Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen. Welcome to the FS KKR Capital Corp's Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions]

Please note that this conference is being recorded. At this time, Robert Paun, Head of Investor Relations, will proceed with the introduction. Mr. begin. may you Paun,

Robert Paun

FSK, morning, recorded, XXXX to XX note earnings Corp. the conference be to KKR Good throughout will the Corp's call. call an the that KKR audio fourth days. Capital Today's as referred be quarter conference is may for fund and you. or FS company being welcome call Capital FS the and Thank available call. of Please replay

November release information XX, included on a FSK Replay XXXX. press that is issued in

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

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

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

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

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

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

over I turn call will to the Michael. now

Michael Forman

Robert, you, is for FSK's significant year fourth us and of good past FSK. you Thank Thank a This XXXX joining year year all and morning, conference everyone. quarter call. accomplishments for earnings for full

assets billion investments. We over our originated as continued originated FS new rotating portfolio investment in investment $X.X into team KKR our

income Analyst Investor rates These We grew interest January as well another in year share achieved investment positive $XXX as the earnings XXXX and strategic a quarter hosted XX% past the and over XXXX. Day. of November as per have successful three September adjusted impact Investor We efforts Day full million goals net notes our rising this unsecured resulted issued in outlined growth in our compared the for of as and meaningful of XXXX. to we

quarterly While have strong market guidance as we both an quarter. uncertainty, each and the year attractive concluded XXXX also supplemental volatility our economic was at year dividend every with with and to exceeded we're a shareholders results a rewarded quarter of base pleased

$X.XX investment public guidance investment fourth our our $X.XX $X.XX to per $X.XX net share of results, respectively. compared we income as income adjusted and generated share share totalling quarter per terms per net of In and totalling

was quarter-over-quarter out-earning value repurchases. on portfolio dividend as slightly our decline share offset $X.XX our asset accretive net X.X% declined investment Our share by per

team million originated approximately investment investments. During $XXX quarter, of the new our fourth

liquidity Finally, we the with liquidity. quarter entered of from approximately a perspective, billion available $X

fourth program. purchased million our to of $XXX and million we $XX of share million end, XXXX, XX, the we In subsequent shares quarter February shares. of $XX Through repurchased quarter, under repurchase we repurchase have $XX shares million

remaining million $XX had we program. XX, $XXX under February million the of As

Based fourth first share. financial total distribution board $X.XX per results, our a on our declared positive quarter of quarter has

to quarterly-based distribution, our base last also approximately increase share X% based X% As this from quarter’s we're of approximately dividend pleased over dividend $X.XX be dividend year share, to part per increase and our raising ago. which in a $X.XX represents our a per

increased long-term reflects our based positive company. The quarterly power outlook dividend the of the on earnings

a On based an throughout based net Additionally, a on annualized $X.XX first share per XXXX on basis, per we minimum of quarterly our on per price. quarter yield XXXX our attractive earnings our value distribution equating annualized to quarterly of company's strength and December $X.XX our distribution total of XXXX. possibly the yield share distributions of and share overall annualized power, during the minimum asset expect beyond, XX.X% supplemental to XX, an quarter represents XX.X% an of approximately

beyond. I'm of extremely experienced proud for during platform, accomplishments the past the and our significant months. resources our of team believe on the and of XX the team we positioned are Based XXXX well I

the conclude like announced merger FS on comment Advisors. to Portfolio I'd recently and Before remarks, I briefly my Investments between

While a for firm, the significant Investments that and FS advisor. KKR is to of has the growth important on it the the our FS FSK transaction note transaction is one accelerating no impact

and that, with and additional the quarter. on provide turn to call color And team the I'll Dan the the over to market

Daniel Pietrzak

Thanks, Michael.

