Welcome to CION Investment Corporation First Quarter 2025 Earnings Call. At this time, participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Charles Arestia, Managing Director and Head of Investor Relations. Please go ahead, sir.

Good morning and welcome to CION Investment Corporation's First Quarter 2025 Earnings Conference Call. An earnings press release was distributed earlier this morning before the 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. It should be reviewed in conjunction with the company's Form 10-Q 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 Mark Gatto, 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 Mark Gatto. Please go ahead, Mark.

Thank you, Charles, and good morning, everyone. Thank you all for joining our call today. CION reported $0.36 in quarterly net investment income for the first quarter, covering our base dividend and representing a slight increase from the prior quarter. Driven by lower interest expense as we absorb the impact of our balance sheet repositioning from late last year. Our net asset value declined quarter over quarter to $14.28, down from $15.43 in the fourth quarter. Driven primarily by fair value marks on a limited number of portfolio companies, somewhat offset by accretion from share repurchases during the quarter. While we will provide additional detail on what drove the quarterly decline in NAV later in the call, two names specifically contributed to most of the decline. First, during the quarter, we announced a new growth capital raise for David's Bridal, expanding the pool of investment partners supporting the company's strategic focus on its asset-light higher growth Pearl Marketplace business. In conjunction with that new term financing facility, equity was issued to our new lending partners, which drove a quarterly reduction in the fair value of certain tranches of our term loan investments. We are hopeful that the recently announced strategic initiatives can accelerate our plan to increase long-term equity value for all stakeholders. Second, we experienced a decline in the mark on our term loan in Anthem Sports and Entertainment, driven primarily by the company's continued strategic business shift away from a subscription-based to a variable-driven revenue model. A shift which requires time to ramp financial results. The overall credit performance of our portfolio has held up well despite a shifting macroeconomic backdrop, and we continue to observe encouraging EBITDA growth trends on an LTM basis in the first quarter. As a result of our quarterly valuation process, we downgraded…

Thank you, Mark, and good morning, everyone. We've remained highly selective with new investments in Q1 as we were effectively at full investment during most of the quarter and worked to maintain our targeted net leverage level of 1.25 times while our loan repayment levels were less than our historical experience, with some slipping into Q2. During the quarter, we passed on a historically higher percentage of potential investments based on credit and pricing considerations as the hangover of record 2024 direct lending fundraising still translated into lower coupon spreads, higher leverage levels, and looser credit documents for many Q1 opportunities. As Mark discussed in his remarks, market conditions changed dramatically during the second half of the quarter, particularly in March, with sentiment souring based on tariff concerns and increased volatility and the first monthly loan outflow we have seen since 2023. We expect new loan spreads, leverage attachment levels, and credit terms to improve going forward based on the prevailing macroeconomic conditions. 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 MOECs to drive yield to 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 debt investments for the quarter based on investment cost was the equivalent of SOFR plus 6.3%. As we discussed in previous quarters, the majority of our annual PIK income is strategically derived from highly structured first lien investments where PIK income is…

Thank you, Gregg, and good morning, everyone. During the first quarter, net investment income was $19.3 million or $0.36 per share compared to $18.7 million or $0.35 per share reported in the fourth quarter. This is an increase of about $600,000 or $0.01 per share. Total investment income was $56.1 million during the first quarter as compared to $57.9 million reported during the fourth quarter. This is a decrease of $1.8 million or about 3% quarter over quarter. The decrease in total investment income was driven by lower transaction fees from origination and amendment activities as well as lower SOFR rates earned on our investments when compared to the prior quarter. On the expense side, total operating expenses were $36 million compared to $39.2 million reported in the fourth quarter. The decrease was driven by lower interest expense due to lower SOFR rates and the benefits of repositioning our debt capital during the past few quarters. At March 31, we had total assets of approximately $1.9 billion and total equity or net assets of $757 million with total debt outstanding of $1.1 billion and 53 million shares outstanding. At the end of the quarter, our net debt to equity ratio was 1.39 times, which is higher than 1.27x at the end of Q4. The increase in leverage was directly impacted by the NAV decrease during the quarter and lower than expected repayment activity near the March. Post quarter end through April, after reflecting recent repayment activity, our current net debt to equity ratio is now 1.34 times. Our portfolio at fair value ended the quarter at $1.8 billion, and the weighted average yield on our debt and other income-producing investments at amortized cost was 12.1% at March 31, which is down 15 basis points from the fourth quarter. At March…

Thank you. Our first question is from Eric Zwick with Lucie Capital Markets. Please proceed.

Thank you. Good morning. I wanted to start first with a question on Anthem Sports, and I appreciate the detail you gave in the commentary already. Just curious, is that a club deal? If so, are you the lead lender there? And then also curious just about the rationale for the shift in their business model and how long, I know it may be hard to tell, but how long you would expect it to take before the financial performance there returns to prior levels?

Hi, Eric. It's Gregg. So there are it is a club deal. There's about five lenders in total in our structure. And we think it will take 24 months approximately to make the transition. And, basically, you're going from the larger predecessor contracts with the larger media companies had now switched to a strategy of more channels but advertising-based as opposed to fixed subscription fees. And it just takes time to ramp up the new places and new channels and advertising to ramp it up to a full annualized basis.

Got it. That's helpful. And then also just looking at through the SOI and of the industry concentrations that did see some depreciation in the quarter, but there were four that were kind of in the health care and pharma industry. But then I noticed also within that same industry, FuturePack, it looks like doubled your investment there. So just curious kind of what you're seeing at FuturePack. I do see that they possibly made an acquisition recently, so maybe it was to help fund that. But so curious about FuturePack as well as kind of the broader trends that are impacting that industry today.

Sure. So FuturePack was an acquisition. It's a relatively large one. And the company now is more of a larger cap company. When we first started, it was lower middle market. And today, it's the profile of a large cap, very strong earnings track record. So they continue to grow. And we were one of the many lenders who re-upped and increased their exposure because of the acquisition pipeline coming. But it's primarily driven by very strong earnings growth.

Got it. And then just in terms of the health care and pharma industry at large, were the kind of depreciation recorded unrealized depreciation recorded for some of the other investments? Was it related to changes at the FDA or anything else? Just kind of curious.

No. Nothing structural like that. Nothing secular. It was much more just mark-to-market comps trading down, things like that. But more at the micro level, not at all any kind of structural or thematic shift.

Got it. And the last one for me, I'll step aside. Are you guys able to provide any update on potential realized gains over the next quarter or two that you might expect in the equity portfolio? Anything kind of popping up there?

Nothing we can disclose. All private companies, so we have to be very careful about what we can say. But over time, we do expect to have some, but it's very hard to say right now without going into breaking confidentiality.

Thank you for taking my questions this morning.

We have no further questions at this time. I would like to turn the conference back over to Mark Gatto for closing remarks.

Thank you, everybody, for joining us today. We look forward to speaking to you next quarter.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.