UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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(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:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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.
Item 2.02 Results of Operations and Financial Condition.
On March 6, 2024, Trinity Capital Inc. (the “Company”) issued a press release announcing its financial results for the year ended December 31, 2023. Such press release is attached as Exhibit 99.1 to this Current Report on 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 March 6, 2024, the Company disseminated an earnings presentation to be used in connection with its conference call and live webcast to discuss its year-end 2023 financial results on March 6, 2024, at 12 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 |
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Description |
99.1 |
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99.2 |
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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 hereunto duly authorized.
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Trinity Capital Inc. |
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Date: |
March 6, 2024 |
By: |
/s/ Kyle Brown |
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Kyle Brown |
Trinity Capital Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
Record Quarterly Net Investment Income of $25.1 Million in Q4
Record Annual Net Investment Income of $89.9 Million in 2023
Return on Average Equity Hits 16.9% in Q4
PHOENIX (March 6, 2024 /PRNewswire/) -- Trinity Capital Inc. (Nasdaq: TRIN) (“Trinity” or the “Company”), a leading provider of diversified financial solutions to growth-stage companies, today announced its financial results for the fourth quarter and year ended December 31, 2023.
Fourth Quarter 2023 Highlights
“Trinity had a tremendous year in 2023, marked by record fundings and investment income along with continued growth in our portfolio,” said Kyle Brown, Chief Executive Officer of Trinity. “Our off-balance sheet growth strategies continued to ramp, and we expect them to contribute to our growth in 2024.”
Brown further highlighted, “Our strong performance has allowed us to increase our regular dividend for twelve straight quarters, resulting in distributions of $2.04 per share to our shareholders in 2023. Our commitments to stringent underwriting and rigorous portfolio management remain central to our approach, and we believe that our shareholders will continue to see the benefits of these practices.”
Full Year 2023 Highlights
1
Fourth Quarter 2023 Operating Results
For the three months ended December 31, 2023, total investment income was $47.8 million, compared to $41.5 million for the quarter ended December 31, 2022. The effective yield on the average debt investments at cost was 16.7% and 15.5% for the periods ended December 31, 2023 and 2022, 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 operating expenses and excise taxes, excluding interest expense, for the fourth quarter of 2023 were $12.3 million, compared to $9.6 million during the fourth quarter of 2022. The increase was primarily attributable to higher compensation associated with additional headcount and amortization of restricted stock grants.
Interest expense for the fourth quarter of 2023 was $10.4 million, compared to $10.3 million during the fourth quarter of 2022. The increase is primarily attributable to an increase in the weighted average interest rate on the credit facility.
Net investment income was $25.1 million, or $0.57 per share, based on 44.3 million basic weighted average shares outstanding for the fourth quarter of 2023, compared to $21.6 million, or $0.62 per share, for the fourth quarter of 2022 based on 35.1 million basic weighted average shares outstanding.
Net unrealized depreciation of $8.1 million during the fourth quarter of 2023 was primarily attributable to $10.2 million of depreciation related to credit-specific adjustments and $0.4 million of depreciation related to general market conditions, partially offset by $2.5 million related to the impact of interest rate changes.
Net realized gain on investments was $0.8 million, primarily attributable to an early repayment of an equipment financing and warrant settlements.
Net increase in net assets resulting from operations was $17.7 million, or $0.40 per share, based on 44.3 million basic weighted average shares outstanding. This compares to a net decrease in net assets resulting from operations of $1.6 million, or $0.05 per share, based on 35.1 million basic weighted average shares outstanding for the fourth quarter of 2022.
Trinity's higher weighted average shares outstanding for the fourth quarter was attributed to additional shares issued during the year.
Net Asset Value
As of December 31, 2023, total net assets increased to $611.2 million, compared to $569.5 million as of September 30, 2023. The increase in total net assets was primarily driven by net investment income that exceeded the declared dividends as well as the issuance of common stock at a premium to NAV per share, partially offset by net realized and unrealized losses on investments. NAV per share increased to $13.19 from $13.17 in the prior quarter.
Portfolio and Investment Activity
As of December 31, 2023, Trinity’s investment portfolio had an aggregate fair value of approximately $1.3 billion and was comprised of approximately $885.3 million in secured loans, $336.8 million in equipment financings and $53.1 million in equity and warrants across 120 portfolio companies. The Company’s debt portfolio is comprised of 76.8% of loans supported by a first lien and 23.2% of loans supported by a second lien, with 69.0% of the debt portfolio at floating rates based on principal outstanding.
