TRIN - Earnings call 4 2020 | Trinity Capital Inc.

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Operator

Good afternoon. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Trinity Capital Fourth Quarter 2020 Earnings Conference Call.

Our host for today's call are Steve Brown, Chairman and Chief Executive Officer; David Lund, Chief Financial Officer; and Sarah Stanton, General Counsel. Kyle Brown, President and Chief Investment Officer; Gerry Harder, Chief Credit Officer; and Michael Testa, Chief Accounting Officer, are also present.

recorded p.m. be being beginning for is X:XX at call and available will replay Today's Time. Standard Eastern The replay is XXXXXXX. dial-in number number the is pin (XXX) XXX-XXXX, and Instructions] [Operator

It call turn is pleasure Sarah to Stanton. the now my over to

Sarah Stanton

ir.trincapinvestment.com. be Erica, Relations released for fourth quarter today close call and after you, earnings XXXX. Trinity's XXXX website year can full the and Trinity market quarter to Thank Capital's accessed everyone, financial Investor conference full year at and from Trinity's fourth welcome, results and were

arranged replay the Trinity's number today's a have website or the and in on We this call by for of provided and by telephone earnings operator. using release passcode

known any Before are Private deemed differ could Securities remind the risks forward-looking statements. these unknown based update statements everyone financial the and no and we Trinity Because guidance, those Capital from are forward-looking materially actual there to of meaning made not of uncertainties, by cause like responsibility on statements. that or assumes I expressed begin, that historical statements these XXXX. any statements certain including during within to or relating Litigation implied may would forward-looking that to be factors Act statements results involve obligation facts Reform important call, this forward-looking to

any Please today, no may longer note speaks March listening call are that of transcript that information the or time-sensitive information be of reported only X, time you as replay on reading. this at advised XXXX. Therefore, accurate

With that, CEO, Chairman and Steve Brown. allow to Capital's me introduce Trinity

Steven Brown

David its I our presentation. expand few proud will the business well. XXXX of we our all summarize that us are and you then brought on of our doing address joining who showed that resilience all those you a to I Thank are results, details the in formative and and and wave the world, later year. during today. accomplishments, challenges unprecedented an thank you, briefly will Sarah, to are healthy hope of

X election strong cash. traded a and a We colleagues We portfolio year maintained that company through downturn. performed added of we a and the team $X.X year-end. We we and a becoming our thank in management XXXX having a teams. I'd with XXXX $XXX after members the raised their our capital shortly and year, opportunities originations, record debt throughout And our to million. investors date new well for support grow and to liquidity due million portfolio high-quality my both in X as publicly successfully of to BDC. growing of continue to company new as reviewed become including During throughout We formation in executed position with finished the like business a continued year. vehicles, includes diligence to dedicated at employees We $XX billion. record over funding our with $XX year which of addition the of had million, had Trinity of team partners equity terms

serve. we Our the that markets, strong the performed the further of venture exemplifies down models example within broader underpinning venture capital how was and debt fundamental performance another it industry

deploying that among growth we few for an and companies debt are heading accordingly. growth-stage financing have XXXX. We opportunity evaluating during billion can over During and for fundraising the properly in believe these deal where capital investment, aggregated see risk the investment There markets review capital to $XXX to future complexity funding, expected to we venture the continues unfulfilled support to was according the in in investments. XXXX, billion billion total and demand equipment $XXX into we who be in year Pitchbook. Having sector $XX exits for struggle, this due opportunities in of generated to billion demand, tremendous been new $X.X

$XX approximately U.S. year results. venture available market full me turning was we Under our context, the address that call that serviceable Specifically, let to XXXX. the briefly over and finance Dave, billion estimate in debt before equipment

for in at for at end to and to but we important $XX.XX of dividend million paid QX, NAV in by QX the the per $XX.X from end income after $X.XX dividend pay to $XX.XX, second and of $X.XX year the by to year the Net It's our investment QX just or shortly the was note XXXX. with have $X.XX prior quarter dividend now our share. decision quarter. compared the increased that would finished ended NAV the QX, the accordance declare $X.XX of

value Additionally, as $XXX of of December XX, XXXX, million. had fair an approximately aggregate our portfolio

