Runway Growth Finance Corp. Reports Fourth Quarter and Fiscal Year Ended 2023 Financial Results
- Strong total investment income of $39.2 million and net investment income of $18.3 million for the fourth quarter of 2023.
- Robust investment portfolio standing at $1.0 billion and net asset value of $13.50 per share.
- Dollar-weighted annualized yield on debt investments of 16.9% for the quarter.
- Completed eight investments totaling $154.6 million in new and existing portfolio companies.
- Low credit loss ratio of 14 basis points on a gross basis and 11 basis points on a net basis.
- Declared first quarter 2024 regular dividend of $0.40 per share and supplemental dividend of $0.07 per share.
- Net asset value per share at $13.50 as of December 31, 2023, with total net assets of $547.1 million.
- Available liquidity of approximately $281.0 million as of December 31, 2023.
- Approved a share repurchase program of up to $25.0 million of outstanding common stock.
- Recent developments include a loan placed on non-accrual status and a new co-management agreement with Cadma Capital Partners LLC.
- Conference call scheduled for March 7, 2024, to discuss financial results.
- Website links provided for participation in the conference call and webcast.
- Net realized loss on investments of $17.2 million for the quarter ended December 31, 2023.
- Net decrease in net assets resulting from operations of $4.8 million, or $0.12 per share, for the quarter ended December 31, 2023.
- Increased total operating expenses driven by higher interest rates and financing expenses.
- Net asset value per share decreased to $13.50 as of December 31, 2023, compared to $14.22 in the prior year period.
Insights
The reported financial results of Runway Growth Finance Corp. reflect a robust total investment income of $39.2 million for Q4 2023, with net investment income at $18.3 million. The key metric here for stakeholders is the net asset value (NAV) per share, which stands at $13.50, a notable figure for assessing the company's per-share asset value. However, this represents a decline from $14.22 the previous year, indicating a potential area of concern regarding asset valuation. Additionally, the dollar-weighted annualized yield on debt investments is exceptionally high at 16.9%, which may attract investor attention due to the higher returns on debt investments compared to industry averages.
Investors should also consider the company's investment portfolio growth to $1.0 billion, suggesting a significant scale of operations. The low credit loss ratio averaging 14 basis points on a gross basis signals strong credit quality and risk management practices. However, it is crucial to scrutinize the increase in total operating expenses to $20.9 million, driven by higher interest rates and financing expenses, as this could affect future net investment income. The declaration of both regular and supplemental dividends for Q1 2024 reflects a commitment to shareholder returns, but the impact of such distributions on the company's capital structure and liquidity should be monitored closely.
Runway Growth's strategic focus on providing capital solutions to late- and growth-stage companies places it within a niche market segment that may have unique growth trajectories compared to more traditional investment avenues. The company's investment activity, with eight new investments in Q4 2023 and a total of $259.2 million in fundings over the year, indicates an aggressive approach to portfolio expansion. This could signal confidence in the market's growth prospects or a competitive positioning strategy.
One point of interest is the company's liquidity position, with approximately $281.0 million in available liquidity, which is a critical factor in its ability to sustain operations and fund new investments. The core leverage ratio has increased to approximately 95%, up from 79% in the previous quarter, suggesting a higher degree of borrowing relative to equity. While leverage can amplify returns, it also increases risk and stakeholders should assess this in the context of current market conditions and interest rate environments.
From a regulatory and compliance perspective, the establishment of a Joint Venture with Cadma Capital Partners LLC is a strategic move that could diversify investment opportunities and spread risk. However, joint ventures also introduce complexities in governance and management that must be navigated carefully to protect stakeholder interests. Additionally, the share repurchase program indicates a management belief in the undervaluation of the company's stock, or a desire to return value to shareholders and such programs are typically well-received by the market.
It is also important to note the non-accrual status of the loan to Mingle Healthcare Solutions, Inc., which reflects the company's proactive approach to risk management. Non-accrual loans are those for which interest income is no longer recognized due to doubts about collectability and this action may influence investor perceptions of credit risk within the portfolio.
