Total Investment Income Surges During Q1,
Out-Earning the Base Distribution by 59%
Announces Second Quarter 2023 Distribution
of $0.34 per Share
CION Investment Corporation (NYSE: CION) (“CION” or the
“Company”) today reported financial results for the first quarter
ended March 31, 2023 and filed its Form 10-Q with the U.S.
Securities and Exchange Commission.
CION also announced that, on May 8, 2023, its co-chief executive
officers declared a second quarter 2023 regular distribution of
$0.34 per share payable on June 15, 2023 to shareholders of record
as of June 1, 2023.
FIRST QUARTER AND OTHER HIGHLIGHTS
- Net investment income and earnings per share for the quarter
ended March 31, 2023 were $0.54 per share and $(0.56) per share,
respectively;
- Net asset value per share was $15.11 as of March 31, 2023
compared to $15.98 as of December 31, 2022. The decrease was
primarily due to the underperformance of certain investments during
the quarter;
- As of March 31, 2023, the Company had $1,011 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 1.02x as of March 31,
2023 compared to 0.98x as of December 31, 2022;
- As of March 31, 2023, the Company had total investments at fair
value of $1,657 million in 109 portfolio companies across 23
industries. The investment portfolio was comprised of 91.2% senior
secured loans, including 88.8% in first lien investments;1
- During the quarter, the Company had new investment commitments
of $15 million, funded new investment commitments of $14 million,
funded previously unfunded commitments of $9 million, and had sales
and repayments totaling $66 million, resulting in a net decrease to
the Company's funded portfolio of $43 million;
- As of March 31, 2023, investments on non-accrual status
amounted to 3.5% and 6.8% of the total investment portfolio at fair
value and amortized cost, respectively;
- During the quarter, the Company repurchased 338,029 shares of
its common stock under its 10b5-1 trading plan at an average price
of $10.63 per share for a total repurchase amount of $3.6 million.
Through March 31, 2023, the Company repurchased a total of
1,996,985 shares of its common stock under its 10b5-1 trading plan
at an average price of $9.53 per share for a total repurchase
amount of $19.0 million; and
- On February 28, 2023, the Company completed a public offering
in Israel pursuant to which the Company issued approximately $80.7
million of its unsecured Series A Notes due 2026, which bear
interest at a rate equal to the Secured Overnight Financing Rate,
or SOFR, plus a credit spread of 3.82% per year payable
quarterly.
DISTRIBUTIONS
- For the quarter ended March 31, 2023, the Company paid a
regular quarterly distribution totaling $18.7 million, or $0.34 per
share, which was an increase of $0.03 per share, or 9.7%, from the
$0.31 per share regular distribution paid for the fourth quarter of
2022.
“We are pleased to report yet another quarter of strong earnings
growth. We believe that our ability to out-earn our dividend and
deliver solid returns to our investors demonstrates the resilience
of our business model and the effectiveness of our strategy focused
on senior secured floating loans. We also believe that our
diversified sourcing capabilities and strong credit performance
have positioned us well for the current economic environment and
the opportunities we see ahead,” said Michael A. Reisner, co-Chief
Executive Officer of CION.
SELECTED FINANCIAL HIGHLIGHTS
As of
(in thousands, except per share data)
March 31, 2023
December 31, 2022
Investment portfolio, at fair value1
$
1,657,026
$
1,749,161
Total debt outstanding2
$
1,010,712
$
957,500
Net assets
$
830,310
$
883,634
Net asset value per share
$
15.11
$
15.98
Debt-to-equity
1.22x
1.08x
Net debt-to-equity
1.02x
0.98x
Three Months Ended
(in thousands, except share and per share
data)
March 31, 2023
December 31, 2022
Total investment income
$
64,975
$
55,500
Total operating expenses and income tax
expense
$
35,117
$
31,623
Net investment income after taxes
$
29,858
$
23,877
Net realized losses
$
(4,525
)
$
(15,692
)
Net unrealized (losses) gains
$
(56,378
)
$
1,350
Net (decrease) increase in net assets
resulting from operations
$
(31,045
)
$
9,535
Net investment income per share
$
0.54
$
0.43
Net realized and unrealized losses per
share
$
(1.10
)
$
(0.26
)
Earnings per share
$
(0.56
)
$
0.17
Weighted average shares outstanding
55,109,482
55,505,248
Distributions declared per share
$
0.34
$ 0.58*
*Includes a special distribution of $0.27 per share.
