Trinity Capital Q2 2025 Earnings Report

Trinity Capital EPS Results

• Actual EPS: $0.53
• Consensus EPS: $0.52
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Trinity Capital Revenue Results

• Actual Revenue: $69.48 million
• Expected Revenue: $68.84 million
• Beat/Miss: Beat by +$641.00 thousand
• YoY Revenue Growth: N/A

Trinity Capital Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 12:00PM ET

Trinity Capital (NASDAQ:TRIN) is a business development company. It is a venture capital firm specializing in venture debt to growth stage companies looking for loans and/or equipment financing. Trinity Capital Inc. was founded in 2019 is based in Phoenix, Arizona with additional offices in the United States.

Trinity Capital Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: We delivered $34.8 million of net investment income in Q2, marking a 30% increase versus the prior year.
• Positive Sentiment: Our net asset value reached a record $924 million (up 11% quarter-over-quarter) while platform AUM surpassed $2.3 billion.
• Positive Sentiment: Trinity secured an investment-grade rating from Moody’s and received SBA approval to launch a $275 million SBIC fund, enabling low-cost leverage and new fee income streams.
• Negative Sentiment: The watch list increased to $97 million at fair value, driven by portfolio companies requiring additional capital or loan modifications.
• Positive Sentiment: We funded $585 million in the first half of 2025—over 20% above last year’s pace—and maintain $849 million of unfunded commitments for future deployment.

Presentation

[Operator]

To all sites on hold, we appreciate your patience and ask that you please continue to stand by. Good afternoon. My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Trinity Capital's Second Quarter twenty twenty five Earnings Conference Call. All participants have been placed in a listen only mode and the floor will be open for your questions following the presentation.

[Operator]

It is now my pleasure to turn the call over to Ben Malcolmson, Head of Investor for Trinity Capital. Please go ahead, sir.

[Ben Malcolmson, Head - IR at Trinity Capital]

Thank you, and welcome to Trinity Capital's second quarter twenty twenty five earnings conference call. Speaking on today's call are Kyle Brown, Chief Executive Officer Michael Testa, Chief Financial Officer and Jerry Harter, Chief Operating Officer. Joining us for the Q and A portion of the call are Ron Cundich, Chief Credit Officer and Sarah Stanton, General Counsel and Chief Compliance Officer. Earlier today, we released our financial results, which are available on our Investor Relations website at ir.trinitycapital.com. Before we begin, please note that certain statements made during this call may be considered forward looking under federal securities laws.

[Ben Malcolmson, Head - IR at Trinity Capital]

Please review our most recent SEC filings for further information on the risks and uncertainties related to these statements. With that, please allow me to turn the call over to Trinity Capital's CEO, Kyle Brown.

[Kyle Brown, CEO & Director at Trinity Capital]

Thank you, Ben, and thanks everyone for joining us today. To get started, we want to share some notable highlights from a strong Q2 for Trinity Capital as we continue to mature as a best in class alternative asset manager focused on the private credit space. We delivered $34,800,000 of net investment income, a 30% increase versus Q2 of last year.

[Kyle Brown, CEO & Director at Trinity Capital]

Our net asset value grew 11% quarter over quarter to a record $924,000,000 Platform AUM increased to more than $2,300,000,000 Our credit quality remains strong with nonaccruals staying steady and representing less than 1% of the portfolio at fair value. And Trinity paid a second quarter cash dividend of $0.51 per share, representing our twenty second consecutive quarter of consistent regular dividend. Many momentum building milestones occurred during the second quarter as well. In May, we received an investment grade rating from Moody's, which allows us to obtain debt capital at more advantageous rates. Then in June, we received a green light letter from the Small Business Administration to launch an SBIC fund, which will potentially provide $275,000,000 of investable capital.

[Kyle Brown, CEO & Director at Trinity Capital]

The fund will be managed under our RIA, which differentiates our platform and generates new management and incentive fees that flow directly to Trend shareholders, creating the opportunity to provide future income beyond our direct lending portfolio. Trinity Capital continues to outperform across key metrics. Our return on equity and effective yield are at or near the top of the BDC space. Our NAV has grown 36% year over year. And since our IPO four years ago, the cumulative return on trend stock is 88%, outpacing our peer average of 67% and S and P's 565% total return in that same time frame.

