PHOENIX, Aug. 2, 2023
/PRNewswire/ -- Trinity Capital Inc. (Nasdaq: TRIN) ("Trinity
Capital" or the "Company"), a leading provider of diversified
financial solutions to growth-stage companies, today announced its
financial results for the quarter ended June
30, 2023.
Second Quarter 2023 Highlights
- Total investment income of $46.0
million, an increase of 37.3% year-over-year
- Net investment income ("NII") of $22.1
million, or $0.61 per basic
share, an increase of 40.8% year-over-year
- Net increase in net assets resulting from operations of
$19.9 million, or $0.55 per basic share
- 18.4% Return on Average Equity "ROAE" (NII/Average Equity)
- 7.6% Return on Average Assets "ROAA" (NII/Average Assets)
- An increase of Net Asset Value to $13.15 per share
- Aggregate debt and equity investment commitments of
$218.5 million
- Total gross investments funded of $154.9
million, comprised of $103.1
million in five new portfolio companies, $48.3 million across seven existing portfolio
companies and $3.5 million into the
recently formed joint venture (the "JV")
- Debt principal repayments of $103.5
million, including $13.7
million from early repayments, $31.0
million from scheduled/amortizing repayments and
$58.8 million of assets sold to the
JV
- Declared a 10th consecutive dividend increase, with
the second-quarter distribution coming in at $0.53 per share, consisting of a regular dividend
of $0.48 per share, an increase of
2.1% from the regular dividend declared in the first quarter of
2023, and a supplemental cash dividend of $0.05 per share
"Our NII performance and portfolio strength this quarter
demonstrate that Trinity's differentiated platform can excel in all
cycles," said Steve Brown, Chairman
and Chief Executive Officer of Trinity Capital. "As we build for
the future, we've made critical investments to grow our team,
expand our platform and diversify our portfolio to build upon our
track record and reputation."
Kyle Brown, President and Chief
Investment Officer of Trinity Capital, added, "Our focus remains on
building an investment portfolio that generates meaningful returns
for our shareholders. We have created a truly unique platform, one
that is well-positioned to capitalize on opportunities that further
diversify our capital base and capabilities. We've been
strategically investing both on and off the balance sheet while
generating additional income from our JV, which flows to the
benefit of our shareholders.
Second Quarter 2023 Operating Results
For the three months ended June 30,
2023, total investment income was $46.0 million compared to $33.5 million for the quarter ended June 30, 2022. The effective yield on the average
debt investments at cost was 16.2% and 13.8% for the periods ended
June 30, 2023 and 2022, respectively.
Effective yields generally include the effects of fees and income
accelerations attributed to early loan repayments and other
one-time events and may fluctuate quarter-to-quarter depending on
the amount of prepayment activity.
Total operating expenses and excise taxes, excluding interest
expense, for the second quarter of 2023 were $11.9
million compared to $10.0 million during the second
quarter of 2022. The increase was primarily attributable to higher
compensation associated with additional headcount and amortization
of restricted stock grants.
Interest expense for the second quarter of 2023 was $12.0 million compared to $7.8 million during the second 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 $22.1 million,
or $0.61 per share based on 36.0 million basic weighted
average shares outstanding for the second quarter of 2023, compared
to $15.7 million or $0.51 per share for the
second quarter of 2022 based on 31.0 million basic weighted average
shares outstanding.
Net unrealized appreciation of $24.4 million during the
second quarter of 2023 was primarily attributable to the flip of
$26.7 million to realized losses,
$2.2 million related to the impact of
interest rate changes and $0.5
million of appreciation related to general market
conditions, offset by $5.0 million of
depreciation related to credit specific adjustments.
Second quarter 2023 net realized loss on investments was
approximately $26.6 million,
primarily attributable to the loss in one portfolio company that
was previously written down on an unrealized basis in prior
quarters.
Second quarter 2023 net increase in net assets resulting from
operations was $19.9 million, or $0.55 per share, based
on 36.0 million basic weighted average shares outstanding. This
compares to a net decrease in net assets resulting from operations
of $7.7 million, or $0.25 per share, based on
31.0 million basic weighted average shares outstanding for the
second quarter of 2022.
Trinity Capital's higher weighted average share count for the
three-month period ended June 30,
2023, as compared to the prior year, is primarily the result
of shares issued under the public equity offering in August 2022 and shares issued under the Company's
ATM program.
Net Asset Value
Total net assets at the end of the second quarter of 2023
increased by 2.6% to $482.0 million,
compared to $469.7 million at the end
of the first quarter of 2023. The increase in total net assets was
primarily driven by net investment income that exceeded the
declared dividend. As a result, NAV improved to $13.15 from $13.07
per share.
