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CION Investment Corporation Reports Third Quarter 2022 Financial Results

Reports Another Solid Quarterly Performance Across All Key Financial Metrics

Announces Fourth Quarter 2022 Distribution of $0.31 per Share and its Intention to Declare a Special Year-End Distribution

NEW YORK, November 10, 2022--(BUSINESS WIRE)--CION Investment Corporation (NYSE: CION) ("CION" or the "Company") today reported financial results for the third quarter ended September 30, 2022 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

CION also announced that, on November 8, 2022, its co-chief executive officers declared a fourth quarter 2022 regular distribution of $0.31 per share payable on December 8, 2022 to shareholders of record as of December 1, 2022.

THIRD QUARTER AND OTHER HIGHLIGHTS

  • Net investment income and earnings per share for the quarter ended September 30, 2022 were $0.45 per share and $0.60 per share, respectively;

  • Net asset value per share was $16.26 as of September 30, 2022 compared to $15.89 as of June 30, 2022. The increase was primarily due to mark to market changes in the Company's portfolio and over earning its distribution for the period;

  • As of September 30, 2022, the Company had $958 million of total principal amount of debt outstanding, of which 79% was comprised of senior secured bank debt and 21% was comprised of unsecured debt. The Company’s debt-to-equity ratio was 1.05x as of September 30, 2022, which represents no change from the debt-to-equity ratio as of June 30, 2022;

  • As of September 30, 2022, the Company had total investments at fair value of $1,797 million in 119 portfolio companies across 22 industries. The investment portfolio was comprised of 92.0% senior secured loans, including 89.8% in first lien investments;1

  • During the quarter, the Company had new investment commitments of $134 million, funded new investment commitments of $127 million, funded previously unfunded commitments of $14 million, and had sales and repayments totaling $155 million, resulting in a net decrease to the Company's funded portfolio of $14 million;

  • As of September 30, 2022, investments on non-accrual status amounted to 0.4% and 1.7% of the total investment portfolio at fair value and amortized cost, respectively;

  • On August 16, 2022, as part of the previously announced $60 million share repurchase policy, the Company entered into a 10b5-1 trading plan with Wells Fargo Securities, LLC and began repurchasing its shares of common stock. During the quarter, the Company repurchased 695,476 shares of its common stock at an average price of $9.65 per share for a total repurchase amount of $6.7 million.

DISTRIBUTIONS

  • For the quarter ended September 30, 2022, the Company paid a regular quarterly distribution totaling $17.6 million, or $0.31 per share, which was an increase of $0.03 per share, or 10.7%, from the $0.28 per share regular distribution paid for the second quarter.

"Despite continuing turbulence in the market, we believe our clear strategic focus on first lien investments, steadfast commitment to a high level of diversification, and continuing penchant to avoid reaching for yield down the capital structure has positioned our portfolio well to perform through the myriad of challenges and headwinds that are expected over the next twelve to eighteen months. Amid challenging market conditions, we were able to generate both net investment income and NAV growth while remaining under-levered relative to our peers. As a result of higher base interest rates, the continued strength of our portfolio and the implementation of our 10b5-1 share repurchase plan, we were able to out earn our distribution and are pleased to announce our intention to declare a special distribution before the year is over," said Michael A. Reisner, co-Chief Executive Officer of CION.

SELECTED FINANCIAL HIGHLIGHTS

As of

(in thousands, except per share data)

September 30, 2022

June 30, 2022

Investment portfolio, at fair value1

$

1,797,244

$

1,791,107

Total debt outstanding2

$

957,500

$

947,500

Net assets

$

914,906

$

905,238

Net asset value per share

$

16.26

$

15.89

Debt-to-equity

1.05x

1.05x

Three Months Ended

(in thousands, except share and per share data)

September 30, 2022

June 30, 2022

Total investment income

$

54,163

$

43,552

Total operating expenses and income tax expense

$

28,606

$

24,264

Net investment income after taxes

$

25,557

$

19,288

Net realized (losses) gains

$

(17,169

)

$

180

Net unrealized gains (losses)

$

25,595

$

(20,734

)

Net increase (decrease) in net assets resulting from operations

$

33,983

$

(1,266

)

Net investment income per share

$

0.45

$

0.34

Net realized and unrealized gains (losses) per share

$

0.15

$

(0.36

)

Earnings per share

$

0.60

$

(0.02

)

Weighted average shares outstanding

56,816,992

56,958,440

Distributions declared per share

$

0.31

$

0.28

Total investment income for the three months ended September 30, 2022 and June 30, 2022 was $54.2 million and $43.6 million, respectively. The increase in investment income was primarily driven by an increase in LIBOR and SOFR rates and fees generated from the Company's investment activity during the three months ended September 30, 2022 compared to the three months ended June 30, 2022.

