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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Registrant’s Telephone Number, Including Area Code: ( |
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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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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 August 7, 2024, Trinity Capital Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2024. 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 August 7, 2024, the Company disseminated an earnings presentation to be used in connection with its conference call and live webcast to discuss its second quarter 2024 financial results on August 7, 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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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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: |
August 7, 2024 |
By: |
/s/ Kyle Brown |
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Kyle Brown |
Exhibit 99.1
Trinity Capital Inc. Reports Second Quarter 2024 Financial Results
Platform AUM grows to $1.7 billion, a 36% increase year-over-year
NII hits a record of $26.7 million, or $0.53 per share
Return on average equity climbs to 16.3%
PHOENIX, August 7, 2024 – Trinity Capital Inc. (Nasdaq: TRIN) (“Trinity” or the “Company”), a leading provider of diversified financial solutions to growth-oriented companies, today announced its financial results for the second quarter ended June 30, 2024.
Second Quarter 2024 Highlights
“Trinity delivered another excellent quarter highlighted by record net investment income for our shareholders,” said Kyle Brown, Chief Executive Officer of Trinity. “The results of the second quarter further demonstrate the strength of our diversified investment platform, with our five distinct business verticals in tech lending, equipment financing, life sciences, warehouse financing, and sponsor finance.”
Brown continued, “We are excited to continue to ramp our growth strategies through our registered investment adviser subsidiary, giving Trinity other sources of capital and new accretive sources of income. We have been strategically investing via our RIA to support our strategic plan to be the leader in the growth lending space.”
Second Quarter 2024 Operating Results
For the three months ended June 30, 2024, total investment income was $54.6 million compared to $46.0 million for the quarter ended June 30, 2023. The effective yield on the average debt investments at cost was 16.0% for the second quarter of 2024 compared to 16.2% for the second quarter of 2023. Effective yields generally include the effects of fees and income accelerations attributed to early loan repayments and other one-time events. They may also fluctuate quarter-to-quarter depending on the amount of prepayment activity.
Total operating expenses and excise taxes, excluding interest expense, for the second quarter of 2024 were $14.0 million compared to $12.0 million during the second quarter of 2023. The increase was primarily attributable to higher compensation associated with additional headcount and amortization of restricted stock grants and additional office rent and related expenses.
Interest expense for the second quarter of 2024 was $13.9 million compared to $12.0 million during the second quarter of 2023. The increase is primarily attributable to an increase in borrowings and increased base rate under our credit facility.
Net investment income was approximately $26.7 million, or $0.53 per share based on 50.2 million basic weighted average shares outstanding for the second quarter of 2024, compared to $22.1 million or $0.61 per share for the second quarter of 2023 based on 36.0 million basic weighted average shares outstanding.
During the three months ended June 30, 2024, our net unrealized appreciation totaled approximately $10.6 million, which included net unrealized appreciation of $6.6 million from our debt investments, net unrealized appreciation of $4.2 million from our equity investments and net unrealized depreciation of $0.2 million from our warrant investments.
Net realized loss on investments was approximately $6.5 million, primarily attributable to the loss on restructuring or exit of three loans partially offset by gains from the exit of equity shares in Core Scientific, Inc.
Net increase in net assets resulting from operations was $30.8 million, or $0.61 per share, based on 50.2 million basic weighted average shares outstanding. This compares to a net increase in net assets resulting from operations of $19.9 million, or $0.55 per share, based on 36.0 million basic weighted average shares outstanding for the second quarter of 2023. Trinity's higher weighted average shares outstanding for the second quarter as compared to the same period in the prior year was mostly attributable to additional shares issued during the twelve-month period.
Net Asset Value
Total net assets at the end of the second quarter of 2024 increased by 8.6% to $680.0 million, compared to $626.3 million at the end of the first quarter of 2024. The increase in total net assets was primarily driven by net investment income that exceeded the declared dividend, proceeds received from the shares issued under the ATM program during the quarter, and net realized and unrealized appreciation on investments. As a result, NAV improved to $13.12 from $12.88 per share.
Portfolio and Investment Activity
As of June 30, 2024, Trinity Capital’s investment portfolio had an aggregate fair value of approximately $1.4 billion and was comprised of approximately $1.0 billion in secured loans, $332.6 million in equipment financings and $89.6 million in equity and warrants across 136 portfolio companies, including the Company’s investment in the muti-sector holdings. The Company’s debt portfolio is comprised of 78.1% first-lien loans and 21.9% second-lien loans, with 69.9% of the debt portfolio at floating rates based on principal outstanding.