of since of of have great originated we and investment FS As pride the FSK. Advisor, $XX time investments reflect our take new capabilities the as KKR team, I in growth in on over the the I establishment billion

are FSK assets pleased positioned mentioned, and of we attractive performance to how the we dividend these have with investors. provide originated an yield our to Michael As

above continue term. we over the of enter near terms we to economic volatility environment, In the market of as expect average levels and XXXX,

certain XXXX. throughout still direction we fighting as economy, companies rates of chain broader on as uncertainty Given remain remaining environment supply margin federal and there's in over will and of inflation, pressures well believe on constraints continued the focus the likely the inflation all continued and lot geopolitical of sizes, reserves the macroeconomic issues, a challenging

opportunities originations, other to and syndicated private believe the more turn to large direct lending new to we created uncertainty to respect markets. the for increased with compelling us economic and scale Sponsors caution exercise volatile continue debt platforms alternatives continued we stable as volatility While investors. debt large investment has

and Additionally, opportunities are increase the new on base and attractive by driven the in widening spread originations us, return rates. extremely to economics

to might Compared higher forward. like approximately what average transaction XXX ago, basis are spreads protection M&A originations gain new investors below enhanced a that has high-quality can going inflation attractive that there With points on stabilized remain for clarity is companies. call look with we economic landscape the until more year levels believe and broader and volumes on confidence will leverage said,

with from see companies. We end portfolio on portfolio these of results at competitive and resilient positive terms middle our market, upper flows, in the company results In the of majority continue performance, the we businesses cash our positions, attribute focus to to noncyclical companies strong companies industries. of financial larger

of companies Our XXXX. growth April in invested have which XX% portfolio companies of across year-over-year reported we in a rate approximately EBITDA weighted average since

addition growth, fourth $XXX we In by to XXXX. to weighted companies, have portfolio $XXX on the EBITDA of quarter this to million the our end million EBITDA of companies focus as as increased continuing average of the to end compared at the larger of

meaningful and impacted Certain chain of portfolio a increasing a depreciation portion by supply the combination contributed of companies have to quarter. our in interest our during issues, fourth been rates, which portfolio inflation,

companies, and detail continue names While investment on portfolio and the later, of to units. we our performance portfolio the of Brian monitor monitoring our more financial team will positioning leaning speak about closely specific in experienced resources

this on work extremely and continuing are we rotate we We to of focused years, the last several portfolio remain done XXXX. the rotation proud have over the in

Turning quarterly activity. to our investment

to prior originations companies During portfolio of we invested and primarily originated the of KKR. and focused few to add-on previously the in our investments. of by quarters, companies. from XX% opportunities financings these similar fourth came quarter, $XXX on And Approximately fundings million existing

During a plus quarter, coupon weighted lending our carried opportunities average weighted points. XX%. of the new fourth XXX LTV SOFAR a and basis average of corporate

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

by a emphasis and is in food One U.S. and into to worth that with managed new Pari distributes on the manufactures investment branded distributor $XXX sources, company. Foods, of the grocery and financing market support XXXX, primer specialty tranche In new a DDTL the million funds products. the unit of noting FSK the January buyout an store and financing provided La KKR our other

more Benefiting incumbency DDTL we and the of our our XXXX, financing to and quarter point with of than original lower economics the from during a acquisition attractive million position, $XXX a fourth investment. sponsor led new unitranche the company by leverage support a

note sponsors companies would of uptick in the occurred, have of situations equity seen long-term coverage, and due the financial fourth both from to which median have contributed In end funds while invested of we the support are times. in our And interest in quarter, recent coverage seeing vintage X.X have of the companies equity we which their meaningful a slight from the sponsors of of capital. amendments business the where a portfolio activity, interest amendment our models viability the we we terms had have at in

the our With I'll detail. to turn that, call discuss portfolio over in more to Brian

Brian Gerson

Thanks, Dan.

