PHOENIX, May 9, 2022
/PRNewswire/ -- Trinity Capital Inc. (Nasdaq: TRIN) ("Trinity
Capital" or the "Company"), a leading provider of debt and
equipment financing to venture capital backed growth stage
companies, today announced its financial results for the first
quarter ended March 31, 2022.
First Quarter 2022 Highlights
- Total investment income of $31.8
million, an increase of 83.8% year-over-year
- Net investment income ("NII") of $15.6
million, or $0.57 per basic
share, an increase of 115.2% year-over-year
- Net realized gains of $52.6
million on the sale of equity and other investments
- Aggregate debt and equity investment commitments of
$305.6 million
- Total gross investments funded of $222.5
million, comprised of $103.9
million across 10 new portfolio companies and $118.6 million across 21 existing portfolio
companies
- Debt principal repayments of $96.5
million
- Investment portfolio of $919.3
million at fair value, an increase of 5.3% from December 31, 2021
- Net asset value ("NAV") per share decreased to $15.15 from $16.40
on December 31, 2021
- Undistributed earnings spillover of $73.2 million, or $2.62 per ending shares outstanding
- Declared a dividend distribution of $0.40 per share for the first quarter, an
increase of 11.1% from Q4 2021, and a new supplemental cash
dividend of $0.15 per share with the
intent to declare equal supplemental dividends in the subsequent
quarters of 2022
"Following an incredible 2021, the team at Trinity has continued
to deliver in 2022, as demonstrated by another quarter of strong
results," said Steven Brown,
Chairman and Chief Executive Officer of Trinity Capital. "We've
continued to execute on our strategic initiatives, growing and
diversifying our portfolio, investing in our team and pursuing
opportunities to strengthen our balance sheet. In recent quarters,
we have been deliberate about building a portfolio and capital
structure that can perform even through disruptive economic cycles.
Our business remains strong as we continue to innovate, evolve and
scale our systems to provide financial solutions that meet the
needs of growth-stage businesses."
"Trinity's continued momentum reflects our differentiated
culture that encourages continuous learning and an entrepreneurial
spirit," said Kyle Brown, President
and Chief Investment Officer of Trinity Capital. "As our team and
platform continue to grow, we remain committed to executing against
our long-term business strategy with the goal of becoming a
preeminent lender in the venture space."
First Quarter 2022 Operating Results
For the three months ended March 31, 2022, total investment
income was $31.8 million compared to $17.3
million for the quarter ended March 31, 2021. This
represents an effective yield on the average debt investments at
cost of 16.3% and 15.5% for the periods ended March 31,
2022 and 2021, respectively. Our effective yield for this
quarter was significantly higher as compared to prior quarters as a
result of $69.7 million of early loan
repayments and a material exit fee earned in the quarter. 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, excluding interest expense, for the
first quarter of 2022 were $8.8 million compared
to $5.4 million during the first quarter of 2021. The
increase was primarily attributable to higher D&O insurance
expense, higher compensation associated with additional headcount,
variable compensation and amortization of restricted stock
grants.
Interest expense for the first quarter of 2022 was $6.8 million compared to $4.6 million during the first quarter of 2021.
The increase is primarily attributable to the higher average debt
outstanding under our August 2026
Notes and December 2026 Notes offset
by slightly lower debt outstanding under our credit
facilities.
Net investment income after taxes was approximately $15.6
million, or $0.57 per share based on 27.4 million basic
weighted average shares outstanding for the first quarter of 2022,
compared to $7.3 million or $0.31 per share for
the first quarter of 2021 based on 23.6 million basic weighted
average shares outstanding.
First quarter 2022 net realized gains on investments were
approximately $52.6 million compared to net realized gains
of $2.6 million during the first quarter of 2021. The
significant realized gains were primarily attributable to the sale
of our public equity positions in Lucid Group Inc. (Nasdaq: LCID)
("Lucid") and Matterport Inc. (Nasdaq: MTTR) ("Matterport").
