FSK - Earnings call transcript Q1 2022

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Operator

Good morning, ladies and gentlemen and welcome to FS KKR Capital Corp’s First Quarter 2022 Earnings Conference Call.

Your lines will be in a listen-only mode during the remarks by FSK’s management. At the conclusion of the company's remarks, we will 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, instructions. the this Head Relations of proceed At Mr. begin. may you Paun,

Robert Paun

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

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

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

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

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

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

Michael Forman

entire first quarter and by FS XXXX Robert start Thank good Capital Corp’s like earnings to to congratulating KKR team you, our Welcome morning delivering quarter on another call. I'd everyone. strong conference results.

As momentum move positive net we XXXX our are growth of portfolio income continuing we as we organic pleased into XXXX. created that strategy and continue through execute new to during successful investments is generating rotation, we investment the

the During billion investment first new investments. our of $X.X team originated quarter,

addition, we investments. performance to a continue increase see our specific improvements experienced with the value, in we both valuation In associated X.X% as and net in asset

performance, As activity earned portfolio's out a dividend. result $X.XX we our per overall again quarterly our our of and investing base share meaningfully

income per investment and net was was was income $X.XX investment share, net our During our $X.XX guidance. per share the per first quarter, public our $X.XX share above which adjusted

From a fee than $X.X and the ended expected was during billion quarter income perspective, higher approximately by primarily outperformance of originations with quarter. we liquidity. Our driven corresponding liquidity the a available

we've $X.XX distribution share million shares strong has May of results, of $XX Xth, share XXXX, approximately the second under $XXX on program a our repurchased of repurchase declared our quarter. per this our Based program. million terms for Board In through

summary, business base over of excess produce team us our and $X.XX I'll Dan provide our results, income to net in which with call where to per generated. that, future. another per and originations As is of the base color is turn confidence additional additional And additional consists the quarter many give investment of a policy continuing with and in the market quarter. coupled the the amounts to quarters produced share strong you know, of our $X.XX In on dividend of dividend during investment share, team quarterly

Dan Pietrzak

a help From challenges, decision take the Michael. the stance Ukraine. hopeful in Federal macro raising we, like rates human Thanks of focused tragedy of perspective, continued inflation, are We supply remain aggressive terms others, more a curb the of to inflation. persistence interest in will chain on and Reserve's loss

points. well $X.XX companies, which as share $X.XX on capital continue structured with of higher believe for shareholders and floor benefit on markets on investments, we to response inflationary move XX% average expect a debt of this we rates basis in given as strong point equal, investing this we overall XXXX, degree From in larger will increased should investment every net as are per volatility pressures, some private least share, and increase lead in rates demand diversification. being $X.XX interest annual things well-positioned our rates other a maintain in are our portfolio all wherever rate short-term believe by weighted public to pricing or opportunity. As floating we to basis XXst, XX Against were between the our increase investments that March income of at The to focus capitalize per on backdrop, continues XXX quarterly power, to basis. we

XX%, average high upper during $XXX middle market, originated the Turning and focus nine included of we our and spread on of asset-based million first average the two we we structures names transactions. new finance XX activity, industries were pursuing. the are the LTV quarter, was as conservative investment EBITA the continued corporate $X.X billion investment quality in investments the well as which invested end companies quarter during new our the The across was to reflecting both approximately and of

again, and standing in the relationships. a Our during yield our long previously weighted illustrating KKR, from carried of companies and X.X% XX% by of came incumbency investments portfolio of average existing and approximately quarter the power activity opportunities invested our

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

As in call, during last enhance income. in Investor primary September investment which we Day our potentially earnings our discussed opportunities, year, net we three would our presented we believe of last XXXX

out First producing certain of income was assets into rotating non-income producing assets.

net in communicated opportunities, total quarter was income. At per on that certain quarters, to operating sheet. $X.XX six over rates range. could up investment was additional interest debt generate share of Second rate on next Investor depending view factors refinancing prevailing and per leverage somewhere cost to other the our Day, these of the our midpoint selectively unsecured target closer And balance third we our our higher