XXXX, portfolio of compares September This value XXXX. portfolio of a fair companies a consisting to billion of and $XX.X had of XX, as value our investment XXX companies. As XXX $XX.X of portfolio December fair XX, billion,

our represented portfolio. approximately largest XX% the of end XX of of the the At fourth companies value quarter, fair our portfolio

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

investments which In of is finance of X.X% value loans and or our asset-based asset-based secured finance lien additional investments. and XX.X% comprised addition, an fair the represented to the equating of predominantly XX.X%, joint first venture portfolio represented

as yield compared was of XX. of on accruing investments to XX.X% as December XX, weighted average XX.X% XXXX, September debt The

the few rise higher is during merger adjusted yield to FSKR. fourth during average associated reminder, as as the the with quarter increase a the in exclude associated with our in yields the past rates As accretion on base with was average originations the primarily well quarters. continued weighted weighted new The yield

issues Fishing as retailer experienced Pure is gear destocking and a the as $XXX merger to weaker Fishing investments due well in which the supplier equipment were excluding our by portfolio depreciation performance-related experienced movers quarter, during on portfolio, million. and largest were results The credit approximately accounting, that of we pressures. quarter impact KBS. impacted Pure inflationary global negative net fourth the During of fishing of leading

of of with variety in been Performance this KBS janitorial and issues negatively provider roll-off labor both a characterize under multiyear performance is the transitory as the point, by of companies inflation, facility maintenance At impacted services will typically and end markets a nature. work. contracts. we COVID-related has to

been Door. sale of and facilitating purchase In comment since we through premiums an real a online and which amount to another has debt which of the facility, prepayment cancellations debt like reduced related exposure. also plus platform, company our reduced $X.X led single-family The in $X at mezzanine is undrawn asset-secured XXXX, has Open commitment billion I'd repayments to an meaningfully combination investment, investment par of homes. a on estate billion October the

$XX.X FSK's amount principal As a to XXXX. XXXX, million of had December $XX.X of $XXX.X amount of undrawn principal total a million commitment XX, September of only compared funded as and XX, amount investment of million

of a fair of In And on the on value fair cost I'll XXXX, September basis, that, with of basis to as portfolio a our XXXX. X% XX, over nonaccrual, on December call to X.X% value a X.X% and as a Steven. on of turn compared terms and XX, nonaccruals cost basis X.X% basis totaled

Steven Lilly

Brian. Thanks,

possibly with to be in per share as an should are per a per our of $X.XX as Michael per able the of to view distribution minimum As a we increase quarter $X.XX company's that shareholders positive in longer, communicate dividend during reward well equate our distribution supplemental pleased to to mentioned share resulting and quarter. base minimum total XXXX earlier, on

asset On an XX, representing on an $X.XX of share. per our yield per December net $XX.XX totals our value distribution annualized share, XX.X% basis, XXXX

of our $XX for were investment by a follows: of quarter was totaled fourth quarter. as increase $XXX Dividend quarter-over-quarter, financial million income million of to total the million an income by million, Turning income Total increased fee income components interest million, Total increased and results quarter-over-quarter. during $XX driven our $X the interest $XX investment The quarter-over-quarter. income. decrease

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

rising base expense interest increase the due our of secured an $XXX $XX Our quarter-over-quarter, to largely of on million facilities. totaled impact million, rates debt

cost Our debt million, totaled quarter-over-quarter. of weighted XX. a at Management X.X% was average of decrease $X $XX December million fees

of net during million which fee incentive is Incentive fees totaled million fourth $XX the quarter, the waiver. $XX

merger, FSKR spread to of FSK, incentive quarters, the fees million the third evenly of closed quarter the part $XX X as during over which XXXX, agreed in noted, adviser previously which As began of XXXX. June of waive

reminder, fee a fourth As incentive quarter the the the represents waiver. XXXX of quarter final of

in was per increased our investment share overall our income as ending net detailed share quarter-over-quarter decreased is the and XQ The per value per follows: on our asset bridge of $XX.XX due net asset decrease XXXX per a in $X.XX by $X.XX value of value a GAAP by of net share to portfolio. share basis investment was

value Our net asset the XX, these With to in by per reduced per share $X.XX $XX.XX. activities share quarter our asset our dividend results by due share during share per share per net and was value increased some $X.XX of repurchases. paid XXXX, of December

income and investment share. quarter guidance expected our million. our investment GAAP recurring $XXX XXXX share, From income to follows: on interest is perspective, approximate basis a is as $X.XX first we income $X.XX forward-looking to expect guidance quarter approximate net first per GAAP to adjusted per a approximate Detailed expect we net

