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 second
quarter ended June 30, 2023.
Second Quarter 2023
Highlights
- Total investment income of $41.9 million
- Net investment income of $19.7 million, or $0.49 per share
- Net asset value of $14.17 per share
- Dollar-weighted annualized yield on debt investments of 16.7%
for the quarter
- Four investments completed in existing portfolio companies,
representing $50.9 million in funded loans
- Aggregate proceeds of $88.7 million received from principal
repayments
- Declared third quarter 2023 regular dividend of $0.40 per
share
- Declared third quarter 2023 supplemental dividend of $0.05 per
share
“Runway Growth’s second quarter results speak to our team’s
diligence and active portfolio management, both of which are
critical elements in constructing our stable portfolio,” said Greg
Greifeld, acting CEO of Runway Growth, and Deputy CIO and Head of
Credit of Runway Growth Capital. “With a robust pipeline exceeding
$2 billion, Runway continued to execute against its credit-first
strategy in pursuit of only the highest quality, late-stage
companies. In all market cycles, Runway has prioritized capital
preservation to protect its borrowers while delivering attractive,
risk-adjusted returns to enhance shareholder value.”
Greifeld continued, “Runway Growth's
sophisticated financing model continues to resonate with late-stage
companies that face working capital constraints amid the current
market backdrop. As we look to the second half of the year, we are
strategically positioned to selectively deploy capital at favorable
terms.”
Second Quarter 2023 Operating
Results
Total investment income for the quarter ended June 30, 2023 was
$41.9 million, compared to $25.0 million for the quarter ended June
30, 2022.
Net investment income for the quarter ended June 30, 2023 was
$19.7 million, or $0.49 per share, compared to $14.5 million, or
$0.35 per share, for the quarter ended June 30, 2022.
The Company's dollar-weighted annualized yield on average debt
investments for the quarter ended June 30, 2023 was 16.7%. 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 June 30, 2023
were $22.2 million, compared to $10.5 million for the quarter ended
June 30, 2022. The increase was driven by growing management fees,
incentive fees and interest expenses related to a significantly
larger loan portfolio. It should be noted that beginning in the
first quarter of 2023, the Company’s base management fee decreased
from 1.625% on annualized basis to 1.5% on an annualized basis, as
the Company’s gross assets exceeded $1.0 billion at December 31,
2022.
Net realized gain on investments was zero for the quarter ended
June 30, 2023, compared to a net realized gain of $0.9 million for
the quarter ended June 30, 2022. The Company experienced no credit
losses during the second quarter or year-to-date in 2023.
For the quarter ended June 30, 2023, net unrealized gain on
investments was $2.6 million, compared to a net change in
unrealized loss of $16.2 million for the comparable prior year
period.
Portfolio and Investment
Activity
As of June 30, 2023, Runway Growth’s investment portfolio had an
aggregate fair value of approximately $1,095 million and was
comprised of approximately $1,044 million in term loans, 99% of
which are senior secured loans and $51 million in warrants and
equity-related investments in 49 portfolio companies.
During the second quarter of 2023, Runway Growth completed four
investments in existing portfolio companies, representing $50.9
million in funded loans.
Total portfolio investment activity for the three and six months
ended June 30, 2023 and 2022 was as follows:
|
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|
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|
|
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|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning investment portfolio |
|
$ |
1,160,316 |
|
|
$ |
754,290 |
|
|
$ |
1,126,309 |
|
|
$ |
729,516 |
|
|
Purchases of
investments |
|
|
50,669 |
|
|
|
147,953 |
|
|
|
63,540 |
|
|
|
233,473 |
|
|
Purchases of
U.S. Treasury Bills |
|
|
— |
|
|
|
— |
|
|
|
34,974 |
|
|
|
— |
|
|
PIK
interest |
|
|
6,028 |
|
|
|
3,793 |
|
|
|
9,783 |
|
|
|
5,130 |
|
|
Sales or
repayments of investments |
|
|
(88,709 |
) |
|
|
(76,915 |
) |
|
|
(98,901 |
) |
|
|
(86,793 |
) |
|
Scheduled
principal payments of investments |
|
|
(2,764 |
) |
|
|
(6,842 |
) |
|
|
(6,771 |
) |
|
|
(7,266 |
) |
|
Sales and
maturities of U.S. Treasury Bills |
|
|
(35,000 |
) |
|
|
— |
|
|
|
(35,000 |
) |
|
|
(45,000 |
) |
|
Amortization
of fixed income premiums or accretion of discounts |
|
|
2,137 |
|
|
|
746 |
|
|
|
5,005 |
|
|
|
3,571 |
|
|
Net realized
gain (loss) on investments |
|
|
— |
|
|
|
903 |
|
|
|
(1,178 |
) |
|
|
532 |
|
|
Net change
in unrealized gain (loss) on investments |
|
|
2,644 |
|
|
|
(16,199 |
) |
|
|
(2,440 |
) |
|
|
(25,434 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Investment Portfolio |
|
$ |
1,095,321 |
|
|
$ |
807,729 |
|
|
$ |
1,095,321 |
|
|
$ |
807,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value
As of June 30, 2023, net asset value (“NAV’”) per share was
$14.17, compared to $14.14 as of June 30, 2022. Total net assets at
the end of the second quarter of 2023 was $573.9 million, down
0.95% from $579.4 million in the prior year period.
