Trinity Capital Inc. · NASDAQ:TRIN
Trinity Capital — Q3 2023 Earnings Presentation
35 slides from Trinity Capital's earnings presentation, Nov 1, 2023
Slide 1: Third Quarter 2023 Investor Presentation
Third Quarter 2023 Investor Presentation
Slide 2: Forward Looking Statements | Disclaimer
FORWARD LOOKING STATEMENTS | DISCLAIMER Trinity Capital Inc. (the “Company”) cautions that this presentation may contain forward-looking statements that are based on current expectations and assumptions about future events, and which are not based in historical fact. The forward-looking statements i
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: Trinity Capital Overview
TRINITY CAPITAL OVERVIEW Diversified financial solutions to growth stage companies | NASDAQ – TRIN, TRINL 15-YEAR MARKET CAP / TRACK P O R T F O L I O (4) L I Q U I D I T Y (4) R E C O R D (1) DIVIDEND YIELD $840.7M $2.7B Fundings $599.0M $257.2M Secured Loans Market C a p (3) Available 62 Companies
Slide 5: The Trinity Platform
THE TRINITY PLATFORM In an evolving market, platform diversification further strengthens Trinity’s position to capture market share and differentiates its financing solutions Business Development Company (“BDC”) Trinity’s foundation was built on its successful investment track record supporting grow
Slide 6: Why Is Trinity Different
WHY IS TRINITY DIFFERENT We understand the growth stage world and provide more than money to our portfolio company partners § Highly experienced executive team with startup experience Deep Operating § Decades of in-depth high-tech experience Experience § Numerous U.S. and International patents issue
Slide 7: Entrenched Industry Relationships
ENTRENCHED INDUSTRY RELATIONSHIPS Multiple shared portfolio companies with top Venture Capital Firms Relationships with top market share banks catering to majority of VC-backed companies We have established inter-creditor agreements with the banks Combining with bank debt results in a lower blended
Slide 8: Underwriting Approach and Risk Mitigation
UNDERWRITING APPROACH AND RISK MITIGATION Disciplined investment approach keeps our annualized loss rate at 30 bps and is more than offset by realized gains on warrant/equity investments (1) CAPITALIZATION FINANCIALS DEBT STRUCTURE Investor Syndicate Revenue & Collateral Gross Margins Cash Life Fund
Slide 9: Secured Term Loans
SECURED TERM LOANS Select Examples Term Loans Axiom Space is developing the world’s first commercial space station. § Investor Syndicate 01 C5 Capital, TQS Advisors, Declaration Partners, SECURED LOANS Boryung Pharma, Aljazira Capital Partner with the banks § Use of Loan General corporate purposes 0
Slide 10: Equipment Financings
EQUIPMENT FINANCINGS Select Examples Emerald Cloud Lab is a remote-controlled life Equipment Financing science laboratory that allows scientists to conduct their experiments without being anchored to a physical lab. § Investor Syndicate 01 COMPANIES WITH CAPEX REQUIREMENTS Manufacturing equipment an
Slide 11: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 12: Q3 2023 Highlights