We expect recurring associated dividend $XX joint our income venture million. to with approximate

fee we our expect and management to fees income other expense From million. expect $XX approximate an approximate million. dividend standpoint, $XX to We

million. expect to approximate incentive We $XX fees

our expenses interest approximate to expense $XXX and approximate million. G&A we $XX other million, expect We expect to

our reminder, other our to adjusted and net income during expenses accounting. between interest recurring and due our of $X.XX a This affected. GAAP categories quarter to investment our the share the income. All merger net are revenues our investment difference related the affects of income not accretion difference expected investments As per

expiration In waiver. adjusted investment income, account fee our we are link XQ guidance, share net our primary through quarter results the to $X.XX to with XXXX of an net income first starting subtract considerations the quarter the our $X.XX effort follows: fourth adjusted share XXXX per for as investment of of per

to fourth income during net pay part expected incremental We account higher to in expected lower certain the the first investment be due than subtract portfolio $X.XX dividend-paying fewer quarter in growth investment fact the of quarter. income that tend companies counterbalanced is portfolio dividend X adjusted days to to first and the by has dividends year. per the share for in rates quarter earnings later as interest fee The

for We is XXXX. helpful in hope terms creating and this starting to of analysts investors information accurate an point,

XXX%, third debt were balance of to levels In gross the compares and XX, the side to net sheet, respectively, at XXXX. end of right our December at XXXX. of terms gross and This our equity XXX% respectively, of debt of net to quarter XXX% and the equity and XXX%

average committed XX, At and balance December approximately sheet was of debt unsecured XX% of and end quarter, billion. overall was our $X available the of fourth comprised our our sheet debt. of liquidity balance our of XX% was drawn effective cost the At X.X%.

I'll that, the for we closing with back call Michael open And turn before remarks to call the questions. a for few

Michael Forman

throughout during macroeconomic environment XXXX, led continued market significant team execution volatility strong to Thanks, the to our the its year. despite that Steven. thank In I'd like closing, for challenging

look experienced are positioned to to committed our strong continue respect we well we forward, liquidity structure, we team. position capital believe portfolio, with investment and As

the supplemental to shareholders are for company's through sharing continued real-time and confidence our ability future on We generate strong shareholders, including have strategy our quarterly with basis optimistic results of in outperformance about distributions. a the

extremely is all continued attractive. your joining we support. believe the call and for and the for the Thank result, forward for shareholders a opportunity As you interest

questions. With open call like the that, we'd operator, to for

Operator

from Truist. [Operator question line Instructions] Hughes first And of Mark the our coming with

open. is line Your

Mark Hughes

set scenario and see up, deal think the to .If before for more we rates clear, pick activity rates you to dependent higher the market I down on we very for the interest to are mean, properly to Thank morning. do the Fed starts expectations slow the longer, you where deals get more Yes. get you are to good interest happen. start

Daniel Pietrzak

It's question. interesting Mark. an

is from I that is perspective inflation of comfort market looking under an think the a control. some sort for M&A

sort do. which expecting, -- are still think that able Fed you'll be you if hasn't increases, the think interest trying accomplished they've we the mission to believe I of rate are to seeing that I are

think with difficult weeks, mean, normalcy. to a couple That I shoots. the last but of year starting started said, level of some of little green I been off of sort it's bit you're the see

is our continue is near see probably and I term, of the you'll pick So be half to slow belief in M&A up think the to going . year. for some the latter

