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spk05: Good afternoon. My name is Catherine, and I will be your conference operator today. At this time, I would like to welcome everyone to Trinity Capital's first quarter 2022 earnings conference call. Our hosts for today's call are Steve Brown, Chairman and Chief Executive Officer, Kyle Brown, President and Chief Investment Officer, David Lund, Chief Financial Officer, Michael Testa, Chief Accounting Officer, and Sarah Stanton, General Counsel. Jerry Harder, Chief Operating Officer, and Ron Kundich, Chief Credit Officer, are also present. Today's call is being recorded and will be made available for replay at 8 p.m. Eastern Time. The replay dial number is 800-938-0997 and no call ID is required for access. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. If you should require operator assistance, please press star zero. We ask that you please pick up your handset to allow optimal sound quality. It is now my pleasure to turn the call over to Sarah Stanton. Please go ahead.
spk06: Thank you, Catherine, and welcome everyone to Trinity Capital's earnings conference call for the first quarter of 2022. Trinity's first quarter 2022 financial results were released today after market close and can be accessed from Trinity's investor relations website at ir.trinitycap.com. A replay of the call is available at Trinity's webpage or by using the telephone number provided in today's earnings release. Before we begin, I would like to remind everyone that certain statements that are not based on historical fact made during this call, including any statements relating to financial guidance, may be deemed forward-looking statements under federal securities laws. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. We encourage you to refer to our most recent SEC filings for information on some of these risk factors. Trinity Capital assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, May 9th, 2022. Therefore, you are advised that time sensitive information may no longer be accurate at the time of any replay listening or transcript reading. With that, allow me to introduce Trinity Capital's Chairman and CEO, Steve Brown.
spk03: Thank you, Sarah, and thank you to everyone joining us today. As you saw in our earnings release this afternoon, we continue to build on the momentum we established in 2021 with another record quarter for fundings in this first quarter of 2022. While we drove exceptional portfolio growth and remain committed to executing against our long-term growth initiatives, we are fully aware of the changing economic environment and will continue investing with the same stewardship we have demonstrated since we first began investing in 2008. We've continued to improve our operations, scale our business, and further broaden our extensive network in both the VC and equipment financing industries, thereby allowing us to deliver returns for our shareholders with strong net investment income performance and significant realized gains. We continue to strengthen our balance sheet after quarter end with a $57.5 million common stock offering in April that was accretive to NAV and an expansion of our credit facility. Public market volatility, rising interest rates, inflation, and geopolitical uncertainty has so far set the backdrop for 2022, but we still see immense opportunity. Deal flow is moving steadily, and Trinity continues to generate strong originations. Our business remains strong, and our rigorous and consistent underwriting process ensures that our portfolio is built for any cycle. Trinity is well positioned to capitalize on opportunities in the emerging growth venture debt market, as an industry leader and partner of choice for management teams. While the team will go into greater detail on the first quarter results, I wanted to share just a few of the key performance highlights. Our growing portfolio contributed to strong operating performance in Q1, allowing us to declare a quarterly dividend of $0.40 per share, an increase of 11% above the prior quarter. This is the fifth quarter in a row that we have increased our dividends. In March, we also announced a special distribution of 15 cents per share, distributing spillover income from 2021. As we have previously stated, our board has indicated its intent to declare equal special dividends in each of the subsequent quarters of 2022 for a total of 60 cents per share in special dividends for 2022, subject to further board approval. We recognized 52.6 million of realized gains during the quarter, primarily from the sale of our equity positions in Lucid and Matterport. We delivered a strong quarter in both commitments and deployments, originating 305.6 million in new commitments and funding 222.5 million in gross deployments across 31 portfolio companies. Q1 net investment income was $15.6 million, or $0.57 per basic share, exceeding our declared regular quarterly dividend by $0.17 per share. Our credit quality in the portfolio remained strong, with 98% of our debt investments at cost performing. Subsequent to quarter end, we strengthened our liquidity position by selling $57.5 million of our common stock, and we upsized our key bank credit facility by $100 million, to a total capacity of 400 million. Collectively, these moves increased our capacity to fuel our growth. Additionally, we announced the promotions of two senior executives as well as a key hire in our new life sciences vertical, demonstrating our commitment to investing in our team and supporting the continued growth of our industry-leading lending platforms. Trinity's innovative, energetic, and collaborative culture continues to be a differentiator in attracting and retaining top talent in our industry. Kyle will provide more color on this in a moment. With regards to the RIA progress, we have stated previously in Q3 of 2021, we filed an application with the SEC for exemptive relief to form a registered investment advisor. If approved, we believe the RIA will provide flexibility for synergistic investment opportunities and create additive earnings for our internally managed