FSK - Earnings call transcript Q4 2024

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Operator

Good morning, ladies and gentlemen. Welcome to the FS KKR Capital Corp's Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

At this time, Anna Kleinhenn, Head of Investor Relations, will proceed with the introductions. Ms. begin. may you Kleinhenn,

Anna Kleinhenn

referred morning, and to Conference Full FS the may note Good or the Corp.'s company the Call. KKR Fourth that throughout be Corp. Capital Quarter Year KKR as and you. FSK, FS fund welcome call. Capital Please to Thank XXXX Earnings

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

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

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

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

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

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

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

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

I'll turn Michael. over call to the

Michael Forman

everyone. Anna, morning Thank and earnings topics: and you, all cover Thank My this during our comments X full XXXX. us for you fourth accomplishments and specific our goals good for quarter year opening XXXX will morning, conference FSK's call. joining for XXXX

we XXXX, specific focused highly During were on objectives. X

To goal our during value stability. the First, X.X% fair to nonaccrual and we a and basis a by portfolio that on reduced year, improve quality XX% to overall on is credit investments XX.X% our cost basis. end,

transactions. if disciplined Second, discipline from our meant that extremely even passing standpoint, an on goal to is origination remain certain

During XXXX, our investment team compelling new deployed $X.X into billion of capital transactions.

XXXX during materially are as as liquidity with We XXXX activity strength we this competitive M&A and to entering expect and a view increase, beyond. available significant perhaps

share. of our per We paid Third, per annual goal shareholders this is distributions sheet. basin with as per the share an provide goal distribution distributions is $X.XX strong special our our achieved our Fourth, of the year. first and supplemental $X.XX we during balance half in $X.XX to goal maintain totaled to share

maturing in notes And of quarter, During million issued the we XXXX. in $XXX maturing unsecured $XXX notes million the issued second during we XXXX. of quarter, fourth unsecured

recognize attractive XXXX, of our our strength continue a starting of quality deep portfolio. from the For that given which year-end. expect position will to are to are we low well-structured as as accretive utilize to team First, of we be goals investment relatively relationships our its will our originate investment leverage follows: We investments,

reduce per distribution, base per to will recognize distribution for returning the to we while balance earnings higher quarterly by of we to rates income, rates we shareholders our our view for net the of awarding our spillover $X.XX interest generated recent of them equated and in Second, year, which recent $X.XX of several interest additional us will a our to our And combination shareholders continue income current the rate provide period. share last expect quarters. total supplemental enable investment distributions based that the with believe share healthy $X.XX of the interest we upon decline through has quarterly during

Third, the to maintain right continue we investment-grade over sheet and side balance proactively time of expect laddering our to ratings. our enhance

closed net guidance $X.XX $X.XX share, our respectively. results. share fourth to $X.XX The per and per income to net $X.XX a few relates reported totaling share in share. guidance comments, results earlier supplemental and quarter declared $X.XX per per public distribution which $X.XX as share has consisting of $X.XX compared of totaling Board share. In to keeping distribution base as Turning new generated financial opportunities, quarter investment of FSK approximately year-end. investment adjusted and share compared per difference our a per a income investment to our after of our our per of distribution our with my first

over the call turn with I'll Dan. And to that,

Daniel Pietrzak

Michael. Thanks,

IRR our of ago, of adviser almost X.X% generated execution years hard strong the XXXX our for entire and team. we strategic of FSK X since have we new FSK. Michael billion the have dedication proud a is work, for inception. an and which $XX originated to establishment was Since year testament investments of platform focus indicated, the As K which I'm a performance of unlevered over of the credit delivered

our us enabled on further XX.X% yield performance to a value were of XX%. XXXX with return deliver strong total shareholders net asset average shareholders a rewarded our Additionally, and

businesses. of and their somewhat of on are the executive affects expected environment issuance these a M&A a administration's may economy and to tariffs a significant geopolitical economic standpoint. including ongoing macroeconomic act recent growth, is number Instead, year orders lending the large partners significant to for the of fronts an for steps and international companies current state rate multiple to the threats policies Turning from across enthusiasm between have quantify quick start and taking with trading current potential inflationary of tempered environment. have interest what The desire moves and swift the The balancing for adjustments. many the lingering pressures

our a event we that longer significant result, M&A a next certain As may than a in take for while robust call investors the observers forecasting. few in to industry are caution increase over increase still expectations activity materialize years, activity

