CION CION Investment Corporation

Disciplined Capital Deployment Contributes to Net Portfolio Growth

CION Investment Corporation (NYSE: CION) (“CION” or the “Company”) today reported financial results for the second quarter ended June 30, 2024 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

CION also announced that, on August 5, 2024, its co-chief executive officers declared a third quarter 2024 base distribution of $0.36 per share, payable on September 17, 2024 to shareholders of record as of September 3, 2024.

SECOND QUARTER AND OTHER HIGHLIGHTS

• Net investment income and earnings per share for the quarter ended June 30, 2024 were $0.43 per share and $0.42 per share, respectively;
• Net asset value per share was $16.08 as of June 30, 2024 compared to $16.05 as of March 31, 2024, an increase of $0.03 per share, or 0.2%. The increase was primarily due to out-earning its distribution by $0.02 per share and repurchases of the Company's common stock below NAV during the quarter ended June 30, 2024, which was partially offset by realized and unrealized losses of $0.01 per share;
• As of June 30, 2024, the Company had $1.07 billion of total principal amount of debt outstanding, of which 61% was comprised of senior secured bank debt and 39% was comprised of unsecured debt. The Company’s net debt-to-equity ratio was 1.13x as of June 30, 2024 compared to 1.03x as of March 31, 2024;
• As of June 30, 2024, the Company had total investments at fair value of $1.82 billion in 107 portfolio companies across 24 industries. The investment portfolio was comprised of 85.1% senior secured loans, including 84.3% in first lien investments;1
• During the quarter, the Company funded new investment commitments of $137 million, funded previously unfunded commitments of $10 million, and had sales and repayments totaling $77 million, resulting in a net increase to the Company's funded portfolio of $70 million;
• As of June 30, 2024, investments on non-accrual status amounted to 1.36% and 2.69% of the total investment portfolio at fair value and amortized cost, respectively, compared to 0.86% and 2.88%, respectively, as of March 31, 2024;
• During the quarter, the Company repurchased 234,982 shares of its common stock under its 10b5-1 trading plan at an average price of $11.37 per share for a total repurchase amount of $2.7 million. Through June 30, 2024, the Company repurchased a total of 3,432,817 shares of its common stock under its 10b5-1 trading plan at an average price of $9.99 per share for a total repurchase amount of $34.3 million; and
• On July 15, 2024, the Company further amended its $675 million senior secured credit facility with JPMorgan Chase Bank, National Association (“JPM”) to (i) reduce the credit spread on the floating interest rate payable by the Company on advances from the three-month SOFR plus a credit spread of 3.20% per year to the three-month SOFR plus a credit spread of 2.55% per year, and (ii) extend the reinvestment period from July 15, 2024 to June 15, 2026 and the maturity date from May 15, 2025 to June 15, 20272.

DISTRIBUTIONS

• For the quarter ended June 30, 2024, the Company paid a quarterly base distribution totaling $19.3 million, or $0.36 per share, and declared a mid-year supplemental distribution totaling $2.7 million, or $0.05 per share, paid on July 12, 2024 to shareholders of record as of June 28, 2024.

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

“I’m pleased to report that CION continues to perform well, with strong results in net investment income, NAV stability, capital deployment, and portfolio credit performance. We are focused on building a durable franchise here at CION, and believe that CION is uniquely positioned for this environment given our middle market, first lien direct lending focus paired with our opportunistic strategy as we seek to capture alpha in volatile and complex market conditions.”

SELECTED FINANCIAL HIGHLIGHTS

 

 

As of

(in thousands, except per share data and ratios)

 

June 30, 2024

 

March 31, 2024

Investment portfolio, at fair value1

 

$

1,822,963

 

$

1,740,700

Total debt outstanding3

 

$

1,069,844

 

$

1,069,844

Net assets

 

$

860,806

 

$

863,059

Net asset value per share

 

$

16.08

 

$

16.05

Debt-to-equity ratio

 

1.24x

 

1.24x

Net debt-to-equity ratio

 

1.13x

 

1.03x

 

 

Three Months Ended

(in thousands, except share and per share data)

 

June 30, 2024

 

March 31, 2024

Total investment income

 