Total investment income for the three months ended March 31,
2023 and December 31, 2022 was $65.0 million and $55.5 million,
respectively. The increase in investment income was primarily
driven by an increase in LIBOR and SOFR rates, dividend income from
certain investments and fees generated from investment activity
during the three months ended March 31, 2023 compared to the three
months ended December 31, 2022.
Operating expenses for the three months ended March 31, 2023 and
December 31, 2022 were $35.1 million and $31.6 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 and
higher advisory fees during the quarter ended March 31, 2023
compared to the quarter ended December 31, 2022.
PORTFOLIO AND INVESTMENT ACTIVITY1
A summary of the Company's investment activity for the three
months ended March 31, 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
$
13,018
87
%
$
66,188
100
%
Senior secured second lien debt
—
—
4
—
Collateralized securities and structured
products - equity
—
—
81
—
Equity
2,000
13
%
—
—
Total
$
15,018
100
%
$
66,273
100
%
During the three months ended March 31, 2023, new investment
commitments were made across 10 existing portfolio companies. Sales
and repayments were primarily driven by the full sale or repayment
of investments in 4 portfolio companies. As a result, the number of
portfolio companies decreased from 113 as of December 31, 2022 to
109 as of March 31, 2023.
PORTFOLIO SUMMARY1
As of March 31, 2023, the Company’s investments consisted of the
following:
Investments at Fair
Value
Investment Type
$ in
Thousands
%
of Total
Senior secured first lien debt
$
1,472,453
88.8
%
Senior secured second lien debt
38,997
2.4
%
Collateralized securities and structured
products - equity
1,133
0.1
%
Unsecured debt
15,517
0.9
%
Equity
128,926
7.8
%
Total
$
1,657,026
100.0
%
The following table presents certain selected information
regarding the Company’s investments:
As of
March 31, 2023
December 31, 2022
Number of portfolio companies
109
113
Percentage of performing loans bearing a
floating rate3
92.8
%
89.8
%
Percentage of performing loans bearing a
fixed rate3
7.2
%
10.2
%
Yield on debt and other income producing
investments at amortized cost4
11.97
%
12.36
%
Yield on performing loans at amortized
cost4
12.90
%
12.61
%
Yield on total investments at amortized
cost
11.18
%
11.80
%
Weighted average leverage (net
debt/EBITDA)5
5.11
x
5.30
x
Weighted average interest coverage5
2.07
x
2.31
x
Median EBITDA6
$35.0 million
$35.0 million
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. As of December 31, 2022,
investments on non-accrual status represented 1.3% and 2.0% of the
total investment portfolio at fair value and amortized cost,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2023, the Company had $1,011 million of total
principal amount of debt outstanding, comprised of $725 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 7.5% for the
quarter ended March 31, 2023. As of March 31, 2023, the Company had
$162 million in cash and short-term investments and $100 million
available under its financing arrangements.2
EARNING CONFERENCE CALL
CION will host an earnings conference call on Wednesday, May 10,
2023 at 11:00 am Eastern Time to discuss its financial results for
the first quarter ended March 31, 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 First Quarter 2023
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
- The discussion of the investment portfolio excludes short-term
investments.
- Total debt outstanding excludes netting of debt issuance costs
of $8.3 million and $6.2 million as of March 31, 2023 and December
31, 2022, 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 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.