In to addition, per income, which net remaining also legacy we the analyze $X.XX portfolio's totaled quarter. contribution investment

quarter fourth stated approximately per we had As share XXXX a income call, $X.XX that through of incremental quarterly two reminder, investment achieved net our we adjusted quarters. run on rate

before of net of quarter of XXXX, incremental upward into rate and per quarterly the end run we've the recent of investment first income. moves adjusted As rates, taking interest $X.XX account share achieved

Our progress follows. as down breaks

of non-income income net time per achieved at $X.XX basis, on producing the per First, a assets. income the Day, incremental net end assets share into income of we've share redeployed of we incremental the Investor quarterly the investment of growth. certain producing investment this we assuming $X.XX potential At growth quarter, first identified

our The leverage. was target at second opportunity we identified operating

Day. approximately in have income portfolio Investor our and and investment of our at finance last the we've per per both per time additional our potential investments, Day, investment relates joint time expanded approximately generate of Investor that The joint investment net share income, three between ramping their the investment quarterly targeted compared phase. run the we which identified quarters, net of the share additional our $X.XX $X. to per to run million income to Over our $X.XX of generated venture venture. at Since investments share rate have as finance asset-based $XXX $X.XX originated we a Day of rate and of of Investor we the we share asset-based XXXX our net are difference

$X.XX investments, these net generate will fully investment once expected share of We ramped, income. additional approximately per

of venture, joint it fully addition, dividends that now $X.XX second of ramped, half is share year. In will that per during this the an contribute expect we additional our

the The opportunity of refinance of unsecured related we the to notes. our side Day, Investor third had to the At balance cost sheet. higher opportunity we time certain spoke right our about

this During quarter in fourth the we issued at In during of this April, billion X.XX% the of May year, last was $X.XX a of due of unsecured notes quarter we our first bond year. $XXX year of that and early X.X%. million unsecured repaid coupon blended

As a result, interest with approximately achieved quarter $X.XX we per year, have of the in second share savings. this beginning

an portfolio in X.X% our at have quarters average over made towards quarterly net an quarterly Offsetting mentioned, income goals at $X.XX net elevated weighted This additional leverage begins contribution net once to compared summary, that, expect incremental per to additional have by In generate combined progress of investment balance recent lower pleased per adjusted investment X.X% laid dividend, share. a out Brian. achieved approximately at approximately income of year. investment turn $X.XX $X.XX to average per Also, the increases as a ABS income. during our of the increases three us income. to have September increased in I the run of approximately call and these over share these the JV to paying impact yield last extremely to we been rates the As begin we we Day. to with per quarter, which interest quarterly investments us a we positive slightly combined adjusted and And I'll impacts generate are our rate to result share of our share such of just Investor by activities, $X.XX as time substantial

Brian Gerson

Thanks Dan.

As $XX.X fourth billion first of of $XX.X of XX, of the billion end companies compares end XXX line XX% of value At consisting XXXX. with our fair our fair December of portfolio portfolio of portfolio companies portfolio our March to investment largest XX the which This quarter. companies. as XXXX, had the quarter, approximately in is XXX and a XX, value the portfolio, represented of a

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

investments, first represented X.X% we asset-based meaningful to finance equating XX.X% finance In XX.X% additional have addition, which principal loans of believe of an predominantly or comprised our the the portfolio, protection. joint portfolio is which venture asset-based represented of investments lien and

During XX, of in lien, accruing XXXX, consisted lien XX% in X% average compared The year-end XX% finance the investments at originations weighted preferred approximately asset-based investments. in equity yield on XX% XXXX. X.X% venture, was equity, joint new XX.X% as X% other investments, of in March in the in loans, first and first debt quarter, our to second X% and

