Runway Growth Finance Corp. Reports Third Quarter 2022 Financial Results


Runway Growth Finance Corp.

Runway Growth Finance Corp.

Delivered Record Total and Net Investment Income of $27.3 and $14.5 Million, Respectively
Increased Core Leverage Ratio of Portfolio to 60%
Grew Investment Portfolio to Record $910.2 Million
Conference Call Today, Thursday, November 3 at 6:00 p.m. ET

WOODSIDE, Calif., Nov. 03, 2022 (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 third quarter ended September 30, 2022.

Third Quarter 2022 Highlights

  • Total investment income of $27.3 million

  • Net investment income of $14.5 million, or $0.36 per share

  • Total investment portfolio of $910.2 million at fair value

  • Net asset value of $14.12 per share

  • Dollar-weighted annualized yield on debt investments of 14.4% for the quarter

  • Nine investments completed in new and existing portfolio companies totaling $216.0 million in new commitments including $161.0 million in funded loans

  • Aggregate proceeds of $55.0 million received from principal repayments

  • Declared fourth quarter dividend of $0.36 per share, up 9% quarter over quarter

“Runway Growth delivered its third consecutive record quarter, driven by our team’s disciplined execution against our strategic initiatives,” said David Spreng, Founder and CEO of Runway Growth. “Our success speaks to the value of our credit-driven investment process, which provides the downside protection of debt with the potential for the upside of equity.”

Spreng continued, “Runway Growth’s weatherproof platform is well positioned with the strongest pipeline we have seen to date. We will continue to serve companies that are embracing venture debt as a vehicle for growth. As we approach year end, the Runway team remains focused on generating prudent portfolio growth through deploying leverage to enhance long-term shareholder value.”

Third Quarter 2022 Operating Results

Total investment income for the quarter ended September 30, 2022 was $27.3 million, compared to $18.6 million for the quarter ended September 30, 2021. This year-over-year growth demonstrates the demand for the company’s creative financing solutions.

Net investment income for the quarter ended September 30, 2022 was $14.5 million, or $0.36 per share, compared to $10.7 million, or $0.32 per share, for the quarter ended September 30, 2021.

The Company’s dollar-weighted annualized yield on average debt investments for the quarter ended September 30, 2022 was 14.4%. 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 September 30, 2022 were $12.8 million, compared to $7.9 million for the quarter ended September 30, 2021. The increase was driven by growing management fees, incentive fees, interest expenses as well as expenses related to being a public company.

Net realized gain on investments for the quarter ended September 30, 2022 was $0.4 million, compared to a net realized gain of $0.7 million for the quarter ended September 30, 2021.

For the quarter ended September 30, 2022, net change in unrealized depreciation on investments was $3.2 million, compared to a net change in unrealized depreciation on investments of $1.2 million for the comparable prior year period, due to the decline in fair value of the company’s loan to Pivot3 and public equity holding in FiscalNote.

Portfolio and Investment Activity

As of September 30, 2022, Runway Growth’s investment portfolio had an aggregate fair value of approximately $910.2 million and was comprised of approximately $875.9 million in term loans, 98% of which are senior secured loans, and $34.2 million in warrants and equity-related investments in 43 portfolio companies.

During the third quarter of 2022, Runway Growth originated nine investments totaling $216.0 million in commitments, including $161.0 million in funded loans, as well as two investments in new portfolio companies and seven new investments in existing portfolio companies.

Total portfolio investment activity for the three and nine months ended September 30, 2022, and 2021 was as follows:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

(unaudited)

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Investment Portfolio

 

$

807,728,604

 

 

$

617,617,043

 

 

 

$

729,516,274

 

 

$

621,826,650

 

Purchases of Investments(1)

 

 

160,562,001

 

 

 

103,788,323

 

 

 

 

399,164,647

 

 

 

239,458,881

 

Purchases of U.S. Treasury Bills

 

 

 

 

 

60,000,660

 

 

 

 

 

 

 

115,000,509

 

Amortization of Fixed Income Premiums or Accretion of Discounts

 

 

1,004,909

 

 

 

1,879,221

 

 

 

 

4,575,984

 

 

 

5,539,659

 

Sales or Repayments of Investments

 

 

(56,351,393

)

 

 

(102,817,182

)

 

 

 

(143,144,652

)

 

 

(197,534,296

)

Scheduled Principal Payments of Investments

 

 

 

 

 

(3,605,000

)

 

 

 

(7,265,675

)

 

 

(5,671,437

)

Sales and Maturities of U.S. Treasury Bills

 

 

 

 

 

(29,999,956

)

 

 

 

(44,999,747

)

 

 

(124,999,118

)

Realized Gain (Loss) on Investments

 

