Greetings, and welcome to the CION Investment Corporation Q4 and Year-End 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Charlie Arestia, Managing Director and Head of Investor Relations. Thank you. You may begin.

Good morning, and welcome to CION Investment Corporation's Fourth Quarter and Full Year 2024 Earnings Conference Call. An earnings press release was distributed earlier this morning before market opened. A copy of the release, along with the supplemental earnings presentation is available on the company's website at www.cionbdc.com in the Investor Resources section and should be reviewed in conjunction with the company's Form 10-K filed with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC. Joining me on today's call will be Michael Reisner, CION Investment Corporation's Co-Chief Executive Officer; Gregg Bresner, President and Chief Investment Officer; and Keith Franz, Chief Financial Officer. With that, I would like to now turn the call over to Michael Reisner. Please go ahead, Michael.

Thank you, Charlie. Good morning, everyone, and thanks for joining our call today. It's an exciting time here at CION, and we are very pleased with our 2024 results, especially against the backdrop of elevated competition and shifting expectations around both inflation and interest rates. Our BDC continues to generate a very attractive yield for our investors, which was enhanced this past year by our midyear and special year-end distributions. We also had the pleasure of hosting both analysts and investors at CION's first Investor Day in January. We took a deeper look at our differentiated investment strategy and our fundamental performance and track record, specifically against similarly valued publicly traded BDCs. We also highlighted several deal case studies across both our core and opportunistic investment strategies and hosted a panel discussion with several of our investing partners in both private credit and private equity. This discussion covered the unique dynamics of club lending from both the lender and sponsor perspective as well as our broader outlook for middle market investing in 2025. Lastly, we did a deep dive on our extensive valuation process, which utilizes both internal and external inputs to mark our portfolio assets. Moving to our financial results for the quarter and full year of 2024. CION reported $0.35 in quarterly net investment income per share for the fourth quarter and $1.79 per share for the full year, exceeding our total 2024 distributions of $1.52 per share. Our net investment income reflects our diverse revenue base of interest income from our core lending strategy as well as accretion from transaction fees and our opportunistic investments. As Keith will describe in more detail, the modest decline in our quarterly net investment income was largely driven by the impact of repositioning of our balance sheet in the prior quarter.…

Thank you, Michael, and good morning, everyone. We remained highly selective with new investments in Q4 as we were effectively at full investment during most of the quarter and successfully achieved our targeted net leverage level of 1.25x while our loan repayment levels were less than typical. During the quarter, we passed on a historically higher percentage of potential investments based on credit and pricing considerations. As Michael discussed in his remarks, market conditions remain very competitive as historic capital inflows continue to chase transactions in a relatively slow M&A environment. This resulted in lower coupon spreads, higher leverage attachment levels and easing credit terms throughout the leverage loan markets. We believe the 2024 cohort for new loan origination may eventually prove to be challenging for those who disproportionately ramped loans during the year. As we presented at our inaugural Investor Day, when you look at the dynamics of the 2024 cohort versus the previous decade, monthly net cash inflows were more than 2x their average levels and coupon spread levels for B, BB and BBB loans finished 2024 at 15% to 25% below historical average levels. We believe this dynamic may ultimately prove challenging for the total returns realized for the 2024 origination cohort. We continue to strategically focus on first lien investing at the top of the capital structure and prefer to utilize secured yield enhancement provisions such as PIK features, exit fees and MOICs to drive yields at the top of the capital structure rather than reaching deeper into capital structures for mezzanine and equity co-investments. We believe our continued investment selectivity and proportional deployment levels helped us to invest in first lien loans at higher spreads when compared to the overall loan markets during the quarter. The weighted average yield for our total funded first lien…

Okay. Thank you, Gregg, and good morning, everyone. As Michael mentioned, we are pleased with our strong performance for the full year in 2024, and we reported another quarter of solid financial results. During the quarter, net investment income was $18.7 million or $0.35 per share compared to $21.6 million or $0.40 per share reported in the third quarter. The decrease of $0.05 per share was driven by a combination of lower SOFR rates on our investments and higher interest expense incurred on our borrowings during the quarter. For the full year, total investment income was $252.4 million as compared to $251 million reported for the full year 2023. Even though we experienced a slight increase in total investment income year-over-year, total investment income during 2024 was impacted by higher transaction fees from our investment activities and lower SOFR rates earned on our investments. Net investment income for the full year was $95.9 million or $1.79 per share as compared to $105 million or $1.92 per share for the full year 2023. The decrease of $0.13 per share was driven by higher interest expense on higher average borrowings outstanding during the year and higher amortization of debt issuance costs in connection with repositioning our debt capital during the second half of 2024. At December 31, we had total assets of approximately $1.9 billion, and total equity or net assets of $821 million with total debt outstanding of $1.1 billion and 53.2 million shares outstanding. At the end of the quarter, our net debt-to-equity ratio was 1.27x, which is slightly higher than 1.18x at the end of Q3. The increase in leverage was impacted by both an increase in the average debt outstanding and a decrease in NAV during the quarter. During the quarter, total debt increased by $48 million due…

[Operator Instructions] Our first question comes from Finian O'Shea with Wells Fargo Securities.

