CION Investment (CION)2024-11-07 00:46Financial Performance - For Q4 2024, the company declared a quarterly base distribution of $0.36 per share, payable on December 16, 2024[313]. - The company reported net portfolio activity of $(61,111) for the three months ended September 30, 2024, compared to $6,670 in 2023[319]. - Investment income for the three months ended September 30, 2024, was $59,627, a decrease of 11.3% from $67,540 in 2023[332]. - Net investment income after taxes for the three months ended September 30, 2024, was $21,618, down 28.0% from $29,990 in 2023[337]. - Net increase in net assets resulting from operations for the nine months ended September 30, 2024, was $28,444, down from $44,322 in 2023[350]. - For the nine months ended September 30, 2024, investment income was $194,538, an increase of 1.3% from $191,011 in 2023[343]. - Total operating expenses and income taxes for the three months ended September 30, 2024, increased to $38,009, compared to $37,550 in 2023[335]. - Total operating expenses and income taxes for the nine months ended September 30, 2024, were $117,364, up from $107,747 in 2023[344]. Investment Activity - Net investment activity for the three months ended September 30, 2024, included $91,286 in senior secured first lien debt purchases, down from $102,666 in 2023[319]. - Total purchases and drawdowns for the nine months ended September 30, 2024, included $330,952 in senior secured first lien debt, compared to $186,493 in 2023[319]. - The company experienced sales and principal repayments of $(153,580) for the three months ended September 30, 2024, compared to $(96,373) in 2023[319]. - The company has entered into multiple term loans and note purchase agreements, including the 2024 Term Loan and the 2027 Note Purchase Agreement, which may impact future financing costs[394][395]. Portfolio Composition - The company’s portfolio primarily consists of senior secured debt, with a focus on private and thinly-traded U.S. middle-market companies[302]. - As of September 30, 2024, total investments amounted to $1,850,244, with a fair value of $1,806,229, representing a decrease from $1,975,630 and $1,954,270 as of December 31, 2023[320][322]. - The average annual EBITDA of portfolio companies increased to $61.7 million, up from $51.8 million[322]. - The investment portfolio's fair value allocation by industry shows that the Business Services sector accounts for 15.5% and Healthcare & Pharmaceuticals for 12.6% as of September 30, 2024[325]. - The total number of portfolio companies increased to 111 as of December 31, 2023, from 103[322]. Risk and Exposure - The investment rating system indicates that 85.7% of the portfolio is rated 2, reflecting stable performance, while 11.8% is rated 3, indicating increased risk[329]. - The company’s investment portfolio quality shows that only 0.6% is rated 1, indicating low risk, down from 5.3% at the end of 2023[329]. - The percentage of floating interest rate investments in the portfolio increased to 81.2% as of September 30, 2024, compared to 80.1% at the end of 2023[323]. - Approximately 6.0% of the company's investments paid fixed interest rates as of September 30, 2024, which may lead to fair value declines in a rising interest rate environment[401]. - The company is subject to financial market risks, including changes in interest rates, which could materially affect its business and financial condition[399]. Commitments and Borrowings - The company reported unfunded commitments of $71,113 as of September 30, 2024, up from $47,349 at the end of 2023[325]. - As of September 30, 2024, outstanding borrowings under the JPM Credit Facility were $450,000, with an unfunded principal amount of $112,500[367]. - The company fully repaid all obligations under the 2021 Term Loan as of September 24, 2024[371]. - As of September 30, 2024, the aggregate principal amount of 2026 Notes outstanding was $125,000, with no unfunded principal[370]. Shareholder Returns - The board approved a share repurchase policy allowing up to $60 million in common stock repurchases, with the discretion to determine timing and method[358]. - As of September 30, 2024, a total of 3,672,497 shares were repurchased under the 10b5-1 trading plan for an aggregate purchase price of $37,187, averaging $10.13 per share[361]. - Total distributions for the year ended December 31, 2023, amounted to $87,867, with a per-share distribution of $1.61[365]. - For the nine months ended September 30, 2024, total distributions were $59,473, averaging $1.11 per share[365]. Economic Environment - Persistent inflationary pressures are expected to affect the profit margins of the company's portfolio companies, particularly in the U.S.[403]. - A sensitivity analysis shows that a 300 basis point increase in interest rates could increase interest income by 15.6%[401]. - The company currently has no off-balance sheet arrangements, which may provide a clearer view of its financial commitments[398]. - The company has not experienced claims or losses related to indemnifications in its contracts, suggesting a low risk of loss[396].