- 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)
March 31, 2023
December 31, 2022
(unaudited)
Assets
Investments, at fair value:
Non-controlled, non-affiliated investments
(amortized cost of $1,576,870 and $1,580,844, respectively)
$
1,479,976
$
1,525,040
Non-controlled, affiliated investments
(amortized cost of $169,539 and $140,344, respectively)
162,785
143,876
Controlled investments (amortized cost of
$76,900 and $82,421, respectively)
80,591
91,114
Total investments, at fair value
(amortized cost of $1,823,309 and $1,803,609, respectively)
1,723,352
1,760,030
Cash
96,016
82,739
Interest receivable on investments
27,333
26,526
Receivable due on investments sold and
repaid
3,239
1,016
Dividends receivable on investments
—
1,275
Prepaid expenses and other assets
4,552
825
Total assets
$
1,854,492
$
1,872,411
Liabilities and Shareholders'
Equity
Liabilities
Financing arrangements (net of unamortized
debt issuance costs of $8,316 and $6,178, respectively)
$
1,002,396
$
951,322
Accounts payable and accrued expenses
1,075
1,012
Interest payable
7,007
7,820
Accrued management fees
6,676
6,924
Accrued subordinated incentive fee on
income
6,334
5,065
Accrued administrative services
expense
694
1,703
Share repurchases payable
—
14,931
Total liabilities
1,024,182
988,777
Shareholders' Equity
Common stock, $0.001 par value;
500,000,000 shares authorized; 54,961,455 and 55,299,484 shares
issued, and 54,961,455 and 55,299,484 shares outstanding,
respectively
55
55
Capital in excess of par value
1,040,955
1,044,547
Accumulated distributable losses
(210,700
)
(160,968
)
Total shareholders' equity
830,310
883,634
Total liabilities and shareholders'
equity
$
1,854,492
$
1,872,411
Net asset value per share of common stock
at end of period
$
15.11
$
15.98
CĪON Investment
Corporation
Consolidated Statements of
Operations
(in thousands, except share
and per share amounts)
Three Months Ended
March 31,
2023
2022
(unaudited)
(unaudited)
Investment income
Non-controlled, non-affiliated
investments
Interest income
$ 42,768
$ 30,994
Paid-in-kind interest income
4,831
4,606
Fee income
1,143
949
Dividend income
—
46
Non-controlled, affiliated investments
Dividend income
3,881
—
Interest income
2,474
1,023
Fee income
1,920
493
Paid-in-kind interest income
1,731
1,445
Controlled investments
Dividend income
4,250
—
Interest income
1,977
2,127
Total investment income
64,975
41,683
Operating expenses
Management fees
6,676
6,655
Administrative services expense
837
720
Subordinated incentive fee on income
6,335
4,133
General and administrative
1,955
2,222
Interest expense
19,309
8,459
Total operating expenses
35,112
22,189
Net investment income before taxes
29,863
19,494
Income tax expense, including excise
tax
5
11
Net investment income after taxes
29,858
19,483
Realized and unrealized (losses)
gains
Net realized (losses) gains on:
Non-controlled, non-affiliated
investments
(4,525)
28
Non-controlled, affiliated investments
—
(97)
Net realized losses
(4,525)
(69)
Net change in unrealized depreciation
on:
Non-controlled, non-affiliated
investments
(41,086)
(7,495)
Non-controlled, affiliated investments
(10,290)
(3,780)
Controlled investments
(5,002)
(250)
Net change in unrealized
depreciation
(56,378)
(11,525)
Net realized and unrealized
losses
(60,903)
(11,594)
Net (decrease) increase in net assets
resulting from operations
$ (31,045)
$ 7,889
Per share information—basic and
diluted
Net (decrease) increase in net assets per
share resulting from operations
$ (0.56)
$ 0.14
Net investment income per share
$ 0.54
$ 0.34
Weighted average shares of common stock
outstanding
55,109,482
56,958,440
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 March 31, 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 May 10, 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/20230510005238/en/
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
Val Ferraro vferraro@equityny.com 212-836-9633
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