[Kyle Brown, CEO & Director at Trinity Capital]

Our goal is to be the top performing BDC, and we believe our ability to consistently deliver strong performance stems from our differentiated structure, disciplined underwriting, and first class team. Our five business verticals, sponsor finance, equipment finance, tech lending, asset based lending, and life sciences position us to maintain a diversified and resilient portfolio across varying macroeconomic conditions. Each vertical is supported by specialized and elite teams of originators, underwriters, and portfolio managers, fostering an efficient, effective, and scalable operating model. Structurally, as an internally managed BDC, our employees, management, and board members all hold the same shares as our investors. This alignment of interest ensures we are fully committed to delivering consistent dividends and growing returns.

[Kyle Brown, CEO & Director at Trinity Capital]

The internally managed structure also creates a premium valuation because shareholders own the management company as well as the underlying assets. Furthermore, all management fees and incentive fees generated through our asset management activities under the RIA are passed on to our shareholders, which drives additional income streams, enhances valuation and supports platform growth. From a talent attraction and retention perspective, we are deeply committed to cultivating a strong culture that draws the best people in the industry as we continue our growth trajectory. We invest in our platform and our processes for future scale as we build a company that earns trust in our employees, partners and shareholders. Our unique culture is built on six core pillars: humility, trust, integrity, uncommon care, continuous learning, and an entrepreneurial spirit.

[Kyle Brown, CEO & Director at Trinity Capital]

Our aim has always been to create an organization that our employees, partners, and shareholders are proud of. We continue to thoughtfully raise both equity and debt to capitalize the business. During Q2, we raised $82,000,000 of equity through the ATM program at an average premium to NAV of 11. And subsequent to quarter end, we issued $125,000,000 of unsecured notes, providing further capitalization for our growth. All this gives continued validation that we can scale the platform while maintaining and increasing our earnings per share.

[Kyle Brown, CEO & Director at Trinity Capital]

We are experiencing tremendous momentum heading into the 2025. In the first half, we funded $585,000,000 outpacing last year's record setting first half by more than 20%. Our investment pipeline remains strong, including $849,000,000 in unfunded commitments as of the end of Q2, well positioned for continued portfolio growth in the 2025. Only 6% of unfunded commitments are considered unconditional, meaning 94% of our unfunded commitments are subject to ongoing diligence and approval by our investment committee. Underwriting and credit performance remain critically important to us.

[Kyle Brown, CEO & Director at Trinity Capital]

To touch on a few newsworthy topics in terms of tariffs, as mentioned in Q1, we continue to actively communicate with the entire portfolio and we've seen a minimal impact to date. Understanding the effects of tariffs on both new and existing portfolio companies remains a core focus for us as we continue to build the business. The positive impact of the tariffs has been an increased demand for our equipment finance business, which concentrates on U. S.-based manufacturing. Our dividend coverage increased quarter over quarter and we expect to maintain this trend.

[Kyle Brown, CEO & Director at Trinity Capital]

We believe future rate cuts should have a beneficial impact for Trinity Capital since a majority of our deals are already at their full rate, and we could see an uptick in prepayments if rate cuts continue as borrowers look to refinance their debt at lower rates, which would generate additional fee income for the benefit of our shareholders and provide capital for future deployment. Additionally, lower rates would reduce our borrowing costs on our credit facility and future bond issuances. From the beginning, we've consistently stated that our objective is to out earn the dividend while growing the BDC, and we continue to deliver on that promise. Trinity Capital remains well positioned in the private credit market with a focus on late stage venture backed companies into the lower middle market. On the capitalization front, we're laying the groundwork for a managed account platform, and this initiative will expand our direct lending strategy, creating additional income streams for Trinity Capital shareholders.

