Runway Growth Finance Corp. Reports First Quarter 2024 Financial Results
Runway Growth Finance Corp. (Nasdaq: RWAY) reported strong financial results for the first quarter of 2024, including total investment income of $40.0 million and net investment income of $18.7 million. David Spreng returned as Chairman, President, and CEO. The company's investment portfolio reached $1.02 billion and declared dividends for the second quarter. Runway Growth emphasized maintaining credit quality and underwriting rigor to deploy capital effectively. The net asset value per share was $13.36, with total net assets at $529.5 million. Liquidity stood at $319.9 million, with a core leverage ratio of 91%. The company initiated a share repurchase program and completed investments in new and existing portfolio companies. The recent events showcased the prepaid balance of $25.3 million by Echo360 Inc. on the Company's senior secured loan, declaration of distributions, and share repurchase activities.
Strong financial performance for the first quarter of 2024 with total investment income of $40.0 million and net investment income of $18.7 million, representing a dollar-weighted annualized yield of 17.4% on debt investments.
David Spreng's return as Chairman, President, and CEO brings stability and leadership to Runway Growth Finance Corp.
Investment portfolio reached $1.02 billion, showcasing the company's commitment to providing flexible capital solutions to late- and growth-stage companies.
Declaration of dividends for the second quarter, with a regular dividend of $0.40 per share and a supplemental dividend of $0.07 per share, demonstrating the company's focus on rewarding shareholders.
Focus on credit quality and underwriting rigor to deploy capital effectively and partner with best-in-class companies to deliver sustainable risk-adjusted returns for shareholders.
Net asset value per share decreased to $13.36 from $14.07 in the previous year, with total net assets down 7% to $529.5 million.
The company's core leverage ratio of approximately 91% indicates a relatively high level of leverage, which may pose risks in a volatile market environment.
Recent repurchase program and share repurchase activities may lead to shareholder dilution and impact the company's capital structure.
Insights
Examining the recent financial results of Runway Growth Finance Corp., we observe a slight uptick in total investment income to
The net asset value (NAV) per share has, however, decreased to
The announced dividend distributions remain consistent, with a regular dividend of
Available liquidity appears robust with
The leverage ratio has slightly decreased from
From an investor's perspective, it's essential to monitor the trend of NAV and the unrealized losses, which could affect long-term shareholder value. However, the company's liquidity position and disciplined dividend payouts could appeal to income-focused investors.
Within the broader context of the alternative investment sector, Runway Growth's performance can be interpreted as relatively stable. The consistency of their investment income reflects a degree of resilience amid fluctuating market conditions. Yet, the subtle decrease in NAV may raise concerns over asset valuation or portfolio performance moving forward.
Furthermore, the dollar-weighted annualized yield on debt investments at
Runway Growth's strategic partnership with Cadma Capital Partners could potentially enhance its capabilities in revenue and lead generation, a positive indicator for future growth prospects. In light of the current venture ecosystem dynamics emphasized by the CEO, such alliances could be critical for the company's operational success and expansion.
Investors would do well to consider the company's strategic positioning within its industry, leveraging its existing relationships and capital reserve to navigate a potentially challenging economic landscape. The company's focus on maintaining credit quality and disciplined investment underwriting is reassuring but requires vigilance to ensure that it translates into expected performances.
Delivered Total and Net Investment Income of
Investment Portfolio of
Chairman, President and CEO David Spreng Returns from Medical Leave
Conference Call Today, Tuesday, May 7, 2024 at 5:00 p.m. ET
MENLO PARK, Calif., May 07, 2024 (GLOBE NEWSWIRE) -- Runway Growth Finance Corp. (Nasdaq: RWAY) (“Runway Growth” or the “Company”), a leading provider of flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity, today announced its financial results for the first quarter ended March 31, 2024. The Company also announced that David Spreng will resume his full responsibilities as Chairman, President and Chief Executive Officer of the Company, effective today, May 7, 2024.
First Quarter 2024 Highlights
- Total investment income of
$40.0 million - Net investment income of
$18.7 million , or$0.46 per share - Net asset value of
$13.36 per share - Dollar-weighted annualized yield on debt investments of
17.4% for the quarter - Two investments completed in new and existing portfolio companies, representing
$25.0 million in funded loans and other investments - Aggregate proceeds of
$34.4 million received from principal prepayments, and$0.4 million received from scheduled amortization
Second Quarter 2024 Distributions
- Declared second quarter 2024 regular dividend of
$0.40 per share - Declared second quarter 2024 supplemental dividend of
$0.07 per share
“In the first quarter, Runway Growth delivered solid financial performance, generated increased pipeline activity, as well as enhanced revenue and lead generation opportunities through the establishment of our joint venture with Cadma Capital Partners,” said David Spreng, Founder and CEO of Runway Growth. “As the current venture ecosystem continues to evolve, we are employing prudent selectivity and underwriting rigor as we look to deploy our ample dry powder in the coming quarters. Maintaining and enhancing credit quality is our primary priority as we have continued confidence in our portfolio’s earnings power and ability to provide consistent distributions to our shareholders. Looking ahead, our team will maintain this level of discipline as we seek to partner with best-in-class companies in the industries we know best, and deliver sustainable risk-adjusted returns for our shareholders.”