During the second quarter, the Company originated approximately $289.3 million of total new commitments. Second quarter gross investments funded totaled approximately $230.6 million, which was comprised of $133.6 million of investments in 10 new portfolio companies, $90.2 million of investments in 18 existing portfolio companies and a $6.8 million investment in the multi-sector holdings. Gross investment fundings during the quarter for equipment financings totaled $118.3 million, loans totaled $103.2 million and warrant and equity investments totaled $9.1 million.
2
Proceeds received from exits and repayments of the Company's investments during the second quarter totaled approximately $180.3 million, which included $68.7 million of investments sold to the multi-sector holdings, $50.0 million from normal amortization, $39.6 million from early debt repayments and $22.0 million from investment sales. The investment portfolio increased by $50.4 million on a cost basis, an increase of 3.5%, and $61.0 million on a fair value basis, an increase of 4.5% as compared to March 31, 2024.
As of the end of the second quarter, loans to three portfolio companies and an equipment financing to one portfolio company were on non-accrual status with a total fair value of approximately $24.0 million, or 1.8% of the Company’s debt investment portfolio at fair value.
The following table shows the distribution of the Company’s loan and equipment financing investments on the 1 to 5 investment risk rating scale at fair value as of June 30, 2024 and December 31, 2023 (dollars in thousands):
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June 30, 2024 |
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December 31, 2023 |
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Investment Risk Rating |
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Designation |
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Investments at |
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Percentage of |
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Investments at |
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Percentage of |
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4.0 - 5.0 |
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Very Strong Performance |
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$ |
70,183 |
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5.3% |
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$ |
40,584 |
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3.3% |
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3.0 - 3.9 |
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Strong Performance |
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306,187 |
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22.9% |
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277,867 |
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22.9% |
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2.0 - 2.9 |
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Performing |
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886,030 |
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66.4% |
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805,730 |
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65.9% |
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1.6 - 1.9 |
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Watch |
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53,449 |
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4.0% |
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56,740 |
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4.6% |
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1.0 - 1.5 |
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Default/Workout |
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8,035 |
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0.6% |
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33,452 |
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2.7% |
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Total Debt Investments excluding Senior Credit Corp 2022 LLC |
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1,323,884 |
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99.2% |
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1,214,373 |
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99.4% |
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Senior Credit Corp 2022 LLC (1) |
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11,335 |
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0.8% |
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7,704 |
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0.6% |
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Total Debt Investments |
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$ |
1,335,219 |
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100.0% |
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$ |
1,222,077 |
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100.0% |
_____________
(1) An investment risk rating is not applied to Senior Credit Corp 2022 LLC.
As of June 30, 2024, the Company’s loan and equipment financing investments had a weighted average risk rating score of 2.7, unchanged from March 31, 2024. Trinity Capital's grading scale is comprised of numerous factors, two key factors being liquidity and performance to plan. A company may be downgraded as it approaches the need for additional capital or if it is underperforming relative to its business plans. Conversely, it may be upgraded upon a capitalization event or if it is exceeding its plan. As such, the overall grading may fluctuate quarter-to-quarter.
Liquidity and Capital Resources
As of June 30, 2024, the Company had approximately $141.4 million in available liquidity, including $46.1 million in unrestricted cash and cash equivalents. At the end of the period, the Company had approximately $95.3 million in available borrowing capacity under its credit facility with KeyBank, subject to existing terms and advance rates and regulatory and covenant requirements.
As of June 30, 2024, Trinity’s leverage, or debt-to-equity ratio, was approximately 114% as compared to 118% as of March 31, 2024.
3
During the three months ended June 30, 2024, Trinity utilized its ATM offering program to sell 3.2 million shares of its common stock at a weighted average price of $14.79 per share, raising $46.9 million of net proceeds.
Distributions
On June 13, 2024, the Company’s Board of Directors declared a regular dividend totaling $0.51 per share with respect to the quarter ended June 30, 2024, which was paid on July 15, 2024, to stockholders of record as of June 28, 2024. The Board of Directors generally determines and announces the Company’s dividend distribution on a quarterly basis.
Recent Developments
For the period from July 1, 2024 to August 6, 2024, the Company issued and sold 1,497,621 shares of its common stock at a weighted-average price of $14.07 per share and raised $20.8 million of net proceeds after deducting commissions to the sales agents on shares sold under the ATM program.
