Strong Operating Performance Drives Record
Quarterly Net Investment Income and Increased Second Quarter 2024
Base Distribution to $0.36 per Share
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
- Net investment income and earnings per share for the quarter
ended March 31, 2024 were $0.60 per share and $0.12 per share,
respectively;
- Net asset value per share was $16.05 as of March 31, 2024
compared to $16.23 as of December 31, 2023, a decrease of $0.18 per
share, or 1.1%. The decrease was primarily due to mark-to-market
price declines to the Company’s portfolio during the quarter ended
March 31, 2024;
- As of March 31, 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 1.03x as of March 31,
2024 compared to 1.10x as of December 31, 2023;
- As of March 31, 2024, the Company had total investments at fair
value of $1.74 billion in 109 portfolio companies across 25
industries. The investment portfolio was comprised of 85.8% senior
secured loans, including 84.2% in first lien investments;1
- During the quarter, the Company funded new investment
commitments of $107 million, funded previously unfunded commitments
of $4 million, and had sales and repayments totaling $207 million,
resulting in a net decrease to the Company's funded portfolio of
$96 million;
- As of March 31, 2024, investments on non-accrual status
amounted to 0.86% and 2.88% of the total investment portfolio at
fair value and amortized cost, respectively, compared to 0.89% and
3.47%, respectively, as of December 31, 2023; and
- During the quarter, the Company repurchased 424,031 shares of
its common stock under its 10b5-1 trading plan at an average price
of $11.01 per share for a total repurchase amount of $4.7 million.
Through March 31, 2024, the Company repurchased a total of
3,197,835 shares of its common stock under its 10b5-1 trading plan
at an average price of $9.89 per share for a total repurchase
amount of $31.6 million.
DISTRIBUTIONS
- For the quarter ended March 31, 2024, the Company paid a
quarterly base distribution totaling $18.3 million, or $0.34 per
share.
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.
CĪON 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
CĪON 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240509985535/en/
Media Susan Armstrong sarmstrong@cioninvestments.com
Investor Relations Charlie Arestia
carestia@cioninvestments.com (646) 253-8259
James Carbonara Hayden IR (646)-755-7412 James@haydenir.com
CION Investment (NYSE:CION)
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