During the fourth quarter, the Company originated approximately $340.7 million of total new commitments and funded approximately $267.4 million, which was comprised of $220.0 million of investments in six new portfolio companies, $47.1 million of investments in ten existing portfolio companies and $0.3 million
2
of investments in the JV. Gross investment fundings during the quarter for secured loans totaled $126.3 million, equipment financings totaled $136.9 million and warrant and equity investments totaled $4.2 million.
Proceeds received from repayments of the Company's debt investments during the fourth quarter totaled approximately $108.9 million, which included $42.9 million from early debt repayments and refinancings, $41.4 million from normal amortization and $24.6 million of investments sold to the JV. The investment portfolio increased by $166.8 million, or approximately 14.5%, on a cost basis, and by $158.6 million, or approximately 14.2%, at fair value as compared to September 30, 2023. Total assets under management, including the assets in the JV, totaled $1.5 billion.
The following table shows the distribution of the Company’s secured loan and equipment financing investments on the 1 to 5 investment risk rating scale at fair value as of December 31, 2023 and September 30, 2023 (dollars in thousands):
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December 31, 2023 |
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September 30, 2023 |
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Investment Risk Rating |
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Investments at |
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Percentage of |
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Investments at |
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Percentage of |
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Scale Range |
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Designation |
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Fair Value |
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Total Portfolio |
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Fair Value |
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Total Portfolio |
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4.0 - 5.0 |
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Very Strong Performance |
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$ |
40,584 |
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3.3 |
% |
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$ |
34,728 |
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3.3 |
% |
3.0 - 3.9 |
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Strong Performance |
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277,867 |
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22.9 |
% |
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225,408 |
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21.2 |
% |
2.0 - 2.9 |
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Performing |
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805,730 |
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65.9 |
% |
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740,097 |
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69.6 |
% |
1.6 - 1.9 |
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Watch |
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56,740 |
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4.6 |
% |
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38,584 |
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3.6 |
% |
1.0 - 1.5 |
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Default/Workout |
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33,452 |
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2.7 |
% |
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17,540 |
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1.6 |
% |
Total Debt Investments excluding Senior Credit Corp 2022 LLC |
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1,214,373 |
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99.4 |
% |
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1,056,357 |
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99.3 |
% |
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Senior Credit Corp 2022 LLC (1) |
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7,704 |
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0.6 |
% |
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7,484 |
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0.7 |
% |
Total Debt Investments |
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$ |
1,222,077 |
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100.0 |
% |
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$ |
1,063,841 |
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100.0 |
% |
As of December 31, 2023, the Company’s secured loan and equipment financing investments had a weighted average risk rating score of 2.7 as compared to 2.8 as of September 30, 2023. Trinity’s grading scale is comprised of numerous factors, two key factors being liquidity and performance to plan. A company may be downgraded as they approach the need for additional capital or if they are underperforming relative to their business plans. Conversely, they may be upgraded upon a capitalization or if they are exceeding their plan. As such, the overall grading may fluctuate quarter-to-quarter.
As of the end of the fourth quarter, secured loans to three portfolio companies and equipment financings to two portfolio companies were on non-accrual status with a total fair value of approximately $43.2 million, or just 3.5% of the Company’s debt investment portfolio at fair value. Subsequent to December 31, 2023, the equipment financing to Core Scientific, Inc. (Nasdaq: CORZ) was removed from non-accrual in connection with its January 2024 emergence from Chapter 11 bankruptcy and Trinity’s receipt of shares of Core Scientific common stock in satisfaction of Trinity’s claims in the bankruptcy.
Liquidity and Capital Resources
As of December 31, 2023, the Company had approximately $141.8 million in available liquidity, including $4.8 million in unrestricted cash and cash equivalents. At the end of the period, the Company had $137.0 million in available borrowing capacity under its credit facility subject to existing terms, advance rates and regulatory and covenant requirements.
As of December 31, 2023, Trinity's leverage or debt-to-equity ratio was approximately 106% as compared to 94% as of September 30, 2023. The increase in the leverage ratio was primarily attributable to additional borrowings under the credit facility to fund portfolio growth.