On July 19, 2024, the Company issued and sold $100.0 million in aggregate principal amount of its unsecured 7.875% Notes due 2029 (the “September 2029 Notes”) under its shelf Registration Statement on Form N-2. On August 1, 2024, the Company issued and sold an additional $15.0 million in aggregate principal amount of the September 2029 Notes pursuant to the exercise in full of the underwriters’ option to purchase additional September 2029 Notes to cover overallotments. The September 2029 Notes began trading on the Nasdaq Global Select Market under the symbol “TRINI” on July 22, 2024.
On August 2, 2024, Trinity entered into an amendment to its KeyBank Credit Facility. Among other changes, the amendment increased the commitment amount available for borrowing under the KeyBank Credit Facility from $350 million to $440 million, permits the Company to request an increased amount of commitments from a total of up to $400 million to a total of up to $690 million in maximum capacity, and extended the maturity date from October 27, 2026 to July 27, 2029.
Conference Call
Trinity Capital will hold a conference call to discuss its second quarter 2024 financial results at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) on Wednesday, August 7, 2024.
To listen to the call, please dial (800) 245-3047, or (203) 518-9765 internationally, and reference Conference ID: TRINQ224 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) 723-0549 or (402) 220-2657.
About Trinity Capital Inc.
Trinity (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's investment objective is to generate current income and, to a lesser extent, capital appreciation through investments, including term loans, equipment financings, 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. For more information, please visit the Company's website at www.trinitycap.com.
4
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.
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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June 30, |
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December 31, |
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2024 |
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2023 |
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(Unaudited) |
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ASSETS |
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Investments at fair value: |
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Control investments (cost of $33,055 and $43,807, respectively) |
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$ |
29,764 |
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$ |
32,861 |
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Affiliate investments (cost of $26,853 and $11,006, respectively) |
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29,109 |
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11,335 |
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Non-Control / Non-Affiliate investments (cost of $1,410,470 and $1,264,503, respectively) |
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1,365,942 |
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1,230,984 |
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Total investments (cost of $1,470,378 and $1,319,316, respectively) |
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1,424,815 |
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1,275,180 |
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Cash and cash equivalents |
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46,102 |
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4,761 |
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Interest receivable |
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13,976 |
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11,206 |
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Deferred credit facility costs |
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1,765 |
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2,144 |
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Other assets |
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18,769 |
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17,691 |
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Total assets |
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$ |
1,505,427 |
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$ |
1,310,982 |
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LIABILITIES |
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KeyBank Credit Facility |
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$ |
254,700 |
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$ |
213,000 |
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2025 Notes, net of $1,048 and $2,015, respectively, of unamortized deferred financing costs |
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151,452 |
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180,485 |
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August 2026 Notes, net of $1,238 and $1,526, respectively, of unamortized deferred financing costs |
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123,762 |
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123,474 |
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March 2029 Notes, net of $3,218 and $0, respectively, of unamortized deferred financing costs |
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111,782 |
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— |
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December 2026 Notes, net of $915 and $1,102, respectively, of unamortized deferred financing costs |
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74,085 |
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73,898 |
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Convertible Notes, net of $924 and $1,243, respectively, of unamortized deferred financing costs and discount |
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49,076 |
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48,757 |
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Distribution payable |
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26,443 |
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23,162 |
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Security deposits |
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11,169 |
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12,287 |
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Accounts payable, accrued expenses and other liabilities |
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22,919 |
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24,760 |
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Total liabilities |
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825,388 |
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699,823 |
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NET ASSETS |
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Common stock, $0.001 par value per share (200,000,000 authorized, 51,849,429 and 46,323,712 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively) |
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52 |
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46 |
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Paid-in capital in excess of par |
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708,529 |
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633,740 |
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Distributable earnings/(accumulated deficit) |
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(28,542 |
) |
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(22,627 |
) |
Total net assets |
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680,039 |
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611,159 |
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Total liabilities and net assets |
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$ |
1,505,427 |
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$ |
1,310,982 |
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NET ASSET VALUE PER SHARE |
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$ |
13.12 |
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$ |
13.19 |
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6
TRINITY CAPITAL INC.
