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Subjects: EARNINGS, Dividend, Conference Call, Webcast

CION Investment Corporation Reports First Quarter 2024 Financial Results


CION Investment Corporation (NYSE: CION) ("CION" or the "Company") today reported financial results for the first quarter ended March 31, 2024 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

CION also announced that, on May 6, 2024, its co-chief executive officers declared a second quarter 2024 base distribution of $0.36 per share, payable on June 17, 2024 to shareholders of record as of June 3, 2024, which is an increase of $0.02 per share, or 5.9%, from the $0.34 per share base distribution paid by the Company during the first quarter of 2024.

FIRST QUARTER AND OTHER HIGHLIGHTS

DISTRIBUTIONS

Michael A. Reisner, co-Chief Executive Officer of CION, commented:

"We reported another solid quarter this morning, continuing our momentum from 2023. Given our strong distribution coverage and outlook for the long-term earnings power of our portfolio, I am excited to announce an increase to our quarterly base dividend to $0.36 per share, up from $0.34 per share last quarter. The underlying credit performance in our portfolio remained strong, with non-accruals improving to 0.86% of fair value. While these trends reflect the rigor of our underwriting discipline and we are optimistic for continued performance in 2024, we remain conservatively levered on a net basis. As we look at our origination pipeline, we continue to see ample opportunities to deploy capital at attractive spreads to qualified middle market borrowers."

SELECTED FINANCIAL HIGHLIGHTS

 

 

As of

(in thousands, except per share data)

 

March 31, 2024

 

December 31, 2023

Investment portfolio, at fair value1

 

$

1,740,700

 

$

1,840,824

Total debt outstanding2

 

$

1,069,844

 

$

1,092,344

Net assets

 

$

863,059

 

$

879,563

Net asset value per share

 

$

16.05

 

$

16.23

Debt-to-equity

 

1.24x

 

1.24x

Net debt-to-equity

 

1.03x

 

1.10x

 

 

Three Months Ended

(in thousands, except share and per share data)

 

March 31, 2024

 

December 31, 2023

Total investment income

 

$

73,554

 

 

$

59,999

 

Total operating expenses and income tax expense

 

$

40,961

 

 

$

38,241

 

Net investment income after taxes

 

$

32,593

 

 

$

21,758

 

Net realized losses

 

$

(9,736

)

 

$

(351

)

Net unrealized (losses) gains

 

$

(16,412

)

 

$

29,585

 

Net increase in net assets resulting from operations

 

$

6,445

 

 

$

50,992

 

 

 

 

 

 

Net investment income per share

 

$

0.60

 

 

$

0.40

 

Net realized and unrealized (losses) gains per share

 

$

(0.48

)

 

$

0.54

 

Earnings per share

 

$

0.12

 

 

$

0.94

 

 

 

 

 

 

Weighted average shares outstanding

 

 

53,960,698

 

 

 

54,292,065

 

Distributions declared per share

 

$

0.34

 

 

$

0.54

 

Total investment income for the three months ended March 31, 2024 and December 31, 2023 was $73.6 million and $60.0 million, respectively. The increase in total investment income was primarily driven by additional investment income from origination and restructuring activities and fees received in connection with the repayment of portfolio investments during the three months ended March 31, 2024.

Operating expenses for the three months ended March 31, 2024 and December 31, 2023 were $41.0 million and $38.2 million, respectively. The increase in operating expenses was primarily driven by higher advisory fees due to an increase in total investment income during the quarter ended March 31, 2024 as compared to the quarter ended December 31, 2023.

PORTFOLIO AND INVESTMENT ACTIVITY1

A summary of the Company's investment activity for the three months ended March 31, 2024 is as follows:

 

 

New Investment
Commitments

 

Sales and Repayments

Investment Type (in thousands)

 

Amount

 

Percentage
of Total

 

Amount

 

Percentage
of Total

Senior secured first lien debt

 

$

115,453

 

92

%

 

$

195,541

 

94

%

Senior secured second lien debt

 

 

?

 

?

 

 

 

5

 

?

 

Collateralized securities and structured products - equity

 

 

?

 

?

 

 

 

64

 

?

