PHOENIX, May 4, 2023
/PRNewswire/ -- Trinity Capital Inc. (Nasdaq: TRIN and TRINL)
("Trinity Capital" 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, 2023.
First Quarter 2023 Highlights
- Total investment income of $41.5
million, an increase of 30.5% year-over-year
- Net investment income ("NII") of $19.3
million, or $0.55 per basic
share, an increase of 23.7% year-over-year
- Net increase in net assets resulting from operations of
$22.5 million, or $0.64 per basic share
- Aggregate debt and equity investment commitments of
$43.2 million
- Total gross investments funded of $70.4
million, comprised of $5.0
million in one new portfolio company, $60.2 million across 11 existing portfolio
companies, and $5.2 million into the
recently formed joint venture (the "JV")
- 16.5% Return on Average Equity "ROAE" (NII/Average Equity)
- 6.8% Return on Average Assets "ROAA" (NII/Average Assets)
- Debt principal repayments of $82.8
million, including $13.1
million from early repayments and $42.1 million of assets sold to the JV
- Declared a dividend distribution of $0.47 per share for the first quarter of 2023, an
increase of 2.2% from the regular dividend declared in the fourth
quarter of 2022
"Our performance in the first quarter generated record NII
results, providing 117% coverage on our regular dividend," said
Steven Brown, Chairman and Chief
Executive Officer of Trinity Capital. "Trinity's differentiated
platform is positioned to capitalize on investment opportunities in
a dynamic market as companies seek a partner that can support them
through their various growth stages. Our veteran team, diversified
portfolio and strong balance sheet, supported by our joint venture,
are as healthy as ever as we provide financial solutions that meet
the needs of growth-stage businesses."
Kyle Brown, President and Chief
Investment Officer of Trinity Capital, added, "Trinity is well
positioned given recent volatility in the banking industry, which
has fundamentally changed the market. Businesses are looking for
more stable, non-bank solutions for their financing needs and we
intend to capitalize on this opportunity with a combination of on-
and off-balance sheet solutions. Our core priorities of portfolio
management and credit quality remain firmly rooted in our operating
process. We continue to track markets and maintain constant
oversight and communication with our portfolio companies as they
navigate the current economic environment. Trinity continues to
realize its vision as an emerging leader, providing diversified
financial solutions to the global growth economy."
First Quarter 2023 Operating Results
For the three months ended March 31, 2023, total investment
income was $41.5 million compared to $31.8
million for the quarter ended March 31, 2022. This
represents an effective yield on the average debt investments at
cost of 15.2% and 16.3% for the periods ended March 31,
2023 and 2022, respectively. The decrease in the effective
yield is attributed to lower fees and income acceleration as a
result of lower early repayments. 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 2023 were $11.1
million compared to $9.4 million during the first
quarter of 2022. The increase was primarily attributable to higher
compensation associated with additional headcount, variable
compensation, amortization of restricted stock grants and higher
professional fees.
Interest expense for the first quarter of 2023 was $11.1
million compared to $6.8 million during the first
quarter of 2022. The increase is primarily attributable to an
increase in borrowings under the 2025 Notes and the KeyBank Credit
Facility, and increased interest rates under the credit facility
due to an increase in SOFR.
Net investment income was approximately $19.3 million,
or $0.55 per share based on 35.1 million basic weighted
average shares outstanding for the first quarter of 2023, compared
to $15.6 million or $0.57 per share for the
first quarter of 2022 based on 27.4 million basic weighted average
shares outstanding.
Net unrealized appreciation of $3.5 million during the
first quarter of 2023 was primarily attributable to $2.8 million related to specific portfolio
adjustments in connection with improved performance by the
portfolio companies, $1.4 million
related to interest rate changes and $0.3
million due to the reversal of unrealized depreciation to
realized losses, offset by $1.0
million related to general market volatility.
First quarter 2023 net realized loss on investments was
approximately $0.4 million, primarily attributable to a loss
in one portfolio company.