[Kyle Brown, CEO & Director at Trinity Capital]

Overall, we are very bullish about the opportunities before us. We look forward to continuing to build a company that delivers outsized returns to our investors and demonstrates uncommon care for our people and our partners. With that, I'll turn the call over to Michael Testa, our CFO, to discuss our financial results in more detail. Michael?

[Michael Testa, CFO at Trinity Capital]

Thank you, Kyle. In the second quarter, we achieved total investment income of $69,500,000 a 27% increase over the same period in 2024. Our industry leading effective yield on the portfolio for Q2 was 15.7%. The increase in total investment income this quarter reflects higher prepayment income from over $100,000,000 of early debt repayments, as well as net portfolio growth in the second quarter. Net investment income for the second quarter was $34,800,000 or $0.53 per basic share compared to $26,700,000 or $0.53 per basic share in the same period of the prior year.

[Michael Testa, CFO at Trinity Capital]

Our net investment income per share represents 104% coverage of our quarterly distribution. Our estimated undistributed taxable income is approximately $63,000,000 or $0.91 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 return on average equity of 15.9%, once again among the top in the BDC space. At the end of Q2, our net asset value was $924,000,000 up 11% from $833,000,000 as of Q1.

[Michael Testa, CFO at Trinity Capital]

And our corresponding NAV per share increased to $13.27 at the end of Q2, as compared to $13.05 as of Q1. The increase in NAV per share reflects net appreciation on the portfolio and accretive equity ATM issuances. During the quarter, we enhanced liquidity and lowered our net leverage ratio by raising $82,000,000 through our equity ATM program at an average premium to NAV of 11%. We opportunistically raised $2,000,000 of gross proceeds from our debt ATM program, all at a premium to par. And as Kyle mentioned, subsequent to quarter end, we issued $125,000,000 of 6.75% unsecured notes due in July 2030.

[Michael Testa, CFO at Trinity Capital]

This institutional bond issuance further diversifies our sources of capital, improves our cost of capital and ladders out our debt maturities. We maintain a strong balance sheet with no debt maturities until August 2026. We continue to benefit from our co investment vehicles which provide approximately $1,900,000 or $03 per share of incremental net investment income to the BDC in Q2. We syndicated $34,000,000 to these vehicles during the quarter. And as of 06/30/2025, we managed over $300,000,000 of assets across these private vehicles, providing incremental growth capital and accretive returns to our shareholders.

[Michael Testa, CFO at Trinity Capital]

Our net leverage ratio decreased to 1.12 times as of quarter end. With strong liquidity, well diversified capital sources, including funding from both the BDC and vehicles managed under our wholly owned registered investment advisor, Trinity is well positioned to thoughtfully underwrite a robust pipeline, maintain a strict credit discipline, and selectively deploy capital in high conviction opportunities. To discuss our portfolio performance and platform in more detail, I'll now pass the call over to our COO, Jerry Harter. Jerry?

[Gerry Harder, COO at Trinity Capital]

Thank you, Michael.

[Gerry Harder, COO at Trinity Capital]

At the end of the second quarter, the composition of our portfolio on a cost basis was composed of approximately 76% secured loans, 17% equipment financings, 4% equity and 2% warrants. The portfolio remains well diversified by investment type, transaction size, industry and geography. We are currently invested in 20 distinct industry categories. Our largest industry exposure is finance and insurance, representing 15% of the portfolio at cost and diversified across 17 borrowers, including both term loans and asset based warehouse facilities. As of the end of Q2, our largest single portfolio company debt exposure represents 3.3% of our debt portfolio on a cost basis.

[Gerry Harder, COO at Trinity Capital]

Our 10 largest debt investments collectively represent 23.1 of our total portfolio on a cost basis. Turning to credit, the 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 second quarter stood at 2.9 based on our one to five scale, where five represents very strong performance. This rating is consistent with prior quarters, reflecting both the addition of high quality originations during the quarter and strong portfolio management of existing investments. Quarter over quarter, the number of portfolio companies on non accrual improved from five to four.

