FSK - Earnings call transcript Q4 2019

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Operator

Good morning ladies and gentlemen. Welcome to the FS KKR Capital Corp's Fourth Quarter and Full Year 2019 Earnings Conference Call.

Your lines will be in a listen-only mode during the remarks by FSK's management. After conclusion of the company's remarks, we will begin the question-and-answer session, at which time, I will give you instructions on how to enter the queue. Please note that today's conference is being recorded.

Paun, Investor Robert with will time, introductions. this Head Relations of proceed At Mr. begin. you Paun may

Robert Paun

note Good the you. Corp.'s year call. FSK, Corp. and Capital welcome to referred the fourth full KKR as Please call. may conference be earnings fund, Thank XXXX and throughout quarter morning or to the FS Capital company that FS KKR

release an XX Today's conference in that available the for days. call XXth, information of issued XXXX. a call is FSK press audio being February on will replay recorded included Replay and is be

In addition, and on and its to presentation December a financial information website year portfolio full financial with FSK has XXXX. its quarter posted containing XXst, supplemental the ended performance for respect

Relations Please form section and prohibited. unauthorized the under today's Events that FSK. property call website note in of link any is is the A to Investor webcast company's Presentations. call and of this Any of strictly the is this rebroadcast the presentation available on

you we to or outcomes statements Today's conference important law. to does results undertake could actual call materially that SEC cause the filings required by factors forward-looking includes FSK's and update not that for to unless forward-looking ask recent with its do most these refer so FSK statements. from statements differ to

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

reconciliations XXXX. XXth, year release February that earnings measures, comparable GAAP with FSK's full and SEC measures most on such to For directly in was the quarter can be fourth found the filed

Non-GAAP nature related substitute for prepared the with in information considered information should a should as considered or in be supplemental in GAAP. isolation be and financial not accordance

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

joining Forman, Ryan on Brian Also and Speaking Pietrzak, Chief call in Investment Co-Chief Operating O'Toole Co-President; Chief will Officer; and the Wilson. Officer Drew Dan Officers, Financial are Gerson, and Co-President; Officer. Michael us Lilly, room Chairman and Steven Executive be Chief today's

the call turn now will Michael. over I to

Michael Forman

earnings to On Thank quarter welcome call, key call. overview will conference then the I over activity, and call KKR results, to annual And thoughts Corp.'s the I'll turn investing on quarterly on certain year Steven the and Dan, everyone to And high-level call Robert. FS Brian, Capital then portfolio today's of we'll provide our some fourth and color items, a you, XXXX financial and full market, for provide additional forward-looking and XXXX. Q&A. open

a year From standpoint, for strategic productive a XXXX was FSK.

assets. assets over we've our progress KKR FS XX directly-originated the portfolio toward months, significant made rotating older from investment last vintage First, away

KKR our during average by portfolio. that investment approximately of next over Credit been today context To XX% originations. this point, we comprised FS FS the the of assets KKR direct XX% we of will assets With investment the investments, our total put originated roughly weight the Based our this, some XX% XX XXXX, be over now KKR advisor have the approximately of of XX% on in life of portfolio platform. would expect months around rotated and sourced of portfolio assets is by our

accretive progress significant our add strategies growing made we two XXXX, we investment will believe returns during Second, long-term important portfolio. which investment within

Systems XX% Our venture our the and peers. beyond the many provide a the of Retirement us $XXX with portfolio X% of to investments XXXX. from our with merger These reach of similar from substantially million has which ability XX, year-end at funded asset-based to the have of at prior and increased additional In KKR billion to of Credit Trust ways leverage of less platform Group manner, strategies to XXXX. of investment $X.X XXXX in year-end committed investments South finance portfolio CCT joint Carolina increased FSIC as approximately than December our our are

In structure. XXXX $XXX million during CLO to aggressive existing and issuance a of Third, we issued optimizing unsecured over on million May closed we million of X-year add-on also capital took XXXX our bond July proceeds. toward our raising XXXX, of first middle-market bonds. In June, unsecured FSK's $XXX $XXX we we steps closed

of last in end of the to year, Additionally we quarter extended fourth credit the revolving our maturity XXXX. of facility the

our FS/KKR we unsecured tangible our in $XXX further on November, represents Finally another structure of liability issued We believe extensive side strengthens example did the of the strength work capital platform. million the bonds. and we the sheet of of balance

