EX-99.1 2 tm2421021d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

CION INVESTMENT CORPORATION REPORTS SECOND QUARTER 2024 FINANCIAL RESULTS

  

Disciplined Capital Deployment Contributes to Net Portfolio Growth

 

 For Immediate Release 

 

NEW YORK, August 8, 2024 — CION Investment Corporation (NYSE: CION) (“CION” or the “Company”) today reported financial results for the second quarter ended June 30, 2024 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

  

CION also announced that, on August 5, 2024, its co-chief executive officers declared a third quarter 2024 base distribution of $0.36 per share, payable on September 17, 2024 to shareholders of record as of September 3, 2024.

  

SECOND QUARTER AND OTHER HIGHLIGHTS

 

•Net investment income and earnings per share for the quarter ended June 30, 2024 were $0.43 per share and $0.42 per share, respectively;

 

•Net asset value per share was $16.08 as of June 30, 2024 compared to $16.05 as of March 31, 2024, an increase of $0.03 per share, or 0.2%. The increase was primarily due to out-earning its distribution by $0.02 per share and repurchases of the Company's common stock below NAV during the quarter ended June 30, 2024, which was partially offset by realized and unrealized losses of $0.01 per share;

 

•As of June 30, 2024, the Company had $1.07 billion of total principal amount of debt outstanding, of which 61% was comprised of senior secured bank debt and 39% was comprised of unsecured debt. The Company’s net debt-to-equity ratio was 1.13x as of June 30, 2024 compared to 1.03x as of March 31, 2024;

 

•As of June 30, 2024, the Company had total investments at fair value of $1.82 billion in 107 portfolio companies across 24 industries. The investment portfolio was comprised of 85.1% senior secured loans, including 84.3% in first lien investments;1

 

•During the quarter, the Company funded new investment commitments of $137 million, funded previously unfunded commitments of $10 million, and had sales and repayments totaling $77 million, resulting in a net increase to the Company's funded portfolio of $70 million;

 

•As of June 30, 2024, investments on non-accrual status amounted to 1.36% and 2.69% of the total investment portfolio at fair value and amortized cost, respectively, compared to 0.86% and 2.88%, respectively, as of March 31, 2024;

 

•During the quarter, the Company repurchased 234,982 shares of its common stock under its 10b5-1 trading plan at an average price of $11.37 per share for a total repurchase amount of $2.7 million. Through June 30, 2024, the Company repurchased a total of 3,432,817 shares of its common stock under its 10b5-1 trading plan at an average price of $9.99 per share for a total repurchase amount of $34.3 million; and

 

•On July 15, 2024, the Company further amended its $675 million senior secured credit facility with JPMorgan 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 from July 15, 2024 to June 15, 2026 and the maturity date from May 15, 2025 to June 15, 20272.

 

 

 

 

DISTRIBUTIONS

 

•For the quarter ended June 30, 2024, the Company paid a quarterly base distribution totaling $19.3 million, or $0.36 per share, and declared a mid-year supplemental distribution totaling $2.7 million, or $0.05 per share, paid on July 12, 2024 to shareholders of record as of June 28, 2024.

 

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

 

“I’m pleased to report that CION continues to perform well, with strong results in net investment income, NAV stability, capital deployment, and portfolio credit performance. We are focused on building a durable franchise here at CION, and believe that CION is uniquely positioned for this environment given our middle market, first lien direct lending focus paired with our opportunistic strategy as we seek to capture alpha in volatile and complex market conditions.”

 

SELECTED FINANCIAL HIGHLIGHTS

 

   As of 
(in thousands, except per share data and ratios)  June 30, 2024   March 31, 2024 
Investment portfolio, at fair value1  $1,822,963   $1,740,700 
Total debt outstanding3  $1,069,844   $1,069,844 
Net assets  $860,806   $863,059 
Net asset value per share  $16.08   $16.05 
Debt-to-equity ratio   1.24x   1.24x
Net debt-to-equity ratio   1.13x   1.03x

 

   Three Months Ended 
(in thousands, except share and per share data)  June 30, 2024   March 31, 2024 
Total investment income  $61,357   $73,554 
Total operating expenses and income tax expense  $38,394   $40,961 
Net investment income after taxes  $22,963   $32,593 
Net realized losses  $(20,277)  $(9,736)
Net unrealized gains (losses)  $19,692   $(16,412)
Net increase in net assets resulting from operations  $22,378   $6,445 
           
Net investment income per share  $0.43   $0.60 
Net realized and unrealized losses per share  $(0.01)  $(0.48)
Earnings per share  $0.42   $0.12 
           
Weighted average shares outstanding   53,595,624    53,960,698 
Distributions declared per share  $0.41   $0.34 

  

Total investment income for the three months ended June 30, 2024 and March 31, 2024 was $61.4 million and $73.6 million, respectively. The decrease in total investment income was primarily driven by higher investment income from origination and restructuring activities and fees received in connection with the repayment of portfolio investments during the three months ended March 31, 2024.

