TriplePoint Venture Growth(US:TPVG)2024-05-01 20:31PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for TriplePoint Venture Growth BDC Corp. for Q1 2024, including assets, operations, and cash flows Consolidated Statements of Assets and Liabilities As of March 31, 2024, total assets decreased to $782.6 million from $978.8 million at year-end 2023, with liabilities also decreasing, resulting in a slight decline in NAV per share to $9.02 Consolidated Balance Sheet Highlights (in thousands, except per share data) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $782,630 | $978,825 | | Investments at fair value | $773,605 | $802,145 | | Cash and cash equivalents | $124 | $153,328 | | Total Liabilities | $441,363 | $632,519 | | Revolving Credit Facility | $39,000 | $215,000 | | Total Net Assets | $341,267 | $346,306 | | Net Asset Value Per Share | $9.02 | $9.21 | Consolidated Statements of Operations For Q1 2024, total investment income decreased to $29.3 million and net investment income to $15.5 million, resulting in a net increase in net assets from operations of $8.0 million or $0.21 per share Q1 2024 vs. Q1 2023 Operating Results (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total investment and other income | $29,273 | $33,629 | | Total operating expenses | $13,750 | $15,050 | | Net investment income | $15,523 | $18,579 | | Net realized and unrealized gains/(losses) | ($7,544) | ($10,900) | | Net increase in net assets from operations | $7,979 | $7,679 | | Net investment income per share | $0.41 | $0.53 | | Net increase in net assets per share | $0.21 | $0.22 | | Distributions declared per share | $0.40 | $0.40 | Consolidated Statements of Changes in Net Assets Net assets decreased from $346.3 million at year-end 2023 to $341.3 million as of March 31, 2024, primarily due to $15.1 million in distributions offsetting the net increase from operations and stock issuances Changes in Net Assets for the Three Months Ended March 31, 2024 (in thousands) | Description | Amount | | :--- | :--- | | Net Assets at December 31, 2023 | $346,306 | | Net increase from operations | $7,979 | | Issuance of common stock, net | $1,255 | | Distributions reinvested in common stock | $828 | | Distributions from distributable earnings | ($15,101) | | Net Assets at March 31, 2024 | $341,267 | Consolidated Statements of Cash Flows For Q1 2024, net cash provided by operating activities was $18.2 million, a significant shift from Q1 2023, while net cash used in financing activities was $189.0 million primarily due to credit facility repayments Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $18,199 | ($32,960) | | Net cash provided by (used in) financing activities | ($189,018) | $31,329 | | Net change in cash, cash equivalents and restricted cash | ($170,819) | ($1,631) | | Cash, cash equivalents and restricted cash at end of period | $763 | $57,629 | Consolidated Schedules of Investments The schedules detail the company's diversified portfolio of debt, warrant, and equity investments, with total fair value decreasing to $773.6 million as of March 31, 2024 Total Investments (in thousands) | Date | Cost | Fair Value | | :--- | :--- | :--- | | March 31, 2024 | $820,339 | $773,605 | | December 31, 2023 | $850,142 | $802,145 | - As of March 31, 2024, the portfolio consisted of 314 investments in 106 companies, including 145 debt investments, 110 warrant investments, and 59 equity investments198200 - The top five industry concentrations by fair value as of March 31, 2024 were: Consumer Products and Services (17.5%), E-Commerce - Clothing and Accessories (15.1%), Financial Institution and Services (9.2%), Healthcare Technology Systems (8.4%), and Business/Productivity Software (8.3%)203 - As of March 31, 2024, debt investments on non-accrual status had a total cost of $64.1 million and a fair value of $47.1 million49 Notes to Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies, related-party agreements, investment valuations, borrowings, and equity transactions Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and Q1 2024 operating results, highlighting decreased investment income, reduced expenses, and changes in portfolio composition, liquidity, and capital resources - Net increase in net assets for Q1 2024 was $8.0 million ($0.21/share), compared to $7.7 million ($0.22/share) for Q1 2023. The change was driven by $15.5 million in net investment income and $7.5 million in net realized and unrealized losses218219 - Total investment income decreased to $29.3 million in Q1 2024 from $33.6 million in Q1 2023, primarily due to a lower weighted average principal amount outstanding on the income-bearing debt portfolio220 - Total operating expenses decreased to $13.8 million in Q1 2024 from $15.1 million in Q1 2023, mainly due to lower interest expense on the Credit Facility223225 - As of March 31, 2024, the weighted average investment ranking of the debt portfolio was 2.21 (on a scale of 1 to 5, with 1 being best), a slight decline from 2.14 at