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
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Three Months Ended |
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Three Months Ended |
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Six Months Ended |
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Six Months Ended |
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June 30, 2024 |
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June 30, 2023 |
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June 30, 2024 |
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June 30, 2023 |
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INVESTMENT INCOME: |
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Interest and dividend income: |
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Control investments |
$ |
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783 |
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$ |
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1,083 |
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$ |
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1,635 |
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$ |
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2,199 |
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Affiliate investments |
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1,256 |
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84 |
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859 |
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118 |
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Non-Control / Non-Affiliate investments |
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49,798 |
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43,362 |
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98,735 |
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82,743 |
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Total interest and dividend income |
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51,837 |
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44,529 |
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101,229 |
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85,060 |
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Fee and other income: |
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Affiliate investments |
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835 |
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674 |
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1,702 |
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1,127 |
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Non-Control / Non-Affiliate investments |
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|
1,969 |
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|
842 |
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2,163 |
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|
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1,396 |
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Total fee and other income |
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|
2,804 |
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|
1,516 |
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3,865 |
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|
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2,523 |
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Total investment income |
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54,641 |
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46,045 |
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105,094 |
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87,583 |
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EXPENSES: |
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Interest expense and other debt financing costs |
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13,885 |
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11,985 |
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26,029 |
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23,067 |
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Compensation and benefits |
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9,944 |
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8,350 |
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19,808 |
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15,967 |
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Professional fees |
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1,338 |
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|
|
|
1,411 |
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|
|
|
2,058 |
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|
|
|
2,828 |
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General and administrative |
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2,092 |
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|
|
|
1,549 |
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|
|
|
4,021 |
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|
|
|
3,044 |
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Total expenses |
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27,259 |
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|
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|
23,295 |
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|
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|
51,916 |
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44,906 |
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NET INVESTMENT INCOME/(LOSS) BEFORE TAXES |
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27,382 |
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22,750 |
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53,178 |
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42,677 |
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Excise tax expense |
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|
639 |
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|
|
|
653 |
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1,278 |
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|
|
|
1,251 |
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NET INVESTMENT INCOME |
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|
26,743 |
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|
|
|
22,097 |
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|
|
|
51,900 |
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|
|
|
41,426 |
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|
|
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NET REALIZED GAIN/(LOSS) FROM INVESTMENTS: |
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|