3
During the three months ended December 31, 2023, Trinity utilized its ATM offering program to sell 3.1 million shares of its common stock at a weighted average price of $14.81 per share, raising $45.2 million of net proceeds.
As of December 31, 2023, the JV had approximately $98.9 million in available liquidity, including $83.4 million of uncalled capital, $15.4 million of availability under the JV’s credit facility, and $0.1 million of cash and cash equivalents.
Distributions
On December 14, 2023, the Company’s Board of Directors declared a regular and supplemental dividend totaling $0.50 per share with respect to the quarter ended December 31, 2023, which was paid on January 12, 2024, to shareholders of record as of December 29, 2023. The Board of Directors generally determines and announces the Company’s dividend distribution on a quarterly basis.
Conference Call
Trinity will hold a conference call to discuss its fourth quarter and full year 2023 financial results at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) on Wednesday, March 6, 2024.
To listen to the call, please dial (800) 225-9448, or (203) 518-9708 internationally, and reference Conference ID: TRINQ423 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) 839-7414 or (402) 220-6068.
About Trinity Capital Inc.
Trinity Capital Inc. (Nasdaq: TRIN), an internally managed business development company, is a leading provider of diversified financial solutions to growth-stage companies with institutional equity investors. Trinity Capital's investment objective is to generate current income and, to a lesser extent, capital appreciation through investments, including term loans and equipment financings and equity-related investments. Trinity Capital 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. For more information, please visit the Company's website at www.trinitycap.com.
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. 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
Ben Malcolmson
Head of Investor Relations
Trinity Capital Inc.
4
ir@trincapinvestment.com
5
TRINITY CAPITAL INC.
Consolidated Statements of Assets and Liabilities
(In thousands, except share and per share data)
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December 31, |
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December 31, |
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2023 |
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2022 |
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ASSETS |
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Investments at fair value: |
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Control investments (cost of $43,807 and $43,375, respectively) |
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$ |
32,861 |
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$ |
37,313 |
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Affiliate investments (cost of $11,006 and $28,580, respectively) |
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11,335 |
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1,528 |
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Non-Control / Non-Affiliate investments (cost of $1,264,503 and $1,081,629, respectively) |
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1,230,984 |
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1,055,545 |
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Total investments (cost of $1,319,316 and $1,153,584, respectively) |
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1,275,180 |
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1,094,386 |
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Cash and cash equivalents |
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4,761 |
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10,612 |
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Interest receivable |
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11,206 |
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9,971 |
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Deferred credit facility costs |
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2,144 |
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2,903 |
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Other assets |
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17,691 |
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8,567 |
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Total assets |
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$ |
1,310,982 |
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$ |
1,126,439 |
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LIABILITIES |
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KeyBank Credit Facility |
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$ |
213,000 |
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$ |
187,500 |
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2025 Notes, net of $2,015 and $3,948, respectively, of unamortized deferred financing costs |
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180,485 |
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178,552 |
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August 2026 Notes, net of $1,526 and $2,103, respectively, of unamortized deferred financing costs |
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123,474 |
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122,897 |
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December 2026 Notes, net of $1,102 and $1,474, respectively, of unamortized deferred financing costs |
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73,898 |
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73,526 |
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Convertible Notes, net of $1,243 and $1,882, respectively, of unamortized deferred financing costs and discount |
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48,757 |
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48,118 |
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Distribution payable |
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23,162 |
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21,326 |
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Security deposits |
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12,287 |
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15,100 |
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Accounts payable, accrued expenses and other liabilities |
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24,760 |
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19,771 |
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Total liabilities |
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699,823 |
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666,790 |
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NET ASSETS |
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Common stock, $0.001 par value per share (200,000,000 authorized, 46,323,712 and 34,960,672 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) |
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46 |
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35 |
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Paid-in capital in excess of par |
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633,740 |
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480,532 |
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Distributable earnings/(accumulated deficit) |
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(22,627 |
) |
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(20,918 |
) |
Total net assets |
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611,159 |
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459,649 |
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Total liabilities and net assets |
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$ |
1,310,982 |
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$ |
1,126,439 |
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NET ASSET VALUE PER SHARE |
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$ |
13.19 |
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$ |
13.15 |
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6
TRINITY CAPITAL INC.
