UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 5, 2021
TRINITY CAPITAL INC.
(Exact name of Registrant as Specified in Its Charter)
Maryland |
| 814-01341 |
| 35-2670395 |
(State or Other Jurisdiction |
| (Commission File Number) |
| (IRS Employer |
1 N 1st Street |
| 85004 |
(Address of Principal Executive Offices) |
| (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (480) 374-5350
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered | |||||
Common Stock, par value $0.001 per share | | TRIN | | Nasdaq Global Select Market | |||||
|
| ||||||||
Item 2.02. Results of Operations and Financial Condition
On August 5, 2021, Trinity Capital Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2021. Such press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for any purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such Section. The information in this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure
On August 5, 2021, the Company disseminated an earnings presentation to be used in connection with its conference call and live webcast to discuss its second quarter 2021 financial results on August 5, 2021, at 5 p.m. Eastern time. A copy of the earnings presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated into this Item 7.01 by reference.
The information furnished in this Item 7.01 and Exhibit 99.2 attached hereto is being furnished and shall not be deemed “filed” for any purpose of Section 18 of the Exchange Act, or otherwise subject to the liabilities of such Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit Number |
| Description |
|
|
|
99.1 |
| |
99.2 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Trinity Capital Inc. | ||
| | ||
August 5, 2021 | By: | /s/ Steven L. Brown | |
| | Name: | Steven L. Brown |
| | Title: | Chief Executive Officer |
Exhibit 99.1
Trinity Capital Inc. Reports Second Quarter 2021 Financial Results
PHOENIX, (August 5, 2021 /PRNewswire/) -- Trinity Capital Inc. (Nasdaq: TRIN) (“Trinity Capital” or the “Company”), a leading specialty lending company that provides debt, including loans and equipment financing, to growth stage companies backed by technology banks, venture capital and private equity firms, today announced its financial results for the quarter ended June 30, 2021.
Second Quarter 2021 Highlights
| ● | Total investment income of $19.5 million, an increase of 40.7% year-over-year |
| ● | Net investment income (“NII”) of $10.1 million, or $0.38 per share, an increase of 49.1% year-over-year |
| ● | Aggregate debt and equity investment commitments of $126.5 million |
| ● | Total gross investments funded of $122.4 million, comprised of $77.1 million across seven new portfolio companies and $45.3 million across 10 existing portfolio companies |
| ● | Unscheduled early principal repayments of $51.1 million |
| ● | Investment portfolio of $597.7 million at fair value, an increase of 11.6% from Q1 2021 |
| ● | Net asset value (“NAV”) per share increased to $14.33 from $13.69 on March 31, 2021 |
| ● | Declared a dividend distribution of $0.29 per share for the second quarter |
Year-to-Date 2021 Highlights
| ● | Total investment income of $36.8 million, an increase of 41.0% year-over-year |
| ● | Net investment income of $17.3 million, or $0.69 per share, an increase of 39.0% year-over-year |
| ● | Total gross investments funded of $209.5 million, an increase of 105.0% year-over-year |
Steven Brown, Chairman and Chief Executive Officer of Trinity Capital, commented, “Trinity Capital achieved strong Q2 2021 financial results and continued to execute on its strategy to expand its venture lending and equipment financing platform. In particular, we set a new record with total commitments of $126.5 million and fundings of $122.4 million, which led to our fifth consecutive quarter of net portfolio growth since becoming a BDC as we approached an investment portfolio of $600 million at fair value. Our operating performance generated GAAP NII of $0.38 per share, which covered our dividend by 131%. This performance is a testament to the notable strong contributions from the five new investment professionals that have joined Trinity since the beginning of 2020.”
Brown continued, “Looking forward, I am very encouraged by the overall health and resiliency in the venture capital industry. As fundraising activity remains strong through the first half of 2021, we expect to continue to see a strong pipeline of emerging growth companies that meet our disciplined sourcing criteria. With total liquidity exceeding $107 million, we remain well-positioned from a financial position to deploy capital, grow our investment portfolio and effectively increase our leverage.”
Second Quarter 2021 Operating Results
For the three months ended June 30, 2021, total investment income was $19.5 million compared to $13.8 million for the quarter ended June 30, 2020. This represents an effective yield on the average debt investments at costs of 15.9% and 14.6% for the periods ended June 30, 2021 and 2020, respectively. Effective yields generally include the effects of fees and income accelerations attributed to early loan repayments and other one-time events and may fluctuate quarter-to-quarter depending on the amount of prepayment activity.
Total expenses, excluding interest expense, for the second quarter of 2021 were $5.0 million compared to $2.8 million during the second quarter of 2020. The increase was primarily attributable to increased
1
employee headcount, higher variable compensation and higher D&O insurance costs as a new public company. Interest expense for the second quarter of 2021 was $4.4 million compared to $4.3 million during the second quarter of 2020.
Net investment income was approximately $10.1 million, or $0.38 per share for the second quarter of 2021, compared to $6.8 million or $0.37 per share for the second quarter of 2020. Net investment income per share during the second quarter of 2021 reflects Trinity's larger weighted average share count for the quarter as a result of approximately 8.0 million shares issued in connection with its initial public offering.
Second quarter 2021 realized net gains on investments were approximately $2.0 million, compared to a net realized loss of $2.0 million during the second quarter of 2020.
Net unrealized appreciation was $12.6 million during the second quarter of 2021, compared to net unrealized appreciation of $2.1 million during the second quarter of 2020.
Second quarter 2021 net increase in net assets resulting from operations was $24.7 million, or $0.93 per share. This compares to a net increase in net assets resulting from operations of $6.9 million or $0.38 per share for the second quarter of 2020.