I our increase backdrop, meaningfully, a note early-stage has deal see strong our where the continue reduced to activity said, during we have in this building direct view that The being of market. and That level Against companies highs interest current scenario would supporting very pipeline from continued tailwinds of portfolio balanced been has XXXX. created XXXX in been burdens the a for lending rates interest of beyond.

return income still environment While for investors. rate simultaneously, levels current the total is of producing attractive driven

the remained across continue to largely generate have industry and contained growth. borrowers and revenue defaults earnings Credit

in lending the of fundamentals providers. and All of this the continue we strong, points market to will credit private scales favor remaining direct believe moving

from Turning There during billion activity sales were $X.XX our no joint to quarter. of quarter. to to venture fourth We the originated investment compared this exits. investments our million $XXX new FSK of

We new on continue financings majority and were of portfolio add-on to our focused the our companies to benefit from portfolio incumbency long-term existing investments across relationships. as KKR

lien in consisted investments New other originations first approximately investments. of and loans, in X% asset-based XX% or equity finance XX% in

through lending investments our $XXX approximately XXX approximately weighted had basis Our leverage X.X new of of SOFR of churns million, direct coupon weighted average points. plus average security EBITDA and a a

X.Xx XXXX portfolio EBITDA $XXX of quarter X.Xx growth quarter XXXX. at to the continue invested have XX% average across weighted reported market our in rebounded million portfolio of XXXX. year-over-year companies last We upper rate end December have average was since a XX, of the we to compared EBITDA Interest focus approximately of companies of as levels during and April weighted to which on the as companies our fourth X.Xx the in coverage of middle

on end our X.X% of basis fair cost basis our portfolio a value of our quarter, on fourth the compare September our This to represented value the of X.X% X.X% portfolio on of and XXXX. and on of a basis XX, X.X% of cost basis. fair As portfolio can as nonaccruals of us a portfolio a

We basis which the assets Non-accruals originated has to Credit on KKR quarter. information based XX% a FSK a and FS fair of market originated of X.X% the on KKR been the X% of the basis to provide by the our basis Advisor the on value fair on with and points value the also basis helpful were it's as portfolio, total KKR by believe Credit. the relating and third basis cost of XX basis XX points quarter. compares end This as cost end a fourth a on of to

added quarter, the removed. During and to on investment X nonaccrual fourth was investments status were

nonaccrual, Solutions Group value. Alacrity in added and to $XX costs position was of fair secured $XX million senior million of contributing lien first Our

position Also company's $XX preferred in nonaccrual, In million process. off our investment quarter, addition, in to Chapter certain Cuba value. during Medical XX added with our million of Corp the of were was parts of Group in debt conjunction contributing cost written and the Miami $XX equity fair

debt our investment receive We expect certain remaining down the post exposure to to in as additional the is proceeds sale company. of the winding relation

$XX the the the million during The provider, the par. In fourth our contributed portfolio quarter. other terms used updates, restructured additional being product repay which of term loan earnings we into to was discussed $XX last of pet capital million call of on sponsor business, worldwide, approximately with

and now FSK first funds, DDTL business. a seats. board X in As XX% million $XX restructuring, has debt and FSK the equity lien equity committed result secured received senior Across million of new ownership to of received a other a take-back $X.X KKR the and

we the MAVERICK the since Resources, are has Natural note announced portfolio energy. diversified that XXXX in Lastly, legacy a which pleased to to has been position, sale

FSK's be As $XX result, million monetized. will a investment

the transaction the will We customary expect in conditions. the to quarters, coming closing subject close

that, I'll with turn Steve. over to And the call

Steven Lilly

Thanks, Dan.