 

406,917

 

 

 

718,310

 

 

 

 

939,377

 

 

 

(4,094,970

)

Net Change in Unrealized Appreciation (Depreciation) on Investments

 

 

(3,182,093

)

 

 

(1,228,382

)

 

 

 

(28,617,263

)

 

 

(3,172,841

)

Ending Investment Portfolio

 

$

910,168,945

 

 

$

646,353,037

 

 

 

$

910,168,945

 

 

$

646,353,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Includes PIK interest.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Asset Value

As of September 30, 2022, net asset value (“NAV’”) per share was $14.12, compared to $14.14 as of June 30, 2022. Total net assets at the end of the third quarter of 2022 were $573.7 million, up 14% from $504.2 million in the prior year period.

For the quarter ended September 30, 2022, net increase in net assets resulting from operations was $11.7 million, or $0.29 per share, compared to a net increase of $10.2 million, or $0.31 per share, for the quarter ended September 30, 2021.

Liquidity and Capital Resources

As of September 30, 2022, the Company had approximately $255.8 million in available liquidity, including unrestricted cash and cash equivalents, and $250 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 60.0, compared to 40.2% for the quarter ended June 30, 2022.

Distributions

On October 27, 2022, the Company’s board of directors declared a regular quarterly distribution of $0.36 per share for the fourth quarter of 2022, payable on November 22, 2022, to stockholders of record as of November 8, 2022. This dividend represents an increase of 9% over the dividend declared in the prior quarter.

Conference Call
Runway Growth will hold a conference call to discuss its third quarter 2022 financial results at 3:00 p.m. PT (6:00 p.m. ET) on Thursday, November 3, 2022. 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, including the impact of COVID-19 and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy. 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.

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.

Statements of Assets and Liabilities

 

 

 

 

 

 

 

 

 

September 30, 2022

 

December 31, 2021

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

 

Non-control/non-affiliate investments at fair value (cost of $910,870,337 and $647,448,895, respectively)

 

$

903,521,674

 

 

$

655,384,403

 

Affiliate investments at fair value (cost of $4,551,235 and $0, respectively)

 

 

2,180,230

 

 

 

 

Control investments at fair value (cost of $21,172,353 and $34,873,846, respectively)

 

 

4,467,041

 

 

 

29,130,371

 

Investment in U.S. Treasury Bills at fair value (cost of $0 and $45,001,250, respectively)

 

 

 

 

 

45,001,500

 

Total investments at fair value (cost of $936,593,925 and $727,323,991, respectively)

 

 

910,168,945

 

 

 

729,516,274

 

Cash and cash equivalents

 

 

5,774,074

 

 

 

4,696,693

 

Accrued interest receivable

 

 

4,402,598

 

 

 

2,368,680

 

Other accounts receivable

 

 

1,823,611

 

 

 

816,065

 

Prepaid expenses

 

 

99,507

 

 

 

949,768

 

Total assets

 

 

922,268,735

 

 

 

738,347,480

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Debt:

 

 

 

 

 

 

Credit facilities, net

 

 

170,009,357

 

 

 

59,864,489

 

2026 Notes, net

 

 

69,130,314

 

 

 

19,623,971

 

2027 Notes, net

 

 

97,405,095

 

 

 

 

Total debt, less unamortized deferred debt costs

 

 

336,544,766

 

 

 

79,488,460

 

Reverse repurchase agreement

 

 

 

 

 

44,774,963

 

Accrued incentive fees

 

 

7,188,966

 

 

 

6,010,250

 

Due to affiliate

 

 

261,180

 

 

 

221,243

 

Interest payable

 

 

3,195,407

 

 

 

249,247

 

Accrued expenses and other liabilities

 

 

1,418,045

 

 

 

1,408,826

 

Total liabilities

 

 

348,608,364

 

 

 

132,152,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

Common stock, par value

 

 

413,806

 

 

 

413,806

 

Additional paid-in capital

 

 

606,063,671

 

 

 

606,047,671

 

Distributable (losses)

 

 

(23,515,173

)

 

 

(266,986

)

Treasury stock

 

 

(9,301,933

)

 

 

 

Total net assets

 

$

573,660,371

 

 

$

606,194,491

 

 

 

 

 

 

 

 

Shares of common stock outstanding ($0.01 par value, 100,000,000 shares authorized)

 

 

40,635,858

 

 

 

41,380,614

 

Net asset value per share

 

$

14.12

 

 

$

14.65

 

Runway Growth Finance Corp.

