On November 9, 2023, CION Invt Corp (CION, Financial) disclosed its financial results for the third quarter ended September 30, 2023, alongside filing its Form 10-Q with the U.S. Securities and Exchange Commission. The company's co-chief executive officers declared a fourth quarter 2023 regular distribution of $0.34 per share, payable on December 15, 2023, to shareholders of record as of December 1, 2023.
Financial Highlights
CION reported a significant increase in its investment portfolio's fair value, reaching approximately $1.73 billion, up from $1.69 billion in the previous quarter. Total debt outstanding saw a modest increase to $1.01 billion from $985.7 million. The company's net assets improved to $860.8 million, up from $836.4 million, with the NAV per share rising from $15.31 to $15.80. The debt-to-equity ratio slightly decreased to 1.17x from 1.18x, and the net debt-to-equity ratio also saw a slight decrease to 1.03x from 1.04x.
Income Statement Analysis
Total investment income for Q3 2023 was $67.5 million, a notable increase from $58.5 million in Q2 2023. This rise was primarily due to make-whole payments received on certain investments. Operating expenses for the quarter were $37.6 million, compared to $35.1 million in the previous quarter, with higher advisory fees and interest expenses attributed to increased SOFR and LIBOR rates. Net investment income after taxes stood at $29.99 million, up from $23.42 million, with earnings per share at $0.87, a significant increase from $0.51 in Q2 2023.
Portfolio and Investment Activity
CION's investment activity for Q3 2023 included new investment commitments totaling $96.8 million across 3 new and 11 existing portfolio companies. Sales and repayments amounted to $96.4 million, resulting in a decrease in the number of portfolio companies from 112 to 109. The portfolio was heavily weighted towards senior secured first lien debt, which constituted 85.7% of the investment portfolio at fair value.
Liquidity and Capital Resources
As of September 30, 2023, CION had $1.01 billion of total principal amount of debt outstanding, with a combined weighted average interest rate of 8.3% for the quarter. The company reported having $124 million in cash and short-term investments and $103 million available under its financing arrangements.
Management Commentary
“We are pleased to have delivered another strong quarter, supported by NII out-earning the dividends and quarterly NAV growth. Our credit performance remains robust, with a decline in non-accruals, down to 1.03% of fair value, and 99% of our portfolio is risk-rated at 3 or higher. We continue to focus on first lien loans to true middle-market companies and have once again demonstrated our ability to access the lending markets, expanding our unsecured debt offering, and maintaining a conservative approach to leverage—all while delivering strong returns to our investors. As we look ahead, CION is strategically positioned to deliver robust returns to shareholders," said Michael A. Reisner, co-Chief Executive Officer of CION.
CION's strong performance in the third quarter, highlighted by increased NAV and outperforming distributions, positions the company well for future growth. The company's strategic focus on senior secured loans and conservative leverage approach underpin its robust financial health. Investors and potential GuruFocus.com members interested in value investing may find CION's latest financial results and strategic positioning compelling for further consideration.
Explore the complete 8-K earnings release (here) from CION Invt Corp for further details.
