FSIC Reports Third Quarter 2017 Financial Results and Declares Regular Distribution for Fourth Quarter

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PHILADELPHIA, Nov. 9, 2017 — FS Investment Corporation (NYSE: FSIC), a publicly traded business development company focused on providing customized credit solutions to private middle market U.S. companies, announced its operating results for the quarter ended September 30, 2017, and that its board of directors has declared its fourth quarter 2017 regular distribution.

Financial Highlights for the Quarter Ended September 30, 20171

  • Net investment income of $0.21 per share, compared to $0.20 per share for the quarter ended September 30, 2016
  • Adjusted net investment income of $0.21 per share, compared to $0.20 per share for the quarter ended September 30, 20162
  • Total net realized loss of $0.07 per share and total net change in unrealized appreciation of $0.21 per share, compared to a total net realized gain of $0.01 per share and a total net change in unrealized appreciation of $0.26 per share for the quarter ended September 30, 2016
  • Paid cash distributions to stockholders totaling $0.22275 per share3
  • Total purchases of $183.4 million versus $225.5 million of sales and repayments
  • Net asset value of $9.43 per share, compared to $9.30 per share as of June 30, 2017

“As we've seen in prior quarters, the credit markets continue to be very competitive,” said Michael C. Forman, Chairman and Chief Executive Officer of FSIC. “With first lien senior secured loans representing 98% of purchases in the quarter, we remain disciplined in our approach with an emphasis on investing at the top of the capital structure.”

Declaration of Regular Distribution for Fourth Quarter 2017

FSIC's board of directors has declared a regular cash distribution for the fourth quarter of $0.19 per share, which will be paid on or about January 3, 2018 to stockholders of record as of the close of business on December 20, 2017.

Summary Consolidated Results

Three Months Ended

(dollars in thousands, except per share data)
(all per share amounts are basic and diluted)1

September 30, 2017

June 30, 2017

September 30, 2016

Total investment income

$103,691

$98,695

$100,557

Net investment income

50,648

46,460

49,003

Net increase (decrease) in net assets resulting from operations

85,398

18,442

114,369

Net investment income per share

$0.21

$0.19

$0.20

Adjusted net investment income per share2

$0.21

$0.19

$0.20

Total net realized and unrealized gain (loss) per share

$0.14

$(0.11)

$0.27

Net increase (decrease) in net assets resulting from operations (Earnings per Share)

$0.35

$0.08

$0.47

Stockholder distributions per share3

$0.22275

$0.22275

$0.22275

Net asset value per share at period end

$9.43

$9.30

$9.42

Weighted average shares outstanding

245,678,745

245,107,405

243,488,590

Shares outstanding, end of period

245,725,416

245,153,010

243,488,590

As of

As of

(dollar amounts in thousands)

September 30, 2017

December 31, 2016

Total fair value of investments

$3,911,399

$3,726,816

Total assets

4,135,463

4,110,071

Total stockholders' equity

2,316,693

2,297,377

Portfolio Highlights as of September 30, 2017

  • Total fair value of investments was $3.9 billion.
  • Core investment strategies4 represented 99% of the portfolio by fair value as of September 30, 2017, including 90% from direct originations and 9% from opportunistic investments. Broadly syndicated/other investments represented the remaining 1% of the portfolio by fair value.
  • Gross portfolio yield prior to leverage (based on amortized cost and excluding non-income producing assets)5 was 10.3%, compared to 10.4% as of June 30, 2017.
  • Total commitments to direct originations (including unfunded commitments) made during the third quarter of 2017 was $199.2 million in 4 companies, 2 of which were existing portfolio companies.
  • Approximately 0.3% of investments were on non-accrual based on fair value.6

Total Portfolio Activity

Three Months Ended

(dollar amounts in thousands)

September 30, 2017

June 30, 2017

September 30, 2016

Purchases

$183,384

$298,682

$217,337

Sales and redemptions

(255,483)

(310,569)

(290,764)

Net portfolio activity

$(42,099)

$(11,887)

$(73,427)

Portfolio Data

 As of September 30, 2017

 As of December, 2016

Total fair value of investments

$3,911,399

$3,726,816

Number of Portfolio Companies

104

102

Average Annual EBITDA of Portfolio Companies

$91,700

$100,000

Weighted Average Purchase Price of Debt Investments

(as a % of par)

