FSK - Earnings call transcript Q1 2021

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Operator

Good morning, ladies and gentlemen. Welcome to FSKKR Capital Corp's First Quarter 2021 Earnings Conference Call.

Your lines will be in a listen-only mode during remarks by FSK's management. At the conclusion of the company's remarks, we'll begin the question-and-answer session, at which time I will give you instructions on entering the queue. Please note that this conference is being recorded. Paun, Investor Robert with will time, introduction. the this Head Relations of proceed At Mr. begin. may you Paun,

Robert Paun

Thank that and note Good FSK, XXXX Corp you. morning be the earnings first Capital may Company conference quarter will May included Fund Corp's or call. call XX days. for XXXX. is conference an in throughout Today's available to Please referred press recorded and that on the Capital audio information be is FSK replay call. being welcome of XX, FSKKR a as to release the the FSKKR issued call Replay

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

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

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

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

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

Michael Forman

first to Robert you, and call. quarter welcome Thank Capital FSKKR conference everyone Corps XXXX earnings

The first positive quarter quarter stable represented FSK. for another

first target the establishment results, since our a we I on volatile quarter, quarter value. during these yield originated of the consecutive quarter our solid our net investment dividend experienced our Again, have our new for an fifth asset achieving target period. annualized. team earned value, report earned especially I'm the that congratulate of dividend investments, current X% increase billion annualized and $XXX of over to the policy pleased we During XXXX in out such again team we represents asset our that net our

meaningful term of $X.XX the public guidance per ended $X.XX liquidity maturities. From of our our the a above During the the and available $X.XX no perspective, was per our share quarter. was approximately per net billion per near with share dividend which income we fourth debt $X.XX quarter, liquidity share, with quarterly first above also quarter of at $X.X investment end share,

a of the second single the a March plan -- XX, for second to the declared has FSKR this an entity Looking to quarter, for the second share of forward the share XX-Q and From we X.X% for FSK. proposed to an as file assuming before which combined closes quarter on $XX.XX quarter, our merger the XXXX. FSK dividend board per between asset yield our FSK of quarter, net perspective, of value equates distribution of annualized end per $X.XX

proposed our detailed our the on our FSK merger closed expectation. we will term regard earnings quarter call with On schedule. guidance and Assuming operating near FSKR provide to second

we based from the have policy. our However, on positive the regarding feedback market received dividend existing

to we Assuming current relatively a intact, market X% minimum target remain conditions expect currently continue revenue. unrealized to

I we are of the positioned for KKR performing, proposed how merger and with and how the the board the prepare closing preferred of for FS team extremely portfolio our the future. As is FSK FSKR, is pleased well investment and

we FSK time. opportune the believe I'll will the be and over result, Dan turn team to the to that, of consummated a color additional proposed that call and and And market quarter. with an FSKR on provide merger the As at the

Dan Pietrzak

of but year. In per later, that our most choosing and own stimulus support belief and a workers package. early decline feds time, on unemployment even extra two targeting the around provided to work Michael. pandemic not at unemployment due related recent right, X.X% what year, of last conference was an accounts of still just shared by Thanks, so is the eligible for quarter focus concerns, as third financial more its well to XXXX At impressive as goal the call, X.X%. November lingering our was the X% reducing inflation with we unemployment, Today, that secondary quarters primary number

in and observers to will hospitality term to companies, included sectors EBITDA than encouraged market, has performance, on revenues financial Going hiring wage their home portfolio labor forward, perhaps certain continued quarters. our have building in the conversations been the lead a unemployment, will in increases focus leisure, by the basis infrastructure, which on travel, sponsors to continue with we as for In last both and and operating quarterly with financial expect. believe three occurring we four meaningful a many may and and sooner primary lead such and near growth with that drop policymakers a

by offset only effects growth term inflation. sectors, many near the quarters we by expected cash believe higher partially the continued marked forward, flow in of Going will across be free coming improvement

