DISTRIBUTIONS
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For the quarter ended September 30, 2024, the Company paid a quarterly base distribution totaling $19.2 million, or $0.36 per share.
Michael A. Reisner, co-Chief Executive Officer of CION, commented:
"I’m pleased with CION’s quarterly results as we continue to navigate a highly competitive credit environment. Additionally, we were very active in managing the right side of CION’s balance sheet in the third quarter. These transactions have given CION a more flexible balance sheet that we believe is better positioned to withstand potential volatility heading into next year."
SELECTED FINANCIAL HIGHLIGHTS
| | | As of | |
| (in thousands, except per share data and ratios) | | September 30, 2024 | | | June 30, 2024 | |
| Investment portfolio, at fair value1 | | $ | 1,752,726 | | | $ | 1,822,963 | |
| Total debt outstanding3 | | $ | 1,069,844 | | | $ | 1,069,844 | |
| Net assets | | $ | 839,190 | | | $ | 860,806 | |
| Net asset value per share | | $ | 15.73 | | | $ | 16.08 | |
| Debt-to-equity ratio | | 1.28x | | | 1.24x | |
| Net debt-to-equity ratio | | 1.18x | | | 1.13x | |
| | | Three Months Ended |
| (in thousands, except share and per share data) | | September 30, 2024 | | June 30, 2024 |
| Total investment income | | $ | 59,627 | | | $ | 61,357 | |
| Total operating expenses and income tax expense | | $ | 38,009 | | | $ | 38,394 | |
| Net investment income after taxes | | $ | 21,618 | | | $ | 22,963 | |
| Net realized gains (losses) | | $ | 3,938 | | | $ | (20,277 | ) |
| Net unrealized (losses) gains | | $ | (25,935 | ) | | $ | 19,692 | |
| Net (decrease) increase in net assets resulting from operations | | $ | (379 | ) | | $ | 22,378 | |
| | | | | |
| Net investment income per share | | $ | 0.40 | | | $ | 0.43 | |
| Net realized and unrealized losses per share | | $ | (0.41 | ) | | $ | (0.01 | ) |
| Earnings per share | | $ | (0.01 | ) | | $ | 0.42 | |
| | | | | |
| Weighted average shares outstanding | | | 53,439,316 | | | | 53,595,624 | |
| Distributions declared per share | | $ | 0.36 | | | $ | 0.41 | |
Total investment income for the three months ended September 30, 2024 and June 30, 2024 was $59.6 million and $61.4 million, respectively. The decrease in total investment income was primarily driven by lower dividend income from equity securities during the three months ended September 30, 2024 compared to the three months ended June 30, 2024. This was partially offset by higher transaction fees during the three months ended September 30, 2024 compared to the three months ended June 30, 2024.
Operating expenses for the three months ended September 30, 2024 and June 30, 2024 were $38.0 million and $38.4 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 September 30, 2024 as compared to the quarter ended June 30, 2024.
PORTFOLIO AND INVESTMENT ACTIVITY1
A summary of the Company's investment activity for the three months ended September 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 | | $ | 94,995 | | 99 | % | | $ | 132,198 | | 86 | % |
| Senior secured second lien debt | | | — | | — | | | | 11,500 | | 8 | % |
| Collateralized securities and structured products - equity | | | — | | — | | | | 21 | | — | |
| Equity | | | 1,182 | | 1 | % | | | 9,861 | | 6 | % |
| Total | | $ | 96,177 | | 100 | % | | $ | 153,580 | | 100 | % |
During the three months ended September 30, 2024, new investment commitments were made across 1 new and 10 existing portfolio companies. During the same period, the Company exited its investments in 5 portfolio companies, 1 via sale and 4 via full repayment. As a result, the number of portfolio companies decreased from 107 as of June 30, 2024 to 103 as of September 30, 2024.