97.5%

98.6%

% of Investments on Non-Accrual 

(based on fair value)6

0.3%

0.2%

Asset Class (based on fair value)

Senior Secured Loans — First Lien

61%

52%

Senior Secured Loans — Second Lien

5%

16%

Senior Secured Bonds

5%

4%

Subordinated Debt

14%

12%

Collateralized Securities

1%

2%

Equity/Other

14%

14%

Portfolio Composition by Strategy (based on fair value)4

Direct Originations

90%

88%

Opportunistic

9%

9%

Broadly Syndicated/Other

1%

3%

Interest Rate Type (based on fair value)

% Variable Rate

65.3%

67.0%

% Fixed Rate

21.0%

19.4%

% Income Producing Equity/Other Investments

2.7%

2.7%

% Non-Income Producing Equity/Other Investments

11.0%

10.9%

Yields (based on amortized cost)5

Gross Portfolio Yield Prior to Leverage

9.4%

9.1%

Gross Portfolio Yield Prior to Leverage — Excluding Non-Income Producing Assets

10.3%

10.1%

Direct Origination Activity

Three Months Ended

(dollar amounts in thousands)

September 30, 2017

June 30, 2017

September 30, 2016

 

Total Commitments

(including unfunded commitments)

$199,157

$197,084

$144,226

Exited Investments (including partial paydowns)

(169,035)

(218,280)

(198,010)

Net Direct Originations

$30,122

$(21,196)

$(53,784)

 

 

Direct Originations Portfolio Data

As of September 30, 2017

As of December 31, 2016

Total Fair Value of Direct Originations

$3,507,097

$3,264,395

Number of Portfolio Companies

74

67

Average Annual EBITDA of Portfolio Companies

$70,700

$64,600

Average Leverage Through Tranche of Portfolio Companies —

Excluding Equity/Other and Collateralized Securities

4.8x

4.8x

% of Investments on Non-Accrual (based on fair value)6

0.1%

Three Months Ended

New Direct Originations by Asset Class (including unfunded commitments)

September 30, 2017

June 30, 2017

September 30, 2016

Senior Secured Loans — First Lien

85%

97%

94%

Senior Secured Loans — Second Lien

2%

5%

Senior Secured Bonds

1%

Subordinated Debt

13%

Collateralized Securities

Equity/Other

2%

1%

 

Average New Direct Origination Commitment Amount

$49,789

$15,160

$20,604

Weighted Average Maturity for New Direct Originations

5/5/2023

12/17/2022

12/11/2021

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of New Direct Originations Funded during Period5

9.6%

9.6%

9.3%

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of New Direct Originations Funded during Period —

Excluding Non-Income Producing Assets5

9.6%

9.7%

9.3%

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Exited during Period5

12.0%

9.9%

8.6%

Leverage and Liquidity as of September 30, 2017

  • Debt to equity ratio of 74%, based on $1.72 billion in total debt outstanding and stockholders' equity of $2.32 billion. FSIC's weighted average effective interest rate (including the effect of non-usage fees) was 4.21%
  • Cash and foreign currency of approximately $179.0 million and availability under its financing arrangements of $261.4 million, subject to borrowing base and other limitations
  • Twenty unfunded debt investments with aggregate unfunded commitments of $176.5 million and two unfunded equity commitments with aggregate unfunded commitments of $311 thousand

Conference Call Information
FSIC will host a conference call at 10:00 a.m. (Eastern Time) on Friday, November 10, 2017, to discuss its third quarter financial results. All interested parties are welcome to participate. You can access the conference call by dialing (877) 443-2408 and using the conference ID 9799008 approximately 10 minutes prior to the call. The conference call will also be webcast, which can be accessed from the Investor Relations section of FSIC's website at www.fsinvestmentcorp.com under Presentations and Reports.

A replay of the call will be available for a period of 30 days following the call by visiting the Investor Relations section of FSIC's website at www.fsinvestmentcorp.com under Presentations and Reports. 

Supplemental Information
An investor presentation of financial information will be made available prior to the call in the Investor Relations section of FSIC's website at www.fsinvestmentcorp.com under Presentations and Reports.

About FS Investment Corporation
FS Investment Corporation (NYSE: FSIC) is a publicly traded business development company (“BDC”) focused on providing customized credit solutions to private middle market U.S. companies. FSIC seeks to invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market companies to achieve the best risk-adjusted returns for its investors. In connection with its debt investments, FSIC may receive equity interests such as warrants or options.

