FS KKR Capital's (FSK) Q3 Earnings Beat On Higher Revenues
Zacks Investment Research | Nov 08, 2019 06:48AM ET
FS KKR Capital Corp.’s (NYSE:FSK) third-quarter 2019 adjusted net investment income (NII) of 22 cents per share surpassed the Zacks Consensus Estimate of 19 cents. However, the bottom line was 8.3% below the year-ago quarter figure.
Results reflect substantial increase in revenues and a strong balance sheet position. However, increase in expenses was an undermining factor.
NII (GAAP Basis) came in at $115 million, up from $56 million in the prior-year quarter.
Total Investment Income & Expenses Surge
Total investment income was $199 million, up significantly from $95 million in the year-ago quarter. The rise was mainly driven by higher interest income. Also, the figure beat the Zacks Consensus Estimate of $193.4 million.
Total operating expenses jumped substantially year over year to $84 million. Drastic surge in interest expense and management fees was the primary reason for the increase.
The fair value of FS KKR Capital’s total investment portfolio was $7.2 billion as of Sep 30, 2019.
As of Sep 30, 2019, FS KKR Capital’s net asset value was $7.86 per share compared with $8.64 as of Sep 30, 2018.
Strong Balance Sheet Position
The company had $7.8 billion in total assets and $4 billion in total stockholders’ equity as of Sep 30, 2019.
At the end of the third quarter, the debt/equity ratio was 0.78. Cash and foreign currency totaled $126 million as of Sep 30, 2019.
Share Repurchase Update
FSK KKR Capital has repurchased $136 million worth of shares through Nov 6, 2019 under the previously announced $200 million share buyback plan.
Our Take
Steady improvement in total investment income and strong origination volume are expected to support FS KKR Capital’s profitability. However, considerable increase in operating expenses is a major concern.
FS Investment Corporation Price, Consensus and EPS Surprise
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