BDC. The review process is still within our expected timeline, and we continue to work with the SEC on their review of our application. Despite the long predicted shift in the public markets and the IPO window essentially shut, The VC operating market remained healthy, with VCs adding $70 billion to the existing $230 billion of dry powder, according to PitchBook, which may help lessen the impact of the general market downturn. In spite of the current market conditions, Trinity continues to perform at record levels. Our business, our team, and our portfolio companies are growing at a stable yet healthy rate. I have confidence in our unique venture lending and equipment financing platform's ability to generate meaningful growth in any economic cycle. We've strengthened our team to further that performance and will maintain a deliberate and disciplined approach to offering capital solutions to the growth stage companies across industries. With that, I will now turn the call over to Kyle Brown, our President and Chief Investment Officer, for some further thoughts on our progress and more detail on the market. Kyle?
spk02: Thanks, Steve, and good afternoon, everyone. Q1 marked the eighth consecutive quarter of portfolio growth, proving that we are sustainably building for scale. This is no small feat and a reflection of our hardworking and dedicated team here at Trinity. Everything we do is centered around our unique team. Our culture of continuous learning, our entrepreneurial spirit keeps our business at the forefront of technology and innovation. We believe the best return on investment is the investment we make in our own people. Turning now to our results, our impressive originations continued in Q1 with $305.6 million in new commitments representing an increase of 23.3% from Q4 of 2021. We funded approximately $222.5 million of new investments leading our portfolio to grow to $921.1 million on a cost basis, an increase of 15.4% over Q4 of 2021. Our $222.5 million of deployments during the quarter reached 31 portfolio companies. including $103.9 million in gross deployments to 10 new portfolio companies and $118.6 million in gross deployments to 21 existing portfolio companies. Gross deployments were partially offset by $96.5 million in principal repayments, of which $69.7 million was from early repayments and $26.8 million was from normal amortization. During the quarter, refinancings of existing portfolio companies accounted for $29.4 million of the early repayments, We also received $62.3 million in gross proceeds from equity and warrant liquidations. We finished the quarter with $277.3 million of unfunded commitments, giving us good visibility into funding opportunities over the next 12 months. The composition of our portfolio remained relatively consistent, with manufacturing once again making up approximately one quarter of our total portfolio. Professional, scientific, and technical services made up 22.2%, followed by information making up approximately 10%. Diving deeper into our portfolio composition, at fair value, approximately 76.1% of our debt portfolio, or $649.5 million, is comprised of secured loans, and 23.9% or $204.3 million is invested in equipment financings. This represents a slight percentage decrease in equipment financing from Q4 2021, but as we have said in the past, equipment financing deals generally fund over subsequent periods to the commitment date and will fluctuate quarter to quarter. The balance of our portfolio, approximately $65.5 million at fair value, is comprised of equity and warrants. The $72 million decrease in our equity investments from the fourth quarter is driven primarily by the sale of our equity investments in Lucid and Matterport. We believe we are a destination company attracting and retaining top talent. We recently welcomed to the team a veteran in the venture ecosystem, Robert Lake, as Managing Director of Life Science. Rob has been supporting venture capital-backed growth stage companies for over 18 years, primarily in the life sciences industry, and has funded over $1.6 billion in debt transactions during his career. He'll be a valuable member to our team as we continue to grow and expand our portfolio. Building a best-in-class, tenured leadership team remains a key priority for our team. Along with hiring top-notch individuals, we are also focused on developing our own talent and creating the leadership team for the future, as demonstrated by the promotions of two senior executives in Q1. Jerry Harder has been promoted from Chief Credit Officer to serve as the company's first Chief Operating Officer, where he will steward corporate infrastructure and operational initiatives to support platform growth and new business creation. Ron Kondich, who formerly served as Senior Vice President of Loan Originations, has been promoted to Chief Credit Officer, succeeding Mr. Harder in the role. In his new role, Mr. Kondich will oversee Trinity Capital's lending, underwriting, and credit processes. These promotions demonstrate our commitment to investing in our own people and building our business for tomorrow. The public market slowdown we've been anticipating resulted in a decrease in M&A and IPO activity compared to previous quarters. As of today, May 9th, 2022, two portfolio companies, Greenlight Bio and Rigetti, successfully completed their D-SPAC transaction in Q1, while Footprint and Presto continue moving towards their own D-SPAC transactions. I'd like to emphasize that we have always been a direct lender first and foremost. And while we have certainly benefited from our equity and more positions in the very hot venture capital ecosystem in 2021, we have not been dependent on it for our success. As demonstrated by our strong net investment income, Our vision has been to build the world's number one lending platform for growth stage companies with a diversified portfolio, many and multiple product offerings. We're well on our way to fulfilling that objective. Now I'll turn the call over to David Lund, our Chief Financial Officer, to discuss our financial performance in more detail. David.
