CION Investment Corporation Reports Second Quarter 2023 Financial Results

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Reports Another Solid Quarterly Performance, Out Earning the Distribution by 26% and Achieving a $0.20 per Share Increase in Net Asset Value

Announces Third Quarter 2023 Base Distribution of $0.34 per Share

Announces Total Supplemental Distribution of $0.10 per Share

NEW YORK, August 09, 2023--(BUSINESS WIRE)--CION Investment Corporation (NYSE: CION) ("CION" or the "Company") today reported financial results for the second quarter ended June 30, 2023 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

CION also announced that, on August 7, 2023, its co-chief executive officers declared (i) a third quarter 2023 regular distribution of $0.34 per share payable on September 15, 2023 to shareholders of record as of September 1, 2023 and (ii) a supplemental distribution of $0.05 per share for both the third and fourth quarters of 2023, payable on October 16, 2023 and January 15, 2024, respectively, to shareholders of record as of September 29, 2023 and December 29, 2023, respectively.

SECOND QUARTER AND OTHER HIGHLIGHTS

  • Net investment income and earnings per share for the quarter ended June 30, 2023 were $0.43 per share and $0.51 per share, respectively;

  • Net asset value per share was $15.31 as of June 30, 2023 compared to $15.11 as of March 31, 2023, an increase of $0.20 per share, or 1.3%. 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 June 30, 2023, the Company had $986 million of total principal amount of debt outstanding, of which 71% was comprised of senior secured bank debt and 29% was comprised of unsecured debt. The Company’s net debt-to-equity ratio was 1.04x as of June 30, 2023 compared to 1.02x as of March 31, 2023;

  • As of June 30, 2023, the Company had total investments at fair value of $1,688 million in 112 portfolio companies across 24 industries. The investment portfolio was comprised of 89.3% senior secured loans, including 87.0% in first lien investments;1

  • During the quarter, the Company funded new investment commitments of $62 million, funded previously unfunded commitments of $8 million, and had sales and repayments totaling $55 million, resulting in a net increase to the Company's funded portfolio of $15 million;

  • As of June 30, 2023, investments on non-accrual status amounted to 1.7% and 4.8% of the total investment portfolio at fair value and amortized cost, respectively;

  • During the quarter, the Company repurchased 328,628 shares of its common stock under its 10b5-1 trading plan at an average price of $9.81 per share for a total repurchase amount of $3.2 million. Through June 30, 2023, the Company repurchased a total of 2,325,622 shares of its common stock under its 10b5-1 trading plan at an average price of $9.57 per share for a total repurchase amount of $22.3 million and;

  • During the quarter, the Company amended its senior secured credit facilities with JPMorgan Chase Bank, National Association and UBS AG to, among other things, extend the maturity from May 15, 2024 and November 19, 2023, respectively, to May 15, 2025 and November 19, 2024, respectively.

DISTRIBUTIONS

  • For the quarter ended June 30, 2023, the Company paid a regular quarterly distribution totaling $18.6 million, or $0.34 per share.

Michael A. Reisner, co-Chief Executive Officer of CION, commented:

"Our quarterly earnings showed continued strength, with NII of $0.43 per share, which once again outperformed our base distribution of $0.34 per share. Moreover, our NAV grew by over 1%, or approximately $0.20 per share.

Our portfolio's credit quality is solid, with many softer credit positions from last quarter related to consumer-facing businesses already restructured. Looking forward, we expect non-accruals to align more closely with our historical average of below 1% on a pro-forma basis.

Amid recent market uncertainties, our share buyback program has capitalized on attractive market price discounts to our NAV per share, supported by our strong balance sheet. Recognizing the significant undervaluation of our shares, we have already repurchased 666,657 shares in 2023, reaffirming our confidence in the company's future growth and potential.

Given our continued strong financial performance, we have declared a supplemental distribution of $0.05/share for both Q3 and Q4."

Looking ahead, CION is confidently positioned to deliver robust returns to shareholders."