As of June 30, 2021, NAV per share increased to $14.33, compared to $13.69 at March 31, 2021. The improvement in NAV was primarily driven by the increase in net investment income, net realized gains and unrealized appreciation on its investment portfolio. Total net assets at the end of the second quarter of 2021 were $379.7 million, compared to $361.6 million at the end of Q1 2021.
Portfolio and Investment Activity
As of June 30, 2021, Trinity Capital’s investment portfolio had an aggregate fair value of approximately $597.7 million and was comprised of approximately $397.5 million in secured loans, $120.9 million in equipment financings, $79.3 million in equity and equity-related investments, including warrants across 60 portfolio companies.
During the second quarter, the Company originated $126.5 million of total new commitments. Second quarter investments funded totaled approximately $122.4 million, which was comprised of $77.1 million of investments in seven new portfolio companies and approximately $45.3 million of investments in 10 existing portfolio companies. The Company continues to shift its portfolio to floating rate loans with approximately 49.3% of its debt portfolio at floating rates on June 30, 2021, compared to 32.1% in Q1 2021.
Proceeds received from repayments of the Company's investments during the second quarter totaled approximately $79.9 million, which included $51.1 million from early debt repayments. The portfolio increased by $49.3 million or approximately 9.4% on a cost basis, and by $62.0 million or approximately 11.6% at fair value as compared to March 31, 2021.
As of the end of the second quarter, loans to two portfolio companies were on non-accrual status with a total fair value of approximately $0.9 million, or just 18 basis points of the Company’s debt investment portfolio.
2
The following table shows the distribution of the Company’s loan and equipment financing investments on the 1 to 5 investment risk rating scale at fair value as of June 30, 2021 (dollars in thousands):
|
| |
| June 30, 2021 |
| December 31, 2020 |
| ||||||
Investment Risk Rating | | | | Investments at |
| Percentage of |
| Investments at |
| Percentage of | | ||
Scale Range | | Designation | | Fair Value | | Total Portfolio |
| Fair Value | | Total Portfolio |
| ||
4.0 - 5.0 | | Very Strong Performance | | $ | 83,915 |
| 16.2% | | $ | 92,519 |
| 20.9% | |
3.0 - 3.9 | | Strong Performance | |
| 206,852 |
| 39.9% | |
| 212,969 |
| 48.0% | |
2.0 - 2.9 | | Performing | |
| 197,503 |
| 38.1% | |
| 116,895 |
| 26.4% | |
1.6 - 1.9 | | Watch | |
| 29,820 |
| 5.7% | |
| 19,230 |
| 4.3% | |
1.0 - 1.5 | | Default/Workout | |
| 343 |
| 0.1% | |
| 1,606 |
| 0.4% | |
Total | | | | $ | 518,433 |
| 100.0% | | $ | 443,219 |
| 100.0% | |
As of June 30, 2021, and in line with the first quarter of 2021, the Company’s loan and equipment financing investments had a weighted average risk rating score of 3.1.
Liquidity and Capital Resources
As of June 30, 2021, the Company had approximately $107.7 million in available liquidity, including $19.1 million in cash and cash equivalents. At the end of the period, the Company had $88.6 million in available borrowing capacity under its credit facility subject to existing terms and advance rates and regulatory and covenant requirements.
As of June 30, 2021, Trinity's leverage was approximately 64.5% as compared to 60.8% as of March 31, 2021. The increase in the leverage ratio was attributable to borrowings under the Company’s credit facility.
Distributions
Trinity Capital’s distribution reinvestment plan provides for the reinvestment of dividends in the form of common stock on behalf of its stockholders unless a stockholder has elected to receive dividends in cash.
On June 15, 2021, the Company’s Board of Directors declared a dividend of $0.29 per share with respect to the quarter ended June 30, 2021, which was paid on July 15, 2021, to shareholders of record as of June 30, 2021.
Portfolio Company M&A Activity
As of August 4, 2021, Trinity held equity investments in two portfolio companies that recently completed mergers with special purpose acquisition companies (“SPACs”).
In July 2021, Lucid, Inc. (formerly Atieva, Inc.), a luxury electric vehicle company, closed its merger with Churchill Capital IV Corp. (NYSE: CCIV) and commenced trading on Nasdaq (symbol: LCID). Trinity holds approximately 1.9 million shares of common stock in Lucid Motors as of August 4, 2021.
In July 2021, Matterport, Inc., a spatial data company, completed a merger with Gores Holding VI (NASDAQ: GHVI, GHVIU and GHVIW) and commenced trading on Nasdaq (symbol: MTTR). Trinity holds approximately 572,000 shares of common stock in Matterport as of August 4, 2021.
Conference Call
Trinity Capital will hold a conference call to discuss its second quarter 2021 financial results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on Thursday, August 5, 2021.
3
To listen to the call, please dial (877) 876-9176, or (785) 424-1670 internationally, and reference Conference ID: TRINQ221 if asked, approximately 10 minutes prior to the start of the call.
A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for seven days. To access the replay, please dial 800-839-7410 or (402) 220-6067.
About Trinity Capital Inc.
Trinity Capital (Nasdaq: TRIN), an internally managed specialty lending company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, is a leading provider of debt, including loans and equipment financing, to growth stage companies, including venture-backed companies and companies with institutional equity investors. Trinity's investment objective is to generate current income and, to a lesser extent, capital appreciation through investments consisting primarily of term loans and equipment financings and, to a lesser extent, working capital loans, equity and equity-related investments. Trinity believes it is one of only a select group of specialty lenders that has the depth of knowledge, experience, and track record in lending to growth stage companies.
