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 second quarter ended June 30, 2024.

Second Quarter 2024 Highlights

  • Total investment income of $34.2 million
  • Net investment income of $14.6 million, or $0.37 per share
  • Net asset value of $13.14 per share
  • Dollar-weighted annualized yield on debt investments of 15.1% for the quarter
  • Two investments completed in new portfolio companies representing $75.5 million in funded loans
  • Aggregate proceeds of $25.3 million received from principal prepayments, and $1.3 million received from scheduled amortizations
  • Repurchased 1,074,842 shares of the Company's common stock during the second quarter under previously authorized $25.0 million share repurchase program

Third Quarter 2024 Distributions

  • Declared third quarter 2024 regular dividend of $0.40 per share
  • Declared third quarter 2024 supplemental dividend of $0.05 per share

“In the second quarter, Runway Growth executed on two new investments as the Company thoughtfully expanded its high quality, late-stage portfolio,” said David Spreng, Founder and CEO of Runway Growth. “Heading into the second half of the year our pipeline is strong, and we remain focused on the performance of our portfolio while capitalizing on opportunities to re-deploy capital and increase the overall diversification of our investments. As a result of our strict underwriting and ongoing monitoring of our portfolio, we feel confident in our ability to position our shareholders for long-term returns.”

Second Quarter 2024 Operating Results

Total investment income for the quarter ended June 30, 2024 was $34.2 million, compared to $41.9 million for the quarter ended June 30, 2023.

Net investment income for the quarter ended June 30, 2024 was $14.6 million, or $0.37 per share, compared to $19.7 million, or $0.49 per share, for the quarter ended June 30, 2023.

The Company's dollar-weighted annualized yield on average debt investments for the quarter ended June 30, 2024 was 15.1%. The Company calculates the yield on dollar-weighted debt investments for any period measured as (1) total investment-related income during the period divided by (2) the daily average of the fair value of debt investments, including investments on non-accrual status, outstanding during the period.

Total operating expenses for the quarter ended June 30, 2024 were $19.6 million, compared to $22.2 million for the quarter ended June 30, 2023.

Net realized gain (loss) on investments was zero for both quarters ended June 30, 2024 and June 30, 2023.

For the quarter ended June 30, 2024, net change in unrealized loss on investments was $6.3 million, compared to a net change in unrealized gain on investments of $2.6 million for the comparable prior year period.

Portfolio and Investment Activity

As of June 30, 2024, Runway Growth’s investment portfolio had an aggregate fair value of approximately $1.06 billion in 55 portfolio companies, and was comprised of approximately $1.02 billion in term loans, 98.6% of which are senior secured loans, and $48.2 million in warrants and other equity-related investments.

During the second quarter of 2024, Runway Growth funded $0.7 million in the Runway-Cadma I LLC joint venture, and completed two investments in new portfolio companies, representing $75.4 million in funded loans, net of upfront loan origination fees.

Total portfolio investment activity for the three and six months ended June 30, 2024 was as follows:

  Three Months Ended June 30,     Six Months Ended June 30,  
  2024     2023     2024     2023  
Beginning investment portfolio $   1,016,332     $   1,160,316     $   1,067,009     $   1,126,309  
Purchases of investments     75,383         50,669         100,025         63,540  
Purchases of U.S. Treasury Bills                             34,974  
PIK interest     2,687         6,028         6,863         9,783  
Sales and prepayments of investments     (25,312 )       (88,709 )       (59,761 )       (98,901 )
Scheduled repayments of investments     (1,333 )       (2,764 )       (1,746 )       (6,771 )
Sales and maturities of U.S. Treasury Bills             (35,000 )       (42,029 )       (35,000 )
Amortization of fixed income premiums or accretion of discounts     1,867         2,137         5,880         5,005  
Net realized gain (loss) on investments                             (1,178 )
Net change in unrealized gain (loss) on investments     (6,300 )       2,644         (12,917 )       (2,440 )
Ending investment portfolio $   1,063,324     $   1,095,321     $   1,063,324     $   1,095,321  

Net Asset Value

As of June 30, 2024, net asset value (“NAV”) per share was $13.14, compared to $14.17 as of June 30, 2023. Total net assets at the end of the second quarter was $506.4 million, down 12% from $573.9 million as of June 30, 2023.

For the quarter ended June 30, 2024, net increase in net assets resulting from operations was $8.3 million, or $0.21 per share, compared to a net increase in net assets resulting from operations of $22.3 million, or $0.55 per share, for the quarter ended June 30, 2023.

Liquidity and Capital Resources

As of June 30, 2024, the Company had approximately $249.8 million in available liquidity, including unrestricted cash and cash equivalents of $8.8 million and $241.0 million in available borrowing capacity under the Company’s credit facility, subject to existing terms, advance rates and regulatory and covenant requirements.

The Company ended the quarter with a core leverage ratio of approximately 110%, compared to 91% for the quarter ended March 31, 2024.

Distributions

On July 30, 2024, the Company’s board of directors declared a regular quarterly distribution of $0.40 per share for the third quarter of 2024, payable on August 26, 2024, to stockholders of record as of August 12, 2024. In addition, the Company’s board of directors declared a supplemental distribution of $0.05 per share for the third quarter of 2024 that is also payable on August 26, 2024 to stockholders of record as of August 12, 2024.