company portfolio originated investments unfunded which $XXX.X record deployments. contractual with XX in gross commitments. $XXX,XXX in fourth made quarter, X XXXX, XXXX the We during of in We million totaling a ended

we commitments, and we However, could conditions commitments or must that to of existing are milestones companies XXXX. during million these prior to portfolio certain that met approximately have subject $XXX fund to be borrowing borrowing those potentially

funding portfolio equipment To and $XXX XXXX is, funding for our pipeline underscore debt number, how million. target expected strong including in is this the

with funding us our our direct to giving just XX% execute origination portfolio and strong months growth year, have XXXX goal, potentially of X in So confidence into the over on to over targets. we ability visibility our

of that reflects into Also, in our our It growth each which loans and our borrowers relationships shows borrower and the finance success needs. growth growing existing new This notably, converting built-in in we equipment repeat while is existing more business, new finance has has equal to borrowers a in equipment group. ratio with identifying of also to funding to were customers. our customer XX

our a total portfolio in of the of million $XX from For year an gross investment partially early proceeds growth net repayments, activity. deployments, our $XXX XXXX, offsetting million from our million which for full were and aggregate $XXX from of to the repayments, received we

performing value. fair nonaccrual have credit million XX.X% Regarding of on quality, $X.X the scale positions proprietary X.X. We cost average $X.X and our X.X% rating currently score weighted was portfolio of X with or totaling at a million on at

financing allocation, fair and scientific and all technical of top value, year. finish terms comprised in comprised of manufacturing; X.X% of which our XX% X/X warrants. allocations and In debt portfolio, XX%, professional, XX%, to portfolio, consistent services; in and representing secured our address sectors, composition, our retail was briefly now respectively. In remain of I'll trade, sector the was equity equipment loans X% X approximately in the XX% portfolio

XX% business. to to financing grown We the which equipment XX% equipment have finance commitment at end the at from our our grow formation the of portion XXXX, of reflects

all based the dispersion the XX%. Geographically, XX% XX% the regional of is below remaining the in investment This community. to relatively ranged region, consistent our portfolio venture and of Western is allocated Northeast regions the is with

the and certain business COVID-XX. of have and states, cities. the restrictions shutdowns reintroduction to We to continue environment Government counties the pandemic relative in rigorously current evaluate to responses led to

are as place U.S. Additionally, of countries. and the February, in travel between restrictions several

economic that shutdowns the current when of While is widening, vaccine will that positioned demand, the lifted. we the surge will lifted. With be believe in activity spread restrictions potential these for it tech our and were slow remains up to exacerbate innovation, once VC-focused we Because are pent-up portfolio imposed we believe is setting by distribution extended scenarios. that virus well are unclear and restrictions driven said,

the experienced which normalize. have and current conditions to volume also increased because remote shift We once digital had environments, grown of

the disciplined approach Our the us withstand allow combined with cycles. of to key sourcing to factors are in one extensive market tenure space, which our underwriting, and VC

close I'll a with few enterprise updates.

I been to of foremost, company not our ownership has and a milestone. a able of in and XXXX, $X this special listed share to for former long-standing be of public has be share billion NASDAQ. First of Trinity This recorded our personal goal the with and inception group mine, over thrilled better think on moment us. a could company whom to are we to since originations in funds a is

I listing you timing. XXXX pandemic We process. this our planned thank that all throughout the patience also unprecedented delayed for your of recognize

as granted extension as And we to quickly able on frame. and public as stockholders were as an Our us could. the we market promised, to time get that practically

now we well-respected belief. as did of proud just us, specializing capital coming We covered are to the effectively analysts, being the lending of that debt out very Trinity to there and able IPO in that public different X venture something affirmation by ahead is firmly opportunity of large be the an proud of space. companies gate. as We is a believe raise of is We're IPO also through X X

in are ways. growing many We

added growth. expected As we new members XXXX have staff and our members in X team X so meet I another added mentioned previously, to XXXX in far

signed to recently a larger a move lease have agreement our accommodate our We Phoenix headquarters to Downtown to space team. in growing office

is success. In points We a innovation in national reached in updating been grow thrilled Arizona make It to completed. We critical view of year which reflects second throughout move plan activity we summary, forward a our well our preserves step of an the part further. look to desired expand and We and our we hub XXXX attempt in construction deliberate longer-term for once as you in a the this our creating as venture Southwest. as presence that important quarter the about our expect as to to culture, important this well path inflection technology here ahead. the has as also this are during way

now turn that, after Dave, which we'll With your questions. take I'll call Dave? the over to

