Good morning. My name is Katie, and I'll be your conference operator today. At this time, I would like to welcome everyone to Trinity Capital's First Quarter 2025 Earnings Conference Call. All participants have been placed in a listen-only mode and the floor will be open for questions following the presentation. It is now my pleasure to turn the call over to Ben Malcolmson, Head of Investor Relations for Trinity Capital.

Thank you, and welcome to Trinity Capital's earnings conference call for the first quarter of 2025. Today, our speakers are Kyle Brown, Chief Executive Officer; Michael Testa, Chief Financial Officer; and Gerry Harder, Chief Operating Officer. Also joining us for the Q&A portion of the call are Ron Kundich, Chief Credit Officer, and Sarah Stanton, General Counsel and Chief Compliance Officer. Trinity Capital's financial results were released earlier today and can be accessed on our Investor Relations website at ir.trinitycapital.com. Before we begin, I would like to remind everyone that certain statements made during this call may be deemed forward-looking statements under federal securities laws. Because forward-looking statements involve known and unknown risks and uncertainties, we encourage you to refer to our most recent SEC filings for information on certain risk factors. Now please allow me to turn the call over to the CEO of Trinity Capital, Kyle Brown.

Thank you, Ben, and thanks to everyone for joining us today. Before addressing the macro environment, we wanted to share some quick highlights from a solid Q1 for Trinity Capital. We delivered $32.4 million of net investment income, a 29% increase versus Q1 of last year. Our net asset value grew to a record $833 million. Platform AUM increased to more than $2.1 billion. Our credit quality remained strong with non-accruals staying consistent and representing less than 1% of the portfolio at fair value. And Trinity paid a first quarter cash dividend of $0.51 per share, representing our 21st consecutive quarter of a consistent or increased regular dividend. Before we dive deeper into Q1 performance, we do want to address macroeconomic and geopolitical conditions that are currently at play. We've been closely monitoring the recent tariff announcements and have been in discussions with all of our portfolio companies to determine the potential impact on their operational performance. Credit quality is of the utmost importance to us, particularly during periods of market volatility. The portfolio management team is actively engaged with every single one of our portfolio companies to analyze the effects of tariffs, quantify the potential impact across all risk factors, and safeguard the health of our investments. An overwhelming majority of our portfolio companies are domestically headquartered and have very limited exposure to imported goods or international sales. As such, most do not expect a near-term impact to operations as a direct result of tariffs imposed by the United States or other countries. Gerry will address the portfolio in greater detail during his portion of the call. Every investment dollar matters to us, and we have demonstrated in previous periods of market uncertainty that we are committed to finding positive outcomes for our partners and most importantly our shareholders. In terms of debt servicing, during this volatile time, almost all of our companies are privately funded by venture capital firms or private equity groups that have dry powder. Additionally, we have not seen an unusual uptick in requests for amendments or delayed payments. Times of volatility can create opportunities as well. As we experienced during the COVID years, when we were able to turn macro trials into great pathways of growth for us, we see this as a moment in time to be thoughtfully opportunistic as well. The top of our funnel is expanding and our underwriting process remains strict as we continue to mature as a best-in-class direct lender to growth-oriented businesses. We are building an asset management business that is resilient even during the ebbs and flows of the market. Our five complementary business verticals, sponsor finance, equipment finance, tech lending, asset-backed lending, and life sciences, position us to have a diversified portfolio that can be durable regardless of macro conditions. As we continue to expand into the future, we want to emphasize the internally managed structure that we operate under. As an internally managed BDC, our employees, management, and the Board, we all own the same shares as our investors. This structure creates great alignment with our shareholders as we strive to deliver growing returns for our investors. Additionally, all the fees and incentive fees that come with being an asset manager under the RIA that we own flow to our shareholders, which drives more income, increases our valuation, and grows the platform. All along, we have said that we are going to out-earn the dividend and grow the BDC. And we continue to do just that. This continued growth is possible for a few reasons. We are positioned well in the private credit space, focused on late-stage VC into the lower middle market. With regard to our capitalization, we are building a foundation for a managed account business, offering high net worth and institutional investors access to our growing direct lending business, which offers Trinity Capital new income streams. From a talent attraction and retention standpoint, we are hyper-focused on culture, attracting the best people in the industry as we continue this growth trajectory. Underpinning our culture are six pillars: humility, trust, integrity, uncommon care, continuous learning, and an entrepreneurial spirit. And three core principles are foundational to us: exhibiting uncommon care for our employees, customers, and stakeholders; serving our clients by being partners rather than just money; and providing outsized returns for our shareholders. We look forward to continuing to create a company that our people, partners, and shareholders are proud of. We're experiencing tremendous momentum right now as we continue to grow a best-in-class platform. Signaling confidence in our platform, subsequent to quarter end, Moody's assigned us an investment grade rating attributable to our growing performance record since inception. Our relatively low reliance on secured funding sources and our strong capitalization and liquidity. This rating from one of the most respected agencies will open up access to cheaper capital and a new pool of investors for us. Turning to our platform performance, we maintain a strong investment pipeline including $623 million in unfunded commitments as of the end of Q1, leaving us well positioned for continued portfolio growth in 2025. More than 90% of these unfunded commitments are subject to ongoing diligence and approval by our investment committee. During the quarter, we increased our NAV through net investment income that exceeded our dividend and accretive ATM offerings. The decrease in NAV per share was mostly driven by the impact of the early retirement of the convertible notes in February, which Michael will address in further detail later in the call. This debt extinguishment removes the overhang to our investors. And we firmly believe this payoff will be a net positive for our shareholders in the coming quarters. Credit underwriting and portfolio management ultimately determine our success over the long term. We have a unique structure of collaboration among originations, credit, and portfolio teams that manage our inbound opportunities and active portfolio companies. We are very selective and follow a rigorous diligence process, where only a small percentage of our deals reach the underwriting stage. This methodical approach mitigates risk and positions us to excel in all macroeconomic cycles. And with that, I'll turn the call over to our CFO, Michael Testa, to discuss our financial results in more detail.