 

Unsecured debt

 

 

1,096

 

1

%

 

 

8,872

 

4

%

Equity

 

 

8,645

 

7

%

 

 

2,760

 

2

%

Total

 

$

125,194

 

100

%

 

$

207,242

 

100

%

During the three months ended March 31, 2024, new investment commitments were made across 5 new and 7 existing portfolio companies. During the same period, the Company received the full repayment on investments in 7 portfolio companies. As a result, the number of portfolio companies decreased from 111 as of December 31, 2023 to 109 as of March 31, 2024.

PORTFOLIO SUMMARY1

As of March 31, 2024, the Company's investments consisted of the following:

 

 

Investments at Fair Value

Investment Type (in thousands)

 

Amount

 

Percentage
of Total

Senior secured first lien debt

 

$

1,465,051

 

84.2

%

Senior secured second lien debt

 

 

28,460

 

1.6

%

Collateralized securities and structured products - equity

 

 

1,004

 

0.1

%

Unsecured debt

 

 

5,506

 

0.3

%

Equity

 

 

240,679

 

13.8

%

Total

 

$

1,740,700

 

100.0

%

The following table presents certain selected information regarding the Company's investments:

 

 

As of

 

 

March 31, 2024

 

December 31, 2023

Number of portfolio companies

 

109

 

111

Percentage of performing loans bearing a floating rate3

 

92.6 %

 

92.5 %

Percentage of performing loans bearing a fixed rate3

 

7.4 %

 

7.5 %

Yield on debt and other income producing investments at amortized cost4

 

12.93 %

 

13.41 %

Yield on performing loans at amortized cost4

 

13.39 %

 

13.98 %

Yield on total investments at amortized cost

 

11.52 %

 

12.12 %

Weighted average leverage (net debt/EBITDA)5

 

4.98x

 

5.02x

Weighted average interest coverage5

 

1.98x

 

1.93x

Median EBITDA6

 

$33.7 million

 

$33.7 million

As of March 31, 2024, investments on non-accrual status represented 0.86% and 2.88% of the total investment portfolio at fair value and amortized cost, respectively. As of December 31, 2023, investments on non-accrual status represented 0.89% and 3.47% of the total investment portfolio at fair value and amortized cost, respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2024, the Company had $1.07 billion of total principal amount of debt outstanding, comprised of $650 million of outstanding borrowings under its senior secured credit facilities and $420 million of unsecured notes and term loans. The combined weighted average interest rate on debt outstanding was 8.4% for the quarter ended March 31, 2024. As of March 31, 2024, the Company had $179 million in cash and short-term investments and $175 million available under its financing arrangements.2

EARNINGS CONFERENCE CALL

CION will host an earnings conference call on Thursday, May 9, 2024 at 11:00 am Eastern Time to discuss its financial results for the first quarter ended March 31, 2024. Please visit the Investor Resources - Events and Presentations section of the Company's website at www.cionbdc.com for a slide presentation that complements the earnings conference call.

All interested parties are invited to participate via telephone or listen via the live webcast, which can be accessed by clicking the following link: CION Investment Corporation First Quarter Conference Call. Domestic callers can access the conference call by dialing (877) 484-6065. International callers can access the conference call by dialing +1 (201) 689-8846. All callers are asked to dial in approximately 10 minutes prior to the call. An archived replay will be available on a webcast link located in the Investor Resources - Events and Presentations section of CION's website.

ENDNOTES

1)

The discussion of the investment portfolio excludes short-term investments.

 

 

2)

Total debt outstanding excludes netting of debt issuance costs of $9.4 million and $10.6 million as of March 31, 2024 and December 31, 2023, respectively.

 

 

3)

The fixed versus floating composition has been calculated as a percentage of performing debt investments measured on a fair value basis, including income producing preferred stock investments and excludes investments, if any, on non-accrual status.

 

 

4)

Computed based on the (a) annual actual interest rate or yield earned plus amortization of fees and discounts on the performing debt and other income producing investments as of the reporting date, divided by (b) the total performing debt and other income producing investments (excluding investments on non-accrual status) at amortized cost. This calculation excludes exit fees that are receivable upon repayment of the investment.

