Trinity Capital Inc. 2026 Q2 Earnings Call

Thank you, and welcome to Trinity Capital's second quarter 2026 earnings conference call. Speaking on today's call are Kyle Brown, Chief Executive Officer, Sarah Stanton, General Counsel and Chief Compliance Officer, Michael Testa, Chief Financial Officer, and Gerry Harder, Chief Operating Officer. Also joining us for the Q&A portion of the call is Ron Kundich, Chief Credit Officer. Earlier today, we released our financial results, which are available on our website at ir.trinitycapital.com. As a reminder, certain statements on this call may be considered forward-looking under federal securities laws. For a full discussion of the risks and uncertainties related to these statements, please refer to our most recent SEC filings. With that, please allow me to turn the call over to Trinity Capital CEO, Kyle Brown.

Thanks, Ben. Thank you to everyone joining today. Trinity Capital leads the BDC space in year-to-date shareholder return as we continue to build a differentiated platform fueled by a diversified 5 vertical lending enterprise, a managed funds business generating income in addition to our portfolio returns, and an internally managed structure that keeps our interests aligned with shareholders. We believe these unique advantages are driving our consistent outperformance. To start off, I'd like to spotlight some shareholder-friendly news from Q2. As of June 30th, Trin's total shareholder return is the best in the BDC space over the last one, three, and five years. From our IPO in 2021 to the end of Q2, Trin's stock has delivered a total return of 174%, far outpacing the S&P 500's 114% and the BDC index's 58% over that same time period.

We are paying a $0.17 monthly dividend through the end of Q3, and Trin shareholders have been the recipients of a consistent distribution for approaching seven consecutive years now. Our managed funds platform continues to grow at a healthy pace, and income generated from the platform contributed 6% of our net investment income in Q2. Looking forward, we have 202 warrant positions and 129 portfolio companies which have the potential to provide incremental upside to our shareholders. Here are some highlights from Trin's performance during the second quarter. Our net asset value grew 9% quarter-over-quarter and 37% year-over-year to a record $1.3 billion. Also, NAV per share increased from $13.27 to $13.47 quarter-over-quarter. Platform AUM increased to $3.2 billion, up 36% year-over-year.

Our originations engine is as strong as ever, achieving a record $619 million of fundings in Q2, along with $709 million of commitments. We maintain strong credit, with non-accruals improving to less than 1% of the portfolio at fair value. Net investment income per share of $0.51 covered our dividend and reflects the strong earnings power of the portfolio. It was a quarter defined by outperformance across NAV, originations, and credit quality. We remain confident in our earnings trajectory and dividend stability heading into the second half of 2026. We continue to grow strategically. Q2 fundings were up 69% year-over-year, and our pipeline is thriving with $700 million in accepted term sheets and $1.2 billion in total unfunded commitments as of June 30th.

Of those unfunded commitments, 91% remain subject to ongoing diligence and investment committee approval, with just 9% unconditional, a structure that preserves underwriting discipline for future deployments. Our originations activity reflects consistent performance across Trinity's five lending verticals, driven by an experienced team and a proprietary pipeline. As a direct lender, we do not rely on syndicated deals and also have immaterial overlap with other BDCs, giving our investors access to a genuinely diversified and differentiated portfolio. During Q2, we announced the acquisition of Equipment Leasing Services, a middle-market equipment financing firm that remains a standalone portfolio company and adds another income generator to the TRIN platform. Our joint venture with Capital Southwest is a co-investment vehicle focusing on first-out senior secured loans in the lower middle market.

This strategic partnership, which features joint decision-making and now includes a scaling portfolio, allows us to diversify into a complementary segment of the lower middle market with a proven partner while minimizing risk and providing stable income for our investors. Subsequent to quarter end, we transitioned our listing to the New York Stock Exchange, a milestone we're proud of and one we believe better positions us in the financial sector and provides improved daily liquidity within our stock. Our goal since day one hasn't changed. Out earn the dividend, grow the business, and do it the right way. That means originating our own deals, underwriting them to our own standards, and making decisions as one aligned team. That alignment starts with structure. As an internally managed BDC, there is no external manager collecting fees. Our employees, management, and board own the same shares as our shareholders.

Our commitment to consistent dividends and long-term value creation isn't a talking point, it's a financial reality. We operate like shareholders because we are shareholders. The fees generated through our managed funds flow back to the BDC, creating incremental income that benefits shareholders directly rather than flowing to a third party. Our five lending verticals provide meaningful diversification while keeping us directly within our core competencies.

Each vertical is staffed by dedicated originators, underwriters, and portfolio managers, creating a scalable model that drives results without sacrificing focus. The people executing that model are why it works. Trinity's unique culture enables us to attract and retain a world-class team of originators and underwriters. What we've built and continue to build is a platform with real breadth, growing scale, and a managed funds business that's delivering meaningful incremental income. None of it is accidental. It's a product of deliberate decisions made the same way quarter after quarter, year after year. The pipeline is active, underwriting discipline is intact. Our capitalization strategy has been constructed to grow earnings power over time. Trinity is built different, built for this moment, and built to last. From here, General Counsel Sarah Stanton, who leads our corporate development efforts, will walk through our updates on the managed funds platform.

Sarah? Thank you, Kyle. Our managed funds and joint ventures continue to scale meaningfully.

With more than $800 million of capacity across these strategies, the managed funds platform contributed $0.03 per share to our $0.51 NII in Q2, enhancing returns for TRIN beyond the income generated by our BDC portfolio. Two recent additions are poised to drive further growth. Our SBIC funds, now adding significant low-cost liquidity, and our Capital Southwest joint venture, extending our reach into the lower middle market. Our SBIC fund has now closed more than $75 million in equity commitments and is already being deployed. At a 2-to-1 debt-to-equity ratio with low-cost leverage from the federal government, the SBIC fund is expected to create more than $250 million of incremental platform capacity at full scale, with the potential to upsize beyond that based on new SBA guidelines.

Meanwhile, our joint venture with Capital Southwest has given us an efficient entry into the lower middle market, a complementary segment we can now access with strong credit discipline alongside a highly respected partner. With this JV, we now co-manage several vehicles that diversify our capitalization sources, expand our originations power, and broaden our capital base without diluting shareholders. The managed funds platform is doing exactly what it was designed to do. Generate incremental returns beyond our interest income, increase our investment capacity, and widen our pool of available capital. The foundation is in place. We expect this platform to become an increasingly meaningful contributor to earnings over time. With that, I'll hand it to CFO Michael Testa for a closer look at our financial results.

Michael? Thank you, Sarah. Our financial performance remains strong in Q2.

We generated $87 million in total investment income, a 25% year-over-year increase, made $41.6 million in net investment income, or $0.51 per share, representing 100% of our quarterly distribution. Our quarter-over-quarter decrease in net investment income per share primarily reflects lower dividend income compared to Q1, which included a non-reoccurring dividend from one of our equity investments. Additionally, Q2 origination activity was back-end weighted, meaning the full income benefit of our record fundings will be more fully reflected in Q3. Our net assets grew 9% to a record $1.3 billion, up 37% year-over-year. NAV per share increased $0.20 to $13.47, up 1.6% quarter-over-quarter, driven primarily by accretive ATM issuances. This accretion more than offset the modest net unrealized and realized appreciation. On the capitalization front, Q2 was an active quarter.