Forward-Looking Statements
This press release may contain "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 or results and involve a number of risks and uncertainties, including the impact of the COVID 19 pandemic on the economy, financial markets, our business, our portfolio companies and our industry. 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 filings with the Securities and Exchange Commission ("SEC"). The Company 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. More information on risks and other potential factors that could affect the Company's financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein or on the webcast/conference call, is included in the Company's filings with the SEC, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recently filed annual report on Form 10-K and subsequent SEC filings.
Contact
Vibhor Garg
Director, Marketing
Trinity Capital, Inc.
vgarg@trincapinvestment.com
4
Trinity Capital, Inc.
Consolidated Statements of Assets and Liabilities
(dollars in thousands, except share and per share data)
|
| June 30, |
| December 31, | ||
| | 2021 | | 2020 | ||
|
| (Unaudited) | | | | |
ASSETS |
| |
|
| |
|
Investments at fair value: |
| |
|
| |
|
Control investments (cost of $62,363 and $57,072, respectively) | | $ | 41,938 | | $ | 48,730 |
Affiliate investments (cost of $13,001 and $20,653, respectively) | |
| 11,795 | |
| 27,650 |
Non-control / Non-affiliate investments (cost of $499,191 and $420,611, respectively) | |
| 543,963 | |
| 417,271 |
Total investments (cost of $574,555 and $498,336, respectively) | |
| 597,696 | |
| 493,651 |
Cash and cash equivalents | |
| 19,124 | |
| 44,656 |
Restricted cash | |
| 15,341 | |
| 16,445 |
Interest receivable | |
| 4,065 | |
| 3,468 |
Prepaid expenses | |
| 1,298 | |
| 744 |
Other assets | |
| 3,923 | |
| 744 |
Total assets | | $ | 641,447 | | $ | 559,708 |
| |
|
| |
|
|
LIABILITIES | |
|
| |
|
|
Credit Facility, net of $1,053 and $2,107, respectively, of unamortized deferred financing costs | | $ | 68,947 | | $ | 132,893 |
2025 Notes, net of $4,168, and $4,697, respectively, of unamortized deferred financing costs | |
| 120,832 | |
| 120,303 |
Convertible Notes, net of $2,786, and $3,448, respectively, of unamortized deferred financing costs and discount | | | 47,214 | | | 46,552 |
Distribution payable | | | 7,682 | | | 4,947 |
Security deposits | |
| 8,812 | |
| 7,874 |
Accounts payable, accrued expenses and other liabilities | |
| 8,240 | |
| 8,391 |
Total liabilities | |
| 261,727 | |
| 320,960 |
| |
|
| |
|
|
Commitments and contingencies (Note 6) | |
|
| |
|
|
| |
|
| |
|
|
NET ASSETS | |
|
| |
|
|
Common stock, $0.001 par value per share (200,000,000 authorized, 26,491,274 and 18,321,274 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively) | |
| 26 | |
| 18 |
Paid-in capital in excess of par | |
| 369,379 | |
| 263,366 |
Distributable earnings/(accumulated loss) | |
| 10,315 | |
| (24,636) |
Total net assets | |
| 379,720 | |
| 238,748 |
Total liabilities and net assets | | $ | 641,447 | | $ | 559,708 |
NET ASSET VALUE PER SHARE | | $ | 14.33 | | $ | 13.03 |
5
Trinity Capital, Inc.
Consolidated Statement of Operations
(dollars in thousands except share and per share data)
|
| | | | |
| | | | | ||
| | Three Months Ended | | Six Months Ended | ||||||||
|
| June 30, 2021 |
| June 30, 2020 |
| June 30, 2021 |
| June 30, 2020 | ||||
INVESTMENT INCOME: |
| |
| | |
|
| |
| | |
|
Interest income: |
| |
| | |
|
| |
| | |
|
Control investments | | $ | 1,266 | | $ | 832 | | $ | 2,572 | | $ | 1,627 |
Affiliate investments | |
| 443 | |
| 604 | |
| 882 | |
| 733 |
Non-Control / Non-Affiliate investments | |
| 16,405 | |
| 12,004 | |
| 31,004 | |
| 21,894 |
Total interest income | | | 18,114 | | | 13,440 | | | 34,458 | | | 24,254 |
Fee income: | | | | | | | | | | | | |
Non-Control / Non-Affiliate investments | | | 1,362 | | | 407 | | | 2,337 | | | 1,841 |
Total fee income | | | 1,362 | | | 407 | | | 2,337 | | | 1,841 |
Total investment income | |
| 19,476 | |
| 13,847 | |
| 36,795 | |
| 26,095 |
| |
|
| |
|
| |
|
| |
|
|
EXPENSES: | |
|
| |
|
| |
|
| |
|
|
Interest expense and other debt financing costs | |
| 4,425 | |
| 4,281 | |
| 9,041 | |
| 8,539 |
Compensation and benefits | |
| 3,370 | |
| 1,690 | |
| 7,366 | |
| 3,079 |
Professional fees | | | 570 | | | 700 | |
| 1,216 | |
| 1,180 |
General and administrative | |
| 1,031 | |
| 415 | | | 1,838 | | | 827 |
Total expenses | |
| 9,396 | |
| 7,086 | |
| 19,461 | |
| 13,625 |
| |
|
| |
|
| |
|
| |
|
|
NET INVESTMENT INCOME | |
| 10,080 | |
| 6,761 | |
| 17,334 | |
| 12,470 |
| |
|
| |
|
| |
|
| |
|
|
NET REALIZED GAIN/(LOSS) FROM INVESTMENTS: | |
|
| |
|
| |
|
| |
|
|
Control investments | |
| — | |
| — | |
| — | |
| — |
Affiliate investments | |
| 1,491 | |
| — | |
| — | |
| — |
Non-Control / Non-Affiliate investments | |
| 504 | |
| (2,002) | |
| 4,590 | |
| (2,884) |
