CION Investment Corporation Q3 FY2025 earnings call

• Michael Reisner noted a strong third quarter with NAV appreciation and significant earnings, driven by robust transaction activity with 20 portfolio companies. The opportunistic strategy contributed meaningfully to net investment income, and excluding income from a specific transaction, the base dividend was still covered. - Gregg Bresner discussed selective new portfolio company investments, high activity within the portfolio, maintaining net leverage range, and focused on incremental opportunities with portfolio companies. Mentioned weighted average yields for first lien investments and PIK income details. - Keith Franz provided financial details like net investment income, total investment income, operating expenses, NAV, balance sheet strength, debt mix, and distribution details, including shift to monthly base distributions starting January 2026 and declaration of $0.36 per share for Q4.

For the third quarter, CION reported $0.74 per share in net investment income. Net investment income was $38.6 million, with total investment income at $78.7 million, up from $52.2 million in the second quarter. Operating expenses were $40.1 million. NAV increased 2.5% quarter-over-quarter to $14.86 per share, driven by fair value increases in the equity portfolio, particularly in Longview Power and Palmetto Solar. The portfolio has approximately 80% in first lien investments, nonaccruals were 1.75% of the portfolio at fair value, and investments risk rated 4 or 5 comprised approximately 2.4% of the portfolio at fair value. Revenue contribution: Net investment income from transaction activity, including fees from portfolio companies, contributed to the earnings, with a significant transaction-related accretion in the quarter.

• Beginning in January 2026, CION will convert base distributions from quarterly to monthly. - Declared a base distribution of $0.36 per share for the fourth quarter of 2025. - Gregg Bresner noted the pipeline is more robust than earlier in the year, with more activity and broader-based, including a pickup in M&A.

• Exposure to spread compression, looser lender protections, and credit concerns driven by high-profile bankruptcies, but CION has no direct exposure to such names or sectors. - Nonaccruals increased from 1.3% in Q2 to 1.75% in Q3, driven by addition of 2 new nonaccrual names, though absolute nonaccruals remain in line with historical experience.

Q: Curious if you could kind of break down either in terms of dollar terms or percentage terms, and what of that $51 million, what came from kind of regular ongoing interest payments? And what was more from the periodic in nonrecurring events?

A: Keith Franz said on a baseline basis, they had interest income similar to Q2, maybe slightly up, and the rest came from restructured investments during the quarter.

Q: Maybe a similar line of questioning on the PIK income in the quarter. You noted the $5 million of capitalized costs. So that was more onetime in nature?

A: Keith Franz said that was a pick event that occurred uniquely in this quarter.

Q: And then so the remaining, call it, $12 million or so, could you provide a breakout of that part, what is structured versus kind of credit related because I know you've got a fair amount that's structured by design?

A: Keith Franz said no different than the pool that Gregg had mentioned on his comments that the majority of that is structured.

Q: As you seem fairly optimistic about the originations outlook. And just curious if you could provide any commentary on the pipeline in terms of the size relative to maybe 3 months ago? And also just the quality of what you're seeing in terms of structure and in yield as you look forward to future activity?

A: Gregg Bresner said the pipeline is more robust than we've seen this year, more activity, broader based, with a pickup in M&A, and spreads and things like that are pretty consistent with past, traditional middle-market type spreads