Consolidated Statements of Operations
(In thousands, except share and per share data)
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Three Months Ended |
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Year Ended |
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December 31, 2023 |
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December 31, 2022 |
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December 31, 2023 |
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December 31, 2022 |
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INVESTMENT INCOME: |
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Interest and dividend income: |
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Control investments |
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$ |
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942 |
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$ |
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1,007 |
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$ |
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4,179 |
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$ |
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5,418 |
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Affiliate investments |
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659 |
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— |
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1,025 |
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862 |
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Non-Control / Non-Affiliate investments |
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43,114 |
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39,593 |
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169,636 |
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132,556 |
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Total interest and dividend income |
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44,745 |
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40,600 |
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174,840 |
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138,836 |
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Fee and other income: |
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Affiliate investments |
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487 |
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— |
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2,158 |
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— |
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Non-Control / Non-Affiliate investments |
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2,602 |
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|
909 |
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4,857 |
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6,664 |
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Total fee and other income |
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3,089 |
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909 |
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7,015 |
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6,664 |
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Total investment income |
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47,834 |
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41,509 |
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181,855 |
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145,500 |
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EXPENSES: |
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Interest expense and other debt financing costs |
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10,446 |
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10,284 |
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44,296 |
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34,148 |
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Compensation and benefits |
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8,434 |
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6,543 |
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33,093 |
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27,189 |
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Professional fees |
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1,307 |
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|
|
1,129 |
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5,407 |
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|
|
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4,113 |
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General and administrative |
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1,896 |
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|
1,520 |
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|
6,598 |
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|
6,075 |
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Total expenses |
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22,083 |
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|
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19,476 |
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|
89,394 |
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71,525 |
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NET INVESTMENT INCOME/(LOSS) BEFORE TAXES |
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25,751 |
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22,033 |
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92,461 |
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73,975 |
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Excise tax expense |
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|
684 |
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|
402 |
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|
2,560 |
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|
|
|
2,389 |
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NET INVESTMENT INCOME |
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|
25,067 |
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|
|
|
21,631 |
|
|
|
|
89,901 |
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|
|
|
71,586 |
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NET REALIZED GAIN/(LOSS) FROM INVESTMENTS: |
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Control investments |
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— |
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(3,877 |
) |
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|
|
— |
|
|
|
|
(4,210 |
) |
Affiliate investments |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(26,251 |
) |
|
|
|
(10,241 |
) |
Non-Control / Non-Affiliate investments |
|
|
|
773 |
|
|
|
|
(5,694 |
) |
|
|
|
(1,820 |
) |
|
|
|
47,304 |
|
Net realized gain/(loss) from investments |
|
|
|
773 |
|
|
|
|
(9,571 |
) |
|
|
|
(28,071 |
) |
|
|
|
32,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
NET CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) FROM INVESTMENTS: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Control investments |
|
|
|
(21 |
) |
|
|
|
12,174 |
|
|
|
|
(4,884 |
) |
|
|
|
719 |
|
Affiliate investments |
|
|
|
(122 |
) |
|
|
|
(7,841 |
) |
|
|
|
27,380 |
|
|
|
|
(17,635 |
) |
Non-Control / Non-Affiliate investments |
|
|
|
(7,993 |
) |
|
|
|
(17,980 |
) |
|
|
|
(7,433 |
) |
|
|
|
(117,898 |
) |
Net change in unrealized appreciation/(depreciation) from investments |
|
|
|
(8,136 |
) |
|
|
|
(13,647 |
) |
|
|
|
15,063 |
|
|
|
|
(134,814 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
|
$ |
|
17,704 |
|
|
$ |
|
(1,587 |
) |
|
$ |
|
76,893 |
|
|
$ |
|
(30,375 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET INVESTMENT INCOME PER SHARE - BASIC |
|
$ |
|
0.57 |
|
|
$ |
|
0.62 |
|
|
$ |
|
2.31 |
|
|
$ |
|
2.26 |
|
NET INVESTMENT INCOME PER SHARE - DILUTED |
|
$ |
|
0.54 |
|
|
|
|
0.57 |
|
|
$ |
|
2.19 |
|
|
$ |
|
2.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - BASIC |
|
$ |
|
0.40 |
|
|
$ |
|
(0.05 |
) |
|
$ |
|
1.98 |
|
|
$ |
|
(0.96 |
) |
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - DILUTED |
|
$ |
|
0.39 |
|
|
$ |
|
(0.05 |
) |
|
$ |
|
1.89 |
|
|
$ |
|
(0.96 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC |
|
|
|
44,308,189 |
|
|
|
|
35,131,465 |
|
|
|
|
38,910,150 |
|
|
|
|
31,672,089 |
|
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED |
|
|
|
48,103,914 |
|
|
|
|
38,649,085 |
|
|
|
|
42,705,875 |
|
|
|
|
35,189,709 |
|
7
Fourth Quarter 2023 Investor Presentation FUELING DISRUPTIVE TECHNOLOGIES. REVOLUTIONIZING THE FUTURE.