Net realized gain/(loss) from investments | |
| 1,995 | |
| (2,002) | |
| 4,590 | |
| (2,884) |
| |
|
| |
|
| |
|
| |
|
|
NET CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) FROM INVESTMENTS: | |
|
| |
|
| |
|
| |
|
|
Control investments | |
| (4,530) | |
| 1,342 | |
| (12,084) | |
| (8,234) |
Affiliate investments | |
| (1,892) | |
| (969) | |
| (8,204) | |
| (2,136) |
Non-Control / Non-Affiliate investments | |
| 19,052 | |
| 1,750 | |
| 48,394 | |
| (11,799) |
Net change in unrealized appreciation/(depreciation) from investments | |
| 12,630 | |
| 2,123 | |
| 28,106 | |
| (22,169) |
| |
|
| |
|
| |
|
| |
|
|
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS BEFORE FORMATION COSTS | |
| 24,705 | |
| 6,882 | |
| 50,030 | |
| (12,583) |
Costs related to the acquisition of Trinity Capital Holdings and Legacy Funds | |
| — | |
| — | |
| — | |
| (15,586) |
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 24,705 | | $ | 6,882 | | $ | 50,030 | | $ | (28,169) |
| |
|
| |
|
| |
|
| |
|
|
NET INVESTMENT INCOME PER SHARE - BASIC AND DILUTED | | $ | 0.38 | | $ | 0.37 | | $ | 0.69 | | $ | 0.69 |
| |
|
| |
|
| |
|
| |
|
|
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - BASIC AND DILUTED | | $ | 0.93 | | $ | 0.38 | | $ | 2.00 | | $ | (1.57) |
| |
|
| |
|
| |
|
| |
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED | |
| 26,478,747 | |
| 18,074,929 | |
| 25,024,925 | |
| 17,959,728 |
6
Exhibit 99.2
| A National Leader in Growth Stage Lending Second Quarter 2021 Investor Presentation Exhibit 99.2 |
| © 2021 Trinity Capital Inc. | 2 Trinity Capital Inc. (the “Company”) cautions that this presentation may contain forward-looking statements that are based on current expectations and assumptions about future events, and which are not based in historical fact. The forward-looking statements in this presentation are based on current conditions as of the date of this presentation, and include, but are not limited to, statements regarding our financial objectives, beliefs, strategies, anticipated future operating results and cash flows, operating expenses, investment originations and performance, available capital, and payment of future dividends and stockholder returns. Although our management believes that the expectations reflected in any forward-looking statements are reasonable, actual results could differ materially from those expressed or implied in the forward-looking statements. By their nature, these forward-looking statements involve numerous assumptions, uncertainties and risks, both general and specific. The risk exists that these statements may not be fulfilled. We caution readers of this presentation not to place undue reliance on these forward-looking statements, as a number of factors could cause future Company results to differ materially from these statements. Forward-looking statements may be influenced in particular by factors such as fluctuations in interest rates and stock indices, the effects of competition in the areas in which we operate, and changes in economic, political and regulatory conditions, including as a result of the coronavirus (COVID-19) pandemic. When relying on forward-looking statements to make decisions, investors should carefully consider the aforementioned factors as well as other uncertainties and events. Historical results discussed in this presentation are not indicative of future results. The information disclosed in this presentation is made as of the date hereof and reflects Trinity Capital Inc.’s current assessment of its financial performance for the most recent period reported. Actual financial results filed with the Securities and Exchange Commission in the future may differ from those contained herein in the event of additional adjustments recorded prior to the filing of its financial statements. The information contained in this presentation should be viewed in conjunction with Trinity Capital Inc.'s most recently filed Quarterly Report on Form 10-Q, Annual Report on Form 10-K or Registration Statement on Form 424B1. We undertake no obligation to update the information contained herein to reflect subsequently occurring events or circumstances, except as required by applicable securities laws and regulations. This presentation does not constitute a prospectus and should under no circumstances be understood as an offer to sell or the solicitation of an offer to buy our common stock or any other securities nor will there be any sale of the common stock or any other securities referred to in this presentation in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction. Nothing in these materials should be construed as a recommendation to invest in any securities that may be issued by Trinity Capital Inc. or as legal, accounting or tax advice. FORWARD LOOKING STATEMENTS | DISCLAIMER |