I want to start on David's Bridal. I know you mentioned the seasonality, but sort of if you can give color on what the add-on was really all about this quarter because I don't think that comes every year. I think you mentioned a sort of strategic transformation as well. Maybe it's that or -- or is it just an overall more leveraged capital structure?

Finian, it's Gregg. So there's 2 components to it. The largest component is I would consider this more nonrecurring in nature because this was our first year after emerging -- the company emerged from bankruptcy in late '23. So this was our full merchandising season so the merchandise build was larger than usual because we had to stand the business back up from -- and this was the first full buying season. So this season would be larger significantly than we would expect in the future and there was also some incremental investment, which is more, again, nonrecurring in nature as we invested in our new [ Pearl ] marketplace, which is the new digital side of the business that we're in the beginning stages of a ramp. So for us, which is a very exciting opportunity. The company did a big press release on it. So it was unusually larger because of those 2 dynamics.

Okay. That's helpful. So should we expect this kind of fourth quarter investment and then maybe a pay down over the course of the year in normal course?

In the normal course, this was more of a onetime thing. I'd say going forward, what you'll see is a more significant pay down on the revolver side of the business. And then at some point, it would waterfall to the term loan. But initially, it would be a sweep down on the revolver.

Okay. And then, I guess, sort of similar question or discussion on Homer City. I guess can you expand -- I think you touched a little bit on, but what was the sort of breakthrough there? You put in more debt. I think that loan still matures pretty soon. So maybe what's -- with whatever you can share what's happening on the equity side? And do you anticipate refinancing that this quarter?

So just we have to be careful because it's a private company, but there's been significant redevelopment as it was a shuttered coal plant that's now being redeveloped into a gas plant and other energy sources. And we can't say too much, but you can assume that all the exciting things that are happening with data centers around the utility space, is something that we are closely aligned with.

Our next question comes from Erik Zwick with Lucid Capital Markets.

Justin Marca on for Erik today. It sounds like the pipeline remains healthy. Can you give us any detail on new versus add-on opportunities and do you expect to increase competition for pricing and structure to kind of remain for the near term?

So our quarter -- this is Gregg. Our quarter, I think, was pretty good illustration of what we expect in upcoming quarters. Roughly 60% of our investments were to existing portfolio companies. And we do expect to see that trend continue because there's been a fair amount of add-on incremental acquisition activity. So we do expect that to continue. As we stated in our talk, I mean, the market remains very competitive. We've been very selective and very careful about pricing and credit when we're making new platform decisions. So I do expect that 60-40 type balance to continue. But we do -- and primarily driven by funds flow, I think you can see the competition in the market. So I think we're going to continue our current strategy, and we do expect to have more significant activity more towards portfolio companies than new platforms.

Okay. And nice to see the resolution on Homer City. Any sort of line of sight to additional resolutions for the credits that remain on accrual today?

Sorry, can you repeat the question?

So just touching on nonaccruals, any sort of line of sight into reaching additional resolutions for the credits that remain there?

I mean I think it's too early to give good visibility, but there are a couple we're watching that could potentially go back on accrual, but we're not quite there yet. So I think that's going to evolve over the year. But there are a couple that we've seen some improvement and it could happen both, but it's a little early.

Okay. And last one for me. We've heard a couple of companies talk about potential impacts of tariffs on portfolio companies. Have you guys started to analyze any of your portfolio companies? And has anyone kind of voice concern about any potential outsized impact that they may be facing.

So this is something we do actively talk with the portfolio companies about. David's Bridal is an example, where we're closer to it. It's a relatively smaller portion of our portfolio because it tends to not be that much based on that kind of sourcing. But in that example, and I think that's the general trend of what we're seeing across the few other portfolio companies is that there has been efforts over the years to divert more production out of China into other Asian countries, which we've successfully done at Bridal. So I think the way most are planning to deal with it is more variability and where they're producing from more diversification and the strategies we've seen are basically to divert more out of China in the short term where they have that flexibility and reduce any tariff exposure. But it's something we talk about every day. But candidly, it's not a big percentage of our portfolio, but that's been a common theme that we've seen.

Thank you. There are no further questions in queue. I will now turn the call back to Michael Reisner, CEO, for final comments.

Great. Well, thank you, everyone, for joining our call today. We appreciate your continued support. We look forward to coming back to you next quarter with our Q1 results. Thank you, everyone.

This concludes today's conference. All parties may disconnect. Have a good day.