XX% of effects the the our with reminder, activity FS as comprised credit, during XXXX the adjusted investment either a KKR the quarter, portfolio December average with is This XX, and investments the quarter we end Including XX% to now is XXXX. of advisor. weighted experienced As investment KKR of the of associated at first March yield XX, accretion of the XXXX, compares merger the the yield approximately exclude at fourth of XX% in originated FSKR. by to or

of disciplined rotate a taking We and positioning are legacy have and assets on portfolio proud to we the continuing our net made investment our we approach run rate income. to progress growing remain focused

first appreciation on of experienced million. excluding accounting, portfolio merger quarter, During the of $X net the impact we investments

during non-accruals in our board In exited we [ph]. and terms of dairy investment the quarter,

certainty securities use into legacy successfully the and and In was SQL investment our restructured addition, interests. quarter equity during

non-accruals our XXXX, value fair XX, X.X% fair portfolio legacy of group of basis. cost of approximately December X.X% their a business to of XX, XXXX. X.X% continue on the on management on to March both Global a investor on a basis a the of and to Jet cost adjust we as the and and compared basis basis value go-forward our declined basis work X.X% As portfolio, on to team portion to our with With regard enhance and a

million quarter, first the approximate we our mezzanine an received of principal on $XX repayment During investment. at par

of rate during XX%. to from on quarter, during accrual adjusted quarter the contractual the result, we fourth rate security its As X% first our the a

our adjusted XX.X% reduced with level X%. prior equity X.XX%. of as from we during quarter preferred on from our the rate accrual its the first our we to Additionally, stock on took accrual similar investment legacy X.X% We JW to rate our in investment preferred of action Aluminum

on to with continues line will of a reduced reflect an its we company indication for the rate accrual perform basis. value While accurately appropriate more believe the budget, JW go-forward in

highlight Before handing to call to like the during significant items two quarter. Steve, the I'd

of of First, the software and we revenue electronic preferred $XXX invested a other and health of acquisition such, cycle group. athenahealth successful familiar in support a Hellman by equity investment well-positioned providers. services athenahealth and company. approximately lien to is million records issue to the was provider we management FSK Capital's athenahealth the with & small Bain support and preferred Friedman former ambulatory to of and equity very and second group credit practices physician were sponsor as and

of Second, we previously DEI LLC, during the are April, Sound pleased to the closed. United sale month announce that known of as

As of XXXX. versus XX, million XXXX, valued XX, our was $XX.X March at stock December of million $XXX.X common as

call to We you our internal recall, many group the converted of of workout into over support invested may during outcome As this that, depths that prime with we subordinated and new company shareholders. believe And a positive a COVID, capital and I'll value the debt the of Steven. equity our strategic acquisition. in our for is creating to example turn governance

Steven Lilly

Brian. Thanks

on guidance, results, focus our balance During I'll this the and call, financial sheet. our forward-looking portion our of

follows. our in increased by activity to our which investment by investment the million Brian our million Dan $X approximate are largely benefit, to about terms February. investment recorded additional our growth of with as total results components quarter-over-quarter, which by Micronics, including one-time the Interest an In for the due we income quarter-over-quarter, The $XX investment portfolio income of primary our income, total and of positive and in $XX driven income million financial predominantly quarter, coupled successful exit due increased investment spoke.

the Our income million of compared first during totaled of $XX fourth increase million quarter XXXX. quarter, fee and $XX dividend to the an

from quarter follows; million as $XX is dividend $XX dividends approximately income portfolio joint from million, and income first million. summarized of approximately income our of dividend other during companies fee fee various the and of venture, Our $XX

than expected elevated the based was Our we of originations and on during the quarter fee higher experienced. first income repayments level

leverage increase were to million the totaled we quarter. quarter-over-quarter, operating throughout fact interest that million, an target due $XX of Our expense $X the at

quarter-over-quarter, of higher fees increase is which compared gross quarter $XX an the during of Our X.X% the $X million net the weighted average due waiver. cost Incentive prior debt and quarter. incentive management average amount quarter, the million of of $XX first $XX during million was fee million, fees were to to the assets totaled