From for Over technology help the believe inherent longer immediate overall we and is we like we balance syndicated inflation investing as term will of certain including platforms, and take perspective, the to repayment other markets. strength healthy economy, continue modest pressures. trends, the believe assets, BDC demographic advantage large sponsors forces, term an the portfolios continued experience inflationary while the to structural of that of

to years. business, the private the over this in recognize credit normal are encouraged markets To the significant focus our has reinvest. repayments we our on continue occurred end, ability to While markets by be we which in growth last several the

come depend on companies platforms well-funded have financing. As sources larger of and regular as traditional both portfolio to sponsors way and

to we our we continue want highly As view move our we call, selective well be in forward will be in the to downside as we later in that underwriting internal to this protected Also, XXXX, a companies Brian in market. the both were to roles KKR of positions, legacy their and we create prior will which played of few about positive establishment the active FS the speak originated repayments outcomes. with sponsors portfolio to advisor, adhere where

KKR FSK. frequently during quarter $XXX closed first In approximately the the terms of million across of it investing From as BDC on investments billion new were of $X.X franchise, first advisor within quarter, began slowly the which volume our does. total a activity standpoint, FS

opportunities, caution pipeline being by our which only on transaction criteria. investment our As to highly to selective, continue met began exercise expand, focusing we

of compares quarter X%, power in closure closure Approximately Again, historical the the our X%. this KKR. illustrating companies FSK relationships. rate During of approximated XX% invested our our from opportunities approximately quarter, which by incumbency and to of rate originations came previously and

repayments Our quarter. factoring with when our $XXX total and to joint in of a $XXX the during million combined sales net $XXX to sales million of of net venture, portfolio equated decrease investments million

$XXX investments and $XXX we During April, million in experienced repayments. we in close million

liquidity the call, the next we level continued repayments to quarter during forecast abundant than a said we months, higher syndicated As our strength few and the fourth of over markets. continue within average given

XX FSK where company while of believe larger committed over opportunity and KKR separate merged sponsor, financing Veritas The detailed companies a IT and business that of KKR In color well metrics $XXX $XXX across FS appear and KKR credit million second accounts transactions KKR of organization solid government with well formed to remainder. portion a lien term with follows; arranger is the states. to with services capitalized, was $X.X second operating cumulative a a the in million, for through accounts summarized government these XXX Peraton approximately Solutions, a points compelling. are of investment FSK, FSKR lien of committed practice we billion a during types sector for in the a on and the a end and a work originated investment locations lead structure dynamics managed other commitment Dental MBX financing acquired find of year lien development KKR services intelligence also appreciation. The delay and XX we leader an service growth. the the was quarter million XX,XXX the $XX through the XXXX, large an a scaled product Corporation, we first examples higher have began of Both and million terms services is defense. Peraton. the $XX credit advisor. for we as IT employees. FSKR financing, loans combination while of few performance ago, attractive, FSKs dental information opportunities other investment the total cybersecurity a The About Since updated on particular million managed XX with example FS March positioned are focus of investments committed Capital the of creates committed KKR $XXX advisor our IT providing committed was remainder. experienced investments The around drawl business for of with new focused the have basis government future

the to investment the investor on our positions. investment I'll what discuss the presentation we these able on We more continue specific. is continue points to manner turn our portfolio deliver. be taken investment over measurable with be in toward to the some pleased to team have companies defensible more information detailed believe illustrate been with believe XX we which with conservative investment that, our slide website. And has operating steps structures and Brian portfolio And This to call to data we to turn in performance