David Lund

afternoon pandemic, first in last and year formation through funded everyone. the IPO in investments then a producing had a January, of record our the year We BDC, good of a solid and to year. this COVID-XX our Steve, starting uncertainties you, with Thank January navigating for as culminating

team the to at and you, support our here the tribute from a Trinity is success investors. Our continued

performance, will performance discussion in liquidity. growth, key With operating fourth capital Steve full year having return results, and performance, NAV areas: markets quarter focus credit covered on my the activity primarily and and following our our first results portfolio I

Let our portfolio me growth. begin with

and million new that, floating borrowings. XX% During companies $XXX.X rate X entered portfolio funded and October to our rate XX portfolio the beginning Of at end financings, and in funded loans new the into deployed floating debt, rate to portfolio including funding XXXX end companies, $XX.X of XX totaling million the loans million existing compared the $XXX,XXX. We're of quarter, funded, of across on of funded fourth quarterly our that At million record. to borrowers, as quarter. the more September a total amounts to equity fixed rate XX match X fourth setting equipment secured funded continuing new third at the from was $XX.X closed approximately was of we $XX.X what XX% was to Within to and floating $XXX.X the our one also million small we quarter, of XXX% $XX.X investment for we was million commitments on loan X. shift

repayments. from Partially normal million offsetting aggregate from $XX.X amortization repayment, received $XX.X principal and an million $XX.X early including gross proceeds of of deployments million was from

net and approximately by As basis funding cost a a million. on portfolio repayment $XX.X grew result our of activity, the

end of portfolio of $XXX our representing million end, quarter basis. to At value a million value the growth QX, fair fair approximately a of had at on compared $XXX XX% a

We our continue venture strong momentum optimistic about are deployment to and see outlook. the in space and funding

entering Steve deploy our of capital guarantee positioned As XXXX outstanding be cannot a to And we we recently drawn offering commitments. completed raise will opportunities actively pipeline convert, believe we from robust our well outstanding while are and our commitments we XXXX mentioned, or December will IPO. that with are the the pipeline during bond

represents basis, I XX.X%, loan GAAP recorded to during fourth originations. weighted a QX fee over $XX.X will million or comprised portfolio of increased increase an now turn million and income $XXX,XXX. $XX.X our the income million $X.X the This of investment income to interest quarter, of our of higher of and related from fee total average primarily income of operating approximately On results. we

early flat $XXX,XXX at generated as compared Income to repayments QX. relatively was from

effective quarter. income yield The effective fee in received primarily XX.X% was QX. driven was higher portfolio the XX.X% compared in to yield the on increase Our during as by

the We compared increase a of our driven and facilities issued $X.X additional credit incurred was to of of $XX and in facility $X.X of in total debt the under debt quarter-over-quarter QX. our borrowings $XX million by fees million as convertible XXXX. under million we interest million various The December

XXXX. compensation, employee X.X%, prior our and debt expenses, Our including cost increase reflecting QX. Other in million amortization, accrual fourth consistent for bonus the including interest through variable fee with quarters, COVID-XX We as of cost in quarter the in weighted navigated was with of increased an goals $X.X year-end compensation average from and debt in bonuses. pandemic operating connection exceeded the the team its

$X.X approximately XXXX to quarterly decrease of our to $XXX,XXX expect We approximately a quarter. in rate expense by run million per compensation

fees professional was and million which $X.X expense during for to $XXX,XXX of QX, approximately G&A related accounting legal valuation, was services.

the result income quarter foregoing net investment or activity, share. million As a per for was of the $X.X $X.XX

recorded equity the driven prior adjustment to the losses portfolios appreciation primarily During net by company. approximately quarter, unrealized quarter. of warrant the of and unrealized million which one recognized the $X.X was million $X.X We recognized portfolio we related of we and connection appreciation mark-to-market depreciation of of loss to with realized million, in reversals realized unrealized to $X in losses, during the our attributed million $X