Thank you, Kyle. In the first quarter, we achieved total investment income of $65 million, a 30% increase over the same period in 2024. Our effective yield on the portfolio for Q1 was once again among the best in the industry at 15.3%, and our core yield, which excludes fee income, remains strong at 14.1%. The decline in our effective yield this quarter was primarily driven by lower fee income from early debt repayments. In Q1, early repayments were well below our historical average. Our core yield reflects the full quarter impact of 50 basis point Fed rate cuts from the prior quarter. Net investment income for the first quarter was $32.4 million or $0.52 per basic share compared to $25.2 million or $0.54 per basic share in the same period of the prior year. Our net investment income per share represents 102% coverage of our quarterly distribution. Our estimated undistributed taxable income is approximately $67 million or $1.04 per share. We continue to reinvest this capital for the benefit of our investors while maintaining a consistent and meaningful distribution. Our platform continues to generate strong returns for our BDC shareholders with ROAE of 15.5% based on net investment income over average equity and ROAA of 7.1% based on net investment income over average total assets. As of March 31, 2025, our NAV was $833 million, up from $823 million as of December 31, 2024. And our corresponding NAV per share was $13.05 at the end of Q1, a decrease from $13.35 as of December 31, 2024. As Kyle explained, the decrease in net assets per share was primarily due to the repayment of convertible notes during this quarter. The holders of our convertible notes elected to exercise their conversion rate on the $50 million of notes during Q1. At our option, we elected to use cash to retire the notes and avoid the impact of further dilution by issuing shares of our common stock. These notes were fully liquidated with available proceeds received from early debt repayments, equity gains, and the use of our credit facility. While the convertible note repayment caused an impact of NAV per share in the first quarter, the early conversion of these debt obligations, which were issued prior to our IPO, reflect a strong performance of the Trinity platform and will be a long term benefit to Trinity shareholders. Additionally, $152.5 million of our 2025 notes matured in January and were repaid in full. As a result of these debt extinguishments, we have no further debt obligations due until August 2026. As Kyle mentioned earlier, we received a Baa3 investment grade rating with a stable outlook from Moody's. This rating is further validation of our underwriting track record, strong performance, and our increased scale and business diversification. The recent payoff of past debt, coupled with the ability to access the capital markets, positions us effectively to capitalize on new opportunities in the coming quarters. During the quarter, we enhanced liquidity by raising $31 million of proceeds from our equity ATM program, an average premium of NAV of 17%, and we raised $4 million of gross proceeds from our net debt ATM program, all at a premium to par. We also continue to realize the benefits of our co-investment vehicles, which in Q1 provided approximately $2.2 million or $0.03 per share of incremental net investment income benefit to the BDC. During Q1, we syndicated $35 million to these vehicles. As of March 31, 2025, we had over $320 million of assets under management in these private vehicles, providing incremental capital for growth and accretive returns to our shareholders. Our net leverage ratio, which represents principal debt outstanding plus cash on hand, was 1.15 times as of March 31, 2025. Our strong liquidity position with diverse capital sources, both from capital raised by the BDC and through our wholly-owned RIA subsidiary, provides Trinity with the flexibility to manage a strong pipeline and be opportunistic in the marketplace. I'll now turn the call over to our COO, Gerry Harder, to discuss our portfolio performance and platform in more detail.