Mark Hughes

the think is Then might trajectory of from we goes of the there the expiration waiver, portfolio? is it incentive performance that as depending anything fees about should of after about on unusual? be kind steady Or she is the the here the

Daniel Pietrzak

point. as more steady it be should Yes, goes the she as

I out as good the bridge the then there to guidance decent starting pretty but to provides think for a consider point that QX, some from year also how Steven related QX to back hopefully, tried QX to of think forward. lay rolls you the and building . you rest

Operator

next the our is question line Group. with coming Hovde And of Erik Zwick from

Erik Zwick

wanted portfolio, finance. looked I an composition there asset-based start to the just quarter-over-quarter I was as in at First, increase

Just curious and range the in that lending the to its continue arena how opportunity kind you total portfolio? current you today to would in of expect composition view stay that in whether to current grow the of or continue

Daniel Pietrzak

Thank market. X are We an flows. of more generally from we like investing It's front We strong. remain returns collateral, do for we of confident of the cash the question. sort perspective. quite you the believe like interesting . think the ended to I the risk-adjusted parts

about we've sort to range. to in of relates we're as the smack think talked market that middle That specifically, XX% said, sort of allocation to of finance, FSK it asset-based I to XX% the

it minus about in. invest to feel do or of to plus an us asset quite X. class point But as there, the expect a probably or sort I we percentage strongly think stay should again, attractiveness you of

Erik Zwick

there. color to the in presentation second down could looking if due pretty And the Slide rates, half improvement in some blue second portfolio half. XX EBITDA. in company at of the there coming interest higher looking year at mentioned to the Appreciate just the graph, are Certainly, move but just bar coverage that the you interest I strong of that in

a pressure So if it get we to impacted seems ratio. coverage a put is if period would like interest EBITDA environment additional into that materially where we on that get recessionary

to operating some portfolio start of how would curious interest profitability just environment? coverage you manage potentially from So view and and you companies more that of these stressed how the be

Daniel Pietrzak

good that's on do happy think I quite we that talked sort question. -- are numbers. about that number I year-on-year call. growth Yes, a EBITDA about of we XX% That's the

I think perspective, practical though, about really from when you that's think that [indiscernible]. a

pretty the that, we So forward. managers on number we're is mindful are backward-looking very a I that focused being risk think and where

So I top of think that's mind. of sort

do net-net have environment, some meaningful you an back I probably you rates get correlation be you flat If with So right? do coverage perspective. a interest coming down, from think could recessionary

about ones don't based focused we great That these the have about sort sort said, of upon the averages, -- we maybe be we average, portfolio these run to may sort And that asked to of numbers things. data right? are on do mean, sort all you deal but be And with these I of may not problematic. it's of or provide, that how here we of talk

any managing I specifically relates post pretty the of our as sort think meaningful last we've new built deal. to the it X-plus over team portfolio years,

entirely on case people portfolio case with extremely the the focused possible. who part we'll team, outcome challenged XX by got They're but of deal responsibility best to monitoring an investment and no arguably dealing generate credits. deal have are the important with We've our new

Operator

next Lynch from our Ryan of coming line with And KBW. Instructions] [Operator question the

Ryan Lynch

activity? slight to is and -- what environment, had uptick would hear question surprising amendment driving really is to to this thoughts but be you going in in First just is which not expected continue curious activity, I likely a increase that forward. going your I mentioned in this be amendment difficult, is on

you're weaker that to rapid business. that the sponsor. there's curious that that Does then is also exactly it to Or something they're to I'd higher mentioned or you Would in seeing injecting that PE support of what burden? rising that that? support level by be not explain the businesses these you fundamentally hear, adjust meant rates from And able and increase consider more interest capital you mean in that

Daniel Pietrzak

Yes.