 

 

5)

For a particular portfolio company, the Company calculates the level of contractual indebtedness net of cash ("net debt") owed by the portfolio company and compares that amount to measures of cash flow available to service the net debt. To calculate net debt, the Company includes debt that is both senior and pari passu to the tranche of debt owned by it but excludes debt that is legally and contractually subordinated in ranking to the debt owned by the Company. The Company believes this calculation method assists in describing the risk of its portfolio investments, as it takes into consideration contractual rights of repayment of the tranche of debt owned by the Company relative to other senior and junior creditors of a portfolio company. The Company typically calculates cash flow available for debt service at a portfolio company by taking EBITDA for the trailing twelve-month period. Weighted average net debt to EBITDA is weighted based on the fair value of the Company's performing debt investments and excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.

 

 

 

For a particular portfolio company, the Company also calculates the level of contractual interest expense owed by the portfolio company and compares that amount to EBITDA ("interest coverage ratio"). The Company believes this calculation method assists in describing the risk of its portfolio investments, as it takes into consideration contractual interest obligations of the portfolio company. Weighted average interest coverage is weighted based on the fair value of the Company's performing debt investments, and excludes investments where interest coverage may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.

 

 

 

Portfolio company statistics, including EBITDA, are derived from the financial statements most recently provided to the Company for each portfolio company as of the reported end date. Statistics of the portfolio companies have not been independently verified by the Company and may reflect a normalized or adjusted amount.

 

 

6)

Median EBITDA is calculated based on the portfolio company's EBITDA as of the Company's initial investment.

 

C?ON Investment Corporation

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

March 31, 2024

 

December 31, 2023

 

 

(unaudited)

 

 

Assets

Investments, at fair value:

 

 

 

 

Non-controlled, non-affiliated investments (amortized cost of $1,541,138 and $1,610,822, respectively)

 

$

1,494,478

 

 

$

1,570,676

 

Non-controlled, affiliated investments (amortized cost of $212,966 and $210,103, respectively)

 

 

202,915

 

 

 

206,301

 

Controlled investments (amortized cost of $154,505 and $154,705, respectively)

 

 

173,444

 

 

 

177,293

 

Total investments, at fair value (amortized cost of $1,908,609 and $1,975,630, respectively)

 

 

1,870,837

 

 

 

1,954,270

 

Cash

 

 

48,482

 

 

 

8,415

 

Interest receivable on investments

 

 

36,366

 

 

 

36,724

 

Receivable due on investments sold and repaid

 

 

11,452

 

 

 

967

 

Prepaid expenses and other assets

 

 

1,137

 

 

 

1,348

 

Total assets

 

$

1,968,274

 

 

$

2,001,724

 

 

 

 

 

 

Liabilities and Shareholders' Equity

Liabilities

 

 

 

 

Financing arrangements (net of unamortized debt issuance costs of $9,388 and $10,643, respectively)

 

$

1,060,455

 

 

$

1,081,701

 

Payable for investments purchased

 

 

21,041

 

 

 

4,692

 

Accounts payable and accrued expenses

 

 

743

 

 

 

1,036

 

Interest payable

 

 

8,556

 

 

 

10,231

 

Accrued management fees

 

 

6,864

 

 

 

6,893

 

Accrued subordinated incentive fee on income

 

 

6,914

 

 

 

4,615

 

Accrued administrative services expense

 

 

642

 

 

 

2,156

 

Shareholder distribution payable

 

 

?

 

 

 

10,837

 

Total liabilities

 

 

1,105,215

 

 

 

1,122,161

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

Common stock, $0.001 par value; 500,000,000 shares authorized; 53,760,605 and

 

 

 

 

54,184,636 shares issued, and 53,760,605 and 54,184,636 shares outstanding, respectively

 

 

54

 

 

 

54

 

Capital in excess of par value

 

 

1,028,360

 

 

 

1,033,030

 

Accumulated distributable losses

 

 

(165,355

)

 

 

(153,521

)

Total shareholders' equity

 

 

863,059

 

 

 

879,563

 

Total liabilities and shareholders' equity

 

$

1,968,274

 

 

$

2,001,724

 

Net asset value per share of common stock at end of period

 

$

16.05

 

 

$

16.23

 

 

C?ON Investment Corporation

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended

 

 

March 31, 2024

 

December 31, 2023

 

 

(unaudited)

 

(unaudited)

Investment income

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

 

Interest income

 

$

55,372

 

 

$

43,096

 

Paid-in-kind interest income

 

 

7,049

 

 

 

6,581

 

Fee income

 

 

3,873

 

 

 

3,127

 

Dividend income

 

 

?

