Release Date: May 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Runway Growth Finance Corp (RWAY, Financial) reported a total investment income of $35.4 million and net investment income of $15.6 million for the first quarter of 2025.
- The company successfully executed three investments in existing portfolio companies, representing $50.7 million in funded loans.
- RWAY's loan portfolio is comprised almost exclusively of first lien senior secured loans, providing a strong security position.
- The company has a strong track record with low loss rates compared to peers and the BDC sector overall.
- RWAY has ample liquidity with $315.4 million in total available liquidity, including unrestricted cash and cash equivalents, and borrowing capacity of $297 million.
Negative Points
- Net assets decreased from $514.9 million at the end of the fourth quarter of 2024 to $503.3 million at the end of the first quarter of 2025.
- NAV per share decreased by 2.2% from $13.79 at the end of the fourth quarter of 2024 to $13.48 at the end of the first quarter of 2025.
- The total investment portfolio's fair value decreased by 6.7% from $1.08 billion in the fourth quarter of 2024 to $1 billion in the first quarter of 2025.
- RWAY has two loans on non-accrual status, representing 0.5% of the total investment portfolio at fair value.
- The company experienced a decrease in the dollar weighted loan to value ratio from 28% to 29.1%.
Q & A Highlights
Q: Can you provide insights into the current state of healthcare lending and its impact on your portfolio?
A: Thomas Raterman, CFO, noted that healthcare lending has been slower and more cautious recently, reflecting broader industry trends. Gregory Greifeld, CIO, added that healthcare remains a core focus, but recent developments, such as potential executive orders affecting drug prices, are being closely monitored.
Q: How does the current pipeline look in terms of refinancing and new opportunities?
A: Gregory Greifeld, CIO, explained that while Q1 saw significant refinancing activity, the pipeline includes new opportunities like the Autobooks deal, which was delayed due to market conditions. The focus remains on ensuring appropriate structure and pricing in deals.
Q: Could you elaborate on the trends in Net Investment Income (NII) and dividend policy?
A: Thomas Raterman, CFO, stated that the company is focused on building NAV per share rather than increasing dividends, as the market isn't crediting the dividend. The base dividend is set to be sustainable under various scenarios, with supplemental dividends targeted at up to 50% of NII.
Q: What are the current trends in private credit terms and how do they compare to a year ago?
A: Gregory Greifeld, CIO, noted an improvement in the structure of deals, with better terms and covenants. The demand for private debt capital has led to more favorable conditions compared to the previous year.
Q: How is the company approaching investments in AI companies?
A: Gregory Greifeld, CIO, mentioned that while there is significant interest in AI, Runway Growth Finance focuses on more mature companies with substantial revenue. They avoid early-stage companies due to higher risks and prefer established businesses like Interactions in their portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