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Control investments |
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(3,916 |
) |
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|
|
— |
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|
|
|
(3,916 |
) |
|
|
|
— |
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Affiliate investments |
|
|
— |
|
|
|
|
(26,251 |
) |
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|
|
— |
|
|
|
|
(26,251 |
) |
Non-Control / Non-Affiliate investments |
|
|
(2,572 |
) |
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|
|
(360 |
) |
|
|
|
(1,220 |
) |
|
|
|
(725 |
) |
Net realized gain/(loss) from investments |
|
|
(6,488 |
) |
|
|
|
(26,611 |
) |
|
|
|
(5,136 |
) |
|
|
|
(26,976 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) FROM INVESTMENTS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Control investments |
|
|
5,691 |
|
|
|
|
(1,188 |
) |
|
|
|
7,655 |
|
|
|
|
(780 |
) |
Affiliate investments |
|
|
1,673 |
|
|
|
|
26,152 |
|
|
|
|
1,926 |
|
|
|
|
27,128 |
|
Non-Control / Non-Affiliate investments |
|
|
3,209 |
|
|
|
|
(568 |
) |
|
|
|
(11,008 |
) |
|
|
|
1,568 |
|
Net change in unrealized appreciation/(depreciation) from investments |
|
|
10,573 |
|
|
|
|
24,396 |
|
|
|
|
(1,427 |
) |
|
|
|
27,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$ |
|
30,828 |
|
|
$ |
|
19,882 |
|
|
$ |
|
45,337 |
|
|
$ |
|
42,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET INVESTMENT INCOME PER SHARE - BASIC |
$ |
|
0.53 |
|
|
$ |
|
0.61 |
|
|
$ |
|
1.07 |
|
|
$ |
|
1.17 |
|
NET INVESTMENT INCOME PER SHARE - DILUTED |
$ |
|
0.51 |
|
|
$ |
|
0.58 |
|
|
$ |
|
1.03 |
|
|
$ |
|
1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - BASIC |
$ |
|
0.61 |
|
|
$ |
|
0.55 |
|
|
$ |
|
0.94 |
|
|
$ |
|
1.19 |
|
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - DILUTED |
$ |
|
0.59 |
|
|
$ |
|
0.52 |
|
|
$ |
|
0.90 |
|
|
$ |
|
1.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC |
|
|
50,161,680 |
|
|
|
|
36,024,566 |
|
|
|
|
48,455,033 |
|
|
|
|
35,551,947 |
|
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED |
|
|
54,064,395 |
|
|
|
|
39,691,361 |
|
|
|
|
52,357,748 |
|
|
|
|
39,218,742 |
|
7
Second Quarter 2024 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 June 30, 2024. 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 JV, EPT 16, and the RIA as of June 30, 2024. Based on the closing price of TRIN of $14.08 on August 6, 2024. As of June 30, 2024. Annualized based on the $0.51 dividend per share declared for Q2 2024 and a closing stock price of $14.14 on June 28, 2024. Includes $46.1 million of cash and cash equivalents and $95.3 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, TRINZ, TRINI 15-Year track Record(1) PORTFOLIO(4) LIQUIDITY(4) 350 Investments 200 Exits $1.7B Assets Under Management(2) MARKET CAP / DIVIDEND YIELD 14.4%Annualized Dividend Yield(5) $751.5M Market Cap(3) $13.12 NAV per share(4) $1,002.6M Secured Loans 70 Companies $332.6M Equipment Financings 32 Companies $89.6M Equity & Warrants 96 Companies $3.4B Fundings $141.4MAvailable Liquidity(6) BBB, BBB(low)Investment Ratings(7) 114%Debt-to-Equity
THE TRINITY PLATFORM Unique internal management structure and capitalization diversification fortifies the TRIN platform and produces enhanced value proposition Additional liquidity Fee and interest income Incremental returns Co-investment opportunities TRINITY CAPITAL (NASDAQ: TRIN) Internally Managed BDC Tech Lending | Equipment Financing | Life Sciences | Warehouse Lending | Sponsor Finance Senior Credit Corp 2022 LLC (Joint Venture) Co-investment vehicle owned 12.5% by TRIN. $235M AUM, as of June 30, 2024. Potential Private Vehicles (private funds, BDCs, SMAs, JVs) EPT 16 LLC (Private Fund advised by RIA) EPT 16 is a private co-investment fund intended to convert to a private BDC (pending SEC exemptive relief). Trinity Capital Adviser (Registered Investment Adviser “RIA”) Trinity’s wholly owned RIA generates management and incentive fees by advising private funds. Benefits to TRIN Shareholders
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 83 dedicated professionals with a unique culture built over 15+ years WHY IS TRINITY DIFFERENT Diversified Financial Solutions Diversified solutions including term loans, equipment financing and asset-based lending 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 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 June 30, 2024. 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 26 bps, which is more than offset by realized gains on warrant and equity investments(1)
Term Loans Select Examples SECURED TERM LOANS 01 SECURED LOANS Lien on all assets including IP 02 BACKED BY INSTITUTIONAL CAPITAL Companies have raised significant equity 03 STILL BURNING CASH Companies in growth mode and still burning cash 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 Whoop has developed a wearable device intended to provide personalized insights to improve overall fitness and wellness. Investor Syndicate Softbank, Foundry Group, IVP, Two Sigma Ventures Use of Loan Extension of runway
Equipment Financings Select Examples 02 EQUIPMENT FINANCINGS 01 COMPANIES WITH CAPEX REQUIREMENTS Mission-critical hard assets JUST-IN-TIME CAPITAL Available as needed to meet growing equipment needs 03 INDUSTRY AGNOSTIC 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 Rocket Lab is a company delivering launch services, spacecraft design services, spacecraft components, manufacturing and on-orbit management solutions. Investor Syndicate Blackrock, Deer Management, Vanguard Use of Equipment Financing Develop and produce rockets, equipment and design services for launch services, space vehicles.
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, EPT 16, and the RIA as of June 30, 2024. 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 $54.6M Net Investment Income (“NII”) of $26.7M Net Interest Margin (“NIM”) of 12.2% NII per share of $0.53 provides 103.9% of regular distribution coverage Consistent second quarter regular dividend distribution of $0.51 per share Robust Earnings Total Debt Investments (at cost): $1,374.7M Total Investments (at cost): $1,470.4M Total Platform Assets Under Management(2) (at fair value): $1,742.2M Effective Yield(3): 16.0% Core Yield(4): 14.7% Debt & equity commitments in 2Q24: $289.3M Debt & equity fundings in 2Q24: $230.6M Unfunded commitments(1) as of 6/30/2024: $436.1M Term sheets signed as of 6/30/2024: $360.8M Q2 2024 HIGHLIGHTS Leading Originations Platform Portfolio Assets
Net Investment Income covered regular dividend by 103.9% in 2Q24 Eighteenth consecutive consistent or increased regular dividend 14.4% annualized total dividend yield(1) SOLID SHAREHOLDER RETURNS Annualized based on the $0.51 dividend per share declared for Q2 2024 and a closing stock price of $14.14 on June 28, 2024.