  

Operating expenses for the three months ended June 30, 2024 and March 31, 2024 were $38.4 million and $41.0 million, respectively. The decrease in operating expenses was primarily driven by lower advisory fees due to a decrease in total investment income during the quarter ended June 30, 2024 as compared to the quarter ended March 31, 2024.

 

 

 

 

PORTFOLIO AND INVESTMENT ACTIVITY1

  

A summary of the Company's investment activity for the three months ended June 30, 2024 is as follows:

 

   New Investment
Commitments		  

Sales and

Repayments 

 
Investment Type (in thousands)  Amount   Percentage of Total   Amount   Percentage of Total 
Senior secured first lien debt  $138,624    93%  $61,908    81%
Senior secured second lien debt   —    —    12,505    16%
Collateralized securities and structured products - equity   —    —    64    — 
Equity   9,758    7%   2,446    3%
  Total  $148,382    100%  $76,923    100%

 

During the three months ended June 30, 2024, new investment commitments were made across 3 new and 16 existing portfolio companies. During the same period, the Company exited its investment in 1 portfolio company via sale and wrote off all investments in 4 portfolio companies. As a result, the number of portfolio companies decreased from 109 as of March 31, 2024 to 107 as of June 30, 2024.

  

PORTFOLIO SUMMARY1

  

As of June 30, 2024, the Company’s investments consisted of the following:

 

   Investments at Fair Value 
Investment Type (in thousands)  Amount  

Percentage

of Total 

 
Senior secured first lien debt  $1,536,753   84.3% 
Senior secured second lien debt   15,050    0.8%
Collateralized securities and structured products - equity   770    0.1%
Unsecured debt   5,493    0.3%
Equity   264,897    14.5%
  Total  $1,822,963    100.0%

  

 

 

 

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

  

   As of 
   June 30, 2024   March 31, 2024 
Number of portfolio companies   107    109 
Percentage of performing loans bearing a floating rate4   94.5%   92.6%
Percentage of performing loans bearing a fixed rate4   5.5%   7.4%
Yield on debt and other income producing investments at amortized cost5   12.86%   12.93%
Yield on performing loans at amortized cost5   13.26%   13.39%
Yield on total investments at amortized cost   11.48%   11.52%
Weighted average leverage (net debt/EBITDA)6   4.74x   4.98x
Weighted average interest coverage6   2.01x   1.98x
Median EBITDA7   $32.8 million    $33.7 million 

 

As of June 30, 2024, investments on non-accrual status represented 1.36% and 2.69% of the total investment portfolio at fair value and amortized cost, respectively. As of March 31, 2024, investments on non-accrual status represented 0.86% and 2.88% of the total investment portfolio at fair value and amortized cost, respectively.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of June 30, 2024, the Company had $1.07 billion of total principal amount of debt outstanding, comprised of $650 million of outstanding borrowings under its senior secured credit facilities and $420 million of unsecured notes and term loans. The combined weighted average interest rate on debt outstanding was 8.4% for the quarter ended June 30, 2024. As of June 30, 2024, the Company had $93 million in cash and short-term investments and $175 million available under its financing arrangements.3

  

EARNINGS CONFERENCE CALL

  

CION will host an earnings conference call on Thursday, August 8, 2024 at 11:00 am Eastern Time to discuss its financial results for the second quarter ended June 30, 2024. 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 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

 

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 $8.1 million and $9.4 million as of June 30, 2024 and March 31, 2024, respectively.

  

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)

 

   June 30, 2024   March 31, 2024 
   (unaudited)   (unaudited) 
Assets
Investments, at fair value:          
     Non-controlled, non-affiliated investments (amortized cost of $1,544,674 and $1,541,138, respectively)  $1,502,910   $1,494,478 
     Non-controlled, affiliated investments (amortized cost of $240,735 and $212,966, respectively)   250,411    202,915 
     Controlled investments (amortized cost of $138,792 and $154,505, respectively)   152,804    173,444 
          Total investments, at fair value (amortized cost of $1,924,201 and $1,908,609, respectively)   1,906,125    1,870,837 
Cash   9,798    48,482 
Interest receivable on investments   40,841    36,366 
Receivable due on investments sold and repaid   2,631    11,452 
Dividends receivable on investments   129    — 
Prepaid expenses and other assets   942    1,137 
   Total assets  $1,960,466   $1,968,274 
           
