CION - Earnings call 3 2021 | CION Investment Corporation

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Operator

Greetings. Welcome to the CION Investment Corp.'s Third Quarter 2021 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Jeehae Linford with -- a representative of the company. Jeehae, you may now begin.

Jeehae Linford

you. Thank welcome Corporation's and Difficulty] CION to morning, [Technical Investment Good

Operator

ahead, My go apologies. Please Jeehae.

Jeehae Linford

filed you. welcome earnings morning, Corporation's problem. the before Good No Thank copy A and distributed this XXXX of Conference market open. Investor the is with should and be in was conjunction earnings along Third Earnings with the website to section Call. release the presentation, supplemental with at Resources company's company's An this Form press XX-Q release, earlier the on morning SEC. Quarter available www.cionbdc.com Investment morning in the reviewed CION

reminder, call forward-looking not number statements may in and a uncertainties. forward-looking you reliance the contain including this forward-looking As the results, this with or of recorded the any differ a may of that of risks call. date materially those filings of are which of or conference statements, a forward-looking guarantees for required CION as note on replay not law. involve number results purposes. Please in statements, call as Actual future being those conference result from today's to view a by of performance is which reflect the such Corporation to no described update factors, unless obligation only company's revise undertakes management's caution statements place Investment We SEC. undue and

Please Investment Mark. President that, Chief and to like Gatto Officer. With Gatto. go Investment Speaking now turn and Executive and Chief Mark Gregg call Michael call Reisner, to CION on Bresner, be ahead, over would will today's Corporation's Co-Chief Keith Mark I Officers; the Financial Officer; Franz,

Mark Gatto

joining Results CION Corporation's Good Conference morning, Third everyone, Quarter for us Welcome today. to Financial Jeehae. Investment Thank Call. XXXX and thank you, you

call on third activities X. On overview hosting our our excited following of brief Exchange the call, quarter on to earnings are New key to performance today's October date. I'll We a York Stock our provide public first listing be and

story. Reisner Michael listed be introduce opportunity earnings will our who to call is our company, this as CION first since to to take Thereafter, may a those the new

Gregg We'll our provide line that, then quarter. our will describe And financial activity results. Franz will investment Bresner the during Following open the additional Q&A. for detail on Keith

So get started. let's

reverse more listed peers, at share be structure with base As per with September to previously on XXX% financed X% share accordingly. and X:X assets information a and we of rate with coverage fee and retroactively presented discussed all split will XX, stock amended hurdle the asset line Also, have announced, our previously effectuated fee our be at announced, and fee a management we on the incentive X.X%. and in X.X% below XX.X%, as

We solid third are results. pleased be reporting quarter to

for we per QX our with generated in generated share a investment gain net successful of third realized into highlight the share solid portion of preferred the our approximately significant even and quarter, a slipping had equity investment common million. We active income a very origination in to investment $X.XX the very pipeline by Conisus, October. performance. the net During A $XX.X closings second was which compared quarter per of exit of driven quarter quarter, $X.XX

$XXX.X million. $XX.X $XXX activity investment Newly to in decrease million totaled funded million a net and investments in sales resulting of compared repayments, in

over we and credit of a $XXX our maintained spite competitive we expect to rigorous in to origination approach alone. In remained investment October environment, nature. in defensive and as strong commitments disciplined activity our We QX of highly be booked in million highly new market

quarter. of increase by Net current from fundamental the market per approach The conditions. We primarily increase each asset that to was continued of NAV as to $X.XX XX, opportunity to second looks the emphasize an a $XX.XX share beyond increased end bottoms-up value September investment nonaccrual driven approximately on the value Premiere on of investment, unrealized fair of and lien one was X.XX% at was nonaccrual Global investments to and the first loan placed total term investments quarter. total X.X% for gains. There Services, status cost. amount status adjusted And on new realized that of

Looking that to see, ahead, and in for meaningful manner. a and we we measured CION grow the optimistic opportunities are

ever, is pipeline recently we a coverage shareholder statement reducing by as regulatory increase proxy and other Our our robust to listed with our in as XXX%, filed seeking BDCs. definitive asset to ratio leverage approval line

maintain partner generating shortly. With our opportunities pursuing while Our Michael portfolio. priorities, the objective me it we to however, over continue Michael. to consistent, carefully strategy is let that, on to focus is more speak over us well and that will Critical past grow topic this years. And has our to continue my performance, the to long-term that served solid X turn

Michael Reisner

Mark. Thanks,

mentioned, name want to is As how echo milestone company. we Officer. Co-Chief event, Mark's our I call listed partner first are about and comments earnings as for Executive my in Mark's this a Michael excited Reisner,

may lender, to would in moments of a of who Corporation As an like take few Investment since middle-market first market, CION and ourselves focused not us. CION U.S. lien. familiar Mark as a middle has we on secured benefit providing primarily senior the be as said, I with to those to XXXX, for the been leading operation provide overview view loans