XX, investment of of largest our the XXX billion, the value At compared portfolio our the As of XX% of the companies quarter, $XX.X approximately companies. represented to a of XX XX% quarter. fourth of end as of fair of XXXX, end had December value investment fair third the portfolio consisting portfolio portfolio our

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

of venture portfolio. In the represented of XX% our joint addition, value our fair approximately

our XX. portfolio, venture, and of the approximately of investments approximately first our when total total XX% of a December our lien consider result, As in senior investors total through secured to entire portfolio our looking joint loans portfolio and investments as XX%

September weighted XX.X% The attributable as primarily accruing XX% December investments of was XX. to base rates XX compared decrease average of is points incremental basis decrease in to spread and the as XXXX, yield debt a on compression. of The decline XX,

as calculation the an average to to with million, income yield a decreased $XX quarter-over-quarter is leverage our of the fee in investments certain in total weighted exclude year. also The this investment by of rates the of quarter investment million income accretion end. of new due From As decline first adjusted in quarter primarily associated and the merger quarter-over-quarter FSKR. delayed perspective, and of the base lower reminder, lower delay resulted closing until the to $XXX closings operational

$XX The was income Total million, of were follows: income our $X a a the quarter-over-quarter. totaled Dividend of investment total quarter-over-quarter. and million, $XXX during fee $XX of million decrease primary million income decrease components quarter as interest

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

$X Management fourth debt and Our a totaled million $XX $X December decrease totaled million $XXX cost quarter, $X a quarter-over-quarter. quarter-over-quarter the million, our during of of XX. of million, totaled million, of incentive $X million. X.X% decrease $XX million a totaled as $X decrease was fees weighted Other quarter-over-quarter, decrease of expenses interest a expense of average million and fees

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

reduced $XX.XX. The Our $X.XX value in per net sum was of during per total quarter. share results our these of XXXX, December value activities paid asset XX, per share the asset by net our distribution share quarterly

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

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

quarter. first other to expect and We $XX the dividend income approximate fee during million

an management to From expect fees million. expense standpoint, our $XX we approximate

as during distributions and to of million. base the of fees currently approximate distributions share And $X.XX $XXX to we per will remarks, per G&A incentive expect our Michael share per year million, total comprised we interest $X.XX $X approximate million $XX our We we share and expenses his expect to supplemental distributions. at expect during approximate of expect least indicated other $X.XX expense

Turning to structure. our capital

issued million plus XXXX, we to floating debt X.XX%. via quarter, fourth to of SOFR X.XXX% revolver. of interest the $XXX outstanding rate agreements were subsequently on swap During rate our Proceeds average repay due unsecured swapped used were notes at which an

We maturities, XXXX. we unsecured our and access continue expect will structure basis to an manage on the for during market proactively upcoming liability opportunistic we

comprised sheet gross Our levels debt unsecured $X.X billion and At September XX% balance compared and XXXX, XX% and XXX%, at XXXX. was of and of and committed net XXX% debt. liquidity equity December respectively, available balance approximately XX, our our XX, XXX% XX, of to was at were sheet drawn XXX% to and our December

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

Michael Forman

Thanks, Stephen.

highly As opportunities strategy of our ahead we the on and we us. move into remain focused XXXX,

Our and updating look forward strong portfolio ample our to transactions and you during XXXX our to the year. on advantage credit balance and We sheet you we us to thank our demonstrate goals for your continues of toward progress during support performance continued with liquidity beyond. take provides quality

line we for like that, With the operator, would open to questions.

Operator

[Operator Instructions] Capital of Markets. comes from Ken Our question Lee first RBC

Kenneth Lee

just the if there. if of on spillover big out color it the the I in some income you the could as wonder there. of guess you is wonder sounds if outlook, outlook terms dividend it just flesh well. in about adjusted what income provide one just further Just dividend your factor implies terms I a I outlook net investment could confidence as

Daniel Pietrzak

want Steve happy to I'm to start, and might to add it.

of there. different a think points couple I

our $X.XX I being the We I supplemental still the have years supplemental, the the still the base kind million note policy being $X.XX. from NAV, of current of the think the of dividend so this last XX%, roughly that at now up idea set couple and base $X.XX, is would of the attractive. with

That's of kind We earning rate that level it Board handful years, well. conversation the considering of the over was prudent -- did with additional several have it's of quarters last with shareholders environment. the the reward We as the well as think over our spread of earnings. been as to

guidance components, we I on remain are $X.XX providing think of the So supplemental expecting of focused but that for and base year. the sort

Steven Lilly

to saying, been, that the I Steven, what was they've we market successful about. it's it were just Ken, And Yes. building -- to add spillover in call on Dan the to balance we've talked