$XXX Net assets million million compared at or $XX.XX as per of end $XXX the QX. or to $XX.XX share of increased per slightly share

our with on loans credit to and are XXXX. Regarding acquired quality, legacy nonaccrual we had perform performing, the continues well portfolio we XX.X% loans our of beginning same portfolio at the very of X from the loans

we So new additions have any category. had to nonaccrual not the

liquidity. to now Switching

million our legacy a Our us January fund vehicles for are $XXX set a X credit where XXXX. we of It acquired in experienced various XXXX, formation In from notes in after the in us XXXX, growth by Crédit facility to offering callable raise million of transaction stock; allowed we with capital X% conjunction million foundation ability funds. debt and through we assumed we portfolio strong a issued $XXX we to million formations, private common raised which Suisse. years; X in $XXX $XXX maturing with our

that $XX in fall an of funding We of convertible December, with to support issuance X% given received notes an XXXX. QX notes XXXX. The additional the investment-grade rating continued convertible our the in million BBB-. funds uncertainty XXXX, markets mature of In raised at we these the the capital in raised of

and subject End-of-period million, cash was liquidity approximately X.X:X, borrowing conditions. in result terms December under capacity facility, million our credit cash available million existing a our XXX%. and of approximately was and of As unrestricted to $XX $XX coverage XX, activities, equivalents, these was $XX as XXXX, of and including leverage asset

reducing net completed $XXX our less down raising of million. thereby January, proceeds to ratio our than our $XX in approximately million, by paid leverage In facility X.X:X. we credit February, And IPO, we

fund we is target X.X activity. XXXX and leverage facility our between X.X. our reminder, credit to in a down to As the draw And intend under investment

our XXXX, December reflects distribution second in XXXX. which a share, our for fourth dividend the NII Board of $X.XX coverage declared Lastly, per of of quarter XXX%

Our to the Board generated Board on net of per This to of given for the earnings XXXX total declaring share dividend March, end basis. a income Directors' intends distributable XXXX end the of We and each XXX% declared coverage based anticipate brought distributions declare prior a that $X.XX QX on subject at for our approval. dividend estimated to quarter. quarter dividends to in

With will back we call to now line for turn to Erica that, the the open questions. Erica?

Operator

from [Operator Instructions] Lynch Ryan KBW. Your with first question is

Ryan Lynch

Congratulations on the IPO. very successful

mentioned markets play, ability lot markets. XXXX. those some a to First of are obviously, was been there's out a question you deploy raise of throughout formed also from your VC I in. good capital And you're There's commentary capital investing been the seem though, to lot equity the and there. question, those had, similar SPAC about My that

that capital a a how when competition out competition from equity source today to the there as much an -- alternative so lender? of And from so potentially standpoint, compared could capital field there's does look serve

Steven Brown

in. Ryan. I Thanks, the calling Yes. for question. appreciate Thanks

would first biggest probably I the compete thing equity. with competition say have. business. nature That's of always we The It's we our the is

the And cycle for industry and estimation others. another off companies liquidity, the and fact there's the so sort has a is lot and liquidity of this that SPAC VC-backed -- taken of of our

a comment be any do being specifically all relative seeing there And that. Will now relative factors team our just team, you haven't maybe market raised? the relative with on are who's we're to treating to right SPAC like some competitive the Kyle, on that. And industry? to his we in capital that, I have we the seen active that it very think, is so competitive But factors Perhaps.

Kyle Brown

date, in a These later-stage are date, to to ability companies, activity. activity. events. activity. Ryan, not be deploy SPAC are tend based the deploy I dollars impact we've Sure. to seen significant some some on ability SPAC companies, our from have that impacts benefiting based But SPAC we mature There that our liquidity more to we on not mentioned, to from seeing dollars be may effects, to and the portfolio significance would say, as

Steven Brown

would play a happen. net both to SPACs get by we our but I Ryan, is positive to to prepayments SPAC and finish others And at this industry. in times can industry, think certainty, activity going a that that you It's Obviously, be the just Trinity saying, when happen. not

earnings would it. redeploy time some You and that you associated also is the give retired get pay will and the offset potential fees us prepayment fees are the that particular those lose that which and to transactions that when sort early upside with of when might happens that warrant off, debt

going So we be to generally it's positive. speaking, think, net a

Ryan Lynch

on commentary helpful That's conditions. Okay. market those

This have new mix From you existing portfolio quarter? I should that say, fundings quarter, Should that pretty fourth funding fourth fairly existing at the in experienced good your of a we And you from visibility high new historical Should companies. to came a then in standpoint, shift all into, your we quarter the companies? of that portfolio in about that said that -- mix I think, this from expect XX% is what from you could XX% occur quarter? saw XXXX.

