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Net investment income (NII):Quarterly NII for the fourth quarter was $25.1 million, an increase of 15.9% year over year.
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Annual results: Annual NII was $89.9 million, an increase of 25.6% year-on-year.
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Return on equity:ROAE reached 16.9% in the fourth quarter, demonstrating efficient capital utilization.
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asset growth: Net asset value (NAV) per share increased to $13.19 and total assets under management increased to $1.5 billion.
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dividend growth: The company’s fourth quarter dividend was $0.50 per share, marking its 12th consecutive quarterly increase.
On March 6, 2024, Trinity Capital, Inc. (NASDAQ:TRIN) released its 8-K filing, announcing record-breaking quarterly and full-year results for 2023. The Company is a closed-end, non-diversified management investment company that provides debt and equipment financing to growth-stage companies, including venture capital-backed companies.
For the fourth quarter, Trinity Capital reported a 15.2% year-over-year increase in total investment income to $47.8 million. Due to the company’s strategic focus on diversified financial solutions, total investment income for the year increased significantly by 25.0% to $181.9 million. These impressive numbers confirm the company’s successful expansion and the high demand for its financial products in growth-stage business areas.
Financial highlights and challenges
Trinity Capital’s fourth quarter results reported record net investment income of $25.1 million. This translates to $0.57 per basic share, an increase of 15.9% compared to the prior year period. The company’s return on average equity (ROAE) is an impressive 16.9%, and its return on average assets (ROAA) is 8.3%, reflecting the company’s high profitability and asset management efficiency.
Despite these achievements, the company faced challenges, including a slight increase in operating expenses, primarily due to increased compensation and the amortization of restricted stock grants. Interest expense also increased slightly due to an increase in the weighted average interest rate on our credit facilities. These challenges highlight the importance of maintaining cost controls and managing interest rate exposures, which are essential to maintaining profitability.
Overview of income statement and balance sheet
The year-end financial report also revealed a net increase in net assets from operations of $17.7 million, or $0.40 per basic share. Trinity Capital’s balance sheet strengthened, with total net assets increasing from $569.5 million at the end of the third quarter to $611.2 million. NAV per share increased slightly to $13.19 from $13.17 in the prior quarter.
Trinity’s investment portfolio has shown significant growth, with the fair value of its 120 portfolio companies approximately $1.3 billion. The company’s debt portfolio is well structured, with 76.8% of its loans in first lien and 69.0% floating rate, providing a hedge against interest rate fluctuations.
Portfolio and investment activity
The company’s investment activity was strong in the fourth quarter, with total investment commitments of $340.7 million and total funding of $267.4 million. Trinity’s disciplined approach to investing, with a focus on secured financing and equipment financing, has contributed to its strong performance. The firm’s investment risk rating system has a weighted average score of 2.7, reflecting a high-performing and robust portfolio.
Trinity’s liquidity and capital resources remained strong, with available liquidity, including cash and borrowing capacity available under its credit facility, of approximately $141.8 million. The company’s leverage ratio increased to approximately 106% primarily due to additional borrowings to fund portfolio growth.
In conclusion, Trinity Capital, Inc. (NASDAQ:TRIN) delivered record results for the fourth quarter and full year of 2023, with significant increases in net investment income and total assets under management. The company is well positioned for continued growth and shareholder value creation through strategic investments and prudent financial management. Looking ahead to his 2024, Trinity remains committed to rigorous underwriting standards and portfolio management practices, which we expect will lead to further success.
For more information on Trinity Capital Inc’s financial results, please see the full 8-K filing.
For more information, please see Trinity Capital Inc’s full 8-K earnings release here.
This article first appeared on GuruFocus.
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