Reports Another Solid Quarterly Performance,
Out Earning the Total Distribution by 41% and Achieving a $0.49 per
Share Increase in NAV
Announces Fourth Quarter 2023 Base
Distribution of $0.34 per Share
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
- Net investment income and earnings per share for the quarter
ended September 30, 2023 were $0.55 per share and $0.87 per share,
respectively;
- Net asset value per share was $15.80 as of September 30, 2023
compared to $15.31 as of June 30, 2023, an increase of $0.49 per
share, or 3.2%. The increase was primarily due to the Company out
earning its distribution for the period and mark-to-market
adjustments to the Company’s portfolio;
- As of September 30, 2023, the Company had $1,008 million of
total principal amount of debt outstanding, of which 72% was
comprised of senior secured bank debt and 28% was comprised of
unsecured debt. The Company’s net debt-to-equity ratio was 1.03x as
of September 30, 2023 compared to 1.04x as of June 30, 2023;
- As of September 30, 2023, the Company had total investments at
fair value of $1,728 million in 109 portfolio companies across 24
industries. The investment portfolio was comprised of 87.8% senior
secured loans, including 85.7% in first lien investments;1
- During the quarter, the Company funded new investment
commitments of $93 million, funded previously unfunded commitments
of $10 million, and had sales and repayments totaling $96 million,
resulting in a net increase to the Company's funded portfolio of $7
million;
- As of September 30, 2023, investments on non-accrual status
amounted to 1.0% and 3.8% of the total investment portfolio at fair
value and amortized cost, respectively, which are down from 1.7%
and 4.8%, respectively, as of June 30, 2023; and
- During the quarter, the Company repurchased 168,023 shares of
its common stock under its 10b5-1 trading plan at an average price
of $10.71 per share for a total repurchase amount of $1.8 million.
Through September 30, 2023, the Company repurchased a total of
2,493,645 shares of its common stock under its 10b5-1 trading plan
at an average price of $9.65 per share for a total repurchase
amount of $24.1 million.
DISTRIBUTIONS
- For the quarter ended September 30, 2023, the Company paid a
regular quarterly distribution totaling $18.6 million, or $0.34 per
share, and declared supplemental distributions of (a) $2.7 million,
or $0.05 per share, which was paid on October 16, 2023 and (b)
$0.05 per share, payable on January 15, 2024 to shareholders of
record as of December 29, 2023.
SUBSEQUENT EVENTS
- On October 10, 2023, the Company completed a private offering
in Israel pursuant to which the Company issued approximately $33.1
million of its additional unsecured Series A Notes due 2026, which
bear interest at a floating rate equal to SOFR plus a credit spread
of 3.82% per year payable quarterly; and
- On November 8, 2023, the Company completed a private offering
pursuant to which the Company issued $100 million of its unsecured
notes due 2027, which bear interest at a floating rate equal to the
three-month SOFR plus a credit spread of 4.75% per year and subject
to a 2.00% SOFR floor payable quarterly.
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
- The discussion of the investment portfolio excludes short-term
investments.
- Total debt outstanding excludes netting of debt issuance costs
of $8.0 million and $9.0 million as of September 30, 2023 and June
30, 2023, respectively.
- 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.
- 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.
- 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.
- Median EBITDA is calculated based on the portfolio company's
EBITDA as of the Company's initial investment.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109335663/en/
Media Susan Armstrong sarmstrong@cioninvestments.com
Investor Relations 1-800-343-3736
Analysts and Institutional Investors James Carbonara
Hayden IR (646)-755-7412 James@haydenir.com
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