 

 

 

128

 

Non-controlled, affiliated investments

 

 

 

 

Interest income

 

 

1,519

 

 

 

1,519

 

Paid-in-kind interest income

 

 

2,482

 

 

 

2,419

 

Dividend income

 

 

27

 

 

 

?

 

Controlled investments

 

 

 

 

Interest income

 

 

3,232

 

 

 

2,786

 

Fee income

 

 

?

 

 

 

341

 

Paid-in-kind interest income

 

 

?

 

 

 

2

 

Total investment income

 

 

73,554

 

 

 

59,999

 

Operating expenses

 

 

 

 

Management fees

 

 

6,864

 

 

 

6,893

 

Administrative services expense

 

 

1,092

 

 

 

1,228

 

Subordinated incentive fee on income

 

 

6,914

 

 

 

4,615

 

General and administrative

 

 

1,784

 

 

 

1,422

 

Interest expense

 

 

24,302

 

 

 

24,023

 

Total operating expenses

 

 

40,956

 

 

 

38,181

 

Net investment income before taxes

 

 

32,598

 

 

 

21,818

 

Income tax expense, including excise tax

 

 

5

 

 

 

60

 

Net investment income after taxes

 

 

32,593

 

 

 

21,758

 

Realized and unrealized (losses) gains

 

 

 

 

Net realized losses on:

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(9,736

)

 

 

(351

)

Non-controlled, affiliated investments

 

 

?

 

 

 

?

 

Controlled investments

 

 

?

 

 

 

?

 

Net realized losses

 

 

(9,736

)

 

 

(351

)

Net change in unrealized (depreciation) appreciation on:

 

 

Non-controlled, non-affiliated investments

 

 

(6,517

)

 

 

7,050

 

Non-controlled, affiliated investments

 

 

(6,246

)

 

 

1,801

 

Controlled investments

 

 

(3,649

)

 

 

20,734

 

Net change in unrealized (depreciation) appreciation

 

 

(16,412

)

 

 

29,585

 

Net realized and unrealized (losses) gains

 

 

(26,148

)

 

 

29,234

 

Net increase in net assets resulting from operations

 

$

6,445

 

 

$

50,992

 

Per share information?basic and diluted

 

 

 

 

Net increase in net assets per share resulting from operations

 

$

0.12

 

 

$

0.94

 

Net investment income per share

 

$

0.60

 

 

$

0.40

 

Weighted average shares of common stock outstanding

 

 

53,960,698

 

 

 

54,292,065

 

ABOUT CION INVESTMENT CORPORATION

CION Investment Corporation is a leading publicly listed business development company that had approximately $2.0 billion in total assets as of March 31, 2024. CION seeks to generate current income and, to a lesser extent, capital appreciation for investors by focusing primarily on senior secured loans to U.S. middle-market companies. CION is advised by CION Investment Management, LLC, a registered investment adviser and an affiliate of CION. For more information, please visit www.cionbdc.com.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "target," "estimate," "intend," "continue," or "believe" or the negatives thereof or other variations thereon or comparable terminology. You should read statements that contain these words carefully because they discuss CION's plans, strategies, prospects and expectations concerning its business, operating results, financial condition and other similar matters. These statements represent CION's belief regarding future events that, by their nature, are uncertain and outside of CION's control. There are likely to be events in the future, however, that CION is not able to predict accurately or control. Any forward-looking statement made by CION in this press release speaks only as of the date on which it is made. Factors or events that could cause CION's actual results to differ, possibly materially from its expectations, include, but are not limited to, the risks, uncertainties and other factors CION identifies in the sections entitled "Risk Factors" and "Forward-Looking Statements" in filings CION makes with the SEC, and it is not possible for CION to predict or identify all of them. CION undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

OTHER INFORMATION

The information in this press release is summary information only and should be read in conjunction with CION's Quarterly Report on Form 10-Q, which CION filed with the SEC on May 9, 2024, as well as CION's other reports filed with the SEC. A copy of CION's Quarterly Report on Form 10-Q and CION's other reports filed with the SEC can be found on CION's website at www.cionbdc.com and the SEC's website at www.sec.gov.


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