First quarter 2023 net increase in net assets resulting from
operations was $22.5 million, or $0.64 per share based on
35.1 million basic weighted average shares outstanding. This
compares to a net decrease in net assets resulting from operations
of $9.1 million or $0.33 per share based on
27.4 million basic weighted average shares outstanding for the
first quarter of 2022.
Trinity Capital's higher weighted average share count for the
three-month period ended March 31,
2023, as compared to the prior year is primarily the result
of shares issued under public equity offerings in April and August
of 2022, shares issued under the Company's ATM program and dividend
reinvestment plan and the issuance of restricted stock to officers
and employees under the 2019 Trinity Capital Inc. Long Term
Incentive Plan, offset by shares purchased under the Company's
stock repurchase program.
Net Asset Value
Total net assets at the end of the first quarter of 2023
increased by 2.2% to $469.7 million,
compared to $459.6 million at the end
of Q4 2022. The increase in total net assets was primarily driven
by net investment income that exceeded the declared dividend and
net unrealized appreciation. The decrease in NAV per share to
$13.07 from $13.15 per share was primarily driven by
additional shares issued through restricted stock awards.
Portfolio and Investment Activity
As of March 31, 2023, Trinity
Capital's investment portfolio had an aggregate fair value of
approximately $1.1 billion and was
comprised of approximately $808.0
million in secured loans, $239.1
million in equipment financings and $44.4 million in equity and warrants across 115
portfolio companies, including the Company's investment in the JV.
The Company's debt portfolio is comprised of 71.5% first lien loans
and 28.5% second lien loans, with 70.0% of the debt portfolio at
floating rates based on principal outstanding.
During the first quarter, the Company originated approximately
$43.2 million of total new
commitments. First quarter investments funded totaled approximately
$70.4 million, which was comprised of
a $5.0 million investment in one new
portfolio company, a $5.2 million
investment in the JV and approximately $60.2
million of investments in 11 existing portfolio companies.
Investment fundings during the quarter for loans totaled
$35.9 million, equipment financings
totaled $31.3 million and warrant and
equity investments totaled $3.2
million.
Proceeds received from repayments of the Company's debt
investments during the first quarter totaled approximately
$82.8 million, which included
$42.1 million of investments sold to
the JV, $27.6 million from normal
amortization and $13.1 million from
early debt repayments. The investment portfolio decreased by
$6.4 million on a cost basis, a
decrease of 0.6%; and by $2.9 million
on a fair value basis, a decrease of 0.3% as compared to
December 31, 2022.
As of the end of the first quarter and consistent with the prior
quarter, loans to two portfolio companies and equipment financings
to two portfolio companies were on non-accrual status with a total
fair value of approximately $23.9
million, or just 2.3% 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,
2023 and December 31, 2022
(dollars in thousands):
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
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
|
|
$
|
2,513
|
|
0.2 %
|
|
$
|
2,729
|
|
0.3 %
|
3.0 - 3.9
|
|
Strong
Performance
|
|
|
285,484
|
|
27.3 %
|
|
|
239,872
|
|
22.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.0 - 2.9
|
|
Performing
|
|
|
719,752
|
|
68.8 %
|
|
|
756,596
|
|
72.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.6 - 1.9
|
|
Watch
|
|
|
19,270
|
|
1.8 %
|
|
|
39,315
|
|
3.7 %
|
1.0 - 1.5
|
|
Default/Workout
|
|
|
16,450
|
|
1.6 %
|
|
|
10,317
|
|
1.0 %
|
Total Debt Investments
excluding i40,
LLC
|
|
|
1,043,469
|
|
99.7 %
|
|
|
1,048,829
|
|
100.0 %
|
|
|
i40, LLC
|
|
|
3,629
|
|
0.3 %
|
|
|
—
|
|
0.0 %
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
Investments
|
|
$
|
1,047,098
|
|
100.0 %
|
|
$
|
1,048,829
|
|
100.0 %
|
As of March 31, 2023, the
Company's loan and equipment financing investments had a weighted
average risk rating score of 2.8 as compared to 2.8 as of
December 31, 2022. 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
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, 2023, the Company
had approximately $174.8 million in
available liquidity, including $8.3 million in
unrestricted cash and cash equivalents. At the end of the period,
the Company had approximately $166.5
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 March 31, 2023, Trinity
Capital's leverage or debt-to-equity ratio was approximately 131%
as compared to 135% as of December 31,
2022. The decrease in the leverage ratio was primarily
attributable to the increase in total net assets during the first
quarter of 2023.