SELECTED FINANCIAL HIGHLIGHTS

As of

(in thousands, except per share data)

June 30, 2023

March 31, 2023

Investment portfolio, at fair value1

$

1,687,691

$

1,657,026

Total debt outstanding2

$

985,712

$

1,010,712

Net assets

$

836,364

$

830,310

Net asset value per share

$

15.31

$

15.11

Debt-to-equity

1.18x

1.22x

Net debt-to-equity

1.04x

1.02x

Three Months Ended

(in thousands, except share and per share data)

June 30, 2023

March 31, 2023

Total investment income

$

58,496

$

64,975

Total operating expenses and income tax expense

$

35,080

$

35,117

Net investment income after taxes

$

23,416

$

29,858

Net realized losses

$

(18,928

)

$

(4,525

)

Net unrealized gains (losses)

$

23,406

$

(56,378

)

Net increase (decrease) in net assets resulting from operations

$

27,894

$

(31,045

)

Net investment income per share

$

0.43

$

0.54

Net realized and unrealized gains (losses) per share

$

0.08

$

(1.10

)

Earnings per share

$

0.51

$

(0.56

)

Weighted average shares outstanding

54,788,740

55,109,482

Distributions declared per share

$

0.34

$

0.34

Total investment income for the three months ended June 30, 2023 and March 31, 2023 was $58.5 million and $65.0 million, respectively. The decrease in investment income was primarily driven by a decrease in dividend income from certain investments and fees generated from investment activity, partially offset by an increase in SOFR and LIBOR rates, during the three months ended June 30, 2023 compared to the three months ended March 31, 2023.

Operating expenses for the three months ended June 30, 2023 and March 31, 2023 were $35.1 million. During the quarter ended June 30, 2023, the Company incurred higher interest expense due to an increase in SOFR and LIBOR rates which was offset by lower advisory fees as compared to the quarter ended March 31, 2023.

PORTFOLIO AND INVESTMENT ACTIVITY1

A summary of the Company's investment activity for the three months ended June 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

$

62,779

90

%

$

54,498

100

%

Senior secured second lien debt

—

—

5

—

Collateralized securities and structured products - equity

—

—

96

—

Unsecured debt

4,200

6

%

—

—

Equity

2,906

4

%

—

—

Total

$

69,885

100

%

$

54,599

100

%

During the three months ended June 30, 2023, new investment commitments were made across 4 new and 8 existing portfolio companies. During the same period, the Company received the full repayment of a loan from one portfolio company. As a result, the number of portfolio companies increased from 109 as of March 31, 2023 to 112 as of June 30, 2023.

PORTFOLIO SUMMARY1

As of June 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

$

1,468,630

87.0

%

Senior secured second lien debt

39,544

2.3

%

Collateralized securities and structured products - equity

1,046

0.1

%

Unsecured debt

17,301

1.0

%

Equity

161,170

9.6

%

Total

$

1,687,691

100.0

%

The following table presents certain selected information regarding the Company’s investments:

As of

June 30, 2023

March 31, 2023

Number of portfolio companies

112

109

Percentage of performing loans bearing a floating rate3

92.2 %

92.8 %

Percentage of performing loans bearing a fixed rate3

7.8 %

7.2 %

Yield on debt and other income producing investments at amortized cost4

12.38 %

11.97 %

Yield on performing loans at amortized cost4

13.10 %

12.90 %

Yield on total investments at amortized cost

11.45 %

11.18 %

Weighted average leverage (net debt/EBITDA)5

4.83x

5.11x

Weighted average interest coverage5

2.00x

2.07x

Median EBITDA6

$35.0 million

$35.0 million

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. As of March 31, 2023, investments on non-accrual status represented 3.5% and 6.8% of the total investment portfolio at fair value and amortized cost, respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2023, the Company had $986 million of total principal amount of debt outstanding, comprised of $700 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 7.9% for the quarter ended June 30, 2023. As of June 30, 2023, the Company had $112 million in cash and short-term investments and $125 million available under its financing arrangements.2

EARNING CONFERENCE CALL

CION will host an earnings conference call on Wednesday, August 9, 2023 at 11:00 am Eastern Time to discuss its financial results for the second quarter ended June 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 Second Quarter 2023 Financial Results Webcast. 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 $9.0 million and $8.3 million as of June 30, 2023 and March 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 believe 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, excluding 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.

CION Investment Corporation

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

June 30, 2023

March 31, 2023

(unaudited)

(unaudited)

Assets

Investments, at fair value:

Non-controlled, non-affiliated investments (amortized cost of $1,583,865 and $1,576,870, respectively)

$

1,510,372

$

1,479,976

Non-controlled, affiliated investments (amortized cost of $204,248 and $169,539, respectively)

198,084

162,785

Controlled investments (amortized cost of $76,900)

80,006

80,591

Total investments, at fair value (amortized cost of $1,823,309 and $1,803,609, respectively)

