PART I: FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Trinity Capital Inc. presents its unaudited consolidated financial statements for the quarter ended March 31, 2025, showing increased total assets, net assets, and a net increase in net assets from operations, with the portfolio detailed in the schedule of investments Consolidated Statements of Assets and Liabilities As of March 31, 2025, total assets increased to $1.86 billion from $1.77 billion at year-end 2024, driven by a rise in total investments at fair value to $1.79 billion, with total liabilities growing to $1.02 billion, resulting in total net assets of $833.4 million and a slight NAV per share decrease to $13.05 from $13.35 Consolidated Assets and Liabilities (in thousands, except per share data) | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Investments (at fair value) | $1,792,689 | $1,725,570 | | Total Assets | $1,857,276 | $1,774,241 | | KeyBank Credit Facility | $392,000 | $113,000 | | Unsecured Notes, net | $566,954 | $764,673 | | Total Liabilities | $1,023,881 | $951,259 | | Total Net Assets | $833,395 | $822,982 | | Net Asset Value (NAV) Per Share | $13.05 | $13.35 | Consolidated Statements of Operations For the three months ended March 31, 2025, total investment income increased to $65.4 million from $50.5 million in the prior-year period, with total net expenses rising to $32.4 million, resulting in net investment income of $32.4 million and a net increase in net assets of $27.1 million Consolidated Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Investment Income | $65,385 | $50,453 | | Total Net Expenses | $32,386 | $24,657 | | Net Investment Income | $32,383 | $25,157 | | Net Realized Gain/(Loss) | $(2,154) | $1,351 | | Net Change in Unrealized Appreciation/(Depreciation) | $(3,142) | $(12,000) | | Net Increase in Net Assets from Operations | $27,087 | $14,508 | | Net Investment Income Per Share - Basic | $0.52 | $0.54 | | Net Change in Net Assets Per Share - Basic | $0.43 | $0.31 | Consolidated Statements of Changes in Net Assets For Q1 2025, net assets increased from $823.0 million to $833.4 million, driven by a $27.1 million net increase from operations and $30.5 million from common stock issuance, partially offset by $32.6 million in distributions and a $15.8 million reduction from convertible note redemption Changes in Net Assets - Q1 2025 (in thousands) | Description | Amount | | :--- | :--- | | Balance as of December 31, 2024 | $822,982 | | Issuance of common stock, net | $30,468 | | Stock-based compensation | $2,609 | | Distributions to stockholders | $(32,581) | | Net increase from operations | $27,087 | | Other (reinvestment, redemptions, etc.) | $(17,170) | | Balance as of March 31, 2025 | $833,395 | Consolidated Statements of Cash Flows In Q1 2025, net cash used in operating activities was $63.3 million, primarily due to new investments, while net cash provided by financing activities was $62.2 million, driven by $398.0 million in credit facility borrowings offsetting $217.8 million in unsecured note repayments, resulting in a $1.2 million net decrease in cash Cash Flow Summary - Q1 2025 vs Q1 2024 (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Provided by/(Used in) Operating Activities | $(63,341) | $(81,401) | | Net Cash Provided by/(Used in) Investing Activities | $(106) | $(33) | | Net Cash Provided by/(Used in) Financing Activities | $62,206 | $88,640 | | Net Increase/(Decrease) in Cash | $(1,241) | $7,206 | | Cash at Beginning of Period | $9,627 | $4,761 | | Cash at End of Period | $8,386 | $11,967 | Consolidated Schedule of Investments As of March 31, 2025, the company's total investment portfolio was valued at $1.79 billion with a cost basis of $1.83 billion, diversified across sectors with Finance and Insurance, Medical Devices, and SaaS as top industries, primarily composed of debt securities - Total investments at fair value reached $1,792.7 million as of March 31, 2025, up from $1,725.6 million at the end of 202411390 Portfolio Composition by Investment Type (March 31, 2025) | Investment Type | Cost | Fair Value | | :--- | :--- | :--- | | Secured Loans | $1,371.0M | $1,330.4M | | Equipment Financings | $339.1M | $336.7M | | Equity | $79.1M | $73.8M | | Warrants | $41.3M | $51.8M | | Total | $1,830.5M | $1,792.7M | Top 5 Industry Concentrations by Fair Value (March 31, 2025) | Industry | Fair Value | % of Total | | :--- | :--- | :--- | | Finance and Insurance | $313.2M | 17.6% | | Medical Devices | $227.0M | 12.7% | | SaaS | $187.0M | 10.4% | | Green Technology | $162.5M | 9.1% | | Other Healthcare Services | $156.5M | 8.7% | Notes to Consolidated Financial Statements The notes detail the company's organization, accounting policies, investment valuation, borrowings, and equity structure, including its status as an internally managed BDC and RIC, predominant Level 3 fair value hierarchy, and specifics on debt facilities, unsecured notes, and equity plans - Trinity Capital is an internally managed, closed-end, non-diversified BDC that has elected to be treated as a RIC for U.S. federal income tax purposes155 - The company's investments are primarily categorized as Level 3 assets (99.1% by fair value), indicating reliance on unobservable inputs for valuation175 - As of March 31, 2025, the company had $49.7 million in unfunded commitments to four portfolio companies, plus commitments to its joint ventures293 