| © 2021 Trinity Capital Inc. | 3 Company & Strategic Overview Financial Highlights Portfolio Highlights Venture Capital and Lending Market 4 13 23 30 34 Supplemental Information 36 Analyst Coverage INVESTOR PRESENTATION | AGENDA |
| COMPANY OVERVIEW |
| © 2021 Trinity Capital Inc. | 5 Business Secured loans and equipment financing to growth stage companies backed by technology banks, venture capital and private equity firms 13 Year Track Record(3) Market Capitalization $14.33(2) NAV per Share Portfolio(2) $108 Million Available Liquidity Liquidity(2) $389.6 Million(1) Market Cap 60 Companies Warrant Positions 11 Companies Equity Positions $23.4 Billion Opportunities $1.4 Billion Fundings 186 Investments 121 Exits 57 Companies Debt Positions Internally Managed - Business Development Company | February 2, 2021 Structure | IPO Date BBB- Investment Rating(4) Debt to Equity 65% TRINITY CAPITAL OVERVIEW Nasdaq | TRIN Exchange | Ticker (3) Historical information includes information and data related to Trinity Capital's predecessor funds, the first of which was launched in 2008, through June 30, 2021. The predecessor funds were merged with and into Trinity Capital on January 16, 2020, immediately after which Trinity Capital began operating as a business development company. (1) Based on the closing price of TRIN on August 4, 2021. (4) Credit rating assigned by Egan-Jones Ratings Company, an independent, unaffiliated rating agency. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. There can be no assurance that this rating will remain for any given period-of-time. (2) As of June 30, 2021. |
| © 2021 Trinity Capital Inc. | 6 We understand the growth stage world and provide more than money to our portfolio company partners Deep Operating Experience ▪ Highly experienced executive team with startup experience ▪ Decades of in-depth high-tech experience ▪ Numerous U.S. and International patents issued One Stop – Loans & Equipment Financing ▪ Providing term loans and equipment financing to growth stage companies ▪ Flexible financing solutions based on the company’s requirement ▪ Financing solutions to a highly fragmented, underserved market Robust & Scalable Platform ▪ Robust and scalable systems for origination, underwriting and monitoring ▪ Separation of origination, underwriting and monitoring duties aides “positive feedback” loop ▪ 39 dedicated professionals with a unique culture built over 13+ years WHY IS TRINITY DIFFERENT |
| © 2021 Trinity Capital Inc. | 7 SEED SEED INVESTMENT PROFITABILITY EARLY GROWTH STAGE LATER TECHNOLOGY PROVEN PRODUCT DEVELOPED SALES DEVELOPMENT & REVENUE REVENUE GROWTH C O M P A N Y V A L U A T I O N COMPANY MILESTONES Trinity Investment Horizon Execution Risk vs. Technology Risk INVESTMENT HORIZON Growth Stage Companies are generally defined as having active equity sponsors, annual revenues up to $100 million and are past technology risk |
| © 2021 Trinity Capital Inc. | 8 Term Loans Madison Reed is an American brand of hair care and hair color products. ▪ Investor Syndicate Norwest Venture Partners, True Ventures, Comcast Ventures ▪ Use of loan Extension of runway DailyPay is a fintech provider of earned income software that integrates with large companies’ payroll & time management systems to allow employees to harness the power of their pay. ▪ Investor Syndicate Intercept Ventures, Inspirational Ventures, RPM Ventures ▪ Use of Loan Working capital, fuel growth Select Examples SENIOR & SUBORDINATED TERM LOANS 01 SENIOR / SUBORDINATED LOAN Work With The Banks 02 BACKED BY INSTITUTIONAL CAPITAL Companies Have Raised Equity 03 STILL BURNING CASH Companies in Growth Mode and Still Burning Cash |
| © 2021 Trinity Capital Inc. | 9 Equipment Financing Impossible Foods is a company that develops plant-based substitutes for meat products ▪ Investor Syndicate Khosla Ventures, Horizons Ventures ▪ Use of Equipment Financing Manufacturing equipment Happiest Baby, the parenting solutions company, has brought to us the safest and smartest baby bed SNOO ▪ Investor Syndicate Lux Capital, Greycroft Partners, Obvious Ventures ▪ Use of Equipment Financing Hardware as a service – Happiest Baby equipment at customer’s location Select Examples EQUIPMENT FINANCING 01 COMPANIES WITH CAPEX REQUIREMENTS Manufacturing Equipment and Hard Assets 02 HARDWARE AS A SERVICE Equipment at Customer Location 03 INDUSTRY AGNOSTIC |
| © 2021 Trinity Capital Inc. | 10 Continued investment in our team and platform ▪ We’ve added to the team over the last nine months ▪ Robust Pipeline activity – 70% increase in opportunities compared to Q2’20 The VC ecosystem has been incredibly resilient ▪ Venture Capital funding continued to be strong in 1H 2021 - $150 Billion(1) ▪ US VCs closed 338 funds totaling $74 billion(1) Focusing on areas that we think are attractive ▪ Identified certain industries and company profiles that help reduce risk in this environment ▪ Large underserved market to growth stage companies (1) Pitchbook NVCA Venture Monitor Q2 2021 CURRENT MARKET CONDITIONS AND OPPORTUNITIES Attractive growth opportunity in the debt and equipment financing space |
