Record Net Investment Income of $25.2 Million in Q1
Record Total Investment Income of $50.5 Million
Return on Average Equity of 16.1%
PHOENIX, May 1, 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 first quarter ended March
31, 2024.
First Quarter 2024 Highlights
- Record total investment income of $50.5
million, an increase of 21.5% year-over-year
- Record net investment income ("NII") of $25.2 million, or $0.54 per basic share, an increase of 30.1%
year-over-year
- Net increase in net assets resulting from operations of
$14.5 million, or $0.31 per basic share
- 16.1% Return on Average Equity "ROAE" (NII/Average Equity)
- 7.5% Return on Average Assets "ROAA" (NII/Average Assets)
- Net Asset Value of $626.3
million, or $12.88 per share
at the end of Q1
- Total gross investment commitments of $286.8 million
- Total gross investments funded of $242.7
million, comprised of $182.9
million across eight new portfolio companies, $57.4 million across 12 existing portfolio
companies and $2.4 million into
Trinity's joint venture (the "JV")
- Debt principal repayments of $148.5
million, including $43.4
million from early repayments on debt investments
- 13th consecutive increase in the regular quarterly
dividend after the first-quarter distribution of $0.51 per share, an increase of 2.0% from the
regular dividend declared in the fourth quarter of 2023
"Trinity's diversified investment platform continued to execute
during the first quarter, delivering strong origination performance
and record net investment income for our shareholders," said
Kyle Brown, Chief Executive Officer
of Trinity. "Our business fundamentals remain strong, and we
continue to benefit from increasing private credit demand while
adhering to our rigorous approach to underwriting and portfolio
management."
Brown further highlighted, "We believe that Trinity's
experienced team and differentiated investment strategy position us
to perform in any market environment. Interest in direct lending
solutions is accelerating, and we stand ready to assist growing
companies with our diverse capital offerings."
First Quarter 2024 Operating Results
For the three months ended March 31, 2024, total investment
income was $50.5 million compared to $41.5
million for the quarter ended March 31, 2023. This
represents an effective yield on the average debt investments at
cost of 15.8% and 15.2% for the periods ended March 31,
2024 and 2023, 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 first quarter of 2024 were $13.2
million compared to $11.1 million during the first
quarter of 2023. The increase is primarily attributable to higher
compensation and benefits associated with additional headcount,
variable compensation and amortization of restricted stock
grants.
Interest expense for the first quarter of 2024 was $12.1
million compared to $11.1 million during the first
quarter of 2023. The increase is primarily attributable to an
increase in the average debt outstanding and an increase in the
weighted average interest rate on total debt.
Net investment income was approximately $25.2 million,
or $0.54 per share based on 46.7 million basic weighted
average shares outstanding for the first quarter of 2024, compared
to $19.3 million or $0.55 per share for the
first quarter of 2023 based on 35.1 million basic weighted average
shares outstanding.
During the three months ended March 31,
2024, our net unrealized depreciation totaled approximately
$12.0 million, which included net
unrealized appreciation of $3.8
million from our warrant investments, net unrealized
depreciation of $3.4 million from our
equity investments and net unrealized depreciation of $12.4 million from our debt investments.
Net realized gain on investments was approximately $1.4
million, primarily attributable to the equipment financing to Core
Scientific, Inc.
Net increase in net assets resulting from operations
was $14.5 million, or $0.31 per share, based on 46.7
million basic weighted average shares outstanding. This compares to
a net increase in net assets resulting from operations
of $22.5 million, or $0.64 per share, based on
35.1 million basic weighted average shares outstanding for the
first quarter of 2023. Trinity's higher weighted average shares
outstanding for the first quarter as compared to the same period in
the prior year was mostly attributable to additional shares issued
during the quarter.
Net Asset Value
As of March 31, 2024, total net
assets increased to $626.3 million,
compared to $611.2 million as of
December 31, 2023. The increase in
total net assets was primarily driven by net investment income that
exceeded the declared dividend and proceeds received from the
shares issued under the ATM program during the quarter, partially
offset by net unrealized depreciation on investments. The change in
NAV per share to $12.88 from
$13.19 per share in the prior quarter
was primarily attributed to new restricted stock awards and net
unrealized depreciation on investments, partially offset by the
accretive issuances of shares under the ATM program.