spk07: Thank you, Kyle. We appreciate everyone taking time to listen in to today's call. To echo Steve and Kyle's comments on Trinity's continued strong performance against the current market backdrop, Our financial discipline is a significant contributor to our continued performance. Not only has our underwriting process been consistent and effective, but we have also strengthened our capital structure ahead of these long anticipated headwinds. Our debt portfolio, which is now 59.6% floating rate compared to 32.1% a year ago, is well positioned as interest rates rise. On the borrowing side, approximately 74% of our outstanding debt at the end of the first quarter was at fixed rates. In addition, we recently increased our capacity under the credit facility with KeyBank by $100 million to a total of $400 million, and also increased the availability by $75 million, bringing total availability to $275 million. As we discussed in our 10-Q file today, a 100 basis point increase in the prime rate would have the effect of adding $2.5 million, or approximately $0.08 per share, to our annual net investment income. So the 50 basis point increase announced last week should have a positive impact to our future earnings. We anticipated and successfully prepared for a changing market, which pushed us on a solid financial footing for the quarters ahead. Diving into our financial and operating results for the first quarter, we recorded total investment income of $31.8 million, an $8.2 million, or a 34.9% increase over the $23.6 million of total investment income recorded during the fourth quarter of 2021, and an increase of 83.9% compared to the same period of 2021. This increase was attributable to higher interest income of $6.9 million on a larger loan portfolio and $1.3 million of higher fee income compared to Q4. Our effective yield on the portfolio for Q1 was 16.3%, an increase of over 100 basis points from Q4, primarily driven by higher interest income and amortization of OID based on the larger portfolio, as well as increased non-recurring fee income, which fluctuates based on investment activity and early repayment activity. We expect our early repayments to be between $45 and $50 million in Q2 and our effective yield to normalize between 15.2 and 15.5 percent. We've incurred a total of $6.8 million of total interest expense and amortization of deferred financing costs on our various debt facilities as compared to $6.2 million in Q4. The increase was primarily driven due to the issuance of the December 2026 notes in December of 2021, as well as the higher average outstanding balance on our key bank facility. For Q1, our weighted average cost of debt, including interest and fee amortization, was 5.9% compared to 6.7% in Q4. The decrease was due to the lower cost of our December 2026 notes and the lower amortization expense with the maturity of our prior credit facility with Credit Suisse. Our operating expenses, which are comprised of compensation, professional expenses, and general and administrative expenses, were approximately $8.8 million during Q1, as compared to approximately $6.8 million during Q4. The increase of approximately $2 million, or 30.2 percent, was driven by increased compensation expenses related to higher headcount and variable compensation and higher D&O expense. We are investing in our team and believe that our new senior level promotions and hires will benefit our bottom line. As a result of this operating activity, net investment income for the first quarter was $15.6 million or 57 cents per basic share as compared to $10.6 million or just 39 cents per basic share in the preceding quarter. We recorded net unrealized depreciation of $77.3 million, attributed primarily to the flip from the unrealized depreciation in our equity portfolio tied to our positions in Lucid and Matterport as we sold our equity positions in these companies during Q1. This was offset by net realized gains of $52.6 million in Q1, again, largely attributed to realizing gains from our equity positions in Lucid and Matterport as well as other realized gains in our equity and warrant portfolios. The difference between the unrealized appreciation and our realized gains solely on Lucid and Matterport of approximately $19 million was attributable to the drop in the public stock price between the valuation date at December 31st, 2021, and the price at which we were able to eventually sell the shares after the respective lockup periods ended. While we have been fortunate to capitalize on the recent strong performance from companies in our portfolio to generate