fee as quarter advisor reminder, per prior bridge of our a June began on just not of of $XX announced part fees as merger, on on previously our in will associated XXXX. calls, FSK-FSKR discussed does on evenly the And an is quarters, merger-related any which As during accretion XXXX, value asset incentive earnings the FSK's waive the the the six closed earn of of a million incentive quarter-over-quarter advisor with third of acquisition spread basis share we which detail FSKR. as over net follows. as The

in per net asset Our of value increase was increased per share an $XX.XX income value share, the overall per $X.XX investment net investment ending of GAAP by by and increased $X.XX XXXX portfolio. was our due XQ of to share

on forward-looking per value the XX, mentioned we expected to to the first quarter. sum earlier one-time dividend income by is per share quarter net quarter first $XX.XX. recurring value and March flat per per investment Dan excluding our our GAAP experienced a net with on that the line during was second paid asset $XXX in interest is our income rate From in net is XXXX these which as spoke quarter approximate per we approximate basis XXXX follows; the relatively income net activities about which income, The is investment results of guidance second $X.XX guidance our I our earlier. approximate Detailed asset reduced investment quarter, a GAAP run adjusted income adjusted which net expect million, call. Our the item share we share of $X.XX compared during to interest expect to $X.XX share share, perspective,

income dividend approximate to growth the associated venture. based expect the joint recurring our on overall $XX venture We of with joint million

an origination during quarter. million and our guidance results the second From and The other our dividend expect primarily during quarter We approximate $XX to quarter. and approximate our of quarterly we first the interest approximate other to waiver management dividend million, of second G&A expect the expense in lower our our is expense fees we $XX to to and income million, activity $XX decline we million, to approximate income incentive other standpoint, fees expectation million versus second to related expenses fee we our expect fee $XX net expect $XX approximate million. $XX expect quarter

run $X.XX another lower about X.X% investment our due of of quarter difference $X.XX to by income, to year to $X.XX which approximately the quarterly $X.XX income which average time key equates that at difference income share our $X.XX a and we that our per and in by net of for expenses be result These origination affected. per interest guidance our rate affects as investment Dan interest associated first, relates categories current share recurring Day, investment investment per share. our time provided net are per per investments XXXX adjusted our second on $X.XX are we the bridge of lower per website. share weighted investment income revenues $X.XX in lower reminder, due our to quarterly from detailed of in of lower adjusted compared the of $X.XX recent in adjusted not spoke accounting. Investor and adjustments as the during In on during the to begin number, share, XX of September activity increases net Investor We yield quarter net rate Day net slide to the GAAP We link earlier, $X.XX due last the XQ to Day per lower we X.X% to quarter. follows; This as share, net at of and expectation adjusted an reflect Investor our then the our share can run $X.XX to the income. equals investment guidance income share second inputs guidance, expected income a with share. number per As our seen our our Other compared by a which add to the rates. portfolio income with accretion merger our of per presentation and adjusted our This of also share of between per fee effort decline earnings

of side available comprised sheet, were XXXX. XXX% XX% net to our quarter our at In liquidity the debt XXXX. March balance fourth of right XXX%, of and cost average debt the gross was the At to March XX, balance billion. terms balance as sheet XXX% debt effective end gross our overall quarter, equity and our XXX%, first respectively, of of of of the to drawn of was debt This levels and of At of was end our respectively, XX% net XX and and approximately sheet equity unsecured our compares of $X.X committed and X.X%. the

with and only have were remarks turn as our discussed activities Investor to company's two back positive simultaneously not to our call of I'll before we balance results open our have sheets that, investment had for regard the the maturities. XX our our questions. with we Dan for closing we success merged but capital, a have last As months, the call also momentum few to have extended we while we over together, with XX Michael lowered balance we And cost the Day, since with sheet pleased our

Michael Forman

first growth look continuing team's our on closing, outlook of initiatives, our to the Steven. quarter results. based We clearly was our current which to I'm and in reflected forward on progress company's Thanks opportunities. excited build strategic In strong about the execution

operator, always, that, I'd our to support. their for investors As continued we'd to the like like thank open And for questions. with call

Operator

Our RBC Instructions] Markets. Thank Kenneth from you. Lee [Operator first comes Capital question of

is Your line open.