First Quarter 2024 Operating Results
Total investment income for the quarter ended March 31, 2024 was
Net investment income for the quarter ended March 31, 2024 was
The Company's dollar-weighted annualized yield on average debt investments for the quarter ended March 31, 2024, was
Total operating expenses for the quarter ended March 31, 2024 were
Net realized loss on investments was
For the quarter ended March 31, 2024, net change in unrealized loss on investments was
Portfolio and Investment Activity
As of March 31, 2024, Runway Growth’s investment portfolio had an aggregate fair value of approximately
During the first quarter of 2024, Runway Growth completed two investments in new and existing portfolio companies, representing
Total portfolio investment activity for the three months ended March 31, 2024, and 2023 was as follows:
| Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| Beginning investment portfolio | $ | 1,067,009 | $ | 1,126,309 | |||
| Purchases of investments | 24,642 | 12,871 | |||||
| Purchases of U.S. Treasury Bills | — | 34,974 | |||||
| PIK interest | 4,176 | 3,755 | |||||
| Sales and prepayments of investments | (34,449 | ) | (10,192 | ) | |||
| Scheduled repayments of investments | (413 | ) | (4,007 | ) | |||
| Sales and maturities of U.S. Treasury Bills | (42,029 | ) | — | ||||
| Amortization of fixed income premiums or accretion of discounts | 4,013 | 2,868 | |||||
| Net realized gain (loss) on investments | — | (1,178 | ) | ||||
| Net change in unrealized gain (loss) on investments | (6,617 | ) | (5,084 | ) | |||
| Ending investment portfolio | $ | 1,016,332 | $ | 1,160,316 | |||
Net Asset Value
As of March 31, 2024, net asset value (“NAV’”) per share was
For the quarter ended March 31, 2024, net increase in net assets resulting from operations was
Liquidity and Capital Resources
As of March 31, 2024, the Company had approximately
The Company ended the quarter with a core leverage ratio of approximately
Distributions
On April 30, 2024, the Company’s board of directors declared a regular quarterly distribution of
Share Repurchase Program
On November 2, 2023, the Company’s board of directors approved a share repurchase program (the “Share Repurchase Program”) under which the Company may repurchase up to
Recent Developments
The Company evaluated events subsequent to March 31, 2024 through May 7, 2024, the date the consolidated financial statements were issued.
On April 26, 2024 Echo360 Inc. prepaid its outstanding principal balance of
On April 30, 2024, the board of directors declared a regular quarterly distribution of
On April 30, 2024, following his return from temporary medical leave and upon the approval of the Company's board of directors, Mr. Spreng, was reinstated as the Company's President and Chief Executive Officer.
For the period commencing March 31, 2024 through May 7, 2024, the Company repurchased 183,702 shares under the Share Repurchase Program.
Conference Call
Runway Growth will hold a conference call to discuss its first quarter and fiscal year ended March 31, 2024, financial results at 2:00 p.m. PT (5:00 p.m. ET) on Tuesday, May 7, 2024. To participate in the conference call or webcast, participants should register online at the Runway Investor Relations website. The earnings call can also be accessed through the following links:
A live webcast will be available in the investor section of the Company’s website, and will be archived for 90 days following the call.
About Runway Growth Finance Corp.
Runway Growth is a growing specialty finance company focused on providing flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity. Runway Growth is a closed-end investment fund that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Runway Growth is externally managed by Runway Growth Capital LLC, an established registered investment advisor that was formed in 2015 and led by industry veteran David Spreng. For more information, please visit www.runwaygrowth.com.
Forward-Looking Statements
Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition 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 from time to time in Runway Growth’s filings with the Securities and Exchange Commission. Runway Growth undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
Important Disclosures
Strategies described involve special risks that should be evaluated carefully before a decision is made to invest. Not all of the risks and other significant aspects of these strategies are discussed herein. Please see a more detailed discussion of these risk factors and other related risks in the Company’s most recent annual report on Form 10-K in the section entitled “Risk Factors”, which may be obtained on the Company’s website, www.runwaygrowth.com, or the SEC’s website, www.sec.gov.
