we the plan. the move So plan. we the to in forward The and -- continue plan, the implemented we'll plan with Board is approved place still

Casey Alexander

Okay.

have sense the you million assets? mark first $XX sort any markdowns the ThermaSys, how of understand market. in there's of and was energy much the thus the I and been the was far the $XXX million approximately spread-related of credit recovery to general Do Secondly, on energy quarter

Brian Gerson

Brian is this speaking. Yes,

to I been this modest I -- put it's there at think exact but it think still recovery, point. an has number on hard it's

million pretty about. was that good ThermaSys. that energy was very Ascent movement investments pointing You're $XX based across in The of FourPoint out excluding $XX we the and mark-to-market-related broad million from remainder it both portfolio right was the feel names really two

Casey Alexander

there's certainly the been mean recovery market. leverage strong loan I in Yes,

have XX%, XX% XX%, of anything And don't sense you so that? like any I mean

Brian Gerson

like was with Yes, picked It we seemed a I about volatility then in volatile agree you January up mean and there manner. kind the the of -- December for four very was that other in context continued month. days, things and

be decent I to pickup and a there we're But it on been percentage. some little of at just think bit put that. definitely a kind exact percentage an has should hesitant

Operator

question from of next Ryan KBW. the Our comes line of Lynch

Ryan Lynch

of a prior equity the bit a higher know equity was question, nonyielding little these focus portfolio, First component its FSIC [NCB,] I rotating some had investments. that of out of of big of a and

smaller, portfolio of With the portfolio is a little FSK equity today. bit its merger, X.X% about

go-forward current you reducing have? just that And running you you I still know, wanted to see are of of So basis? a you to that? at if reduce guys are planning that, comfortable goals of kind exposure guys the Or one is that on with that that kind where on

Brian Gerson

you. question, good thank a it's Ryan,

equity during book. real 'XX inside we on did think progress I make FSIC of the

And year I FSIC. the we it's merged now the it on X%, think specifically entity X.X%. number went to started XX% at inside of combined XX%, the was,

on, X, sort with of with We actually proper Home is it's comfortable good restructuring. some think was we some and positions, name, the X/X nothing well, any it. think those lot up good is day deal that of important know I an we of something The The investment are performance, for -- true of kind own the quite right? top-X Partners, of has of investment type there, a spend roughly largest probably of that names to -- time larger I do which make what activities. us, parts two sort of we balance. think One, equity we quite larger names in a underlying something those there's positions to

So target on science own. with number we equity lower. we to the probably other that I comparable that sure would X%, what of a there's side, to for I think we not want would think I'm but be X% we feel it, That sort said, perfect bucket. like

Dan Pietrzak

forced down, sellers, also add I'd think we'd not any that, to means. we are I come by well, But like is it

Ryan Lynch

Sure.

Okay, that makes one other And then sense. just one.

as with JV's familiar CCT For with that the investors strategy FSK's compares how investment you who entity. Can just strategy? those maybe of and the investment describe maybe the aren't sort

Brian Gerson

Yes, I mean.

been been had but a that objective real partners, bucket. in good past at probably allow we've it bit. also I to with apart we I'd mean very from quarters, a probably financing fortunate a a manner others to to over use the set have strategic We and the that opportunistically got grow JV And little nonEPC market. think it We've different bit there a expand some to were had break had we've us X than we those in so Goldman. I to X able good So it the use of set that we've up been up that there. happy line nicely

of what marrying I FSIC in of FSK, inside together the the think X were similar. now foundations I think and of terms CCT fairly did

year we KKR sort of perspective. in more credit quarters with platform, for the the last of an evolving FSIC -- I now X were evolving last origination to think we're from align mainly

of remain So same. JV I the the think the goals

to step sure of leverage will continue sort but it, it et alignment grow look we make align, continues a probably, think to it there back right to to I I and continues have -- cetera, that we think is as take the

Operator

for our And remarks. call you. question-and-answer Thank to turn does Mr. over to conclude any Michael I'd back like closing this session Forman today. the for

Michael Forman

relationship all of the listening our Thank everybody, continuing look you. today. forward to appreciate the in and with comments, questions, you, for We

So thank you.

Operator

the in participation program. conclude This and conference. you does Ladies thank gentlemen, your today's for

a You now day. great Everyone, have may disconnect.

FS KKR Capital (FSK) 3 Mar 192018 Q4 Earnings call transcript