CION Investment (US:CION)2025-11-06 00:22Distribution and Income - The company declared a quarterly base distribution of $0.36 per share for Q4 2025, payable on December 15, 2025[371]. - The company changed the timing of base distributions to monthly starting January 2026, with monthly distributions declared quarterly in advance[372]. - 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[412]. - Total distributions for the year ended December 31, 2024, amounted to $1.52 per share, totaling $81,308[414]. - For the nine months ended September 30, 2025, total distributions were $1.08 per share, totaling $56,809[414]. Investment Portfolio - As of September 30, 2025, the company's total investments amounted to $1,910,155,000, with a fair value of $1,840,584,000[373]. - The company has 91 portfolio companies as of September 30, 2025[373]. - The company’s investment objective is to generate current income and capital appreciation, focusing on senior secured debt of U.S. middle-market companies[360]. - The company’s portfolio primarily consists of senior secured first lien debt, which accounted for 80.0% of the investment portfolio[373]. - The average annual EBITDA of portfolio companies was $58.1 million, while the median annual EBITDA was $34.6 million[373]. - The gross annual portfolio yield based on the purchase price was 9.31%[374]. - As of September 30, 2025, 85.7% of the investment portfolio was rated 2, indicating a stable risk level[382]. - The investment portfolio's fair value as of September 30, 2025, was $1,738,184, with a total investment of $1,840,584 including short-term investments[379]. - The company had 105 portfolio companies as of December 31, 2024, which decreased to 90 by October 29, 2025[383]. - The average annual EBITDA of portfolio companies was $53.6 million, while the median annual EBITDA was $34.2 million[376]. Financial Performance - Investment income for the three months ended September 30, 2025, was $78,711, an increase from $59,627 in the same period of 2024, reflecting higher income from restructured investments[386]. - The net investment income after taxes for the three months ended September 30, 2025, was $38,567, compared to $21,618 in 2024[385]. - The net increase in net assets resulting from operations for the nine months ended September 30, 2025, was $20,489, down from $28,444 in 2024, a decline of 28.0%[400]. - For the nine months ended September 30, 2025, total investment income was $187,029, down from $194,538 in 2024, a decrease of 3.9%[394]. - The net realized loss on investments for the three months ended September 30, 2025, was $(9,605), compared to a gain of $3,938 in 2024, reflecting a negative shift of $13,543[390]. - The net change in unrealized appreciation on investments was $6,916 for the three months ended September 30, 2025, a recovery from a depreciation of $(25,935) in 2024[391]. Borrowings and Commitments - As of September 30, 2025, the company had outstanding borrowings of $300,000 under the JPM Credit Facility and $100,000 under the 2025 UBS Credit Facility[416][417]. - The company had $125,000 in aggregate principal amount of 2026 Notes outstanding as of September 30, 2025[418]. - Unfunded commitments amounted to $70,681 as of December 31, 2024, decreasing to $47,816 by October 29, 2025[379]. - Unfunded commitments amounted to $48,689 as of September 30, 2025[424]. Share Repurchase - The company repurchased 1,215,751 shares during the nine months ended September 30, 2025, for a total cost of $11,984, averaging $9.86 per share[410]. - From October 1, 2025, to October 29, 2025, the company repurchased 302,571 shares at an average price of $9.35 per share, totaling $2,828[411]. - Since the inception of the 10b5-1 trading plan in August 2022, the company has repurchased 5,310,061 shares for a total of $53,333, averaging $10.04 per share[411]. Market Conditions and Risks - The U.S. inflation rate remains high, with persistent inflationary pressures expected in the near to medium-term, potentially affecting profit margins of portfolio companies[450]. - The company is subject to market volatility due to geopolitical events, energy price fluctuations, and trade disputes, which could impact its financial performance[450]. - 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 its investments being in variable rate[445]. - The interest rate sensitivity analysis shows that a 300 basis point increase in interest rates could result in a 15.2% increase in net interest income, while a 300 basis point decrease could lead to a 12.7% decrease[447]. - Approximately 8.1% of the company's investments paid fixed interest rates as of September 30, 2025, which may lead to fair value declines in a rising interest rate environment[448]. Operational Costs - For the three months ended September 30, 2025, total operating expenses and income taxes increased to $40,144 from $38,009 in 2024, representing a 5.6% increase[387]. - The decrease in interest expense for the nine months ended September 30, 2025, was primarily due to lower SOFR rates, despite higher average borrowings[395]. Financial Management - The company has no off-balance sheet arrangements, ensuring transparency in its financial reporting[443]. - The company pays an annual administration fee of 0.20% on JPM's total financing commitment, which is part of its cost structure[446]. - The company’s long-term investments are expected to be financed primarily with equity and long-term debt, indicating a strategic approach to capital management[446].