XX, executed repurchased under purchasing February Fourth, believe million million-share we this of our repurchase million repurchase the per in our And program we of share. million importance shares XX.X $X.XX commitment. of $XXX we $XXX a have average program. share approximately continue XXX price during by at shares XXXX Through to XXXX weighted of

Finally, both mentioned with our earnings I continued our build we the team leadership on credit experience in private to call, last executive and operating BDC industry. out as quarterly strong and and

work we have As still do. strategic the XXXX, recognize achieved pleased we during as we are progress we and to operational with

During position. experienced vintage vast share. the $X.XX FS/KKR advisor the Art to we realized depreciation prior this investments Van our The and related unrealized originated depreciation million portfolio, of across Micronics investment quarter of Dairy, or $XXX and fourth XXXX majority per totaling including certain Furniture, to energy Borden older

on discuss Brian later this in Gerson will the call. more detail

toward focus with investment portfolio of vintage FS/KKR continuing originations. assets associated our depreciation portfolio to Our rotate direct our older underscores

coverage we are full perspective the XXXX, From with income pleased investment year dividend that a the we up over-earned for XXX%. net in dividend

be continue to to will incentive our due our move in expect XXXX, income into we As fee agreement. net provision look-back investment the positively impacted we advisory

three quarter the P&L to $XX million expect million $XX per to during flowed currently next approximate benefit benefit $X.XX or While $X.XX to share quarters. over of the a portion of the fourth the this we XXXX, through

in And with that discuss detail. call I'll the turn these and over to greater Dan to items the and other team

Dan Pietrzak

during few I we a And investment you, quarter. an what seeing our comments the are the market. provide Thank then Michael. on on in will provide I'll update activity

were by impacted markets several loan key leverage points. the XXXX, data During

contributed year. new CLO the issuance time reduction particularly same in flows during approximately At broadly declined $XX of the fund roughly $X the issuance quarters to the First, XXXX. by a in during coupled market, factors This within fourth These year-over-year. or loan X.X%. institutional volumes decline third declined loan by billion billion syndicated in and the volatility approximately with resulted XX% meaningful activity M&A

the meaningful the size transactions. of to Given to our advantage sizeable were ability of the able across and structure, side platform, in our on to commitments we volatility take well-structured the this commit dollars origination KKR relationships make capital

allows alternative syndicated markets. size for execution to of borrowers our middle-market deliver volatile and and Our to an uncertain scale certainty providing us upper

increased to quarter $X.XX billion fourth presentation, the in were third $XXX slide quarter deployment compared million in the our in on $XXX to third seen Sales quarter As to XX million quarter in XXXX. our of XXXX. compared fourth the pay-downs earnings of $XXX the and total million of

our Fourth sales venture. quarter sales million $XXX and to joint of pay-downs included

the to platform net million, which represents highlight net to vintage level of since to advisor the the within was portfolio. deployment momentum as names these quarterly Excluding and of rotate $XXX our deployments commitment our sales, began continue highest FS/KKR investment of continuing the out

was of sales billion $X.XX total For pay-downs. billion and deployment our versus XXXX, the of full year $X.X

were sales the capital $XXX Excluding part XXXX secured for continuing senior focus venture, our deployments to our investments the million joint structure. was in of of XXXX deployment of million. in total on $XXX Approximately XX% net that

the of a our the KKR Credit and KKR market broad level quarter, high to volume. fourth over In footprint, platform origination Given Credit continues XXX screen deal evaluated transactions. volatility the

X% year, than disciplined as and rate closing full shown less year. platform the transactions. the selective For Nevertheless, the KKR by roughly our evaluated X,XXX Credit we remain during

finance covenants financial our of hard in Our is platform, origination structures, focus our team of amortization; we terms broad be efforts. investment ensuring unique sponsor well on by the risk. continues and high-quality to including our feel good downside This and as well activity businesses, relationships, and all as of borrower work network financial deal protected driven asset-based

approximately of XXXX, FSK markets As million start remained in we loans. Albeit was which we funded we more XX% $XXX or last transactions at much saw the than FSK Across volatile this of moved quarter of has unitranche in the healthy. of portfolio, committed new of have in much year first-lien fourth the deployment was January, XXXX. into

business team and the monitoring across build our underwriting portfolio continued KKR including We also hires origination, institutionalizing the to platform, the Credit out expand teams. the several with further