Brian Gerson

Dan. Thanks,

end largest represented portfolio, remains line several last $X.X of billion our companies. XX, our as of companies investment in had and a December fair XX portfolio our of a value of with quarters. the value the At of XX top for XXX This approximately the March compares fair our portfolio to consisting of of results XX% which billion XXXX. quarter, As XXX portfolio $X.X portfolio companies

as debt of as to first XX. of continue secured our lien focus XX.X% on loans March of secured We consisted XX.X% and investments, portfolio senior

compared was quarter. as yielding represented finance addition, with assets XXXX. venture weighted associated The asset December investments In the XX.X% during predominantly and decline of accruing repayment of the equating closed represented XXXX, of which as the during was comprised lien which believe principal assets to which finance based our yield or the quarter our to meaningful XX XX% joint X.X% quarter yielding lower yield X.X% portfolio, XX.X% during loans, first asset investments, protection. average is debt based and higher portfolio, average on primarily at our investments additional of the weighted we March have in XX the an new The of

investments our repayments XXXX. we of collars during advisor approximately by were the the establishment made In experienced FS in its repayments surrounding April of the terms to KKR XX% related since quarter,

XX% other were legacy associated with of repayments The investments. our

mentioned, Dan as these of follows. two As investments are highlighted legacy

million this support In syndicated and year, more draw the million to Kodiak originated to acquisitions. the products building In to in term market, the full August XXXX the provided by Partners, growth. unit delayed the distributes the commitment we at Since builders Kodiak, is fund our business. when increased in Kodiak Building and price was commercial of incremental remodelers. an First full to investment the than loan $XXX investment and call American re-capitalization through February a small business charge SSKs XX XXXX, repaid dividend company's completed $XX investment, tuck-in providing and company's $XXX the builders XXX. Court completed million acquisitions. The was that Square December of original our two time investment purchased We which Accordion

refinanced in blue improving systems was the This repaid of us human whole our investments systems. diverse October was business, quarter July thereby solutions refinancing repay acquisitive first company we chip [Indiscernible], XXXX, during The The Another the all in when the provider with facility. is THL and Uniton’s company XXXX Partners our that legacy financing serving all customers. was acquired [ph] period. highly during a was a sizable to the U.S., position. originated the allowed investment opportunistically capital the in In set new

repaid is originated of in sale XX% March the year loan January by repayments, as of of Our effects par of in the the yielding comprised upon company. this KKR. XX is our other full investments these investment approximately portfolio XXXX of of Including at now and

Turning was we experienced during $XXX million $XXX our first million. the quarter. quarter, portfolio during net unrealized appreciation realized total experienced and unrealized back appreciation to our during amount portfolio, the of $XXX existing across of depreciation realized the And and million. quarter portfolio totaled The we the

static our aircraft a watch Youth pool and & XX we and During placed Family is Park Services asset NBG the Airbus on accrual Sequel Park the for during on back Boeing has has and by Leasing. Covid-XX of impacted distributor Central the quarter, quarter, placed non-accrual, market. designer, Leasing, of manufacturer been one list decor heavily products Central NBG status. on pandemic. Also investments two Sequel been Home we home and the a

And pandemic, the consumer the the invested products. capital support has business recovered months company. later, COVID meaningfully driven the additional several we strong its now During of by depths for demand to

result represented portfolio end value our approximately of quarter, on with the cost and I'll December as Steven fair a of cost compared first at in value activities As turn results the a X.X% non-accruals on our portfolio to discuss call basis a to basis, that, basis our on of these X.X% basis, a is the And X.X% on more XXXX. to X.X% XX financial our over detail. a and fair of

Steven Lilly

Thanks, Brian.

results, partially $XX investment financial In in our primarily and terms in investments, the Dan quarter-over-quarter spoke weighted new experienced decrease a activity income, as interest average which quarter. We carried X%. which about Brian several due offset our impacted million activity the coupon This was investment our decline total were our $XX of behind of was to the the following. during million investments of higher refinanced of yields color by income by

income and flat the Our the The fee in during remained and approximately components income various our joint of from dividend from income $XX Other million quarter. portfolio largest dividend included quarter-over-quarter. dividend quarter. our $X companies fee total dividends during venture million

quarter. our quarter-over-quarter tied representing change of a totaled $X activity million during origination the income $XX repayment the and fee Finally, quarter, the decrease million with directly to during

by share, increase NAV by our share increased is increased GAAP starting of during value quarter-over-quarter Our for to investment management expense and by XXXX XQ net and was share basis compared of per relatively during follows; gross the NAV our share lower flat bridge a our the fees quarter. the decreased amounts interest million of quarter-over-quarter investment the per as as $XX.XX overall detailed quarter $X assets was quarter on per $X.XX due income and prior an The to to portfolio. $X.XX of the due per in average