[Gerry Harder, COO at Trinity Capital]

During Q2, one new company was added to non accrual status, while two prior nonaccrual investments were realized and rolled off. As of June 30, nonaccrual credits had a total fair value of approximately $15600000.0.4.9 percent of the total debt portfolio consistent with the preceding quarter. At the end of Q2, 81% of our total principal outstanding was secured by first position liens on enterprise, equipment, or both. For loans covered by enterprise value, the weighted average loan to value was 20%, with 58% of our portfolio companies maintaining a loan to value below 15%. In the second quarter, our portfolio companies collectively raised over $1,300,000,000 in equity capital, demonstrating the continued strength of our portfolio and our portfolio's ability to attract fundings in the current macro environment.

[Gerry Harder, COO at Trinity Capital]

These metrics underscore the strong credit profile of our portfolio with borrowers generally well capitalized and positioned to finance their operational growth, including servicing of their debt obligations. In closing, we want to emphasize that credit quality and disciplined portfolio management remain top priorities for Trinity Capital. Our team operates with a shareholder mindset, consistently striving for outcomes that serve the best interest of both our investors and our partners. Before we conclude the call, we'd like to open the line for questions. Operator?

[Operator]

We'll take our first question from Casey Alexander with Compass Point. Please go ahead. Your line is open.

[Casey Alexander, Analyst at Compass Point Research & Trading LLC]

Yes. Good afternoon on the East Coast. Good morning on the West Side. Kyle, you made a comment that tariffs were driving more interest in equipment finance, but this quarter was much more heavily slanted towards secured loans than equipment finance. Is that something that you see occurring over the rest of the year?

[Kyle Brown, CEO & Director at Trinity Capital]

Hey, Casey. Thanks for the question. No, I think that's more of just the timing. Our tech lending group had a great quarter. They won a lot of deals, performed very well.

[Kyle Brown, CEO & Director at Trinity Capital]

And equipment financing was in line with our expectations and also had a really significant quarter in terms of term sheets accepted. So more of a timing issue, Casey, and you can expect them to continue their growth going forward.

[Gerry Harder, COO at Trinity Capital]

Yeah, a little bit of additional color, Casey, this is Jerry. Year to date, our deployments have been 26 equipment. That's a little bit higher than we set out in our AOP, but within what we would expect. And as Kyle mentioned, pretty strong quarter four commitments for that vertical.

[Casey Alexander, Analyst at Compass Point Research & Trading LLC]

Okay, thanks for that. Secondly, look, this is clearly a great quarter being reflected in the stock right now. But I'm obliged to ask, there was a relatively meaningful increase in the watch list at fair value quarter over quarter. Now, you define those as need for additional capital or underperforming relative to the And those can be two very different things because need for additional capital can be simply be a timing issue.

[Casey Alexander, Analyst at Compass Point Research & Trading LLC]

But can you give us a feel for how much of that $97,000,000 is portfolio companies that are lining up for additional capital versus how many are underperforming their business plans?

[Ron Kundich, Chief Credit Officer at Trinity Capital]

Hey, Casey, this is Ron Cundich. I'll take that. Looking at the list right now, I think it's a combination of the two things. Let me step back. It's not a one way street.

[Ron Kundich, Chief Credit Officer at Trinity Capital]

These companies hit the watch list and oftentimes pop off the watch list. Two big ads to the watch list this quarter. Those companies are actively raising capital from their investors. We're in negotiations with them as to how we can help with perhaps a modification of our loan. It is a catch all.

[Ron Kundich, Chief Credit Officer at Trinity Capital]

Company performance oftentimes leads to company's needs for capital. The two things are related more often than not. So that's kind of how I would describe that, Casey. If you have any follow ups, feel free.

[Casey Alexander, Analyst at Compass Point Research & Trading LLC]

Right, thank you.

[Operator]

We'll take our next question from Doug Harter with UBS. Please go ahead. Your line is open.

[Douglas Harter, Equity Research Analyst at UBS Group]

Thanks. I was hoping you could give us some more thoughts or color around the expected pacing of raising third party capital. You mentioned separately managed accounts. How should we think about the potential growth of that pool of capital?