Thank you, Michael. I'd like to begin by expanding on Kyle's remarks regarding the impact of tariffs on both our portfolio companies and our business processes. Over the past several weeks, our portfolio management teams have reached out to all of our portfolio companies to better understand the potential impact of tariffs on their business models and financial projections. Based on these discussions, we believe that our portfolio has very limited direct exposure to the impact of tariffs, and we are remaining in close contact with our portfolio companies as they navigate through the economic impact of the evolving trade policies. We have also added an additional process step to our underwriting flow to ensure that we have a clear understanding of potential direct or indirect tariff risks before any funding is released to either new or existing portfolio companies. As a reminder, a vast majority of our unfunded commitments are subject to ongoing diligence and approval by our investment committee. We will continue to follow these additional processes related to tariffs for as long as necessary to ensure that we are deploying our capital in a prudent fashion. Turning back to the general composition of the portfolio, at the end of the first quarter on a cost basis, our total portfolio consisted of approximately 75% secured loans, 19% equipment financing, 4% equity, and 2% warrants. The composition of our portfolio continues to be diversified across investment type, transaction size, industry, and geography. Our portfolio is segmented across 22 industry categories, with our largest industry exposure, finance and insurance, representing 16.9% of the portfolio at cost. This portion of the portfolio is spread across 16 borrowers and includes both term loans and asset-backed warehouse facilities. Our second largest industry exposure is medical devices, representing 12.3% of our portfolio at cost and spread across 11 borrowers. Across our five business verticals, the approximate breakdown of our fundings in Q1 was as follows: 38% to equipment financing, 29% to life sciences, 18% to sponsor finance, 10% to tech lending, and 5% to asset-based lending. As of the end of Q1, our largest portfolio company debt exposure represents 4% of our debt portfolio and 3.7% of our total portfolio on a cost basis. Our 10 largest debt investments collectively represent 23.4% of our total portfolio on a cost basis. Now turning our attention to credit. The credit quality of our portfolio remained consistent quarter over quarter with approximately 99.1% of our portfolio performing on a fair value basis. Our average internal credit rating for the first quarter stood at 2.9 based on our one to five rating system with five indicating very strong performance. This rating is consistent with the average credit rating in each of the last three quarters and is attributable to strong originations of new credits within the first quarter and excellent work by our portfolio management team with existing portfolio companies. As a percentage of the debt portfolio on a cost basis, credits within the lowest two tiers improved slightly as compared to Q4. Quarter over quarter, the number of portfolio companies on non-accrual remained consistent at five. During Q1, one additional portfolio was added to the non-accrual list, while one existing non-accrual was realized in the quarter. Subsequent to quarter end, an additional non-accrual credit was realized at the Q1 fair value. At the end of Q1, our non-accrual credits had a total fair value of approximately $15.2 million, representing 0.9% of the total debt portfolio, a very slight increase as compared to the fourth quarter. At quarter end, 78% of our total principal outstanding was backed by first position liens on enterprise, equipment, or both. For our financings covered under all asset liens, the weighted average loan to value as of the end of Q1 was 23%, while 53% of our portfolio companies have a loan to value of less than 15%. These statistics demonstrate that our portfolio companies are generally not over-levered and are in a healthy position to service the debt even in instances where our loan may not be in first position. In Q1, our portfolio companies collectively raised more than $900 million of equity. Our portfolio is strong and continues to be able to secure funding even in a challenging market. In closing, we want to emphasize that our credit quality and portfolio management are of the utmost importance to Trinity. One of Trinity's hallmarks is that our staff members think and operate like shareholders, and we always strive for resolutions that benefit both our investors and our partners. Before we conclude our call, we would like to open the line for questions.