PORTFOLIO SUMMARY1
As of September 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 | | $ | 1,494,524 | | 85.3 | % |
| Senior secured second lien debt | | | 3,873 | | 0.2 | % |
| Collateralized securities and structured products - equity | | | 685 | | — | |
| Unsecured debt | | | 11,761 | | 0.7 | % |
| Equity | | | 241,883 | | 13.8 | % |
| Total | | $ | 1,752,726 | | 100.0 | % |
The following table presents certain selected information regarding the Company’s investments:
| | | As of |
| | | September 30, 2024 | | | June 30, 2024 | |
| Number of portfolio companies | | 103 | | | 107 | |
| Percentage of performing loans bearing a floating rate4 | | 94.3 | % | | 94.5 | % |
| Percentage of performing loans bearing a fixed rate4 | | 5.7 | % | | 5.5 | % |
| Yield on debt and other income producing investments at amortized cost5 | | 12.23 | % | | 12.86 | % |
| Yield on performing loans at amortized cost5 | | 12.73 | % | | 13.26 | % |
| Yield on total investments at amortized cost | | 10.88 | % | | 11.48 | % |
| Weighted average leverage (net debt/EBITDA)6 | | 5.02 | x | | 4.74 | x |
| Weighted average interest coverage6 | | 2.14 | x | | 2.01 | x |
| Median EBITDA7 | | $32.8 million | | | $32.8 million | |
As of September 30, 2024, investments on non-accrual status represented 1.85% and 3.40% of the total investment portfolio at fair value and amortized cost, respectively. 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.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2024, the Company had $1.07 billion of total principal amount of debt outstanding, comprised of $550 million of outstanding borrowings under its senior secured credit facilities and $520 million of unsecured notes and term loans. The combined weighted average interest rate on debt outstanding was 8.2% for the quarter ended September 30, 2024. As of September 30, 2024, the Company had $83 million in cash and short-term investments and $162 million available under its financing arrangements.3
EARNINGS CONFERENCE CALL
CION will host an earnings conference call on Thursday, November 7, 2024 at 11:00 am Eastern Time to discuss its financial results for the third quarter ended September 30, 2024. Please visit the Investor Resources 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 Third 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 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 $14.9 million and $8.1 million as of September 30, 2024 and June 30, 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) |
| | | | | |
| | | September 30, 2024 | | June 30, 2024 |
| | | (unaudited) | | (unaudited) |
| Assets |
| Investments, at fair value: | | | | |
| Non-controlled, non-affiliated investments (amortized cost of $1,421,998 and $1,544,674, respectively) | | $ | 1,381,177 | | | $ | 1,502,910 | |
| Non-controlled, affiliated investments (amortized cost of $276,204 and $240,735, respectively) | | | 273,152 | | | | 250,411 | |
| Controlled investments (amortized cost of $152,042 and $138,792, respectively) | | | 151,900 | | | | 152,804 | |
| Total investments, at fair value (amortized cost of $1,850,244 and $1,924,201, respectively) | | | 1,806,229 | | | | 1,906,125 | |
| Cash | | | 29,765 | | | | 9,798 | |
| Interest receivable on investments | | | 49,446 | | | | 40,841 | |
| Receivable due on investments sold and repaid | | | 28,604 | | | | 2,631 | |
| Dividends receivable on investments | | | 76 | | | | 129 | |
| Prepaid expenses and other assets | | | 1,501 | | | | 942 | |
| Total assets | | $ | 1,915,621 | | | $ | 1,960,466 | |
| | | | | |
| Liabilities and Shareholders' Equity |
| Liabilities | | | | |
| Financing arrangements (net of unamortized debt issuance costs of $14,925 and $8,134, respectively) | | $ | 1,054,919 | | | $ | 1,061,710 | |
| Payable for investments purchased | | | — | | | | 11,789 | |
| Accounts payable and accrued expenses | | | 1,316 | | | | 1,031 | |
| Interest payable | | | 7,201 | | | | 9,614 | |
| Accrued management fees | | | 6,854 | | | | 6,841 | |
| Accrued subordinated incentive fee on income | | | 4,586 | | | | 4,871 | |
| Accrued administrative services expense | | | 1,515 | | | | 1,128 | |
| Share repurchases payable | | | 40 | | | | — | |
| Shareholder distribution payable | | | — | | | | 2,676 | |
| Total liabilities | | | 1,076,431 | | | | 1,099,660 | |
| | | | | |
| Shareholders' Equity | | | | |
| Common stock, $0.001 par value; 500,000,000 shares authorized; 53,363,245 and 54,525,623 shares issued, and 53,359,886 and 53,525,623 shares outstanding, respectively | | | 53 | | | | 54 | |
| Capital in excess of par value | | | 1,023,687 | | | | 1,025,689 | |
| Accumulated distributable losses | | | (184,550 | ) | | | (164,937 | ) |
| Total shareholders' equity | | | 839,190 | | | | 860,806 | |
| Total liabilities and shareholders' equity | | $ | 1,915,621 | | | $ | 1,960,466 | |
| Net asset value per share of common stock at end of period | | $ | 15.73 | | | $ | 16.08 | |
| CĪON Investment Corporation Consolidated Statements of Operations (in thousands, except share and per share amounts) |
