Trinity Capital Inc. · NASDAQ:TRIN
Trinity Capital — Q4 2023 Earnings Presentation
36 slides from Trinity Capital's earnings presentation, Mar 6, 2024
Slide 1: Fourth Quarter 2023 Investor Presentation
Fourth 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 $885.3M $3.0B Fundings $668.2M $141.8M Secured Loans Market C a p (3) Available 63 Companie
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 intercreditor agreements with the banks Combining with bank debt results in a lower blended c
Slide 8: Underwriting Approach and Risk Mitigation
UNDERWRITING APPROACH AND RISK MITIGATION Disciplined investment approach keeps our annualized loss rate at 27 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 Athletic Brewing brews high-quality, great-tasting Equipment Financings non-alcoholic craft beer. ▪ Investor Syndicate Alliance Consumer Growth, TRB Advisors, Keurig Dr 01 COMPANIES WITH CAPEX REQUIREMENTS Manufacturing equipment and hard assets Pepper ▪ Use of E
Slide 11: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 12: Q4 2023 Highlights
Q4 2023 HIGHLIGHTS ▪ Total Investment Income of $47.8M ▪ Net Investment Income (“NII”) of $25.1M Robust ▪ Net Interest Margin (“NIM”) of 13.2% ▪ Earnings ▪ NII per share of $0.57 provides 114.0% of regular distribution coverage Increased the fourth quarter regular dividend distribution to $0.50 per
Slide 13: Solid Shareholder Returns
SOLID SHAREHOLDER RETURNS DIVIDEND GROWTH $0.50 $0.49 $7.00 $0.48 $0.50 $0.47 $0.46 $0.45 $0.70 $0.45 $0.42 $6.00 $0.40 $0.70 $0.40 $0.36 $0.65 $5.00 $0.33 $0.35 $0.60 Net Investment Income covered $0.29 $0.60 $4.00 $0.27 $0.27 $0.27 $0.28 $0.30 regular dividend by 114.0% in 4Q23 $0.45 $0.25 $0.22 $
Slide 14: Quarterly Income Statement
QUARTERLY INCOME STATEMENT For the three months ended (In thousands, except per share amounts) 12/31/2023 09/30/2023 06/30/2023 03/31/2023 12/31/2022 Total Investment Income $47,834 $46,438 $46,045 $41,538 $41,509 Interest expense and other debt financing costs 10,446 10,783 11,985 11,081 10,284 Com
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% 11.2% $1,400 16.7% 16.7% 17.0% 9.7% 16.2% $40,000 8.3% 5.6% 16.4% 14.8% $1,200 15.5% 15.5% 16.0% 18.0% 15.2% 15.0% $35,000 19.4% 14.8% 19.1% 15.0% $
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% 16.9% 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% 8.3% 7.7% 7.6% 6.5% 6.4%
Slide 17: Net Investment Income (NII) Per Share Bridge
NET INVESTMENT INCOME (NII) PER SHARE BRIDGE (1) (1) Includes the impact of share activity and equity incentive plans. © 2024 Trinity Capital Inc. | 17
Slide 18: Quarterly Balance Sheet
QUARTERLY BALANCE SHEET (In thousands, except per share amounts) 12/31/2023 09/30/2023 06/30/2023 03/31/2023 12/31/2022 Assets Total investments at fair value $ 1,275,180 $ 1,116,552 $ 1,148,018 $ 1,091,531 $ 1,094,386 Cash and cash equivalents 4,761 7,230 12,268 8,344 10,612 Interest receivable 11,
Slide 19: Net Asset Value (NAV) Per Share Bridge
NET ASSET VALUE (NAV) PER SHARE BRIDGE Earnings and Investment Portfolio Share Distributions Performance Impact(1) (1) Includes the impact of share activity and equity incentive plans. © 2024 Trinity Capital Inc. | 19
Slide 20: Debt Capital Structure