FORWARD-LOOKING STATEMENTS | DISCLAIMER 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. 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.
COMPANY OVERVIEW
Historical information includes information and data related to Trinity Capital's predecessor funds, the first of which was launched in 2008, through December 31, 2023. 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. Includes the fair value of assets managed by Trinity Capital through the joint venture as of December 31, 2023. Based on the closing price of TRIN of $14.39 on March 5, 2024. As of December 31, 2023. Annualized based on the $0.50 dividend per share declared for Q4 2023 and a closing stock price of $14.53 on December 29, 2023. Includes $4.8 million of cash and cash equivalents and $137.0 million of available borrowing capacity on our KeyBank Credit Facility. Credit ratings assigned by Egan-Jones Ratings Company and Morningstar DBRS, respectively, which are independent, unaffiliated rating agencies. 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. TRINITY CAPITAL OVERVIEW Diversified financial solutions to growth-stage companies | NASDAQ – TRIN, TRINL 15-Year track Record(1) PORTFOLIO(4) LIQUIDITY(4) 317 Investments 185 Exits $1.5B Assets Under Management(2) MARKET CAP / DIVIDEND YIELD 13.8% Annualized Dividend Yield(5) $668.2M Market Cap(3) $13.19 NAV per share(4) $885.3M Secured Loans 63 Companies $336.8M Equipment Financings 29 Companies $53.1M Equity & Warrants 101 Companies $3.0B Fundings $141.8M Available Liquidity(6) BBB, BBB(low) Investment Ratings(7) 106% Debt-to-Equity
THE TRINITY PLATFORM The JV invests in loans and equipment financings originated by Trinity, with an initial equity capital commitment of up to $171 million. The JV credit facility with KeyBank was closed in Q2 2023. The JV’s total investment portfolio at fair value was $150.7 million as of December 31, 2023. Trinity is permitted to organize, acquire and wholly own a portfolio company that intends to operate as an investment adviser registered with the SEC. This allows Trinity to raise funds off the balance sheet in a complementary way. In an evolving market, platform diversification further strengthens Trinity’s position to capture market share and differentiates its financing solutions Trinity’s foundation was built on its successful investment track record supporting growth-stage businesses through secured loans and equipment financings. Registered Investment Adviser (“RIA”) Joint Venture (“JV”) Business Development Company (“BDC”) Additional liquidity Fee and interest income Incremental returns Co-investment opportunities On/off-balance sheet growth Capability expansion BDC JV RIA
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 Robust & Scalable Platform Robust and scalable systems for origination, underwriting and monitoring Separation of origination, underwriting and portfolio management duties aids “positive feedback” loop 68 dedicated professionals with a unique culture built over 15+ years WHY IS TRINITY DIFFERENT Diversified Financial Solutions Provider of diversified financial solutions to growth-stage companies worldwide Runway extension to augment institutional equity funding Strong portfolio diversification
Multiple shared portfolio companies with top Venture Capital Firms We have established intercreditor 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 ENTRENCHED INDUSTRY RELATIONSHIPS
Investor Syndicate Revenue & Gross Margins Business Model Includes historical information of Trinity Capital's predecessor funds, the first of which was launched in 2008, through December 31, 2023. Past performance is not indicative of future results. 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)