Statements of Operations

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Investment income

 

 

 

 

 

 

 

 

 

 

 

 

From non-control/non-affiliate investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

25,365,328.00

 

 

$

16,732,069.00

 

 

$

61,749,677.00

 

 

$

47,542,136.00

 

Payment in-kind interest income

 

 

1,199,498.00

 

 

 

434,464.00

 

 

 

3,248,563.00

 

 

 

2,424,022.00

 

Dividend income

 

 

317,674.00

 

 

 

343,755.00

 

 

 

1,020,766.00

 

 

 

1,031,265.00

 

Fee income

 

 

445,399.00

 

 

 

982,190.00

 

 

 

1,519,292.00

 

 

 

2,663,160.00

 

From affiliate investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

4,654

 

 

 

 

Payment in-kind interest income

 

 

 

 

 

 

 

 

96,291

 

 

 

 

Fee income

 

 

 

 

 

 

 

 

8,311

 

 

 

 

From control investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

113,554

 

 

 

1,112,421

 

 

 

113,554

 

Payment in-kind interest income

 

 

 

 

 

3,786

 

 

 

2,984,450

 

 

 

3,786

 

Other income

 

 

805

 

 

 

248

 

 

 

1,268

 

 

 

517

 

Total investment income

 

 

27,328,704

 

 

 

18,610,066

 

 

 

71,745,693

 

 

 

53,778,440

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 

3,065,581

 

 

 

2,301,656

 

 

 

8,487,820

 

 

 

6,647,207

 

Incentive fees

 

 

3,625,686

 

 

 

2,686,475

 

 

 

8,590,821

 

 

 

6,498,482

 

Interest expense

 

 

3,588,289

 

 

 

812,852

 

 

 

6,070,906

 

 

 

2,302,582

 

Professional fees

 

 

720,115

 

 

 

612,854

 

 

 

1,968,036

 

 

 

1,433,360

 

Overhead allocation expense

 

 

258,191

 

 

 

249,141

 

 

 

713,457

 

 

 

655,260

 

Insurance expense

 

 

268,806

 

 

 

23,087

 

 

 

806,042

 

 

 

69,638

 

Administration fee

 

 

161,245

 

 

 

179,500

 

 

 

497,896

 

 

 

420,360

 

Debt financing fees

 

 

794,124

 

 

 

738,087

 

 

 

2,226,658

 

 

 

1,447,288

 

Directors’ fees

 

 

90,727

 

 

 

67,750

 

 

 

261,727

 

 

 

201,750

 

Tax expense

 

 

 

 

 

 

 

 

1,073

 

 

 

41

 

Other expenses

 

 

258,991

 

 

 

197,540

 

 

 

685,841

 

 

 

539,142

 

Total operating expenses

 

 

12,831,755

 

 

 

7,868,942

 

 

 

30,310,277

 

 

 

20,215,110

 

Net investment income

 

 

14,496,949

 

 

 

10,741,124

 

 

 

41,435,416

 

 

 

33,563,330

 

Realized and unrealized gain (loss) on investments

 

 

 

 

 

 

 

 

 

 

 

 

Realized gain (loss) on non control/non-affiliate investments, including U.S. Treasury Bills

 

 

406,917

 

 

 

718,310

 

 

 

939,442

 

 

 

(4,076,766

)

Realized gain (loss) on control investments

 

 

 

 

 

 

 

 

(65

)

 

 

 

Net realized gain (loss) on investments

 

 

406,917

 

 

 

718,310

 

 

 

939,377

 

 

 

(4,076,766

)

Net change in unrealized appreciation (depreciation) on non-control/non-affiliate investments, including U.S. Treasury Bills

 

 

(1,956,044

)

 

 

(6,857,594

)

 

 

(14,275,206

)

 

 

(10,979,143

)

Net change in unrealized appreciation (depreciation) on affiliate investments

 

 

(171,789

)

 

 

 

 

 

(3,380,221

)

 

 

 

Net change in unrealized appreciation (depreciation) on control investments

 

 

(1,054,260

)

 

 

5,629,212

 

 

 

(10,961,836

)

 

 

7,806,302

 

Net change in unrealized appreciation (depreciation) on investments and U.S. Treasury Bills

 

 

(3,182,093

)

 

 

(1,228,382

)

 

 

(28,617,263

)

 

 

(3,172,841

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in net assets resulting from operations

 

$

11,721,773

 

 

 

10,231,052

 

 

$

13,757,530

 

 

$

26,313,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations per common share

 

$

0.29

 

 

 

0.31

 

 

$

0.33

 

 

$

0.81

 

Net investment income per common share

 

$

0.36

 

 

 

0.32

 

 

$

1.01

 

 

$

1.04

 

Weighted-average shares outstanding

 

 

40,774,154

 

 

 

33,160,481

 

 

 

41,119,467

 

 

 

32,360,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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