| © 2021 Trinity Capital Inc. | 11 Multiple shared portfolio companies with top Venture Capital Firms We have established inter-creditor agreements with the banks Combining with bank debt results in a lower blended cost to our customers We provide equipment financing and incremental debt capital Relationships with top market share banks catering to majority of VC-backed companies PARTNERSHIP WITH TOP VCs AND TECHNOLOGY BANKS |
| © 2021 Trinity Capital Inc. | 12 Investor Syndicate Revenue & Gross Margins Business Model (1) Includes historical information of Trinity Capital's predecessor funds, the first of which was launched in 2008, through June 30, 2021. Past performance is not indicative of future results. No assurance can be given that the Company’s investment objective will be achieved or that an investor will receive a return of all or any part of such investor’s investment. Investment results may vary significantly over any given time period. FINANCIALS DEBT STRUCTURE CAPITALIZATION MANAGEMENT PRODUCT & MARKET Product Differentiation Market Potential Industry & Start-up Experience BOD Make-up Fund Vintage & Dry Capital Collateral Cash Life UNDERWRITING APPROACH AND RISK MITIGATION Disciplined investment approach keeps our annualized loss rate at 27 Bps and is more than offset by realized gains on warrant/equity investments (1) |
| FINANCIAL HIGHLIGHTS |
| © 2021 Trinity Capital Inc. | 14 ▪ Total Investment Income of $19.5M ▪ Net Investment Income (“NII”) of $10.1M ▪ Net Investment Margin (“NIM”) of $12.3% ▪ NII per share of $0.38 provides 131% distribution coverage ▪ Increased the second quarter dividend distribution to $0.29 per share Robust Earnings Leading Originations Platform Portfolio Yielding Assets Liquidity Credit Rating ▪ Total Debt Investments (at cost): $521.0M ▪ Total Investments (at cost): $574.6M ▪ Effective Yield: 15.9% compared to 15.5% in Q1 2021 ▪ Debt & equity commitments in Q2 2021: $126.5M ▪ Debt & equity fundings in Q2 2021: $122.4M ▪ Net portfolio growth at Cost: $49.3M ▪ Net portfolio growth at FMV: $62.0M ▪ $108M available liquidity (subject to existing terms and covenants of the Company’s credit facility) ▪ Debt to Equity 65% ▪ Egan Jones BBB-(1) ▪ Stable Outlook Q2 2021 HIGHLIGHTS (1) Credit rating assigned by Egan-Jones Ratings Company, an independent, unaffiliated rating agency. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. There can be no assurance that this rating will remain for any given period of time. |
| © 2021 Trinity Capital Inc. | 15 For the three months ended (In 000’s, except per share amounts) 06/30/2021 3/31/2021 12/31/2020 9/30/2020 06/30/2020 Total Investment Income $19,476 $17,320 $15,340 $13,529 $13,847 Interest expense and other debt financing costs 4,425 4,616 4,340 3,893 4,281 Compensation and benefits 3,370 3,996 4,482 2,892 1,681 General and administrative 1,601 1,455 1,232 1,128 1,124 Total Operating Expenses 9,396 10,067 10,054 7,913 7,086 Net Investment Income (NII) 10,080 7,253 5,286 5,616 6,761 Net Realized Gain / (Loss) from Investments 1,995 2,595 (5,029) (1,490) (2,002) Net Change in Unrealized Appreciation / (Depreciation) from Investments 12,630 15,476 8,995 8,208 2,122 Costs related to the acquisition of Trinity Capital Holdings, LLC. and Legacy Funds -- 472 -- Net Increase (Decrease) in Net Assets from Operations $24,705 $25,324 $9,724 $12,334 6,881 Net Investment Income (NII) per Share $0.38 $0.31 $0.29 $0.31 $0.37 Net Increase (Decrease) in Net Assets resulting from Operations per Share $0.93 $1.08 $0.53 $0.68 $0.38 Weighted Average Shares Outstanding – Basic and Diluted 26,479 23,555 18,261 18,166 18,075 QUARTERLY INCOME STATEMENT |
| © 2021 Trinity Capital Inc. | 16 INCOME SOURCE & PORTFOLIO YIELD TRENDS $391 $390 $448 $464 $521 14.2% 13.1% 13.6% 14.6% 14.8% 14.6% 14.1% 14.5% 15.5% 15.9% 8% 9% 10% 11% 12% 13% 14% 15% 16% $200 $250 $300 $350 $400 $450 $500 $550 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 PORTFOLIO YIELDS Total Debt Investments (Cost, $ in million) Core Yield (excluding fee income) Effective Yield (including fee income) Early principal repayments of $51.1 million in Q2 2021 generated higher portfolio yields 66.1% 63.4% 63.8% 64.0% 61.9% 24.2% 27.2% 26.0% 23.8% 20.9% 9.7% 9.4% 10.2% 12.2% 17.2% $- $3,000 $6,000 $9,000 $12,000 $15,000 $18,000 $21,000 2Q20 3Q20 4Q20 1Q21 2Q21 SOURCES OF INVESTMENT INCOME IN THOUSANDS Loans - Cash + OID Equipment Financing - Cash + OID Accelarated OID + Fees |
| © 2021 Trinity Capital Inc. | 17 NET INVESTMENT INCOME PER SHARE BRIDGE |