Term Loans Axiom Space is developing the world’s first commercial space station. Investor Syndicate C5 Capital, TQS Advisors, Declaration Partners, Boryung Pharma, Aljazira Capital Use of Loan General corporate purposes Mainspring developed a new category of clean power generation — the linear generator — that delivers fuel-flexible power to accelerate the transition to the future grid. Investor Syndicate Lightrock, Khosla Ventures, Bill Gates Use of Loan Extension of runway Select Examples SECURED TERM LOANS 01 SECURED LOANS Partner with the banks 02 BACKED BY INSTITUTIONAL CAPITAL Companies have raised significant equity 03 STILL BURNING CASH Companies in growth mode and still burning cash
Equipment Financings Select Examples EQUIPMENT FINANCINGS 01 COMPANIES WITH CAPEX REQUIREMENTS Manufacturing equipment and hard assets 02 HARDWARE AS A SERVICE Equipment at customer location 03 INDUSTRY AGNOSTIC Nature’s Fynd is a food company creating versatile alternative proteins to nourish the world’s growing population while nurturing the planet. Investor Syndicate SoftBank, Breakthrough Energy Ventures, Blackstone Strategic Partners Use of Equipment Financing Food production equipment Athletic Brewing brews high-quality, great-tasting non-alcoholic craft beer. Investor Syndicate Alliance Consumer Growth, TRB Advisors, Keurig Dr Pepper Use of Equipment Financing New brewery build out with beverage canning lines and fermenting tanks
FINANCIAL HIGHLIGHTS
All unfunded commitments are conditional, subject to additional lending provisions, and generally dependent upon the portfolio company reaching certain milestones before the commitment becomes available. Includes the fair value of assets managed by Trinity Capital through the JV as of December 31, 2023. Effective yield includes fees and accelerated income from prepayments but excludes fees earned from the JV, and is calculated based on the daily weighted average debt investments at cost. Core yield excludes fees and accelerated income from prepayments. Total Investment Income of $47.8M Net Investment Income (“NII”) of $25.1M Net Interest Margin (“NIM”) of 13.2% NII per share of $0.57 provides 114.0% of regular distribution coverage Increased the fourth quarter regular dividend distribution to $0.50 per share, a 2.0% increase over the regular dividend declared in the prior quarter Robust Earnings Total Debt Investments (at cost): $1,255.8M Total Investments (at cost): $1,319.3M Total Platform Assets Under Management(2) (at fair value): $1,453.3M Effective Yield(3): 16.7% Core Yield(4): 15.2% Debt & equity commitments in 4Q23: $340.7M Debt & equity fundings in 4Q23: $267.4M Unfunded commitments(1) as of 12/31/2023: $358.4M Term sheets signed as of 12/31/2023: $134.6M Q4 2023 HIGHLIGHTS Leading Originations Platform Portfolio Assets
Net Investment Income covered regular dividend by 114.0% in 4Q23 Twelve consecutive regular quarterly dividend increases 13.8% annualized total dividend yield(1) SOLID SHAREHOLDER RETURNS Annualized based on the $0.50 dividend per share declared for Q4 2023 and a closing stock price of $14.53 on December 29, 2023.
For the three months ended For the three months ended Nine Months Ended September 30 (In thousands, except per share amounts) 12/31/2023 09/30/2023 06/30/2023 03/31/2023 12/31/2022 Total Investment Income $47,834 $46,438 $46,045 $41,538 $41,509 Interest expense and other debt financing costs 10,446 10,783 11,985 11,081 10,284 Compensation and benefits 8,434 8,693 8,350 7,617 6,543 General and administrative(1) 3,887 3,556 3,613 3,509 3,051 Total Operating Expenses 22,767 23,032 23,948 22,207 19,878 Net Investment Income (NII) 25,067 23,406 22,097 19,331 21,631 Net Realized Gain / (Loss) from Investments 773 (1,868) (26,611) (365) (9,571) Net Change in Unrealized Appreciation / (Depreciation) from Investments (8,136) (4,717) 24,396 3,520 (13,647) Net Increase (Decrease) in Net Assets from Operations $17,704 $16,821 $19,882 $22,486 $(1,587) Net Investment Income (NII) per Share – Basic $0.57 $0.58 $0.61 $0.55 $0.62 Net Increase (Decrease) in Net Assets resulting from Operations per Share – Basic $0.40 $0.42 $0.55 $0.64 $(0.05) Weighted Average Shares Outstanding – Basic 44,308 40,119 36,025 35,074 35,131 QUARTERLY INCOME STATEMENT General and administrative expenses include excise tax expense.