Portfolio and Investment Activity
As of March 31, 2024, Trinity's
investment portfolio had an aggregate fair value of approximately
$1.4 billion and was comprised of
approximately $1.0 billion in secured
loans, $277.6 million in equipment
financings and $75.5 million in
equity and warrants across 128 portfolio companies. The Company's
debt portfolio is comprised of 75.3% first lien loans and 24.7%
second lien loans, with 75.4% of the debt portfolio at floating
rates based on principal outstanding.
During the first quarter, the Company originated
approximately $286.8 million of total new commitments and
funded approximately $242.7 million, which was comprised
of $182.9 million of investments in eight new portfolio
companies, $57.4 million of investments in 12 existing
portfolio companies and $2.4 million of investments in
the JV. Gross investment fundings during the quarter for secured
loans totaled $187.4 million, equipment financings
totaled $50.1 million and warrant and equity investments
totaled $5.3 million.
Proceeds received from repayments of the Company's debt
investments during the first quarter totaled
approximately $148.5 million, which included $43.4
million from early repayments on debt investments and
$55.4 million of assets sold to the
JV. The investment portfolio increased by $100.7 million, or
approximately 7.6%, on a cost basis, and by $88.7 million, or
approximately 7.0%, at fair value as compared to December 31,
2023. Total assets under management, including the assets in the
JV, increased by 10.2% to a total of $1.6 billion.
As of the end of the first quarter, secured loans to four
portfolio companies and equipment financings to one portfolio
company were on non-accrual status, with an aggregate fair value of
approximately $30.4 million, or 2.4%
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 March 31,
2024 and December 31, 2023
(dollars in thousands):
|
|
|
|
March 31,
2024
|
|
December 31,
2023
|
Investment
Risk
Rating
Scale Range
|
|
Designation
|
|
Investments at
Fair Value
|
|
Percentage
of
Total
Portfolio
|
|
Investments at
Fair Value
|
|
Percentage
of
Total
Portfolio
|
4.0 - 5.0
|
|
Very Strong
Performance
|
|
$
|
56,991
|
|
4.4 %
|
|
$
|
40,584
|
|
3.3 %
|
3.0 - 3.9
|
|
Strong
Performance
|
|
|
275,107
|
|
21.4 %
|
|
|
277,867
|
|
22.9 %
|
2.0 - 2.9
|
|
Performing
|
|
|
875,950
|
|
68.0 %
|
|
|
805,730
|
|
65.9 %
|
1.6 - 1.9
|
|
Watch
|
|
|
65,410
|
|
5.1 %
|
|
|
56,740
|
|
4.6 %
|
1.0 - 1.5
|
|
Default/Workout
|
|
|
5,539
|
|
0.4 %
|
|
|
33,452
|
|
2.7 %
|
Total Debt Investments
excluding
Senior Credit Corp 2022
LLC
|
|
|
1,278,997
|
|
99.3 %
|
|
|
1,214,373
|
|
99.4 %
|
|
|
Senior Credit
Corp
2022
LLC (1)
|
|
|
9,394
|
|
0.7 %
|
|
|
7,704
|
|
0.6 %
|
Total Debt
Investments
|
|
$
|
1,288,391
|
|
100.0 %
|
|
$
|
1,222,077
|
|
100.0 %
|
_____________
|
(1) An investment risk rating is not applied to
Senior Credit Corp 2022 LLC.
|
As of both March 31, 2024 and
December 31, 2023, the Company's loan
and equipment financing investments had a weighted average risk
rating score of 2.7. Trinity'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 they are underperforming relative to their
business plans. Conversely, they may be upgraded upon a
capitalization event or if they are exceeding their plan. As such,
the overall grading may fluctuate quarter-to-quarter.
Liquidity and Capital Resources
As of March 31, 2024, the Company
had approximately $172.0 million in
available liquidity, including $12.0 million in
unrestricted cash and cash equivalents. At the end of the period,
the Company had approximately $160.0
million in available borrowing capacity under its credit
facility with KeyBank, subject to existing terms and advance rates
and regulatory and covenant requirements.