$

61,357

 

 

$

73,554

 

Total operating expenses and income tax expense

 

$

38,394

 

 

$

40,961

 

Net investment income after taxes

 

$

22,963

 

 

$

32,593

 

Net realized losses

 

$

(20,277

)

 

$

(9,736

)

Net unrealized gains (losses)

 

$

19,692

 

 

$

(16,412

)

Net increase in net assets resulting from operations

 

$

22,378

 

 

$

6,445

 

 

 

 

 

 

Net investment income per share

 

$

0.43

 

 

$

0.60

 

Net realized and unrealized losses per share

 

$

(0.01

)

 

$

(0.48

)

Earnings per share

 

$

0.42

 

 

$

0.12

 

 

 

 

 

 

Weighted average shares outstanding

 

 

53,595,624

 

 

 

53,960,698

 

Distributions declared per share

 

$

0.41

 

 

$

0.34

 

Total investment income for the three months ended June 30, 2024 and March 31, 2024 was $61.4 million and $73.6 million, respectively. The decrease in total investment income was primarily driven by higher 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 June 30, 2024 and March 31, 2024 were $38.4 million and $41.0 million, respectively. The decrease in operating expenses was primarily driven by lower advisory fees due to a decrease in total investment income during the quarter ended June 30, 2024 as compared to the quarter ended March 31, 2024.

PORTFOLIO AND INVESTMENT ACTIVITY1

A summary of the Company's investment activity for the three months ended June 30, 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

 

$

138,624

 

93

%

 

$

61,908

 

81

%

Senior secured second lien debt

 

 

—

 

—

 

 

 

12,505

 

16

%

Collateralized securities and structured products - equity

 

 

—

 

—

 

 

 

64

 

—

 

Equity

 

 

9,758

 

7

%

 

 

2,446

 

3

%

Total

 

$

148,382

 

100

%

 

$

76,923

 

100

%

During the three months ended June 30, 2024, new investment commitments were made across 3 new and 16 existing portfolio companies. During the same period, the Company exited its investment in 1 portfolio company via sale and wrote off all investments in 4 portfolio companies. As a result, the number of portfolio companies decreased from 109 as of March 31, 2024 to 107 as of June 30, 2024.

PORTFOLIO SUMMARY1

As of June 30, 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

 

$

1,536,753

 

84.3

%

Senior secured second lien debt

 

 

15,050

 

0.8

%

Collateralized securities and structured products - equity

 

 

770

 

0.1

%

Unsecured debt

 

 

5,493

 

0.3

%

Equity

 

 

264,897

 

14.5

%

Total

 

$

1,822,963

 

100.0

%

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

 

 

As of

 

 

June 30, 2024

 

March 31, 2024

Number of portfolio companies

 

107

 

109

Percentage of performing loans bearing a floating rate4

 

94.5%

 

92.6%

Percentage of performing loans bearing a fixed rate4

 

5.5%

 

7.4%

Yield on debt and other income producing investments at amortized cost5

 

12.86%

 

12.93%

Yield on performing loans at amortized cost5

 

13.26%

 

13.39%

Yield on total investments at amortized cost

 

11.48%

 

11.52%

Weighted average leverage (net debt/EBITDA)6

 

4.74x

 

4.98x

Weighted average interest coverage6

 

2.01x

 

1.98x

Median EBITDA7

 

$32.8 million

 

$33.7 million

As of June 30, 2024, investments on non-accrual status represented 1.36% and 2.69% of the total investment portfolio at fair value and amortized cost, respectively. 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.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 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 June 30, 2024. As of June 30, 2024, the Company had $93 million in cash and short-term investments and $175 million available under its financing arrangements.3

EARNINGS CONFERENCE CALL

CION will host an earnings conference call on Thursday, August 8, 2024 at 11:00 am Eastern Time to discuss its financial results for the second quarter ended June 30, 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 Second 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)

The Company incurred certain customary costs and expenses in connection with the JPM fifth amendment and will pay an annual administrative fee of 0.20% on JPM's total financing commitment.

 

3)

Total debt outstanding excludes netting of debt issuance costs of $8.1 million and $9.4 million as of June 30, 2024 and March 31, 2024, respectively.