Thank you. Our first question will come from Casey Alexander with Compass Point. Your line is open.

Yeah. I was just hoping you could point me in the right direction here. I mean, the fourth quarter had a 3% increase in portfolio investments, interest-earning portfolio investments. And then you were a net originator again in this quarter and yet interest income dropped about 5% quarter over quarter. Can you give me some color and point me in the right direction for me to help me understand why it would drop quite that much?

Hey, Casey. So a couple of things. One, we saw the effects of that rate cut last year, kind of moved through the portfolio. I think we're actually in a really great position going forward as it relates to rate cuts, having the majority of our portfolio really already at kind of base floor rates. So we feel good about that. But there were some effects of that rate cut. We also saw a pretty strong decrease in payoffs, and that resulted in a few cents of less of earnings that we typically see in just pull-forward fees. So those two things right there were the majority of the decrease.

Okay. But a fast follow-up to that, how do you see generally when you get into a more uncertain environment, payoffs slow down even more? Would that be your expectation that we would see a slowdown in payoffs at least in Q2 and Q3 while the market is digesting the new economic format?

Yeah. You know what, in Q1, I think that's a lot of the delays and our kind of regular payoffs were pushed to this quarter. Subsequent to quarter end, we've already received our normal payoffs that we see in a quarter. So you'll see that bounce back and we also have other payoffs pending. So we'll see how that plays out. We can't predict how that will play out. But already we've seen normal payoffs this quarter, which will obviously help with earnings.

All right. That's great. That's good information. Thank you, Kyle. My last question is that medical devices is a pretty substantial portion of the portfolio. And in talking to people, what I've been told is that a large percentage of the components that go into medical devices actually do come from Asia. Can you comment on what your investigation into tariff impacts found specifically relative to medical devices?

Hey, Casey, this is Ron Kundich. Good question. As Gerry alluded to in his prepared remarks, we took an extremely deep dive into the portfolio all across the board. I can report that our life science portfolio received significant feedback from their companies, even quantified feedback from many companies around the impact of tariffs. And specific to your question, the impact on tariffs with regard to their supply chain. And there were no alarming findings. I hesitate to give you any specifics here on this call, but it was very good. I classify our tariff impact within the portfolio as low, as Gerry alluded to in his prepared remarks. So ongoing review, ongoing analysis. Gerry?

The only thing I'd add, while I have no doubt that what you say is true, Casey, with respect to the components, medical devices, in general, tend to be higher-margin devices where the subcomponent costs are just not a big part of the overall labor burden and material product costs. So that's why I think the quantified impacts for the med devices tend to be low.

All right. Thank you for taking my questions. Appreciate it.

Thank you.

Thank you. Our next question comes from Doug Harter with UBS. Your line is open.

Hi. This is Cory Johnson on for Doug. So this quarter, commitments were at the slowest pace that they've been in a while. Can you talk just a little bit about what was behind that? Is that timing, changes in the market, any business decisions that trend or anything?

So, I want to make sure I heard you right. Did you reference commitments, funding commitments?

Yeah. Correct.

So listen, we took a page out of our COVID playbook. And when you see large kind of macroeconomic conditions deteriorate or change, it's really important for us to focus on our portfolio first, kind of take a defensive stance, understand where the wind is blowing and how what's going on is going to impact businesses, and then really invest into companies that are benefiting from it. And so we did just that. We slowed some of our originations efforts. We had to make sure that we put a new filter in place so that any deal that we were looking at funding, any new deal in the pipeline, we understood the effects of tariffs and whether or not we wanted to fund that company. We had to apply sensitization from a credit standpoint to each of those companies to make sure that they still have the cash life or EBITDA or cash flow that we thought they had. And so what that meant was us slowing down and funding a little bit less in Q1. Now those deals didn't go away. The pipeline is robust. It's growing. We have significant deal flow right now. And it's led us into Q2 with an understanding of who is benefiting from it and who is not, and giving us a really interesting point to invest in these companies going forward. So anyway, commitments are down simply by choice and we're still monitoring what's going on, but that's not a trend.