seeing think in. it's right, that think that but of I with necessarily think some I you're when kick I these think slight anything don't business course anything companies fundamentally this are activity we more uptick, I normal an there's wrong else, of does

said, frankly, down of covenants That sort pressure a be covenants very there there you're or, well like chain so inflationary that supply the to do over the of times, majority have of in sort delever. point company issue, of wages be here sort deals could those a the step time quite to of could lot forced and do

the So metric there the usually there metrics. But down of is of that. is the literal be regular side, I performance way of just that a loan. credit other be step And think will some lot times, more of could driving the financial it some on kind

of support, remain market, I mean the value terms on those seen proposition -- that. companies the value end the I we've companies happy business the strong. focus -- of and lending we've of the of middle upper the been with think those we think in we've

footprint mind have sort of I sort and financial going we of think for to That sponsors. period doesn't we've sit seen do we these think relationship thing inject capital to origination our where over not then in in But they it. built sake a relationships of with the real at out longer-term X the today. any have just I just mean there's

origination of available. years if a in was I fund just old, is form sort more sponsor probably the in X that's of than it's it X, that more fund. of recent current in several X, point. years but think over But much powder probably the the likely, have And plus, simpler the was dry supporting a is it dollars that equity last usually I They think, a is new financial sort to

Ryan Lynch

the pressure. I this that were that's quarter down the a those a And loans why of some credit-related helpful. background gave and you mark Pure mentioned the feeling That's of received question sort And backdrop, had, Fish KDS. X you other Okay. businesses

ended that you then are thought be issues problems those But were clear experiencing you transitory. of to both these -- both wasn't And it of that it that you consider seem with these why to saying the businesses me transitory.

if you your so could And would explain comment, behind process thought that helpful. that be

Daniel Pietrzak

I'm these these companies Brian add to I sort probably in what might is I sort we companies, between the happy an of we're size and of $XXX the million of Yes. X to, of the to the strength equity loans sort average want of mean, it. the believe think them, of saying scale and have there's beneath loans or we so of made.

that's we've way of We fairly very real in sort during the same. wage high-quality seen So I sort brands euphoria think a I of with bit the -- of inventory. its works cetera. on some there's a overbought times out. we inflation, think of cohort, there. People think business just it's lot large, other tough that of think a retailers think We And et on KPS, this

. current the obviously, reflecting on we they So is worked though in raising which out it the we're ourselves why marks, is think the we're point the move call.

Operator

Point. next And line from coming Alexander Compass of question our with Casey the

Casey Alexander

bit, If focus to #XX. can we Slide go a little back

the percentage the of be -- of of under And sort a do interest averages. the what you time in terminal and good is of I'm portfolio. likely currently you guys onetime portfolio then at would and said, I at of interest us sort kind forecasting don't lot at the point what sort rate, of portfolio Can that manage of tails the coverage? little curious percentage the coverage expected about are share under what you of know As a math, it onetime with you

Daniel Pietrzak

Casey. Yes. Thanks,

Just a handful of of sort names today. would X be under time

But portfolio. right. I to you're to Slide think I information the we the on think fast I up the And if evolved, line think think someone is, of have I X% the very individual the top -- you forward point. I to it of think, think on more of much XX do end portfolio think X% the right? value understand for kind don't of off terminal head being my focused rate I the I has important don't total it's items. how I

in earnings, $X.XX, that That in you that said, X.Xx that you of if them there $X.X up So maybe Slide billion right? put maybe of MAX no more change that handful curve, think more pops a to of look at see context, with percent. XX, to a it names goes and I forward couple sort goes the on up couple

Brian Gerson

And Brian. is Casey, this

basis think percentage impact looking was to here plus go-forward less from go higher the on smaller point and base change rates recognize that smaller, as the I other the a basis, gets coupon on the at what a rate versus the the is so it in past.