As team direct added the seasoned documentation structures. and help environment, of expertise drive deal quality we driving investment have believe the In in members this better outcomes. legal we and to current will assist future important is

syndicated the to of in turning quarter, market interesting We to review highlights thought would Now, we earnings occurred the think through transactions the few companies of was lenders. the committed trend fourth deal One helpful that flow refinancings be with a direct larger quality saw from the we shows which of X slide we exiting during it to quarter. the presentation. loan

deal billion unitranche a insurance committed KKR clients. investor middle and part commercial $X.X and Credit club risk the facility $XXX broker for million loan $XXX as upper-middle example, practices revolver draw For term on and strategies focused largest was of serving national a specialty million delayed a in and

FSK while of platform committed $XXX million remainder. the other committed managed rest KKR BDC of financing, the the and accounts the

Lionbridge risk rest and a managed the Fortune of accounts the facility $XX management worldwide. market platform million companies $XXX Both as while and marketing, FSK facilities the with committed KKR committed localization, delivering to KKR leading for financing, and strategies loans. language addition new lead Lionbridge application and committed unitranche XXX these the Technologies, remainder. syndicated of In digital refinanced provider testing arranger million structures service the the other services to BDC investor content a

financing is committed a a sponsor. of provide provider end and the also the markets. This having size million and of lead million a and an the to Credit of scale $XXX services KKR and and certainty a was KBS, borrower management arranger a FSK of example to for financing. range backing on $XXX janitorial investor business to high-quality facilities

call Brian of turn I our portfolio some will the now to highlights. over discuss to

Brian Gerson

of provide portfolio of XX, at fair I'll XXX investment the end a on and the slide of as presentation the Dan. earnings the billion, portfolio summary of portfolio Beginning a year. of $X.X companies. events of X had December our the value Thanks, investment consisting

end our top portfolio the of of portfolio quarter. the XX% with the line XX companies in quarter, largest end fourth the At the third of represented

on risk key as tool. a portfolio diversification, continue view focus we We which mitigation to

as of Additionally, senior we XX. comprised investments secured remain December secured is senior loans as of focused portfolio XX% our on

median EBITDA times; was leverage the The an million XXXX; leverage million to and EBITDA borrowers million and our median X.X X.X and XX, of $XX million X.X times. average $XX were while and median leverage at $XX leverage compares times. was of of the $XX average September This average of times EBITDA an of EBITDA average and was median X.X

was yield was in attributable to accruing investments to September XXXX average yields repayment X.X% XXXX. certain the on decline December debt at weighted compared as XX, XX.X% well at of in decline XX, as the higher-yielding The LIBOR The as investments.

cost approximately on At the on fourth FSK's of and a X.X% quarter, a September compared as value a value the end at cost to XXXX. and at fair non-accrual X.X% on basis X.X% on was basis fair basis X.X% XX, of portfolio

quarter, on placed fourth Angelica Filtration Corp. Dairy. three the we Borden investments During Micronics and non-accrual: Holdings,

mentioned we the if helpful As we additional the And during was Michael the be on earlier $XXX our thought value. million. of quarter in investments to portfolio the color provided that depreciation led majority some fourth specific it decline would

protection face this on million to $XXX January despite Xth, originated which to owns you million Borden, for XXXX. filed was the prevent value Code loan Borden Chapter in of U.S. many outcome. $XX effort unitranche Bankruptcy XX FSK are best aware of Dairy our As under

to quarter. in the in end investment marked XXXX was $XX.X in XX.X% Borden Our unrealized million year at of a cost loss down resulting

and stakeholders. out-of-port an filing deal in the for our to to forego sponsor we preserved believe file view to we greatest Unfortunately, Prior agreed with the and would've unnecessarily restructuring, negotiate negotiated management were for our all the bankruptcy sponsor protection. management working the value which decided and closely