Delivered Total and Net Investment Income of
Investment Portfolio of
Conference Call Today, Thursday, March 7, 2024 at 5:00 p.m. ET
MENLO PARK, Calif., March 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 fourth quarter and fiscal year ended December 31, 2023.
Fourth Quarter 2023 Highlights
- Total investment income of
$39.2 million - Net investment income of
$18.3 million , or$0.45 per share - Net asset value of
$13.50 per share - Dollar-weighted annualized yield on debt investments of
16.9% for the quarter - Eight investments completed in new and existing portfolio companies, representing
$154.6 million in funded loans and other investments - Aggregate proceeds of
$63.4 million received from principal prepayments
2023 Fiscal Year Highlights
- Total investment portfolio at year-end 2023 of
$1.0 billion at fair value, excluding US Treasury Bills - Net investment income of
$78.3 million , or$1.93 per share - Net asset value (“NAV”) at 12/31/2023 of
$547.1 million , or$13.50 per share - Total investment fundings of
$259.2 million :$83.5 million in four new portfolio companies and$175.7 million in 14 existing portfolio companies - Low credit loss ratio of an average 14 basis points per year on a gross basis and an average 11 basis points per year on a net (debt and equity) basis, based on cumulative commitments since inception
First Quarter 2024 Distributions
- Declared first quarter 2024 regular dividend of
$0.40 per share - Declared first quarter 2024 supplemental dividend of
$0.07 per share
“In 2023, Runway Growth drove shareholder return while taking a measured approach to portfolio management as we preserved industry-leading credit quality,” said Greg Greifeld, Acting Chief Executive Officer of Runway Growth, and Deputy Chief Investment Officer and Head of Credit of Runway Growth Capital. “Over the course of the year, Runway Growth expanded its return on equity by 33 basis points and ended the fourth quarter with eight investments in new and existing portfolio companies.”
Greifeld continued, “We are proud of our team’s thoughtful due diligence, consistent partnership with borrowers, and the momentum we delivered to end the year. We have applied a critical lens to evaluating our pipeline of opportunities, and are in a position to originate attractive investments that meet our high credit bar in the year ahead. Runway Growth is committed to generating shareholder value, which is reinforced by our strong and consistent base dividend and ongoing supplemental distributions.”
Fourth Quarter 2023 Operating Results
Total investment income for the quarter ended December 31, 2023 was
Net investment income for the quarter ended December 31, 2023 was
The Company's dollar-weighted annualized yield on average debt investments for the quarter ended December 31, 2023, was
Total operating expenses for the quarter ended December 31, 2023 were
Net realized loss on investments was
For the quarter ended December 31, 2023, net change in unrealized loss on investments was
Portfolio and Investment Activity
As of December 31, 2023, Runway Growth’s investment portfolio had an aggregate fair value of approximately
During the fourth quarter of 2023, Runway Growth completed eight investments in new and existing portfolio companies, representing
Total portfolio investment activity for the three and twelve months ended December 31, 2023, and 2022 was as follows:
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Beginning investment portfolio | $ | 1,010,927 | $ | 910,169 | $ | 1,126,309 | $ | 729,516 | |||||||
| Purchases of investments | 94,937 | 229,899 | 200,464 | 622,719 | |||||||||||
| Purchases of U.S. Treasury Bills | 41,999 | — | 76,973 | — | |||||||||||
| PIK interest | 4,590 | 2,310 | 19,924 | 8,655 | |||||||||||
| Sales and prepayments of investments | (63,407 | ) | (16,000 | ) | (289,078 | ) | (159,144 | ) | |||||||
| Scheduled repayments of investments | (285 | ) | (2,488 | ) | (7,331 | ) | (9,754 | ) | |||||||
| Sales and maturities of U.S. Treasury Bills | — | — | (35,000 | ) | (45,000 | ) | |||||||||
| Amortization of fixed income premiums or accretion of discounts | 1,350 | 2,287 | 8,682 | 6,863 | |||||||||||
| Net realized gain (loss) on investments | (17,209 | ) | (2,000 | ) | (18,387 | ) | (1,061 | ) | |||||||
| Net change in unrealized gain (loss) on investments | (5,893 | ) | 2,132 | (15,547 | ) | (26,485 | ) | ||||||||
| Ending investment portfolio | $ | 1,067,009 | $ | 1,126,309 | $ | 1,067,009 | $ | 1,126,309 | |||||||
Net Asset Value
As of December 31, 2023, net asset value (“NAV’”) per share was
For the quarter ended December 31, 2023, net decrease in net assets resulting from operations was
Liquidity and Capital Resources
As of December 31, 2023, the Company had approximately
The Company ended the quarter with a core leverage ratio of approximately
Distributions
On February 1, 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 December 31, 2023 through March 7, 2024, the date the consolidated financial statements were issued.
