Delivered Total and Net Investment Income of $43.8 and $22.0 Million, Respectively
Investment Portfolio of $1.0 Billion
Conference Call Today, Tuesday, November 7, at 5:00 p.m. ET
MENLO PARK, Calif., Nov. 07, 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 third quarter ended September 30, 2023.
Third Quarter 2023 Highlights
- Total investment income of $43.8 million
- Net investment income of $22.0 million, or $0.54 per share
- Net asset value of $14.08 per share
- Dollar-weighted annualized yield on debt investments of 18.3% for the quarter
- Six investments completed in new and existing portfolio companies, representing $40.8 million in funded loans
- Aggregate proceeds of $125.3 million received from principal repayments
- Declared fourth quarter 2023 regular dividend of $0.40 per share
- Declared fourth quarter 2023 supplemental dividend of $0.06 per share
“Runway Growth’s third quarter demonstrates the resilience of our high quality, late-stage portfolio purpose-built to deliver superior credit performance,” said Greg Greifeld, Acting Chief Executive Officer of Runway Growth, and Deputy Chief Investment Officer and Head of Credit of Runway Growth Capital. “Runway’s pipeline remains healthy and demand from companies for creative financing solutions is accelerating. Our team’s evaluation standards have never been higher as we seek to underwrite the right deals for Runway’s stable and consistent portfolio.”
Greifeld continued, “Runway Growth’s priority is preserving credit quality as we aim to protect our shareholders’ capital while generating attractive returns. With industry low leverage and ample dry powder waiting to be deployed into a capital starved market, Runway is well positioned to drive non-dilutive portfolio growth and ROE for shareholders as we approach 2024.”
Third Quarter 2023 Operating Results
Total investment income for the quarter ended September 30, 2023 was $43.8 million, compared to $27.0 million for the quarter ended September 30, 2022.
Net investment income for the quarter ended September 30, 2023 was $22.0 million, or $0.54 per share, compared to $14.5 million, or $0.36 per share, for the quarter ended September 30, 2022.
The Company's dollar-weighted annualized yield on average debt investments for the quarter ended September 30, 2023 was 18.3%. 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, 2023 were $21.7 million, compared to $12.5 million for the quarter ended September 30, 2022. The increase was driven by growing management fees, incentive fees and interest expenses related to a larger loan portfolio and an increase in total borrowings at higher interest rates.
Net realized gain on investments was zero for the quarter ended September 30, 2023, compared to a net realized gain of $0.4 million for the quarter ended September 30, 2022. The Company experienced no credit losses during the third quarter or year-to-date in 2023.
For the quarter ended September 30, 2023, net change in unrealized loss on investments was $7.2 million, compared to a net change in unrealized loss of $3.2 million for the comparable prior year period.
Portfolio and Investment Activity
As of September 30, 2023, Runway Growth’s investment portfolio had an aggregate fair value of approximately $1,011 million and was comprised of approximately $962 million in term loans, 99% of which are senior secured loans and $49 million in warrants and other equity-related investments in 50 portfolio companies.
During the third quarter of 2023, Runway Growth completed six investments in new and existing portfolio companies, representing $40.8 million in funded loans.
Total portfolio investment activity for the three and nine months ended September 30, 2023, and 2022 was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Beginning investment portfolio | $ | 1,095,321 | $ | 807,729 | $ | 1,126,309 | $ | 729,516 | ||||||||
| Purchases of investments | 41,987 | 159,347 | 105,527 | 392,820 | ||||||||||||
| Purchases of U.S. Treasury Bills | — | — | 34,974 | — | ||||||||||||
| PIK interest | 5,551 | 1,215 | 15,334 | 6,345 | ||||||||||||
| Sales or repayments of investments | (126,770 | ) | (56,351 | ) | (225,671 | ) | (143,144 | ) | ||||||||
| Scheduled principal payments of investments | (275 | ) | — | (7,046 | ) | (7,266 | ) | |||||||||
| Sales and maturities of U.S. Treasury Bills | — | — | (35,000 | ) | (45,000 | ) | ||||||||||
| Net realized gain (loss) on investments | — | 407 | (1,178 | ) | 939 | |||||||||||
| Net change in unrealized gain (loss) on investments | (7,214 | ) | (3,183 | ) | (9,654 | ) | (28,617 | ) | ||||||||
| Amortization of fixed income premiums or accretion of discounts | 2,327 | 1,005 | 7,332 | 4,576 | ||||||||||||
| Ending Investment Portfolio | $ | 1,010,927 | $ | 910,169 | $ | 1,010,927 | $ | 910,169 | ||||||||
Net Asset Value
As of September 30, 2023, net asset value (“NAV’”) per share was $14.08, compared to $14.12 as of September 30, 2022. Total net assets at the end of the third quarter of 2023 was $570.5 million, down 0.55% from $573.7 million in the prior year period.
