CION Investment Corporation Q4 FY2025 earnings call

Michael Reisner highlighted core first lien portfolio performance, NAV decline driven by unrealized mark-to-market adjustments, capital markets execution with $172.5 million in senior unsecured notes in Q4 and $135 million post-quarter end, share repurchases. Gregg Bresner discussed software exposure (1.8% of portfolio), Q4 investment activity (selective, fewer exiting repayments, passed on higher percentage of potential investments), secondary credit market conditions, weighted average yield of new direct first lien investments, PIK income. Keith Franz discussed net investment income, total investment income, operating expenses, balance sheet, debt capital, distributions

Core first lien portfolio represents approximately 81% of investments. Weighted average interest coverage increased from 1.94x to 2.6x quarter-over-quarter. EBITDA growth in portfolio companies is positive. Risk rated 4 and 5 names held steady at ~2.4% of portfolio at fair value. Added 1 new term loan to nonaccrual status (Healthway). Nonaccruals remained essentially flat at 1.78% of portfolio at fair value. Software exposure stands at approximately 1.8% of portfolio at fair value. Net asset value decreased 7.4% quarter-over-quarter to $13.76 from $14.86. Net investment income in Q4 was $18.3 million or $0.35 per share compared to $38.6 million or $0.74 per share in Q3. Total investment income in Q4 was $53.8 million vs $78.7 million in Q3. Total operating expenses in Q4 were $35.5 million vs $40.1 million in Q3. At Dec 31, total assets ~$1.9 billion, total equity/net assets $708 million, total debt outstanding $1.1 billion, 51.4 million shares outstanding. Portfolio at fair value ended quarter at $1.7 billion. Weighted average yield on debt and other income-producing investments at amortized cost was 10.7% vs 10.9% in Q3. NAV at Dec 31 was $13.76 per share vs $14.86 per share at end of Sep. Net debt-to-equity ratio increased to 1.44x from 1.28x at end of Sep. Weighted average cost of debt capital was about 7.35% vs previous quarter. Paid base distribution of $0.36 per share in Q4. Full year 2025 total distributions $1.44 per share. Changed base distribution timing to monthly starting Jan 2026. Declared second quarter base distribution of $0.30 per share, paid monthly in Apr, May, Jun at $0.10 per share per month

Continuing to see resilient underlying economy. Portfolio companies generally performing in line with or better than expectations. Confident in durability of first lien focused strategy for remainder of 2026. Expect to use scheduled repayment activity to delever. PIK income expected to come down significantly as certain deals repay. Changed base distribution timing to monthly beginning Jan 2026. Declared second quarter base distribution of $0.30 per share, paid monthly in Apr, May, Jun at $0.10 per share per month

Q: Question on leverage, thoughts on appropriate level and management of leverage over next year or so.

A: Keith Franz said elevated leverage, expect over next few quarters organic growth in NAV positions may help, ultimately plan to use scheduled repayment activity to delever.

Q: Question on PIK income, split of tick by design vs restructured PIK and plans to reduce contribution.

A: Gregg Bresner said ~75% of PIK is by design, concentrated in few names expected to refinance over next 12-18 months, expect PIK contribution to come down significantly.

Q: Question on weighted average interest coverage increase, if from lower interest rates or EBITDA improvement.

A: Gregg Bresner said combination of increased EBITDA and reduction in base rates