CION Investment (US:CION)2025-08-06 22:12Distribution and Share Repurchase - The company declared a quarterly base distribution of $0.36 per share for Q3 2025, payable on September 16, 2025[364]. - The board of directors increased the share repurchase policy by $20 million, bringing the total authorized amount to $80 million[365]. - During the six months ended June 30, 2025, the company repurchased 885,427 shares at an average price of $9.86 per share, totaling $8,728[404]. - From July 1, 2025, to July 30, 2025, the company repurchased 217,040 shares at an average price of $9.87 per share, totaling $2,142[405]. - Since the inception of the 10b5-1 trading plan in August 2022, the company has repurchased 4,871,638 shares for a total of $49,178, averaging $10.09 per share[405]. - The company intends to distribute at least 90% of its net ordinary income and realized net short-term capital gains to maintain RIC tax treatment[406]. - Total distributions for the year ended December 31, 2024, amounted to $1.52 per share, totaling $81,308[408]. - For the six months ended June 30, 2025, total distributions were $0.72 per share, totaling $38,083[408]. Investment Portfolio and Performance - As of June 30, 2025, the total investments amounted to $1,901,114,000, with a fair value of $1,824,628,000[367]. - The portfolio consists of 99 companies, with an average annual EBITDA of $54.7 million and a median annual EBITDA of $34.6 million[367]. - The gross annual portfolio yield based on the purchase price is 10.99%[368]. - Senior secured first lien debt represents 85.0% of the investment portfolio at fair value[367]. - The company primarily generates revenue from interest income on debt securities and capital gains from equity interests in portfolio companies[362]. - The average annual EBITDA of portfolio companies was $53.6 million, while the median annual EBITDA was $34.2 million[370]. - The gross annual portfolio yield based on the purchase price was 10.96%[370]. - As of June 30, 2025, the investment portfolio was composed of 85.0% senior secured first lien debt, with a total fair value of $1,753,955[377]. - Investment income for the three months ended June 30, 2025, was $52,244, a decrease from $61,357 in the same period of 2024[379]. - The net increase in net assets resulting from operations for the three months ended June 30, 2025, was $27,316, compared to $22,378 in 2024[379]. - The company had 105 portfolio companies as of December 31, 2024, which decreased to 98 by July 30, 2025[370][377]. - The weighted average price of investments purchased was 96.17% as of December 31, 2024, and 93.03% as of July 30, 2025[370][377]. - The investment portfolio's fair value was $1,765,955 as of June 30, 2025, compared to $1,819,870 as of December 31, 2024[376]. Financial Results and Operating Expenses - Total operating expenses and income taxes decreased from $38,394 in Q2 2024 to $35,322 in Q2 2025, a reduction of approximately 5.6%[381]. - Net investment income after taxes fell from $22,963 in Q2 2024 to $16,922 in Q2 2025, representing a decline of about 26.3%[383]. - Net realized loss on investments increased from $(20,277) in Q2 2024 to $(32,376) in Q2 2025, reflecting a rise of approximately 59.7%[384]. - Net change in unrealized appreciation on investments rose significantly from $19,692 in Q2 2024 to $42,770 in Q2 2025, an increase of about 117.0%[385]. - For the six months ended June 30, 2025, investment income decreased to $108,318 from $134,911 in the same period of 2024, a decline of approximately 19.8%[388]. - Total operating expenses and income taxes for the six months ended June 30, 2025 were $72,144, down from $79,355 in 2024, a decrease of about 9.1%[389]. - Net (decrease) increase in net assets resulting from operations shifted from $28,823 in the first half of 2024 to $(15,389) in the first half of 2025[394]. Debt and Liquidity - As of June 30, 2025, the company had outstanding borrowings of $325,000 under the JPM Credit Facility and $100,000 under the 2025 UBS Credit Facility[410][411]. - The company had $125,000 in aggregate principal amount of 2026 Notes outstanding as of June 30, 2025[412]. - Unfunded commitments amounted to $64,793 as of June 30, 2025, and increased to $67,075 by July 30, 2025[418]. - The company has entered into various credit facilities and term loans, including the 2022 Term Loan of $50,000 and the 2024 Term Loan of $30,000[413][414]. - Cash and short-term investments totaled $65,206 as of June 30, 2025, providing sufficient liquidity for upcoming operational needs[399]. Interest Rate and Market Risks - As of June 30, 2025, 78.7% of the company's investments paid variable interest rates, indicating a significant exposure to interest rate fluctuations[439]. - The company expects that a rise in interest rates could lead to a substantial increase in net investment income, particularly due to the majority of variable rate investments[439]. - The current base interest rate is 4.44% as of June 30, 2025, with potential changes in net interest income ranging from a decrease of 14.6% with a 300 basis point drop to an increase of 16.4% with a 300 basis point rise[441]. - Approximately 8.4% of the company's investments paid fixed interest rates as of June 30, 2025, which may decline in fair value with rising market interest rates[442]. - The company is subject to risks related to changes in market interest rates, which could adversely affect its financial condition and results of operations[440]. - The company may seek to further borrow funds to make additional investments, impacting net investment income based on the difference between borrowing and investment rates[440]. - The company has various interest rate hedging activities to manage interest rate risk, as permitted by the 1940 Act[440]. Economic Environment - The U.S. inflation rate remains elevated, with potential persistence in the near to medium-term, impacting market volatility and the company's portfolio companies' profit margins[444]. - Market volatility has been exacerbated by geopolitical tensions, energy price fluctuations, and trade disputes, affecting overall economic activity[444]. - Persistent inflationary pressures and foreign currency exchange volatility could affect the profit margins of the company's portfolio companies[444].