Got it. And so you would say, or would you say now that you have kind of been able to assess things and you feel like a bit more comfortable and that commitments will go back up in Q2? Or are you still playing it a little bit more defensively?

So there are certain segments we've already identified that are benefiting from this. We have seen within Q1 and carrying into Q2 pretty significant uptick in CapEx spend for companies that manufacture in the U.S. Our equipment business is poised to benefit from that. You saw that with nearly a third of our deployments in Q1 were equipment, over a third. And I don't think that's going to slow down. So that's a great differentiator for us as a lender. We can look at that and say, great, let's we're poised to really benefit from this if it continues. I think manufacturing in the U.S. is a good place to be, and we're really focused on it. So I'm not going to tell you that it's going to be two or three times what we did in Q1, but the pipeline is very strong right now.

Got it. Thank you.

Thank you. Our next question comes from Christopher Nolan with Ladenburg Thalmann. Your line is open.

Hey, guys. The stock, the common stock, is yielding 14.5% or so, which is pretty close to what your core yield is. How does that affect your consideration of raising additional common equity?

Hey, Chris, it's Mike here. Appreciate the question. Yeah, it's something we're modeling. We look at, we're only going to raise capital when it's accretive to our investors. So we raised about $31 million this quarter on the ATM. Again, that's an efficient way of raising capital. It's lower than we've done in the past, but we're looking at all the different levers from liquidity on balance sheet to off-balance sheet returns for deploying on balance sheet versus syndicating and raising more capital and the benefit from accretive benefits we get from those fundings being in the RIA. So I appreciate the modeling exercise and the math for raising capital on balance sheet versus how that trickles down and leverages a number of moving parts to the benefit of our investors.

Great. And then reading into that, I guess the new vehicles that you guys are raising, the separate managed funds would take a bigger role going forward. How do you guys allocate deals between those separate managed accounts and the BDC?

So we think about the managed accounts as just additional liquidity, right? And so you kind of just touched on it. Our goal, our overall encompassing goal is to grow earnings, grow the dividend. So earn it, out-earn it and grow. That's our goal. We've said it over and over again. Our managed accounts give us the ability to generate new income. So there is a quarterly shuffle that happens and making sure that we do that. And that in some quarters might mean we need to raise some additional equity, common equity. That right now, and frankly the rest of this year, a lot of that is focused on raising capital off-balance sheet private funds and generating new income there. And so we meet twice a week. We look at the model. We try to make sure that we are keeping leverage around that kind of one-to-one mark and over time hoping to decrease that, giving ourselves more liquidity while also increasing earnings. So the answer is it's not an exact answer because the output just has to be EPS is stable and growing.

Great. Final question. What do you think the impact will be on the fair value evaluation of your portfolio company investments? I mean, will this increase the base rate, the risk-free rate? And then on top of that, you add the risk premiums. Any color on that would be great.

Chris, I don't know if I understood the question, the fair value of the entire portfolio in general or investment in the RIA?

No. Each of your investments and your scheduled investments is valued by an outside firm on a periodic basis. How does the tariffs impact the methodology and does it impact does it raise the risk premium of your investments and thus lower your fair value?

Yeah, I think certainly, Chris, in valuing the equity portion of our portfolio, right, that's going to be a function of market multiples as of June 30 when the marks are affected, right? So to the extent that trade policies are affecting the markets where our portfolio companies find themselves, then that could certainly affect those marks. With respect to the debt portfolio, if we've got performing debt instruments, we're going to value that with a discounted cash flow. And I think based on what we know today, I would say it would be unlikely that we would across the board add to the discount rate as we value that portfolio. However, the end of the quarter is two months away, and we can't say what may or may not happen. But based on what we know today, we don't think we would need to make such an encompassing portfolio-wide adjustment.

Okay. Thanks, Gerry. Okay. See you guys.

Thank you. Our next question comes from Paul Johnson with KBW. Your line is open.

Yes. Good afternoon. Thanks for taking my questions. Kyle, how do you think about the lower yields in the portfolio over the last several quarters? Do you see that as a result of your expansion into broader origination areas, including some sponsor-backed deals? Are there other contributing factors, such as lower activity, that you believe might play a more significant role?