The is income our effects our per to with quarter of per guidance by results these per $XX.XX. the NAV FSKR NAV XXXX of looking approximate net as to quarter $X.XX share investment second our $X.XX from forward March expect XX perspective, our the a dividend. per any during was of income we activities in our From bridge merger prior share sum reduced first investment quarter share. per $X.XX second share Our guidance net to The of proposed follows. share

the quarter. interest of higher the second repayments first the experienced volumes lower combination to we million by quarter, assets origination of yielding and approximately the to following; anticipated expected income Our that during effects of recurrent due $X certain decline is a during

We to quarter expect income joint associated first remain the our dividend flat venture at approximately with $XX with million. recurring

fee other second From we expenses, to expect G&A We operating income and quarter-over-quarter. million including our $XX standpoint, fees, during the expense, interest flat expense quarter. relatively dividend costs management to expect approximate remain and an

our and at sheet, respectively, of XXX% XXX% levels our the XXX%, XXX% gross This of side of as equity to right of the net XXXX. the of terms debt compares fourth March respectively, XX, and and In net debt-to-equity quarter. balance end and gross for to

XX% available investment our balance of portfolio to March XX% billion sheet comfortable of sheet of approximately percentage future Our very value is comprised unsecured debt. and XX, XX% growth. At of our the a X.X of liquidity equates which and allows of portfolio, approximately committed our balance drawn for was

And to call the continue for turn be weighted call questions. of with debt overall that, X.X%. before to of we cost open We pleased the back with few Michael, a closing for remarks I'll our average

Michael Forman

Thanks, Steven.

active standpoint. we XXXX will of start an year quarter first represent believe a investment strong from what to be an The

In deepening are and of our informed for you few our establishment single KKR, future. would change repositioning the strategic operator, the broadening to open platform our team a what with and to our merger last proposed be time we behalf more to FSKR appreciate call positioned shareholders. like provide forward an to interest what our excited portfolio, has entire On fortifying questions. your our represented been our balance addition, partnership that we professionals, with The team, progress, of proved with preparing and than of and excellent keeping XXX continue to has platform, our we the to years be sheet investment support. of And we team our to has look will opportunities we the for by well of BDC across for from

Operator

question from Compass first Instructions] Alexander Casey with Thank you comes [Operator Our Point.

You may proceed with question. your

Casey Alexander

just you and all them time. to have I I'll morning, give good at one Hi, three

loan syndicated could First, channel. relative competition the if pipeline broadly pipeline the from and generally the the discuss you to

portfolio potential are million obviously a holding Thank sheet three to pre-payments my my on interest as and then to last wide high have from you portfolio, close and assets, balance you the And level quarter of sell earning is could not XX% the given balance the income the down pre-payments question maintaining if and sheet during which XX% them questions. are Secondly, producing. of of investments rotation of more Those that's the JV for of equity discuss the XXX opposed assets into you. on some the

