CION's Q3 2025: Contradictions Emerge on Interest Income, PIK Income, and Origination Pipeline

Date of Call: November 6, 2025

Financials Results

• Revenue: Total investment income $78.7M, up ~51% Q/Q from $52.2M in Q2 2025
• EPS: $0.74 per share net investment income ($38.6M), compared to $0.32 per share ($16.9M) in Q2 2025

Guidance:

• Declared Q4 base distribution of $0.36 per share payable Dec 15 to shareholders of record Dec 1.
• Converting base distributions from quarterly to monthly beginning January 2026; monthly distributions will be declared quarterly in advance.
• Company will provide comparable guidance on anticipated transactional income when conditions allow to help manage investor expectations.

Business Commentary:

* Strong Financial Performance: - CION Investment Corporation reported $0.74 per share in net investment income for Q3, driven by robust transaction activity involving 20 portfolio companies. - The growth was driven by increased transaction-related fees, other yield enhancement measures, and significant transaction-related accretion from a portfolio company.

• NAV Appreciation and Share Repurchase:
• The net asset value increased by 2.5% to $14.86 per share, driven by fair value increases in equity investments and an accretive share repurchase program.

• Longview Power was a significant contributor to NAV growth due to strong fundamental performance and broader sector growth.

• Opportunistic Investments and Strategic Transactions:

• CION's opportunistic strategy contributed meaningfully to net investment income, highlighting strategic investments like Juice Plus's consensual restructuring.

• These investments are aimed at enhancing overall returns and providing a strategic component of portfolio earnings power over the long term.

• Credit Performance and Balance Sheet:

• Nonaccruals increased to 1.75% of fair value, driven by two new names but remain in line with historical experience.
• The strong balance sheet includes over $1 billion in unencumbered assets, a healthy debt mix, and solid liquidity with over $105 million in cash and short-term investments.

Sentiment Analysis:

Overall Tone: Positive

• Management called it “a strong third quarter” with NAV up 2.5% to $14.86, reported $0.74 per share in net investment income, highlighted meaningful transaction-related accretion and continued share repurchases (≈330k shares at $9.86 in Q3 and ~325k at $9.33 in early Q4), and noted portfolio nonaccruals remained relatively low at 1.75%.

Q&A:

• Question from Erik Zwick (Lucid Capital Markets, LLC, Research Division): Of the incremental interest income (~$51M), how much was regular ongoing interest versus periodic/nonrecurring events?
  Response: Baseline interest income was roughly in line with Q2 (slightly up); the incremental portion primarily resulted from restructured investments and transaction-related items.

• Question from Erik Zwick (Lucid Capital Markets, LLC, Research Division): The $5 million of capitalized PIK — was that a one-time event in the quarter?
  Response: Yes — the $5M PIK capitalization was a unique, quarter-specific event (a one-off PIK event).

• Question from Erik Zwick (Lucid Capital Markets, LLC, Research Division): For the remaining incremental (~$12M), can you break out structured versus credit-related drivers given your structured-first approach?
  Response: The majority of that incremental income was from structured investments, consistent with prior commentary.

• Question from Erik Zwick (Lucid Capital Markets, LLC, Research Division): How does the current pipeline compare to three months ago in size and quality, and what are you seeing on structure and yields going forward?
  Response: Pipeline is more robust and broader than earlier in the year with a pickup in M&A; spreads and structures remain consistent with traditional middle‑market levels seen previously.

Contradiction Point 1

Interest Income and PIK Income Breakdown

It involves the breakdown of interest income and PIK income, which are crucial for understanding the company's income structure and financial performance.

How much of the $51 million came from regular ongoing interest payments versus periodic nonrecurring events? - Erik Zwick(Lucid Capital Markets)

2025Q3: On a baseline basis, we had interest income similar to what we recorded in Q2, maybe slightly up and then the rest of it came from the restructured investments that we experienced during the quarter. - Keith Franz(CFO)

How will NII per share cover the declared dividend rate given headwinds and SOFR rate compression? - Erik Zwick(Lucid Capital Markets)

2025Q2: Historically, these factors have offset each other. - Gregg Bresner(CIO)

Contradiction Point 2

Origination Pipeline and Activity

It pertains to the company's outlook on origination pipeline and activity, which is essential for revenue projections and investor expectations.

How has the pipeline size changed compared to three months ago? How is the quality of deals in terms of structure and yield? - Erik Zwick(Lucid Capital Markets)

2025Q3: Definitely more robust than we've seen this year. More activity, it's broader based. There's definitely been a pickup in M&A, which is different from the first 2 quarters. - Gregg Bresner(CIO)

What is the outlook for originations in 3Q and how will it balance against repayments? - Erik Zwick(Lucid Capital Markets)

2025Q2: We have a number of investment opportunities in the pipeline, but it's too early to tell how these will play out. - Gregg Bresner(CIO)

Contradiction Point 3

Pipeline and Origination Activity

It involves changes in the outlook for originations and pipeline activity, which are crucial for understanding the company's growth prospects and investment strategies.

Has the pipeline size changed compared to three months ago? Are the structure and yield quality of future opportunities improving? - Erik Zwick(Lucid Capital Markets, LLC, Research Division)

2025Q3: Erik, it's Gregg. Definitely more robust than we've seen this year. More activity, it's broader based. There's definitely been a pickup in M&A, which is different from the first 2 quarters. - Gregg Bresner(CIO)

Has the pipeline shown improvement since the end of 2024? Is there a specific portfolio segment showing more improvement? - Erik Zwick(Lucid Capital Markets)

2025Q1: While we are seeing an increase in investment in M&A, we are not seeing a pickup in commercial or industrial lending. - Gregg Bresner(CIO)

Contradiction Point 4

Originations Outlook and Activity

It involves differing perspectives on the outlook for originations, which is crucial for understanding the company's growth trajectory and investment strategy.

Can you comment on the pipeline's size compared to three months ago? Also, what's the quality of structure and yield for future activity? - Erik Zwick(Lucid Capital Markets, LLC, Research Division)

2025Q3: Erik, it's Gregg. Definitely more robust than we've seen this year. More activity, it's broader based. There's definitely been a pickup in M&A, which is different from the first 2 quarters. - Gregg Bresner(CIO)

Can you discuss new versus add-on opportunities and near-term competitive expectations? - Justin Marca(Lucid Capital Markets)

2024Q4: In Q4, 60% of investments were to existing portfolio companies, with a continued trend expected. - Gregg Bresner(CIO)

Contradiction Point 5

PIK Income Components

It involves differing explanations of the components of PIK income, which are important for understanding the company's financial performance and investment strategy.

Was the $5 million in capitalized costs related to the quarter's PIK income a one-time item? - Erik Zwick(Lucid Capital Markets, LLC, Research Division)

2025Q3: I don't know if I would necessarily use that vernacular, but yes, that was a pick event that occurred uniquely in this quarter. - Keith Franz(CFO)

Can you explain how the $28 million PIK income is split between interest and dividend yield? - Erik Zwick(Lucid Capital Markets, LLC, Research Division)

2024Q4: I think your initial question was about the $28 million. It was -- it was entirely interest income. - Keith Franz(CFO)