For the quarter ended June 30, 2023, net increase in net assets
resulting from operations was $22.3 million, or $0.55 per
share, compared to a net decrease of $0.8 million,
or $0.02 per share, for the quarter ended June 30,
2022.
Liquidity and Capital
Resources
As of June 30, 2023, the Company had approximately $227.7
million in available liquidity, including unrestricted cash and
cash equivalents, and $190.0 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 97%, compared to 104% for the quarter ended March 31,
2023.
Distributions
On August 1, 2023, the Company’s board of directors declared a
regular quarterly distribution of $0.40 per share for the third
quarter of 2023, payable on August 31, 2023, to stockholders of
record as of August 15, 2023. In addition, the Company’s board of
directors declared a supplemental dividend of $0.05 per share for
the third quarter of 2023 that is also payable on August 31, 2023
to stockholders of record as of August 15, 2023.
Recent Developments
On July 10, 2023, the Company funded an investment of $20.0
million to Elevate Services, Inc.
On July 18 and July 27, 2023 the Company funded investments of
$0.6 million and $0.8 million, respectively, to Fidelis
Cybersecurity, Inc. On July 31, 2023 and August 1, 2023, the
Company received $16.7 million and $1.0 million, respectively, from
the sale of investments in Fidelis Cybersecurity, Inc.,
representing payment in full to the Company.
On July 18, 2023, the Company received share issuance proceeds
from Marley Spoon AG (“Marley Spoon”) in connection with Marley
Spoon’s business combination transaction. On July 26, 2023,
the Company received $5.4 million as a partial repayment of its
loan to Marley Spoon.
On July 31, 2023, the Company announced that R. David Spreng,
the Company’s President, Chief Executive Officer and Chairman of
the Board of Directors, will be taking a temporary leave of absence
from the Company in order to undergo treatment for a medical
condition. In connection with Mr. Spreng’s temporary leave of
absence, the Board of Directors made certain temporary and
permanent appointments on July 31, 2023, effective immediately.
Thomas B. Raterman was appointed to temporarily serve as Acting
President of the Company. Mr. Raterman joined the Company in 2015
as Chief Financial Officer, Treasurer and Secretary, was appointed
Chief Operating Officer in 2021, and will continue to serve in
these roles. Greg Greifeld, the Managing Director, Deputy Chief
Investment Officer and Head of Credit at Runway Growth Capital, was
appointed to temporarily serve as Acting Chief Executive Officer of
the Company. Mr. Greifeld will continue to serve as in his existing
aforementioned roles. Julie Persily, Chair of the Audit Committee
of the Board of Directors and independent director, was appointed
to temporarily serve as Acting Chairperson of the Board of
Directors. Mr. Raterman, Mr. Greifeld, and Ms. Persily will serve
in their respective acting positions until R. David Spreng returns
to his duties as President and Chief Executive Officer, or until
their successors are elected and qualified, or until their sooner
death, resignation or removal from office. In addition, Ms. Persily
was permanently appointed as Lead Independent Director of the Board
of Directors.
On August 1, 2023, Allurion Technologies, Inc. prepaid its
outstanding principal balance of $55.0 million on its senior
secured loan.
On August 1, 2023, the Board of Directors declared an ordinary
distribution of $0.40 per share and a supplemental distribution of
$0.05 per share for stockholders of record on August 15, 2023
payable on or before August 31, 2023.
On August 3, 2023, the Company entered into an amendment to its
custody agreement, dated as of January 6, 2017, with U.S. Bank
Trust Company, National Association, as successor in interest to
U.S. Bank National Association, as custodian (the “Custodian”) and
U.S. Bank National Association, as document custodian (the
“Document Custodian”) to provide for custody services for Foreign
Assets by the Custodian to the Company.