Net unrealized depreciation was $77.3 million during the
first quarter of 2022, compared to net unrealized appreciation
of $15.5 million during the first quarter of 2021. The
unrealized depreciation was primarily attributable to the reversal
of the unrealized appreciation in Lucid and Matterport on the sale
of the equity positions.
A provision for income taxes of $0.7
million related to estimated excise tax was recorded in the
first quarter of 2022 as compared to $0.1
million in the first quarter of 2021.
First quarter 2022 net decrease in net assets resulting from
operations was $9.1 million, or
$0.33 per share based on 27.4 million
basic weighted average shares outstanding. This compares to a net
increase in net assets resulting from operations of $25.3 million or $1.08 per share based on 23.6 million basic
weighted average shares outstanding for the first quarter of
2021.
Trinity Capital's higher weighted average share count for the
three-month period ended March 31,
2022, as compared to the prior year is primarily the result
of the full impact of shares issued in connection with our
IPO, issuance of restricted stock to officers and employees
under the 2019 Trinity Capital Inc. Long Term Incentive Plan as
well as shares issued under the Company's dividend reinvestment
plan.
Net Asset Value
As of March 31, 2022, NAV per
share decreased to $15.15, compared
to $16.40 on December 31, 2021. Total net assets at the end of
the first quarter of 2022 decreased by 5.0% to $424.0 million, compared to $446.5 million at the end of Q4 2021. The
decrease in total net assets and NAV per share was primarily driven
by the reversal of prior period unrealized appreciation on Lucid
and Matterport which exceeded the realized gains by approximately
$19.1 million and an increase in the
number of shares outstanding. The difference between the unrealized
appreciation and realized gains was the result of the stock price
declines through the dates on which the Company was able to
liquidate the shares following the relevant lock-up periods.
Portfolio and Investment Activity
As of March 31, 2022, Trinity
Capital's investment portfolio had an aggregate fair value of
approximately $919.3 million and was
comprised of approximately $649.5
million in secured loans, $204.3
million in equipment financings and $65.5 million in equity and warrants across 98
portfolio companies.
During the first quarter, the Company originated approximately
$305.6 million of total new
commitments comprised of secured loans totaling $232.5 million, equipment financing totaling
$70.0 million and equity investments
totaling $3.1 million. First quarter
investments funded totaled approximately $222.5 million, which
was comprised of approximately $164.0 million of secured loans, $49.1
million of equipment financings and $9.4 million of warrant and equity
investments. The Company continues to shift its portfolio to
floating rate loans with approximately 59.6% of its debt portfolio
at floating rates as of March 31, 2022.
Proceeds received from repayments of the Company's debt
investments during the first quarter totaled approximately
$96.5 million, which included
$69.7 million from early debt
repayments and $26.8 million from
normal amortization. In addition, the Company received proceeds of
$62.3 million from the sale of equity
and warrant investments primarily related to four portfolio
companies. The investment portfolio increased by $123.2 million on a cost basis, an increase of
15.4%; and by $45.9 million on a fair
value basis, an increase of 5.3% as compared to December 31, 2021. The lower increase on a fair
value basis was due to the sale of the appreciated positions in
Lucid and Matterport.
As of the end of the first quarter, loans to three portfolio
companies were on non-accrual status with a total fair value of
approximately $4.0 million, or just
0.5% 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 March 31,
2022 and December 31, 2021
(dollars in thousands):
|
|
|
|
March 31, 2022
|
|
December 31, 2021
|
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
|
|
$
|
80,592
|
|
9.4%
|
|
$
|
84,785
|
|
11.5%
|
3.0 - 3.9
|
|
Strong
Performance
|
|
|
332,019
|
|
38.9%
|
|
|
236,466
|
|
32.1%
|
2.0 - 2.9
|
|
Performing
|
|
|
429,044
|
|
50.3%
|
|
|
396,846
|
|
53.9%
|
1.6 - 1.9
|
|
Watch
|
|
|
8,858
|
|
1.0%
|
|
|
13,427
|
|
1.9%
|
1.0 - 1.5
|
|
Default/Workout
|
|
|
3,286
|
|
0.4%
|
|
|
4,444
|
|
0.6%
|
|
|
Total
|
|
$
|
853,799
|
|
100.0%
|
|
$
|
735,968
|
|
100.0%
|
As of March 31, 2022, the
Company's loan and equipment financing investments had a weighted
average risk rating score of 3.1 as compared to 3.0 as of
December 31, 2021.