| © 2021 Trinity Capital Inc. | 18 (In 000’s, except per share amounts) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Assets Total Investments at fair value $597,696 $535,741 $493,651 $425,484 418,844 Cash and cash equivalents 19,124 36,026 44,656 36,323 21,849 Restricted cash 15,341 15,259 16,445 16,331 16,552 Interest Receivable 4,065 3,924 3,468 3,158 3,186 Prepaid Expenses & Other Assets 5,221 3,037 1,488 1,132 910 Total Assets $641,447 $593,987 559,708 482,428 $461,341 Liabilities Credit facility, net of unamortized deferred financing cost $68,947 $43,420 $132,893 $112,411 $102,167 2025 Notes payable, net of unamortized deferred financing cost 120,832 120,594 120,303 120,178 119,968 Convertible Notes payable, net of unamortized deferred financing costs and discount 47,214 47,113 46,552 -- Distribution Payable 7,682 7,396 4,947 -- Security Deposits 8,812 8,605 7,874 7,060 6,096 Accounts Payable, accrued expenses, and other liabilities 8,240 5,296 8,381 5,454 4,464 Total Liabilities 261,727 232,424 320,960 245,103 232,695 Net Assets 379,720 $361,563 $238,748 $237,325 228,646 Shares Outstanding 26,491 26,415 18,321 18,236 18,138 Net Assets per Share $14.33 $13.69 $13.03 $13.01 $12.61 BALANCE SHEET |
| © 2021 Trinity Capital Inc. | 19 GROWING NET ASSET VALUE Accretive NAV per Share Growth Net Asset Value – 4.7% increase this quarter Initial Public Offering in Q1 of 2021 $224.6 $228.6 $237.3 $238.7 $361.6 $379.7 $12.44 $12.61 $13.01 $13.03 $13.69 $14.33 $11.00 $11.50 $12.00 $12.50 $13.00 $13.50 $14.00 $14.50 $- $50 $100 $150 $200 $250 $300 $350 $400 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 NAV ($ millions) NAV per Share |
| © 2021 Trinity Capital Inc. | 20 NET ASSET VALUE (NAV) PER SHARE BRIDGE $10.0 $13.0 $13.5 $14.0 $14.5 $15.0 $12.5 $13.69 0.38 0.08 0.60 (0.12) (0.29) $14.33 |
| © 2021 Trinity Capital Inc. | 21 Key borrowing types ($ in million) at 6/30/21 Funding Source Debt Commitment Outstanding Principle Undrawn Commitment Stated Maturity Interest Rate Notes: 2025 Unsecured Notes $125.0 $125.0 - January 16, 2025 7.0% Convertible Notes $50.0 $50.0 - December 11, 2025 6.0% Bank Facility: Credit Suisse Credit Facility $300.0 $70.0 $230.0 January 8, 2022 3-month Libor + 3.25% DEBT CAPITAL STRUCTURE |
| © 2021 Trinity Capital Inc. | 22 $0.22 $0.49 $0.76 $1.03 $1.31 $1.60 $- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Cumulative Distributions per share Total Dividends Distributable Net Income covered dividends by 131% in Q2’2021 Strong Earnings and Dividend Growth Consistently paid a quarterly dividend since formation in Q1 2020 SOLID SHAREHOLDER RETURNS |
| PORTFOLIO HIGHLIGHTS |
| (1) Based on Fair Market Value © 2021 Trinity Capital Inc. | 24 Industry Diversification(1) Geography Diversification(1) 28% 15% 13% 7% 6% 5% 5% 21% Professional, Scientific, and Technical Services Manufacturing Retail Trade Information Space Research and Technology Rental and Leasing Wholesale Trade Finance and Insurance Industry Diversification(1) Other < 5% individual industry Agriculture, Forestry, Fishing and Hunting Pharmaceutical Educational Services Administrative and Support and Waste Management Health Care and Social Assistance Construction Real Estate 52.7% 6.6% 7.3% 5.2% 0.1% 24.0% 4.1% PORTFOLIO DIVERSIFICATION At June 30, 2021 Utilities |
| © 2021 Trinity Capital Inc. | 25 PORTFOLIO SUMMARY (1) Based on Fair Market Value $128,021 $49,619 $22,438 Total Portfolio: By Type At Fair Value as of March 31, 2021 I n $ 0 0 0 Secured Loan Equipment Financing Equity Warrant $120,903 $52,515 $26,748 Total Portfolio: By Type At Fair Value as of June 30, 2021 I n $ 0 0 0 Secured Loan Equipment Financing Equity Warrant June 30, 2021 March 31, 2021 Cost Fair Value Cost Fair Value Type Amount % Amount % Amount % Amount % Secured Loan $400,944 69.8% $397,530 66.4% $338,940 64.5% $335,663 62.6% Equipment Financing 120,078 20.9% 120,903 20.2% 127,717 24.3% 128,021 23.9% Equity 39,715 6.9% 52,515 8.8% 44,609 8.5% 49,619 9.3% Warrants 13,818 2.4% 26,748 4.6% 13,965 2.7% 22,438 4.2% Total $574,555 100.0% $597,696 100.0% $525,231 100.0% $535,741 100.0% $335,663 $397,530 |
| © 2021 Trinity Capital Inc. | 26 PORTFOLIO TRENDS (1) Based on outstanding principal (2) Based on Fair Market Value 91.9% 82.9% 74.6% 67.9% 50.7% 8.1% 17.1% 25.4% 32.1% 49.3% 2Q20 3Q20 4Q20 1Q21 2Q21 FIXED VS FLOATING DEBT INVESTMENTS (1) Fixed Floating 67.8% 64.3% 65.0% 62.6% 66.4% 25.3% 24.8% 23.9% 20.2% 6.5% 7.3% 6.6% 9.3% 8.8% 2.8% 3.0% 3.6% 4.2% 4.6% 2Q20 3Q20 4Q20 1Q21 2Q21 TOTAL PORTFOLIO BY INVESTMENT TYPE (2) Loans Equipment Finance Equity Warrant 22.0% Pivoting to floating rate portfolio Strong Asset Diversification |