[Kyle Brown, CEO & Director at Trinity Capital]

Yes, you bet. Thanks, Doug. We have been actively setting up and laying the groundwork for our managed account business for over a year. Some of that has required SEC approval. We continue to build assets under management.

[Kyle Brown, CEO & Director at Trinity Capital]

We had been waiting for SEC approval for some time to convert our private fund into a non traded BDC, which we'll be managing. We're at the very end of that process and hoping to launch and really start growing that entity now. And so the groundwork's been laid for over a year. We're starting to see the fruits of that trickle in now and very excited about rolling that out and seeing more of that fruit get delivered here in subsequent quarters. And then the last part of your question is a big, big part of our future.

[Kyle Brown, CEO & Director at Trinity Capital]

As an operating company, which has the ability to generate income above and beyond just the loans that we issue, we are highly incentivized to build that business and to generate new management fees and incentive fees because it directly benefits our shareholders and gives us the ability to generate an increased earnings per share, which again, as a BDC gives us the ability to generate new dividend income and higher dividend income. So it's a big, big part of our future. The groundwork's been laid. It's taken a long time to get there. And now we're starting to execute on it. So very excited about where we're at.

[Gerry Harder, COO at Trinity Capital]

Yeah, one thing I would add, this is previously announced, but we did get our green light letter from the SBA as Kyle mentioned in the prepared remarks. And so that sets off a sequence of events to create that SBIC fund which will be managed accounts under our RIA as well.

[Kyle Brown, CEO & Director at Trinity Capital]

And maybe just to put a finer point on that, we are raising unlike most BDCs when they get an SBIC license, they down downstream their own equity just to get an extra leverage, which is better for their return on equity. We are actually raising $87,500,000 of equity, BDCs which will then get two tiers of leverage, dollars $275,000,000 of new capital with management fees and incentive fees that will begin flowing into Trinity. And we're hoping to close out that fund this year and start deploying next year. So this is in real time happening and we're really excited about the upside that comes from it.

[Douglas Harter, Equity Research Analyst at UBS Group]

Great. Appreciate the answers here.

[Operator]

We'll take our next question from John Hecht with Jefferies. Please go ahead. Your line is open.

[John Hecht, Managing Director at Jefferies]

Hey, thanks for taking my questions and congrats on another good quarter. I guess just diving a little bit more into the SBIC, maybe can you talk to us about like how the interest rate positioning of that, if I recall that type of debt is tied to you know, it's adjustable rate debt tied to some type of part of the treasury curve. And then what are the characteristics of assets that go into that and how do they differ from the rest of the portfolio in terms of contribution and economics?

[Kyle Brown, CEO & Director at Trinity Capital]

Hey John, good to hear from you. Thanks for the question. So the SBIC fund is great for LPs, of course, that we're raising money from, and then it's incredible for Trinity with new management fees and incentive fees. But the real benefit here is you get two times leverage. Every dollar of equity we raise, we get $2 from in debentures backed by the SBA fixed at some It's right around 5% today, so it's a very low cost of capital for the life of the fund.

[Kyle Brown, CEO & Director at Trinity Capital]

So that ends up creating an incredible return for the LPs that we raise money from, and then it creates a really interesting value prop for us as that cost of capital is extremely low, lower than what we can currently get at the BDC level even right now. And so that gives us a great new pool of capital with a very low cost of that capital and the ability and new liquidity. And so we intend to draw down and start deploying next year. And of course, we're generating current management fees and incentive fees along the way. And so it's a great that'll be our third SBIC license for Trinity Capital, the first since becoming a public company.

[Kyle Brown, CEO & Director at Trinity Capital]

And we think that's going to be a great addition and some future upside for our shareholders there.

[Gerry Harder, COO at Trinity Capital]

And I would add the mandate of that fund will be a co investment vehicle alongside the BDC. Not every deal that we do within a BDC will fit into an SBIC fund, for example, deals in foreign jurisdictions won't apply, but largely it will co invest alongside the BDC.

[Kyle Brown, CEO & Director at Trinity Capital]

It'll just be programmatic, so it'll just take a little piece of every deal we do.