Operating expenses for the three months ended September 30, 2022 and June 30, 2022 were $28.6 million and $24.3 million, respectively. The increase in operating expenses was primarily driven by an increase in interest expense under the Company's financing arrangements due to higher LIBOR and SOFR rates during the quarter ended September 30, 2022 compared to the quarter ended June 30, 2022.

PORTFOLIO AND INVESTMENT ACTIVITY1

A summary of the Company's investment activity for the three months ended September 30, 2022 is as follows:

New Investment Commitments

Sales and Repayments

Investment Type

$ in Thousands

%

of Total

$ in Thousands

%

of Total

Senior secured first lien debt

$

112,078

84

%

$

154,469

100

%

Senior secured second lien debt

18,108

14

%

9

Collateralized securities and structured products - equity

133

Equity

3,379

2

%

261

Total

$

133,565

100

%

$

154,872

100

%

During the three months ended September 30, 2022, new investment commitments were made across 6 new portfolio companies and 5 existing portfolio companies. Sales and repayments were primarily driven by the full sale or repayment of investments in 8 portfolio companies. As a result, the number of portfolio companies decreased from 121 as of June 30, 2022 to 119 as of September 30, 2022.

PORTFOLIO SUMMARY1

As of September 30, 2022, the Company’s investments consisted of the following:

Investments at Fair Value

Investment Type

$ in

Thousands

%

of Total

Senior secured first lien debt

$

1,616,352

89.8

%

Senior secured second lien debt

38,716

2.2

%

Collateralized securities and structured products - equity

1,366

0.1

%

Unsecured debt

28,319

1.6

%

Equity

112,491

6.3

%

Total

$

1,797,244

100.0

%

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

As of

September 30, 2022

June 30, 2022

Number of portfolio companies

119

121

Percentage of performing loans bearing a floating rate3

89.1%

89.2%

Percentage of performing loans bearing a fixed rate3

10.9%

10.8%

Yield on debt and other income producing investments at amortized cost4

10.76%

9.14%

Yield on performing loans at amortized cost4

10.98%

9.51%

Yield on total investments at amortized cost

10.33%

8.90%

Weighted average leverage (net debt/EBITDA)5

4.97x

4.67x

Weighted average interest coverage5

2.67x

3.29x

Median EBITDA6

$37.3 million

$33.7 million

As of September 30, 2022, investments on non-accrual status represented 0.4% and 1.7% of the total investment portfolio at fair value and amortized cost, respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2022, the Company had $958 million of total principal amount of debt outstanding, comprised of $753 million of outstanding borrowings under its senior secured credit facilities and $205 million of unsecured notes and term loans. The combined weighted average interest rate on debt outstanding was 5.4% for the quarter ended September 30, 2022. As of September 30, 2022, the Company had $53 million in cash and short-term investments and $72 million available under its financing arrangements.2

EARNING CONFERENCE CALL

CION will host an earnings conference call on Thursday, November 10, 2022 at 11:00 am Eastern Time to discuss its financial results for the third quarter ended September 30, 2022. 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 Third Quarter 2022 Financial Results Webcast. Domestic callers can access the conference call by dialing (877) 445-9755. International callers can access the conference call by dialing +1 (201) 493-6744. 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 $7.0 million and $7.8 million as of September 30, 2022 and June 30, 2022, 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, 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.

CĪON Investment Corporation

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

September 30, 2022

June 30, 2022

(unaudited)

(unaudited)

Assets

Investments, at fair value:

Non-controlled, non-affiliated investments (amortized cost of $1,629,044 and $1,660,187, respectively)

$

1,567,403

$

1,601,753

Non-controlled, affiliated investments (amortized cost of $138,586 and $131,439, respectively)

142,202

113,554

Controlled investments (amortized cost of $84,347 and $84,347, respectively)

97,443

90,145

Total investments, at fair value (amortized cost of $1,851,977 and $1,875,973, respectively)

1,807,048

1,805,452

Cash

43,661

42,542

Interest receivable on investments

26,976

21,962

Receivable due on investments sold and repaid

7,146

2,713

Prepaid expenses and other assets

841

2,112

Total assets

$

1,885,672

$

1,874,781

Liabilities and Shareholders' Equity

Liabilities

Financing arrangements (net of unamortized debt issuance costs of $7,014 and $7,849, respectively)