INCOME SOURCE & PORTFOLIO YIELD TRENDS Strong Yields Produce Solid Investment Income Includes fees and dividend income earned from the JV. Effective yield includes fees and accelerated income from prepayments but excludes fees earned from the JV, and is calculated based on the daily weighted average debt investments at cost. Core yield excludes fees and accelerated income from prepayments. (2) (3) (1)
NII RETURNS AND USE OF LEVERAGE Delivering strong returns through effective use of leverage NII return on average assets (ROAA) is calculated as NII divided by average assets for the quarterly period, annualized. NII return on average equity (ROAE) is calculated as NII divided by average net assets for the quarterly period, annualized. Leverage ratio is calculated as outstanding principal of borrowings divided by net assets as of the end of the quarterly period.
NET INVESTMENT INCOME (NII) PER SHARE BRIDGE Includes the impact of share activity and equity incentive plans. (1)
For the three months ended Nine Months Ended September 30 (In thousands, except per share amounts) 12/31/2023 09/30/2023 06/30/2023 03/31/2023 12/31/2022 Assets Total investments at fair value $ 1,275,180 $ 1,116,552 $ 1,148,018 $ 1,091,531 $ 1,094,386 Cash and cash equivalents 4,761 7,230 12,268 8,344 10,612 Interest receivable 11,206 10,920 12,117 10,450 9,971 Other assets 19,835 16,224 16,680 12,977 11,470 Total Assets $ 1,310,982 $ 1,150,926 $ 1,189,083 $ 1,123,302 $ 1,126,439 Liabilities KeyBank Credit Facility $ 213,000 $ 100,000 $ 232,000 $ 183,500 $ 187,500 2025 Notes, net of unamortized deferred financing cost 180,485 180,002 179,519 179,035 178,552 August 2026 Notes, net of unamortized deferred financing cost 123,474 123,330 123,186 123,041 122,897 December 2026 Notes, net of unamortized deferred financing cost 73,898 73,805 73,712 73,619 73,526 Convertible Notes, net of unamortized deferred financing cost and discount 48,757 48,597 48,437 48,278 48,118 Distribution payable 23,162 23,353 19,432 16,885 21,326 Security deposits 12,287 14,464 14,986 15,277 15,100 Accounts payable, accrued expenses, and other liabilities 24,760 17,912 15,816 13,997 19,771 Total Liabilities $ 699,823 $ 581,463 $ 707,088 $ 653,632 $ 666,790 Net Assets $ 611,159 $ 569,463 $ 481,995 $ 469,670 $ 459,649 Shares outstanding 46,324 43,247 36,665 35,926 34,961 Net Assets per Share (NAV per share) $13.19 $13.17 $13.15 $13.07 $13.15 QUARTERLY BALANCE SHEET
Includes the impact of share activity and equity incentive plans. NET ASSET VALUE (NAV) PER SHARE BRIDGE Earnings and Distributions Investment Portfolio Performance Share Impact(1)
Diversified Borrowings ($ in millions) as of December 31, 2023 Funding Source Debt Commitment Outstanding Principal Undrawn Commitment Stated Maturity Interest Rate Notes: 2025 Unsecured Notes(1) $182.5 $182.5 - January 16, 2025(2) 7.00% Convertible Notes $50.0 $50.0 - December 11, 2025 6.00% August 2026 Unsecured Notes $125.0 $125.0 - August 24, 2026 4.375% December 2026 Unsecured Notes $75.0 $75.0 - December 15, 2026 4.25% Bank Facility: KeyBank Credit Facility $400.0(3) $213.0 $137.0(3) October 27, 2026 Adjusted Term SOFR + 3.25% DEBT CAPITAL STRUCTURE The 2025 Unsecured Notes trade on the Nasdaq Global Select Market under the symbol “TRINL.” Callable at par at any time on or after January 16, 2023. Represents maximum facility amount of which $350.0 million is available as of December 31, 2023.