As of of debt, comprised X.X% portfolio loans. a entire of senior the for of comprised XX.X% secured September being portfolio XX, of lien lien our respectively, first and of and XX.X% was total second

annual of million. consisting companies, an XXX company portfolio is approximately with Our median average diversified, of highly EBITDA portfolio $XX portfolio

billion of have retail business is broader industries Our focus with alternative models, focus the our historically, over that and we team. differentiate navigating the capital companies BDC the over $X competitive over have AUM has as the highly with CION and note, structure, different exclusive focused a of the for the asset Group with years, and integrated top vertically grow billion our in within And Management distribution we important Funds. And Diversified impact XX funds, of And our the manager managed part of integral $X organization, that portfolio to industries. on years. CION BDC noncyclical of Investment of was XX September on along however, which which, Credit CION platform, CION we enabled represent COVID-XX important when us through past X.X the XX, is includes our investment ourselves a over believe Ares Ares developed sector. culture to is past structure

have and equity as the and sourcing that robust, club of inclusive relationships. direct have like-minded we the with deep private lead sponsors, We both believe network emphasizes organization diverse well opportunities the approach first partners lien as where we differentiated investments, select

we solid experienced we uniquely believe and CION important impact together ultimately our roughly our management an to worked for long-tenured, been and repeat skills investment bring in firms many to record in with Our We backgrounds which employees Investment I a for over to performance manages and CION. us positively over network. and approach that XX track underwriting, assets, together operational date. Mark goal years supporting XX of is differentiation years, that a Corporation complete including ago. and nearly have and highly team Group generating and $X.X partner become Investment valued represent Today, XX credit cofounding the in source our a CION has of billion diverse team

the to decision of our fulfill enhanced shareholders X, New our York operations position CION As the to made officially listing opportunity move strategic Exchange. years also pledge of liquidity existing trading to with BDC, on for we CION to Mark forward X to After as and Stock on grow. in began order provide the nontraded a noted, the October CION

coverage our As have regulatory asset increase to process, leverage and we proxy the reducing our definitive as part mentioned, seeking by of XXX%. statement ratio Mark a filed shareholder approval to

our we the which spring to a intention X market trading recently has Board after and share periods plan establish judge the repurchases. $XX early in plan for had plan We trading reporting XXbX-X a Additionally, announced share repurchase to performance. our anticipate facilitate stock's XXXX in to implementing approval million

our In as noncontrolling our is addition, adviser, on in somewhat other us a understanding is they part counsel, Apollo, not shareholder with is access a participants. originated now with would way, provide critical deal-sourcing able as and a and of based any to development, that our legal while conversations our any which show deals market to our new and regulator

we acquainted CION getting we As embarking this company, on to have public-facing you. forward better path continue as more a with new look

to like and our overview activity quarter. the investment for market the an Gregg for investment over would of it I Now to turn

Gregg Bresner

morning, Gregg Michael. Bresner, Thanks, everyone. of Officer I'm President Good CION. and Chief Investment

record a liquidity to mentioned, pace market continues LCD from for reported September transaction QX, $XXX middle-market $XXX is X.XX% quarters high loan billion during in leveraged U.S. and loan the of by third of experience in quarter we market through X.XX%, billion, XXXX, continued for the and characterized surpassing robust XX, to on abundant continued down effective volume, issuance Mark average total record XXXX in institutional for environment tighten X is in issuance, spreads, first As as loans the tightening yields market volumes. The increases and & of as Standard to QX an XXXX. Poor's Despite the X.XX% respectively. prior by

of represents investment investment acquired quarter. which realized generated as highlight acquisition, during in by and successful investment an the that active activity preferred CS lien investments of the was maturity average the was funded already be solution that lien the cost pharmaceutical million Conisus and in companies, by of quarter. higher of newly private to our companies. capital loan business M&A for and and Most acquisition with Repayment October. to closely approximately of and exit repayment borrowers $XXX second million million yield our $XXX.X investment carried a market outcomes of longer QX new portfolio initially additional decrease of of required made CION investment activity million into to totaling its in to a consisted $XX.X transformation million the across was million. Accordingly, time to net participating XX.XX%. new Park parties. XX its full higher model, portion CION's common other commitments, management million, amounted investment tenure transformation significant first agency the were customers approximately up stock QX $XXX-plus November for Conisus, structure investment of quarter, we to of of gain team for sponsor in million most new X holdings capital commitments and value-add our while a to and and strategic funded investment participating the $XXX.X were material the the yield our a the flexibility. Working closed the a The of quarter the totaled pipeline notably, common for commitments, with equity Our exit. of from of preferred date. We and lien Despite the month XX on investments, our a the over in existing advertising an XXXX. the combined Conisus with driven quarter equity, all month equity an for closings another offering upside. par we effective most exchanged in October, The investment funded utilized during portfolio investment strategic new X.XX%. part on Accordingly, we created totaled to made the resulted XX.X% first contemplating the commitments. Of the for win-win front. on proved And one this the of origination a totaled flexibility At yield invest portfolio and View shaping conditions, remained in during ultimately quarter, analytics A $XXX commitments the new our a profile of of of XX which team, successful third with to to significant investment a $XX.X realization with $XXX.X cost business,