Steven Brown

question. Good

think seeing of mix requires just quarter-to-quarter, so we're I in I the now. seeing finance going growth layer to additional funding. business. much the is additional it's the wouldn't reason that That and inherently funding our Part you're that equipment right depend in

we companies they grow, have equipment needs. fill As those capital needs, and

see equipment as portion that disproportionate. So grow, portion, equipment of to of little see our a some portfolio the finance you going maybe you're

ongoing that a we getting to But and you, customers an stronger additional tell some portfolio will see of think we they and that's portfolio get drawdowns would think can do. growth reflective as basis ratio. fund love opportunities. that at equipment we companies the versus more perhaps something that's well. not probably business. growing something having And lose a relationship as I that of to loans I But we our to the have That's like This other are grow, positive you when to we continue on fund that continue that We happening them. them and are have

David Lund

Ryan, this a existing actually throw is in It as $XX I of technically on funding million Dave. was loans would the happened X. an October one that loan. was also classified that

existing. heavily more really, was new of existing XX-XX balance was that loans towards weighted there the between It happened. as was than and So more the it a

Ryan Lynch

Okay. Got it. And then just one me. last for one

some regarding sense some curious, of a company of SPACs. shares obviously portfolios what you Lucid you or give your fair investment shares of many preferred market us today some would is nice XXXX be -- of implying would Is lot where is Motors mergers be Series the out new Lucid just is a to price? kind it of Motors. I'm You D calculate via Churchill one really value in to think or in XXX,XXX portfolio that own and into what from meaningful your there in any Obviously, Atieva what those would in -- activity, shares value the able that be pretty disclosed of trading Atieva disclosed your at a investment entering stock. Capital in converted how way on guys with to CCIV's based we there preferred

Steven Brown

Ryan. question, Great

need to are say, could believe and Ryan, level activity not First, in portfolio obviously the The level is There that top companies would I this do things be to that we prefer out would SPAC -- where numbers is the get at to on there. Relative And we're kind company we'll we're that the activity relative conversion, shares of of by company. that so our position, for portfolio would that at to number point, ultimately SPAC to attractive say portfolio. the details to into we're happen SPAC that fruition, we on come a of own the some at specific in that to speculative that. encouraged of exuberant. I seeing

will excited what become. from closer we and into, about perspective, And we sense here know a translate our get exactly that so can moves on what may time what to have we get we as that we're and today, and

Operator

is Your next Thalmann. question Nolan from with Ladenburg Christopher

Christopher Nolan

Ryan successful echo business I'll a realized ]? congratulations. loss, on I The IPO, that's [ am correct

Steven Brown

That's correct.

Christopher Nolan

did you I your million you in And fundings expected Okay. gross Steve, that mishear XXXX? in comments mention did you? in then, Or $XXX

Steven Brown

No, that's fundings for our XXXX. correct. target That in is

Christopher Nolan

guys or Okay. with you loans as in And Right the now, quarter. equipment third which forward, is to then make you was in looking it's terms percentage roughly even of that of going you how investments number finance? XX%, up? Do go it the expect are what

Steven Brown

like. to. market and don't we is number it. it's a to pursuing can for tell a actively committed know that it's is what and that we're market built So going specifically market, a are What you, it's look we a Christopher, we disorganized growing team it, We've

look We portfolio you is expect can't beauty disorganized, that what grow. the to means which The exactly portion we tell like. will it's of it

guess where Our equipment this ratio end place point probably a at best to is is That's a sort of our guess. X:X best of up. we financings loans would

those in know, you different. are the structure As X

in You is loans, a the term little we amortization of then shorter the amortization, the excuse And -- financing, interest-only. And which for nice is me, leases, rapid mix a little with longer portfolio. with with little a sort think get term equipment which those. a then

look our best guess. something could in So for you probably would X:X is the be future