Dan Pietrzak

if bit Thank well. something, probably with go add than historically think And Brian talked I as I'll Yes, been happy we've is morning. I me rather pipelines, January, them. a we've through good little as might Tell Casey, it you. about, slower. missed

a in it flexibility I as credit loan. execution, think platforms looking larger draw private do are every maybe You to a there, cost saw the amount Right, that. the have been remarks, Right. little is entire some That happening they of generally of people grow, of certainly certain terms with market. capital. expect, of market access the found them bit, just, of ways, sort view been cooled normalize of said, sort in we have most And a of many BDC And has Because cheaper for in or a delayed kind the game. what we're the $X.X getting in competing we to forms more repayments what syndicated in my a said, across not as for capital weren't billion more and slugging to franchise. And ability have syndicated sponsors seeing on We're that we the the we I right, were do investing day to that refinanced out down expecting bit. frothy of provides, trying we'll I that year, market. the say, That companies, probably right? we're don't and borrowers. we and have market term

tailwind the, net about of was terms has pipeline. So interest, think a Obviously, headwind a the I number, feel dynamic. a a of in of little in market of market the there bit maybe but strength just deployment been I terms think good we syndicated the good

of quarters exited of I line think has handful sort focus positions, a of of of a as amount items been it the quarters, on individual the out we've fair for been many rotating of the like ours, some equity over last, that's on positive.

one ones company in of some either a maybe QX, was announcement find business moving needle. the fully called larger think would ASG, got terms have a get the of We we can QX positions, that larger or you of That sold, there. the repaid miss that I said,

we're happy I that. to think see

transaction think when sort high sort that of majority piece, keeping level for all it a we're of the maybe super in last good I economics And to the the obviously, of terms the involved. JV. question does was go of

said, not portfolio we including So that the sort non-EPC capacity. for are different it's material will managing Right, things, of that managing move.

Casey Alexander

think All Thank got you. right, it. I thank Yes, you. I

Dan Pietrzak

you. Thank

Operator

Thank you.

with John question Jeffries. next Hecht from Our comes

may hear Wells with with you your John, proceed Fargo. O’Shea You Our from us? question can comes question. next Finian

question. You may proceed your with

Finian O’Shea

everyone, good morning. Hey,

the fee? First million estimate have question perhaps, for or incentive waivers? XX you do fee to that the how you'd of Dan, of behind Michael far the compares And final how be on

Dan Pietrzak

what I'm of I That the because can Finian. handful with NAV quarters. here. inside sort that over take then we been offline happy we've FSK, the could probably assuming you're of vis-à-vis details meeting of last said, And I I sort pretty we've have growth seen don't think of follow up

after think we've handful some NVG, where sound has about that where proactively call Yes, there them, bounce, united call. back. we it actually of market of NCI script COVID. we can we've some And like, talked the during been, the like we'll general can up put like that a for bounce names, exact of days you, into but if has we some just offline money been of you'd of seen darker I follow that like of the with math but sort

Finian O’Shea

this complete and I as and direct will plan look resume interested FSI for up. platform the the can a perhaps fundraising fundraising. KKR the and was separately, the side? entity, second that We you get combined platform these, side you follow on or had just potential how Yes, efforts I on Once Okay. lending question on an entity. FSK to merger

Dan Pietrzak

capital about think into We merger hopefully things Yes, about remarks done. we Fin pools various done getting of QX. I the in talked that the obviously, to getting pointing, kind do we've time on All of time. as prepared focused raised to been the from are laser

mindful making sort matter. I a I having But We this to address past. the Right. think I amount in do believe cognizant we the scale we've think the are, leverage that call the of heard pretty of about market. know, also these we're covering where deployed dividends talk target sure you of size appropriately right that about this inside of been you've our us but will out companies, space That ensure numbers, targeting. what we're of about that also for both said, is capital, sort inside we're and kind of to there sort of

think think So unique of different the those normal about. but we I or anything a ways don't than course are business,

Finian O’Shea

Okay, you. all great. me. for Thank That’s

Dan Pietrzak

Fin. Thanks

Operator

And comes you. Lynch KBW. Ryan Thank question with next from

You may with your question. proceed

Ryan Lynch

Hey, be guys Casey's questions. going you following when average. portfolio you question you balance morning. guys, FSKRs sheet, of sheet and on Thanks when that your leverage, target kind up to I just for mean, Kind and are use good this combine taking quarter, of your under regarding balance kind growth my of leverage you that

So, is how guys that get of into portfolio? how going think will at the have are with And our strength, do a guys Is possible strong Right now, main your even kind growing that a [Indiscernible] now? that's market you that even you right priority much to given of you priority?