1,788,462

1,723,352

Cash

11,515

96,016

Interest receivable on investments

33,200

27,333

Receivable due on investments sold and repaid

997

3,239

Prepaid expenses and other assets

608

4,552

Total assets

$

1,834,782

$

1,854,492

Liabilities and Shareholders' Equity

Liabilities

Financing arrangements (net of unamortized debt issuance costs of $8,976 and $8,316, respectively)

$

976,737

$

1,002,396

Accounts payable and accrued expenses

1,344

1,075

Interest payable

8,183

7,007

Accrued management fees

6,546

6,676

Accrued subordinated incentive fee on income

4,967

6,334

Accrued administrative services expense

574

694

Share repurchases payable

67

—

Total liabilities

998,418

1,024,182

Shareholders' Equity

Common stock, $0.001 par value; 500,000,000 shares authorized; 54,645,571 and 54,961,455 shares issued, and 54,632,827 and 54,961,455 shares outstanding, respectively

55

55

Capital in excess of par value

1,037,729

1,040,955

Accumulated distributable losses

(201,420

)

(210,700

)

Total shareholders' equity

836,364

830,310

Total liabilities and shareholders' equity

$

1,834,782

$

1,854,492

Net asset value per share of common stock at end of period

$

15.31

$

15.11

CION Investment Corporation

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

Three Months Ended

June 30,

Six Months Ended

June 30,

Year Ended

December 31,

2023

2022

2023

2022

2022

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Investment income

Non-controlled, non-affiliated investments

Interest income

$

47,117

$

31,749

$

89,885

$

62,743

$

140,560

Paid-in-kind interest income

4,297

4,613

9,128

9,219

22,737

Fee income

1,154

2,554

2,297

3,503

9,019

Dividend income

—

—

—

46

103

Non-controlled, affiliated investments

Interest income

1,734

1,545

4,208

2,568

5,865

Dividend income

52

53

3,933

53

79

Paid-in-kind interest income

1,751

874

3,482

2,319

6,204

Fee income

477

13

2,397

506

525

Controlled investments

Dividend income

—

—

4,250

—

1,275

Interest income

1,914

1,742

3,891

3,869

6,049

Paid-in-kind interest income

—

409

—

409

2,482

Total investment income

58,496

43,552

123,471

85,235

194,898

Operating expenses

Management fees

6,546

6,839

13,222

13,494

27,361

Administrative services expense

910

781

1,747

1,501

3,348

Subordinated incentive fee on income

4,965

4,091

11,300

8,224

18,710

General and administrative

2,074

1,712

4,029

3,934

7,278

Interest expense

20,467

10,841

39,776

19,300

49,624

Total operating expenses

34,962

24,264

70,074

46,453

106,321

Net investment income before taxes

23,534

19,288

53,397

38,782

88,577

Income tax expense, including excise tax

118

—

123

11

372

Net investment income after taxes

23,416

19,288

53,274

38,771

88,205

Realized and unrealized (losses) gains

Net realized (losses) gains on:

Non-controlled, non-affiliated investments

(18,928

)

180

(23,453

)

208

(11,217

)

Non-controlled, affiliated investments

—

—

—

(97

)

(21,530

)

Foreign currency

—

—

—

—

(3

)

Net realized (losses) gains

(18,928

)

180

(23,453

)

111

(32,750

)

Net change in unrealized appreciation (depreciation) on:

Non-controlled, non-affiliated investments

23,396

(17,482

)

(17,690

)

(24,977

)

(19,807

)

Non-controlled, affiliated investments

595

(1,577

)

(9,695

)

(5,357

)

13,523

Controlled investments

(585

)

(1,675

)

(5,587

)

(1,925

)

970

Net change in unrealized appreciation (depreciation)

23,406

(20,734

)

(32,972

)

(32,259

)

(5,314

)

Net realized and unrealized gains (losses)

4,478

(20,554

)

(56,425

)

(32,148

)

(38,064

)

Net increase (decrease) in net assets resulting from operations

$

27,894

$

(1,266

)

$

(3,151

)

$

6,623

$

50,141

Per share information—basic and diluted

Net increase (decrease) in net assets per share resulting from operations

$

0.51

$

(0.02

)

$

(0.06

)

$

0.12

$

0.89

Net investment income per share

$

0.43

$

0.34

$

0.97

$

0.68

$

1.56

Weighted average shares of common stock outstanding

54,788,740

56,958,440

54,948,225

56,958,440

56,556,510

ABOUT CION INVESTMENT CORPORATION

CION Investment Corporation is a leading publicly listed business development company that had approximately $1.8 billion in total assets as of June 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 August 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/20230809867159/en/

Contacts

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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