In March 2024, the Company closed
an underwritten public offering of $100.0
million in aggregate principal amount of 7.875% notes due
2029 (the "March 2029 Notes") and the
underwriters subsequently exercised their option to purchase an
additional $15.0 million of the
March 2029 Notes. The March 2029 Notes are traded on the Nasdaq Global
Select Market under the trading symbol "TRINZ." On April 16, 2024, the Company caused notice to be
issued to the holders regarding the Company's exercise of its
option to redeem a portion of the issued and outstanding 2025
Notes. The Company will redeem $30.0
million in aggregate principal amount of the $182.5 million in aggregate principal amount of
outstanding 2025 Notes on May 17,
2024.
As of March 31, 2024, Trinity's leverage or debt-to-equity
ratio was approximately 118% as compared to 106% as
of December 31, 2023. The increase in the leverage ratio was
primarily attributable to the increase in total debt outstanding to
fund net portfolio growth.
During the three months ended March 31,
2024, Trinity utilized its ATM offering program to sell 1.7
million shares of its common stock at a weighted average price of
$14.84 per share, raising
$24.3 million of net proceeds.
As of March 31, 2024, the JV had
approximately $94.5 million in
available liquidity, including $64.0
million of uncalled capital, $30.3
million of availability under the JV's credit facility and
$0.2 million of cash and cash
equivalents. During the quarter, the JV expanded its credit
facility to $120 million.
Distributions
On March 14, 2024, the Company's
Board of Directors declared a dividend of $0.51 per share with respect to the quarter ended
March 31, 2024, which was paid on
April 15, 2024, to stockholders of
record as of March 28, 2024.
Conference Call
Trinity will hold a conference call to discuss its first quarter
2024 financial results at 9:00 a.m. Pacific
Time (12:00 p.m. Eastern Time)
on Wednesday, May 1, 2024.
To listen to the call, please dial (800) 245-3047, or (203)
518-9765 internationally, and reference Conference ID: TRINQ124 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) 839-2389 or
(402) 220-7204.
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.
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.
TRINITY CAPITAL
INC.
Consolidated
Statements of Assets and Liabilities
(In thousands,
except share and per share data)
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2024
|
|
|
2023
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Investments at fair
value:
|
|
|
|
|
|
|
Control investments
(cost of $43,972 and $43,807, respectively)
|
|
$
|
34,989
|
|
|
$
|
32,861
|
|
Affiliate investments
(cost of $13,421 and $11,006, respectively)
|
|
|
14,004
|
|
|
|
11,335
|
|
Non-Control /
Non-Affiliate investments (cost of $1,362,605 and
$1,264,503,
respectively)
|
|
|
1,314,869
|
|
|
|
1,230,984
|
|
Total investments
(cost of $1,419,998 and $1,319,316, respectively)
|
|
|
1,363,862
|
|
|
|
1,275,180
|
|
Cash and cash
equivalents
|
|
|
11,967
|
|
|
|
4,761
|
|
Interest
receivable
|
|
|
13,312
|
|
|
|
11,206
|
|
Deferred credit
facility costs
|
|
|
1,955
|
|
|
|
2,144
|
|
Other
assets
|
|
|
18,596
|
|
|
|
17,691
|
|
Total
assets
|
|
$
|
1,409,692
|
|
|
$
|
1,310,982
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
KeyBank Credit
Facility
|
|
$
|
190,000
|
|
|
$
|
213,000
|
|
2025 Notes, net of
$1,531 and $2,015, respectively, of unamortized deferred
financing
costs
|
|
|
180,969
|
|
|
|
180,485
|
|
August 2026 Notes, net
of $1,382 and $1,526, respectively, of unamortized
deferred financing
costs
|
|
|
123,618
|
|
|
|
123,474
|
|
March 2029 Notes, net
of $3,191 and $0, respectively, of unamortized
deferred financing
costs
|
|
|
111,809
|
|
|
|
—
|
|
December 2026 Notes,
net of $1,008 and $1,102, respectively, of
unamortized deferred
financing costs
|
|
|
73,992
|
|
|
|
73,898
|
|
Convertible Notes, net
of $1,084 and $1,243, respectively, of unamortized
deferred financing
costs and discount
|
|
|
48,916
|
|
|
|
48,757
|
|
Distribution
payable
|
|
|
24,808
|
|
|
|
23,162
|
|
Security
deposits
|
|
|
11,114
|
|
|
|
12,287
|
|
Accounts payable,
accrued expenses and other liabilities
|
|
|
18,150
|
|
|
|
24,760
|
|
Total
liabilities
|
|
|
783,376
|
|
|
|
699,823
|
|
|
|
|
|
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
Common stock, $0.001
par value per share (200,000,000 authorized,
48,643,194 and
46,323,712 shares issued and outstanding as of
March 31, 2024 and
December 31, 2023, respectively)
|
|
|
49
|
|
|
|
46
|
|
Paid-in capital in
excess of par
|
|
|
659,194
|
|
|
|
633,740
|
|
Distributable
earnings/(accumulated deficit)
|
|
|
(32,927)
|
|
|
|
(22,627)
|
|
Total net
assets
|
|
|
626,316
|
|
|
|
611,159
|
|
Total liabilities
and net assets
|
|
$
|
1,409,692
|
|
|
$
|
1,310,982
|
|
NET ASSET VALUE PER
SHARE
|
|
$
|
12.88
|
|
|
$
|
13.19
|
|
TRINITY CAPITAL
INC.