 

4)

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.

 

5)

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.

 

6)

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.

 

7)

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

CĪON Investment Corporation

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

June 30, 2024

 

March 31, 2024

 

 

(unaudited)

 

(unaudited)

Assets

Investments, at fair value:

 

 

 

 

Non-controlled, non-affiliated investments (amortized cost of $1,544,674 and $1,541,138, respectively)

 

$

1,502,910

 

 

$

1,494,478

 

Non-controlled, affiliated investments (amortized cost of $240,735 and $212,966, respectively)

 

 

250,411

 

 

 

202,915

 

Controlled investments (amortized cost of $138,792 and $154,505, respectively)

 

 

152,804

 

 

 

173,444

 

Total investments, at fair value (amortized cost of $1,924,201 and $1,908,609, respectively)

 

 

1,906,125

 

 

 

1,870,837

 

Cash

 

 

9,798

 

 

 

48,482

 

Interest receivable on investments

 

 

40,841

 

 

 

36,366

 

Receivable due on investments sold and repaid

 

 

2,631

 

 

 

11,452

 

Dividends receivable on investments

 

 

129

 

 

 

—

 

Prepaid expenses and other assets

 

 

942

 

 

 

1,137

 

Total assets

 

$

1,960,466

 

 

$

1,968,274

 

 

 

 

 

 

Liabilities and Shareholders' Equity

Liabilities

 

 

 

 

Financing arrangements (net of unamortized debt issuance costs of $8,134 and $9,388, respectively)

 

$

1,061,710

 

 

$

1,060,455

 

Payable for investments purchased

 

 

11,789

 

 

 

21,041

 

Accounts payable and accrued expenses

 

 

1,031

 

 

 

743

 

Interest payable

 

 

9,614

 

 

 

8,556

 

Accrued management fees

 

 

6,841

 

 

 

6,864

 

Accrued subordinated incentive fee on income

 

 

4,871

 

 

 

6,914

 

Accrued administrative services expense

 

 

1,128

 

 

 

642

 

Shareholder distribution payable

 

 

2,676

 

 

 

—

 

Total liabilities

 

 

1,099,660

 

 

 

1,105,215

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

Common stock, $0.001 par value; 500,000,000 shares authorized; 53,525,623 and 54,760,605 shares issued, and 53,525,623 and 53,760,605 shares outstanding, respectively

 

 

54

 

 

 

54

 

Capital in excess of par value

 

 

1,025,689

 

 

 

1,028,360

 

Accumulated distributable losses

 

 

(164,937

)

 

 

(165,355

)

Total shareholders' equity

 

 

860,806

 

 

 

863,059

 

Total liabilities and shareholders' equity

 

$

1,960,466

 

 

$

1,968,274

 

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

 

$

16.08

 

 

$

16.05

 

 

CĪON Investment Corporation

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

Year Ended

December 31,

 

 

2024

 

2023

 

2024

 

2023

 

2023

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

Investment income

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

38,512

 

 

$

47,117

 

 

$

93,884

 

 

$

89,885

 

 

$

184,013

 

Paid-in-kind interest income

 

 

7,236

 

 

 

4,297

 

 

 

14,285

 

 

 

9,128

 

 

 

22,317

 

Fee income

 

 

1,338

 

 

 

1,154

 

 

 

5,211

 

 

 

2,297

 

 

 

7,871

 

Dividend income

 

 

5,139

 

 

 

—

 

 

 

5,139

 

 

 

—

 

 

 

210

 

Non-controlled, affiliated investments

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,383

 

 

 

1,734

 

 

 

3,902

 

 

 

4,208

 

 

 

7,068

 

Paid-in-kind interest income

 

 

2,569

 

 

 

1,751

 

 

 

5,051

 

 

 

3,482

 

 

 

8,372

 

Fee income

 

 

704

 

 

 

477

 

 

 

704

 

 

 

2,397

 

 

 

2,432

 

Dividend income

 

 

13

 

 

 

52

 

 

 

40

 

 

 

3,933

 

 

 

3,946

 

Controlled investments

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

3,163

 

 

 

1,914

 

 

 