$

950,486

$

939,651

Payable for investments purchased

11,635

Accounts payable and accrued expenses

1,853

1,194

Interest payable

5,143

5,603

Accrued management fees

6,943

6,839

Accrued subordinated incentive fee on income

5,421

4,091

Accrued administrative services expense

604

530

Share repurchases payable

316

Total liabilities

970,766

969,543

Commitments and contingencies

Shareholders' Equity

Common stock, $0.001 par value; 500,000,000 shares authorized;

56,373,217 and 56,958,440 shares issued, and 56,262,964 and 56,958,440 shares outstanding, respectively

57

57

Capital in excess of par value

1,053,278

1,059,989

Accumulated distributable losses

(138,429

)

(154,808

)

Total shareholders' equity

914,906

905,238

Total liabilities and shareholders' equity

$

1,885,672

$

1,874,781

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

$

16.26

$

15.89

CĪON 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,

2022

2021

2022

2021

2021

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Investment income

Non-controlled, non-affiliated investments

Interest income

$

37,336

$

31,036

$

100,079

$

87,305

$

119,792

Paid-in-kind interest income

6,876

3,969

16,095

13,957

17,306

Fee income

4,542

1,543

8,045

3,356

5,927

Dividend income

57

81

103

254

366

Non-controlled, affiliated investments

Interest income

1,949

1,425

4,517

3,867

4,961

Paid-in-kind interest income

1,174

776

3,493

2,655

3,160

Fee income

19

525

Dividend income

13

3,790

66

5,550

5,576

Controlled investments

Interest income

2,197

6,066

260

Paid-in-kind interest income

409

Total investment income

54,163

42,620

139,398

116,944

157,348

Operating expenses

Management fees

6,942

8,443

20,436

24,469

31,143

Administrative services expense

733

722

2,234

2,103

3,069

Subordinated incentive fee on income

5,421

2,933

13,645

2,933

6,875

General and administrative

2,027

2,709

5,961

7,950

9,805

Interest expense

13,469

8,175

32,769

23,551

31,807

Total operating expenses

28,592

22,982

75,045

61,006

82,699

Net investment income before taxes

25,571

19,638

64,353

55,938

74,649

Income tax expense, including excise tax

14

26

25

41

342

Net investment income after taxes

25,557

19,612

64,328

55,897

74,307

Realized and unrealized (losses) gains

Net realized (losses) gains on:

Non-controlled, non-affiliated investments

4,267

873

4,475

1,344

(4,100

)

Non-controlled, affiliated investments

(21,433

)

18,856

(21,530

)

17,776

8,010

Controlled investments

(3,067

)

(3,067

)

Foreign currency

(3

)

7

(3

)

(4

)

(3

)

Net realized (losses) gains

(17,169

)

19,736

(17,058

)

16,049

840

Net change in unrealized appreciation (depreciation) on:

Non-controlled, non-affiliated investments

(669

)

6,937

(25,646

)

32,132

25,566

Non-controlled, affiliated investments

18,966

(21,177

)

13,609

(4,354

)

7,261

Controlled investments

7,298

5,373

3,067

10,790

Net change in unrealized appreciation (depreciation)

25,595

(14,240

)

(6,664

)

30,845

43,617

Net realized and unrealized gains (losses)

8,426

5,496

(23,722

)

46,894

44,457

Net increase in net assets resulting from operations

$

33,983

$

25,108

$

40,606

$

102,791

$

118,764

Per share information—basic and diluted (1)

Net increase in net assets per share resulting from operations

$

0.60

$

0.44

$

0.71

$

1.81

$

2.09

Net investment income per share

$

0.45

$

0.35

$

1.13

$

0.98

$

1.31

Weighted average shares of common stock outstanding

56,816,992

56,774,323

56,910,773

56,758,586

56,808,960

(1)

The Company completed a two-to-one reverse stock split, effective as of September 21, 2021. The weighted average shares used in the computation of the net increase in net assets per share resulting from operations and net investment income per share reflect the reverse stock split on a retroactive basis.

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, 2022. 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 10, 2022, 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/20221110005381/en/

Contacts

Media
Susan Armstrong
sarmstrong@cioninvestments.com

Investor Relations
1-800-343-3736

Analysts and Institutional Investors
Lena Cati
The Equity Group
lcati@equityny.com
212-836-9611