shareholder returns, we are not equity investors, and we will generally sell our equity positions as soon as it is practical to do so. Net assets decreased by approximately 5% to $424 million, or NAV of $15.15 per share, compared to Q4 net assets of $446. or NAV of $16.40 per share. The quarter-over-quarter decrease of $1.25 per share in NAV was primarily the result of the aforementioned flip between unrealized depreciation and realized gain, $5.8 million of unrealized depreciation, and the impact of additional shares issued under our restricted stock and drip programs. slightly offset by the net investment income that exceeded both our regular and supplemental dividends. Our NAV per share grew robustly on a year-over-year basis, increasing by $1.46 per share compared to the first quarter of 2021. Despite a challenging market, Trinity has maintained its financial and underwriting discipline, which has allowed us to continue growing our originations and portfolio. I will now hand the call over to Mike Testa, our Chief Accounting Officer, who will discuss our credit performance, liquidity, and capital allocation efforts. Mike?
spk12: Thanks, Dave. To begin with credit quality, our portfolio continued to perform through the first quarter of 2022 with over 90% of our portfolio performing well. We currently have three portfolio companies on non-accrual with a carrying cost basis of $17.2 million and a fair value of $4 million, representing just 0.5% of the fair value of the debt investment portfolio. Our average credit rating for the first quarter improved slightly to 3.1, based on our 1 to 5 rating system, with 5 indicating very strong performance. Moving to liquidity, available liquidity as of March 31, 2022, was approximately $94.7 million, including approximately $28.7 million in unrestricted cash and cash equivalents, and a borrowing capacity of approximately $66 million, under our credit facility, subject to existing terms and conditions. Subsequent to the first quarter, we announced a pair of positive updates to our capital structure that enhanced our liquidity. First, on April 5th, we announced an offering of our common stock, which generated $50 million in gross proceeds, as well as an additional $7.5 million from the exercise of our underwriters over allotment options. Second, we upsized our key bank credit facility by $100 million, raising the total size of this facility from $300 million to $400 million. The stock offering and credit facility upsides reflect the confidence our investors and lenders have in our business to continue to drive income and the strength of our venture debt portfolio to perform through market fluctuations. Our leverage increased approximately 120% from 104% in the fourth quarter, and prior to the equity raise, we completed in April. As a reminder, we have communicated that our target leverage ratio is between 115% and 135%, depending on the timing of investment activity. Regarding our efforts to maximize returns for shareholders, on March 15, 2022, our board declared a cash dividend of $0.40 per share for the first quarter of 2022, representing an 11% increase from before 2021 as well as a $0.15 per share supplemental dividend to partially distribute spillover income earned in 2021. Both dividends were paid on April 15, 2022. Our GAAP net investment income generated coverage of approximately 143% of our regular dividend for the quarter. We anticipate declaring both our regular core dividend and a $0.15 per share supplemental dividend for the second quarter of 2022 subject to our board's approval. Finally, our net investment income and realized gains in Q1, combined with our earnings spillover from 2021, have generated earnings spillover at the end of Q1 of approximately $73.2 million, or $2.62 per share based on our outstanding shares at the end of the quarter. This spillover allows us the opportunity to continue to make investments in our portfolio and generate additional returns for our shareholders, as well as consider additional investor distributions. Echoing the sentiments of my colleagues, Trinity is on a strong operational and financial footing as we head into the second quarter. Our resilient portfolio and expanding liquidity has fueled us for further growth in the quarters ahead. With that, I will now open the line up for questions. Operator?
spk05: And again, if you would like to ask a question, please press star and one on your touchtone phone. You can remove yourself from the queue by pressing the pound key. We'll take our first question today from Brian Lynch with KBW. Your line is open.
