CION Investment Corporation (NYSE: CION) ("CION" or the "Company") today reported financial results for the third quarter ended September 30, 2023 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.
CION also announced that, on November 6, 2023, its co-chief executive officers declared a fourth quarter 2023 regular distribution of $0.34 per share payable on December 15, 2023 to shareholders of record as of December 1, 2023.
THIRD QUARTER AND OTHER HIGHLIGHTS
DISTRIBUTIONS
SUBSEQUENT EVENTS
Michael A. Reisner, co-Chief Executive Officer of CION, commented:
"We are pleased to have delivered another strong quarter, supported by NII out-earning the dividends and quarterly NAV growth. Our credit performance remains robust, with a decline in non-accruals, down to 1.03% of fair value, and 99% of our portfolio is risk-rated at 3 or higher. We continue to focus on first lien loans to true middle-market companies and have once again demonstrated our ability to access the lending markets, expanding our unsecured debt offering, and maintaining a conservative approach to leverage?all while delivering strong returns to our investors. As we look ahead, CION is strategically positioned to deliver robust returns to shareholders."
SELECTED FINANCIAL HIGHLIGHTS
|
|
As of |
||||
(in thousands, except per share data) |
|
September 30, 2023 |
|
June 30, 2023 |
||
Investment portfolio, at fair value1 |
|
$ |
1,727,943 |
|
$ |
1,687,691 |
Total debt outstanding2 |
|
$ |
1,008,212 |
|
$ |
985,712 |
Net assets |
|
$ |
860,760 |
|
$ |
836,364 |
Net asset value per share |
|
$ |
15.80 |
|
$ |
15.31 |
Debt-to-equity |
|
1.17x |
|
1.18x |
||
Net debt-to-equity |
|
1.03x |
|
1.04x |
|
|
Three Months Ended |
||||||
(in thousands, except share and per share data) |
|
September 30, 2023 |
|
June 30, 2023 |
||||
Total investment income |
|
$ |
67,540 |
|
|
$ |
58,496 |
|
Total operating expenses and income tax expense |
|
$ |
37,550 |
|
|
$ |
35,080 |
|
Net investment income after taxes |
|
$ |
29,990 |
|
|
$ |
23,416 |
|
Net realized losses |
|
$ |
(8,123 |
) |
|
$ |
(18,928 |
) |
Net unrealized gains |
|
$ |
25,606 |
|
|
$ |
23,406 |
|
Net increase in net assets resulting from operations |
|
$ |
47,473 |
|
|
$ |
27,894 |
|
|
|
|
|
|
||||
Net investment income per share |
|
$ |
0.55 |
|
|
$ |
0.43 |
|
Net realized and unrealized gains per share |
|
$ |
0.32 |
|
|
$ |
0.08 |
|
Earnings per share |
|
$ |
0.87 |
|
|
$ |
0.51 |
|
|
|
|
|
|
||||
Weighted average shares outstanding |
|
|
54,561,367 |
|
|
|
54,788,740 |
|
Distributions declared per share |
|
$ |
0.39 |
|
|
$ |
0.34 |
|
Total investment income for the three months ended September 30, 2023 and June 30, 2023 was $67.5 million and $58.5 million, respectively. The increase in investment income was primarily driven by make-whole payments received on certain investments during the three months ended September 30, 2023.
Operating expenses for the three months ended September 30, 2023 and June 30, 2023 were $37.6 million and $35.1 million, respectively. During the quarter ended September 30, 2023, the Company incurred higher advisory fees due to an increase in investment income and higher interest expense because of an increase in SOFR and LIBOR rates as compared to the quarter ended June 30, 2023.
PORTFOLIO AND INVESTMENT ACTIVITY1
A summary of the Company's investment activity for the three months ended September 30, 2023 is as follows:
|
|
New Investment Commitments |
|
Sales and Repayments |
||||||||
Investment Type |
|
$ in Thousands |
|
% of Total |
|
$ in Thousands |
|
% of Total |
||||
Senior secured first lien debt |
|
$ |
96,427 |
|
100 |
% |
|
$ |
96,283 |
|
100 |
% |
Senior secured second lien debt |
|
|
? |
|
? |
|
|
|
5 |
|
? |
|
Collateralized securities and structured products - equity |
|
|
? |
|
? |
|
|
|
86 |
|
? |
|
Equity |
|
|
377 |
|
? |
|
|
|
? |
|
? |
|
Total |
|
$ |
96,804 |
|
100 |
% |
|
$ |
96,374 |
|
100 |
% |
During the three months ended September 30, 2023, new investment commitments were made across 3 new and 11 existing portfolio companies. During the same period, the Company received the full repayment on investments in 5 portfolio companies and sold all investments in 1 portfolio company. As a result, the number of portfolio companies decreased from 112 as of June 30, 2023 to 109 as of September 30, 2023.
