Record Quarterly Net Investment Income of
$25.1 Million in Q4
Record Annual Net Investment Income of
$89.9 Million in 2023
Return on Average Equity Hits 16.9% in
Q4
PHOENIX, March 6, 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 fourth
quarter and year ended December 31,
2023.
Fourth Quarter 2023 Highlights
- Record total investment income of $47.8
million, an increase of 15.2% year-over-year
- Record net investment income ("NII") of $25.1 million, or $0.57 per basic share, an increase of 15.9%
year-over-year
- Net increase in net assets resulting from operations of
$17.7 million, or $0.40 per basic share
- 16.9% Return on Average Equity "ROAE" (NII/Average Equity)
- 8.3% Return on Average Assets "ROAA" (NII/Average Assets)
- Net Asset Value increased to $13.19 per share, up from $13.17 at the end of Q3
- Record total gross investment commitments of $340.7 million
- Record total gross investments funded of $267.4 million, comprised of $220.0 million across six new portfolio
companies, $47.1 million across ten
existing portfolio companies and $0.3
million into the joint venture (the "JV")
- Debt principal repayments of $108.9
million, including $42.9
million from early repayments and refinancings, $41.4 million from scheduled/amortizing
repayments and $24.6 million of
assets sold to the JV
- 12th consecutive increase in the regular quarterly
dividend after the fourth-quarter distribution of $0.50 per share, an increase of 2.0% from the
regular dividend declared in the third quarter of 2023
"Trinity had a tremendous year in 2023, marked by record
fundings and investment income along with continued growth in our
portfolio," said Kyle Brown, Chief
Executive Officer of Trinity. "Our off-balance sheet growth
strategies continued to ramp, and we expect them to contribute to
our growth in 2024."
Brown further highlighted, "Our strong performance has allowed
us to increase our regular dividend for twelve straight quarters,
resulting in distributions of $2.04
per share to our shareholders in 2023. Our commitments to stringent
underwriting and rigorous portfolio management remain central to
our approach, and we believe that our shareholders will continue to
see the benefits of these practices."
Full Year 2023 Highlights
- Record total investment income of $181.9
million, an increase of 25.0% year-over-year
- Record net investment income of $89.9
million, or $2.31 per share,
an increase of 25.6% year-over-year
- Record total gross investments funded of $641.8 million, an increase of 1.7%
year-over-year
- Net investment portfolio growth at cost of $165.7 million, an increase of 14.4%
year-over-year
- Total platform assets under management of $1.5 billion, an increase of 29.0%
year-over-year
- Undistributed earnings spillover of $64.5 million, or $1.39 per share outstanding, based on total
shares outstanding at Q4 2023
Fourth Quarter 2023 Operating Results
For the three months ended December 31, 2023, total
investment income was $47.8 million, compared
to $41.5 million for the quarter ended December 31,
2022. The effective yield on the average debt investments at cost
was 16.7% and 15.5% for the periods ended December 31, 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 fourth quarter of 2023 were $12.3
million, compared to $9.6 million during the fourth
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 fourth quarter of 2023 was $10.4
million, compared to $10.3 million during the fourth
quarter of 2022. The increase is primarily attributable to an
increase in the weighted average interest rate on the credit
facility.
Net investment income was $25.1
million, or $0.57 per share, based on 44.3 million
basic weighted average shares outstanding for the fourth quarter of
2023, compared to $21.6 million, or $0.62 per share, for the fourth quarter of 2022
based on 35.1 million basic weighted average shares
outstanding.
Net unrealized depreciation of $8.1 million during the
fourth quarter of 2023 was primarily attributable to $10.2 million of depreciation related to
credit-specific adjustments and $0.4
million of depreciation related to general market
conditions, partially offset by $2.5
million related to the impact of interest rate changes.
Net realized gain on investments was $0.8
million, primarily attributable to an early repayment of an
equipment financing and warrant settlements.