Portfolio and Investment Activity
As of June 30, 2023, Trinity
Capital's investment portfolio had an aggregate fair value of
approximately $1.1 billion and was
comprised of approximately $856.0
million in secured loans, $244.1
million in equipment financings and $47.9 million in equity and warrants across 117
portfolio companies, including the Company's investment in the JV.
The Company's debt portfolio is comprised of 77.6% first lien loans
and 22.4% second lien loans, with 72.1% of the debt portfolio at
floating rates based on principal outstanding.
During the second quarter, the Company originated approximately
$218.5 million of total new
commitments. Second quarter gross investments funded totaled
approximately $154.9 million, which
was comprised of $103.1 million of
investments in five new portfolio companies, $48.3 million of investments in seven existing
portfolio companies and a $3.5
million investment in the JV. Gross investment fundings
during the quarter for loans totaled $108.9
million, equipment financings totaled $39.7 million and warrant and equity investments
totaled $6.3 million.
Proceeds received from repayments of the Company's debt
investments during the second quarter totaled approximately
$103.5 million, which included
$58.8 million of investments sold to
the JV, $31.0 million from normal
amortization and $13.7 million from
early debt repayments. The investment portfolio increased by
$32.1 million on a cost basis, an
increase of 2.8%, and $56.5 million
on a fair value basis, an increase of 5.2% as compared to
March 31, 2023.
As of the end of the second quarter, a loan to one portfolio
company and equipment financings to two portfolio companies were on
non-accrual status with a total fair value of approximately
$22.5 million, or 2.0% 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,
2023 and December 31, 2022
(dollars in thousands):
|
|
|
|
June 30,
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
|
|
$
|
8,758
|
|
0.8 %
|
|
$
|
2,729
|
|
0.3 %
|
3.0 - 3.9
|
|
Strong
Performance
|
|
|
272,933
|
|
24.8 %
|
|
|
239,872
|
|
22.9 %
|
2.0 - 2.9
|
|
Performing
|
|
|
762,695
|
|
69.3 %
|
|
|
756,596
|
|
72.1 %
|
1.6 - 1.9
|
|
Watch
|
|
|
34,410
|
|
3.1 %
|
|
|
39,315
|
|
3.7 %
|
1.0 - 1.5
|
|
Default/Workout
|
|
|
15,216
|
|
1.4 %
|
|
|
10,317
|
|
1.0 %
|
Total Debt Investments
excluding Trinity
Investor JV I LLC
|
|
|
1,094,012
|
|
99.4 %
|
|
|
1,048,829
|
|
100.0 %
|
|
|
Trinity Investor JV I
LLC
|
|
|
6,083
|
|
0.6 %
|
|
|
—
|
|
—
|
Total Debt
Investments
|
|
$
|
1,100,095
|
|
100.0 %
|
|
$
|
1,048,829
|
|
100.0 %
|
As of June 30, 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 March 31, 2023. 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 its 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 June 30, 2023, the Company
had approximately $130.3 million in
available liquidity, including $12.3 million in
unrestricted cash and cash equivalents. At the end of the period,
the Company had approximately $118.0
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, 2023, Trinity Capital's leverage or
debt-to-equity ratio was approximately 138% as compared to 131% as
of March 31, 2023. The increase in the leverage ratio was
primarily attributable to borrowings under the KeyBank Credit
Facility in support of our investing activity.
Distributions
On June 14, 2023, the Company's
Board of Directors declared a regular and supplemental dividend
totaling $0.53 per share with respect
to the quarter ended June 30, 2023,
which was paid on July 14, 2023, to
stockholders of record as of June 30,
2023. The Board of Directors generally determines and
announces the Company's dividend distribution on a quarterly
basis.
Conference Call
Trinity Capital will hold a conference call to discuss its
second quarter 2023 financial results at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) on Wednesday, August 2, 2023.
To listen to the call, please dial (800) 225-9448, or (203)
518-9708 internationally, and reference Conference ID: TRINQ223 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) 839-5490 or
(402) 220-2550.
About Trinity Capital Inc.
Trinity Capital Inc. (Nasdaq: TRIN), an internally managed
business development company, is a leading provider of diversified
financial solutions to growth-stage companies with institutional
equity investors. Trinity Capital's investment objective
is to generate current income and, to a lesser extent, capital
appreciation through investments, including term loans and
equipment financings and equity-related investments. Trinity
Capital believes it is one of only a select group of specialty
lenders that has the depth of knowledge, experience and track
record in lending to growth stage companies. For more information,
please visit the Company's website at www.trinitycap.com.
