Trinity Capital Inc. Q4 FY2024 earnings call

• 2024 was an excellent year with record net investment income ($116 million) and $1.2 billion fundings. Major milestones included launch of new verticals, expansion to Europe, and RIA co-investment vehicle.
• Q4 highlights: Net investment income of $35 million, NAV at $823 million, platform AUM over $2 billion, and a $0.51 per share dividend.
• Five business verticals with dedicated teams for origination, credit, and portfolio management, allowing efficient scaling.
• Strategic initiatives: RIA co-investment vehicle providing incremental income, balance sheet strength with $50 million from ATM, $600 million credit facility, and $142.5 million private placement debt offering.

In the fourth quarter, Trinity Capital's five business verticals contributed to growth. Fundings breakdown was 33% equipment financing, 28% sponsor finance, 27% tech lending, 7% life sciences, and 3% asset-backed lending. Net investment income for Q4 was $35 million, a 38% increase vs Q4 2023. Net asset value grew to $823 million, up 9% from the prior quarter. Platform AUM exceeded $2 billion, and Trinity paid a $0.51 per share cash dividend in Q4.

• Intend to decrease leverage over time by downstreaming assets to managed accounts.
• RIA growth will enable reducing BDC leverage.
• Debt ATM program provides flexibility for capital raising.
• No debt obligations due until August 2026, with early debt extinguishments reflecting strong platform performance.

• Credit risks related to portfolio companies, though nonaccrual credits are low and improving.
• Market risks affecting investment opportunities.
• Regulatory risks in managing RIA and third-party capital.
• Company-specific risks for individual nonaccrual loans, which are isolated to specific companies.

Q: How have you maintained low nonaccruals?

A: We have experts in each vertical, with underwriters and portfolio managers experienced in their respective areas, and a rigorous underwriting process at the front end of the pipeline.

Q: How are you approaching leverage in the current environment?

A: We intend to decrease leverage over time by downstreaming assets to managed accounts, aiming for a healthy level around 1 to 1, and RIA growth will help reduce BDC leverage.

Q: What is the NAV impact from the repayment of convertible debt?

A: The estimated Q1 NAV impact from repaying convertible debt is approximately $0.27 per share based on current outstanding shares.

Q: How do you think about FinTech exposure and bank partnerships?

A: We consider multiple bank partnerships in underwriting, ensuring diversification, and limit exposure by focusing on asset-backed lending in fintech with receivable-type financing.

Q: What are your targets for RIA comp EPS contribution in 2025?

A: We anticipate dividends from RIA fees and income, with expense allocations and income from managed accounts contributing, though specific forward-looking EPS numbers aren't provided yet.

Q: How does the Trump administration's focus affect life sciences exposure?

A: We have limited exposure to bio/pharma, focusing on med device companies post-FDA approval, and don't see immediate impact from the Trump administration's focus.

Q: Is the debt ATM for unsecured notes?

A: Yes, the debt ATM program is eligible for Trinity's TRINI and TRINZ debt issuances, providing efficient capital-raising flexibility.