And will situation we the We working we to the recovery Nevertheless, bankruptcy are investment. value that will are result delivered including company's the our the to progresses. less which stakeholders updates as disappointed maximize of to company provide in being we path the chose continue employees. all believe value

we of was the also originated quarter in where revolver. experienced loan face million an investment Furniture, Another value depreciation was unitranche million Art that asset-based XXXX. during sits FSK Van owns $XXX which million $XX behind $XX

The marked unrealized was Midwestern Van XX.X% company million $XX.X quarter stores to of states. resulting fourth in declines meaningful the been the the the sales in operates cost been During furniture throughout experiencing a loss. same-store value-oriented in our loan. Art loan year has quarterly which of has value U.S. reflected down

company's position. the monitoring We closely are liquidity

our on provider ABL However, the recovery investment will other our interested depend the this negotiations parties. ongoing on sponsor with ultimate the company and

in quarter inline filtration credit, was solutions designer unrealized unitranche a depreciation manufacturer experienced million process $XX FSK of originated and the applications, where owns during and Filtration, Micronics industrial Another of global amount entire face-value which XXXX. we a vintage solid/liquid was the loan.

quarter fourth loan led the planned a cost loss. $XX.X was the financial of of suspension which the non-accrual loan on to marked was the to markdown the in This and due company's the in resulting of million down the placement During quarter sales to unrealized XX.X% declining fourth process mark-to-market status. performance

As depreciation fourth highlighted as of in portfolio for The Van spread was the certain Art accounted of Borden positions Micronics these well earlier, in Michael the three the across names; energy the the majority remainder portfolio. as the Furniture, quarter. depreciation

to turning Now joint the venture.

fair value presentation, joint of as XX. to compared $X.XX the XX $X.XX was ventures billion XXXX at market XX, December investments Slide seen at As earnings September on at billion our

reminder, of of joint $X total And of billion as allocation this allocation. are a December venture And our we up portfolio. equity a to XX% our represented XX has commitments. As X.X% targeting

we creating additional spoken in investing how these our focus transactions across as our prior opportunities as in asset-based have compelling finance provide diversification On on returns investment and well about investing can portfolio. calls

XX% represented of finance targeting a allocation. XX% Asset-based XX% December investments And XX. are of portfolio the to as we

long-term exposure for allocation, and our to non-income-producing Additionally, targets focus certain assets. out equity of in on of we rotating terms continue portfolio reducing

initiatives. difficult positions, the time to and of for strategic given it investments lines nature the our However specific predict these is minority

of X% investments represented a end important X.X% here equity progress focus the XXXX. approximately we is X% portfolio. term allocation. year are to Long our the targeting And for of At an

will more in discuss I call now turn financial our to results Steven detail. the to over

Steven Lilly

Thanks, Brian.

portion XXXX. for of year our results the this full During a fourth I'll call of quarter the and financial provide summary

and XX, earnings X You XX can find Slide continuing information on of XX Slides and starting this the presentation. on

million Our during to total the income investment as million in compared was quarter. fourth $XXX third $XXX quarter the

a provide into the during behind breaks bit income numbers of To our buckets. the color investment quarter, two

recurring is income second The interest fee the and bucket income income. first and bucket dividend is

to nature. experienced the repayments mentioned earnings during were as first backend on Within primarily certain originations our coupled in fourth robust our quarter we associated quarter, the due timing during the decline interest experienced income, we more and the a in despite bucket, last in weighted with call; we difference the also still late which during quarter with third originations quarter,

quarter. might expect LIBOR comments, one earlier we in as based higher during weighted income interest well. new on our the the quarter repayments investments As carried we Dan's during decline affected continued experienced the average yields total the negatively than The made

PIK reclassified in during and which Finally reduced company, reclassified income had cash income our change relating the This recorded quarter, as quarter been which to during interest and interest. during year interest elevated fourth cash earlier elevated we interest quarter. the one portfolio the was interest PIK interest as PIK as we the

