CION Investment Corporation

Greetings and welcome to the Scion Investment Corporation second quarter 2025 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, please press star zero on your telephone keypad. And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Charlie Orestia, Managing Director and Head of IR. Thank you, sir. You may begin.

Good morning and welcome to Scion Investment Corporation's second quarter 2025 earnings conference call. An earnings press release was distributed earlier this morning before market opened. A copy of the release along with a supplemental earnings presentation is available on the company's website at www.scionbdc.com in the investor resources section. It should be reviewed in conjunction with the company's form 10Q 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, Scion Investment Corporation's Co-Chief Executive Officer, Greg 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, and good morning, everyone. Thank you all for joining our call today. This morning, Scion reported 32 cents in quarterly net investment income for the second quarter, mainly impacted by two positions, including a restructuring of Anthem Entertainment, which we discussed in the prior quarter, and the exit of our position in several hospital loans, which Greg will discuss. Excluding this one-time impact, our quarterly net investment income would have exceeded our base dividend level of $0.36 per share. As I will touch upon in a bit, we are keeping our dividend steady at this time. Our net asset value increased 1.5% quarter over quarter to $14.50, up from $14.28 in the first quarter, driven by fair value increases in our equity positions in Longview Power, David's Bridal, and several other smaller positions. We also continue to repurchase shares in the open market during the quarter, which remains accretive to our NAV. Longview Power is our second largest equity position, and saw improved valuation this quarter due to better than expected financial performance and strong capacity auction results. As we have noted on prior calls, we expect some quarterly volatility in the fair value marks of our equity positions in Davids Bridal given the relative size of the position and the nature of its business. This quarter, our positions in Davids were marked higher due to improved trading performance of comparable companies increased clarity around potential impact of tariffs, and the continued growth of its higher multiple PERL digital marketplace. We are pleased with the continued credit performance of our portfolio as underlying fundamentals remain encouraging. We are seeing weighted average adjusted EBITDA growth at the portfolio company level in the mid single digits on an LTM basis, reflecting sustainable growth and healthy operations. Following our quarterly evaluation process, we downgraded investments in seven portfolio companies on our internal risk rating scale and upgraded investments in four portfolio companies. Several of our rating upgrades were due to anticipated repayments subsequent to the quarter following portfolio company sales or other transactions where we have received notification of a pending payoff. Investments risk-rated 4 or 5 represent less than 2% of the portfolio at fair value, similar to the prior quarter. Overall, non-accruals remain low at 1.37% of the portfolio at fair value. Capital markets were especially volatile in early Q2, and our share buyback activity accelerated as a result. We repurchased approximately 699,000 shares of our common stock at an average price of $9.37 during the quarter. We are excited to announce that our board has authorized a $20 million upsize to our share repurchase program, which was renewed at our quarterly board meeting earlier this week. We continue to believe that our share buyback preserves strong alignment with our shareholders, along with our insider purchasing, and remains a prudent use of capital as long as it is accretive to NAV. When we spoke with you last quarter, investors were attempting to digest a whirlwind of macroeconomic challenges, including the initial wave of steep tariff declarations on various trading partners around the globe. Since then, improved clarity around both the strategy behind the tariffs as well as negotiated deals has led to a broader market rally and stronger sentiment. While it is too soon to say whether this trend will continue into the back half of the year, initial discussions with our portfolio companies remain positive. Repayments accelerated this quarter and we expect additional repayments in the third quarter, which should allow us to deploy into our forward pipeline while balancing our overall leverage profile. Overall, we are pleased with our growth in NAV and continued steady credit performance in our portfolio. Regarding earnings, I want to share some incremental context around our dividend policy, even our net investment income for the period. We are maintaining our dividend at 36 cents per share for a couple of reasons. The first, what we believe is the non-recurring nature of the impact to our earnings this quarter as a result of the two positions I mentioned. And second, we are currently leading the recapitalization of one of our larger portfolio companies in a transaction that we expect to close in the third quarter, which we believe will be highly accretive to both earnings and NAV. As we have mentioned in the past, we encourage investors not to overly focus on any particular 90-day window when evaluating our performance, as this does not reflect how we manage our investment and portfolio management processes. As we outlined at our Investor Day earlier this year, we see our opportunistic investing strategy as a strong complement to our core direct lending strategy, allowing Scion to enhance shareholder returns while remaining focused on a conservative first-lane position. While we acknowledge that this can introduce some volatility into our earnings on a quarter-to-quarter basis, we believe this volatility tends to skew meaningfully to the upside and thus should be evaluated on a longer-term perspective. With that, I'll now turn the call over to Greg to discuss our portfolio and investment activity during the quarter.