Casey Alexander

inflationary a they adjusting in vacuum. you do How they be folks going feel operating companies the are mean portfolio environment. environment. in My news, the understand I They on your not next question must context, see your is in companies, sort of broader operating the an portfolio of like a what's to

think that to companies think manage around adjusting that don't their longer, companies to to So even if portfolio enhance to and the would adjusting you M&A you successfully And how ability inflation forward. that for do environment? are sticks begin your ultimately

Daniel Pietrzak

Yes.

inflation I think from stopped probably that needs is of big mean, equilibrium investor sort we've a it catalyst environment. will I the is world that M&A gut upward. minimum, sort enhance at of or the M&A the My some is at catalyst broader first. the think community move that the I environment view

I finding buyer. simple think that the into willing gets that that of idea just willing finding seller and

people existed for people I plus honestly, grow high multiples M&A of because to out the sort towards still pay some that multiples that a them activity probably still want relate maybe or the best-in-class there businesses have skewed think, year it's are strong business willing are We and that are seeing to would those for more businesses, ago.

CFO, the better a probably In the of have market, larger governance. end thing borrower, focused of we terms management team, upper on mean, got better better middle the I we've seen CEO, this X

the So from Board. their more better controls, support

think through? being fair mindful are I increases have seen amount company are legs, do but that's But a their bit We've companies of that. times pricing do we've we seen positive. We've may what sort little able to think of I a seen? seen X times, go at one or last we increases pricing a that concerned it be

people take look you for looked in something, this. think can I out. think, a pretty have they -- I time normal like where costs

their chain theme a think market. have companies the diversify supplier are overall in I I that's supply issues that broader looking to those some had base think

teams very I we've good job So be a think very to do forward-leaning. seen trying management

is for think, I X have things. moves we kind the is job, pressure, it And has fast to real the said, pressure as but reality like I think and to companies continue across up rates. some One, a enhance Obviously, doing been wage just time, expect the these and been I for relates building we that think been meaningful market. they've right, the very the maybe forward. value of and hopefully good going wage

Casey Alexander

not sure years when I all didn't of the I'm but after said a to equilibrium the equilibrium means. was make occur what this could that in you chuckle, at business, world XX world me

of it's think change state always a always I We're this. of in stressing flux. sort

Daniel Pietrzak

the That's that my the time. mind at popped word in

Casey Alexander

Thanks for appreciate. taking questions. I my

Operator

for Daniel remarks. this [Operator at Instructions] the turn I see no call questions back over further Pietrzak closing now I to any will Mr. time.

take Raymond like would line question the with Dodd And James. that just from One question? X next you moment to Sorry, me of Robert coming our up, please. queued

Robert Dodd

liens where we in can that So on the capital look maybe a you to it on primarily terms is following just Or any it kind that, uptick. it's across business? talked thematically bit up actually give that? there's or idiosyncratic little it second the capital color slight the question, like individual Any you of exposure is more about more at amendment if industry on in on structure? of to Ryan group Or goods depending something totally portfolio is activity,

Daniel Pietrzak

would something financial generally unitranche bit deal we of to that a you idiosyncratic. in that there is thanks lien for question, relate exists and that the a obviously, wouldn't a if us. first amendment of lot was table deal, be the bit, covenant, or on That in conversations front come little a a Probably doing would i.e., a to back leverage little lien a covenant probably second so covenant, more the the said,

be that capital it been where industries, challenge could it But on of sort just across a part I play. depending that sort impacting argue test think Yes, having. think So the would be because to does that you have of I could think of certain into all that's they may of folks I skewed sort structure. come

slight uptick, a by I think again, not I'm it's but it. But surprised been

amendment that think we continue, be nothing activity in I just sort clear. seen but it's the that to of have will like would XXXX,

Operator

Pietrzak. Mr. will back you. to Daniel now turn Thank I it

Daniel Pietrzak

thank time points. any thank you . you follow-up a for available everyone as But we're your to again. for Have Well, And today. always, day. good

Operator

and conference Ladies contour participation. that your gentlemen, today. for does for you Thank

now may You disconnect.

FS KKR Capital (FSK) 28 Feb 232022 Q4 Earnings call transcript