Michael Forman

your Good I right. Ryan. Yes, sure. math, Ryan roughly mean, right, one morning, -- we're time.

in that under FSKR. here the net is So at

that at night. look last out numbers the you came If

of sort That leverage think being growth. ample means I right. that pretty of good number, about we kind target actually under room feeling for we're have

footprint invested in we've from our very the As over in made, a last very opinion, of years, we've of good meaningfully our good sort several hires, bunch firms. sort of origination

is pipeline origination quite our active. So

prior target pricing really at into that the market number think As kind or us And being competing in out. the of I and day said also of can that sort view Right, definitely of in repayments. about the But good and and day that of quite feeling those medium ours. of that terms sort leverage market, in that don't we the the I of has conditions of some question, driven, our market feel bleed term. said, I

the I good about business. of the think we feel footprint

I tailwinds that of also for do fair some think we're of to but this, are focused every name it business, That's I to I deploy to we and be game of don't present in And you're the that the I themselves. And unhappy dry comes day on trying origination. last industry, just having are powder side. and a those when risk overall maybe think about, point, going I but markets very to the continue. amount Brian Ryan. this the like see necessarily underwriting mean, when mentioned, disciplined of And opportunities

Ryan Lynch

given only Okay, fair maybe your economy targeting day, at seeing you you on that I'm are highly more of are M&A the cap U.S. versus the were backdrop guys focusing remaining, investments you that back enough. on still And really mentioned, is at has in guys selective then all, opportunities, increasing, or deal are XXXX? meet the point changed or criteria. as investment approach investment you your curious, just XXXX, what

Michael Forman

from A the most of working teams little bit, still obviously, home.

of levels of appropriate doing change, but kind doing in that a different right? that's So manner. You're diligence, a

in sort and of sort to view. a maybe dramatically we're that, I normal over. That XX, recessionary the think for environment XX, course, general in of was underwriting came never the really

Now tailwind. an a, maybe of economic sort we're sitting in

we're this pandemic. we're, of about we're side feels that of said, pretty going of potential there is sort thinking three on darn thinking I years of have think We're good other inflation. By performance. rates, the economic It couple We're a other like Now to thinking for two, we're about environment, years of plus about, wage thinking out. probably right? about things, rising recessionary any sort that potential

of today. same try environment I to but the we're So in the fundamentals adjust think basics that lot for a market and

Brian Gerson

in Brian, in an of always Yes, after is looking at, when a we, this terms the only we're that, we're we're that year we investment. underwrite always recession underwriting the fund two credit, scenarios thing after next is we the or

discipline our underwriting, quality changed. So terms much on is of know, quantity you in versus our very think we're don't and, focused, I

Ryan Lynch

Okay, understood.

You guys really involving there just ugly nice human this want SQL? did bring but investment on quarter, are one There, you out have I to that guys articles a didn't out investment have really some other in a and things. some investment, quarter, there tragedy

in Regarding those, the how that challenge that change way public achieving does of sort some change are items of some the really, does in kind those business? that of you guys, that investment resolution approach kind business, of that

Michael Forman

guess, It essence, Yes, kind been words for originated of has Ryan, XXXX. order. was as on it I mean, Well, challenge Yes. thanks it legacy a investment. a the I is

we've, we're team of to help this. built workout on our specifically happy a professionals, like situations think, that with fairly I address us kind deep bench of the side we've

dialogue we're the we're of top find and sort going cognizant And think resolution we've sure maybe good also of, risk a I existing on of to do the doing this the right got into too hard there. to this thing, the work Without And I detail that the think make think, with position. a I the but we very is, going call, sponsor, capable to to we're priority cognizant are list. that. quite much is