$XX during fee total Dan third income, our million perspective, dividend to the quarter fourth and $XX earlier, quarter-over-quarter meaningful we originations and as higher The million the fee quarter. as the the related quarter compared increase fee activity the well higher discussed dividend during a as to experienced prepayment during that given From quarter. income during that totaled

the to third per decline net of rate XXXX. due and quarter taxes. three XX lower repayment the of largely floating December the in net to in to decline months $X.XX the quarter-over-quarter and across portfolio activity yields certain LIBOR, of was in investment assets our higher-yielding excise income The quarter a in XXXX, impact investment income $X.XX due non-accrual per the share fourth portfolio, share ended compares $X.XX which was share, of per For our XXXX

year-over-year investment predominantly $X.XX increase which quarter in XXXX. in was excise net incentive quarterly the lower of income during fees investment was net the The fourth driven by per income of the impact excludes Adjusted share, taxes. quarter fourth

the approximately agreement $XX fee is $XX of the XXXX. the XXXX. to fourth addition resulted regard reductions of third contractual This million incentive quarter to reductions our of in quarter experienced in in we terms In details incentive of provision, fee during look-back the million of with

we three $X.XX $XX look-back reduce to anticipate income what with continue $X.XX line during In will incentive of provision over we call, the quarters, approximately additional providing $XX share. to our quarter to earnings the next investment per million net that third XXXX fees stated million or

Turning back losses to million and our results. unrealized Net were during share. realized or on the $XXX quarter investments per $X.XX

vintage portfolio during related was our portfolio. As to across depreciation Michael investment certain assets earlier, and the of the quarter Brian majority discussed the

In terms of year full results.

and our share income per net as share Our was investment XXXX. share of net year per $X.XX XXXX $X.XX full investment per during to our for of dividend compared $X.XX income

value as December September per share share per XX, as compared asset as at XXXX. share of XXXX to XX, and $X.XX XXXX net XX, per was of Our December $X.XX $X.XX

main slide in presentation, income earnings and which net value excess of losses, dividend. of The X net activity investment the can change drivers the on in of include and share the unrealized asset repurchase benefit the be the realized seen of

In terms of dividends.

our we During dividend. fourth the paid quarter, $X.XX per regular share

Our of dividend first of regular March record of quarterly XX, with $X.XX April close dividend This share, per stockholders will XXXX. of be quarter a consistent the paid which paid the is business per-share X, dividend Directors throughout XXXX. Board on declared XXXX as to has of on

to $X.X XX, million of total and cash Turning to cash of XXXX, $X.X our $X.X total billion. XX, was September at total investments billion, value balance December $X.X were sheet assets assets XXXX. of were total compares $XXX as fair million investments and total $XXX billion value total fair as of at billion, This of

our year, longer strengthening dated of rate side sheet on capital structure significant fixed balance earlier, past Michael highlighted maturity our liability the adding As debt. further we made have by progress the during

we and sources. improve during to our on continue our to as We focus diversify XXXX structure seek capital will funding

At billion. outstanding XXXX, as December December billion $X.X debt of $X.X XX, total XX, of XX% drawn our debt Unsecured of debt with was debt total approximately represented committed XXXX.

Our of by to the the net joint at venture. the well as of receivables, $XXX quarter our sales and million debt as to sheet, to end quarter on representing is the calculated the end as was excluding compared XX% at equity fourth XX% in cash third balance our

This meaningful X.X% of on Our as the weighted X.X% on to was end of at weighted third interest average represents December rate rate rate a debt X.X% of effective compared XXXX interest the XXXX. approximately XX, our debt at the end average of at reduction from quarter XXXX.

I'll few that, a call with back And Michael turn for the to comments. closing

Michael Forman

Thanks, leadership Steven. with our team, rotating are the progress look work next updating our be strategic assets, that for our to several and Thank pleased out you on optimizing In out closing, across is continued to while year. including we vintage over time of progress the older your structure past to our we there capital initiatives forward recognize today. building also over done. We you everyone year,

your we As always, appreciate support.