Net increase in net assets resulting from operations
was $17.7 million, or $0.40 per share, based on 44.3
million basic weighted average shares outstanding. This compares to
a net decrease in net assets resulting from operations of $1.6
million, or $0.05 per share, based on 35.1 million
basic weighted average shares outstanding for the fourth quarter of
2022.
Trinity's higher weighted average shares outstanding for the
fourth quarter was attributed to additional shares issued during
the year.
Net Asset Value
As of December 31, 2023, total net
assets increased to $611.2 million,
compared to $569.5 million as of
September 30, 2023. The increase in
total net assets was primarily driven by net investment income that
exceeded the declared dividends as well as the issuance of common
stock at a premium to NAV per share, partially offset by net
realized and unrealized losses on investments. NAV per share
increased to $13.19 from $13.17 in the prior quarter.
Portfolio and Investment Activity
As of December 31, 2023, Trinity's
investment portfolio had an aggregate fair value of approximately
$1.3 billion and was comprised of
approximately $885.3 million in
secured loans, $336.8 million in
equipment financings and $53.1
million in equity and warrants across 120 portfolio
companies. The Company's debt portfolio is comprised of 76.8% of
loans supported by a first lien and 23.2% of loans supported by a
second lien, with 69.0% of the debt portfolio at floating rates
based on principal outstanding.
During the fourth quarter, the Company originated approximately
$340.7 million of total new
commitments and funded approximately $267.4
million, which was comprised of $220.0 million of investments in six new
portfolio companies, $47.1 million of
investments in ten existing portfolio companies and $0.3 million of investments in the JV. Gross
investment fundings during the quarter for secured loans totaled
$126.3 million, equipment financings
totaled $136.9 million and warrant
and equity investments totaled $4.2
million.
Proceeds received from repayments of the Company's debt
investments during the fourth quarter totaled approximately
$108.9 million, which included
$42.9 million from early debt
repayments and refinancings, $41.4
million from normal amortization and $24.6 million of investments sold to the JV. The
investment portfolio increased by $166.8
million, or approximately 14.5%, on a cost basis, and by
$158.6 million, or approximately
14.2%, at fair value as compared to September 30, 2023. Total assets under
management, including the assets in the JV, totaled $1.5 billion.
The following table shows the distribution of the Company's
secured loan and equipment financing investments on the 1 to 5
investment risk rating scale at fair value as of December 31, 2023 and September 30, 2023 (dollars in thousands):
|
|
|
|
December 31, 2023
|
|
|
September 30,
2023
|
|
Investment Risk
Rating
|
|
|
|
Investments
at
|
|
|
Percentage
of
|
|
|
Investments
at
|
|
|
Percentage
of
|
|
Scale
Range
|
|
Designation
|
|
Fair
Value
|
|
|
Total
Portfolio
|
|
|
Fair
Value
|
|
|
Total
Portfolio
|
|
4.0 - 5.0
|
|
Very Strong
Performance
|
|
$
|
40,584
|
|
|
|
3.3
|
%
|
|
$
|
34,728
|
|
|
|
3.3
|
%
|
3.0 - 3.9
|
|
Strong
Performance
|
|
|
277,867
|
|
|
|
22.9
|
%
|
|
|
225,408
|
|
|
|
21.2
|
%
|
2.0 - 2.9
|
|
Performing
|
|
|
805,730
|
|
|
|
65.9
|
%
|
|
|
740,097
|
|
|
|
69.6
|
%
|
1.6 - 1.9
|
|
Watch
|
|
|
56,740
|
|
|
|
4.6
|
%
|
|
|
38,584
|
|
|
|
3.6
|
%
|
1.0 - 1.5
|
|
Default/Workout
|
|
|
33,452
|
|
|
|
2.7
|
%
|
|
|
17,540
|
|
|
|
1.6
|
%
|
Total Debt Investments
excluding Senior
Credit Corp 2022 LLC
|
|
|
|
|
1,214,373
|
|
|
|
99.4
|
%
|
|
|
1,056,357
|
|
|
|
99.3
|
%
|
.