Ryan Lynch

the That's all guys. Okay. today, for time appreciate me. I

Michael Forman

Ryan. you Thank

Operator

you. Thank

Hovde. Our from Rowe with next question comes Bryce

question. your with proceed may You

Bryce Rowe

Thanks. Good morning.

questions to wanted hit here. Just a on couple

quarters the couple last really of X%, terms commentary from the in some dividend First, target. NAV yield of around the

just portion really and especially FSK is equity my from quarter, the I fair a how this the the both we've guess question portfolio increased, So value FSKR. of perspective kind around at of seen of

might how with X% so that, feels target, portfolio? it -- the to relative you it like more you bogey a in hit about to do how tougher to X% do target speak, that that be equity think to that, So

Dan Pietrzak

mean, And five we quarters question. we've Yes. And dividend for in act Bryce now the well. thanks check is reaction I sort think Lilly to a I the gotten as Steven put might good of want for ago. policy

been we've over we've think I able been happy that to earned.

you're we think correct, appreciation I have some that portfolio. equity in seen

new of Some of new driven talked driven side uplift new into of the that we before, a businesses, sales by is meaningful other that some in pandemic. dollars with on can where some be and darker earnings processes by the, the situations those about the put some days we of scene, just that

see the equity and we about we now that tension of Steven, policy, good feel mean, think to that growth. but two, so feel the sort about So between obviously, free the but, I where think, I think we're I happy X%, dividend I we're add. to mindful sit

Steven Lilly

think I you covered it. No,

well. covered you think I it

Bryce Rowe

maybe it's the is a facilities another down the outstanding on perspective. come FSK the capital then from on structure the and at is, quarter. this is, as portfolio revolving Usage Alright, debt down sheet or question here balance come

on the you're I'm of side about you the sheet, how combine kind comment being there curious some thinking revolving be combined balance of how possibly, organization structure how that might So if to able guidance how right can would just and capital helpful. the any, and look the you're on any facilities,

Dan Pietrzak

I that a reduce a done come used being sort mean, down. deals down, two But things, the points. a couple sort we've leverage one, full statement the think, I One, Obviously financial were of perspective, happy of combo of also probably recent to. no, that right. to Yes, Number revolvers. maybe think correct. of our from now coming revolver benefit on has the of bond I is

past of over the that's change couple you'll least at quarters. think the I see

expect market talked in time. to the time you out been what of able the sheet of to past is from should I sort we've access is, go-forward roadmap what for unsecured happy on basis. a FSK think about the we've the probably that We've been the balance writes

into the as of collapsed we one up, revolver just our to way expectation continue think look it I And can set part the that. is deal. is the from is revolver perspective, the regular be then would way

that. the sort So no of there's for needed of consensus

the sum forma pro a revolver, you them together So joint entity. in can

Bryce Rowe

Thanks Okay, much. so great.

Dan Pietrzak

Thank you.

Operator

you. Thank

Our Dodd Raymond next with comes from question James. Robert

with You question. may your proceed

Robert Dodd

very how competitive If interest bat, on quarter. pipeline? think? do the some you up? a and kept on what generally. downs, you you the environment actually kicked of And this do the is, the on tough about to Congratulations I the pay coverage earnings NAV Or maybe pretty guys. do QX? which saw Which Hi, originations quality Obviously, but feel in is

So that of year? maybe to the look how repayments. only tend the go your say as remainder true? the through it we would but the originations say, metric, then the of first maybe Is does in one pipeline? that your expectations for half the in And were And

Michael Forman

question. fair Yes, no,

where got use terms I of to and been, we think feel that I showed, selective. reservations, the the think in right? we've we've good, quality numbers remarks prepared

quality on not that's been the structure. basis And material got end kind a as we've at of think of we of sleep sort both as focused quality chasing of focus. to to business, I at well day, be need And the of points, night. right, well

that of positions in that of a good also just known of we the time, numbers. think lot that lot incumbency long talked percentage a sort these about we've of feel comfort we have names for are a about, the I