Conference CallRunway Growth will hold a
conference call to discuss its second quarter ended June 30, 2023
financial results at 2:00 p.m. PT (5:00 p.m. ET) on Tuesday, August
8, 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 StatementsStatements 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 DisclosuresStrategies 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) |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023 |
|
December 31, 2022 |
|
|
|
(unaudited) |
|
|
|
Assets |
|
|
|
|
|
|
|
Investments
at fair value: |
|
|
|
|
|
|
|
Non-control/non-affiliate investments at fair value (cost of
$1,048,488 and $1,126,879, respectively) |
|
$ |
1,036,661 |
|
|
$ |
1,114,935 |
|
|
Affiliate investments at fair value (cost of $55,603 and $4,551,
respectively) |
|
|
47,047 |
|
|
|
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 $1,122,054 and $1,150,602,
respectively) |
|
|
1,095,321 |
|
|
|
1,126,309 |
|
|
Cash and
cash equivalents |
|
|
37,740 |
|
|
|
5,761 |
|
|
Interest and
fees receivable |
|
|
8,110 |
|
|
|
8,766 |
|
|
Other
assets |
|
|
470 |
|
|
|
930 |
|
|
Total assets |
|
|
1,141,641 |
|
|
|
1,141,766 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Debt: |
|
|
|
|
|
|
|
Credit facility |
|
|
310,000 |
|
|
|
337,000 |
|
|
2026 Notes |
|
|
95,000 |
|
|
|
70,000 |
|
|
2027 Notes |
|
|
152,250 |
|
|
|
152,250 |
|
|
Unamortized deferred debt costs |
|
|
(9,977 |
) |
|
|
(10,293 |
) |
|
Total debt, less unamortized deferred debt costs |
|
|
547,273 |
|
|
|
548,957 |
|
|
Incentive
fees payable |
|
|
10,817 |
|
|
|
8,808 |
|
|
Interest
payable |
|
|
8,291 |
|
|
|
6,221 |
|
|
Accrued
expenses and other liabilities |
|
|
1,362 |
|
|
|
1,728 |
|
|
Total liabilities |
|
|
567,743 |
|
|
|
565,714 |
|
|
|
|
|
|
|
|
|
|
Net
assets |
|
|
|
|
|
|
|
Common stock, par value |
|
|
414 |
|
|
|
414 |
|
|
Additional paid-in capital |
|
|
605,774 |
|
|
|
605,774 |
|
|
Distributable (losses) |
|
|
(21,474 |
) |
|
|
(19,320 |
) |
|
Treasury Stock |
|
|
(10,816 |
) |
|
|
(10,816 |
) |
|
Total net assets |
|
$ |
573,898 |
|
|
$ |
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 |
|
$ |
14.17 |
|
|
$ |
14.22 |
|
|
|
|
|
|
|
|
|
|
|
Runway
Growth Finance Corp. |
|
|
Consolidated
Statements of Operations |
|
|
(In thousands,
except share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
Investment income |
|
|
|
|
|
|
|
|
|
|
|
|
From
non-control/non-affiliate investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
$ |
33,818 |
|
|
|
$ |
19,849 |
|
|
$ |
|
68,671 |
|
|
$ |
|
36,385 |
|
|
|
Payment in-kind interest income |
|
|
|
6,425 |
|
|
|
|
1,043 |
|
|
|
|
10,221 |
|
|
|
|
2,049 |
|
|
|
Dividend income |
|
|
|
319 |
|
|
|
|
318 |
|
|
|
|
643 |
|
|
|
|
703 |
|
|
|
Fee Income |
|
|
|
615 |
|
|
|
|
523 |
|
|
|
|
660 |
|
|
|
|
914 |
|
|
|
From
affiliate investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
593 |
|
|
|
|
5 |
|
|
|
|
885 |
|
|
|
|
5 |
|
|
|
Payment in-kind interest income |
|
|
|
— |
|
|
|
|
7 |
|
|
|
|
— |
|
|
|
|
97 |
|
|
|
Fee Income |
|
|
|
— |
|
|
|
|
8 |
|
|
|
|
— |
|
|
|
|
8 |
|
|
|
From control
investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
— |
|
|
|
|
618 |
|
|
|
|
— |
|
|
|
|
1,112 |
|
|
|
Payment in-kind interest income |