Q3 2023 HIGHLIGHTS § Total Investment Income of $46.4M § Net Investment Income (“NII”) of $23.4M Robust § Net Interest Margin (“NIM”) of 12.9% § NII per share of $0.58 provides 118.4% of regular distribution coverage Earnings § Increased the third quarter regular dividend distribution to $0.49 per s
Slide 13: Solid Shareholder Returns
SOLID SHAREHOLDER RETURNS DIVIDEND GROWTH $0.49 $7.00 $0.48 $0.50 $0.47 $0.46 $0.45 $0.45 $0.42 $6.00 $0.40 $0.70 $0.40 $0.36 $0.65 $5.00 $0.35 $0.33 $0.60 $0.29 $0.60 Net Investment Income covered $0.28 $0.30 $4.00 $0.27 $0.27 $0.27 regular dividend by 118.4% in 3Q23 $0.45 $0.25 $0.22 $0.30 $3.00 $
Slide 14: Quarterly Income Statement
QUARTERLY INCOME STATEMENT For the three months ended (In thousands, except per share amounts) 09/30/2023 06/30/2023 03/31/2023 12/31/2022 09/30/2022 Total Investment Income $46,438 $46,045 $41,538 $41,509 $38,689 Interest expense and other debt financing costs 10,783 11,985 11,081 10,284 9,306 Comp
Slide 15: Income Source & Portfolio Yield Trends
INCOME SOURCE & PORTFOLIO YIELD TRENDS Strong Yields Produce Solid Investment Income SOURCES OF INVESTMENT INCOME PORTFOLIO YIELDS $50,000 $45,000 8.4% $1,200 16.7% 17.0% 9.7% 16.2% $40,000 8.3% 5.6% 16.4% 15.5% 15.5% 16.0% 11.0% 18.0% $1,000 15.2% 15.0% $35,000 19.4% 14.8% 19.1% 15.0% 14.2% 14.3% $
Slide 16: NII Returns and Use of Leverage
NII RETURNS AND USE OF LEVERAGE N I I R E T U R N O N AV E R A G E A S S E T S ( R O A A ) (1) & N I I R E T U R N O N AV E R A G E E Q U I T Y ( R O A E ) (2) 20.0% 17.9% 18.4% 17.6% 16.5% 15.4% 14.3% 15.0% 13.5% 12.0% 10.9% 11.4% 9.7% 10.2% 9.5% 8.9% 10.0% 8.2% 8.0% 7.7% 7.6% 6.5% 6.4% 6.7% 6.8% 6
Slide 17: Net Investment Income (NII) per Share Bridge
NET INVESTMENT INCOME (NII) PER SHARE BRIDGE R E C O N C IL IAT IO N O F Q U A R T E R LY N II P E R S H A R E Increase Decrease Total $0.70 $0.03 $0.65 $0.01 $(0.01) $0.61 $0.60 $0.58 $(0.06) $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 2Q23 NII Change in Change in Change in Impact of 3Q23 NII (1) per Share
Slide 18: Balance Sheet
BALANCE SHEET (In thousands, except per share amounts) 09/30/2023 06/30/2023 03/31/2023 12/31/2022 09/30/2022 Assets Total investments at fair value $ 1,116,552 $ 1,148,018 $ 1,091,531 $ 1,094,386 $ 1,042,175 Cash and cash equivalents 7,230 12,268 8,344 10,612 34,141 Interest receivable 10,920 12,11
Slide 19: Net Asset Value (NAV) per Share Bridge
NET ASSET VALUE (NAV) PER SHARE BRIDGE R E C ON C IL IAT ION OF QU A R T E R LY N AV P E R S H A R E Increase Decrease Total $14.00 $0.58 $13.50 $0.10 $13.15 $0.15 $13.17 ($0.54) ($0.05) $13.00 ($0.22) $12.50 $12.00 Earnings and Investment Portfolio Share Distributions Performance Impact(1) $11.50 $
Slide 20: Debt Capital Structure
DEBT CAPITAL STRUCTURE Diversified Borrowings ($ in millions) as of September 30, 2023 Debt Outstanding Undrawn Funding Source Stated Maturity Interest Rate Commitment Principal Commitment Notes: 2025 Unsecured Notes(1) $182.5 $182.5 - January 16, 2025(2) 7.00% Convertible Notes $50.0 $50.0 - Decemb
Slide 21: Portfolio Highlights
J//////// PORTFOLIO HIGHLIG
Slide 22: Portfolio Diversification
PORTFOLIO DIVERSIFICATION Diversified across investment type, transaction size, industry and geography Investment Type(1) Transaction Size(1)(2) 13.2% 4.7% Loans 35.5% Greater than $30M 75.3% Equipment Financing $15M - $30M 20.0% Equity & Warrants Less than $15M 51.3% Industry Type(1) Geographic All