Kenneth Lee

over market my question. given taking the One My leverage how target you you've manage call. Thanks. do the backdrop, leverage do Hi, you about to near-term? current you and the the thanks reached for expect how your

Dan Pietrzak

the Good leverage do morning last evolve think, of just problem. part No again, the near-term? to of, sort but over perfectly hear the questions, I Ken. didn't expect kind I we how of

Kenneth Lee

it? That's

Dan Pietrzak

the you're too, think kind almost of think kind I in smack so our I right, we're range, Yes, of middle of target it. inside

about if we sort mind kind in and So, our happy I of to anything, There's be to out we're some where look that change to think be, market we're that. probably of is volatility at to considering range remain this leverage going what going expect I that of around think there. to level, of no

And happy been first we've numbers the market amount issuance think we that year. unsecured into with the pretty we the especially, in this debt as talked I of about month of did, get we those of the our a in bonds. in a unsecured real of rate, structure, is think script, funded good I of, great for now is which has kind instead been liability the thing size XX% debt

Kenneth Lee

Great. if follow-up And I just one may.

kind talked You wondering talk any on of appetite could if you otherwise? the your recently, low bit equity either preferred more related structure, for about the investment a just equity or Thanks. capital about little current investment

Dan Pietrzak

Yes, to do that. no, happy

on, I would what's subordinate think bar market be for anything with would of, wise, be high. that the quite kind going

to You're of sort investment. health athena referring the

of, LTV prior investment of. be real think second companies, management we did February a and of fond have only the really XX us. that XXXX, opportunity a Again, tremendously, buyout below spot, $X $X with that us. sort sort company part larger prep of we capital deal roughly EBITDA, did billion over years, name to a though, got was has we're that into sort itself, quite company, of company I new a a sort time. we of of, know of a them. Those are a lien But in we sweet lender. to a -- quite as for We falls of team of, bit after for now, well, want closed to these last we think was history kind I deal the billion two repaid This with large the the there, think get that of good presented behind, is roughly done, the grown

Kenneth Lee

helpful. very Great, Thanks again.

Dan Pietrzak

Thanks Ken.

Operator

Thank you.

comes Wedel Our next JPMorgan. from of question Melissa

open. is line Your

Melissa Wedel

have taking my walk NII was I Good correctly, wanted you clarify, but thought was said this the a On to NII and comments I Steve, the that. one sure by morning. for I that been that bit, higher questions. I if higher rates, lowered sensitivity, provided, helpful. you heard a with I'm you share adjusted wanted I dig might per that your $X.XX would amount on I benefit of to adjusted Thanks into asset really which think to little think, was because not rates would have NII?

Steven Lilly

talked of hi, move this we thanks increase -- sheet, rates increased, LIBOR outline other the as an question. were in asset -- Melissa, on investments period fours those fourth the have balance side we for as -- a quarter with you there because to I takes we very of on have like what as some rates, we the call the and before obviously, fours. is and first through BDCs in think it high well on Yes, of trying a the about rates time pierce our as, percentage

see basis of XXX as LIBOR net month time timing share was of $X.XX And the we'll between bit therefore I on believe going five. with, take under quarter for one will an your And a of most -- guess, annual that really X.XX modeling in forward, was and a there. borrowers it it basis for others like a the of we three-month like quarterly purposes, benefit difference. end under every call, something, rates But little basis generate contract, income points and we it's an the typically incremental LIBOR four or before are will a investment given so that so our Melissa three of now, increase the on just of on

of modeling as more page -- on detailed quarter think have after guidance. in is so supplement I quarter, thoughts And guidance earnings fourth XX third well, the quarter, than for just to those purposes, call. our free which So, would are that our incumbent [ph] second

Melissa Wedel

being thinking or just of definitely hear at and point going yield a a investment Got leverage, the it. or seem And forward, around of levels on your particularly investments, terms reached in those with these new having real as risk potential it curious bit about environment, days? your does certain for satisfied higher level about the about outlook that is volatility I'm in pricing quite