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2025 financial performance, highlighting a 29.6% year-over-year increase in total investment income to $65.4 million driven by an expanded debt investment portfolio, with the asset coverage ratio at 186.1% as of March 31, 2025 Portfolio Composition and Investment Activity As of March 31, 2025, the investment portfolio's fair value grew to $1.79 billion across 155 companies, with secured loans and equipment financings constituting 74.2% and 18.8% respectively, and the company invested $220.4 million while receiving $157.1 million in proceeds during the quarter - During Q1 2025, the company invested a total of $220.4 million, including $94.8 million in six new portfolio companies396 - The company received $157.1 million in proceeds from repayments and sales during Q1 2025, including $59.1 million from early debt repayments396 Portfolio Asset Quality The company uses a 1-to-5 risk rating system for debt investments, with a weighted average risk rating of 2.9 as of March 31, 2025, where 'Performing' or better investments constituted 95.3% of the portfolio by fair value, and non-accrual investments represented 0.9% or $15.2 million Debt Investment Risk Rating Distribution (Fair Value) | Designation | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Very Strong Performance | 5.6% | 5.6% | | Strong Performance | 34.0% | 28.3% | | Performing | 55.7% | 60.7% | | Watch | 3.0% | 3.9% | | Default/Workout | 0.9% | 0.7% | - As of March 31, 2025, five portfolio companies were on non-accrual status, with a total fair value of $15.2 million, representing 0.9% of the debt investment portfolio's fair value408 Results of Operations For Q1 2025, total investment income rose to $65.4 million from $50.5 million in Q1 2024, with total expenses increasing to $33.0 million, resulting in net investment income of $32.4 million and a net increase in net assets from operations of $27.1 million Comparison of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Investment Income | $65,385 | $50,453 | | Total Expenses | $32,999 | $25,296 | | Net Investment Income | $32,383 | $25,157 | | Net Realized/Unrealized Gain (Loss) | $(5,296) | $(10,649) | | Net Increase in Net Assets | $27,087 | $14,508 | Financial Condition, Liquidity and Capital Resources The company's liquidity is sourced from operations, debt facilities, and equity offerings, with $8.4 million in cash and $208.0 million available under its KeyBank Credit Facility as of March 31, 2025, and an asset coverage ratio of 186.1%, exceeding the 150% regulatory requirement - As of March 31, 2025, liquidity sources included $8.4 million in cash and $208.0 million in available borrowings under the KeyBank Credit Facility430431 - The company's asset coverage ratio was 186.1% as of March 31, 2025, exceeding the 150% statutory requirement for BDCs433 Contractual Obligations as of March 31, 2025 (in thousands) | Obligation | Total Amount | | :--- | :--- | | KeyBank Credit Facility | $392,000 | | August 2026 Notes | $125,000 | | December 2026 Notes | $75,000 | | March 2029 Notes | $115,261 | | September 2029 Notes | $118,390 | | Series A Notes | $142,500 | | Operating Leases | $6,707 | | Total | $974,858 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks, primarily valuation risk for its illiquid Level 3 investments and interest rate risk, with 76.9% of its debt portfolio consisting of floating-rate investments, and a 100 basis point increase in base rates estimated to increase net income by $8.8 million annually - The company's primary market risks are valuation risk for its illiquid portfolio and interest rate risk due to its mix of floating-rate assets and liabilities450451453 - As of March 31, 2025, approximately 76.9% of the company's debt investments by principal were floating-rate, while borrowings under the KeyBank Credit Facility are also floating-rate454 Annualized Impact of Hypothetical Interest Rate Changes on Net Income (in thousands) | Basis Point Change | Net Income/(Loss) Impact | | :--- | :--- | | Up 300 bps | $26,479 | | Up 200 bps | $17,653 | | Up 100 bps | $8,826 | | Down 100 bps | $(725) | | Down 200 bps | $(912) | | Down 300 bps | $1,228 | Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were deemed effective as of the end of the period covered by the report458 - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2025459 PART II: OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently subject to any material legal proceedings, nor is it aware of any material legal proceedings being threatened against it - As of the reporting date, Trinity Capital is not a party to any material legal proceedings460 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the company's risk factors were reported for the three months ended March 31, 2025462 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On April 15, 2025, the company issued 21,072 shares of its common stock at a price of $14.39 per share pursuant to its amended and restated distribution reinvestment plan, with this issuance exempt from Securities Act registration requirements - The company issued 21,072 shares of common stock on April 15, 2025, under its distribution reinvestment plan464 Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None465 Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and various employment agreements and incentive plan documents
Trinity Capital (TRIN) - 2025 Q1 - Quarterly Report