Runway Growth Finance Corp. Q4 FY2024 earnings call

• Fourth quarter results: total investment income $33.8M, net investment income $14.6M. - Acquisition of investment adviser by BC Partners Credit: closed in Jan, Runway Growth Capital remains investment adviser. - Portfolio performance: focus on late and growth stage, strong credit quality. - Origination plans: Runway Growth Capital seeking to grow originations in loan size $30M to $150M, ideal allocation to BDC $20M to $45M. - Venture debt sector: deal value increased to over $53B in 2024, Runway positioned to benefit from sector tailwinds. - Rating system: loans start as Category 2, deviation from plan can move to Category 3 but most still pay loans on time. - Capital allocation: Board declared $0.36 per share dividend for Q1 2025, base dividend $0.33 per share, supplemental up to 50% of NII excess over base.

For the fourth quarter, Runway delivered total investment income of $33.8 million and net investment income of $14.6 million. The weighted average portfolio risk rating decreased to 2.33 in Q4 2024 from 2.48 in Q3 2024. The dollar-weighted loan-to-value ratio decreased from 29.3% to 26.6%. The total investment portfolio, excluding U.S. Treasury Bills, had a fair value of approximately $1.08 billion, an increase from $1.07 billion in Q3 2024. Net assets were $514.9 million at Dec 31, 2024, up from $507.4 million in Q3 2024. NAV per share was $13.79, up 3% from Q3 2024. The loan portfolio is 97% floating rate. Total operating expenses were $19.2 million in Q4 2024, down from $20.8 million in Q3 2024. Net realized loss on investments was $2.9 million in Q4 2024. Two loans were on non-accrual status, representing 0.5% of the total investment portfolio. Leverage ratio and asset coverage remained at 1.08 times and 1.92 times respectively. Total available liquidity was $244.8 million, and unfunded commitments were $176.7 million. The Board declared aggregate distributions of $0.36 per share for Q1 2025.

• Runway Growth Capital seeking to grow originations in loan size $30M to $150M, ideal BDC allocation $20M to $45M. - Expect focus to diversify BDC portfolio, leverage BC Partners' scale and expertise. - Anticipate venture debt sector tailwinds to continue, Runway positioned to execute. - Board aims for stable and consistent dividend with base dividend $0.33 per share and supplemental up to 50% of NII excess over base.

• Market conditions caused by uncertainties surrounding interest rates. - Changing economic conditions. - Other factors identified in SEC filings that could cause actual results to differ from forward-looking statements. - Potential inaccuracies in assumptions underlying forward-looking statements.

Q: Was there expected additional originations in the next 10 days before the quarter ends?

A: Greg Greifeld said originations are typically back-ended, working with companies and could have originations closed this quarter but some might push to next quarter.

Q: What percentage of loan book is trading at interest rate floors?

A: Greg Greifeld said majority are at or above floors, newer deals at floors, older deals above floors.

Q: Thoughts on dividend change and Board of Directors changes?

A: Tom Raterman said Board wants stable dividend, adopted base dividend sustainable, no change in leverage target, new Board recognizes importance of consistent dividend.

Q: Broader understanding of origination opportunity set with BC Partners?

A: Greg Greifeld said BC Partners' platform brings more eyes, expertise to underwrite different structures, funnel to expand with larger network.

Q: Gains or losses on equity and warrant positions?

A: Tom Raterman said Gynesonics merger led to gain, mostly reflected in fair value at 12/31.

Q: Expectation of share repurchases?

A: Tom Raterman said management and Board discuss, will assess what creates better return for building portfolio and value.

Q: Venture market and capital markets activity?

A: Greg Greifeld said selected company activity continues, exits slower, expectation of uptick in new fundings and M&A volume in next quarters.

Q: Equity portfolio size and management?

A: Tom Raterman said equity portfolio is debt investor focus, driven by certain events, always looking to realize liquid investments.

Q: Spillover amount and guidance?

A: Tom Raterman said goal is to maintain at least one quarter of spillover and grow in coming quarters.