spk04: Good afternoon. Thanks for taking my questions. First one just has to do with kind of the environment that we sit in today in the venture capital ecosystem. You know, how would you describe it as a whole, both being a manager of a bunch of venture-backed loans, which are obviously, you know, valuations have come down in a lot of the space, certainly in the public markets, it's going to transfer to the private markets, but also as, you know, a manager who's looking to deploy additional capital in this environment. So can you kind of, because I think one would obviously be, I think, pretty negative and one would be positive. So how would you just describe the environment as a whole to that?
spk03: Yeah, thanks, Ryan. This is Steve. We've talked about this before, but I think the environment where valuations are being repriced in the VC market is not necessarily a negative for our model and for Trinity. We've seen that throughout the years, and even though valuations get repriced down, Down rounds occur where there's a new commitment to our portfolio companies, which ultimately allows us to get repaid. So clearly there's a repricing going on in the BC world. But then the other thing that we look at is the dry powder. And I mentioned that in my remarks. There is a lot of dry powder available right now for the right portfolio companies in the BC sector. And as you know, we have been working hard to ensure that we've got those portfolio companies in our portfolio. So I think generally speaking, you know, the downward trend in pricing or the downward trend in valuation is not necessarily a negative. And we certainly see capacity with the VCs to continue to support. And then, Kyle, maybe you'd just touch on, you know, the positive side of it, which is the opportunity that is presented in this kind of market.
spk02: Sure. Yeah, we believe that companies that are continuing to grow at a rapid pace who have the ability to and have the right financial backing will continue to get funding. Companies that have the ability to kind of see around the corner towards profitability, they'll continue to get the backing. And then there are, with reset evaluations, there are going to be very mature companies that are growing right in with the metrics that we're looking for that simply need an additional six to 12 months of runway to continue to achieve those milestones, to continue to achieve that growth, and make sure that they're not subject to a diluted down round just because of where the market's at. There will be some really interesting opportunities for very strong companies who maybe are looking for a debt bridge that maybe weren't looking for that before. So, you know, there's some market volatility there, but out of it, there's also some opportunity.
spk04: Okay. That's helpful backdrop. David, I have one for you. It looked like the portfolio had some additional write-downs in it outside of just the reversals from Lucid and Matterport. Can you describe what was the nature of those additional write-downs? Were they mark-to-market adjustments given the changes in the market, or was there a specific credit or two that kind of drove those additional write-downs?
spk07: There were two portfolio companies that we took small bite-downs on during the quarter, market-to-market and some of it just judgmental. So the rest of the portfolio was pretty stable, but we did have two adjustments in that category. What were those two companies?
spk11: Yeah, Ryan, so the, you know, two companies we have on non-accrual. One has been on non-accrual, that's Store Intelligence. We took a small unrealized depreciation within the quarter. Second credit is actually one of our control positions, work well, prevention and care. We moved from watch lists into non-accrual and we took a small unrealized depreciation with that one as well.
spk04: And then just my last question, you mentioned this in your prepared comments, but You guys hired Rob Lake to get into the life sciences. Can you just talk about what he brings and what that looks like from ramping up? Because that's not a sector you guys have been super active in in the past. So I would just love to hear any sort of timelines. that we should expect before you guys can be active in that space? Does he need to hire out a team? Can he be active today? Does he need to get more integrated? Just what does that look like going forward?
spk02: Yeah, we're really excited to bring Rob on board. He's built multiple teams within the life science industry at Oxford and Bridge as well. We've said this over and over again. We intend to be a number one lender in the space, in the venture-backed growth stage space, and Life science is part of that. And what we intend to do is continue to focus on companies that are raising institutional capital, who are well into revenue, and we're looking to underwrite and take execution risk, not any different than what we do on our tech side. And so as we step into this space more and more, we're going to make sure we bring on professionals who have been there and done that. And then we're going to make sure we're not taking technology risk, FDA risk, et cetera. We're going to focus on taking execution risk. Jerry, you want to add anything else to that?
spk11: No, it's well stated, Kyle. You know, now we've got a strong leader on board in Rob, and our focus has now turned to building out the remainder of that team, building out our business model and our credit policy. We're going to do it thoughtfully, the Trinity way. And as Kyle said, we'll be focusing on those growth stage opportunities just like we are doing in Techland.