We haven't experienced much compression across all five verticals compared to what other BDCs and lenders have faced. This is mainly due to the changes in rates and our growth in the upstream and more mature sponsor finance business, which should excite investors. These are more established companies with less volatility that enhance the overall portfolio. While there's a slight decrease in yield, I still believe we have best-in-class performance. We're largely shielded from further rate declines in most of the portfolio due to those flow rates. I would certainly prioritize the diversification and risk reduction of the portfolio over the minor change in yield. However, it’s important to remember our outstanding positions in over 100 warrants, which we can't predict in terms of performance timing. These positions offer potential upside that historically has compensated for any expected losses and provides additional benefits.

Thanks. Appreciate that. Thanks for color there. And then I may have missed it on the call, but I was just wondering if you could remind us of how much of the portfolio is sort of first lien without any sort of additional lender or bank ahead of you in the loan?

Paul, this is Ron again. 78% of the portfolio is first lien, not encumbered by any senior debt. That's a pretty direct answer to your specific question. Happy to elaborate if you have any follow-ups.

Yeah. In the second lien or sub or mezz layers that we take there, frankly those are the more mature companies. We take the position of partnering with a bank, provide the lower blended cost of capital for the company, and we would be more than willing to be the senior facility. But that lower blended cost of capital ends up putting the company in a better position. So when we do it, that typically just means that's a more mature company, later stage, better credit quality. And so we just rarely see issues with those loans.

Thanks for that. Once again, very helpful. And then the last one I had was just I was wondering if you've seen anything on a quarter-to-date in terms of revolver jobs or liquidity issues or demands from any of your borrowers? That's all. Thanks.

No, we haven't observed any increase in companies seeking capital or requesting additional draws. It's important to note that in many cases, we have milestones established. A company cannot simply request more funds without having achieved certain objectives. In fact, I would say that around 90% of our portfolio consists of outstanding commitments. We need to evaluate and approve the deal before releasing any capital, and this decision is entirely at our discretion.

Thank you. Our next question comes from Sean-Paul Adams with B. Riley Securities. Your line is open.

Good afternoon. You guys have a pretty good track record of this stable dividend. Congrats on 21 quarters without a cut. But this quarter's NII kind of had a narrow margin versus the dividend payout. How committed are you guys when it comes to the dividend or dividend increases? And do you guys currently have any plans to build more spillover?

Good question. There are a couple of points to consider. First, for BDCs, maintaining the dividend without decreasing it is fundamental. We are highly focused on preserving and increasing the dividend. Our board will meet to decide whether to maintain or raise it. Internally, our objective is to cover the dividend and enhance that coverage over time. This quarter, our coverage was lower due to several factors, including payoffs that accounted for $0.03 to $0.04 of regular earnings per share that we did not achieve. There were also other specific circumstances affecting this quarter. Our aim is to build and grow. Currently, we are in a position where, if we over-earn the dividend while still generating a 14% dividend yield, our stock does not accurately reflect its true value. Therefore, increasing the dividend doesn’t seem practical at the moment since we aren't receiving recognition for that. We have been concentrating on growing NAV for several consecutive quarters, and we will likely keep doing that. The Board will meet quarterly to determine if we want to create additional spillover. Ultimately, we will need to distribute over 90% of earnings, so if we are successful in our plans, we may find ourselves in a position to issue special dividends, which would benefit shareholders. That's a challenge we would welcome.

Got it. Got it. Thank you for the color. And when you're looking at forward quarters, if there is a material crunch on the earnings front, how are you looking at the balance of the dividend distribution versus the NAV?

We feel really good about covering our dividend.

Got it. Thank you.

All right. That was easier than I thought. But we feel really good about covering the dividend.

Sounds good. I appreciate the color.

You bet.

Thank you. It appears we have no further questions at this time. I'll now turn the call back over to CEO, Kyle Brown, for closing remarks.

All right. Well, we'd like to thank everybody for participating in our call today. We appreciate your interest and investment in Trinity Capital. We look forward to updating you on our second quarter results at our earnings call on August 6. Have a great rest of your day. Thanks. Bye.

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.