Dan Pietrzak

that I I I far. would a terms of pretty beginning mean, share it's was pricing. we so but risk Yes, is in -- year of view how been mean, it's May, the think adventurous it only

sort I year of with coming sidelines aggressive. has been, with of a the sat Ukraine been think movement real, inflation off all on we real. the started having pretty around The money, the have conversations lot rates out has troubling. out been of, The Europe news

year. So, just I think we're the of rest as expecting last deal volume we go through the

see us floating think and on benefit people I today for be think risk I getting up. know basis know, approach and will of go most a rate because but included and I in forward are will return I overall wait you portfolio think we're a you of a the the lot think assets, go this

Melissa Wedel

you. Thank

Dan Pietrzak

you. Thank

Operator

Paul from comes KBW. question Johnson next Our of

Your open. line is

Paul Johnson

for guys. morning, good questions. taking Yes, the Thanks

markets a obviously, You it's curious, maybe rates kind base with has January, little moved on have bit bit this but I'm refinancing sort on earlier conducive do continuing remain that? cost for existing cost window of a debt? the wait execute still touched debt, to the basically just to left approach question, more or and more higher pretty the -- of, quite lower Ken's closed to of back paused of but since a that you higher temporary, in Maybe

Dan Pietrzak

right got The of, pretty we QX with way that. is, probably material, for of issuer of, and the or we're thought right But pretty in be year, our us, into is this Paul think, wait pay the the the that one. see market. I been think sort but the of about just into think end I moves probably to the and deal. use X.XX% market have I what we like think I said, that sort your of was kind I we at think off the did don't to proceeds would of right statement, of thankful outlook happy wait XXXX. any see pretty, sort Obviously, this of

Now, feel good we I think about though. overall our position,

Our duration revolver got and attached we'll on keeping it it's banks, that to group of duration. partner focused great is with be a real

Paul Johnson

Thanks. portfolio. more Appreciate and leasing part asset-backed financed on, that. Then specifically, your your your of just

environment, Just balances wondering from -- from your the part the a talk outstanding that tend environment, that affected that's portfolio? the effect through or benefit rate assets, that how that about against to if you rising Any does sort of longer leases? of current how outstanding environment could to potentially plays by underlying

Dan Pietrzak

good question, fair question. No,

I grow our think portfolio happy that part here. we've been to of

I you sort lot protection, those collateral a us. of product available roughly downside think it's deals have actual as We to and we focus do on XX%.

we about is think of this real amount a sort exposure sort I lot rental good single had family of when --probably fair leasing either of or exposure. asset-backed, there's because benefits we've think inflation, aviation, a of,

asset-based of that? relates consumer? the inflation rates, finance a had think the moves, We any the will now. a as consumer effort hard that mover at pick expenses are got, sort least from most on pump. of bit in backdrop? it not some they to of asset-backed a, as your really shocks worry sort kind of exposure, purpose, is So, were occupies on But or are getting overall necessarily where are. be large deals, which portfolio an done that we though little big Or light we'd obviously sort what's the this of market rate on the of as to impact these you of have of prices the You've I these you up is, probably kind thinking at very the

about we think feel it. pretty I good So,

Paul Johnson

real of kind just active to Appreciate currently be know some in where on pretty color one quick would One standpoint stand and bit from well. that a that pulling balance price-to-book of the that measured repurchases, off quarter. end, first BDC's sector Any market? this is you on conjunction, Are obviously back Thanks. this trades sheet trying more as kind I or quite the here, just where sell sheet stock buyback Are taking balance leverage? a leverage to in approach quarter a you The basis expecting on of, the taking on today? with helpful. a repurchased post the the you shares you your prioritize the be leverage in there

Dan Pietrzak

I you the been we've think all recall, several of active, last sort very if years. buyback over

do bought I it expect over think we probably to do get plan some under continue its and stock. we filled. We to plan this entities, has between back XXbX-X FSK predecessor This to million a of of sort been active. expect buy $XXX of program or

buy think a is we going to think I with about for to volatility to said, it's bit fact -- sort plan intend thought no change a historically but been, that trying maybe the more market I like we and to under has have XXbX-X fill the skew the of, out it. I