|
|
|
— |
|
|
|
|
2,654 |
|
|
|
|
— |
|
|
|
|
2,984 |
|
|
|
Other
income |
|
|
|
125 |
|
|
|
|
— |
|
|
|
|
125 |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
investment income |
|
|
|
41,895 |
|
|
|
|
25,025 |
|
|
|
|
81,205 |
|
|
|
|
44,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees |
|
|
|
4,337 |
|
|
|
|
2,862 |
|
|
|
|
8,296 |
|
|
|
|
5,422 |
|
|
|
Incentive
fees |
|
|
|
4,920 |
|
|
|
|
3,621 |
|
|
|
|
9,483 |
|
|
|
|
4,965 |
|
|
|
Interest and
other debt financing expenses |
|
|
|
11,410 |
|
|
|
|
2,336 |
|
|
|
|
22,330 |
|
|
|
|
3,915 |
|
|
|
Professional
fees |
|
|
|
475 |
|
|
|
|
813 |
|
|
|
|
1,008 |
|
|
|
|
1,195 |
|
|
|
Administration agreement expenses |
|
|
|
615 |
|
|
|
|
426 |
|
|
|
|
1,198 |
|
|
|
|
872 |
|
|
|
Insurance
expense |
|
|
|
268 |
|
|
|
|
269 |
|
|
|
|
536 |
|
|
|
|
538 |
|
|
|
Tax
expense |
|
|
|
— |
|
|
|
|
1 |
|
|
|
|
50 |
|
|
|
|
1 |
|
|
|
Other
expenses |
|
|
|
194 |
|
|
|
|
218 |
|
|
|
|
382 |
|
|
|
|
411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses |
|
|
|
22,219 |
|
|
|
|
10,546 |
|
|
|
|
43,283 |
|
|
|
|
17,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
|
|
|
19,676 |
|
|
|
|
14,479 |
|
|
|
|
37,922 |
|
|
|
|
26,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
realized and net change in unrealized gain (loss) on
investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
gain (loss) on non-control/non-affiliate investments |
|
|
|
— |
|
|
|
|
903 |
|
|
|
|
(1,178 |
) |
|
|
|
532 |
|
|
|
Net realized gain (loss) on investments |
|
|
|
— |
|
|
|
|
903 |
|
|
|
|
(1,178 |
) |
|
|
|
532 |
|
|
|
Net change
in unrealized gain (loss) on non-control/non-affiliate
investments |
|
|
|
1,538 |
|
|
|
|
(8,164 |
) |
|
|
|
117 |
|
|
|
|
(12,318 |
) |
|
|
Net change
in unrealized gain (loss) on affiliate investments |
|
|
|
(103 |
) |
|
|
|
(42 |
) |
|
|
|
(6,089 |
) |
|
|
|
(3,208 |
) |
|
|
Net change
in unrealized gain (loss) on control investments |
|
|
|
1,209 |
|
|
|
|
(7,993 |
) |
|
|
|
3,532 |
|
|
|
|
(9,908 |
) |
|
|
Net change in unrealized gain (loss) on investments |
|
|
|
2,644 |
|
|
|
|
(16,199 |
) |
|
|
|
(2,440 |
) |
|
|
|
(25,434 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
realized and unrealized gain (loss) on investments |
|
|
|
2,644 |
|
|
|
|
(15,296 |
) |
|
|
|
(3,618 |
) |
|
|
|
(24,902 |
) |
|
|
Net
increase (decrease) in net assets resulting from
operations |
|
|
$ |
22,320 |
|
|
|
$ |
(817 |
) |
|
$ |
|
34,304 |
|
|
$ |
|
2,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income per common share (basic and diluted) |
|
|
$ |
0.49 |
|
|
|
$ |
0.35 |
|
|
$ |
|
0.94 |
|
|
$ |
|
0.65 |
|
|
|
Net increase
(decrease) in net assets resulting from operations per common share
(basic and diluted) |
|
|
$ |
0.55 |
|
|
|
$ |
(0.02 |
) |
|
$ |
|
0.85 |
|
|
$ |
|
0.05 |
|
|
|
Weighted-average shares outstanding (basic and diluted) |
|
|
|
40,509,269 |
|
|
|
|
41,215,664 |
|
|
|
|
40,509,269 |
|
|
|
|
41,294,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Runway Growth Finance (NASDAQ:RWAY)
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From Aug 2024 to Sep 2024
Runway Growth Finance (NASDAQ:RWAY)
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From Sep 2023 to Sep 2024