Are more asset sales contemplated to hit the 1.3x-1.4x leverage target, or are most sales complete?

No incremental selective asset sales are planned. The focus is on larger potential financing transactions, implying individual asset sales are largely complete. “On an incremental basis, no selective asset sales. We're looking at larger potential transactions on the financing side, but not in terms of individual asset sales. I think we're pretty much done.”

What are the potential options and outlook for the legacy brick-and-mortar David's Bridal business after the contemplated split with Pearl?

The legacy retail business will be run for cash flow, while the Pearl digital platform will be managed for high organic growth. The separation allows for different strategic transaction opportunities for each business, catering to different investor interests. “So, you can assume the legacy retail business will be run for cash flow as opposed to the Pearl side of the house, which is organically scaling at a very high rate. So 1 is really a technology business with a very high growth profile. The other is a more mature retail-based business that is going to be run more for profitability as for growth.”

How does the new origination pipeline look, and is net portfolio growth unlikely for a few quarters until deleveraging is complete?

The company believes its stock is an attractive investment given its current trading price. Investment activity will be portfolio-focused, and net portfolio growth is unlikely for a couple of quarters as the company prioritizes share repurchases and deleveraging. “Yes, we think that's the right way to look at it. I think, you know, given where our stock trades, we think that's a very attractive investment. You know, our investment activity will be portfolio focused. And last quarter, our weighted average spread was SOFR plus 800. So the portfolio tends to be higher yielding on what you'll see in a new issue opportunity. So for us, our focus is the portfolio and repurchase of shares and deleveraging.”

CION

CION (CION) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Aug 6, 2026

Source: earnings call transcript

Executive summary

CION Q2 FY26 — Strong NAV Growth and Deleveraging Progress

CION delivered a strong second quarter, marked by significant NAV appreciation driven by equity portfolio mark-to-market gains and validated asset sales. The company is actively executing a deleveraging plan, targeting a pro forma net debt to equity of 1.35x, and has increased its share repurchase authorization, signaling confidence in its undervalued stock. Management is prioritizing share repurchases over new investments while focusing on portfolio optimization and strategic separations like David's Bridal.

Highlights

Net asset value per share increased 3.5% to $13.57, up from $13.11.
Net investment income rose to $0.29 per share, up from $0.25 per share in Q1.
Non-accruals at fair value declined to 1.44% from 1.53%, with no new names added.
Sold over $64 million in portfolio assets at approximately 99% of par, validating carrying values.
Increased share repurchase authorization by $50 million to a total of $130 million.

Concerns

Estimated $0.02 per share NII impact due to timing and carrying excess cash.
Risk-rated 3 investments, requiring more engagement, increased to 14.1% from 12.9% QoQ.
Stock trades at a significant discount, implying a portfolio loss rate 14x historical annualized rate.

Guidance & targets

Category	Target	Timeline	Confidence
Pro forma net debt to equity ratio	approximately 1.35x high materiality	Ongoing	High
Net leverage range	low end of 1.3x to 1.4x high materiality	Ongoing	High
Deleveraging plan completion	end of the third or fourth quarter high materiality	Q3 FY26 or Q4 FY26	High
Total deleveraging amount	around $270 million high materiality	Ongoing	High
Dividend coverage	further support our distribution for the remainder of the year high materiality	Remainder of 2026 · FY26	Medium
New investments	materially reduce or cease investments in new portfolio companies medium materiality	For the time being	High
Unsecured debt mix	80% of our debt mix will be in unsecured debt medium materiality	Ongoing	High

Deals & partnerships

publicly traded company Longview Power, CION's largest equity position, entered into a purchase and sale agreement with a publicly traded company.

A third party has independently underwritten this asset's fair value and concluded it is worth basically the same, if not slightly more than our valuation, further validating our marks.

Risks & headwinds

Market skepticism of portfolio marks Current

Stock trades at a price that assumes a portfolio loss rate that is more than 14x our historical annualized loss rate dating back to our inception in 2012.