PORTFOLIO SUMMARY1
As of September 30, 2023, the Company's investments consisted of the following:
|
|
Investments at Fair Value |
||||
Investment Type |
|
$ in Thousands |
|
% of Total |
||
Senior secured first lien debt |
|
$ |
1,481,498 |
|
85.7 |
% |
Senior secured second lien debt |
|
|
36,114 |
|
2.1 |
% |
Collateralized securities and structured products - equity |
|
|
1,224 |
|
0.1 |
% |
Unsecured debt |
|
|
14,631 |
|
0.8 |
% |
Equity |
|
|
194,476 |
|
11.3 |
% |
Total |
|
$ |
1,727,943 |
|
100.0 |
% |
The following table presents certain selected information regarding the Company's investments:
|
|
As of |
||
|
|
September 30, 2023 |
|
June 30, 2023 |
Number of portfolio companies |
|
109 |
|
112 |
Percentage of performing loans bearing a floating rate3 |
|
92.5 % |
|
92.2 % |
Percentage of performing loans bearing a fixed rate3 |
|
7.5 % |
|
7.8 % |
Yield on debt and other income producing investments at amortized cost4 |
|
13.04 % |
|
12.38 % |
Yield on performing loans at amortized cost4 |
|
13.55 % |
|
13.10 % |
Yield on total investments at amortized cost |
|
11.81 % |
|
11.45 % |
Weighted average leverage (net debt/EBITDA)5 |
|
4.78x |
|
4.83x |
Weighted average interest coverage5 |
|
1.93x |
|
2.00x |
Median EBITDA6 |
|
$33.7 million |
|
$35.0 million |
As of September 30, 2023, investments on non-accrual status represented 1.0% and 3.8% of the total investment portfolio at fair value and amortized cost, respectively. As of June 30, 2023, investments on non-accrual status represented 1.7% and 4.8% of the total investment portfolio at fair value and amortized cost, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2023, the Company had $1,008 million of total principal amount of debt outstanding, comprised of $722 million of outstanding borrowings under its senior secured credit facilities and $286 million of unsecured notes and term loans. The combined weighted average interest rate on debt outstanding was 8.3% for the quarter ended September 30, 2023. As of September 30, 2023, the Company had $124 million in cash and short-term investments and $103 million available under its financing arrangements.2
EARNING CONFERENCE CALL
CION will host an earnings conference call on Thursday, November 9, 2023 at 11:00 am Eastern Time to discuss its financial results for the third quarter ended September 30, 2023. 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 2023 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 - Events and Presentations section of CION's website.
ENDNOTES
CION Investment Corporation |
||||||||
Consolidated Balance Sheets |
||||||||
(in thousands, except share and per share amounts) |
||||||||
|
|
September 30, 2023 |
|
June 30, 2023 |
||||
|
|
(unaudited) |
|
(unaudited) |
||||
Assets |
||||||||
Investments, at fair value: |
|
|
|
|
||||
Non-controlled, non-affiliated investments (amortized cost of $1,555,700 and $1,583,865, respectively) |
|
$ |
1,508,505 |
|
|
$ |
1,510,372 |
|
Non-controlled, affiliated investments (amortized cost of $207,222 and $204,248, respectively) |
|
|
201,617 |
|
|
|
198,084 |
|
Controlled investments (amortized cost of $132,900 and $76,900, respectively) |
|
|
134,755 |
|
|
|
80,006 |
|