With will questions. open that, now for we the call

Operator

[Operator comes first Shane Instructions] Our JPMorgan. from question with Rick

Rick Shane

guys. taking questions morning. my this for Thanks Hey

of had quarter in the curious one Truck-Lite. with conversations your given disruptions chain related that big you've First, any business am to if coronavirus? I investments was supply during them about

Dan Pietrzak

Hey Rick, that. for thanks

lot of corona tariffs bit is gone company, by the when the impacts broader about were. honest, thinking kind We spent a to point be little of think I right? issue the what an were company a time probably

than the of originated the portfolio the the of it sort discussion coronavirus really days. past supply the gone clearly I the around continuing the that chain of of was We've as I and out scrub in points. broader few start We're think think that Asia.

kind especially on be of last in if sort challenges not honest it we name few saw that what As have out that across heard Apple of the others. changes to days chain. weeks the just surprise evolves of we coming the with supply But of or me and won't not of kind portfolio

clear us. Obviously is situation and the So, focus for dynamic. fairly fluid

Rick Shane

Got it.

to about the P&L million. about we when million X% cost basis, think of then, When does NII? we X% that of Okay. to $XXX that $XXX the equate between a on through new NII about And runs nonaccruals to on somewhere how basis total an up

Dan Pietrzak

at looking Steven. I'm

put quarter. you million about I think to way; it's think sort dollar of we for this sort is terms a that probably a it little into bit -- $X of better a there's impact

Steven Lilly

Yes, Rick. that's right

Rick Shane

per million $X it's quarter? So

Steven Lilly

Correct.

Rick Shane

you, Okay. much very Thank Great. Michael.

Operator

with Our comes John Jefferies. next question from Hecht

John Hecht

questions. morning and Good my thanks for guys taking

talked the portfolio. should to planned What an when the and guys kind portfolio it I we relative you'd that's -- about, the of think You completed characteristics to complete now? think rotation the XX-month about NIM where the of in is

Dan Pietrzak

give originations did We it start some question. quarter the of the advisor. Good during related since this John. originations as stats Thanks to

I were in deal saw happy with QX. volume think, the we we

that I its it's you'll as by think, driven QX see of think flow some We the the of frankly, being back. some in in we discussed; that beginning I lot markets. saw probably syndicated of into QX. that a quite way on volatility in just But abate, ways,

just this think will for than we XX higher advisor about, to, this will think, continue I we have talked threshold from That months to rotate I clearly and this be get even XX overall the to should've that originations. started. when KKR XX% to a XX%-plus

probably in there of joint of as with want far we're percentages higher. our thinking construction, accretive. think that on I right? a five out target. terms don't to couple for think We're venture page off do around I One, are be laying the been XX% we a That's caveats, probably what portfolio

you can up. the think going see I dividends

be more X% the high. QX expect is sort higher in down to equity think X% to That go I to of too down. as of That well. we a dividend needs bucket to needs number. The to come

pretty you've perspective pretty a obviously, we're And the then, but market, a weeks from risk -- risk in fluid couple got defensive. just -- and,

the capital as So can we're top on putting deals new structure. been you has where see, of the on more

the construction is the should think generally going that -- portfolio is But headed down. to number we're the path you forward. way in that debt what you go expect or think I subordinated expect I

John Hecht

seeing you I level and within trends, that or but for color. kind trends? get guys you the what any of guys Okay. Thanks revenue or average -- level of commentary know, EBITDA, EBITDA then, just portfolio revenue company high the And to in level trends company terms level EBITDA at are thinking the on about

Dan Pietrzak

go Yes. inside well. mean, It's FSK. of than broadly through think I even entire we we portfolio, the a quite frankly, good just about what's yes, question it, as more

the EBITDA. of to revenue XXXX, related I and for still growth think quarters we seeing it last were several as

that more I has would growth you generally I just been which expect. muted, though think think probably

I think it's a the credit trend we're entire portfolio. across seeing generally

have we missed some some think I seen budgets in names.

those least But, revenue sort underwriting, I think, to some relevant of necessarily at up, sort quarters. in ways, think, not are than but what but seeing budgets was to still more relevant our there. in muted of put we I just forward were trends, prior

John Hecht

And coronavirus. then, to see the whether ability mean, work pipeline, been concerns funnel markets seeing you its with respect anything is, the all disrupted kind last the the of question or with the are about spreads current what's through happening to have to obviously, equity environment? I we your in