For the quarter ended September 30, 2023, net increase in net assets resulting from operations was $14.8 million, or $0.37 per share, compared to a net increase in net assets of $11.7 million, or $0.29 per share, for the quarter ended September 30, 2022.
Liquidity and Capital Resources
As of September 30, 2023, the Company had approximately $311.9 million in available liquidity, including unrestricted cash and cash equivalents and $297.0 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 79%, compared to 97% for the quarter ended June 30, 2023.
Distributions
On November 2, 2023, the Company’s board of directors declared a regular quarterly distribution of $0.40 per share for the fourth quarter of 2023, payable on November 28, 2023, to stockholders of record as of November 13, 2023. In addition, the Company’s board of directors declared a supplemental dividend of $0.06 per share for the fourth quarter of 2023 that is also payable on November 28, 2023 to stockholders of record as of November 13, 2023.
Share Repurchase Program
On November 2, 2023, the Company’s board of directors approved a share repurchase program (the “Share Repurchase Program”) under which the Company may repurchase up to $25.0 million of its outstanding common stock. Under the Share Repurchase Program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations.
Recent Developments
On October 6, 2023, the Company funded an investment of $8.0 million to Betterment Holdings, Inc.
On October 6, 2023, the Company received a partial prepayment of $24.5 million from Brivo, Inc. on its senior secured loan.
On October 19, 2023, the Company funded an investment of $3.1 million to Gynesonics, Inc.
On October 26, 2023, the Company funded an investment of $1.4 million to Snagajob, Inc. in connection with a restructuring of its loan.
On November 3, 2023, the Company funded an investment of $30.0 million to Linxup, LLC.
On November 6, 2023, the Company funded an investment of $5.0 million to Route 92 Medical, Inc.
Conference Call
Runway Growth will hold a conference call to discuss its third quarter ended September 30, 2023, financial results at 2:00 p.m. PT (5:00 p.m. ET) on Tuesday, November 7, 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.
Important Disclosures
Strategies described involve special risks that should be evaluated carefully before a decision is made to invest. Not all of the risks and other significant aspects of these strategies are discussed herein. Please see a more detailed discussion of these risk factors and other related risks in the Company’s most recent annual Form 10-K report in the section entitled “Risk Factors”, which may be obtained on the Company’s website www.runwaygrowth.com or the SEC’s website www.sec.gov.
IR Contacts:
Stefan Norbom, Prosek Partners, snorbom@prosek.com
Thomas B. Raterman, Acting President, 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) | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Investments at fair value: | ||||||||
| Non-control/non-affiliate investments at fair value (cost of $971,230 and $1,126,879, respectively) | $ | 951,779 | $ | 1,114,935 | ||||
| Affiliate investments at fair value (cost of $55,681 and $4,551, respectively) | 47,535 | 2,084 | ||||||
| Control investments at fair value (cost of $17,963 and $19,172, respectively) | 11,613 | 9,290 | ||||||
| Total investments at fair value (cost of $1,044,874 and $1,150,602, respectively) | 1,010,927 | 1,126,309 | ||||||
| Cash and cash equivalents | 14,945 | 5,761 | ||||||
| Interest and fees receivable | 8,152 | 8,766 | ||||||
| Other assets | 167 | 930 | ||||||
| Total assets | 1,034,191 | 1,141,766 | ||||||
| Liabilities | ||||||||
| Debt: | ||||||||
| Credit facility | 203,000 | 337,000 | ||||||
| 2026 Notes | 95,000 | 70,000 | ||||||
| 2027 Notes | 152,250 | 152,250 | ||||||