value portfolio Now secured had senior with products. less first I'll information equity composition. of fair in our end, bit billion, investments. in included in debt floating in structured This lien, Over lien, provide second the total in XXX is a than of investments $X.X unsecured loans. and XX% and XXX XX.X% rate little of X% quarter a portfolio XX.X% X.X% X.X% comprised market overall in each about we portfolio in on more At companies

mentioned, lien-focused As first we a Michael are have Mark and BDC.

the with makeup We do any and pleased are types current terms material composition not plan respect of to of of shift investments. the portfolio in our on with

par yield about X.XX% to of of of As leverage second of the gross average to at our of investment $XX.X average end and X.XX% annual third a weighted purchase a with million. portfolio quarter quarter, of end, compared the an price XX.X% had prior size

X our with is Turning and largest portfolio of a at industries and mix, next to health consumer in Overall, we XX XX.X% credit third of entire the the to at consistent is XX.X% the quality. and our concentration services the companies fair The well coverage portfolio. The based services The that high-quality a on and believe terms X.X%, debt with at of at portfolio interest of in EBITDA net our have which weighted represented we and the being stable. X.Xx, X.Xx portfolio which industries the performance slight totals approximately portfolio is XX.X%, the quarter. was average X.Xx diversified second portfolio end, pharmaceuticals companies from care underlying business end value quarter from weighted of was at was improvement quarter. companies average prior quarter

of amortized total respectively, second X.XX% September costs, X.XX% compared of were investments XX, X.XX% the value and end on quarter. and portfolio of the and X.XX% As fair nonaccrual to status the investment at at

placed first in we have total This new loan [ of XX% status. under tranche. Premiere ] of on represent the this investment nonaccrual approximately X.X% holdings lien Global, there During which was the par. CION's valued quarter, of was one currently

investments X and a higher. which X% ratings Our of universe. our XX% risk portfolio is rating portfolio, than X internal or X over appear not of of consistent X BDC throughout be asset quarter, with with risk up to definition second with the consistent total rated the of The does made the less

risk is has the of or -- to increased such ability with return Our definition and to acquisition full origination investment the or risk recoup principal our of cost since dividend indicates interest expected. X our of

intensity for a today, increased quarter. environment, X third in that conditions will here monitoring we risk the initial And only we're summary, CION's Given sit robust our the support expect investment, by very since pleased assets. In rated repayment is with risk origination in change as tempered continue activity. part market to we

to provide end turn ahead continues cautious through us the Keith. pipeline now as the with over optimism XXXX. I we Our will to of look call

Keith Franz

Financial you, good My Gregg, is and everyone. Chief Thank Officer. Keith Franz, Okay. morning, name the company's

for the we earlier, mentioned results reported As solid third quarter.

related income investment net June investment the share in or quarter. $XX.X $X.XX investment increase QX, dividend share of XX% The quarter. investment For Conisus $X.XX prior Total $XX.X per an or $XX.X or to the million from during income million was million, was to by was the higher our exit compared million income driven income increase $X.X quarter. in the in of per

the gross of increase fees due exit Conisus. under were our assets to investment the side, expense incentive On management higher in an in average and management successful

the debt higher recognized million, prior compared of with also the total to we relating solicitation operating and legal, with the million had $XXX assets total to quarter, $XXX We higher due year advisory expenses net and outstanding costs management, to of XX.X $X.X nonrecurring costs. At of under shares the listing, including end assets million outstanding. proxy billion of

second XX% quarter at the end, debt-to-equity compared As ratio a at to was of result, end the our XX% quarter.