Christopher Nolan

and of think And current Okay. sustain that given roughly the are that that the X/X a And drivers, your the can that that's is go loans profit dividend, does forward portfolio. X:X? you secured -- mix

Steven Brown

profit That's that's loans comment. when real But dollar those you get and say they're out little longer, look good because Yes. the you little a from a to would you, good. I a at more

to redeploy little a not is capital dollar higher. those yield on Even able the financings, the risk and equipment that there, off is the though quicker With real you're quicker. you're typically

our think high IRR, that a to higher of projecting. maintaining we're effective kinds a on little very that to of little equipment a IRR, lower X:X, dollar a And And we lower at so financing, little a generate modeling. level a get mix we the that's real you nice yield we're mix little dollar. higher returns So believe the relative that's what real

Operator

question with Alexander Your Casey from is next Compass Point.

Casey Alexander

you a your go it questions -- the or risk looking performance into the loan, I When couple which have here. I'm does you new underwrite When category strong rating of category? at scale. -- investment performing a

Steven Brown

to at a Gerry Chief crack Credit is our take that want you one? Officer. do Gerry,

Gerald Harder

Thanks Sure. for question, Casey. the

So rated we're it sort in rating of either. an it going performing to into our do category, near initial so is to I But around say, default typically, of doesn't -- category that X.X on would most scale. and falls that, the near the top the

Casey Alexander

Okay.

when I so historically, categories I the being to try And these categories as ripe a that as at much debt category as And in not how strong to animal, top of at look that change because are category. in look when might I kind different for loans performance look equipment a category, very worked finance? funds, And venture of get the how nearly being at prepayments X it's strong just often generally, that's particularly the feel most is the term very equipment because performance wondering do. finance,

Steven Brown

Yes, that's a great actually question.

combo, highest-rated portfolio one got loan finance is company. to actually of we've -- a So an and one particular a term companies equipment our is

in our strong financing. of equipment is Another performers

X term I of are them financings think X blended, X that makes exclusively or is companies, the So of them X if loans and or sense. X of --

David Lund

options prepay you which head on book. the Yes. on keeps it have there, and The don't prepay, hit typically don't typically the equipment those And Casey. financings

sort -- performing again, do that or we're And ability trying we going refinancing can it. when there those strong to all in as what a out have the and to there's the course, really look good folks loans equipment of do you financings, to of incumbent, on at keep if the books. to -- customers -- take So of we're

Casey Alexander

it's Okay. the on BDCs, Well, with probably which my million of other right amortization, is comparative a regular a fairly that some $XX.X number. into venture basis high relates question, next debt

a loans that before assuming that they whereas finance in I'm to the have amortize. immediately, generally by starts delay term part start driven equipment amortizing So fact that's

So level of because do of sort is prepayments with regular your lower only level offset that amortization, XX% higher of loans? portfolio you hopefully, a term of

Steven Brown

way I exactly at that's the think Yes, to it. look

David Lund

fair. I that's very think

Steven Brown

like we that or like with ability that. Yes, absolutely. in category. We repayments Yes. and off smaller getting And little rapid the risk amortization

Casey Alexander

very helpful. Okay. Great. That's

Matterport. my Now to or Ryan's but to your question, and question don't relation I understand last sound mean I combative, don't in to answer Atieva

know you incongruous speak. where would stand on I where don't you are in very the shareholders to seems in you stock investments your not dark, to benchmark give stand, the shareholders out why you a want to it public. be so to these trading be there your If important understand for that

Steven Brown

Yes. At this public point, there's information there. out

certain still I guys end number And up closes that happen be make don't to that we Matterport and/or ownership is think you. And Lucid question. point a And coy be. You have. of know this think fair want things and you to have because the a more. move forward, our with a Atieva, sense shares. we have deal as same There And information hear all are I and at now it's we you. to time between in going I at would know this more. time, we exactly in doesn't But to speculate shareholders, what hear will to our we But market an the the it

Casey Alexander

Okay. the you we IPO. to listen, the look with future. right. in Well, And congratulations working forward All on