|
|
Senior Credit Corp 2022
LLC (1)
|
|
|
7,704
|
|
|
|
0.6
|
%
|
|
|
7,484
|
|
|
|
0.7
|
%
|
Total Debt
Investments
|
|
|
|
$
|
1,222,077
|
|
|
|
100.0
|
%
|
|
$
|
1,063,841
|
|
|
|
100.0
|
%
|
|
|
(1)
|
An investment risk
rating is not applied to Senior Credit Corp 2022 LLC.
|
As of December 31, 2023, the
Company's secured loan and equipment financing investments had a
weighted average risk rating score of 2.7 as compared to 2.8 as of
September 30, 2023. Trinity's grading
scale is comprised of numerous factors, two key factors being
liquidity and performance to plan. A company may be downgraded as
they approach the need for additional capital or if they are
underperforming relative to their business plans. Conversely, they
may be upgraded upon a capitalization or if they are exceeding
their plan. As such, the overall grading may fluctuate
quarter-to-quarter.
As of the end of the fourth quarter, secured loans to three
portfolio companies and equipment financings to two portfolio
companies were on non-accrual status with a total fair value of
approximately $43.2 million, or just
3.5% of the Company's debt investment portfolio at fair value.
Subsequent to December 31, 2023, the
equipment financing to Core Scientific, Inc. (Nasdaq: CORZ) was
removed from non-accrual in connection with its January 2024 emergence from Chapter 11 bankruptcy
and Trinity's receipt of shares of Core Scientific common stock in
satisfaction of Trinity's claims in the bankruptcy.
Liquidity and Capital Resources
As of December 31, 2023, the
Company had approximately $141.8
million in available liquidity, including $4.8
million in unrestricted cash and cash equivalents. At the end
of the period, the Company had $137.0
million in available borrowing capacity under its credit
facility subject to existing terms, advance rates and regulatory
and covenant requirements.
As of December 31, 2023, Trinity's leverage or
debt-to-equity ratio was approximately 106% as compared to 94% as
of September 30, 2023. The increase in the leverage ratio
was primarily attributable to additional borrowings under the
credit facility to fund portfolio growth.
During the three months ended December
31, 2023, Trinity utilized its ATM offering program to sell
3.1 million shares of its common stock at a weighted average price
of $14.81 per share, raising
$45.2 million of net proceeds.
As of December 31, 2023, the JV
had approximately $98.9 million in
available liquidity, including $83.4
million of uncalled capital, $15.4
million of availability under the JV's credit facility, and
$0.1 million of cash and cash
equivalents.
Distributions
On December 14, 2023, the
Company's Board of Directors declared a regular and supplemental
dividend totaling $0.50 per share
with respect to the quarter ended December
31, 2023, which was paid on January
12, 2024, to shareholders of record as of December 29, 2023. The Board of Directors
generally determines and announces the Company's dividend
distribution on a quarterly basis.
Conference Call
Trinity will hold a conference call to discuss its fourth
quarter and full year 2023 financial results at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) on Wednesday, March 6, 2024.
To listen to the call, please dial (800) 225-9448, or (203)
518-9708 internationally, and reference Conference ID: TRINQ423 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) 839-7414 or
(402) 220-6068.