Distributions
On March 14, 2023, the Company's
Board of Directors declared a dividend of $0.47 per share with respect to the quarter ended
March 31, 2023, which was paid on
April 14, 2023, to stockholders of
record as of March 31, 2023.
Conference Call
Trinity Capital will hold a conference call to discuss its first
quarter 2023 financial results at 3:00 p.m.
Pacific Time (6:00 p.m. Eastern
Time) on Thursday, May 4,
2023.
To listen to the call, please dial (800) 343-4849, or (203)
518-9856 internationally, and reference Conference ID: TRINQ123 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) 839-9145 or
(402) 220-6080.
About Trinity Capital Inc.
Trinity Capital Inc. (Nasdaq: TRIN and TRINL), 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, including the
impact of the COVID-19 pandemic on the economy, financial markets,
our business, our portfolio companies and our industry. Actual
results may differ materially from those in the forward-looking
statements as a result of a number of factors, including those
described from time to time in filings with the Securities and
Exchange Commission. Trinity 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.
TRINITY
CAPITAL INC
|
Consolidated
Statements of Assets and Liabilities
|
(In thousands,
except share and per share data)
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Investments at fair
value:
|
|
|
|
|
|
|
Control investments
(cost of $44,096 and $43,375, respectively)
|
|
$
|
38,442
|
|
|
$
|
37,313
|
|
Affiliate investments
(cost of $28,580 and $28,580, respectively)
|
|
|
7,688
|
|
|
|
1,528
|
|
Non-control /
Non-affiliate investments (cost of $1,074,533 and $1,081,629,
respectively)
|
|
|
1,045,401
|
|
|
|
1,055,545
|
|
Total investments
(cost of $1,147,209 and $1,153,584, respectively)
|
|
|
1,091,531
|
|
|
|
1,094,386
|
|
Cash and cash
equivalents
|
|
|
8,344
|
|
|
|
10,612
|
|
Interest
receivable
|
|
|
10,450
|
|
|
|
9,971
|
|
Deferred credit
facility costs
|
|
|
2,713
|
|
|
|
2,903
|
|
Other
assets
|
|
|
10,264
|
|
|
|
8,567
|
|
Total
assets
|
|
$
|
1,123,302
|
|
|
$
|
1,126,439
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
KeyBank Credit
Facility
|
|
$
|
183,500
|
|
|
$
|
187,500
|
|
2025 Notes, net of
$3,465 and $3,948, respectively, of unamortized deferred
financing
costs
|
|
|
179,035
|
|
|
|
178,552
|
|
August 2026 Notes, net
of $1,959 and $2,103, respectively, of unamortized deferred
financing costs
|
|
|
123,041
|
|
|
|
122,897
|
|
December 2026 Notes,
net of $1,381 and $1,474, respectively, of unamortized
deferred financing costs
|
|
|
73,619
|
|
|
|
73,526
|
|
Convertible Notes, net
of $1,722 and $1,882, respectively, of unamortized deferred
financing costs and discount
|
|
|
48,278
|
|
|
|
48,118
|
|
Distribution
payable
|
|
|
16,885
|
|
|
|
21,326
|
|
Security
deposits
|
|
|
15,277
|
|
|
|
15,100
|
|
Accounts payable,
accrued expenses and other liabilities
|
|
|
13,997
|
|
|
|
19,771
|
|
Total
liabilities
|
|
|
653,632
|
|
|
|
666,790
|
|
|
|
|
|
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
Common stock, $0.001
par value per share (200,000,000 authorized, 35,925,764 and
34,960,672 shares issued and outstanding as of
March 31, 2023 and
December 31, 2022, respectively)
|
|
|
36
|
|
|
|
35
|
|
Paid-in capital in
excess of par
|
|
|
484,951
|
|
|
|
480,532
|
|
Distributable
earnings/(accumulated deficit)
|
|
|
(15,317)
|
|
|
|
(20,918)
|
|
Total net
assets
|
|
|
469,670
|
|
|
|
459,649
|
|
Total liabilities
and net assets
|
|
$
|
1,123,302
|
|
|
$
|
1,126,439
|
|
NET ASSET VALUE PER
SHARE
|
|
$
|
13.07
|
|
|
$
|
13.15
|
|
TRINITY
CAPITAL INC.