As of we sit represents quarters worth today, that total dividends. X.X

the X strategy In X.X which plus total to minus for terms time, we certainly of year, would basis, covered said a reduce and the dividends, we long-term long be like that quarters we'd or worth this on stock to quarters. a you of somewhere around

So long-term to in it of back brings level, that that range. us that sort target level

payments this and that of certainty to well more some think shareholders it's year. than nothing signal, good So as obviously, have for a

Kenneth Lee

one you. just if may. I Got Very And helpful follow-up, there.

in thoughts would a rates spread could mentioned as if some in there. unit think you prepared of like, you seeing spreads I how trends seeing per you the you're wonder of base quarter around kind there? the risk, getting decline compression remarks, What well for in leverage? characterize example, get just I are your the I

Daniel Pietrzak

of a mean spread across credit I seen almost compression. all amount Ken, I markets, Yes. decent think, we've

third new into at of I saw flow year of the of think going spread kind quarter. probably more the half of ways, compression first in sort last a deal least the lot for of in that we

new albeit maybe kind I testing deals, some still of on maybe the levels. So certain seen stability we've think new

is pretty syndicated argue though. seen kind before as X.XX% X% I or you lending deal you've down could But way tightened direct these income the of market fee the days regular think well. meaningfully

said, also repricing a side risk would amount of to on also, market love bit repricings well. think reward. I of positions certain that That put names we are think highly are it a in if those exit borrower-friendly of context think seen a though, I more we certain spreads. in potentially use if other days didn't correlated repricings we've when you book. I And that, these the to think the necessarily the the I generally comes it's that to can But performing

the mind. on total deals other size the of that, seeing still of side company, roughly still in that of is think XX% think, these the considering, I the our attractive strength return company, we're of the I pretty the it's

Operator

Trading. Compass Research comes of question Alexander and next Our Point from Casey

Casey Alexander

Since and there the rolled QX closed new to to might got terms of over deals purposes, any give granularity or modeling much because any already originations QX? help how it have quantify in way from for is

Daniel Pietrzak

think talking odd deals, flow, a a handful fee about the $X.XX-odd right a think to generated sort have income. set $X.XX of of couple timing kind And that We're you trying number. would -- to deals just I of difference. the probably of those it's

Casey Alexander

Okay. M&A filling. your but And talked you same that pipeline said may how at you then time, the be is about delayed,

are policies, equity So if back you sponsors pipeline of just fill the completely from is they what some M&A the are starting are to getting that government rid where bulk pipeline you -- insulated where books that you forward seeing pickup need are get the delayed? are being of companies that of these bring do to fill private

Daniel Pietrzak

probably it's sure LPs we that, right? that lining I'll across it all to has the many think get far prepared should You've No, waiting a crisper market. to of have been the private was think remarks. of got the of rest that everything kind market equity wanting Yes. and back. I of it's up meaningful were way capital impact -- fair and what not little not I maybe been I'm gets call that But levels, ways, sort sure bit we volumes the M&A question, in maybe a in we but for I'm in 'XX the off for,

dry been years. of couple powder. You've got slow a bunch a of It's

the that others up to new I trend on capital administration the further markets board. of coming think sort and on build as it were probably relates

points, of company the So I slowing our think bit doing of work It's some it's in are people were larger wave than the whether more a to simpler mind, little that down quarters in that 'XX in of think or portfolio in our with I maybe at mind, tariffs I the sort level. a of think busier points expecting we're but I said, as busier and we're think forward. maybe we different we're get expecting. go otherwise, kind That way, and 'XX, now

Casey Alexander

one one on characterize MAVERICK. And Okay. or the at you that above below? Would last mark kind sale of

Daniel Pietrzak

characterize QX Fair would question. a the is of mark. I as that's the It mark. above fair mean below would in have I the Actually, I sort mark. think it -- mark quite

Unknown Executive

mark, Above yes. the

Daniel Pietrzak

sale The kind was of above price mark. the

ways certain think as through there the closing monetize that as I got to are will a on which we go-forward conditions basis. go

there straight would value you line but we our mark with have incorporate for of just all value in seen. how I sale the market the the kind think think in we I bring not of of kind something above it would certain that. price, that's valuations, to to points But in was like would