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 ("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)
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Investments at fair
value:
|
|
|
|
|
|
|
Control investments
(cost of $43,807 and $43,375, respectively)
|
|
$
|
32,861
|
|
|
$
|
37,313
|
|
Affiliate investments
(cost of $11,006 and $28,580, respectively)
|
|
|
11,335
|
|
|
|
1,528
|
|
Non-Control /
Non-Affiliate investments (cost of $1,264,503 and $1,081,629,
respectively)
|
|
|
1,230,984
|
|
|
|
1,055,545
|
|
Total investments
(cost of $1,319,316 and $1,153,584, respectively)
|
|
|
1,275,180
|
|
|
|
1,094,386
|
|
Cash and cash
equivalents
|
|
|
4,761
|
|
|
|
10,612
|
|
Interest
receivable
|
|
|
11,206
|
|
|
|
9,971
|
|
Deferred credit
facility costs
|
|
|
2,144
|
|
|
|
2,903
|
|
Other
assets
|
|
|
17,691
|
|
|
|
8,567
|
|
Total
assets
|
|
$
|
1,310,982
|
|
|
$
|
1,126,439
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
KeyBank Credit
Facility
|
|
$
|
213,000
|
|
|
$
|
187,500
|
|
2025 Notes, net of
$2,015 and $3,948, respectively, of unamortized deferred
financing costs
|
|
|
180,485
|
|
|
|
178,552
|
|
August 2026 Notes, net
of $1,526 and $2,103, respectively, of unamortized deferred
financing costs
|
|
|
123,474
|
|
|
|
122,897
|
|
December 2026 Notes,
net of $1,102 and $1,474, respectively, of unamortized
deferred financing costs
|
|
|
73,898
|
|
|
|
73,526
|
|
Convertible Notes, net
of $1,243 and $1,882, respectively, of
unamortized deferred financing costs and discount
|
|
|
48,757
|
|
|
|
48,118
|
|
Distribution
payable
|
|
|
23,162
|
|
|
|
21,326
|
|
Security
deposits
|
|
|
12,287
|
|
|
|
15,100
|
|
Accounts payable,
accrued expenses and other liabilities
|
|
|
24,760
|
|
|
|
19,771
|
|
Total
liabilities
|
|
|
699,823
|
|
|
|
666,790
|
|
|
|
|
|
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
Common stock, $0.001
par value per share (200,000,000 authorized,
46,323,712 and 34,960,672 shares issued and outstanding as of
December 31, 2023 and December 31, 2022,
respectively)
|
|
|
46
|
|
|
|
35
|
|
Paid-in capital in
excess of par
|
|
|
633,740
|
|
|
|
480,532
|
|
Distributable
earnings/(accumulated deficit)
|
|
|
(22,627)
|
|
|
|
(20,918)
|
|
Total net
assets
|
|
|
611,159
|
|
|
|
459,649
|
|
Total liabilities
and net assets
|
|
$
|
1,310,982
|
|
|
$
|
1,126,439
|
|
NET ASSET VALUE PER
SHARE
|
|
$
|
13.19
|
|
|
$
|
13.15
|
|
TRINITY CAPITAL
INC.
Consolidated Statements of Operations (In thousands,
except share and per share data)
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
|
December 31, 2023
|
|
|
December 31, 2022
|
|
|
December 31, 2023
|
|
|
December 31, 2022
|
|
INVESTMENT
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Control
investments
|
|
$
|
|
942
|
|
|
$
|
|
1,007
|
|
|
$
|
|
4,179
|
|
|
$
|
|
5,418
|
|
Affiliate
investments
|
|
|
|
659
|
|
|
|
|
—
|
|
|
|
|
1,025
|
|
|
|
|
862
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
43,114
|
|
|
|
|
39,593
|
|
|
|
|
169,636
|
|
|
|
|
132,556
|
|
Total interest and
dividend income
|
|
|
|
44,745
|
|
|
|
|
40,600
|
|
|
|
|
174,840
|
|
|
|
|
138,836
|
|
Fee and other
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate
investments
|
|
|
|
487
|
|
|
|
|
—
|
|
|
|
|
2,158
|
|
|
|
|
—
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