Dan Pietrzak

you syndicated think, for think I bit from terms fast high-level flow-through feeling direct. last points just off in coronavirus, months. Probably, aggressive credit started of, are, flow even That -- a But, XXXX market, the of just said, sort through the in private a I the the market. the little had market XX maybe in did too that quite dynamics. and more

kind post of, Labor changed That meaningfully, Day.

what origination that's our numbers. you think I in see

numbers origination flowing prepared in see you'll in QX, our talked we of what our through sort what that's think remarks. about I

this year. of You pretty then hot, market start move back. the The was darn

mode. wait-and-see in everybody's Clearly,

to of will eye of either and being that that it. talked and sort deals couple a interesting we're us for marketed weeks were for about. I going or a volatility think days positive I it's on be close keeping be suspect

John Hecht

Great. much Thanks guys. very

Operator

Your next Point. question comes from Compass Casey with Alexander

Casey Alexander

in you interest couple how Can income You gauge it can from of tell of questions. a rate just reclassified that was quarter? year into How is? from income go-forward much we was PIK was sort income PIK loan. much said what Hi. us the kind it of particular so for full A of the that

Steven Lilly

quarter. $X Steven. we Sure. million, once realized less rough in This is quarter. the -- about a that it's compounds little realized million this instrument numbers year, And than Casey a this is its an a breakdown we $X fourth The it

presentation quarter $XX.X $XX or it's So, PIK, actually third something to think $XX that. goes it There's page the million XX, I million. of in there; rounding earnings from like in a bit the technically little on in million

So, $X related million name. one of to is that the difference

Casey Alexander

Okay. All right.

the to million on your over Secondly, call, earnings now $XXX last months, repurchase the program. since you're last share three up

months, bucks. last the three give couple million or purchased a $XX you Over take

$XX of have is repurchase or some in give you of sense which yours terms share three You the million than program? left the temper less Can reloading us months. Board's

Michael Forman

Yes, numbers this your the repurchase would've question. We've numbers. promises. our plans And the followed are circumstances. in through Forman. I share Thank the under Michael for recited you is always always correct. on same believers big We've been right

Board. And do accretive then said, the revisit dynamics before the you current left we have still As we we recognize the these levels. at million $XX in that program and with programs impact the the program we of fully will execute

Casey Alexander

million-plus little the that I'm Thank income income. And a Yes, quarter-over-quarter lot, $XXX mentioning okay. a did greater that dividend quarter? is actually impact you. were we you And dividend should that the of maybe in waterfall -- the the actually which a bit. the late assuming on something loans occur and to JV basis, wrong, I'm expect worth lastly Dan on that the declined into down of have QX? a Is

Dan Pietrzak

Yes.

is we've quarter-over-quarter. up mean JV it's Casey this right. income got think exactly I I think -- dividend the I

talk I think timing that that difference there. is about exactly you

that inside have go we think QX. up to that you number will -- continue expectation of an have should I

quarter. smaller And of which movers for total nominally of sort finance amounts some should've investments pay of smaller the were impacted the the just in other asset-based there, sort that dividends overall the continue to

Casey Alexander

questions. All Okay. for right. Thank you my taking

Operator

Your James. comes next Raymond with from question Matt Tjaden

Matt Tjaden

give Anything of to morning. so Good so terms up increased? top I specifically should portfolio as -- median mind question us guys. Quick say, in can company color or X.X X.X. to you that Hi from leverage, of on leverage why

Dan Pietrzak

ensuring Yeah. think right of right? Hey, thinking I real backing Matt, where mean, from very a we think choosing it's we specific. downside. about focused in Dan been companies that perspective we are are I companies in sectors the on we've there's kind those that risk Pietrzak. Nothing median, and

I will having which up names than think the some anything into up positions of the was median, leverage ticks numbers. sort those of individual specific that just end higher I there. wouldn't read in

Matt Tjaden

any And then update on general just Great. Anders? Hilding Okay. secondly

Dan Pietrzak

couple say, at the the excited there of was the think appointment. announced very things a can year. new that start we We're about I CEO

I real value he really background and from that interesting can comes think a to add business.

that cost some chutes I of including in parts side. other we've sort green the of materials seen think on raw

certain key acknowledge positive sort there's think still of to I a lot do work items. So there. of we But

Matt Tjaden

Okay. guys. Thanks for all That's Right. me.