| © 2021 Trinity Capital Inc. | 27 HYPOTHETICAL WARRANT UPSIDE • Investment of $16.3 million (50%) • Proceeds of $32.6 million (2X) • Cost of $23.2 million • Potential gain of $9.4 million or $0.35 per share • Investment of $16.3 million (50%) • Proceeds of $48.8 million (3X) • Cost of $23.2 million • Potential gain of $25.6 million or $0.97 per share • Investment of $16.3 million (50%) • Proceeds of $65.1 million (4X) • Cost of $23.2 million • Potential gain of $41.9 million or $1.58 per share 2 Pending Portfolio Company M&A Liquidity Events at 6/30/21 ▪ Matterport and Atieva (Lucid Motors) have entered into definitive merger agreements with Special Purpose Acquisition Companies (SPACs) 94 Warrant Positions in 60 Portfolio Companies ▪ GAAP fair value ~ $26.7 million ▪ GAAP cost ~ $13.8 million ▪ ~ $32.6 million in nominal exercise value Hypothetical Models of Potential Warrant Gains at 6/30/21 ▪ Assume that only 50% of warrants will monetize ▪ Cost of exercised warrants is ~ $23.2 million ▪ Based on 26.5 million shares of common stock outstanding at 6/30/21 MULTIPLE MULTIPLE MULTIPLE 2X 3X 4X FOR ILLUSTRATION PURPOSES ONLY |
| © 2021 Trinity Capital Inc. | 28 $371 $380 $381 $443 $464 $518 2.9 3.2 3.2 3.2 3.2 3.1 1 1.5 2 2.5 3 3.5 $- $100 $200 $300 $400 $500 $600 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Total Debt Investments (FV, $ in million) Weighted Investment Credit Rating Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Very Strong Performance (4.0 – 5.0) $83,915 16.2% $110,278 23.8% $92,519 20.9% $59,767 15.8% $63,877 16.8% Strong Performance (3.0 – 3.9) $204,906 39.5% $164,709 35.4% 212,969 48.0% $187,844 49.3% $176,131 46.5% Performing (2.0 – 2.9) $199,449 38.5% $148,690 32.1% 116,895 26.4% $130,263 34.2% $135,718 35.7% Watch (1.6– 1.9) $29,820 5.7% $39,194 8.5% 19,230 4.3% - 0.0% - 0.0% Default/Workout (1.0 – 1.5) $343 0.1% $812 0.2% 1,606 0.4% $3,502 0.7% $3,956 1.0% Weighted Average 3.1 3.2 3.2 3.2 3.2 Credit risk rating at Fair Value, Q2 2021 – Q2 2020 ($ in thousands) Consistent and disciplined underwriting standards DISCIPLINED CREDIT RATING |
| © 2021 Trinity Capital Inc. | 29 Select List of Current & Historical Investments DIVERSIFIED PORTFOLIO |
| VENTURE CAPITAL AND LENDING MARKET |
| Source: Pitchbook NVCA Venture Monitor Q2 2021 © 2021 Trinity Capital Inc. | 31 $30 $38 $37 $28 $32 $45 $42 $48 $74 $85 $82 $88 $143 $142 $164 $150 3,405 4,406 4,851 4,598 5,515 6,897 8,020 9,494 10,693 11,302 10,165 11,066 11,521 12,449 12,362 7,058 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q2 2021 # of Deals Dollar Invested (billions) VC dollars # of deals US VC deal activity ( 1 ) (1) As of june 30, 2021 VENTURE CAPITAL MARKET |
| © 2021 Trinity Capital Inc. | 32 $35 $32 $13 $19 $23 $25 $21 $38 $41 $49 $44 $72 $62 $81 $74 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q2 2021 Billions Capital Raised ($) US VC fundraising activity Source: Pitchbook NVCA Venture Monitor Q2 2021 ( 1 ) (1) As of june 30, 2021 VENTURE CAPITAL FUNDRAISING |
| © 2021 Trinity Capital Inc. | 33 (1) Pitchbook NVCA Venture Monitor Q1 2021 (2) Based on Management Estimates Opportunity in an underserved market There were about 10 significant venture debt lenders The top 3 largest players in the industry achieved < ~15% market share(2) $25 billion Market Opportunity Capacity(2) LARGE UNTAPPED MARKET IN 2020 VC Investments in 2020(1) $166 Bn $50 Bn Venture Debt Market(2) - 2020 Approx. 30% of the Venture Capital Removing Bank participation (50%) Venture Debt Market(2) - 2020 $25 Bn Total addressable market (TAM) Serviceable addressable market (SAM) >>>>>> >>>>>> VENTURE DEBT MARKET |
| ANALYST COVERAGE |
| © 2021 Trinity Capital Inc. | 35 Followed by seven firms Trinity Capital is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Trinity Capital’s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Trinity Capital or its management. Trinity Capital does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations. Ryan Lynch (initiated coverage 2/23/21) Finian O’Shea (initiated coverage 2/23/21) Brock Vandervliet (initiated coverage 2/23/21) Sarkis Sherbetchyan (initiated coverage 2/23/21) Casey Alexander (initiated coverage 2/23/21) Christopher Nolan (initiated coverage 2/23/21) EXTENSIVE INDUSTRY ANALYST COVERAGE Mitchell Penn (initiated coverage 5/3/21) |
| SUPPLEMENTAL INFORMATION |
| © 2021 Trinity Capital Inc. | 37 BUSINESS DEVELOPMENT COMPANY (BDC) REGULATED INVESTMENT COMPANY (RIC) Trinity Capital Inc. is an Internally Managed BDC under the 1940 Act and Intends to Elect be treated as a RIC for Federal Income Tax Purposes beginning with its Taxable Year ending December 31, 2020 ▪ Regulated by the SEC under the Investment Company Act of 1940 (the “1940 Act”) ▪ Leverage limited to approximately 2:1 debt/equity ▪ Investments are required to be carried at fair value ▪ Majority of Board of Directors must be independent ▪ Offer managerial assistance to portfolio companies ▪ Distribute taxable income as dividend distributions to shareholders, subject to approval by Trinity Capital’s Board of Directors ▪ Mandates asset diversification ▪ Eliminates corporate taxation ▪ Allows for the retention of capital gains and/or spillover of taxable income REGULATION & STRUCTURE |
| We look forward to our growing partnership. THANK YOU |