Mitigation:Validated marks through over $64 million in asset sales at 99% of par; independent third-party validation of Longview Power's fair value.

Impact of timing on NII Q2 FY26

$0.02 per share

Mitigation:Carried excess cash to pay down secured credit facilities without minimum utilization penalty.

Increased engagement for risk-rated 3 investments Q2 FY26

Risk-rated 3 investments increased from 12.9% in Q1 to 14.1% in Q2.

Mitigation:These investments are still expected to achieve full repayment, but require more active management.

Media hysteria about private credit and software exposure Current

Median BDC trading approximately 30% off last year's levels; CION punished even further.

Mitigation:CION has less than 2% software exposure and no ARR-based loans; portfolio predominantly senior secured, first-lien debt.

What to watch in Q3 FY26

Deleveraging plan completion

End of Q3 or Q4 FY26

Current Net debt to equity 1.52x; $125M JPMorgan facility repaid; $115M Israeli bonds to be repaid.

Target Completion of $270M deleveraging plan; pro forma net debt to equity ~1.35x.

Why it matters

Successful deleveraging is key to improving financial flexibility and reducing perceived risk, potentially impacting valuation.

We expect our deleveraging plan to be completed by the end of the third or fourth quarter.

Find out whether CION delivers this. Inve re-checks your case every morning.

Q&A highlights

Who were the buyers of the Q2/Q3 loan sales, and how were these transactions structured (auction vs. negotiated)?

The buyers were a diversified mix, either co-investors or members of the loan syndicate. Transactions were negotiated on a loan-by-loan basis, straightforward due to sales being close to par, and often involved pieces of deals CION still holds.

“So it was a diversified mix of buyers, and it was either a combination of somebody we generally deal with as a co-investor in transactions at large or somebody within the syndicate of those names.”

asked by Erik Zwick · answered by Gregg Bresner

2 min read 6 chapters

Detailed narrative

Portfolio Valuation Validation

Management highlighted the validation of its portfolio marks through recent asset sales. Over $64 million in assets were sold at approximately 99% of par, aligning closely with carrying values. This was further supported by an independent third-party valuation of the Longview Power transaction, which confirmed CION's valuation, providing market confirmation of specific fair value marks in real time.

Strategic Deleveraging and Capital Actions

CION is actively executing a deleveraging plan, targeting a pro forma net debt to equity of approximately 1.35x, down from 1.52x. This includes repaying $115 million in Israeli bonds and $125 million on a JPMorgan credit facility. The board also authorized a $50 million increase to the share repurchase program, bringing the total to $130 million, with management prioritizing repurchases over new investments.

Longview Power Transaction

Longview Power, CION's largest equity position, entered a purchase and sale agreement with a publicly traded company. This transaction is expected to generate significant cash proceeds and meaningful net investment income, which should support the base dividend for the remainder of 2026 and further enable deleveraging and share repurchases.

David's Bridal Strategic Separation

The company plans to separate David's Bridal into two distinct entities: a legacy retail business and the high-growth Pearl digital media network. This separation aims to fuel future growth and position both businesses for strategic transaction opportunities, with the retail segment managed for cash flow and Pearl for high organic growth.

Credit Quality and PIK Income

Non-accruals at fair value declined to 1.44% and at amortized cost to 4.41%, with no new non-accruals added. Management clarified that 85% of PIK income is structured by design as a yield enhancement strategy, not due to borrower distress, and 100% is from risk-rated 3 or better companies. PIK income is expected to decline in coming quarters.

Investment Activity and Portfolio Mix

Q2 investment activity focused on add-on investments in existing portfolio companies, with $54 million funded out of $57 million committed. Loan repayment activity returned to pre-2024 levels, totaling $157 million. The portfolio remains defensive, with approximately 79% in first-lien investments, expected to increase after equity monetizations.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.