Paul Johnson

you my Congratulations taking That's last all credit, on questions. the well and me. appreciate and improving for NII from it. Got as as Day Investor

Dan Pietrzak

Paul. that for Thank you

Operator

of Our Instructions] [Operator Compass comes Alexander from you. next Thank Casey Point. question

Your line open. is

Casey Alexander

He lot can you know there refinance ones. you got you some be debt an a service of good on Do on ask that, could where area but penalty paying seems quick the my Yes, because two to when the cut that clearly COVID button, questions, I'll without bond of real right morning. your a big cost?

Dan Pietrzak

morning Casey. Yes, good

available to of, repay, it now. is think sort I

form in -- year. I coming the coming prepayment to would any over the start penalties of pretty of sort sort materially think of drop quarters the

time. at reevaluate we'll that think of, I that, sort

reduce an about right, think the to in I years. coming costs. coming there's that of we'll dimensions or opportunity you're think think some quarters I But potentially those

Casey Alexander

tell And point legacy as of portfolio at what working are down a along, the percentage total secondly what are you to all us been investments you. can -- this in you've this what Thank down time?

Dan Pietrzak

Yes. XX% down kind of years. last of the several sort is kind of been over number talking moved the obviously meaningfully about, that's we've

the rotation happy with assets think to we've the of all yielding are we've I portfolio what been and with is in regards number that done portfolio. XX% that a very perspective, a percentage that

Casey Alexander

year, you view? of down your by that would figure that gets would be to And end the the that single-digits

Dan Pietrzak

resolve towards or sort It's necessarily of the sort that there's not exit shareholder have that. of how a on names of sole controlling either we make of that up. those in of trending really Several generate sort not that, but definitely were mean probably the the handful there probably voice to I larger those quarters. with linear, active will of all view outcome But on in of the coming quite perfectly or kind it we're the best the it's possible trying names in how of terms wind down.

Casey Alexander

Thank the questions. for taking Great. I right. you All appreciate.

Dan Pietrzak

you, Casey. Thank

Operator

Thank you.

from of Hovde. comes Bryce Our Rowe next question

is Your line open.

Bryce Rowe

morning. Good Thanks.

ask gain got unrealized loss and Obviously, about I from the in perspective. within more the think Nice NAV up you've both like I'd two of spread maybe gain perspective on to quarter. again, portfolio events and some to and on market-driven to versus realized an see, a characterize could what's activity widening here the moving parts, the portfolio? some maybe going see company-specific credit marks but the the investment quarter, try Let's type you

Dan Pietrzak

the to going and mean, -- Brian's to I think this. I points add Yes, maybe coupled to were

happy outside that down with else relates I mentioned and by of on the activity happening including think sort certain sort material it pretty pretty and that maybe results of, add that? you a move to the was right. want got prior We European Europe we very of Brian, what's But of United, business, I are offsets Ukraine. that sort impacted call. to we sort [indiscernible] Russia had to a anything in mean as to There

Brian Gerson

quarter, were look if investments about third fact was portfolio, that you a down two-thirds the about during of that then and Yes, debt down I really widen probably mean, spreads the the spread-driven. up. were across And given slightly

Dan Pietrzak

activity NAV overall pretty quarter. the individuals the and up on in of but bit this obviously, market, be volatility the in little I name Bryce happy think then we're So, to to

Bryce Rowe

me. Yes. Thanks. My other were questions it asked. That's for

Dan Pietrzak

Great. Thank you.

Operator

further like I'm I to any to at I'd for remark. you. Thank would over no Pietrzak time. call closing this showing questions Dan say turn the back

Dan Pietrzak

If you to out thank not We today. on there for other reach anyone follow-up the appreciated any do hesitate questions, time please to everyone, it. really are or your again. points Well, team. Thanks

Operator

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

great Have day. now disconnect. may You a

FS KKR Capital (FSK) 10 May 222022 Q1 Earnings call transcript