Consolidated
Statements of Operations
(In thousands,
except share and per share data)
(Unaudited)
|
|
|
|
Three
Months
Ended
|
|
|
Three
Months
Ended
|
|
|
|
|
March 31, 2024
|
|
|
March 31, 2023
|
|
|
INVESTMENT
INCOME:
|
|
|
|
|
|
|
|
|
|
Interest and dividend
income:
|
|
|
|
|
|
|
|
|
|
Control
investments
|
|
$
|
|
852
|
|
|
$
|
|
1,116
|
|
|
Affiliate
investments
|
|
|
|
385
|
|
|
|
|
34
|
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
48,155
|
|
|
|
|
39,381
|
|
|
Total interest and
dividend income
|
|
|
|
49,392
|
|
|
|
|
40,531
|
|
|
Fee and other
income:
|
|
|
|
|
|
|
|
|
|
Affiliate
investments
|
|
|
|
866
|
|
|
|
|
453
|
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
195
|
|
|
|
|
554
|
|
|
Total fee and other
income
|
|
|
|
1,061
|
|
|
|
|
1,007
|
|
|
Total investment
income
|
|
|
|
50,453
|
|
|
|
|
41,538
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Interest expense and
other debt financing costs
|
|
|
|
12,144
|
|
|
|
|
11,081
|
|
|
Compensation and
benefits
|
|
|
|
9,864
|
|
|
|
|
7,617
|
|
|
Professional
fees
|
|
|
|
720
|
|
|
|
|
1,417
|
|
|
General and
administrative
|
|
|
|
1,929
|
|
|
|
|
1,495
|
|
|
Total
expenses
|
|
|
|
24,657
|
|
|
|
|
21,610
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME/(LOSS) BEFORE TAXES
|
|
|
|
25,796
|
|
|
|
|
19,928
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax
expense
|
|
|
|
639
|
|
|
|
|
597
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME
|
|
|
|
25,157
|
|
|
|
|
19,331
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REALIZED
GAIN/(LOSS) FROM INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
1,351
|
|
|
|
|
(365)
|
|
|
Net realized
gain/(loss) from investments
|
|
|
|
1,351
|
|
|
|
|
(365)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN
UNREALIZED APPRECIATION/(DEPRECIATION) FROM
INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
Control
investments
|
|
|
|
1,963
|
|
|
|
|
408
|
|
|
Affiliate
investments
|
|
|
|
254
|
|
|
|
|
976
|
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
(14,217)
|
|
|
|
|
2,136
|
|
|
Net change in
unrealized appreciation/(depreciation) from
investments
|
|
|
|
(12,000)
|
|
|
|
|
3,520
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS
|
|
$
|
|
14,508
|
|
|
$
|
|
22,486
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT INCOME
PER SHARE - BASIC
|
|
$
|
|
0.54
|
|
|
$
|
|
0.55
|
|
|
NET INVESTMENT INCOME
PER SHARE - DILUTED
|
|
$
|
|
0.52
|
|
|
|
|
0.52
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE - BASIC
|
|
$
|
|
0.31
|
|
|
$
|
|
0.64
|
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE -
DILUTED
|
|
$
|
|
0.30
|
|
|
$
|
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC
|
|
|
|
46,748,386
|
|
|
|
|
35,074,076
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED
|
|
|
|
50,595,651
|
|
|
|
|
38,740,871
|
|
|
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SOURCE Trinity Capital Inc.