CION Investment (US:CION)2023-11-12 10:22Financial Data and Key Metrics Changes - The company reported a strong third quarter with net income of $0.87 per share, an increase of 70.6% quarter-over-quarter and 45% year-over-year [21] - Net investment income was $30 million or $0.55 per share, up from $23.4 million or $0.43 per share in the previous quarter, reflecting a $6.6 million increase [47] - Total investment income for Q3 was $67.5 million, a 15% increase from $58.5 million in the second quarter [47] - The net asset value (NAV) increased by $0.49 per share to $15.80, a 3.2% increase quarter-over-quarter [49] Business Line Data and Key Metrics Changes - The portfolio's non-accrual rate fell to 1.03% of fair value, down from 1.69% in the previous quarter, indicating improved credit performance [23] - The company maintained 87.8% of its portfolio in senior secured loans and 11.3% in equity positions, focusing on high-quality earnings [27] Market Data and Key Metrics Changes - The company successfully issued $33 million of additional floating rate Series A unsecured notes and closed a $100 million unsecured floating rate note with institutional investors [25][51] - The weighted average cost of debt capital was approximately 8.3% [34] Company Strategy and Development Direction - The company aims to increase its leverage towards a net leverage target of 1.25 times while remaining cautious about market conditions [7] - The focus remains on lending to middle-market companies, with a median EBITDA of $33.7 million, emphasizing a conservative approach to investment [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to provide solid returns despite current market conditions, supported by a robust deal pipeline and a conservative balance sheet [36][38] - The company remains selective with new investments, particularly cautious regarding the U.S. consumer environment [40] Other Important Information - The company declared a fourth quarter base distribution of $0.34 per share and a supplemental distribution of $0.05 per share [35][53] - The company has repurchased approximately 168,023 shares at an average price of $10.71 per share during the quarter [8] Q&A Session Questions and Answers Question: What is the company's approach to achieving its leverage target of 1.25 times? - Management indicated a cautious approach to obtaining additional leverage, considering market rates and the mix between secured and unsecured debt [56] Question: Can you explain the decline in median EBITDA and its implications? - Management clarified that the decline in median EBITDA is more reflective of portfolio changes rather than a decrease in earnings, with organic EBITDA growth observed in existing portfolio companies [58][59]