Secondary Offering
In April 2022, subsequent to
quarter-end, the Company closed an underwritten public offering of
$50.0 million of shares of its common
stock at a public offering price of $18.15 per share. In connection with the
offering, the underwriters exercised a 30-day option to purchase up
to 413,226 additional shares of its common stock generating an
additional $7.5 million.
Liquidity and Capital Resources
As of March 31, 2022, the Company
had approximately $94.7 million in
available liquidity, including $28.7 million in
unrestricted cash and cash equivalents. At the end of the period,
the Company had approximately $66.0
million in available borrowing capacity under its credit
facility with KeyBank, subject to existing terms and advance rates
and regulatory and covenant requirements. Subsequent to the end of
the first quarter, the total capacity under the KeyBank Credit
Facility was expanded by an additional $100.0 million to a total of $400.0 million and available borrowing capacity
was increased to $275.0 million with
the addition of MUFG Union Ltd. to the banking syndicate and an
increase in availability from KeyBank N.A.
As of March 31, 2022, Trinity Capital's leverage or
debt-to-equity ratio was approximately 120% as compared to 104% as
of December 31, 2021. The increase in the leverage ratio
was primarily attributable to borrowings under the KeyBank Credit
Facility.
Distributions
On March 17, 2022, the Company's
Board of Directors declared a dividend of $0.40 per share with respect to the quarter ended
March 31, 2022, which was paid on
April 15, 2022, to shareholders of
record as of March 31, 2022. In
addition to the regular quarterly dividend, the Company's Board of
Directors declared a new supplemental cash dividend of $0.15 per share in the first quarter, with the
intent to declare equal special dividends in the second, third and
fourth quarters of 2022 for a total of $0.60 per share in 2022, subject to future Board
of Director approval.
Portfolio Company M&A and IPO Activity
As of May 9, 2022, Trinity Capital
held debt, equity or warrant investments in two portfolio companies
that recently completed their de-SPAC transactions and two
additional companies that have entered into definitive agreements
to go public via special purpose acquisition companies
("SPACs").
On November 10, 2021, E la Carte,
Inc., (d/b/a Presto, Inc.), announced it had entered into a
definitive merger agreement with Ventoux CCM Acquisition Corp.
(Nasdaq: VTAQ). Trinity Capital initially committed $10.0 million in debt financing beginning in
March 2016 and held warrants for
104,284 shares of common stock, 497,183 shares of preferred Series
A stock and 106,841 shares of Preferred Series AA-1 stock as of
March 31, 2022.
On December 13, 2021, Footprint
International Holding, Inc. announced it had entered into a
definitive merger agreement with Gores Holding III (Nasdaq: GIIXU).
Trinity Capital initially committed $18.0
million in equipment financing in February 2020 and held $17.8 million in secured loans and a warrant for
115,695 shares of common stock as of March
31, 2022.
On February 2, 2022, Greenlight
Biosciences completed its de-SPAC merger with Environmental Impact
Acquisition Corp and began trading on the Nasdaq under the ticker
symbol "GRNA." Trinity Capital initially committed $11.3 million in equipment financing beginning in
January 2021 and held $8.6 million in equipment financing and 23,017
shares of common stock as of March 31,
2022.
On March 2, 2022, Rigetti &
Co., Inc. completed its de-SPAC merger with Supernova Partners
Acquisition Company II, Ltd. and began trading on the Nasdaq under
the stock symbol "RGTI." Trinity Capital initially committed
$12.0 million in debt financing
beginning in April 2021 and held
$32.0 million in secured loans,
50,000 shares of common stock and a warrant for 783,132 shares of
common stock as of March 31,
2022.