DEBT CAPITAL STRUCTURE Diversified Borrowings ($ in millions) as of December 31, 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 - Decembe
Slide 21: Portfolio Highlights
PORTFOLIO HIGHLIGHTS
Slide 22: Portfolio Diversification
PORTFOLIO DIVERSIFICATION Diversified across investment type, transaction size, industry and geography Investment Type(1) Transaction Size(1)(2) 4.1% 20.7% 34.5% Loans Greater than $30M 69.5% Equipment Financing $15M - $30M Equity & Warrants Less than $15M 26.4% 44.8% 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 $1,350,000 4.2% $1,200,000 4.2% 4.1% 4.1% 4.7% $1,050,000 26.4% 21.3% 20.0% 67.5% 69.0% $900,000 22.5% 21.9% 70.0% 72.1% IN THOUSANDS 73.8% $750,0
Slide 24: Hypothetical Warrant Upside
HYPOTHETICAL WARRANT UPSIDE For Illustration Purposes Only 2X MULTIPLE 146 Warrant Positions in 90 Portfolio Companies • Proceeds of $56.9 million (2X) • Potential gain of $13.3 million ▪ GAAP fair value ~ $33.5 million or $0.29 per share ▪ GAAP cost ~ $30.2 million ▪ ~ $56.9 million in nominal exer
Slide 25: Disciplined Credit Rating
DISCIPLINED CREDIT RATING Consistent and Disciplined Underwriting Standards $1,250 3.5 $1,000 2.8 2.8 2.8 2.8 3.0 2.7 $750 2.5 $1,214 Total Debt Investments (FV, $ in million) (1) $500 $1,049 $1,043 $1,094 $1,056 2.0 Weighted Investment Credit Rating $250 1.5 $0 1.0 4Q22 1Q23 2Q23 3Q23 4Q23 Credit R
Slide 26: Interest Rate Sensitivity
INTEREST RATE SENSITIVITY ANNUALIZED INTEREST RATE SENSITIVITY ($ in thousands, except per share data) $15,000 $0.28 $0.40 69.0% floating rate debt $0.30 $10,000 investment portfolio as $0.15 $0.20 $5,000 $12,999 of December 31, 2023 (1) $7,058 $0.10 $- $- $(4,768) $(0.10) $(5,000) $(8,440) $(0.10)
Slide 27: Diversified Portfolio
DIVERSIFIED PORTFOLIO Select List of Current & Historical Investments © 2024 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 19,025 20,000 17,592 18,000 $350 15,766 16,000 $300 13,637 13,680 Dollars Invested ($ in billions) 14,000 12,564 $250 11,878 11,858 # of Deals 11,176 11,007 12,000 10,053 $200 10,000 8,000 $150 6,000 $100 4,000 $50 2,000 $147 $149 $173 $348 $242 $1
Slide 30: Venture Capital Fundraising
VENTURE CAPITAL FUNDRAISING US VC Fundraising Activity (1) $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $169 $173 $23 $39 $42 $51 $47 $71 $73 $93 $67 $- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Capital raised ($ in billions) (1) As of December 31, 2023, per Pitchbook NVCA Venture Moni
Slide 31: Venture Debt Market
VENTURE DEBT MARKET US Venture Debt Deal Activity (1) $45 2,500 2,365 2,155 $40 1,821 2,000 $35 1,765 Dollars Invested ($ in billions) 1,483 $30 1,553 1,424 # of Deals 1,373 1,368 1,500 $25 1,091 $20 1,000 857 $15 $10 500 $5 $12 $15 $13 $13 $27 $28 $33 $42 $41 $30 $7 $- - 2013 2014 2015 2016 2017 20
Slide 32: Analyst Coverage
ANALYST COVERAGE
Slide 33: Extensive Industry Analyst Coverage
EXTENSIVE INDUSTRY ANALYST COVERAGE Followed by eight firms Paul Johnson Finian O’Shea Mitchell Penn Vilas Abraham (initiated coverage 2/23/2021) (initiated coverage 2/23/2021) (initiated coverage 5/3/2021) (initiated coverage 2/23/2021) Bryce Rowe Christopher Nolan Casey Alexander Kyle Joseph (init
Slide 34: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 35: 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 36: 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 6