Operator

Finian Our O'Shea from next question Wells Fargo. with comes

Finian O'Shea

Good my morning. for question. Hi. Thanks taking

Just it's Dairy, mostly us XX of have was confidential, the appreciating days consensual that company the last XX/XX and granted into how and use on mark? just color your current that give read approximately probably negotiations my you first Can expired. tone is is should baked that Borden cash on but the

Dan Pietrzak

Yeah. Hi, Dan. Fin, it's

of I were we can said dialogues there's domain, that this in lot find this. the response we've you this think I disappointed But we recent in it's prepared pretty a in remarks, lot to a the the public outcome. right? name, because with of filed as think

sort initial our agreed-upon of was to the go can that see filings there. You deal and

kind on the I meaningfully sort over play QX will we're play And of next when probably to months. And a the what's and of thought beyond into mark. think lot focused handful nothing maximizing there this right outcome now. took of on things comment out that there's source. we about thing weeks of We out

Finian O’Shea

you the more more And you in I on a you. were and you are on what where terms in Okay. of more monitoring. people portfolio mentioned hiring little Can outlook those color? any give staffing and to capacities few a think us pathway as in Thank

Dan Pietrzak

Yeah, happy to.

the been we've We've platform, added opportunity platform I think this here. We've here. partnership involved by added direct with very us to excited proud. of becoming think we're in in overall at the I And relation just level staff. BDC the that certain

more who we've really the of institutionalized I outcomes. The are years last think handful gotten We've business. originators driving,

side. will built-up think, We've including call numbers. can a what lot very and structuring a, in of the you underwriting on, I see experienced I resources

really you'd drive for work performance, looks book to resource the imagine a investment this a with of unit monitoring portfolio a built early the into We've portfolio size. real what just team's,

all added. the be very the we have mentioned I need important. on, market of terms and is conditions, we on legal downside. and a expertise belief -- that -- top Being focused in we that I think key on do do to I documents this

where So, build see we've added sort platform to the continue like, to-date. do I us it's will on I been we that, -- think, think, we've necessary. important we for done of But to

Finian O’Shea

names, vintage theme sort businesses? And Okay. gone across say, non-accrual just -- underperformed Thank that there question or legacy then, the any you. is onto have final or here probably on, of these

them, of a Is manage you, underperformance? Is of out to type it maturity come of to a as an trying platform, off? situation? it part And these a Or this and of kind more is that head? one lot approaching being situations aggressive, forcing to

Dan Pietrzak

Yeah.

think couple parts. I a

positions which at include may definitely there's situations or get us, proactively out of selling value we've face of of So that sort kind par. below think, trying to I been

think we've I been back to names just certain that get and are repaid. there cash very that get happy

par. quarter, we last situations -- at fairly were position repaid, portfolio the got like there think, about A.P. Plasman -- FSK was where high-yielding in talked which largest I name,

We were of wanted leverage be was about a That in, quite at not sector happy we just to that sort that. number.

about that, Cov-Lite, furniture sort that Cov-Lite a today, retailer. of the probably probably is loan we them talked names was of should not I a sector one a be meaning in think,

by Van and Art both anything milk. in add. And changes, to case Borden in the looking I Brian, too secular there's at think I'm consumption of else names in of larger somewhat But retail those hit

Brian Gerson

secularly Yeah. both you're Van, Art with I right businesses. look challenged I mean, and Borden think,

going Dairy not we're I that focusing on something now forward. is business, think, Micronics

Energy again a bit of little quarter, drive something going on this not was we're focusing forward.

Finian O’Shea

Okay. Thanks for much. That's all me. so

Operator

I'm time. not further this showing questions, any at

Dan Pietrzak

everybody, quarter. thanks We for talking well time Great, forward to to Thank you you. look today. next their

Operator

does and conclude gentlemen, Ladies this presentation. today's

And wonderful You may now disconnect. a have day.

FS KKR Capital (FSK) 28 Feb 202019 Q4 Earnings call transcript