But you'll, business, out good some that's financed a So I to and making Robert, names which if could protect allowing be there, think right, quality, of try transaction because selective, out. we the loan, overall taken but out feel you you base you in didn't obviously, of is you'll good be us very some that's the prefer financed, case volume think well. would performing I you're amount they the about, again, credit of point, to get the were well so at it, there's

Robert Dodd

Got it it. got

kind some isn't closed any I that, particular for? is there selectivity follow good, you maybe the a that's some get that over historical looking the because but the that I you're lower rate is average, on thing is quarter yet of is that X% close on wrong, now. of don't a for, driving in guys Just bills mean of me the half Or there issue market mean, but theme rate, are higher, on up coming right are that desk looking or to color that? that

Michael Forman

there's anything I right. don't specific, think

into not certain that I your definitely think lend there's there's just without we covenant. a will situations

a could driver. clearly that So very be

I market the for a lack [Indiscernible] unitronics the sort that we be the needs believer supposed that that think we've more to the heavy, of do is better But deal. to wouldn't are and [ph] big covenant rule. word be exception a doesn't mean a of

like in one, private people you see option and then this, that's markets do think a I looking a syndicated at option. or of sort

just little they're two from business prepared option for the maybe well, be bit X% could know, a not we're private, looking perspective, it's matter know you bigger that they and companies. we're because So a lien be with one compete to public a second to going low not a of a to artificially may lend a syndicated we

Robert Dodd

it. you. Appreciate Thank

Michael Forman

you. Thank

Operator

you. Instructions] Thank John Jefferies. [Operator Our next question Hecht comes from with

question. with may You your proceed

John Hecht

then on. questions I Morning all, are what's if guys for at first the makes thanks apologize. of redundant. some blew It disclosure it also just of kind the was my – for phone assess blew easier thanks because And phone was My going earlier. up. to these But clear. apologize I I additional quarter this up of super

appreciate So the disclosure.

lot mix very first consistent question link relative is, quarter focus a It's was to of second there your of first on it in in particularly focus clear, the with on this conservative. So lien ads. the terms of more was being percentage

mix the So interest that we near your on evolution about the is pipeline based what should expect that or of over we do for term think in how time?

Dan Pietrzak

assumption, safe I it's John. pretty Yes, a think

level the the overall very to structure. build said, portfolio of conservatism. second we play are with a much part that and that of capital trying are lien to that We in do prepared That

bit little we we the both and I correct. But a we're think probably size in of on a well, you're, but minimum, think think, firm return of a think, more total business, definitely a bit in both the as, just I In could kind and conceptually, sort I terms of together. of quarters, more selective more maybe have pretty, you're starting quality one. as of there well, I a Well, you're those fair target. sort assumptions, be put weighted too individual

John Hecht

that. do does to the then grow in of you capacity the that second and And the out? combined do entities the ability in terms once with continue Okay. are to your does SCJV, that two What quarter here,

Dan Pietrzak

does our JVs I also to intention will be of sort two think urge two individuals, the it mean, things. I together.

no I the think, than different combined. dramatically

regular the sheets sort so So BDC larger way some will us flexibility. balance. balance of think I give there more Yes,

team the JV. a has sort on to the think bit been I liability little more be of of side creative able that

think doesn't but view of So as the I it flexibility, a positive, just would of capacity, it magically I of create structure sort the some additional well. albeit as financing sort

John Hecht

guys. very much, Okay, great. Thanks

Dan Pietrzak

Thank you.

Operator

you. not I'm now like Pietrzak remarks. further at Thank back to the further And any time. to questions over I any for showing turn call Dan this would

Dan Pietrzak

good to look taking We you Right. in to with the call day. the for coming time for you Thank forward everyone talking a this morning. again the Have months.

Operator

this Thank participating. Ladies conference gentlemen, concludes today's and you. for Thank call. you

disconnect. now You may

FS KKR Capital (FSK) 11 May 212021 Q1 Earnings call transcript