[John Hecht, Managing Director at Jefferies]

Okay, that's helpful. And then anything to think, I guess still on the concept, related concept on interest rates, anything that, like, we should be thinking about in terms of prepayments or repayments if rates go down? I mean, you gave some of the sensitivities on the business to declining rates, but anything else we should think about in terms of the impacts? I know the lower rates will help borrowers get lower cost of capital and so forth, but is there anything from a portfolio perspective we should be thinking about?

[Kyle Brown, CEO & Director at Trinity Capital]

Well, on the prepayments year to date are kind of in line with our expectations and historical expectations for prepayments. Lower rates are going to be really interesting for us. Unlike most BDCs, the majority of our portfolio is really kind of either at full rates for our floating rate loans or a quarter of the portfolio is equipment financings, which are really fixed once we deploy. So the majority of our portfolio is really set to see some upside because the cost of our capital will go down, of course, with our revolving line of credit, and then future debt issuances will be lower in theory. And so there's some really interesting upside just from a return perspective if rates do go down.

[Kyle Brown, CEO & Director at Trinity Capital]

And the answer to your question is yes. If rates go down, companies may look to refinance their debt into lower cost of capital. And of course, that gives us the ability to kind of pick and choose maybe who we want to stay with create new facilities for. And then it'll also give us the ability to pull forward fees and closing or exit fees, etc, which could generate some nice returns in the meantime. So it's looking pretty positive if that ends up happening for us.

[Kyle Brown, CEO & Director at Trinity Capital]

That was a couple of years in the making planning and making sure we were set up for that eventuality.

[John Hecht, Managing Director at Jefferies]

Okay, that's great. And then just one quick final question. Anything that we should be thinking about in terms of seasonality in the third and fourth quarter for originations or repayments?

[Kyle Brown, CEO & Director at Trinity Capital]

So we mentioned it. We've got approaching $1,000,000,000 in unfunded commitments. You can think about that as mostly when we're doing manufacturing lines, as companies grow, they need additional capital. And so a lot of that's going be equipment financing as companies continue to grow and improve. They're going to need more capital for it.

[Kyle Brown, CEO & Director at Trinity Capital]

We mentioned we have a lot of momentum going into Q3. Well, a lot of that is signed term sheets, which kind of roll into that unfunded commitment amount. So we're on a great pace right now for deployment and we have line of sight for a strong deployment quarter in Q3.

[John Hecht, Managing Director at Jefferies]

Great. Thank you guys very much.

[Kyle Brown, CEO & Director at Trinity Capital]

Thanks, John.

[Operator]

We'll take our next question from Sean Paul Adams with B. Riley Securities. Please go ahead. Your line is open.

[Sean-Paul Adams, Equity Research Analyst - BDCs & Specialty Finance at B. Riley Securities]

Hey, guys. Good afternoon and congrats on the quarter. Can you provide a little bit more detail on NexCAR and space perspective? And if there's any kind of near term plan given their upcoming maturity dates?

[Ron Kundich, Chief Credit Officer at Trinity Capital]

Yeah, this is Jean Paul, this is Ron again. Nexstar has been on the list for several quarters now. As you might know and recall, we're partnering with another BDC on that loan. All I can tell you is broken record, but there are ongoing discussions with the company regarding a loan modification. The company continues to receive backing from their investors, which is good and hopefully more to report next quarter on that one.

[Ron Kundich, Chief Credit Officer at Trinity Capital]

And then you asked about space perspective, obviously, on the non accrual list this quarter. We expect to finalize transaction during Q3. There'll be more to report later, but that's what I've got for you right now.

[Sean-Paul Adams, Equity Research Analyst - BDCs & Specialty Finance at B. Riley Securities]

Perfect. I appreciate the color. Thank you.

[Kyle Brown, CEO & Director at Trinity Capital]

Thanks, Sean.

[Operator]

We'll take our next question from Christopher Nolan with Ladenburg Thalmann. Please go ahead. Your line is open.

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

Hey, guys. What are the thoughts in terms of, given the tax changes that just happened, click on change your

[Kyle Brown, CEO & Director at Trinity Capital]

Hey, Chris. We can't hear you. Maybe a little bit louder.

