Trinity Capital (US:TRIN)2024-08-07 19:00Financial Data and Key Metrics Changes - Trinity Capital achieved record total investment income of $54.6 million, an 18.7% increase year-over-year [11] - Net asset value (NAV) grew to $680 million, up from $626 million in the previous quarter, with NAV per share increasing to $13.12 [13] - Net investment income for Q2 was $26.7 million, or $0.53 per basic share, compared to $22.1 million, or $0.61 per basic share in the same period of the prior year [12] Business Line Data and Key Metrics Changes - In Q2, gross fundings totaled $231 million, with 52% allocated to equipment financing, 15% to life sciences, 15% to tech lending, 9% to sponsor finance, and 6% to warehouse lending [18] - The company has diversified into five distinct business verticals: tech lending, equipment financing, life sciences, warehouse financing, and sponsor finance [5] Market Data and Key Metrics Changes - The company raised nearly $47 million in net proceeds through its aftermarket equity program, all at a premium to NAV [6] - As of June 30, 2024, total liquidity was $141 million, comprised of $95 million of undrawn capacity under the credit facility and approximately $46 million in cash [13] Company Strategy and Development Direction - Trinity Capital is expanding into Europe to enhance global exposure and support high-growth companies [6] - The company aims to continue its accretive platform growth and diversify its investments to create a best-in-class direct lending platform [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain strong credit quality, with approximately 98.2% of the portfolio performing on a fair value basis [19] - The company is optimistic about future growth, supported by a strong investment pipeline and a selective approach to new opportunities [10] Other Important Information - The company has a net leverage ratio of 1.07x as of June 30, 2024, indicating a strong liquidity position [16] - Portfolio companies on non-accrual decreased to 4% from 5% in the previous quarter, reflecting improved credit quality [20] Q&A Session Summary Question: Can you talk about the decline in non-accrual assets and the pace of resolution? - The Chief Credit Officer noted that one company was promoted off the non-accrual list, and the remaining four are in various stages of work out, with one company undergoing a reconstitution process [22] Question: Should we expect Trinity to carry debt for the new venture with Eagle Point? - The CFO indicated that currently, it is just an equity investment, and they will evaluate the need for debt as the investment grows [23] Question: Can you clarify the move into Europe and its implications for the BDC? - The General Counsel stated that they will continue to optimize investments in Europe while adhering to the 30% bad asset bucket limit [26] Question: What leverage do you expect to use in the new co-investment vehicles? - The CEO mentioned a focus on one-to-one leverage for the co-investment vehicles, mirroring the publicly traded BDC [30] Question: How is the asset sensitivity position of the BDC in light of potential rate cuts? - The CEO explained that the company has floor rates on almost all deals, which may provide protection against lowering rates [33]