FSIC is advised by FB Income Advisor, LLC, an affiliate of FS Investments, and is sub-advised by GSO / Blackstone Debt Funds Management LLC, an affiliate of GSO Capital Partners (“GSO”). GSO, with approximately $99.5 billion in assets under management as of September 30, 2017, is the credit platform of Blackstone, one of the world's leading managers of alternative investments. For more information, please visit www.fsinvestmentcorp.com.

About FS Investments
FS Investments is a leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth and focuses on setting industry standards for investor protection, education and transparency. 

FS Investments is headquartered in Philadelphia, PA with offices in Orlando, FL and Washington, DC. The firm had more than $20 billion in assets under management as of September 30, 2017.

Visit www.fsinvestments.com to learn more.

Forward-Looking Statements and Important Disclosure Notice
This announcement may contain certain forward-looking statements, including statements with regard to future events or the future performance or operations of FSIC. Words such as “believes,” “expects,” “projects,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in FSIC's operations or the economy generally due to terrorism or natural disasters, future changes in laws or regulations and conditions in FSIC's operating area, and the price at which shares of FSIC's common stock trade on the New York Stock Exchange. Some of these factors are enumerated in the filings FSIC makes with the SEC. FSIC undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The press release above contains summaries of certain financial and statistical information about FSIC. The information contained in this press release is summary information that is intended to be considered in the context of FSIC's SEC filings and other public announcements that FSIC may make, by press release or otherwise, from time to time. FSIC undertakes no duty or obligation to update or revise the information contained in this press release. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. Investors should not view the past performance of FSIC, or information about the market, as indicative of FSIC's future results.

Other Information
The information in this press release is summary information only and should be read in conjunction with FSIC's quarterly report on Form 10-Q for the quarterly period ended September 30, 2017, which FSIC filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 9, 2017, as well as FSIC's other reports filed with the SEC. A copy of FSIC's quarterly report on Form 10-Q for the quarterly period ended September 30, 2017 and FSIC's other reports filed with the SEC can be found on FSIC's website at www.fsinvestmentcorp.com and the SEC's website at www.sec.gov.

Certain Information About Distributions
The determination of the tax attributes of FSIC's distributions is made annually as of the end of its fiscal year based upon its taxable income and distributions paid, in each case, for the full year. Therefore, a determination as to the tax attributes of the distributions made on a quarterly basis may not be representative of the actual tax attributes for a full year. FSIC intends to update stockholders quarterly with an estimated percentage of its distributions that resulted from taxable ordinary income. The actual tax characteristics of distributions to stockholders will be reported to stockholders annually on Form 1099-DIV.

The timing and amount of any future distributions on FSIC's shares of common stock are subject to applicable legal restrictions and the sole discretion of its board of directors. There can be no assurance as to the amount or timing of any such future distributions, including the special distribution referenced herein.

FSIC may fund its cash distributions to stockholders from any sources of funds legally available to it, including proceeds from the sale of shares of FSIC's common stock, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets and dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies. FSIC has not established limits on the amount of funds it may use from available sources to make distributions. There can be no assurance that FSIC will be able to pay distributions at a specific rate or at all.

Contact Information:

Investors

Chris Condelles
[email protected]
267-439-4365

Dominic Mammarella
[email protected]
215-220-4280

Media

Marc Yaklofsky / Kate Beers
[email protected]
215-495-1174

Income Statement

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Investment income

From non-controlled/unaffiliated investments:

Interest income

$

82,349

$

86,569

$

230,115

$

264,717

Paid-in-kind interest income

8,430

6,811

22,899

20,434

Fee income

5,005

4,214

34,081

21,191

Dividend income

21

21

From non-controlled/affiliated investments:

Interest income

3,448

1,851

10,485

3,656

Paid-in-kind interest income

550

162

1,855

436

Fee income

1,232

1,263

633

Dividend income

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Maria Burns

Maria Burns

Maria is a Viral News Editor who graduated from the University Of California. She likes social media trends, being semi-healthy, Buffalo Wild Wings and vodka with lime. When she isn’t writing, Maria loves to travel. She last went to Thailand to play with elephants and is planning a trip to Bali.
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