Effective January 1, 2024, the Company placed one loan to Mingle Healthcare Solutions, Inc. on non-accrual status, representing an outstanding principal of
On February 14, 2024, the Company received a partial prepayment of
On March 7, 2024, the Company and Cadma Capital Partners LLC entered into a Limited Liability Company Agreement to co-manage Runway-Cadma I LLC (the "Joint Venture"). The Joint Venture is expected to invest in various types of investments, including, but not limited to, first and second lien senior secured term loans, including delayed draw and multi-tranche loans, and secured revolving credit facilities.
Conference Call
Runway Growth will hold a conference call to discuss its fourth quarter and fiscal year ended December 31, 2023, financial results at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, March 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. 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 Form 10-K report 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) | |||||||
| December 31, 2023 | December 31, 2022 | ||||||
| Assets | |||||||
| Investments at fair value: | |||||||
| Non-control/non-affiliate investments at fair value (cost of | $ | 972,604 | $ | 1,114,935 | |||
| Affiliate investments at fair value (cost of | 51,456 | 2,084 | |||||
| Control investments at fair value (cost of | 950 | 9,290 | |||||
| Investment in U.S. Treasury Bills at fair value (cost of | 41,999 | — | |||||
| Total investments at fair value (cost of | 1,067,009 | 1,126,309 | |||||
| Cash and cash equivalents | 2,970 | 5,761 | |||||
| Interest and fees receivable | 8,269 | 8,766 | |||||
| Other assets | 905 | 930 | |||||
| Total assets | 1,079,153 | 1,141,766 | |||||
| Liabilities | |||||||
| Debt: | |||||||
| Credit facility | 272,000 | 337,000 | |||||
| 2026 Notes | 95,000 | 70,000 | |||||
| 2027 Notes | 152,250 | 152,250 | |||||
| Unamortized deferred debt costs | (9,172 | ) | (10,293 | ) | |||
| Total debt, less unamortized deferred debt costs | 510,078 | 548,957 | |||||
| Incentive fees payable | 12,500 | 8,808 | |||||
| Interest payable | 6,764 | 6,221 | |||||
| Accrued expenses and other liabilities | 2,740 | 1,728 | |||||
| Total liabilities | 532,082 | 565,714 | |||||
| Net assets | |||||||
| Common stock, par value | 414 | 414 | |||||
| Additional paid-in capital | 605,110 | 605,774 | |||||
| Distributable earnings (losses) | (47,637 | ) | (19,320 | ) | |||
| Treasury stock | (10,816 | ) | (10,816 | ) | |||
| Total net assets | $ | 547,071 | $ | 576,052 | |||
| Shares of common stock outstanding ( | 40,509,269 | 40,509,269 | |||||
| Net asset value per share | $ | 13.50 | $ | 14.22 | |||
| RUNWAY GROWTH FINANCE CORP. Consolidated Statements of Operations (In thousands, except share and per share data) | |||||||||||||||
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Investment income | |||||||||||||||
| From non-control/non-affiliate investments: | |||||||||||||||
| Interest income | $ | 32,743 | $ | 33,515 | $ | 136,912 | $ | 95,264 | |||||||
| Payment-in-kind interest income | 4,667 | 2,310 | 20,083 | 5,558 | |||||||||||
| Dividend income | 318 | 318 | 1,279 | 1,338 | |||||||||||
| Fee income | 757 | 315 | 3,342 | 1,383 | |||||||||||
| From affiliate investments: | |||||||||||||||
| Interest income | 604 | — | 2,090 | 5 | |||||||||||
| Payment-in-kind interest income | — | — | — | 96 | |||||||||||