Operator

of from next Our James. comes Robert question Raymond Dodd

Robert Dodd

of larger right? -- that. players I M&A tied finance, of kind to you but the focused are On build, sponsor are on of just the a the market mean the lot

been while, A for and you've the up. the your how for of side growth of book? outlook So kind pipeline. side, wave. obviously, sponsor it lot that in of has but outlook from talk building back on next about mean a market what's that separately been characterize asset-backed The I you 'XX the finance as would

Daniel Pietrzak

focused of we're there. roughly you're business think AUM. here active north We've I been a people part got mean We've at It's total doing been of that. of right, We've I Robert. on FSK. kind a XX got what billion there. $XX got always Yes. big of We've

equity banks. I for light. market We've amount which for thematic, We've of come certain seen out kind market-driven activity different I asset with Right? of that's -- almost is sheet balance different a We've reasons. think amount portfolios think where fair the that seen going equity is had a of kind banks. companies a different on seen rewarding being things of

If business. you in think about our asset others, storage asset-backed essentially the businesses we're or

that X So of in to that do we those do partnerships market, people feels do institutional side, exploit. those proprietary is bunch bunch market of market a that with we've that big on of there's at think can got ago like more a we are years probably continue unique try business there. good a ways, least angles did in to interest. names I going get the I corporates wouldn't the or of to think market we're size corporates lot meaningful. probably But direct with. lending historically to A starting of origination The it's terms get or XX to

Robert Dodd

said just Got any I mean, [indiscernible]. mean average the portfolio. across the not the not it. where weak, portfolio right? areas market up? But are ramping you I that's are concerns I XX%. And of are or growth weakness? there either seeing the whole mean, then areas Obviously, broadly, EBITDA clearly of on weighted you I That's think is portfolio across

Daniel Pietrzak

question. right the It's

or in though ratios, we've sort specific they're interest I on environment been think of have I mentioned couple customer idiosyncratic would the side a the more an issues seen loss those of last have more handful that otherwise portfolio the have or issuers, been say was where we of have either would coverage broadly, rebounding that lower whether years. the of maybe been probably probably it to probably for names even kind here across we

that there it the does expose companies think becomes is that or road up bubbles an sort issue bump of when a faster. I in

goes on. time been again, probably more there's kind that little But more bit probably of as So idiosyncratic. a it's of

that's out scenarios of right mind. inflation of on the continued touched to different, tariffs. there touched kind wage employees on that think, or the Government days. either of are think there things do top of get top these efficiency Department amount are the of We mind I there ability concerns I or We are around

the the scenarios it, to economy, we're pretty pretty using events constructive there levers out the on this. economy. unit, we're be U.S. to whole downside either we're think do We're there's on of focused I big or some I have So and our the monitoring pretty some but portfolio on team using constructive think that

Operator

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

Finian O'Shea

the $XX Is the think one-off the for think rebound recurring the a that strong practice, the you that's or more should quarter improvement. said as we think dividend question fees. million, for similar of then on of questions I CCOP sort a nonrecurring, Can an of moves we And it of around that's Couple a bit. level? one, but understanding in little a --

should we the [indiscernible] So think million that, well. as of $XX there

Daniel Pietrzak

move in the what bit. great maybe think will you're mean, first, be I we've fair. fees I you could a as last right. have range dividend, earned I think there. venture of But different would kind of within got Obviously, about there's there -- other couple events it probably there think or On is kind joint Obviously, seen joint inside we of repayments venture partner with how of distributions there. that quarters we the manage a

note, room we joint some think grow got I venture. would the I to

XXX. about right? venture. But joint of the I But from that's on now, leverage the comfortable we'd almost way like where I in mind line I we're kind side top from lower obviously, of the that's a think I at our a think us. versus leverage we're right target target least perspective where perspective, it's of at be think at with -- the more for of we're kind XXX right, pretty

fee think I of dividend and kind income. you're broader

You released. I linear terms space, of know necessarily think are not the asset-backed flow bounce that when in around all cash will right? those is well, deals

what I so around just bit. consistent call muted. fairly bit income assets call probably holding think of lower, for because time will that even I'll a a income kind bit venture joint I pro is amount make of we But one to to monthly But your and call way think little pro originations we're rolling the bit continue maybe I of point. a have probably think a more bounce on is regular is sort off. sort more probably or fee that been of little to call, see And the a

Finian O'Shea

Okay.