| Unamortized deferred debt costs | (9,265 | ) | (10,293 | ) | ||||
| Total debt, less unamortized deferred debt costs | 440,985 | 548,957 | ||||||
| Incentive fees payable | 12,779 | 8,808 | ||||||
| Interest payable | 8,025 | 6,221 | ||||||
| Accrued expenses and other liabilities | 1,911 | 1,728 | ||||||
| Total liabilities | 463,700 | 565,714 | ||||||
| Net assets | ||||||||
| Common stock, par value | 414 | 414 | ||||||
| Additional paid-in capital | 605,774 | 605,774 | ||||||
| Distributable (losses) | (24,881 | ) | (19,320 | ) | ||||
| Treasury Stock | (10,816 | ) | (10,816 | ) | ||||
| Total net assets | $ | 570,491 | $ | 576,052 | ||||
| Shares of common stock outstanding ($0.01 par value, 100,000,000 shares authorized) | 40,509,269 | 40,509,269 | ||||||
| Net asset value per share | $ | 14.08 | $ | 14.22 | ||||
| Runway Growth Finance Corp. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Investment income | ||||||||||||||||
| From non-control/non-affiliate investments: | ||||||||||||||||
| Interest income | $ | 35,498 | $ | 25,365 | $ | 104,169 | $ | 61,750 | ||||||||
| Payment in-kind interest income | 5,195 | 1,200 | 15,416 | 3,249 | ||||||||||||
| Dividend income | 318 | 318 | 961 | 1,021 | ||||||||||||
| Fee Income | 1,925 | 153 | 2,585 | 1,067 | ||||||||||||
| From affiliate investments: | ||||||||||||||||
| Interest income | 601 | — | 1,486 | 5 | ||||||||||||
| Payment in-kind interest income | — | — | — | 97 | ||||||||||||
| Fee Income | 15 | — | 15 | 8 | ||||||||||||
| From control investments: | ||||||||||||||||
| Interest income | — | — | — | 1,112 | ||||||||||||
| Payment in-kind interest income | — | — | — | 2,984 | ||||||||||||
| Other income | 227 | 1 | 352 | 1 | ||||||||||||
| Total investment income | 43,779 | 27,037 | 124,984 | 71,294 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Management fees | 4,302 | 3,066 | 12,598 | 8,488 | ||||||||||||
| Incentive fees | 5,511 | 3,626 | 14,994 | 8,591 | ||||||||||||
| Interest and other debt financing expenses | 10,442 | 4,382 | 32,772 | 8,297 | ||||||||||||
| Professional fees | 466 | 482 | 1,504 | 1,677 | ||||||||||||
| Administration agreement expenses | 449 | 459 | 1,647 | 1,331 | ||||||||||||
| Insurance expense | 269 | 268 | 805 | 806 | ||||||||||||
| Tax expense | — | — | 50 | 1 | ||||||||||||
| Other expenses | 304 | 256 | 656 | 667 | ||||||||||||
| Total operating expenses | 21,743 | 12,539 | 65,026 | 29,858 | ||||||||||||
| Net investment income | 22,036 | 14,498 | 59,958 | 41,436 | ||||||||||||
| Net realized and net change in unrealized gain (loss) on investments | ||||||||||||||||
| Net realized gain (loss) on non-control/non-affiliate investments | — | 407 | (1,178 | ) | 939 | |||||||||||
| Net realized gain (loss) on investments | — | 407 | (1,178 | ) | 939 | |||||||||||
| Net change in unrealized gain (loss) on non-control/non-affiliate investments | (7,624 | ) | (1,957 | ) | (7,507 | ) | (14,275 | ) | ||||||||
| Net change in unrealized gain (loss) on affiliate investments | 410 | (172 | ) | (5,679 | ) | (3,380 | ) | |||||||||
| Net change in unrealized gain (loss) on control investments | — | (1,054 | ) | 3,532 | (10,962 | ) | ||||||||||
| Net change in unrealized gain (loss) on investments | (7,214 | ) | (3,183 | ) | (9,654 | ) | (28,617 | ) | ||||||||
| Net realized and unrealized gain (loss) on investments | (7,214 | ) | (2,776 | ) | (10,832 | ) | (27,678 | ) | ||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 14,822 | $ | 11,722 | $ | 49,126 | $ | 13,758 | ||||||||
| Net investment income per common share | $ | 0.54 | $ | 0.36 | $ | 1.48 | $ | 1.01 | ||||||||
| Net increase (decrease) in net assets resulting from operations per common share | $ | 0.37 | $ | 0.29 | $ | 1.21 | $ | 0.33 | ||||||||
| Weighted-average shares outstanding | 40,509,269 | 40,774,154 | 40,509,269 | 41,119,467 | ||||||||||||