September net at seeking increase As shareholder X.X% our proxy per previously assets about asset or statement per which ratio. Total is a our at June coverage the million or have $XXX from million $XX.XX $X.XX discussed, definitive share $XX.XX approval to prior reduce was XX share and share compared quarter. XX, an or of leverage increase per we filed to $XXX

with over to a are recovered sheet, $XXX with that our over experienced March of servicing with the unencumbered report strong COVID We and leverage the that in ended has pleased a XXXX. We NAV due debt solid low XX% quarter of to balance capacity decline assets, occurred NAV during we liquidity. million strong

and under facilities $XX over in our million investment pipeline. investments million our to current have We to and access short-term $XXX cash finance another

million $X.XX about share about per share $XX by were covered or cash period, distributions third year-to-date our fully for income. our which and per all of $X.XX or paid shareholders the During million of the $XX taxable paid to quarter, we

a Additionally, distribution expected announced per $X.XX of the we for range year-end previously of to in the share a and regular per quarterly quarter distribution $X.XX $X.XX to fourth share. be special

and special beginning monthly on as -- distributions We regular will be with regular December we shareholders quarterly cash December also X% regular to move that be from December quarterly distribution on would record distributions XX. On fourth a quarter. The shareholders is X, of to we the X per the of the will the of an announced as paid of share XX XXXX, distribution for record cash per paid which of declared XX, quarter. quarterly $X.XX from first quarter $X.XX fourth the share increase November December of of to cash or

well of In in earnings release terms economic factors. declaring each of expectation taking company's forward, our announce will distribution distributions in related and with policy, into outlook ongoing June quarterly and special X another future consideration as performance year, the distributions with quarterly December, as both X each the we general going

free note, undertaken questions final who shareholders Relations corporate review ready listing, And their in prepared found and a feel Investor regarding answer questions. The to direct website the connection with can our www.cionbdc.com. any actions with be team shares we shareholders our on reach at the have all should of your to As team to filings contact SEC. number encourage our the our with to our who are

Okay. Mark concluding call back the for some over With turn will to that, comments. I

Mark Gatto

Thank you, the investors existing next. have we we Keith. excited a any believe will what expressed to our we be what's In are from ready said, operator, the closing, our appreciate by and for support ahead. With take new on shareholders great us joining journey questions. We confidence very are that

Operator

Our with of first is question O'Shea Wells Instructions] line from Fargo. the Finian [Operator

Finian O'Shea

inaugural on the Congratulations earnings quarter.

into the getting Apollo. mechanics to think Is relief, on mentioned on with color loans and just you in progress their participate toward Any appreciated. there how did sound you First ability would there co-invest have co-investment this it receiving assignment? or co-investment is would progress work co-investment Mike, Or order? -- question I be relief, potential there's exemptive for like

Michael Reisner

Sure.

us could they I [ for would little it's like in a regulators. not there to. will no not they do control Apollo because because our exemptive will us it they relief careful guess participant with be we They say what say is as of understanding us. ] refer be need. any deal of not when terms that market seeking we ] can affiliate I'll is with not the an we theirs. what [ when bit seek definitive is I treat other just will they nor of We're It treat deals So

Finian O'Shea

Mike, actually, a and strategies to Okay. question, club Great. That's sponsor. the mentioned helpful. And you had between direct market second the

is are you wondering you to market, there large willing do or the of have club able private taken very large or in seeing -- are tranches? -- quasi-syndicate, the one and few. But some them are if to that both really doing. down by clubbed participate in is broader On you're We're club would lender, unit it be you some market interested seeing a -- large between something that a open very up if up broader is

Mark Gatto

will tell agreement I We credit you are that the down all as well it to seeing it. terms the as of comes economics.

that compare are So would economics consider rest to middle compare in the then better club and we're I But going to we see of what market. we to see tending market that it. the the more traditional

Finian O'Shea

would second do for your And Okay. strategy you side, the a improvement, investment part X:X the liability of or margin? public what and any, you're One any on now And that of change X-part the Makes is see the if then investment -- then the in leverage? for overall hopefully I that or leverage, guess, above. structure for positioned strategy on sort a Would more sense. Keith question, question.

Keith Franz

of entity, economics, investment approach. in to and I being our wait on think is do of not terms the a side, We listed answer it's the I see. in think a no. change And terms as expect anything on the

to what at market, our As we go the we and ] bear see can approval the from economics we'll we time. seek [ shareholders

Finian O'Shea

Okay. final Makes And a question Keith. for sense.

$X.XX December for. -- it's says know to I think And a still I terribly, I looking XX, press and of may on of payable. When the somewhat amount? this a expect not do somewhat -- you But declare it wide special you didn't missed have mentioned the -- $X.XX what exactly release, in but range. to I'm

Keith Franz

Yes.

closer -- to with into move be probably in a a position good firmer we'll come we out as December, think I number. to

Operator

[Operator I'll for to time, remarks. Instructions] further this At the management turn call back

Michael Reisner

who appreciate care, to everyone, in today. everyone. the Great. we your call and Thank do you forward CION, We you, speaking Take next look joined to quarter. interest

Operator

This conference. you. Thank concludes today's

this time. Thank participation. You may you disconnect your your for lines at

CION Investment (CION) 15 Nov 212021 Q3 Earnings call transcript