6,395

 

 

 

3,891

 

 

 

8,090

 

Paid-in-kind interest income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,050

 

Fee income

 

 

300

 

 

 

—

 

 

 

300

 

 

 

—

 

 

 

1,391

 

Dividend income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,250

 

 

 

4,250

 

Total investment income

 

 

61,357

 

 

 

58,496

 

 

 

134,911

 

 

 

123,471

 

 

 

251,010

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

Management fees

 

 

6,841

 

 

 

6,546

 

 

 

13,705

 

 

 

13,222

 

 

 

26,856

 

Administrative services expense

 

 

1,246

 

 

 

910

 

 

 

2,338

 

 

 

1,747

 

 

 

3,971

 

Subordinated incentive fee on income

 

 

4,871

 

 

 

4,965

 

 

 

11,785

 

 

 

11,300

 

 

 

22,277

 

General and administrative

 

 

1,659

 

 

 

2,074

 

 

 

3,443

 

 

 

4,029

 

 

 

7,382

 

Interest expense

 

 

23,773

 

 

 

20,467

 

 

 

48,075

 

 

 

39,776

 

 

 

85,556

 

Total operating expenses

 

 

38,390

 

 

 

34,962

 

 

 

79,346

 

 

 

70,074

 

 

 

146,042

 

Net investment income before taxes

 

 

22,967

 

 

 

23,534

 

 

 

55,565

 

 

 

53,397

 

 

 

104,968

 

Income tax expense (benefit), including excise tax

 

 

4

 

 

 

118

 

 

 

9

 

 

 

123

 

 

 

(54

)

Net investment income after taxes

 

 

22,963

 

 

 

23,416

 

 

 

55,556

 

 

 

53,274

 

 

 

105,022

 

Realized and unrealized gains (losses)

 

 

 

 

 

 

 

 

 

 

Net realized losses on:

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(13,186

)

 

 

(18,928

)

 

 

(22,922

)

 

 

(23,453

)

 

 

(31,927

)

Non-controlled, affiliated investments

 

 

(7,091

)

 

 

—

 

 

 

(7,091

)

 

 

—

 

 

 

—

 

Controlled investments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Net realized losses

 

 

(20,277

)

 

 

(18,928

)

 

 

(30,013

)

 

 

(23,453

)

 

 

(31,927

)

Net change in unrealized appreciation (depreciation) on:

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

1,417

 

 

 

23,396

 

 

 

(5,100

)

 

 

(17,690

)

 

 

15,658

 

Non-controlled, affiliated investments

 

 

23,202

 

 

 

595

 

 

 

16,956

 

 

 

(9,695

)

 

 

(7,335

)

Controlled investments

 

 

(4,927

)

 

 

(585

)

 

 

(8,576

)

 

 

(5,587

)

 

 

13,896

 

Net change in unrealized appreciation (depreciation)

 

 

19,692

 

 

 

23,406

 

 

 

3,280

 

 

 

(32,972

)

 

 

22,219

 

Net realized and unrealized (losses) gains

 

 

(585

)

 

 

4,478

 

 

 

(26,733

)

 

 

(56,425

)

 

 

(9,708

)

Net increase (decrease) in net assets resulting from operations

 

$

22,378

 

 

$

27,894

 

 

$

28,823

 

 

$

(3,151

)

 

$

95,314

 

Per share information—basic and diluted

 

 

 

 

 

 

 

 

 

 

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

 

$

0.42

 

 

$

0.51

 

 

$

0.54

 

 

$

(0.06

)

 

$

1.74

 

Net investment income per share

 

$

0.43

 

 

$

0.43

 

 

$

1.03

 

 

$

0.97

 

 

$

1.92

 

Weighted average shares of common stock outstanding

 

 

53,595,624

 

 

 

54,788,740

 

 

 

53,778,161

 

 

 

54,948,225

 

 

 

54,685,327

 

 

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 June 30, 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 August 8, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808818785/en/

Media Susan Armstrong sarmstrong@cioninvestments.com

Investor Relations Charlie Arestia carestia@cioninvestments.com (646) 253-8259

James Carbonara Hayden IR James@haydenir.com (646) 755-7412