Liabilities and Shareholders' Equity
Liabilities          
Financing arrangements (net of unamortized debt issuance costs of $8,134 and $9,388, respectively)  $1,061,710   $1,060,455 
Payable for investments purchased   11,789    21,041 
Accounts payable and accrued expenses   1,031    743 
Interest payable   9,614    8,556 
Accrued management fees   6,841    6,864 
Accrued subordinated incentive fee on income   4,871    6,914 
Accrued administrative services expense   1,128    642 
Shareholder distribution payable   2,676    — 
Total liabilities   1,099,660    1,105,215 
           
Shareholders' Equity          
Common stock, $0.001 par value; 500,000,000 shares authorized; 53,525,623 and          
54,760,605 shares issued, and 53,525,623 and 53,760,605 shares outstanding, respectively   54    54 
Capital in excess of par value   1,025,689    1,028,360 
Accumulated distributable losses   (164,937)   (165,355)
Total shareholders' equity   860,806    863,059 
Total liabilities and shareholders' equity  $1,960,466   $1,968,274 
Net asset value per share of common stock at end of period  $16.08   $16.05 

 

 

 

 

CĪON 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,		 
   2024   2023   2024   2023   2023 
   (unaudited)   (unaudited)   (unaudited)   (unaudited)     
Investment income                         
Non-controlled, non-affiliated investments                         
     Interest income  $38,512   $47,117   $93,884   $89,885   $184,013 
     Paid-in-kind interest income   7,236    4,297    14,285    9,128    22,317 
     Fee income   1,338    1,154    5,211    2,297    7,871 
     Dividend income   5,139    —    5,139    —    210 
Non-controlled, affiliated investments                         
     Interest income   2,383    1,734    3,902    4,208    7,068 
     Paid-in-kind interest income   2,569    1,751    5,051    3,482    8,372 
     Fee income   704    477    704    2,397    2,432 
     Dividend income   13    52    40    3,933    3,946 
Controlled investments                         
     Interest income   3,163    1,914    6,395    3,891    8,090 
     Paid-in-kind interest income   —    —    —    —    1,050 
     Fee income   300    —    300    —    1,391 
     Dividend income   —    —    —    4,250    4,250 
Total investment income   61,357    58,496    134,911    123,471    251,010 
Operating expenses                         
Management fees   6,841    6,546    13,705    13,222    26,856 
Administrative services expense   1,246    910    2,338    1,747    3,971 
Subordinated incentive fee on income   4,871    4,965    11,785    11,300    22,277 
General and administrative   1,659    2,074    3,443    4,029    7,382 
Interest expense   23,773    20,467    48,075    39,776    85,556 
Total operating expenses   38,390    34,962    79,346    70,074    146,042 
   Net investment income before taxes   22,967    23,534    55,565    53,397    104,968 
Income tax expense (benefit), including excise tax   4    118    9    123    (54)
Net investment income after taxes   22,963    23,416    55,556    53,274    105,022 
Realized and unrealized gains (losses)                         
Net realized losses on:                         
   Non-controlled, non-affiliated investments   (13,186)   (18,928)   (22,922)   (23,453)   (31,927)
   Non-controlled, affiliated investments   (7,091)   —    (7,091)   —    — 
   Controlled investments   —    —    —    —    — 
Net realized losses   (20,277)   (18,928)   (30,013)   (23,453)   (31,927)
Net change in unrealized appreciation (depreciation) on:                         
   Non-controlled, non-affiliated investments   1,417    23,396    (5,100)   (17,690)   15,658 
   Non-controlled, affiliated investments   23,202    595    16,956    (9,695)   (7,335)
   Controlled investments   (4,927)   (585)   (8,576)   (5,587)   13,896 
Net change in unrealized appreciation (depreciation)   19,692    23,406    3,280    (32,972)   22,219 
Net realized and unrealized (losses) gains   (585)   4,478    (26,733)   (56,425)   (9,708)
Net increase (decrease) in net assets resulting from operations  $22,378   $27,894   $28,823   $(3,151)  $95,314 
Per share information—basic and diluted                         
Net increase (decrease) in net assets per share resulting from operations  $0.42   $0.51   $0.54   $(0.06)  $1.74 
Net investment income per share  $0.43   $0.43   $1.03   $0.97   $1.92 
Weighted average shares of common stock outstanding   53,595,624    54,788,740    53,778,161    54,948,225    54,685,327 

 

 

 

 

 

 

ABOUT CION INVESTMENT CORPORATION

  

CION Investment Corporation is a leading publicly listed business development company that had approximately $2.0 billion in total assets as of June 30, 2024. 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 8, 2024, 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.

 

CONTACTS

 

Media

Susan Armstrong

sarmstrong@cioninvestments.com

 

Investor Relations

Charlie Arestia

carestia@cioninvestments.com

(646) 253-8259

 

James Carbonara

Hayden IR

James@haydenir.com

(646) 755-7412