Total investments, at fair value (amortized cost of $1,895,822 and $1,865,013, respectively) |
|
|
1,844,877 |
|
|
|
1,788,462 |
|
Cash |
|
|
6,805 |
|
|
|
11,515 |
|
Interest receivable on investments |
|
|
40,378 |
|
|
|
33,200 |
|
Receivable due on investments sold and repaid |
|
|
2,646 |
|
|
|
997 |
|
Dividends receivable on investments |
|
|
82 |
|
|
|
? |
|
Prepaid expenses and other assets |
|
|
1,552 |
|
|
|
608 |
|
Total assets |
|
$ |
1,896,340 |
|
|
$ |
1,834,782 |
|
|
|
|
|
|
||||
Liabilities and Shareholders' Equity |
||||||||
Liabilities |
|
|
|
|
||||
Financing arrangements (net of unamortized debt issuance costs of $8,001 and $8,976, respectively) |
|
$ |
1,000,211 |
|
|
$ |
976,737 |
|
Payable for investments purchased |
|
|
9,663 |
|
|
|
? |
|
Accounts payable and accrued expenses |
|
|
1,510 |
|
|
|
1,344 |
|
Interest payable |
|
|
7,238 |
|
|
|
8,183 |
|
Accrued management fees |
|
|
6,741 |
|
|
|
6,546 |
|
Accrued subordinated incentive fee on income |
|
|
6,362 |
|
|
|
4,967 |
|
Accrued administrative services expense |
|
|
1,064 |
|
|
|
574 |
|
Share repurchases payable |
|
|
67 |
|
|
|
67 |
|
Shareholder distribution payable |
|
|
2,724 |
|
|
|
? |
|
Total liabilities |
|
|
1,035,580 |
|
|
|
998,418 |
|
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
||||
Shareholders' Equity |
|
|
|
|
||||
Common stock, $0.001 par value; 500,000,000 shares authorized; 54,477,427 and 54,645,571 shares issued, and 54,464,804 and 54,632,827 shares outstanding, respectively |
|
|
54 |
|
|
|
55 |
|
Capital in excess of par value |
|
|
1,035,929 |
|
|
|
1,037,729 |
|
Accumulated distributable losses |
|
|
(175,223 |
) |
|
|
(201,420 |
) |
Total shareholders' equity |
|
|
860,760 |
|
|
|
836,364 |
|
Total liabilities and shareholders' equity |
|
$ |
1,896,340 |
|
|
$ |
1,834,782 |
|
Net asset value per share of common stock at end of period |
|
$ |
15.80 |
|
|
$ |
15.31 |
|
CION 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, |
||||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
|
||||||||||
Investment income |
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-controlled, non-affiliated investments |
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
|
$ |
51,032 |
|
|
$ |
37,336 |
|
|
$ |
140,917 |
|
|
$ |
100,079 |
|
|
$ |
140,560 |
|
Paid-in-kind interest income |
|
|
6,608 |
|
|
|
6,876 |
|
|
|
15,736 |
|
|
|
16,095 |
|
|
|
22,737 |
|
Fee income |
|
|
2,447 |
|
|
|
4,542 |
|
|
|
4,744 |
|
|
|
8,045 |
|
|
|
9,019 |
|
Dividend income |
|
|
82 |
|
|
|
57 |
|
|
|
82 |
|
|
|
103 |
|
|
|
103 |
|
Non-controlled, affiliated investments |
|
|
|
|
|
|
|
|
|
|
||||||||||
Paid-in-kind interest income |
|
|
2,471 |
|
|
|
1,174 |
|
|
|
5,953 |
|
|
|
3,493 |
|
|
|
6,204 |
|
Interest income |
|
|
1,341 |
|
|
|
1,949 |
|
|
|
5,549 |
|
|
|
4,517 |
|
|
|
5,865 |
|
Dividend income |
|
|
13 |
|
|
|
13 |
|
|
|
3,946 |
|
|
|
66 |
|
|
|
79 |
|
Fee income |
|
|
35 |
|
|
|
19 |
|
|
|
2,432 |
|
|
|
525 |
|
|
|
525 |
|
Controlled investments |
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
|
|
1,413 |
|
|
|
2,197 |
|
|
|
5,304 |
|
|
|
6,066 |
|
|
|
6,049 |
|
Dividend income |
|
|
? |
|
|
|
? |
|
|
|
4,250 |
|
|
|
? |
|
|
|
1,275 |
|
Paid-in-kind interest income |
|
|
1,048 |
|
|
|
? |
|
|
|
1,048 |
|
|
|
409 |
|
|
|
2,482 |