way, So ABF well in taxable that the sort generate might might of imagine question Q&A and level, it at generate if that that over And some in what's is the there tying that the this discussion and a when Or extends low same target we assumed there's NOI to quarters? X on some. significant pay good that does mid-XXs from amount, revisit sort NOI of like, down to does like into remarks back nonaccruals year, a 'XX ongoing covered say you this pretty that the, a you dividend get income the if looking out chance into this a of here. I now? from year any, policy

Daniel Pietrzak

Yes.

is then me Steven going to Let it. take start and

to happens I difficult will make very that probably relates 'XX, the what But rest. clarity 'XX. add or think upon Steven, to seeing deal dependent as think about it But forecast we're I to it's the cetera. in et right? provide I and we markets, to kind out be what of think statement think the wanted activity,

Steven Lilly

of range this right. year last we're in XXXX, think to X the into we'd quarter's range around quarters' paid things then quarters, X there. plus all remember, kind was helped as our Finian, spillover I the That bit dividends. $X.X our kind closer as a end the X.X At that's of entered and you now. equal, worth of No, to And the little X.X our came of the mentioned top we in being of special first us quarters. questions, of which total million we earlier close of on on, quarters when down dividend a quarter's be is year, end X or again, one of worth minus of worth basis dividends,

shareholders will a we'll periscope good move of spillover a year. year this and does, see always it year-over-year are. on basis. again, says, think to just up of strategy, very this there little returning again, many because things it's, we some where sort bit so So Dan to, capital then as But next of and a And takes puts

Finian O'Shea

like might to to X high are try peers. sort say, But that a time we're year, you fan there let too we to some I did is -- sort end it to lesson it as like back stick you find Is forward? stick learned, where that to forward, don't this beyond get -- just up close it quarters to hot of Or you it of going let there always it run know, going this of going the maybe did for to be your going advantageous this any and feel is up. and like like like times

Steven Lilly

Well, as increase were environment, mentioned We is rates. the the I think in with higher his more Dan prepared rate-driven. remarks, in really

there higher our indicate many on a so earnings were And and would you peers. of from basis -- per as share materially we also

our or We're And think And our accounted healthy that in say different target. in the good a so minus for over different I we of spillover X plus sort I increase readily would comfortable that's levels quarters so that. have very companies think target balance.

just for total really that a save several last again, speak, would back payout that come incrementally, nice an level rates that at the to We to some we point quarters. just an because expectation to artificially want of quarters high rate down. grew balance the couple We We didn't at had wanted because to weren't above in upset take environment. that it a was, so

would So very comfortable as and we it's with. be worked frankly moved

Operator

from Truist Maxwell Securities. question Our Fritscher next of comes

Maxwell Fritscher

I'm calling in Mark for Hughes.

the of economic on day cetera. You've tariffs, et around topics orders, executive the hit

I more broadly. think

dynamics? of portfolio as think positioned to but how And your relative these sorry you this, some if you I do at missed today, you're look

Daniel Pietrzak

question. good I ways. back take some Well, step would in a

even actual election. months the I we -- think of going before now, back for kind multiple

issue. It's different gone risk As not the government actually what the a be this think firm, where kind of we're but whole have think large could team, themselves the companies both position to things We're might focused percentage of of on using the relate out to deal anything as monitoring our tariff we or where we through about a scenarios impacts of be. an of to portfolio kind portfolio. position the contracts teams have with the the by going that of might portfolio firm or resources kind through could

the that's news. think I good

the eye certain name. thing keeping though we're a our be think it is could I individual on to that material

is like the I right, also, sense thing in end. really whole out note, of But the it pretty how play this will dynamic, would at

some for other think catalyst conversations conversations tariffs I of a the of has with countries. been probably these certain almost around

effectively of list So that because focused it's and We've got I live. names continue it we're suspect will of it, to evolve. a on

Maxwell Fritscher

over picks this on of M&A helpful that's of trend versus then your thoughts wanted I course your half up of to views this you borrowers as or to year, borrowers incumbent just the the Yes, how get And color. new mix expect year.