For the three months ended For the three months ended Nine Months Ended September 30 (In thousands, except per share amounts) 06/30/2024 03/31/2024 12/31/2023 09/30/2023 06/30/2023 Total Investment Income $ 54,641 $ 50,453 $ 47,834 $ 46,438 $ 46,045 Interest expense and other debt financing costs 13,885 12,144 10,446 10,783 11,985 Compensation and benefits 9,944 9,864 8,434 8,693 8,350 General and administrative(1) 4,069 3,288 3,887 3,556 3,613 Total Operating Expenses 27,898 25,296 22,767 23,032 23,948 Net Investment Income (NII) 26,743 25,157 25,067 23,406 22,097 Net Realized Gain / (Loss) from Investments (6,488) 1,351 773 (1,868) (26,611) Net Change in Unrealized Appreciation / (Depreciation) from Investments 10,573 (12,000) (8,136) (4,717) 24,396 Net Increase (Decrease) in Net Assets from Operations $ 30,828 $ 14,508 $ 17,704 $ 16,821 $ 19,882 Net Investment Income (NII) per Share – Basic $0.53 $0.54 $0.57 $0.58 $0.61 Net Increase (Decrease) in Net Assets resulting from Operations per Share – Basic $0.61 $0.31 $0.40 $0.42 $0.55 Weighted Average Shares Outstanding – Basic 50,162 46,748 44,308 40,119 36,025 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) 06/30/2024 03/31/2024 12/31/2023 09/30/2023 06/30/2023 Assets Total investments at fair value $ 1,424,815 $ 1,363,862 $ 1,275,180 $ 1,116,552 $ 1,148,018 Cash and cash equivalents 46,102 11,967 4,761 7,230 12,268 Interest receivable 13,976 13,312 11,206 10,920 12,117 Other assets 20,534 20,551 19,835 16,224 16,680 Total Assets $ 1,505,427 $ 1,409,692 $ 1,310,982 $ 1,150,926 $ 1,189,083 Liabilities KeyBank Credit Facility $ 254,700 $ 190,000 $ 213,000 $ 100,000 $ 232,000 2025 Notes, net of unamortized deferred financing cost 151,452 180,969 180,485 180,002 179,519 August 2026 Notes, net of unamortized deferred financing cost 123,762 123,618 123,474 123,330 123,186 March 2029 Notes, net of unamortized deferred financing cost 111,782 111,809 -- -- -- December 2026 Notes, net of unamortized deferred financing cost 74,085 73,992 73,898 73,805 73,712 Convertible Notes, net of unamortized deferred financing cost and discount 49,076 48,916 48,757 48,597 48,437 Distribution payable 26,443 24,808 23,162 23,353 19,432 Security deposits 11,169 11,114 12,287 14,464 14,986 Accounts payable, accrued expenses, and other liabilities 22,919 18,150 24,760 17,912 15,816 Total Liabilities $ 825,388 $ 783,376 $ 699,823 $ 581,463 $ 707,088 Net Assets $ 680,039 $ 626,316 $ 611,159 $ 569,463 $ 481,995 Shares outstanding 51,849 48,643 46,324 43,247 36,665 Net Assets per Share (NAV per share) $13.12 $12.88 $13.19 $13.17 $13.15 QUARTERLY BALANCE SHEET
Includes the impact of share activity and equity incentive plans. NET ASSET VALUE (NAV) PER SHARE BRIDGE Earnings and Distributions Investment Portfolio Performance ShareImpact(1)
Diversified Borrowings ($ in millions) as of June 30, 2024 Funding Source Debt Commitment Outstanding Principal Undrawn Commitment Stated Maturity Interest Rate Notes: 2025 Unsecured Notes(1) $152.5 $152.5 - 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% March 2029 Unsecured Notes(3) $115.0 $115.0 - March 30, 2029(4) 7.875% Bank Facility: KeyBank Credit Facility $400.0(5) $254.7 $95.3(5) October 27, 2026 Adjusted Term SOFR + 2.85% to 3.25% DEBT CAPITAL STRUCTURE The 2025 Unsecured Notes trade on the Nasdaq Global Select Market under the symbol “TRINL.” Callable at par, in whole or in part, at any time on or after January 16, 2023. On May 17, 2024, the Company redeemed $30.0 million in aggregate principal amount of the then outstanding 2025 Notes. Following this redemption, the remaining aggregate principal amount outstanding of such notes is $152.5 million. The March 2029 Unsecured Notes trade on the Nasdaq Global Select Market under the symbol “TRINZ.” Callable at par, in whole or in part, at any time on or after March 30, 2026. Represents maximum facility amount of which $350.0 million is available as of June 30, 2024. On August 2, 2024, the Company increased the facility to $690.0 million, of which $440.0 million is available.