| |
| |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Year Ended December 31, |
| | | | 2024 | | | | 2023 | | | | 2024 | | | | 2023 | | | | 2023 | |
| | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | |
| Investment income | | | | | | | | | | |
| Non-controlled, non-affiliated investments | | | | | | | | | | |
| Interest income | | $ | 40,613 | | | $ | 51,032 | | | $ | 134,497 | | | $ | 140,917 | | | $ | 184,013 | |
| Paid-in-kind interest income | | | 5,526 | | | | 6,608 | | | | 19,811 | | | | 15,736 | | | | 22,317 | |
| Fee income | | | 900 | | | | 2,447 | | | | 6,111 | | | | 4,744 | | | | 7,871 | |
| Dividend income | | | 345 | | | | 82 | | | | 5,484 | | | | 82 | | | | 210 | |
| Non-controlled, affiliated investments | | | | | | | | | | |
| Interest income | | | 429 | | | | 1,341 | | | | 4,331 | | | | 5,549 | | | | 7,068 | |
| Paid-in-kind interest income | | | 3,831 | | | | 2,471 | | | | 8,882 | | | | 5,953 | | | | 8,372 | |
| Fee income | | | 2,894 | | | | 35 | | | | 3,598 | | | | 2,432 | | | | 2,432 | |
| Dividend income | | | 89 | | | | 13 | | | | 129 | | | | 3,946 | | | | 3,946 | |
| Controlled investments | | | | | | | | | | |
| Interest income | | | 2,991 | | | | 1,413 | | | | 9,386 | | | | 5,304 | | | | 8,090 | |
| Paid-in-kind interest income | | | — | | | | 1,048 | | | | — | | | | 1,048 | | | | 1,050 | |
| Fee income | | | 2,009 | | | | 1,050 | | | | 2,309 | | | | 1,050 | | | | 1,391 | |
| Dividend income | | | — | | | | — | | | | — | | | | 4,250 | | | | 4,250 | |
| Total investment income | | | 59,627 | | | | 67,540 | | | | 194,538 | | | | 191,011 | | | | 251,010 | |
| Operating expenses | | | | | | | | | | |
| Management fees | | | 6,854 | | | | 6,741 | | | | 20,559 | | | | 19,963 | | | | 26,856 | |
| Administrative services expense | | | 1,184 | | | | 996 | | | | 3,522 | | | | 2,743 | | | | 3,971 | |
| Subordinated incentive fee on income | | | 4,586 | | | | 6,362 | | | | 16,371 | | | | 17,662 | | | | 22,277 | |
| General and administrative | | | 1,855 | | | | 1,931 | | | | 5,298 | | | | 5,960 | | | | 7,382 | |
| Interest expense | | | 23,551 | | | | 21,757 | | | | 71,626 | | | | 61,533 | | | | 85,556 | |
| Total operating expenses | | | 38,030 | | | | 37,787 | | | | 117,376 | | | | 107,861 | | | | 146,042 | |
| Net investment income before taxes | | | 21,597 | | | | 29,753 | | | | 77,162 | | | | 83,150 | | | | 104,968 | |
| Income tax benefit, including excise tax | | | (21 | ) | | | (237 | ) | | | (12 | ) | | | (114 | ) | | | (54 | ) |
| Net investment income after taxes | | | 21,618 | | | | 29,990 | | | | 77,174 | | | | 83,264 | | | | 105,022 | |
| Realized and unrealized gains (losses) | | | | | | | | | | |
| Net realized gains (losses) on: | | | | | | | | | | |
| Non-controlled, non-affiliated investments | | | 3,938 | | | | (8,123 | ) | | | (18,984 | ) | | | (31,576 | ) | | | (31,927 | ) |
| Non-controlled, affiliated investments | | | — | | | | — | | | | (7,091 | ) | | | — | | | | — | |
| Controlled investments | | | — | | | | — | | | | — | | | | — | | | | — | |
| Net realized gains (losses) | | | 3,938 | | | | (8,123 | ) | | | (26,075 | ) | | | (31,576 | ) | | | (31,927 | ) |
| Net change in unrealized (depreciation) appreciation on: | | | | | | | | |
| Non-controlled, non-affiliated investments | | | (4,242 | ) | | | 26,298 | | | | (9,342 | ) | | | 8,608 | | | | 15,658 | |
| Non-controlled, affiliated investments | | | (7,539 | ) | | | 559 | | | | 9,417 | | | | (9,136 | ) | | | (7,335 | ) |
| Controlled investments | | | (14,154 | ) | | | (1,251 | ) | | | (22,730 | ) | | | (6,838 | ) | | | 13,896 | |
| Net change in unrealized (depreciation) appreciation | | | (25,935 | ) | | | 25,606 | | | | (22,655 | ) | | | (7,366 | ) | | | 22,219 | |
| Net realized and unrealized (losses) gains | | | (21,997 | ) | | | 17,483 | | | | (48,730 | ) | | | (38,942 | ) | | | (9,708 | ) |
| Net (decrease) increase in net assets resulting from operations | | $ | (379 | ) | | $ | 47,473 | | | $ | 28,444 | | | $ | 44,322 | | | $ | 95,314 | |
| Per share information—basic and diluted | | | | | | | | | | |
| Net (decrease) increase in net assets per share resulting from operations | | $ | (0.01 | ) | | $ | 0.87 | | | $ | 0.53 | | | $ | 0.81 | | | $ | 1.74 | |
| Net investment income per share | | $ | 0.40 | | | $ | 0.55 | | | $ | 1.44 | | | $ | 1.52 | | | $ | 1.92 | |
| Weighted average shares of common stock outstanding | | | 53,439,316 | | | | 54,561,367 | | | | 53,663,884 | | | | 54,817,855 | | | | 54,685,327 | |
ABOUT CION INVESTMENT CORPORATION
CION Investment Corporation is a leading publicly listed business development company that had approximately $1.9 billion in total assets as of September 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 November 7, 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/20241107247848/en/
Contacts
Media
Susan Armstrong
sarmstrong@cioninvestments.com
Investor Relations
Charlie Arestia
carestia@cioninvestments.com
(646) 253-8259