Slide 23: Portfolio Trends
PORTFOLIO TRENDS FIXED VS FLOATING DEBT INVESTMENTS ( 1 ) TOTAL PORTFOLIO BY INVESTMENT TYPE ( 2 ) Fixed Floating Loans Equipment Financing Equity & Warrants $1,200,000 4.2% 4.1% 4.1% 4.7% $1,000,000 4.3% 21.3% 20.0% 22.5% 21.9% 23.6% 62.2% 67.5% 70.0% $800,000 72.1% 73.8% IN THOUSANDS $600,000 $400
Slide 24: Hypothetical Warrant Upside
HYPOTHETICAL WARRANT UPSIDE For Illustration Purposes Only 2X MULTIPLE 140 Warrant Positions in 87 Portfolio Companies • Proceeds of $53.8 million (2X) • Potential gain of $13.5 million § GAAP fair value ~ $31.7 million or $0.31 per share § GAAP cost ~ $26.9 million § ~ $53.8 million in nominal exer
Slide 25: Disciplined Credit Rating
DISCIPLINED CREDIT RATING Consistent and Disciplined Underwriting Standards $1,100 3.5 $1,000 $900 2.9 2.8 2.8 2.8 2.8 3.0 $800 $700 2.5 $600 Total Debt Investments (FV, $ in million) (1) $1,049 $1,043 $1,094 $1,056 $500 $997 2.0 Weighted Investment Credit Rating $400 $300 $200 1.5 $100 $0 1.0 3Q22
Slide 26: Interest Rate Sensitivity
INTEREST RATE SENSITIVITY ANNUALIZED INTEREST RATE SENSITIVITY ($ in thousands, except per share data) $15,000 $0.31 $0.40 73.8% floating rate debt $0.30 $10,000 investment portfolio as $0.15 $0.20 $13,363 $5,000 of September 30, 2023 (1) $6,682 $0.10 $- $- $(6,325) $(5,000) $(0.10) 18.8% floating r
Slide 27: Diversified Portfolio
DIVERSIFIED PORTFOLIO Select List of Current & Historical Investments © 2023 Trinity Capital Inc. | 27
Slide 28: Venture Capital and Lending Market
VENTURE CAPITAL AND LENDING MARKET
Slide 29: Venture Capital Market
VENTURE CAPITAL MARKET US VC Deal Activity (1) $400 18,926 20,000 17,670 18,000 $350 16,000 $300 13,616 13,593 14,000 Dollars Invested ($ in billions) 12,506 $250 11,863 11,807 11,935 # of Deals 11,171 10,962 12,000 10,058 $200 10,000 8,000 $150 6,000 $100 4,000 $50 2,000 $147 $151 $173 $347 $245 $1
Slide 30: Venture Capital Fundraising
VENTURE CAPITAL FUNDRAISING US VC Fundraising Activity (1) $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $163 $173 $22 $38 $42 $51 $47 $72 $70 $93 $43 $- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Capital raised ($ in billions) (1) As of September 30, 2023, per Pitchbook NVCA Venture Mon
Slide 31: Analyst Coverage
ANALYST COVERAGE
Slide 32: Extensive Industry Analyst Coverage
EXTENSIVE INDUSTRY ANALYST COVERAGE Followed by eight firms Ryan Lynch Fi ni an O’ Shea Mi tchel l Penn Vi l as Abr aham (initiated coverage 2/23/2021) (initiated coverage 2/23/2021) (initiated coverage 5/3/2021) (initiated coverage 2/23/2021) Br yce Rowe Chr i stopher Nol an Casey Al exander Kyl e
Slide 33: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 34: Regulation & Structure
REGULATION & STRUCTURE Trinity Capital Inc. is an Internally Managed BDC under the 1940 Act and has elected to be treated as a RIC for Federal Income Tax Purposes beginning with its Taxable Year ending December 31, 2020 BUSINESS DEVELOPMENT COMPANY (BDC) § Regulated by the SEC under the Investment C
Slide 35: Thank You
THANK YOU We look forward to our growing partnership. T R I N I T Y C A P. C O M 3 5