RWAY Runway Growth Finance Corporation

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 07, 2024 (March 07, 2024)

 

 

Runway Growth Finance Corp.

(Exact name of Registrant as Specified in Its Charter)

 

 

Maryland			814-01180	47-5049745
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
205 N. Michigan Ave. Suite 4200
Chicago, Illinois				60601
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (312) 281-6270

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		RWAY		Nasdaq Global Select Market
7.50% Notes due 2027		RWAYL		Nasdaq Global Select Market
8.00% Notes due 2027		RWAYZ		Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On March 7, 2024 Runway Growth Finance Corp. (the “Company”) issued a press release announcing its financial results for the quarter ended December 31, 2023. The text of the press release is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information set forth under this Item 2.02, including the information set forth in Exhibit 99.1 hereto, is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise. The information set forth under this Item 2.02, including Exhibit 99.1, shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit Number		Description
99.1		Press Release, dated March 7, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			Runway Growth Finance Corp.
Date:	March 7, 2024	By:	/s/ Thomas B. Raterman
			Acting President, Chief Operating Officer, Chief Financial Officer, Treasurer, and Secretary

 

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Runway Growth Finance Corp. Reports Fourth Quarter and Fiscal Year Ended 2023 Financial Results

Delivered Total and Net Investment Income of $39.2 million and $18.3 million, Respectively

Investment Portfolio of $1.0 billion

Conference Call Today, Thursday, March 7, 2024 at 5:00 p.m. ET

MENLO PARK, Calif., March 7, 2024—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

2023 Fiscal Year Highlights

First Quarter 2024 Distributions

 

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“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 $39.2 million, compared to $36.5 million for the quarter ended December 31, 2022.

Net investment income for the quarter ended December 31, 2023 was $18.3 million, or $0.45 per share, compared to $18.4 million, or $0.45 per share, for the quarter ended December 21, 2022.

The Company's dollar-weighted annualized yield on average debt investments for the quarter ended December 31, 2023, was 16.9%. 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 outstanding during the period.

Total operating expenses for the quarter ended December 31, 2023 were $20.9 million, compared to $18.1 million for the quarter ended December 31, 2022. The increase was driven by higher interest rates and increased financing expenses on borrowings.

Net realized loss on investments was $17.2 million for the quarter ended December 31, 2023, compared to a net realized loss of $2.0 million for the quarter ended December 31, 2022.

For the quarter ended December 31, 2023, net change in unrealized loss on investments was $5.9 million, compared to a net change in unrealized gain of $2.1 million for the comparable prior year period.

Portfolio and Investment Activity

As of December 31, 2023, Runway Growth’s investment portfolio had an aggregate fair value of approximately $1.0 billion and was comprised of approximately $978.5 million in term loans, 98.5% of which are senior secured loans and $46.5 million in warrants and other equity-related investments in 52 portfolio companies.

During the fourth quarter of 2023, Runway Growth completed eight investments in new and existing portfolio companies, representing $154.6 million in funded loans.

 

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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 $13.50, compared to $14.22 as of December 31, 2022. Total net assets at the end of the quarter of 2023 was $547.1 million, down 5.0% from $576.1 million in the prior year period.

For the quarter ended December 31, 2023, net decrease in net assets resulting from operations was $4.8 million, or $0.12 per share, compared to a net increase in net assets of $18.5 million, or $0.46 per share, for the quarter ended December 31, 2022.

Liquidity and Capital Resources

As of December 31, 2023, the Company had approximately $281.0 million in available liquidity, including unrestricted cash and cash equivalents of $3.0 million and $278.0 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 95%, compared to 79% for the quarter ended September 30, 2023.

Distributions

On February 1, 2024, the Company’s board of directors declared a regular quarterly distribution of $0.40 per share for the first quarter of 2024, payable on February 28, 2024, to stockholders of record as of February 12, 2024. In addition, the Company’s board of directors declared a supplemental dividend of $0.07 per share for the first quarter of 2024 that is also payable on February 28, 2024, to stockholders of record as of February 12, 2024.

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 $25.0 million of its outstanding common stock. Under the Share Repurchase Program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with applicable securities laws and regulations.

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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 $4.3 million at a fair market value of $3.8 million as of December 31, 2023. The loan comprised 0.37% of the total fair value of the Company's investment portfolio, excluding U.S. Treasury Bills, as of December 31, 2023.

On February 14, 2024, the Company received a partial prepayment of $7.1 million from MarleySpoon SE on its senior secured loan.

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.

 

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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

 

 

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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 $1,005,024 and $1,126,879, respectively)		$		972,604			$		1,114,935
Affiliate investments at fair value (cost of $58,861 and $4,551, respectively)				51,456					2,084
Control investments at fair value (cost of $950 and $19,172, respectively)				950					9,290
Investment in U.S. Treasury Bills at fair value (cost of $42,014 and $0, respectively)				41,999					—
Total investments at fair value (cost of $1,106,849 and $1,150,602, respectively)				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 ($0.01 par value, 100,000,000 shares authorized)				40,509,269					40,509,269
Net asset value per share		$		13.50			$		14.22

 

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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

 

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v3.24.0.1

Document And Entity Information	Mar. 07, 2024
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 07, 2024
Entity Registrant Name	Runway Growth Finance Corp.
Entity Central Index Key	0001653384
Entity Emerging Growth Company	true
Entity File Number	814-01180
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	47-5049745
Entity Address, Address Line One	205 N. Michigan Ave.
Entity Address, Address Line Two	Suite 4200
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60601
City Area Code	(312)
Local Phone Number	281-6270
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Ex Transition Period	false
Sec 7.50 Notes Due 2027 [Member]
Document Information [Line Items]
Title of 12(b) Security	7.50% Notes due 2027
Trading Symbol	RWAYL
Security Exchange Name	NASDAQ
Common Stock Par Value 0.01 Per Share [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	RWAY
Security Exchange Name	NASDAQ
Notes 8.00 Due 2027 [Member]
Document Information [Line Items]
Title of 12(b) Security	8.00% Notes due 2027
Trading Symbol	RWAYZ
Security Exchange Name	NASDAQ

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