Steven Brown

Yes. much. so Thanks

David Lund

Casey. Thanks,

Operator

question Securities. next with is from Sherbetchyan Sarkis Your B. Riley

Sarkis Sherbetchyan

echo IPO. congratulations on the I my

deploy meaningful come capital give here to equity and to debt ability pipeline the Obviously, raised in some plus wanted the recently the back liquidity proceeds you Just the 'XX. position. to

I even deployment fairly cadence net $XXX of from 'XX get upon Do fiscal want some investment can be activity of think you flavor the million. mentioned Do Just expected you a progresses. depend you as the if think prepayment activity? speak will you it Maybe it think here. for to the the to of cadence a originations will perspective?

Steven Brown

going it's cannot impacted to -- there's seasonality our which business. of we be to going certainly prepayments, it's by So But predict. in a lot not

my will year. be into and That statistically, writing, and remarks stated cadence. We plan. opportunities a -- in we've in the ever originations. So sort in translates had our of an a as of that given growing largest historically number that see equal for Trinity, had would stated we probably you we've I And

certainly more deployment gate to the the going hopeful, here, year, be out But So we're speaking, generally cadence against that number. of regular of of across the that see will you're a case.

Sarkis Sherbetchyan

Fantastic. the quarters, rate more towards X seeing And shift we're from past the portfolio floating. the and away loans in fixed

you floating may you the any where capital prepared this your you towards taking commented own you're structure Can considering have remarks. specifically David, speak structure? think, that I capital on the in fixed target versus for in maybe and mind

David Lund

Sure.

I obviously all our think as possible. target to out get much our of rate as fixed is

So -- fixed financing rate but to loans. tends equipment our be

So portfolio for to our in will XX% a a loans be looking fixed of if we're equipment, that those rate. you that's on being can a anticipate XX% target

want For variable we rate. balance to push of the the loans, being towards on a

Sarkis Sherbetchyan

provided prior I Xx -- given multiple, well. of should get your to for in think warrant equity multiple And multiple. Slide about be thinking illustration questioners a your nice investors and and sense some in presentation of Xx the want presentation Xx there what earnings as here the the and with just I you've asked of positions, slide, a kind how Great. potential warrant XX, kind on on upside

David Lund

Sure.

So...

Steven Brown

Yes, go David. ahead,

David Lund

Go ahead.

Steven Brown

I'll add and to. it, get You need I if

David Lund

earn to of it the experience, the portfolio, Xx that that's Hercules, Yes. in at point warrants, sense invested; And of we gets XX% about why at that if potentially Clearly, saw we and you portfolio Xx; $X.XX completely. XX% some do. could $X.XX to investors have give of upside we're the Based XX% away in Xx. will to trying this at on experience would the we portfolio time, prior with go if portfolio show potentially generally what of $X.XX a invested -- multiple the Trinity, to try my of could

just to we're potentially trying to So do. warrant give sense investors what of our a portfolio the could

Steven Brown

investors. to should very our markets, be a of be gains make things losses fees pots alone we live would when our of I probably with a with a just the if great in that model. And approach cycles our of in returns that and warrant your portfolios talk the be business That's get sure I grounded of case. the your really word. business properly, Yes. happening, offset and losses of return those fact There's what words the and and to and this, to in and that That a we there's your in one to would your that's careful gains offset we these stay end you and And activity And euphoria. add want that. good It principal lot want of. we're especially the underwriting capital, day, lot use could the provides very talking that which happening all that it, principal your base portfolio. we lots careful look the of like fees interest, back that at capitalize business, base we about the investors. now. market a expect even warrant potential just about want good ] our and happen. pays But to to get interest in end, disciplined not There's very SPAC right you're Clearly, to business, is off you is preservation at you across you It's [ it's really different interest get we to investors in business. other our could

when hoping our Trinity. at that's will to have thinking markets this. focus happen that Liquid about we're opportunities. and that, play We always out provide we're So

So...

Operator

Fargo with Wells Finian Your O'Shea next question is from Securities.