Daniel Pietrzak

Yes.

this the you're we of when are think level -- talked up. the prepared the going I right about and at that sense M&A length in we in Q&A, confident remarks about

think almost by would the that I that reduce for number. definition, incumbencies

portfolios. their advantage the an the size with think of larger platforms do I have

but business. right? are think our advantage today, prior, loans credit very it's the that you we not even got of I from on that history that the of to even you've leverage have that company. may well is loans lent it's loans the books sort know But might just

I down incumbency on company should a by that an easier diligence most trends side. to on ]. before. in the its not I [ It's of think market side probably is simplistic you've to you format. mind It's a just think almost for activity also lent to that in expect that increased helpful But definition just bit number on M&A my origination income the lend helpful point side,

Operator

question from of comes Wedel next Melissa JPMorgan. Our

Melissa Wedel

it few first item point the over take quarters XQ. that year, the average I one teens. beyond And was deals into XQ quarter. was deals it your few income that that high it follow XQ, the like income first slipping a looking even fee Is sort for it that. fee line into slipped than like half first lower? there wanting up for the in income a on is of The looks X in -- something sounds the drive But at would to less fee the

Daniel Pietrzak

on. kind they any number I to with was But would amount of line add. deals dependent right? But it, the Melissa, the continue asset-backed not business probably when Yes, I pay volatility certain I to do respect activity I to of this. think that. It's linear distributions low on can mean Steven, of to of in think expect think have add kind of will all I Steven average. a can kind necessarily type obviously and the artificially new historical might you want that are

Steven Lilly

adding to just Yes. bit. a No, that Melissa

that those have delayed something $X think earlier deals probably those fourth we of in I to million more would had lines. along a million Dan in quarter, question $XX had a would mentioned million couple deals the with $XX the were range. in imagine the closed, that as I been the

you and If just basis. $XX $XX average. long-term our below average, on sort that, it's million that's Obviously, goes a the at million, above of look quarterly between it

think comments unique were the coupled with mix it, the more in fourth to of of activity I deals Dan's And so quarter delayed. couple that about was a

Melissa Wedel

of of sort the through point. the first slipping this related of to way XQ. then mean, And the at deals Okay. into X/X we're quarter I

shaping In is elevated Can up? first terms anything how was quarter Certainly, and with is share of activity it you exits, us. share XQ. repayment you there in can

Daniel Pietrzak

Yes.

correct I sort think repayments, in in a right? we're of the I act ways amount everyone some expect probably concert. market have expect to certain you're -- additional markets these You syndicated think always we the should of open, on

markets there points market of can think time step some will the we're that. the be syndicated seeing I not open, I think in might but private when in obviously, be as when

or an we're of seeing that sort refinancing instances where place are get being certain deals on. just as in are of repaid being taking kind repriced a move of of to I opportunity and sort think put we new

should expect better you QX. of to in probably think I though of be versus the new deals balance kind repayments

Melissa Wedel

in And last one I'll one. throw

being tight a portfolio the feel point your bit? the environment, how the little market the syndicated you about urgent to do relevering given market about broadly open, Just being broad

Daniel Pietrzak

Yes.

describe that when it's think moments I matters. this certain probably just as it's lending market to [indiscernible] is deals. where is discipline be because probably environment there'll would not when lender racing do the imply kind moments, do friendly, the borrower-friendly. always do kind right of direct there's an think I certain I of word

deal a is though underwriting but a a high a with I view default, recovery if think always that theme of not having downside default protection, about a rate. having the you're there is

it remains But borrower-friendly So still as today. of is the I sort said, I more attractive. total return think

positive the I unequivocally, that's lower think I at of our a think range, are end thing. We

speaks of structure have, to the liability think is vehicles, very it we strength the know, you these in I which important.

XXX kind of you should for in expect that talked think about X to to quarters always that we've what of of the going quarter trend coming that the I to is range of kind the we're back over upper up X target with midpoint leverage.

Operator

questions to now further at no this remarks. I for back would showing time. it like to I'm Dan Pietrzak turn closing

Daniel Pietrzak

today you, thank everyone, the Well, joining on for call. us

As always, appreciate your time. we

not, speak quarter. questions do didn't you if to to things you please hesitate call, the or next address If have any further we Thank And again don't you. we'll on out. that reach

Operator

in today's conference. Thank This the you for participation program. does conclude your

disconnect. now You may

FS KKR Capital (FSK) 27 Feb 252024 Q4 Earnings call transcript