PORTFOLIO HIGHLIGHTS
PORTFOLIO DIVERSIFICATION Diversified across investment type, transaction size, industry and geography Based on fair market value as of December 31, 2023. Includes debt investments only. Consists of the fair value of our investment in the JV as of December 31, 2023. The portfolio companies held within the JV’s investment portfolio represent a diverse set of geographic regions generally consistent with those in which we invest directly. Investment Type(1) Transaction Size(1)(2) Industry Type(1) Geographic Allocation(1) International 2.7% JV(3) 0.9% 36.5% 8.7% 4.5% 13.5% 3.3% 29.9%
Based on outstanding principal Based on fair market value Mix of fixed and floating rate investments Strong asset diversification PORTFOLIO TRENDS
HYPOTHETICAL WARRANT UPSIDE Proceeds of $56.9 million (2X) Potential gain of $13.3 million or $0.29 per share Proceeds of $85.3 million (3X) Potential gain of $41.7 million or $0.90 per share Proceeds of $113.8 million (4X) Potential gain of $70.2 million or $1.52 per share 146 Warrant Positions in 90 Portfolio Companies GAAP fair value ~ $33.5 million GAAP cost ~ $30.2 million ~ $56.9 million in nominal exercise value Hypothetical Models of Potential Warrant Gains at 12/31/2023 Assume that only 50% of warrants will monetize Cost of exercised warrants is ~ $43.6 million Based on 46.3 million shares of common stock outstanding at 12/31/2023 MULTIPLE MULTIPLE MULTIPLE 2X 3X 4X For Illustration Purposes Only
4Q23 3Q23 2Q23 1Q23 4Q22 Very Strong Performance (4.0 – 5.0) $40,584 3.3% $34,728 3.3% $8,758 0.8% $2,513 0.2% $2,729 0.3% Strong Performance (3.0 – 3.9) $277,867 22.9% $225,408 21.3% $272,933 25.0% $285,484 27.4% $239,872 22.9% Performing (2.0 – 2.9) $805,730 65.9% $740,097 70.1% $762,695 69.7% $719,752 69.0% $756,596 72.1% Watch (1.6– 1.9) $56,740 4.6% $38,584 3.6% $34,410 3.1% $19,270 1.8% $39,315 3.7% Default/Workout (1.0 – 1.5) $33,452 2.7% $17,540 1.7% $15,216 1.4% $16,450 1.6% $10,317 1.0% Weighted Average 2.7 2.8 2.8 2.8 2.8 Credit Risk Rating of Debt investments at Fair Value, 4Q 2023 – 4Q 2022 ($ in thousands)(1) Consistent and Disciplined Underwriting Standards DISCIPLINED CREDIT RATING The total fair value of debt investments excludes our debt investment in the JV, which was $7.7 million as of December 31, 2023. (1)
INTEREST RATE SENSITIVITY 69.0% floating rate debt investment portfolio as of December 31, 2023(1) 33.0% floating rate borrowings as of December 31, 2023(2) Based on outstanding principal of debt investments Based on outstanding principal of borrowings
Select List of Current & Historical Investments DIVERSIFIED PORTFOLIO
VENTURE CAPITAL AND LENDING MARKET
US VC Deal Activity(1) VENTURE CAPITAL MARKET As of December 31, 2023, per Pitchbook NVCA Venture Monitor Q4 2023.
US VC Fundraising Activity(1) VENTURE CAPITAL FUNDRAISING As of December 31, 2023, per Pitchbook NVCA Venture Monitor Q4 2023.
VENTURE DEBT MARKET US Venture Debt Deal Activity(1) As of December 31, 2023, per Pitchbook NVCA Venture Monitor Q4 2023.
ANALYST COVERAGE
EXTENSIVE INDUSTRY ANALYST COVERAGE Followed by eight firms Paul Johnson (initiated coverage 2/23/2021) Finian O’Shea (initiated coverage 2/23/2021) Vilas Abraham (initiated coverage 2/23/2021) Bryce Rowe (initiated coverage 9/16/2022) Casey Alexander (initiated coverage 2/23/2021) Christopher Nolan (initiated coverage 2/23/2021) Mitchell Penn (initiated coverage 5/3/2021) 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. Kyle Joseph (initiated coverage 7/5/2023)
SUPPLEMENTAL INFORMATION
BUSINESS DEVELOPMENT COMPANY (BDC) REGULATED INVESTMENT COMPANY (RIC) Trinity Capital Inc. is an Internally Managed BDC under the 1940 Act and has elected to 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
36 THANK YOU We look forward to our growing partnership. TRINITYCAP.COM