FSK - Quick Take - Strategic Actions Announced with Poor 1Q26 Results

Research evidence excerpt

FSK - Quick Take - Strategic Actions Announced with Poor 1Q26 Results

Truist Securities

Equity Research Report May 11, 2026

FINANCIALS: BDCs FS KKR Capital Corp. (FSK)

FSK - Quick Take - Strategic Actions Announced with Poor 1Q26 Arren Cyganovich, CFA

212-319-2334 Results

Arren.Cyganovich@truist.com

Several "strategic value enhancement actions" were announced in conjunction with another

weak earnings report that included a spike in non-accruals to 8.1% at cost (4.2% at fair

Current Price (May 8, $10.84 value), a 10% q/q decline in NAV per share, and dividend reduction. The actions (detailed 2026)

below) show KKR's belief in intrinsic value of KKR's portfolio by offering preferred converts

Stock Rating HOLD and a tender offer for FSK shares. It also is waiving its share of the income incentive fee

Unchanged (50% of that fee) to help support net investment income. All in, we are glad to see support

by the external investment manager and believe it should help limit some of the near-term

Price Target $11.00 pain of poor credit performance (shares are down 3% pre-market). We look to hear more of

Unchanged the details on the earnings call today at 9:00AM ET.

1Q26 Details - FSK reported 1Q26 adjusted NII per share of $0.41 compared to consensus

and our estimate of $0.44. The miss was due to lower interest income as new non-accruals

4 Page Document were added and the portfolio declined, mitigated by lower interest expense. NAV per share

declined by 10% q/q to $18.83 from $20.89 driven by both realized and unrealized losses.

Net leverage rose to 1.31x from 1.22x q/q due to the decline in NAV. FSK declared a dividend

Reasons for this report for 2Q of $0.42 vs. $0.48 in 1Q ($0.45 base and $0.03 supplemental).