FS KKR Capital Corp. Reports 2025 Financial Results, Declares Q1 2026 Distribution, and Provides Portfolio Highlights

FS KKR Capital Corp. (FSK) Reports Q4 and Full Year 2025 Results, Declares Q1 2026 Distribution

Key Financial Highlights and Shareholder Updates

FS KKR Capital Corp. (NYSE: FSK) has released its financial and operating results for the fourth quarter and full year ended December 31, 2025. The company’s board of directors also declared a first quarter 2026 distribution of \$0.48 per share, which includes a supplemental distribution and will be paid on or about April 2, 2026 to shareholders of record as of March 18, 2026.

Quarterly Highlights (Q4 2025)

Net investment income (NII) of \$0.48 per share, down from \$0.57 per share in Q3 2025.
Adjusted Net Investment Income of \$0.52 per share, also down from \$0.57 per share in the prior quarter.
Net asset value (NAV) per share declined to \$20.89, compared to \$21.99 at the end of Q3 2025 and \$23.64 at the end of 2024.
Total net realized and unrealized loss of \$0.89 per share, a significant shift from a gain of \$0.19 per share in Q3 2025.
Earnings per share (EPS) of (\$0.41), sharply lower than \$0.76 per share in the previous quarter.
Distributions paid to shareholders during the quarter totaled \$0.70 per share.
Net debt to equity ratio rose to 122%, up from 116% in Q3 2025.
Total purchases of \$1,098 million versus \$1,334 million of sales and repayments, including \$528 million of sales to the company’s JV, Credit Opportunities Partners JV, LLC.

Full Year 2025 Results

Net investment income of \$2.34 per share, down from \$2.90 per share in 2024.
Adjusted net investment income of \$2.34 per share compared to \$2.88 per share for 2024.
Total net realized and unrealized loss of \$2.30 per share, compared to a loss of \$0.81 per share in 2024.
Adjusted net realized and unrealized loss of \$2.24 per share, versus a loss of \$0.72 per share in 2024.
Cash distributions paid to shareholders totaled \$2.80 per share.

Management Commentary & Portfolio Developments

Michael C. Forman, Chief Executive Officer and Chairman, acknowledged that specific challenges in certain investments affected results in the second and fourth quarters of 2025. He stated that the investment team will focus on stabilizing these investments and pursuing new high-quality originations, especially in first lien senior secured structures, aiming to further diversify the investment portfolio.

Declared Q1 2026 Distribution

A total distribution of \$0.48 per share for Q1 2026, consisting of a base distribution of \$0.45 and a supplemental distribution of \$0.03.
Payable on or about April 2, 2026 to stockholders of record as of March 18, 2026.

Portfolio and Investment Metrics (as of December 31, 2025)

Total fair value of investments was \$13.0 billion, with 62.4% invested in senior secured securities.
Weighted average annual yield on accruing debt investments: 10.1% (excluding merger accounting impact: 10.0%).
Weighted average annual yield on all debt investments: 9.3% (excluding merger accounting: 9.2%).
Exposure to top ten largest portfolio companies by fair value: 19%, down from 20% at Q3 2025.
Investments on non-accrual status represented 3.4% of the total investment portfolio at fair value and 5.5% at amortized cost, both up from the prior quarter.
Net debt to equity ratio: 122%, based on \$7.6 billion in total debt, \$208 million in cash/cash equivalents, and \$305 million net receivable for investments sold/repaid.
62% of the company’s debt was unsecured, 38% secured.
Weighted average effective interest rate (including non-usage fees): 5.08%.
Total liquidity: \$208 million in cash and \$3.3 billion in available financing arrangements (subject to borrowing base and other limitations).

Detailed Financial Statements

Income Statement (Year ended December 31, 2025)

Total investment income: \$1,519 million (down from \$1,721 million in 2024).
Total operating expenses: \$843 million (down from \$885 million in 2024).
Net investment income: \$654 million (down from \$813 million in 2024).
Total net realized and unrealized loss: (\$624 million) (significantly higher than \$228 million loss in 2024).
Net increase in net assets from operations: \$11 million, or \$0.04 per share (down sharply from \$585 million, or \$2.09 per share, in 2024).

Balance Sheet (December 31, 2025)

Total assets: \$13,729 million (down from \$14,219 million in 2024).
Total liabilities: \$7,880 million (up from \$7,597 million in 2024).
Total stockholders’ equity: \$5,849 million (down from \$6,622 million in 2024).
Net asset value per share: \$20.89 (down from \$23.64 at year-end 2024).

Important Shareholder Information & Potential Price Sensitivities

Drop in net investment income, NAV, and EPS: These declines may raise concerns about portfolio performance and asset quality, likely impacting investor sentiment and share price.
Substantial increase in net realized and unrealized losses: The company reported a full-year net realized and unrealized loss of \$2.30 per share, compared to a loss of \$0.81 per share in 2024, highlighting pressure on portfolio valuations and possible credit challenges.
Rising non-accrual investments: Non-accruals rose to 3.4% of the portfolio at fair value, up from 2.9% in the prior quarter, pointing to an uptick in credit stress within the portfolio.
Increased leverage: Net debt to equity ratio rose to 122%, which may increase risk perceptions.
Dividend sustainability: While the Q1 2026 distribution remains robust, the sustainability of future distributions could be questioned given declining income and rising losses.
Management’s focus on portfolio stabilization: The CEO’s statement about challenges in certain investments and the focus on high-quality, first lien loans may be seen as a proactive shift to address asset quality concerns.

Conference Call and Additional Information

The company will host its Q4 and full year 2025 results conference call via webcast on Thursday, February 26, 2026 at 9:00 a.m. Eastern Time.
Details and replay will be available on the company’s investor relations website.

About FS KKR Capital Corp. and FS/KKR Advisor, LLC

FS KKR Capital Corp. is a leading publicly traded business development company focused on providing credit solutions to private middle market U.S. companies, primarily through senior secured debt. The company is advised by FS/KKR Advisor, LLC, a partnership between Future Standard (formerly FS Investments) and KKR Credit.

Future Standard is a major alternative asset manager with approximately \$86 billion in assets under management as of September 30, 2025.

Disclaimer

This article is for informational purposes only and does not constitute investment advice, an offer, or solicitation for the purchase or sale of any securities. Investors should review the company’s filings with the SEC and consult with their financial advisor before making any investment decisions. Past performance is not indicative of future results. The information is based on the company’s press release and is subject to change without notice.