2,602
|
|
|
|
|
909
|
|
|
|
|
4,857
|
|
|
|
|
6,664
|
|
Total fee and other
income
|
|
|
|
3,089
|
|
|
|
|
909
|
|
|
|
|
7,015
|
|
|
|
|
6,664
|
|
Total investment
income
|
|
|
|
47,834
|
|
|
|
|
41,509
|
|
|
|
|
181,855
|
|
|
|
|
145,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and
other debt financing costs
|
|
|
|
10,446
|
|
|
|
|
10,284
|
|
|
|
|
44,296
|
|
|
|
|
34,148
|
|
Compensation and
benefits
|
|
|
|
8,434
|
|
|
|
|
6,543
|
|
|
|
|
33,093
|
|
|
|
|
27,189
|
|
Professional
fees
|
|
|
|
1,307
|
|
|
|
|
1,129
|
|
|
|
|
5,407
|
|
|
|
|
4,113
|
|
General and
administrative
|
|
|
|
1,896
|
|
|
|
|
1,520
|
|
|
|
|
6,598
|
|
|
|
|
6,075
|
|
Total
expenses
|
|
|
|
22,083
|
|
|
|
|
19,476
|
|
|
|
|
89,394
|
|
|
|
|
71,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME/(LOSS) BEFORE TAXES
|
|
|
|
25,751
|
|
|
|
|
22,033
|
|
|
|
|
92,461
|
|
|
|
|
73,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax
expense
|
|
|
|
684
|
|
|
|
|
402
|
|
|
|
|
2,560
|
|
|
|
|
2,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME
|
|
|
|
25,067
|
|
|
|
|
21,631
|
|
|
|
|
89,901
|
|
|
|
|
71,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REALIZED
GAIN/(LOSS) FROM INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Control
investments
|
|
|
|
—
|
|
|
|
|
(3,877)
|
|
|
|
|
—
|
|
|
|
|
(4,210)
|
|
Affiliate
investments
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(26,251)
|
|
|
|
|
(10,241)
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
773
|
|
|
|
|
(5,694)
|
|
|
|
|
(1,820)
|
|
|
|
|
47,304
|
|
Net realized
gain/(loss) from investments
|
|
|
|
773
|
|
|
|
|
(9,571)
|
|
|
|
|
(28,071)
|
|
|
|
|
32,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN
UNREALIZED
APPRECIATION/(DEPRECIATION) FROM INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Control
investments
|
|
|
|
(21)
|
|
|
|
|
12,174
|
|
|
|
|
(4,884)
|
|
|
|
|
719
|
|
Affiliate
investments
|
|
|
|
(122)
|
|
|
|
|
(7,841)
|
|
|
|
|
27,380
|
|
|
|
|
(17,635)
|
|
Non-Control /
Non-Affiliate investments
|
|
|
|
(7,993)
|
|
|
|
|
(17,980)
|
|
|
|
|
(7,433)
|
|
|
|
|
(117,898)
|
|
Net change in
unrealized appreciation/(depreciation) from
investments
|
|
|
|
(8,136)
|
|
|
|
|
(13,647)
|
|
|
|
|
15,063
|
|
|
|
|
(134,814)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE/(DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS
|
|
$
|
|
17,704
|
|
|
$
|
|
(1,587)
|
|
|
$
|
|
76,893
|
|
|
$
|
|
(30,375)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT INCOME
PER SHARE - BASIC
|
|
$
|
|
0.57
|
|
|
$
|
|
0.62
|
|
|
$
|
|
2.31
|
|
|
$
|
|
2.26
|
|
NET INVESTMENT INCOME
PER SHARE - DILUTED
|
|
$
|
|
0.54
|
|
|
|
|
0.57
|
|
|
$
|
|
2.19
|
|
|
$
|
|
2.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE - BASIC
|
|
$
|
|
0.40
|
|
|
$
|
|
(0.05)
|
|
|
$
|
|
1.98
|
|
|
$
|
|
(0.96)
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE - DILUTED
|
|
$
|
|
0.39
|
|
|
$
|
|
(0.05)
|
|
|
$
|
|
1.89
|
|
|
$
|
|
(0.96)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC
|
|
|
|
44,308,189
|
|
|
|
|
35,131,465
|
|
|
|
|
38,910,150
|
|
|
|
|
31,672,089
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED
|
|
|
|
48,103,914
|
|
|
|
|
38,649,085
|
|
|
|
|
42,705,875
|
|
|
|
|
35,189,709
|
|
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SOURCE Trinity Capital Inc.