PORTFOLIO HIGHLIGHTS
PORTFOLIO DIVERSIFICATION Diversified across investment type, transaction size, industry and geography Based on fair market value as of June 30, 2024. Includes debt investments only. Consists of the fair value of our investments in the JV, EPT 16, and the RIA as of June 30, 2024. The portfolio companies held within the multi-sector holdings 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 2.0% Multi-Sector Holdings(3) 1.6% 28.7% 11.0% 5.0% 13.0% 6.8% 31.9%
Based on outstanding principal. Based on fair market value. Mix of fixed and floating rate investments Strong asset diversification PORTFOLIO TRENDS
2Q24 1Q24 4Q23 3Q23 2Q23 Very Strong Performance (4.0 – 5.0) $70,183 5.3% $56,991 4.5% $40,584 3.3% $34,728 3.3% $8,758 0.8% Strong Performance (3.0 – 3.9) $306,187 23.1% $275,106 21.5% $277,867 22.9% $225,408 21.3% $272,933 25.0% Performing (2.0 – 2.9) $886,030 67.0% $875,950 68.5% $805,730 66.3% $740,097 70.1% $762,695 69.7% Watch (1.6– 1.9) $53,449 4.0% $65,410 5.1% $56,740 4.7% $38,584 3.6% $34,410 3.1% Default/Workout (1.0 – 1.5) $8,035 0.6% $5,539 0.4% $33,452 2.8% $17,540 1.7% $15,216 1.4% Weighted Average 2.7 2.7 2.7 2.8 2.8 Credit Risk Rating of Debt investments at Fair Value, 2Q 2024 – 2Q 2023 ($ 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 $11.3 million as of June 30, 2024. (1)
INTEREST RATE SENSITIVITY 69.9% floating rate debt investment portfolio as of June 30, 2024(1) 33.0% floating rate borrowings as of June 30, 2024(2) Based on outstanding principal of debt investments. Based on outstanding principal of borrowings.
HYPOTHETICAL WARRANT UPSIDE Proceeds of $63.4 million (2X) Potential gain of $16.4 millionor $0.32 per share Proceeds of $95.1 million (3X) Potential gain of $48.1 millionor $0.93 per share Proceeds of $126.8 million (4X) Potential gain of $79.8 millionor $1.54 per share 156 Warrant Positions in 102 Portfolio Companies GAAP fair value ~ $37.4 million GAAP cost ~ $30.5 million ~ $63.4 million in nominal exercise value Hypothetical Models of Potential Warrant Gains at 6/30/2024 Assume that only 50% of warrants will monetize Cost of exercised warrants is ~ $47.0 million Based on 51.8 million shares of common stock outstanding at 6/30/2024 MULTIPLE MULTIPLE MULTIPLE 2X 3X 4X For Illustration Purposes Only
Select List of Current & Historical Investments DIVERSIFIED PORTFOLIO
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) Douglas Harter (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. Matt Hurwit (initiated coverage 7/5/2023)
SUPPLEMENTAL INFORMATION
BUSINESS DEVELOPMENT COMPANY (BDC) REGULATED INVESTMENT COMPANY (RIC) Trinity Capital Inc. is an Internally Managed BDC regulated 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-to-equity Investments are required to be carried at fair value Majority of Board of Directors must be independent Must offer managerial assistance to portfolio companies Must distribute at least 90% of taxable income as dividend distributions to shareholders, subject to approval by Board of Directors Mandates asset diversification Eliminates corporate taxation Allows for the retention of capital gains and/or spillover of taxable income REGULATION & STRUCTURE
32 THANK YOU We look forward to our growing partnership. TRINITYCAP.COM