Runway Growth Finance Corp. Reports Third Quarter 2022 Financial Results

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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