Delivered Record Quarterly and Annual Net Investment Income of $18.4 and $59.8 Million, Respectively
Increased Core Leverage Ratio of Portfolio to 97%
Grew Investment Portfolio to Record $1.1 Billion
Conference Call Today, Thursday, March 2 at 6:00 p.m. ET
WOODSIDE, Calif., March 02, 2023 (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 fourth quarter and fiscal year ended December 31, 2022.
Fourth Quarter 2022 Highlights
- Total investment income of $36.8 million
- Net investment income of $18.4 million, or $0.45 per share
- Net asset value of $14.22 per share
- Dollar-weighted annualized yield on debt investments of 15.5% for the quarter
- 12 investments completed in new and existing portfolio companies totaling $327.0 million in new commitments including $232.6 million in funded loans
- Aggregate proceeds of $16.0 million received from principal repayments
- Declared first quarter 2023 dividend of $0.40 per share, up 11% quarter over quarter
- Declared a first quarter 2023 supplemental dividend of $0.05 per share
2022 Fiscal Year Highlights
- Total investment portfolio at year-end 2022 of $1.1 billion at fair value
- Net investment income of $59.8 million, or $1.46 per share
- Net asset value (“NAV”) at 12/31/2022 of $576.1 million, or $14.22 per share
- Total investment fundings of $628.8 million: $401.1 million in 14 new portfolio companies and $227.7 million in 12 existing portfolio companies
- No credit losses and industry-leading low credit loss ratio of 6 basis points per year on a gross basis and 1 basis point per year on a net (debt and equity) basis, based on cumulative commitments
“Runway Growth delivered its fifth consecutive record quarter, which we believe validates our investment strategy in high quality, late-stage companies,” said David Spreng, Founder and CEO of Runway Growth. “During 2022, Runway continued to prudently deploy leverage achieving its objective range, to unlock increasingly attractive shareholder returns while fueling minimally dilutive growth for our portfolio companies.”
Spreng continued, “Runway Growth’s success speaks to the value of our differentiated and durable model that offers sustainable yield despite market volatility. Increasingly, later-stage companies are turning to Runway Growth to embrace debt as minimally dilutive growth capital as the cost differential between equity expands. Looking to 2023, our funnel remains robust and Runway Growth is confident in our disciplined strategy to drive earnings and long-term shareholder value.”
Fourth Quarter 2022 Operating Results
Total investment income for the quarter ended December 31, 2022 was $36.8 million, compared to $17.6 million for the quarter ended December 31, 2021. The year-over-year improvement is primarily due to portfolio growth and an increase in interest income on investments resulting from the new loans originated.
Net investment income for the quarter ended December 31, 2022 was $18.4 million, or $0.45 per share, compared to $10.9 million, or $0.28 per share, for the quarter December 31, 2021.
The Company's dollar-weighted annualized yield on average debt investments for the quarter ended December 31, 2022 was 15.5%. 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, 2022 were $18.4 million, compared to $6.7 million for the quarter ended December 31, 2021. The increase was driven by growing management fees, incentive fees and interest expenses.
Net realized loss on investments for the quarter ended December 31, 2022 was $2.0 million, compared to a net realized gain of $8.2 million for the quarter ended December 31, 2021.
For the quarter ended December 31, 2022, net change in unrealized appreciation on investments was $2.1 million, compared to $0.1 million for the comparable prior year period, due to the increase in fair value of our equity portfolio.
Portfolio and Investment Activity
As of December 31, 2022, Runway Growth’s investment portfolio had an aggregate fair value of approximately $1,126 million and was comprised of approximately $1,094 million in term loans, 99% of which are senior secured loans, and $32.5 million in warrants and equity-related investments in 43 portfolio companies.
During the fourth quarter of 2022, Runway Growth originated 12 investments totaling $327.0 million in commitments, including $232.6 million in funded loans, as well as six investments in new portfolio companies and six new investments in existing portfolio companies.
Total portfolio investment activity for the three and twelve months ended December 31, 2022 and 2021 was as follows:
| Three Months Ended December 31, | Fiscal Year Ended December 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Beginning Investment Portfolio | $ | 910,169 | $ | 646,353 | $ | 729,516 | $ | 621,827 | ||||||||
| Purchases of Investments | 229,883 | 187,410 | 622,719 | 424,441 | ||||||||||||
| Purchases of U.S. Treasury Bills | — | 95,002 | — | 210,002 | ||||||||||||
| PIK interest | 2,326 | 568 | 8,655 | 2,996 | ||||||||||||
| Amortization of Fixed Income Premiums or Accretion of Discounts | 2,287 | 2,202 | 6,863 | 7,742 | ||||||||||||
| Sales or Repayments of Investments | (16,000 | ) | (100,291 | ) | (159,144 | ) | (297,825 | ) | ||||||||
| Scheduled Principal Payments of Investments | (2,488 | ) | (105 | ) | (9,754 | ) | (5,777 | ) | ||||||||
| Sales and Maturities of U.S. Treasury Bills | — | (110,000 | ) | (45,000 | ) | (234,999 | ) | |||||||||
| Net realized Gain (Loss) on Investments | (2,000 | ) | 8,249 | (1,061 | ) | 4,154 | ||||||||||
| Net Change in Unrealized Appreciation (Depreciation) on Investments | 2,132 | 128 | (26,485 | ) | (3,045 | ) | ||||||||||
| Ending Investment Portfolio | $ | 1,126,309 | $ | 729,516 | $ | 1,126,309 | $ | 729,516 | ||||||||
Net Asset Value
As of December 31, 2022, net asset value (“NAV’”) per share was $14.22, compared to $14.12 as of September 30, 2022. Total net assets at the end of the fourth quarter of 2022 were $576.1 million, down 5% from $606.2 million in the prior year period.
For the quarter ended December 31, 2022, net increase in net assets resulting from operations was $18.5 million, or $0.46 per share, compared to a net increase of $19.3 million, or $0.49 per share, for the quarter ended December 31, 2021.
Liquidity and Capital Resources
As of December 31, 2022, the Company had approximately $93.8 million in available liquidity, including unrestricted cash and cash equivalents, and $88 million in available borrowing capacity under the Company’s credit facility, subject to existing terms, advance rates and regulatory and covenant requirements. Subsequent to quarter end, we increased our credit facility by $50 million, bringing our total available liquidity to $143.8 million, including unrestricted cash and cash equivalents, and borrowing capacity of 138 million under our credit facility and our aggregate facility commitment to $475 million.
The Company ended the quarter with a core leverage ratio of approximately 97%, compared to 60% for the quarter ended September 30, 2022.
Distributions
On February 23, 2023, the Company’s board of directors declared a regular quarterly distribution of $0.40 per share for the first quarter of 2023, payable on March 21, 2023, to stockholders of record as of March 7, 2023. This dividend represents an increase of 11% over the dividend declared in the prior quarter. In addition, the Board of Directors declared a supplemental dividend of $0.05 per share for the first quarter of 2023 that is also payable on March 21, 2023, to stockholders of record as of March 7, 2023. Runway Growth intends to declare and pay a similar supplemental dividend for each subsequent fiscal quarter during 2023, subject to future approval by the Board of Directors.
Conference Call
Runway Growth will hold a conference call to discuss its fourth quarter and fiscal year ended December 31, 2022 financial results at 3:00 p.m. PT (6:00 p.m. ET) on Thursday, March 2, 2023. 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. | |||||||||
| Consolidated Statements of Assets and Liabilities | |||||||||
| (In thousands, except share and per share data) | |||||||||
| December 31, 2022 | December 31, 2021 | ||||||||
| Assets | |||||||||
| Investments at fair value: | |||||||||
| Non-control/non-affiliate investments at fair value (cost of $1,126,879 and $647,449, respectively) | $ | 1,114,935 | $ | 655,384 | |||||
| Affiliate investments at fair value (cost of $4,551 and $0, respectively) | 2,084 | — | |||||||
| Control investments at fair value (cost of $19,172 and $34,874, respectively) | 9,290 | 29,131 | |||||||
| Investment in U.S. Treasury Bills at fair value (cost of $0 and $45,001, respectively) | — | 45,001 | |||||||
| Total investments at fair value (cost of $1,150,602 and $727,324, respectively) | 1,126,309 | 729,516 | |||||||
| Cash and cash equivalents | 5,761 | 4,697 | |||||||
| Accrued interest receivable | 6,741 | 2,369 | |||||||
| Other assets | 2,955 | 1,766 | |||||||
| Total assets | 1,141,766 | 738,348 | |||||||
| Liabilities | |||||||||
| Debt: | |||||||||
| Credit facilities | 337,000 | 61,000 | |||||||
| 2026 Notes | 70,000 | 20,000 | |||||||
| 2027 Notes | 152,250 | — | |||||||
| Unamortized deferred debt costs | (10,293 | ) | (1,511 | ) | |||||
| Total debt, less unamortized deferred debt costs | 548,957 | 79,489 | |||||||
| Reverse repurchase agreement | — | 44,775 | |||||||
| Incentive fees payable | 8,808 | 6,010 | |||||||
| Interest payable | 6,221 | 249 | |||||||
| Accrued expenses and other liabilities | 1,728 | 1,630 | |||||||
| Total liabilities | 565,714 | 132,153 | |||||||
| Commitments and contingencies (Note 3) | |||||||||
| Net assets | |||||||||
| Common stock, par value | 414 | 414 | |||||||
| Additional paid-in capital | 605,774 | 606,048 | |||||||
| Distributable (losses) | (19,320 | ) | (267 | ) | |||||
| Treasury Stock | (10,816 | ) | — | ||||||
| Total net assets | $ | 576,052 | $ | 606,195 | |||||
| Shares of common stock outstanding ($0.01 par value, 100,000,000 shares authorized) | 40,509,269 | 41,380,614 | |||||||
| Net asset value per share | $ | 14.22 | $ | 14.65 | |||||
| Runway Growth Finance Corp. | |||||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||||
| (In thousands, except share and per share data) | |||||||||||||||||
| Three Months Ended December 31, | Fiscal Year Ended December 31, | ||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Investment income | |||||||||||||||||
| From non-control/non-affiliate investments: | |||||||||||||||||
| Interest income | $ | 33,515 | $ | 15,684 | $ | 95,264 | $ | 63,226 | |||||||||
| Payment in-kind interest income | 2,310 | 568 | 5,558 | 2,992 | |||||||||||||
| Dividend income | 318 | 364 | 1,338 | 1,395 | |||||||||||||
| Fee Income | 664 | 964 | 2,184 | 3,627 | |||||||||||||
| From affiliate investments: | |||||||||||||||||
| Interest income | — | — | 5 | — | |||||||||||||
| Payment in-kind interest income | — | — | 96 | — | |||||||||||||
| Fee Income | — | — | 8 | — | |||||||||||||
| From control investments: | |||||||||||||||||
| Interest income | — | — | 1,112 | 113 | |||||||||||||
| Payment in-kind interest income | — | — | 2,985 | 4 | |||||||||||||
| Other income | — | — | 2 | 1 | |||||||||||||
| Total investment income | 36,807 | 17,580 | 108,552 | 71,358 | |||||||||||||
| Operating expenses | |||||||||||||||||
| Management fees | 3,394 | 2,342 | 11,882 | 8,989 | |||||||||||||
| Incentive fees | 4,592 | 2,733 | 13,183 | 9,232 | |||||||||||||
| Interest expense | 7,685 | 251 | 13,756 | 2,554 | |||||||||||||
| Professional fees | 745 | 329 | 2,815 | 1,844 | |||||||||||||
| Overhead allocation expense | 307 | 172 | 1,020 | 827 | |||||||||||||
| Insurance expense | 210 | 270 | 1,016 | 339 | |||||||||||||
| Administration fee | 160 | 159 | 658 | 579 | |||||||||||||
| Debt financing fees | 779 | 150 | 3,005 | 1,638 | |||||||||||||
| Directors' fees | 91 | 92 | 352 | 293 | |||||||||||||
| Tax expense | 290 | — | 291 | 1 | |||||||||||||
| Other expenses | 194 | 154 | 778 | 570 | |||||||||||||
| Total operating expenses | 18,447 | 6,652 | 48,756 | 26,866 | |||||||||||||
| Net investment income | 18,360 | 10,928 | 59,796 | 44,492 | |||||||||||||
| Realized and unrealized gain (loss) on investments | |||||||||||||||||
| Realized gain (loss) on non-control/non-affiliate investments, including U.S. Treasury Bills | — | 8,249 | 939 | 4,172 | |||||||||||||
| Realized gain (loss) on control investments | (2,000 | ) | — | (2,000 | ) | — | |||||||||||
| Net realized gain (loss) on investments | (2,000 | ) | 8,249 | (1,061 | ) | 4,172 | |||||||||||
| Net change in unrealized appreciation (depreciation) on non control/non-affiliate investments, including U.S. Treasury Bills | (4,594 | ) | (5,252 | ) | (18,870 | ) | (16,231 | ) | |||||||||
| Net change in unrealized appreciation (depreciation) on affiliate investments | (97 | ) | — | (3,476 | ) | — | |||||||||||
| Net change in unrealized appreciation (depreciation) on control investments | 6,823 | 5,380 | (4,139 | ) | 13,186 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on investments and U.S. Treasury Bills | 2,132 | 128 | (26,485 | ) | (3,045 | ) | |||||||||||
| — | — | — | |||||||||||||||
| Net realized and unrealized gain on investments | 132 | 8,377 | (27,546 | ) | 1,127 | ||||||||||||
| Net increase in net assets resulting from operations | $ | 18,492 | $ | 19,305 | $ | 32,250 | $ | 45,619 | |||||||||
| Net increase in net assets resulting from operations per common share | $ | 0.46 | $ | 0.49 | $ | 0.79 | $ | 1.33 | |||||||||
| Net investment income per common share | $ | 0.45 | $ | 0.28 | $ | 1.46 | $ | 1.30 | |||||||||
| Weighted-average shares outstanding | 40,531,403 | 39,593,658 | 40,971,242 | 34,183,358 | |||||||||||||