Share Repurchase Program

On November 2, 2023, the Company’s board of directors approved a share repurchase program (the “Repurchase Program”), under which the Company may repurchase up to $25.0 million of its outstanding shares of common stock. Under the Repurchase Program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. In the second quarter, the Company repurchased approximately 1,074,842 shares under the Repurchase Program. The Repurchase Program will terminate upon the earlier of (i) November 1, 2024 or (ii) the repurchase of $1.5 million remaining availability under the Repurchase Program.

On July 30, 2024, the Company’s board of directors approved a new share repurchase program (the “New Repurchase Program”) under which the Company may repurchase up to $15.0 million of its outstanding shares of common stock. Under the New Repurchase Program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. If not renewed, the New Repurchase Program will terminate upon the earlier of (i) July 30, 2025 or (ii) the repurchase of $15.0 million of the Company's shares of common stock.

Recent Developments

The Company evaluated events subsequent to June 30, 2024 through August 8, 2024, the date the consolidated financial statements were issued.

On July 17, 2024, the Company increased its commitment to Elevate Services Inc. by $20.0 million, of which $3.0 million was funded at close.

On July 30, 2024, the Company's board of directors declared a regular distribution of $0.40 per share and a supplemental distribution of $0.05 per share for stockholders of record as of August 12, 2024, payable on or before August 26, 2024.

On July 31, 2024, Cloudpay, Inc. prepaid its outstanding principal balance of $75.0 million on the Company's senior secured loan.

Conference Call

Runway Growth will hold a conference call to discuss its second quarter ended June 30, 2024 financial results at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, August 8, 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:

  • Conference Call
  • Webcast

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, 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)  
    June 30, 2024     December 31, 2023  
    (Unaudited)        
Assets                
Investments at fair value:                
Non-control/non-affiliate investments at fair value (cost of $1,055,456 and $1,005,024, respectively)   $   1,011,472     $   972,604  
Affiliate investments at fair value (cost of $59,025 and $58,861, respectively)       50,373         51,456  
Control investments at fair value (cost of $1,600 and $950, respectively)       1,479         950  
Investment in U.S. Treasury Bills at fair value (cost of $0 and $42,014, respectively)               41,999  
Total investments at fair value (cost of $1,116,081 and $1,106,849, respectively)       1,063,324         1,067,009  
Cash and cash equivalents       8,810         2,970  
Interest and fees receivable       5,760         8,269  
Other assets       342         905  
Total assets       1,078,236         1,079,153  
Liabilities                
Debt:                
Credit facility       309,000         272,000  
2026 Notes       95,000         95,000  
2027 Notes       152,250         152,250  
Unamortized deferred debt costs       (7,562 )       (9,172 )
Total debt, less unamortized deferred debt costs       548,688         510,078  
Incentive fees payable       13,865         12,500  
Interest payable       7,010         6,764  
Accrued expenses and other liabilities       2,289         2,740  
Total liabilities       571,852         532,082  
Net assets                
Common stock, par value       414         414  
Additional paid-in capital       605,108         605,110  
Distributable earnings (losses)       (64,872 )       (47,637 )
Treasury stock       (34,266 )       (10,816 )
Total net assets   $   506,384     $   547,071  
                 
Shares of common stock outstanding ($0.01 par value, 100,000,000 shares authorized)       38,547,295         40,509,269  
Net asset value per share   $   13.14     $   13.50  

RUNWAY GROWTH FINANCE CORP.Consolidated Statements of Operations(Unaudited)(In thousands, except share and per share data)
    Three Months Ended June 30,     Six Months Ended June 30,  
    2024     2023     2024     2023  
Investment income                                
From non-control/non-affiliate investments:                                
Interest income   $   30,935     $   33,818     $   65,390     $   68,671  
Payment-in-kind interest income       2,330         6,425         6,537         10,221  
Dividend income               319                 643  
Fee income       187         615         807         660  
From affiliate investments:                                
Interest income       600         593         1,199         885  
Other income       141         125         269         125  
Total investment income       34,193         41,895         74,202         81,205  
Operating expenses                                
Management fees       3,946         4,337         7,898         8,296  
Incentive fees       3,649         4,920         8,317         9,483  
Interest and other debt financing expenses       10,867         11,410         21,727         22,330  
Professional fees       253         490         915         1,038  
Administration agreement expenses       472         615         1,036         1,198  
Insurance expense       209         268         417         536  
Tax expense                       2         50  
Other expenses       206         179         635         352  
Total operating expenses       19,602         22,219         40,947         43,283  
Net investment income       14,591         19,676         33,255         37,922  
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       (6,484 )       1,538         (11,549 )       117  
Net change in unrealized gain (loss) on affiliate investments       305         (103 )       (1,247 )       (6,089 )
Net change in unrealized gain (loss) on control investments       (121 )       1,209         (121 )       3,532  
Net change in unrealized gain (loss) on investments, including U.S. Treasury Bills       (6,300 )       2,644         (12,917 )       (2,440 )
Net realized and unrealized gain (loss) on investments       (6,300 )       2,644         (12,917 )       (3,618 )
Net increase (decrease) in net assets resulting from operations   $   8,291     $   22,320     $   20,338     $   34,304  
Net investment income per common share (basic and diluted)   $   0.37     $   0.49     $   0.84     $   0.94  
Net increase (decrease) in net assets resulting from operations per common share (basic and diluted)   $   0.21     $   0.55     $   0.51     $   0.85  
Weighted average shares outstanding (basic and diluted)       39,180,767         40,509,269         39,786,511         40,509,269  
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