spk04: Okay. Understood. I appreciate the time this afternoon. Thanks, Ryan. Thanks, Ryan.
spk05: We'll take our next question from Finian O'Shea with Wells Fargo. Your line is open.
spk10: Hi, everyone. Good afternoon. Can you give us some color on the Via Photon, I hope I'm pronouncing it right, deal post quarter? It looked like you brought in a partner. I'm not sure if you've sold down and syndicated in the past, but if that's the case, was there a sort of a fee you earned on top of the loan, and if you can describe the nature of the partner, if it's a like-minded lender or a bank or LP, any color you could give there?
spk02: Well, I don't know that we had a partner on that deal, Finian. Yeah, we're just shaking our heads going, I don't think we did a partner on that deal. That's just a Trinity position.
spk10: Okay, I could be reading that wrong, of course, apologies. Second question, can you give us any context on how we should model compensation? What are the sort of drivers? Is it origination? Is it assets? Is it performance? You know, that moved up a couple million quarter to quarter and trying to figure out where to go from here.
spk07: Yeah, this is Dave. We added seven people in the quarter and had some promotions as well, and we also had some supplemental bonuses. I think what you see for this quarter is probably a good run rate at this point. We will add people during the course of this year, so it will tick up a little bit depending upon those people, but I think the first quarter is kind of a good proxy to the remaining year.
spk10: Okay, so that's the run rate for this year or, you know, as a percent of the asset base going forward?
spk07: Yeah, that's a good basis for, you know, the range of 2022. Trying to tell you what 2023 would look like would be something I couldn't really give you good clarity on, but I think it's a good proxy for the rest of this year.
spk10: Okay. And did the performance of last year, obviously Lucid was a big hit. Was that a big driver there if you're able to sort of give any color or meat on the bone on how much performance plays into the rewards and so forth? I ask because we probably won't see something like that this year with how the markets are playing out. So seeing if that'll sort of be a headwind on compensation.
spk07: Yeah. We did, with the approval of the board, put a plan in place to have kind of a long-term incentive program that will cover the next seven quarters for our employees. It's kind of a retention as well as a bonus based on the performance of really what happened in this first quarter. We had a stellar performance, and we had, you know, $52 million of realized gains. There are not many BDCs that can point to that type of performance. So we did put a retention program in place to cover the next seven quarters. But again, that's subject to approval quarter to quarter based on ongoing performance of the company.
spk10: Okay, makes sense. Thanks so much. Thanks, Ben.
spk03: Thanks, guys.
spk05: And as a reminder, if you would like to ask a question, please press star and one on your telephone keypad. We'll go next to Christopher Nolan with Lattenberg Thalman. Your line is open.
spk08: Hey, guys. In terms of setting the dividend, should we be looking at the new 40 cents as a consistent base dividend going forward?
spk07: It will depend upon, obviously, the performance each quarter that we have. Certainly, that's a target. We don't raise our dividend without the expectation that that would be the run rate. So I think that that's probably a reasonable expectation, at least through the rest of this year. And it may go up if performance continues to be as stellar as it has been.
spk08: Okay. Then, given the growth rate that you guys are looking at, and given that your stock trades at a premium – Is the increase in the credit facility just sort of just some insurance? It seems like to me that you guys have flexibility either to raise fixed rate debt or more equity. I mean, what are your thoughts going forward in terms of increasing capital?
spk07: It provides liquidity on kind of an almost just as needed basis. We are growing the portfolio. We do use that as something of a warehouse. Then look to do fixed rate borrowing if the market allows, and maybe even a securitization at some point in time. But we do use it to fund the continued growth of the portfolio.
spk08: Got it. And final question, non-accruals. You've got store intelligence and utility associates. What's the third company in non-accrual?
spk11: The third one is, yeah, the third one is WorkWell. And just as a reminder, the utility, that's simply an unsecured financing that was brought into the BDC at formation. So it's a performing company, but it's a paid-in-kind interest without a security interest, so we carry that on non-accrual and have since inception.
spk08: Okay. Because I'm looking at the queue, and it worked well. It's not marked as non-accrual on the scheduled investments, bro.
spk11: Yeah, it's not a goal at the end of the year. It should be.
spk08: Okay. Okay. No problem. Okay. