FS KKR Capital II : Franchise Fourth Quarter 2020 Earnings Presentation

FS KKR BDC Franchise

Financial Information

QUARTER AND YEAR ENDED DECEMBER 31, 2020

Including: FS KKR Capital Corp. (FSK) and FS KKR Capital Corp. II (FSKR)

FSK Fourth Quarter and Year End Results

FSK - Summary of Quarterly Results

Fourth Quarter Performance

Dividend

• • Net investment income (NII) for the quarter ended December 31, 2020 was $78 million, or $0.63 per share, as compared to $78 million, or $0.63 per share, for the quarter ended September 30, 2020.

• • Adjusted NII(1) for the quarter ended December 31, 2020 was $89 million, or $0.72 per share, as compared to $78 million, or $0.63 per share, for the quarter ended September 30, 2020.

• • Net asset value (NAV) per share as of December 31, 2020 was $25.02, compared to $24.46 as of September 30, 2020.

• • Net realized and unrealized gains on investments of $65 million, or $0.53 per share, for the quarter ended December 31, 2020, as compared to net realized and unrealized gains on investments of $132 million, or $1.06 per share, for the quarter ended September 30, 2020.

• • New investment fundings in the fourth quarter were approximately $613 million. Net investment activity in the fourth quarter was $115 million, net of $97 million of sales to Strategic Credit Opportunities Partners, LLC (SCJV).

• • Paid a dividend of $0.60 per share for the fourth quarter of 2020.

• • Declared a dividend of $0.60 per share for the first quarter of 2021.

• • For the quarter ended December 31, 2020, the NII / Dividend coverage ratio was 105%.

• • For the quarter ended December 31, 2020, the Adjusted NII(1) / Dividend coverage ratio was 120%.

Portfolio	•	Diversified portfolio with 164 portfolio companies spread across 23 industries.
Diversification
•	Exposure to the top ten largest portfolio companies by fair value was 22% as of December 31, 2020.
•	Announced on May 6, 2020, that certain affiliates of the owners of FSK's investment adviser have committed $100 million to
Stock Support
a $350 million investment vehicle established to invest from time to time in shares of FSK and FSKR. Through December
31, 2020, this vehicle had purchased approximately $61 million of FSK common stock.
•	November 2020 - Transaction announcement
Merger Update
•	March 2021 - Proxy solicitation begins
•	Q2 / Q3 2021 - Shareholder meetings & target closing

1.

Adjusted to remove the impact of $10M of excise tax, and $1M associated with the acceleration of deferred financing costs in conjunction with the closing of a debt facility during the quarter. See the Appendix for the reconciliation between NII and Adjusted NII.

FSK Financial Results

(Dollar amounts in millions, except per share data)

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

NII per share(1)

$0.79

$0.78

$0.62

$0.63 $0.63

Adjusted NII per share(1) (2)

$0.83

$0.78

$0.62

$0.63 $0.72

Net realized and unrealized gains (losses) per share(1)

($1.00)

($6.36)

($1.08)

$1.06 $0.53

Net increase (decrease) in net assets resulting from operations (earnings per share) (1)

($0.21)

($5.59)

($0.44)

$1.70 $1.16

Stockholder distributions per share(1)

$0.76

$0.76

$0.60

$0.60 $0.60

Net asset value per share at period end(1)

$30.54

$24.36

$23.37

$24.46 $25.02

Weighted average shares outstanding (in millions) (1)

127.2

125.9

123.8

123.8 123.8

Shares outstanding, end of period (in millions) (1)

126.6

124.3

123.8

123.8 123.8

Total investments at fair value

$7,357

$6,945

$6,624

$6,649 $6,780

Total assets

$8,216

$7,439

$6,956

$7,126 $7,453

Cash(3)

$106

$193

$95

$136 $191

Total debt(4)

$4,195

$4,258

$3,928

$3,980 $4,042

Debt-to-equity, Net(5)

0.89x

1.28x

1.29x

1.20x

1.19x

Adjusted NII / total recurring dividend

111%

103%

103%

105%

120%

• 1. The share and per share amounts reflect the FSK Reverse Stock Split on a retroactive basis. Effective as of June 15, 2020, FSK completed a 4-to-1 reverse stock split of its shares of common stock (the FSK Reverse Stock Split). As a result of the FSK Reverse Stock Split, every four shares of FSK's common stock issued and outstanding were automatically combined into one share of FSK's common stock.

• 2. See the Appendix for a reconciliation between NII and Adjusted NII.

• 3. Includes cash, restricted cash, and cash denominated in foreign currency.

• 4. Principal amount outstanding.

• 5. Net debt-to-equity ratio is debt outstanding, net of cash and foreign currency and net payable/receivable for investments purchased/sold and repaid, divided by net assets.