IR Contacts:
Stefan Norbom, Prosek Partners, snorbom@prosek.com
Thomas B. Raterman, Acting President, Chief Financial Officer and Chief Operating Officer, tr@runwaygrowth.com
| RUNWAY GROWTH FINANCE CORP. Consolidated Statements of Assets and Liabilities (In thousands, except share and per share data) | ||||||||
| March 31, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Investments at fair value: | ||||||||
| Non-control/non-affiliate investments at fair value (cost of | $ | 965,397 | $ | 972,604 | ||||
| Affiliate investments at fair value (cost of | 49,985 | 51,456 | ||||||
| Control investments at fair value (cost of | 950 | 950 | ||||||
| Investment in U.S. Treasury Bills at fair value (cost of | — | 41,999 | ||||||
| Total investments at fair value (cost of | 1,016,332 | 1,067,009 | ||||||
| Cash and cash equivalents | 6,915 | 2,970 | ||||||
| Interest and fees receivable | 6,846 | 8,269 | ||||||
| Other assets | 845 | 905 | ||||||
| Total assets | 1,030,938 | 1,079,153 | ||||||
| Liabilities | ||||||||
| Debt: | ||||||||
| Credit facility | 237,000 | 272,000 | ||||||
| 2026 Notes | 95,000 | 95,000 | ||||||
| 2027 Notes | 152,250 | 152,250 | ||||||
| Unamortized deferred debt costs | (8,336 | ) | (9,172 | ) | ||||
| Total debt, less unamortized deferred debt costs | 475,914 | 510,078 | ||||||
| Incentive fees payable | 13,836 | 12,500 | ||||||
| Interest payable | 7,935 | 6,764 | ||||||
| Accrued expenses and other liabilities | 3,784 | 2,740 | ||||||
| Total liabilities | 501,469 | 532,082 | ||||||
| Net assets | ||||||||
| Common stock, par value | 414 | 414 | ||||||
| Additional paid-in capital | 605,108 | 605,110 | ||||||
| Distributable earnings (losses) | (54,628 | ) | (47,637 | ) | ||||
| Treasury stock | (21,425 | ) | (10,816 | ) | ||||
| Total net assets | $ | 529,469 | $ | 547,071 | ||||
| Shares of common stock outstanding ( | 39,622,162 | 40,509,269 | ||||||
| Net asset value per share | $ | 13.36 | $ | 13.50 | ||||
| RUNWAY GROWTH FINANCE CORP. Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Investment income | ||||||||
| From non-control/non-affiliate investments: | ||||||||
| Interest income | $ | 34,455 | $ | 34,853 | ||||
| Payment-in-kind interest income | 4,207 | 3,796 | ||||||
| Dividend income | — | 324 | ||||||
| Fee income | 620 | 45 | ||||||
| From affiliate investments: | ||||||||
| Interest income | 599 | 292 | ||||||
| Other income | 128 | — | ||||||
| Total investment income | 40,009 | 39,310 | ||||||
| Operating expenses | ||||||||
| Management fees | 3,952 | 3,959 | ||||||
| Incentive fees | 4,668 | 4,563 | ||||||
| Interest and other debt financing expenses | 10,860 | 10,920 | ||||||
| Professional fees | 662 | 548 | ||||||
| Administration agreement expenses | 564 | 583 | ||||||
| Insurance expense | 208 | 268 | ||||||
| Tax expense | 2 | 50 | ||||||
| Other expenses | 429 | 173 | ||||||
| Total operating expenses | 21,345 | 21,064 | ||||||
| Net investment income | 18,664 | 18,246 | ||||||
| Net realized and net change in unrealized gain (loss) on investments | ||||||||
| Net realized gain (loss) on non-control/non-affiliate investments, including U.S. Treasury Bills | — | (1,178 | ) | |||||
| Net realized gain (loss) on investments, including U.S. Treasury Bills | — | (1,178 | ) | |||||
| Net change in unrealized gain (loss) on non-control/non-affiliate investments, including U.S. Treasury Bills | (5,065 | ) | (1,421 | ) | ||||
| Net change in unrealized gain (loss) on affiliate investments | (1,552 | ) | (5,986 | ) | ||||
| Net change in unrealized gain (loss) on control investments | — | 2,323 | ||||||
| Net change in unrealized gain (loss) on investments, including U.S. Treasury Bills | (6,617 | ) | (5,084 | ) | ||||
| Net realized and unrealized gain (loss) on investments | (6,617 | ) | (6,262 | ) | ||||
| Net increase (decrease) in net assets resulting from operations | $ | 12,047 | $ | 11,984 | ||||
| Net investment income per common share (basic and diluted) | $ | 0.46 | $ | 0.45 | ||||
| Net increase (decrease) in net assets resulting from operations per common share (basic and diluted) | $ | 0.30 | $ | 0.30 | ||||
| Weighted average shares outstanding (basic and diluted) | 40,392,255 | 40,509,269 | ||||||
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