Forward-Looking Statements
This press release may contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Statements other than statements of historical facts
included in this press release may constitute forward-looking
statements and are not guarantees of future performance or results
and involve a number of risks and uncertainties. Actual results may
differ materially from those in the forward-looking statements as a
result of a number of factors, including those described from time
to time in filings with the Securities and Exchange Commission.
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)
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Investments at fair
value:
|
|
|
|
|
|
|
Control investments
(cost of $44,246 and $43,375, respectively)
|
|
$
|
37,403
|
|
|
$
|
37,313
|
|
Affiliate investments
(cost of $8,690 and $28,580, respectively)
|
|
|
8,767
|
|
|
|
1,528
|
|
Non-Control /
Non-Affiliate investments (cost of $1,126,366 and
$1,081,629, respectively)
|
|
|
1,101,848
|
|
|
|
1,055,545
|
|
Total investments
(cost of $1,179,302 and $1,153,584, respectively)
|
|
|
1,148,018
|
|
|
|
1,094,386
|
|
Cash and cash
equivalents
|
|
|
12,268
|
|
|
|
10,612
|
|
Interest
receivable
|
|
|
12,117
|
|
|
|
9,971
|
|
Deferred credit
facility costs
|
|
|
2,523
|
|
|
|
2,903
|
|
Other
assets
|
|
|
14,157
|
|
|
|
8,567
|
|
Total
assets
|
|
$
|
1,189,083
|
|
|
$
|
1,126,439
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
KeyBank Credit
Facility
|
|
$
|
232,000
|
|
|
$
|
187,500
|
|
2025 Notes, net of
$2,981 and $3,948, respectively, of unamortized deferred
financing costs
|
|
|
179,519
|
|
|
|
178,552
|
|
August 2026 Notes, net
of $1,814 and $2,103, respectively, of unamortized
deferred financing costs
|
|
|
123,186
|
|
|
|
122,897
|
|
December 2026 Notes,
net of $1,288 and $1,474, respectively, of
unamortized deferred financing costs
|
|
|
73,712
|
|
|
|
73,526
|
|
Convertible Notes, net
of $1,563 and $1,882, respectively, of unamortized
deferred financing costs and discount
|
|
|
48,437
|
|
|
|
48,118
|
|
Distribution
payable
|
|
|
19,432
|
|
|
|
21,326
|
|
Security
deposits
|
|
|
14,986
|
|
|
|
15,100
|
|
Accounts payable,
accrued expenses and other liabilities
|
|
|
15,816
|
|
|
|
19,771
|
|
Total
liabilities
|
|
|
707,088
|
|
|
|
666,790
|
|
|
|
|
|
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
Common stock, $0.001
par value per share (200,000,000 authorized,
36,664,864 and 34,960,672 shares issued and outstanding as of
June 30, 2023
and December 31, 2022, respectively)
|
|
|
37
|
|
|
|
35
|
|
Paid-in capital in
excess of par
|
|
|
496,825
|
|
|
|
480,532
|
|
Distributable
earnings/(accumulated deficit)
|
|
|
(14,867)
|
|
|
|
(20,918)
|
|
Total net
assets
|
|
|
481,995
|
|
|
|
459,649
|
|
Total liabilities
and net assets
|
|
$
|
1,189,083
|
|
|
$
|
1,126,439
|
|
NET ASSET VALUE PER
SHARE
|
|
$
|
13.15
|
|
|
$
|
13.15
|
|
TRINITY
CAPITAL INC.
