CION Investment Corporation Reports Third Quarter 2024 Financial Results
Solid Performance and Increased Financial Flexibility
CION also announced that, on
THIRD QUARTER AND OTHER HIGHLIGHTS
-
Net investment income and earnings per share for the quarter ended
September 30, 2024 were$0.40 per share and$(0.01) per share, respectively; -
Net asset value per share was
$15.73 as ofSeptember 30, 2024 compared to$16.08 as ofJune 30, 2024 , a decrease of$0.35 per share, or 2.2%. The decrease was primarily due to mark-to-market price declines to the Company’s portfolio during the quarter endedSeptember 30, 2024 ; -
As of
September 30, 2024 , the Company had$1.07 billion of total principal amount of debt outstanding, of which 51% was comprised of senior secured bank debt and 49% was comprised of unsecured debt. The Company’s net debt-to-equity ratio was 1.18x as ofSeptember 30, 2024 compared to 1.13x as ofJune 30, 2024 ; -
As of
September 30, 2024 , the Company had total investments at fair value of$1.75 billion in 103 portfolio companies across 24 industries. The investment portfolio was comprised of 85.5% senior secured loans, including 85.3% in first lien investments;1 -
During the quarter, the Company funded new investment commitments of
$78 million , funded previously unfunded commitments of$15 million , and had sales and repayments totaling$154 million , resulting in a net decrease to the Company's funded portfolio of$61 million ; -
As of
September 30, 2024 , investments on non-accrual status amounted to 1.85% and 3.40% of the total investment portfolio at fair value and amortized cost, respectively, compared to 1.36% and 2.69%, respectively, as ofJune 30, 2024 ; -
During the quarter, the Company repurchased 165,737 shares of its common stock under its 10b5-1 trading plan at an average price of
$12.08 per share for a total repurchase amount of$2.0 million . ThroughSeptember 30, 2024 , the Company repurchased a total of 3,598,554 shares of its common stock under its 10b5-1 trading plan at an average price of$10.09 per share for a total repurchase amount of$36.3 million ; -
On
July 15, 2024 , the Company further amended its$675 million senior secured credit facility withJPMorgan 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 fromJuly 15, 2024 toJune 15, 2026 and the maturity date fromMay 15, 2025 toJune 15, 2027 2; -
On
September 18, 2024 , the Company completed a private offering pursuant to which the Company issued an additional$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 3.90% per year; -
On
September 24, 2024 , the Company fully repaid all outstanding borrowings of$30 million under its 2021 term loan from an Israeli institutional investor that was due onSeptember 30, 2024 ; -
On
September 30, 2024 , the Company entered into a 3-year unsecured term loan agreement with an Israeli institutional investor under which the Company borrowed$30 million , which bears interest at a floating rate equal to the three-month SOFR plus a credit spread of 3.80% per year; and -
On
October 3, 2024 , the Company completed a public baby bond offering in theU.S. pursuant to which the Company issued$172.5 million of its unsecured 7.50% Notes due 2029, which listed and commenced trading on the NYSE under the ticker symbol "CICB" onOctober 9, 2024 .
DISTRIBUTIONS
-
For the quarter ended
September 30, 2024 , the Company paid a quarterly base distribution totaling$19.2 million , or$0.36 per share.
“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) |
|
|
|
|
||||
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) |
|
|
|
|
||||
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
Operating expenses for the three months ended
PORTFOLIO AND INVESTMENT ACTIVITY1
A summary of the Company's investment activity for the three months ended
|
|
|
|
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
PORTFOLIO SUMMARY1
As of
|
|
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 |
||||
|
|
|
|
|
||
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 |
|
|
|
|
As of
LIQUIDITY AND CAPITAL RESOURCES
As of
EARNINGS CONFERENCE CALL
CION will host an earnings conference call on
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 |
|
|
||
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) |
||||||||
|
|
|
|
|
||||
|
|
(unaudited) |
|
(unaudited) |
||||
Assets |
||||||||
Investments, at fair value: |
|
|
|
|
||||
Non-controlled, non-affiliated investments (amortized cost of |
|
$ |
1,381,177 |
|
|
$ |
1,502,910 |
|
Non-controlled, affiliated investments (amortized cost of |
|
|
273,152 |
|
|
|
250,411 |
|
Controlled investments (amortized cost of |
|
|
151,900 |
|
|
|
152,804 |
|
Total investments, at fair value (amortized cost of |
|
|
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 |
|
$ |
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, |
|
|
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
|
|
Nine Months Ended
|
|
Year Ended
|
||||||||||||||
|
|
|
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
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
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
View source version on businesswire.com: https://www.businesswire.com/news/home/20241107247848/en/
Media
sarmstrong@cioninvestments.com
Investor Relations
carestia@cioninvestments.com
(646) 253-8259
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