Runway Growth Finance Corp. Reports Third Quarter 2022 Financial Results

By: Runway Growth Finance Corp. via GlobeNewswire

November 03, 2022 at 16:35 PM EDT

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

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.