FSIC Reports Fourth Quarter and Full Year 2015 Financial Results and Declares Regular Distribution for First Quarter

PHILADELPHIA, Feb. 29, 2016 /PRNewswire/ -- 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 and full year ended December 31, 2015, and announced that its board of directors has declared its first quarter 2016 regular distribution.

Financial Highlights for the Quarter Ended December 31, 2015¹

• Net investment income of $0.23 per share, compared to $0.28 per share for the quarter ended December 31, 2014.
• Adjusted net investment income of $0.24 per share, compared to $0.24 per share for the quarter ended December 31, 2014.²
• Total net realized loss on investments of $0.08 per share and total net change in unrealized depreciation on investments of $0.47 per share, compared to a total net realized gain on investments of $0.02 per share and a total net change in unrealized depreciation on investments of $0.34 per share for the quarter ended December 31, 2014.
• Paid cash distributions to stockholders totaling $0.22275 per share.³
• Committed $604 million to direct originations versus $319 million of sales and repayments, resulting in net direct origination investment activity of $285 million.
• Net asset value of $9.10 per share, compared to $9.64 per share as of September 30, 2015.

Financial Highlights for the Year Ended December 31, 2015¹

• Net investment income of $1.10 per share, compared to $0.97 per share for the year ended December 31, 2014.
• Adjusted net investment income of $1.03 per share, compared to $0.99 per share for the year ended December 31, 2014.²
• Total net realized loss on investments of $0.26 per share and total net change in unrealized depreciation on investments of $0.68 per share, compared to a total net realized gain on investments of $0.12 per share and a total net change in unrealized depreciation on investments of $0.31 per share for the year ended December 31, 2014.
• Paid cash distributions to stockholders totaling $0.89 per share.³
• Total purchases of $1.6 billion, 80% of which were in senior secured debt (first and second lien senior secured loans and senior secured bonds).

Michael C. Forman, Chairman and Chief Executive Officer of FSIC, commented, "Continued financial market volatility in the fourth quarter contributed to meaningfully weaker secondary prices and wider clearing yields across the corporate credit markets. While secondary market volatility may place downward pressure on asset values, we believe credit quality remains strong and are pleased with the overall health of the portfolio. We are taking advantage of the recent credit market selloff to improve FSIC's overall credit profile and maintain or improve the overall yield of the investment portfolio, while still moving up the capital structure."

Declaration of Regular Distribution for First Quarter 2016

FSIC's board of directors has declared a regular cash distribution for the first quarter of $0.22275 per share, which will be paid on or about April 4, 2016, to stockholders of record as of the close of business on March 23, 2016.

Summary Consolidated Results

Portfolio Highlights

• As of December 31, 2015, total fair value of investments was $4.0 billion.
• Core investment strategies⁴ represented 97% of the portfolio by fair value as of December 31, 2015, including 85% from direct originations and 12% from opportunistic investments. Broadly syndicated/other investments represented the remaining 3% of the portfolio by fair value as of December 31, 2015.
• Gross portfolio yield prior to leverage (based on amortized cost and excluding non-income producing assets)⁵ as of December 31, 2015, was 10.4%, unchanged compared to September 30, 2015.
• Total commitments to direct originations (including unfunded commitments) made during the fourth quarter of 2015 was $604 million in 16 portfolio companies, including 10 in existing portfolio companies.
• As of December 31, 2015, there were no investments on non-accrual in FSIC's investment portfolio.⁶

Total Portfolio Activity

Direct Origination Activity

Leverage and Liquidity

As of December 31, 2015, FSIC's debt to equity ratio was 83%, based on $1.83 billion in total debt outstanding and stockholders' equity of $2.21 billion. FSIC's weighted average effective interest rate (including the effect of non-usage fees) was 3.96% as of December 31, 2015.

As of December 31, 2015, FSIC had cash (including foreign currency, at fair value) of approximately $82.0 million and availability under its financing arrangements of $390.4 million, subject to borrowing base and other limitations.

As of December 31, 2015, FSIC had 19 debt investments with aggregate unfunded commitments of $129.7 million and two equity investments with unfunded commitments of $590,000.

Conference Call Information

FSIC will host a conference call at 10:00 a.m. (Eastern Time) on Tuesday, March 1, 2016, to discuss its fourth quarter and full year 2015 results. All interested parties are welcome to participate. You can access the conference call by dialing (877) 443-2408 and using the conference ID 38412123 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 Franklin Square Capital Partners ("Franklin Square"), and is sub-advised by GSO / Blackstone Debt Funds Management LLC, an affiliate of GSO Capital Partners ("GSO"). GSO, with approximately $79.0 billion in assets under management as of December 31, 2015, 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 Franklin Square

Franklin Square is a leading manager of alternative investment funds designed to enhance investors' portfolios by providing access to asset classes, strategies and asset managers that typically have been available to only the largest institutional investors. The firm's funds offer "endowment-style" investment strategies that help construct diversified portfolios and manage risk. Franklin Square strives not only to maximize investment returns but also to set the industry standard for best practices by focusing on transparency, investor protection and education for investment professionals and their clients.

Founded in Philadelphia in 2007, Franklin Square quickly established itself as a leader in the world of alternative investments by introducing innovative credit-based income funds, including the industry's first non-traded BDC. The firm managed approximately $17.0 billion in assets as of September 30, 2015, and is the largest manager of BDC assets with approximately $15.7 billion in BDC assets as of September 30, 2015. For more information, please visit www.franklinsquare.com.

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.

Individual investors and endowments may have different investment horizons, liquidity needs and risk tolerances. In addition, fees that may be incurred by an investor in a fund sponsored by Franklin Square may be different than fees incurred by an endowment investing in similar assets as those in which the funds invest.

Other Information

The information in this press release is summary information only and should be read in conjunction with FSIC's annual report on Form 10-K for the year ended December 31, 2015, which FSIC filed with the U.S. Securities and Exchange Commission (the "SEC") on February 29, 2016, as well as FSIC's other reports filed with the SEC. A copy of FSIC's annual report on Form 10-K for the year ended December 31, 2015, 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.

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:
Jim Ballan
Senior Vice President,
Investor Relations and Capital Markets
[email protected] 
267-439-4375

Media:
Franklin Square Media Team
[email protected] 
215-495-1174

Income Statement

Balance Sheet

Non-GAAP Financial Measures

This press release contains certain financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). FSIC uses these non-GAAP financial measures internally in analyzing financial results and believes that the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing results and trends and in comparing FSIC's financial results with other BDCs.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with FSIC's consolidated financial statements prepared in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures has been provided in this press release, and investors are encouraged to review the reconciliation.

Reconciliation of Non-GAAP Financial Measures¹

SOURCE FS Investment Corporation

Related Links

http://www.fsinvestmentcorp.com