Senior Leadership Appointments
On March 17, 2022, the Company
announced that Gerry Harder was
promoted to serve as the Company's first Chief Operating Officer,
and Ron Kundich was promoted to
Chief Credit Officer, succeeding Mr. Harder in that role. These
promotions will expand and deepen the Company's management team as
it continues to execute against its long-term strategic plan.
On April 11, 2022, the Company
announced the appointment of Rob Lake as Managing Director, Life
Sciences in San Diego, California.
Mr. Lake, a veteran in the venture ecosystem, has been supporting
venture capital-backed growth stage companies for more than 18+
years.
Conference Call
Trinity Capital will hold a conference call to discuss its first
quarter 2022 financial results at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern
Time) on Monday, May 9,
2022.
To listen to the call, please dial (866) 831-8713, or (203)
518-9822 internationally, and reference Conference ID: TRINQ122 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) 938-0997 or
(402) 220-1541.
About Trinity Capital Inc.
Trinity Capital (Nasdaq: TRIN), an internally managed
specialty lending company that has elected to be regulated as a
business development company under the Investment Company Act of
1940, as amended, is a leading provider of debt, including loans
and equipment financing, to growth stage companies, including
venture-backed companies and companies with institutional equity
investors. Trinity Capital's investment objective is to generate
current income and, to a lesser extent, capital appreciation
through investments consisting primarily of term loans and
equipment financings and, to a lesser extent, working capital
loans, equity 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.
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, including the
impact of the COVID 19 pandemic on the economy, financial markets,
our business, our portfolio companies and our industry. 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2022
|
|
2021
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Investments at fair
value:
|
|
|
|
|
|
|
Control investments
(cost of $39,167 and $38,994, respectively)
|
|
$
|
28,057
|
|
$
|
32,214
|
Affiliate investments
(cost of $41,621 and $41,609, respectively)
|
|
|
28,941
|
|
|
32,192
|
Non-control /
Non-affiliate investments (cost of $840,263 and $717,253,
respectively)
|
|
|
862,350
|
|
|
809,064
|
Total investments (cost
of $921,051 and $797,856, respectively)
|
|
|
919,348
|
|
|
873,470
|
Cash and cash
equivalents
|
|
|
28,684
|
|
|
31,685
|
Restricted
cash
|
|
|
—
|
|
|
15,057
|
Interest
receivable
|
|
|
6,482
|
|
|
5,551
|
Deferred credit
facility costs
|
|
|
2,188
|
|
|
2,308
|
Other assets
|
|
|
9,237
|
|
|
9,047
|
Total
assets
|
|
$
|
965,939
|
|
$
|
937,118
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
KeyBank Credit
Facility
|
|
$
|
134,000
|
|
$
|
81,000
|
August 2026 Notes, net
of $2,535 and $2,679, respectively, of unamortized deferred
financing costs
|
|
|
122,465
|
|
|
122,321
|
2025 Notes, net of
$3,319 and $3,616, respectively, of unamortized deferred financing
costs
|
|
|
121,681
|
|
|
121,384
|
December 2026 Notes,
net of $1,749 and $1,842, respectively, of unamortized deferred
financing costs
|
|
|
73,251
|
|
|
73,158
|
Convertible Notes, net
of $2,361 and $2,515, respectively, of unamortized deferred
financing costs and discount
|
|
|
47,639
|
|
|
47,485
|
Credit Suisse Credit
Facility
|
|
|
—
|
|
|
10,000
|
Distribution
payable
|
|
|
15,389
|
|
|
9,803
|
Security
deposits
|
|
|
11,549
|
|
|
10,840
|
Accounts payable,
accrued expenses and other liabilities
|
|
|
15,924
|
|
|
14,594
|
Total
liabilities
|
|
|
541,898
|
|
|
490,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
ASSETS
|
|
|
|
|
|
|
Common stock, $0.001
par value per share (200,000,000 authorized, 27,982,842 and
27,229,541 shares issued and outstanding as of
March 31, 2022 and December 31, 2021,
respectively)
|
|
|
28
|
|
|
27
|
Paid-in capital in
excess of par
|
|
|
370,570
|
|
|
368,609
|
Distributable
earnings/(accumulated loss)
|
|
|
53,443
|
|
|
77,897
|
Total net
assets
|
|
|
424,041
|
|
|
446,533
|
Total liabilities
and net assets
|
|
$
|
965,939
|
|
$
|
937,118
|
NET ASSET VALUE PER
SHARE
|
|
$
|
15.15
|
|
$
|
16.40
|
TRINITY CAPITAL
INC.