| Fee income | — | — | 15 | 8 | |||||||||||
| From control investments: | |||||||||||||||
| Interest income | — | — | — | 1,112 | |||||||||||
| Payment-in-kind interest income | — | — | — | 2,985 | |||||||||||
| Other income | 136 | — | 488 | 2 | |||||||||||
| Total investment income | 39,225 | 36,458 | 164,209 | 107,751 | |||||||||||
| Operating expenses | |||||||||||||||
| Management fees | 4,113 | 3,394 | 16,711 | 11,882 | |||||||||||
| Incentive fees | 4,052 | 4,592 | 19,046 | 13,183 | |||||||||||
| Interest and other debt financing expenses | 10,371 | 8,464 | 43,143 | 16,761 | |||||||||||
| Professional fees | 846 | 456 | 2,350 | 2,133 | |||||||||||
| Administration agreement expenses | 478 | 507 | 2,125 | 1,838 | |||||||||||
| Insurance expense | 223 | 210 | 1,028 | 1,016 | |||||||||||
| Tax expense | 614 | 290 | 664 | 291 | |||||||||||
| Other expenses | 211 | 185 | 867 | 851 | |||||||||||
| Total operating expenses | 20,908 | 18,098 | 85,934 | 47,955 | |||||||||||
| Net investment income | 18,317 | 18,360 | 78,275 | 59,796 | |||||||||||
| 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 | (196 | ) | — | (1,374 | ) | 939 | |||||||||
| Net realized gain (loss) on control investments | (17,013 | ) | (2,000 | ) | (17,013 | ) | (2,000 | ) | |||||||
| Net realized gain (loss) on investments, including U.S. Treasury Bills | (17,209 | ) | (2,000 | ) | (18,387 | ) | (1,061 | ) | |||||||
| Net change in unrealized gain (loss) on non-control/non-affiliate investments, including U.S. Treasury Bills | (12,984 | ) | (4,594 | ) | (20,491 | ) | (18,870 | ) | |||||||
| Net change in unrealized gain (loss) on affiliate investments | 741 | (97 | ) | (4,938 | ) | (3,476 | ) | ||||||||
| Net change in unrealized gain (loss) on control investments | 6,350 | 6,823 | 9,882 | (4,139 | ) | ||||||||||
| Net change in unrealized gain (loss) on investments, including U.S. Treasury Bills | (5,893 | ) | 2,132 | (15,547 | ) | (26,485 | ) | ||||||||
| Net realized and unrealized gain (loss) on investments | (23,102 | ) | 132 | (33,934 | ) | (27,546 | ) | ||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (4,785 | ) | $ | 18,492 | $ | 44,341 | $ | 32,250 | ||||||
| Net investment income per common share (basic and diluted) | $ | 0.45 | $ | 0.45 | $ | 1.93 | $ | 1.46 | |||||||
| Net increase (decrease) in net assets resulting from operations per common share (basic and diluted) | $ | (0.12 | ) | $ | 0.46 | $ | 1.09 | $ | 0.79 | ||||||
| Weighted average shares outstanding (basic and diluted) | 40,509,269 | 40,531,403 | 40,509,269 | 40,971,242 | |||||||||||
FAQ
What was Runway Growth Finance Corp.'s total investment income for the fourth quarter of 2023?
What was the net investment income for Runway Growth in the fourth quarter of 2023?
What was the company's investment portfolio value at the end of 2023?
What was the net asset value per share of Runway Growth as of December 31, 2023?
What dividends were declared for the first quarter of 2024 by Runway Growth?
What was the total net assets of Runway Growth as of the end of the quarter of 2023?
What was the core leverage ratio of Runway Growth at the end of the quarter?
What program did Runway Growth's board of directors approve on November 2, 2023?
What recent event affected Runway Growth's loan portfolio?
When is the conference call scheduled for discussing financial results?