|
Consolidated
Statements of Operations
|
(In thousands,
except share and per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
March 31, 2023
|
|
|
March 31, 2022
|
|
INVESTMENT
INCOME:
|
|
|
|
|
|
|
|
|
Interest
income:
|
|
|
|
|
|
|
|
|
Control
investments
|
|
$
|
|
1,116
|
|
|
$
|
|
1,373
|
|
Affiliate
investments
|
|
|
|
34
|
|
|
|
|
428
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
39,381
|
|
|
|
|
26,605
|
|
Total interest
income
|
|
|
|
40,531
|
|
|
|
|
28,406
|
|
Fee income:
|
|
|
|
|
|
|
|
|
Affiliate
investments
|
|
|
|
453
|
|
|
|
|
—
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
554
|
|
|
|
|
3,439
|
|
Total fee
income
|
|
|
|
1,007
|
|
|
|
|
3,439
|
|
Total investment
income
|
|
|
|
41,538
|
|
|
|
|
31,845
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
Interest expense and
other debt financing costs
|
|
|
|
11,081
|
|
|
|
|
6,798
|
|
Compensation and
benefits
|
|
|
|
7,617
|
|
|
|
|
6,455
|
|
Professional
fees
|
|
|
|
1,417
|
|
|
|
|
832
|
|
General and
administrative
|
|
|
|
1,495
|
|
|
|
|
1,477
|
|
Total
expenses
|
|
|
|
21,610
|
|
|
|
|
15,562
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME/(LOSS) BEFORE TAXES
|
|
|
|
19,928
|
|
|
|
|
16,283
|
|
|
|
|
|
|
|
|
|
|
Excise tax
expense
|
|
|
|
597
|
|
|
|
|
674
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME
|
|
|
|
19,331
|
|
|
|
|
15,609
|
|
|
|
|
|
|
|
|
|
|
NET REALIZED
GAIN/(LOSS) FROM INVESTMENTS:
|
|
|
|
|
|
|
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
(365)
|
|
|
|
|
52,644
|
|
Net realized
gain/(loss) from investments
|
|
|
|
(365)
|
|
|
|
|
52,644
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN
UNREALIZED APPRECIATION/(DEPRECIATION) FROM
INVESTMENTS:
|
|
|
|
|
|
|
|
|
Control
investments
|
|
|
|
408
|
|
|
|
|
(4,331)
|
|
Affiliate
investments
|
|
|
|
976
|
|
|
|
|
(3,264)
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
2,136
|
|
|
|
|
(69,723)
|
|
Net change in
unrealized appreciation/(depreciation) from
investments
|
|
|
|
3,520
|
|
|
|
|
(77,318)
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS
|
|
$
|
|
22,486
|
|
|
$
|
|
(9,065)
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT INCOME
PER SHARE - BASIC
|
|
$
|
|
0.55
|
|
|
$
|
|
0.57
|
|
NET INVESTMENT INCOME
PER SHARE - DILUTED
|
|
$
|
|
0.52
|
|
|
$
|
|
0.54
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE
- BASIC
|
|
$
|
|
0.64
|
|
|
$
|
|
(0.33)
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE
- DILUTED
|
|
$
|
|
0.60
|
|
|
$
|
|
(0.33)
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC
|
|
|
|
35,074,076
|
|
|
|
|
27,416,943
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED
|
|
|
|
38,740,871
|
|
|
|
|
30,768,333
|
|
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SOURCE Trinity Capital Inc.