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

Oh, apologies. Can you hear me now?

[Kyle Brown, CEO & Director at Trinity Capital]

Yep.

[Ron Kundich, Chief Credit Officer at Trinity Capital]

Yes. Gotcha.

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

Okay.

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

Thanks. Given the tax changes, is that gonna benefit the equipment financing business?

[Kyle Brown, CEO & Director at Trinity Capital]

I think you're speaking about tariffs, right?

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

Actually, no, I'm not. I'm talking about the accelerated depreciation where you can start taking 100% right off to year one.

[Kyle Brown, CEO & Director at Trinity Capital]

Yeah, I mean, theory, yes. As you know, most of our equipment deals are set up as financings. We don't own the equipment, the company does. And more depreciation for and you got to think about it for some of these companies are going to be venture backed, still growing. And then many of which, as you've probably seen the portfolio grow, are going to be in the lower middle market or public companies that have strong EBITDA, those will absolutely benefit.

[Kyle Brown, CEO & Director at Trinity Capital]

And so we have seen a pretty massive uptick over 20% year to date in equipment financing requests and just overall company's plans for CapEx spend. And some of that has a lot to do, I think, with some of the tax changes.

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

And should we expect the percentage of equipment financing to grow relative to as a percentage of the portfolio?

[Kyle Brown, CEO & Director at Trinity Capital]

We have it baked in about a quarter of our deployments or thereabouts. And they continue to hit that or achieve higher than that. As our other four verticals continue to grow as well, you have continued to see kind of more diversification across the platform. And yes, equipment continues to be about a quarter for overall deployment.

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

And follow-up question. In terms of any considerate I mean, your investment portfolio is really secured loans, equipment financing and equity. And any consideration of expanding that into revolving facilities for your portfolio companies?

[Kyle Brown, CEO & Director at Trinity Capital]

So our ABL business does provide some receivable financing and that's a really great and exciting business for us that continues to grow. So we are doing some of that and have been doing some of that for a couple of years. Our assets there are enterprise type customers and receivables. Where we're providing an advance against those receivables and they're in bankruptcy remote SPVs. High quality assets, short term receivables, that's a great business for us.

[Kyle Brown, CEO & Director at Trinity Capital]

We continue to see that grow. We expect that continue to grow going forward, but it is just one of our five verticals.

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

Final question. Congratulations on getting the investment grade rating. If you guys decide to do, let's say, another BDC vehicle like a non traded BDC, is the investment grade for the management or is this specifically for the trend publicly traded BDC?

[Michael Testa, CFO at Trinity Capital]

Hey, Chris, it's Mike. Yeah, right now that investment grade rating is for the platform. So if we do raise another BDC non traded, we'd have to go and get additional ratings for that vehicle. But again, that additional rating would look to the same assets if it's co investment, you're looking at the same assets. So the validation you get from Moody's looking through into the platform and the assets, you get some benefit there.

[Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc]

Sounds good. Thanks, Mike. Okay, great quarter, guys. Thanks.

[Kyle Brown, CEO & Director at Trinity Capital]

Thanks Chris.

[Operator]

We'll take our next question from Paul Johnson with KBW. Please go ahead. Your line is open.

[Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)]

Yes, thank you for taking my questions. In terms of just the funds within the RIA complex, kind of where are you at, I guess, from a deployment standpoint at this point? Are these funds fully deployed here in terms of leverage and it's more based on kind of fundraising here on out or where do you kind of stand there?

[Michael Testa, CFO at Trinity Capital]

Hey Paul, it's Mike. Yeah, we're continuing to ramp the RIA. You'll see in Q3, we did raise some more capital. So you'll see that deployment increase from what we did in Q2. It's around 12% of our any new funding that we do is syndicated into the RIA.

[Kyle Brown, CEO & Director at Trinity Capital]

In the RIA, Paul, just put a stamp on it, it's an incredible opportunity for us to increase our revenues and earnings per share. But it's also a great tool for us to manage our debt to equity ratios at Trent. And that's really important because what we need and what we want are better ratings, which then drive down the cost of our debt capital over time on future bond issuances and provides us with great liquidity so that we can really manage where we're raising money or whether we need to raise additional equity or debt at TRND. So it's just a great tool overall, not just from an earnings perspective, but to really make the trend BDC more and more efficient.

[Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)]

Thanks for that. And where would you guys like to be, I guess, in terms of contribution from the RIA to trends overall business?

[Kyle Brown, CEO & Director at Trinity Capital]

I mean, as you know, as an internally managed BDC, we own the same shares as our investors. And so to the extent we could raise and be very successful raising more and more capital off balance sheet in managed funds, that drives up earnings per share significantly for our shareholders and limits our need to raise equity and debt. So there will be a balance between capital that we're raising on balance sheet and off balance sheet, but it will always come down, always come down to can we grow and if we grow, will it be accretive to our investors? Makes no sense to grow in a way that's dilutive to our investors. So the answer to your question is, can we continue to grow the business?

[Kyle Brown, CEO & Director at Trinity Capital]

Can we attract the best talent in the world? Can we retain the best talent in the world? And then can we continue to stay really relevant in the market and build the business while making sure we don't dilute investors? Like if that box doesn't get checked, there's no point in growing. So the answer to the question is can we grow?

[Kyle Brown, CEO & Director at Trinity Capital]

Yes or no. And then what's the way to do it that's accretive to our investors?

[Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)]

Okay. Thank you. And then one question I just had too is that it looks like a majority of your portfolio is kind of at or approaching the floor in its rate, in its interest rate. But I guess when a loan is at the floor where it's been there kind of for some time as rates kind of start to move lower, how likely are those loans to be refinanced or prepaid early, either getting refinanced by another lender or just getting taken out by the equity early? Or is it a lot more just kind of dependent on the overall exit environment in terms of getting those loans repaid?

[Gerry Harder, COO at Trinity Capital]

Yeah, this is Jerry. Let me take a crack at that for you. You know, I think our borrowers in general, interest rates aside, if they can scale and grow and become eligible for lower cost financing from a bank, they're going to do that. So that's a lot of the refis that we see are portfolio companies that essentially graduate from the Trinity type of debt. I don't know that a couple points of interest rate change is incentive enough for companies.

[Gerry Harder, COO at Trinity Capital]

And certainly sometimes it is, right? And we'll see that. And as Kyle mentioned, it puts us in a great perspective because we get the first look, so to speak, at what this new portfolio or what this company can achieve with new debt, and maybe that's a place where we want to participate. So we don't really fear those interest rate driven refis because it's a very incremental savings for the company. If we elect to ride along, we often can do so.

[Gerry Harder, COO at Trinity Capital]

If a company is going to qualify for bank debt, then congratulations and they should go do that.

[Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)]

Thank you. That's all for me.

[Gerry Harder, COO at Trinity Capital]

Thanks, Paul.

[Operator]

And there are no further questions on the line at this time. I'll turn the call back to your CEO, Kyle Brown, for any closing remarks.

[Kyle Brown, CEO & Director at Trinity Capital]

Well, on behalf of Trinity Capital and our team, thank you for joining us today. We appreciate your continued interest and investment in Trinity Capital, and we look forward to sharing our third quarter results on our next earnings call scheduled for November 5. Have a great day. Thanks. Bye.

[Operator]

And this does conclude Trinity Capital's second quarter twenty twenty five earnings conference Call. Thank you for your participation and you may now disconnect.

Participants

Executives

• Ben Malcolmson, Head - IR
• Kyle Brown, CEO & Director
• Michael Testa, CFO
• Gerry Harder, COO
• Ron Kundich, Chief Credit Officer

Analysts

• Casey Alexander, Analyst at Compass Point Research & Trading LLC
• Douglas Harter, Equity Research Analyst at UBS Group
• John Hecht, Managing Director at Jefferies
• Sean-Paul Adams, Equity Research Analyst - BDCs & Specialty Finance at B. Riley Securities
• Christopher Nolan, SVP - Equity Research at Ladenburg Thalmann & Co. Inc
• Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)