Trinity Capital Inc. Reports Second Quarter 2023 Financial Results
Second Quarter 2023 Highlights
- Total investment income of
, an increase of$46.0 million 37.3% year-over-year - Net investment income ("NII") of
, or$22.1 million per basic share, an increase of$0.61 40.8% year-over-year - Net increase in net assets resulting from operations of
, or$19.9 million per basic share$0.55 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
per share$13.15 - Aggregate debt and equity investment commitments of
$218.5 million - Total gross investments funded of
, comprised of$154.9 million in five new portfolio companies,$103.1 million across seven existing portfolio companies and$48.3 million into the recently formed joint venture (the "JV")$3.5 million - Debt principal repayments of
, including$103.5 million from early repayments,$13.7 million from scheduled/amortizing repayments and$31.0 million of assets sold to the JV$58.8 million - Declared a 10th consecutive dividend increase, with the second-quarter distribution coming in at
per share, consisting of a regular dividend of$0.53 per share, an increase of$0.48 2.1% from the regular dividend declared in the first quarter of 2023, and a supplemental cash dividend of per share$0.05
"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
Total operating expenses and excise taxes, excluding interest expense, for the second quarter of 2023 were
Interest expense for the second quarter of 2023 was
Net investment income was approximately
Net unrealized appreciation of
Second quarter 2023 net realized loss on investments was approximately
Second quarter 2023 net increase in net assets resulting from operations was
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
Portfolio and Investment Activity
As of June 30, 2023, Trinity Capital's investment portfolio had an aggregate fair value of approximately
During the second quarter, the Company originated approximately
Proceeds received from repayments of the Company's debt investments during the second quarter totaled approximately
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
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 | Designation | Investments at | Percentage | Investments at | Percentage | ||||||||
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 | 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
As of June 30, 2023, Trinity Capital's leverage or debt-to-equity ratio was approximately
Distributions
On June 14, 2023, the Company's Board of Directors declared a regular and supplemental dividend totaling
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 | $ | 37,403 | $ | 37,313 | ||||
Affiliate investments (cost of | 8,767 | 1,528 | ||||||
Non-Control / Non-Affiliate investments (cost of | 1,101,848 | 1,055,545 | ||||||
Total investments (cost of | 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 | 179,519 | 178,552 | ||||||
August 2026 Notes, net of | 123,186 | 122,897 | ||||||
December 2026 Notes, net of | 73,712 | 73,526 | ||||||
Convertible Notes, net of | 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, | 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 | ||||||||||||||||||||
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 | ||||||||||||||||||||
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 | $ | 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 - | $ | 0.55 | $ | (0.25) | $ | 1.19 | $ | (0.58) | ||||||||||||
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - | $ | 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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SOURCE Trinity Capital Inc.