CION Investment Corporation

Greetings and welcome to the Scion Investment Corp first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to send the conference over to your host, Jihei Linford, a company representative. Thank you. You may begin.

Thank you. Good morning and welcome to Scion Investment Corporation's first quarter-ended March 31st, 2022 earnings conference call. An earnings press release was distributed earlier this morning before market opened. A copy of the press release along with a supplemental earnings presentation is available on the company's website at www.scionbdc.com in the investor resources section and 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. We caution you to not place undue reliance on forward-looking statements which reflects Management's view only as of the date of this call. Scion Investment Corporation undertakes no obligation to update or revise any such forward-looking statements unless required by law. Speaking on today's call will be Mark Gatto and Michael Reisner, Scion Investment Corporation's Co-Chief Executive Officers, Brad Bresner, President and Chief Investment Officer, and Keith Rand, Chief Financial Officer. With that, I would now like to turn the call over to Mark Gatto. Please go ahead, Mark.

Thank you, Jihei. Good morning, everyone, and thank you for joining us today. I will start our call today with an overview of our first quarter results. Michael will discuss our long-term corporate strategy and where we stand to date. Greg will review our investment activity during the quarter, and Keith will provide additional detail on our financial results. This morning, we reported solid first quarter 2022 results. Our net investment income for the first quarter increased to 34 cents per share as compared to 32 cents per share for the fourth quarter of 2021. This quarter's net investment income reflects the growth of the portfolio as we ended the quarter with net funded portfolio activity of $77 million. We have discussed our growth plans on previous calls and we believe we are well positioned to continue to grow our portfolio and begin to see the benefits of being more fully invested. Michael will further dive into this topic in his remarks. As mentioned, investment activity in the first quarter was solid, with new investment commitments totaling $155 million relative to sales and repayments of $61 million. We funded 15 new investments, with over 50% of such investment commitments to new portfolio companies. We remained focused on first lien debt investments and were able to keep the level of these investments at the end of the quarter unchanged from a year ended 2021 at 92%, which represents a significant increase from 82% of our portfolio at year end 2020. In terms of credit quality, the portfolio continues to perform well. There were no new investments placed on non-accrual status during the quarter. Non-accruals accounted for just 0.6% of the overall portfolio at fair value at quarter end, a slight decrease in the overall percentage from year end 2021. Currently, we have ample leverage capacity to pursue our measured and disciplined growth strategy. As many of you on this call know, we received shareholder approval to reduce our asset coverage ratio requirement from 200% to 150% at the end of last year. As Michael will discuss in more detail shortly, during the quarter and subsequent to quarter end, we successfully increased our total debt capacity by $150 million by increasing the principal amount available for borrowing from J.P. Morgan by $100 million and borrowing an additional $50 million pursuant to an unsecured term loan. We recognize that rising interest rates are top of mind to those on this call and in our industry. At quarter end, roughly 90% of our performing loan portfolio was in floating rate investments, of which 80% had a LIBOR or SOFR floor with a weighted average floor of 0.85%. On the liability side, we do expect rising interest rates will increase the cost on our borrowings. but we expect a net positive impact to net investment income as rates continue to rise. As we all know, we are living in uncertain times with respect to the U.S. and global economies. Inflation, rising interest rates, and geopolitical events are impacting the financial markets and the broader macro economy. From our perspective, when we think about the uncertainties that lie ahead, we are focused on aspects under our control as we think about managing risk while pursuing growth in a prudent and measured manner. We believe we have the ability and capacity to continue to generate investment income without veering from our core investment strategy. With that, let me turn it over to Michael.