CION Investment Corp Q1 FY2025 earnings call

• Net investment income for Q1 was $0.36, covering the base dividend and slightly up from prior quarter. - NAV declined due to fair value marks on some portfolio companies, offset somewhat by share repurchase accretion. - Announced new growth capital raise for David's Bridal and saw decline in mark on term loan in Anthem Sports. - Portfolio credit performance held up well with encouraging EBITDA growth trends on LTM basis. - Downgraded five investments in three portfolio companies and upgraded four in three, with low non-accruals. - Repurchased ~186,000 shares at avg price $11.68, over 70% through authorized repurchase program. - Q1 investment activity: ~$65 million in new investment commitments, ~$55 million funded, ~94% first lien loans; sales and repayments totaled $49 million; net funded investments increased by ~$15 million. - PIK income from highly structured first lien investments, with ~18% from litigation finance portfolios, starting to receive increased repayments from litigation portfolios.

CION reported $0.36 in quarterly net investment income for the first quarter, covering the base dividend and showing a slight increase from the prior quarter. Net asset value declined quarter over quarter to $14.28 from $15.43 in the fourth quarter. Net investment income for the first quarter was $19.3 million or $0.36 per share, up from $18.7 million or $0.35 per share in the fourth quarter. Total investment income in the first quarter was $56.1 million, down from $57.9 million in the fourth quarter. Total operating expenses were $36 million in the first quarter, down from $39.2 million in the fourth quarter. At March 31, total assets were approximately $1.9 billion, total equity or net assets were $757 million, total debt outstanding was $1.1 billion, and there were 53 million shares outstanding. The net debt to equity ratio was 1.39 times at March 31, changing to 1.34 times post quarter end. The portfolio has approximately 87% in first lien investments, over 98% risk-rated three or better, and non-accruals decreased from 1.41% of fair value in Q4 to 1.2% in Q1.

• Declared second quarter base distribution of $0.36 per share, to be paid on June 16 to shareholders of record as of June 2.

• Macro uncertainty including prolonged decrease in consumer confidence could affect portfolio companies. - Tariffs and trade deal negotiations causing capital market volatility. - Specific investments like Anthem Sports facing challenges due to business model shift taking time to ramp financial results. - Fair value fluctuations in some portfolio companies due to various factors like new investment rounds and market conditions.

Q: About Anthem Sports, is it a club deal and lead lender, and how long to expect financial performance to return to prior levels?

A: It's a club deal with about five lenders in total. We think it will take approximately 24 months to make the transition.

Q: About FuturePack, doubled investment, what's seeing there?

A: FuturePack made an acquisition, is now a larger cap company with strong earnings track record, and we increased exposure due to acquisition pipeline.

Q: About depreciation in health care and pharma industry investments, related to FDA?

A: No, it's more mark-to-market comps trading down at micro level, not structural or thematic shift.

Q: Potential realized gains in equity portfolio over next quarter or two?

A: Nothing can be disclosed as all private companies, need to be careful with confidentiality.