year-end 2023. Investments on non-accrual status increased in fair value to $47.1 million from $29.0 million215216 - Unfunded commitments decreased to $73.1 million as of March 31, 2024, from $118.1 million at the end of 2023263 Portfolio Composition, Investment Activity and Asset Quality As of Q1 2024, the investment portfolio's fair value decreased to $773.6 million, with debt investments forming the majority, while asset quality saw a slight decline Portfolio Investment Activity (in thousands) | Activity | Three Months Ended March 31, 2024 | | :--- | :--- | | Beginning portfolio at fair value | $802,145 | | New debt investments, net | $13,155 | | Scheduled principal amortization | ($6,812) | | Principal prepayments | ($30,842) | | Net realized (losses) on investments | ($8,951) | | Net change in unrealized gains on investments | $1,263 | | Ending portfolio at fair value | $773,605 | Debt Portfolio Credit Quality by Fair Value | Credit Category | March 31, 2024 (%) | December 31, 2023 (%) | | :--- | :--- | :--- | | 1 - Clear | 11.5% | 13.8% | | 2 - White | 64.1% | 64.5% | | 3 - Yellow | 16.1% | 16.1% | | 4 - Orange | 8.2% | 5.5% | | 5 - Red | 0.1% | 0.1% | Liquidity and Capital Resources The company's liquidity is supported by cash and its $350 million credit facility, with borrowings reduced to $39.0 million and an asset coverage ratio of 179% Outstanding Debt (in thousands) | Liability | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Revolving Credit Facility | $39,000 | $215,000 | | 2025 Notes | $70,000 | $70,000 | | 2026 Notes | $200,000 | $200,000 | | 2027 Notes | $125,000 | $125,000 | | Total | $434,000 | $610,000 | - The company's asset coverage ratio was 179% as of March 31, 2024, exceeding the required minimum of 150%261 - During Q1 2024, the company sold 132,478 shares under its ATM Program for net proceeds of $1.3 million. As of March 31, 2024, $27.0 million remained available for sale under the program172260 - Subsequent to quarter-end, on April 29, 2024, the company amended its Credit Facility to extend the revolving period to August 31, 2024187278 Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to interest rate risk, with a majority of its debt portfolio bearing floating rates, and a 100 basis point rate increase estimated to boost annual net investment income by $3.7 million - As of March 31, 2024, approximately 67.3% ($469.2 million) of the debt portfolio bore floating interest rates, all with interest rate floors of 3.25% or higher283 Hypothetical Annual Impact of Interest Rate Changes on Net Investment Income (in thousands) | Change in Interest Rates | Net increase (decrease) in net investment income | | :--- | :--- | | Up 300 basis points | $11,204 | | Up 200 basis points | $7,469 | | Up 100 basis points | $3,735 | | Down 100 basis points | ($3,647) | | Down 200 basis points | ($6,929) | | Down 300 basis points | ($9,733) | - The company may also have exposure to foreign currency exchange rate risk, but as of March 31, 2024, it had no hedging transactions in place for either interest rate or currency risk287288 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report290 - No changes in internal control over financial reporting occurred during Q1 2024 that materially affected, or are reasonably likely to materially affect, the company's internal controls291 PART II. OTHER INFORMATION Legal Proceedings The company is involved in legal proceedings, including a putative securities class action and consolidated shareholder derivative complaints alleging federal securities law violations and breaches of fiduciary duty - A putative securities class action complaint was filed against the Company and certain officers in June 2023. A motion to dismiss was filed by the defendants in January 2024293 - Two shareholder derivative complaints were filed in late 2023/early 2024, which were consolidated in March 2024. The complaints allege breaches of fiduciary duty294 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, 2023 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023, have occurred during the three months ended March 31, 2024296 Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2024, the company issued 93,330 shares of common stock for $0.8 million under its dividend reinvestment plan, exempt from registration - In Q1 2024, 93,330 shares of common stock were issued under the dividend reinvestment plan for $0.8 million297 Other Information This section reports no changes in Rule 10b5-1 trading plans, an amendment to the Credit Facility extending its revolving period, and updated estimated annual expenses totaling 19.86% of net assets - On April 29, 2024, the Company amended its Credit Facility to extend the revolving period to August 31, 2024301 Annual Expenses (as a percentage of net assets) | Expense Category | Percentage | | :--- | :--- | | Base management fee | 5.07% | | Incentive fee | 3.66% | | Interest payments on borrowed funds | 8.26% | | Other expenses | 2.87% | | Total annual expenses | 19.86% |