Trinity Capital Inc. Q1 FY2025 earnings call

• Trinity delivered strong Q1 results with net investment income up, NAV and AUM growth, and strong credit quality. - Addressed macroeconomic and geopolitical conditions, monitoring tariffs and their impact on portfolio companies. Portfolio management team engaged with companies to analyze tariff effects; majority of portfolio companies have limited tariff exposure. - Emphasized internally managed structure, alignment with shareholders, and diversified business verticals. Received investment grade rating from Moody's. - Strong investment pipeline with $623 million unfunded commitments. NAV increase due to net investment income and accretive ATM offerings, though decrease per share due to convertible note retirement. - Liquidity enhanced by equity and debt ATM programs; co-investment vehicles provided incremental income. - Portfolio composition: 75% secured loans, 19% equipment financing, 4% equity, 2% warrants; diversified across industries and verticals. Credit quality consistent, 99.1% of portfolio performing, non-accruals at 0.9% of debt portfolio.

Trinity Capital achieved $32.4 million of net investment income in Q1 2025, a 29% increase vs Q1 2024. Net asset value grew to a record $833 million, and platform AUM increased to over $2.1 billion. Non-accruals were less than 1% of the portfolio at fair value. Product segment breakdown in Q1: 38% to equipment financing, 29% to life sciences, 18% to sponsor finance, 10% to tech lending, and 5% to asset based lending.

• Maintaining strong investment pipeline with $623 million unfunded commitments. - Expecting normal payoffs to boost earnings in subsequent quarters. - Focus on growing managed accounts and generating new income to out earn and grow dividend. - Goal to keep leverage around 1:1 mark and increase earnings over time.

• Macroeconomic and geopolitical uncertainties, particularly tariffs, pose potential impact on portfolio companies' operational performance and credit quality.

Q: Fourth quarter portfolio investments increased but interest income dropped; why?

A: Kyle Brown stated it was due to rate cut effects and lower payoffs resulting in less pull forward fees.

Q: Impact of tariffs on medical devices?

A: Ron Kundich reported low impact after thorough investigation of the portfolio; life science portfolio had no alarming findings regarding tariff impact on supply chains.

Q: Slow commitments in Q1?

A: Gerry Harder explained it was a defensive stance due to macroeconomic conditions, focusing on portfolio first, but pipeline is robust and deals didn't go away.

Q: Stock yield vs core yield and raising equity?

A: Michael Testa said they model raising capital accretively, and managed accounts generate new income, with a focus on EPS growth and leveraging liquidity.

Q: Allocation of deals between managed accounts and BDC?

A: Kyle Brown mentioned managed accounts provide additional liquidity and help generate new income, with a focus on growing earnings and the dividend, and a quarterly review of the model to ensure leverage and earnings growth.

Q: Impact of tariffs on fair value evaluation?

A: Gerry Harder said debt portfolio valuation via discounted cash flow unlikely to have broad adjustments, while equity portion's fair value affected by market multiples as of June 30.

Q: Portfolio first lien percentage?

A: Ron Kundich stated 78% of the portfolio is first lien, not encumbered by senior debt.

Q: Dividend commitment and NAV?

A: Kyle Brown said they focus on covering the dividend, with the goal to grow coverage and build NAV over time, and the board will decide on dividend increases and special dividends when earnings allow