- Net Investment Income (Full Year 2024): $116 million, or $2.20 per share.
- Net Investment Income (Q4 2024): $35 million, a 38% increase from Q4 2023.
- Net Asset Value (NAV) Q4 2024: $823 million, up 9% from $757 million in the prior quarter.
- Total Investment Income (Q4 2024): $71 million, a 48% increase over Q4 2023.
- Effective Yield on Portfolio (Q4 2024): 16.4%.
- Core Yield (Q4 2024): 14.7%.
- Return on Average Equity (ROAE): 17.4% based on net investment income over average equity.
- Return on Average Assets (ROAA): 7.6% based on net investment income over average total assets.
- Net Gains (Q4 2024): Approximately $9.3 million from the sale of two equity and warrant positions.
- Net Leverage Ratio (December 31, 2024): 1.08 times.
- Portfolio Composition (End of Q4 2024): 75% secured loans, 18% equipment financing, 5% equity, 2% warrants.
- Non-Accrual Credits (End of Q4 2024): Total fair value of approximately $12.7 million, representing 0.8% of the total debt portfolio.
- Portfolio Companies' Equity Raised (Q4 2024): $1.9 billion.
- Portfolio Companies' Equity Raised (Full Year 2024): $4.7 billion, a 69% increase from 2023.
- Warning! GuruFocus has detected 7 Warning Signs with TRIN.
Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Trinity Capital Inc (NASDAQ:TRIN) achieved record net investment income of $116 million for 2024, translating to $2.20 per share.
- The company expanded its lending platform into Europe with a new London-based team, enhancing its international presence.
- Trinity Capital Inc (NASDAQ:TRIN) launched new business verticals in sponsor finance and asset-backed lending, diversifying its revenue streams.
- The company reported a strong fourth quarter with a 38% increase in net investment income compared to the previous year.
- Trinity Capital Inc (NASDAQ:TRIN) maintained a high effective yield of 16.4% on its portfolio, outperforming industry averages.
Negative Points
- The company faces potential risks from macroeconomic cycles, which could impact its investment pipeline and portfolio performance.
- Trinity Capital Inc (NASDAQ:TRIN) has a net leverage ratio of 1.08 times, which may pose a risk if market conditions deteriorate.
- The company experienced a slight increase in non-accrual credits, with one new addition from the tech lending portfolio.
- There is a potential NAV impact of approximately $0.27 per share in Q1 2025 due to the early extinguishment of debt obligations.
- Trinity Capital Inc (NASDAQ:TRIN) has exposure to fintech companies that rely on bank partnerships, which could be a risk if these partnerships face challenges.
Q & A Highlights
Q: How has Trinity Capital maintained low non-accruals, and are there any early warning signs of credit deterioration as we head into 2025? A: Ron Kundich, Chief Credit Officer, explained that Trinity Capital's low non-accruals are due to their rigorous underwriting process and expertise within each of their five business verticals. Each vertical has specialized underwriters and portfolio managers, which helps maintain credit quality. There are no immediate warning signs of credit deterioration as they head into 2025.
Q: How is Trinity Capital approaching leverage in the current environment? A: Kyle Brown, CEO, stated that Trinity Capital aims to decrease leverage over time. They plan to raise money off-balance sheet and create new liquidity, allowing them to maintain a healthy leverage level around one-to-one. The goal is to decrease leverage while increasing earnings per share as the RIA generates new earnings.
Q: What is Trinity Capital's strategy for raising capital through the ATM program, and how does it align with maintaining leverage? A: Kyle Brown, CEO, mentioned that the ATM program is used as just-in-time financing, which is less expensive and efficient. They plan to raise equity or debt in a way that is accretive to investors. Michael Testa, CFO, added that they are diversifying capital sources and have launched a debt ATM for additional flexibility.
Q: Can you quantify the retirement expense for the bond conversion next quarter? A: Michael Testa, CFO, estimated a $0.27 per share impact on NAV due to the bond conversion. The cost to extinguish the debt is approximately $66 million.
Q: How does Trinity Capital manage fintech exposure, particularly regarding bank partnerships? A: Gerald Harder, COO, explained that they consider bank partnerships during underwriting, ensuring multiple banks are involved to mitigate risks. Kyle Brown, CEO, added that their ABL group focuses on fintech, often replacing banks by providing advances against receivables, which they find favorable.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
Comments