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
March 31, 2022
|
|
March 31, 2021
|
INVESTMENT
INCOME:
|
|
|
|
|
|
|
Interest
income:
|
|
|
|
|
|
|
Control
investments
|
|
$
|
1,373
|
|
$
|
1,307
|
Affiliate
investments
|
|
|
428
|
|
|
438
|
Non-Control /
Non-Affiliate investments
|
|
|
26,605
|
|
|
14,600
|
Total interest
income
|
|
|
28,406
|
|
|
16,345
|
Fee
income:
|
|
|
|
|
|
|
Non-Control /
Non-Affiliate investments
|
|
|
3,439
|
|
|
975
|
Total fee
income
|
|
|
3,439
|
|
|
975
|
Total investment
income
|
|
|
31,845
|
|
|
17,320
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
Interest expense and
other debt financing costs
|
|
|
6,798
|
|
|
4,616
|
Compensation and
benefits
|
|
|
6,455
|
|
|
3,996
|
Professional
fees
|
|
|
832
|
|
|
647
|
General and
administrative
|
|
|
1,477
|
|
|
750
|
Total
expenses
|
|
|
15,562
|
|
|
10,009
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME BEFORE TAXES
|
|
|
16,283
|
|
|
7,311
|
|
|
|
|
|
|
|
Excise tax
expense
|
|
|
674
|
|
|
58
|
|
|
|
|
|
|
|
NET INVESTMENT
INCOME
|
|
|
15,609
|
|
|
7,253
|
|
|
|
|
|
|
|
NET REALIZED
GAIN/(LOSS) FROM INVESTMENTS:
|
|
|
|
|
|
|
Control
investments
|
|
|
—
|
|
|
—
|
Affiliate
investments
|
|
|
—
|
|
|
—
|
Non-Control /
Non-Affiliate investments
|
|
|
52,644
|
|
|
2,595
|
Net realized
gain/(loss) from investments
|
|
|
52,644
|
|
|
2,595
|
|
|
|
|
|
|
|
NET CHANGE IN
UNREALIZED APPRECIATION/(DEPRECIATION) FROM
INVESTMENTS:
|
|
|
|
|
|
|
Control
investments
|
|
|
(4,331)
|
|
|
(7,554)
|
Affiliate
investments
|
|
|
(3,264)
|
|
|
(6,312)
|
Non-Control /
Non-Affiliate investments
|
|
|
(69,723)
|
|
|
29,342
|
Net change in
unrealized appreciation/(depreciation) from
investments
|
|
|
(77,318)
|
|
|
15,476
|
|
|
|
|
|
|
|
NET
INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS
|
|
$
|
(9,065)
|
|
$
|
25,324
|
|
|
|
|
|
|
|
NET INVESTMENT INCOME
PER SHARE - BASIC
|
|
$
|
0.57
|
|
$
|
0.31
|
NET INVESTMENT INCOME
PER SHARE - DILUTED
|
|
$
|
0.54
|
|
|
0.31
|
|
|
|
|
|
|
|
NET CHANGE IN NET
ASSETS RESULTING FROM OPERATIONS PER SHARE - BASIC &
DILUTED
|
|
$
|
(0.33)
|
|
$
|
1.08
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC & DILUTED
|
|
|
27,416,943
|
|
|
23,554,950
|
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multimedia:https://www.prnewswire.com/news-releases/trinity-capital-inc-reports-first-quarter-2022-financial-results-301542994.html
SOURCE Trinity Capital Inc.