Consolidated
Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June 30, 2023
|
|
|
June 30, 2022
|
|
|
June 30, 2023
|
|
|
June 30, 2022
|
|
INVESTMENT
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Control
investments
|
|
$
|
|
1,083
|
|
|
$
|
|
1,365
|
|
|
$
|
|
2,199
|
|
|
$
|
|
2,738
|
|
Affiliate
investments
|
|
|
|
84
|
|
|
|
|
433
|
|
|
|
|
118
|
|
|
|
|
862
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
43,362
|
|
|
|
|
30,713
|
|
|
|
|
82,743
|
|
|
|
|
57,317
|
|
Total interest
income
|
|
|
|
44,529
|
|
|
|
|
32,511
|
|
|
|
|
85,060
|
|
|
|
|
60,917
|
|
Fee income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate
investments
|
|
|
|
674
|
|
|
|
|
—
|
|
|
|
|
1,127
|
|
|
|
|
—
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
842
|
|
|
|
|
947
|
|
|
|
|
1,396
|
|
|
|
|
4,386
|
|
Total fee
income
|
|
|
|
1,516
|
|
|
|
|
947
|
|
|
|
|
2,523
|
|
|
|
|
4,386
|
|
Total investment
income
|
|
|
|
46,045
|
|
|
|
|
33,458
|
|
|
|
|
87,583
|
|
|
|
|
65,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and
other debt financing costs
|
|
|
|
11,985
|
|
|
|
|
7,761
|
|
|
|
|
23,067
|
|
|
|
|
14,559
|
|
Compensation and
benefits
|
|
|
|
8,350
|
|
|
|
|
6,877
|
|
|
|
|
15,967
|
|
|
|
|
13,331
|
|
Professional
fees
|
|
|
|
1,411
|
|
|
|
|
891
|
|
|
|
|
2,828
|
|
|
|
|
1,723
|
|
General and
administrative
|
|
|
|
1,549
|
|
|
|
|
1,558
|
|
|
|
|
3,044
|
|
|
|
|
3,035
|
|
Total
expenses
|
|
|
|
23,295
|
|
|
|
|
17,087
|
|
|
|
|
44,906
|
|
|
|
|
32,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME/(LOSS) BEFORE TAXES
|
|
|
|
22,750
|
|
|
|
|
16,371
|
|
|
|
|
42,677
|
|
|
|
|
32,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax
expense
|
|
|
|
653
|
|
|
|
|
657
|
|
|
|
|
1,251
|
|
|
|
|
1,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME
|
|
|
|
22,097
|
|
|
|
|
15,714
|
|
|
|
|
41,426
|
|
|
|
|
31,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REALIZED
GAIN/(LOSS) FROM INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Control
investments
|
|
|
|
—
|
|
|
|
|
(228)
|
|
|
|
|
—
|
|
|
|
|
(228)
|
|
Affiliate
investments
|
|
|
|
(26,251)
|
|
|
|
|
(9,633)
|
|
|
|
|
(26,251)
|
|
|
|
|
(9,633)
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
(360)
|
|
|
|
|
244
|
|
|
|
|
(725)
|
|
|
|
|
52,888
|
|
Net realized
gain/(loss) from investments
|
|
|
|
(26,611)
|
|
|
|
|
(9,617)
|
|
|
|
|
(26,976)
|
|
|
|
|
43,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN
UNREALIZED APPRECIATION/(DEPRECIATION) FROM
INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Control
investments
|
|
|
|
(1,188)
|
|
|
|
|
(804)
|
|
|
|
|
(780)
|
|
|
|
|
(5,136)
|
|
Affiliate
investments
|
|
|
|
26,152
|
|
|
|
|
6,913
|
|
|
|
|
27,128
|
|
|
|
|
3,650
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
(568)
|
|
|
|
|
(19,929)
|
|
|
|
|
1,568
|
|
|
|
|
(89,652)
|
|
Net change in
unrealized appreciation/(depreciation) from
investments
|
|
|
|
24,396
|
|
|
|
|
(13,820)
|
|
|
|
|
27,916
|
|
|
|
|
(91,138)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS
|
|
$
|
|
19,882
|
|
|
$
|
|
(7,723)
|
|
|
$
|
|
42,366
|
|
|
$
|
|
(16,787)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT INCOME
PER SHARE - BASIC
|
|
$
|
|
0.61
|
|
|
$
|
|
0.51
|
|
|
$
|
|
1.17
|
|
|
$
|
|
1.07
|
|
NET INVESTMENT INCOME
PER SHARE - DILUTED
|
|
$
|
|
0.58
|
|
|
|
|
0.48
|
|
|
$
|
|
1.10
|
|
|
$
|
|
1.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE -
BASIC
|
|
$
|
|
0.55
|
|
|
$
|
|
(0.25)
|
|
|
$
|
|
1.19
|
|
|
$
|
|
(0.58)
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE -
DILUTED(1)
|
|
$
|
|
0.52
|
|
|
$
|
|
(0.25)
|
|
|
$
|
|
1.13
|
|
|
$
|
|
(0.58)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC
|
|
|
|
36,024,566
|
|
|
|
|
30,955,022
|
|
|
|
|
35,551,947
|
|
|
|
|
29,188,790
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED
|
|
|
|
39,691,361
|
|
|
|
|
34,331,597
|
|
|
|
|
39,218,742
|
|
|
|
|
32,565,365
|
|
|
(1) For the
three and six months ended June 30, 2022, the impact of the
hypothetical conversion of Convertible Notes was
antidilutive.
|
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multimedia:https://www.prnewswire.com/news-releases/trinity-capital-inc-reports-second-quarter-2023-financial-results-301891081.html
SOURCE Trinity Capital Inc.