Finian O'Shea

don't consider the the on is of, commitments. distinct delay unfunded versus I Or portfolio. question unfunded? sort where nature there of have from form different venture of there another nature know? in that? you you explain not doing guess, First, of something you're looks your what Is Can the some peers pretty -- really drawn, lending the -- that you consider BDCs do venture we This

Steven Brown

across I question, our and have sort the expectation we Fin. hope took It's opportunity unfunded years to a commitments the of for obligation. legally, Thanks business this that grow path and Great Yes. will where fund. portfolio. there's certainly, don't Since in the not But companies many bulk started legal ago, of have I then that. a we

it that. state And so we like

are future. think as to hopeful is obligations. may we to have stated, portfolio. It's expected, deployments the not that a Now And we fund. our have, we I hear of presently. in say have to reported, in that exist close I But commitments about obligation, won't very what legal our we inside or legal where small, so. of doesn't believe not some about But -- today, think presently, $XXX million is $XXX,XXX, that typical specific they portfolio we would and you a legal obligation have unfunded the But there or that

hope I helpful. that So is distinction

Finian O'Shea

Yes. questions ahead. Maybe go X --

David Lund

just entered commitment amount not borrowed true that. don't a into I have commitments, going No, to say, I but we've a and fund. an to certain it's mean, obligation, was we've We of

commitments million, contractually And we into entered don't to but the we've have $XXX that's actually distinction. over those spend dollars. of So

Finian O'Shea

And Appreciate Okay, then G&A. your just makes for sense. a guidance Dave, on perhaps. follow-on

I Just, a question. X-part guess,

number the Or normal a include touched that on What First, that we plan? as you does on or your -- $X.X fee, one And level that well? stock comp but as well? stuff? is can is impending potential then is professional IPO expect sort million next, of the

David Lund

Sure.

because So anything with in accruals our the bonus plan by XXXX. that the had include regards shareholders the by were doesn't time, It granted that's approved the this just any looking in comp at and or for fact, or, had we Board. we point RSUs to SEC haven't comp, in

that in not that's number. So

will I the bit. think that with to a professional fees, down And regards come little

happened think with that capitalized. some that initial are not there IPO the I expenses were

general run our will come rate only but a small of in G&A. G&A the -- So down -- amount terms

Finian O'Shea

for well congratulate as the all successful I'd Okay. helpful. on you like me. That's And to IPO. That's

Steven Brown

Fin. Thanks,

Operator

Manu [Operator is with Instructions] Your question next from Srivareerat UBS.

Manu Srivareerat

that echo the been rates think wanted Well, rising but I I I rates. Most rate my one well. very with guess sensitive. of rate questions very on guys. you're to environment. or I wonder exposed just question really a to world have have as of you how that answered, Congratulations, we think don't

David Lund

why looking to one we're that's to over switch the Well, reason Right. variable rate loans.

our I XX portfolio, from anywhere to our average months. think what's important XX is life is in

that's think before million we significant So our fixed there's from rate. any have portfolio do rising And rates. wind the $XXX impact will down then we

rate So of our in kind any portfolio interest good changes think as weather changes over. a position we're I to

Manu Srivareerat

a been on Okay. any losses question to able I there over stress I hold is credit. years. particular line? guess other very a Are color mean, vertical there business my has Are any Any there? to nominal Trinity or the obviously, rate credit signs emerging? of

Steven Brown

want on do Gerry, that? to touch you

Gerald Harder

at where there. weighted rating risk sat to we very And -- our with it see back reported, the see if consistency at QX. we is QX, consistent average We you'd good think Sure. look as further QX -- you I even pretty

pending at no that there's this no, seeing So we're time. vulnerabilities

Manu Srivareerat

that's for guys. Congratulations me, again. Well, all

David Lund

Thank so much.

Steven Brown

you. Thank

Operator

questions And turn remarks. over there I'll this Brown no now back call Steve for further at the are closing to time.

Steven Brown

I we drive equipment We're Thanks so have again. on to Thank company for say want be you build continue very just you Trinity. being investors. debt can that Guys, to to just just out and finance returns for best we your the for and thank be platform be to that to NASDAQ excited listed commitment the to you. can we venture

look we next and to reporting you forward to quarter. you, thank So

Operator

Thank conference participating. Ladies and for you concludes call. today's gentlemen, this

disconnect. may now You

Trinity Capital (TRIN) 4 Mar 212020 Q4 Earnings call transcript