|
Total investment income |
|
|
67,540 |
|
|
|
54,163 |
|
|
|
191,011 |
|
|
|
139,398 |
|
|
|
194,898 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
||||||||||
Management fees |
|
|
6,741 |
|
|
|
6,942 |
|
|
|
19,963 |
|
|
|
20,436 |
|
|
|
27,361 |
|
Administrative services expense |
|
|
996 |
|
|
|
733 |
|
|
|
2,743 |
|
|
|
2,234 |
|
|
|
3,348 |
|
Subordinated incentive fee on income |
|
|
6,362 |
|
|
|
5,421 |
|
|
|
17,662 |
|
|
|
13,645 |
|
|
|
18,710 |
|
General and administrative |
|
|
1,931 |
|
|
|
2,027 |
|
|
|
5,960 |
|
|
|
5,961 |
|
|
|
7,278 |
|
Interest expense |
|
|
21,757 |
|
|
|
13,469 |
|
|
|
61,533 |
|
|
|
32,769 |
|
|
|
49,624 |
|
Total operating expenses |
|
|
37,787 |
|
|
|
28,592 |
|
|
|
107,861 |
|
|
|
75,045 |
|
|
|
106,321 |
|
Net investment income before taxes |
|
|
29,753 |
|
|
|
25,571 |
|
|
|
83,150 |
|
|
|
64,353 |
|
|
|
88,577 |
|
Income tax (benefit) expense, including excise tax |
|
|
(237 |
) |
|
|
14 |
|
|
|
(114 |
) |
|
|
25 |
|
|
|
372 |
|
Net investment income after taxes |
|
|
29,990 |
|
|
|
25,557 |
|
|
|
83,264 |
|
|
|
64,328 |
|
|
|
88,205 |
|
Realized and unrealized gains (losses) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net realized (losses) gains on: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-controlled, non-affiliated investments |
|
|
(8,123 |
) |
|
|
4,267 |
|
|
|
(31,576 |
) |
|
|
4,475 |
|
|
|
(11,217 |
) |
Non-controlled, affiliated investments |
|
|
? |
|
|
|
(21,433 |
) |
|
|
? |
|
|
|
(21,530 |
) |
|
|
(21,530 |
) |
Foreign currency |
|
|
? |
|
|
|
(3 |
) |
|
|
? |
|
|
|
(3 |
) |
|
|
(3 |
) |
Net realized losses |
|
|
(8,123 |
) |
|
|
(17,169 |
) |
|
|
(31,576 |
) |
|
|
(17,058 |
) |
|
|
(32,750 |
) |
Net change in unrealized appreciation (depreciation) on: |
|
|
|
|
|
|
|
|
||||||||||||
Non-controlled, non-affiliated investments |
|
|
26,298 |
|
|
|
(669 |
) |
|
|
8,608 |
|
|
|
(25,646 |
) |
|
|
(19,807 |
) |
Non-controlled, affiliated investments |
|
|
559 |
|
|
|
18,966 |
|
|
|
(9,136 |
) |
|
|
13,609 |
|
|
|
13,523 |
|
Controlled investments |
|
|
(1,251 |
) |
|
|
7,298 |
|
|
|
(6,838 |
) |
|
|
5,373 |
|
|
|
970 |
|
Net change in unrealized appreciation (depreciation) |
|
|
25,606 |
|
|
|
25,595 |
|
|
|
(7,366 |
) |
|
|
(6,664 |
) |
|
|
(5,314 |
) |
Net realized and unrealized gains (losses) |
|
|
17,483 |
|
|
|
8,426 |
|
|
|
(38,942 |
) |
|
|
(23,722 |
) |
|
|
(38,064 |
) |
Net increase in net assets resulting from operations |
|
$ |
47,473 |
|
|
$ |
33,983 |
|
|
$ |
44,322 |
|
|
$ |
40,606 |
|
|
$ |
50,141 |
|
Per share information?basic and diluted |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase in net assets per share resulting from operations |
|
$ |
0.87 |
|
|
$ |
0.60 |
|
|
$ |
0.81 |
|
|
$ |
0.71 |
|
|
$ |
0.89 |
|
Net investment income per share |
|
$ |
0.55 |
|
|
$ |
0.45 |
|
|
$ |
1.52 |
|
|
$ |
1.13 |
|
|
$ |
1.56 |
|
Weighted average shares of common stock outstanding |
|
|
54,561,367 |
|
|
|
56,816,992 |
|
|
|
54,817,855 |
|
|
|
56,910,773 |
|
|
|
56,556,510 |
|
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, 2023. 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 9, 2023, 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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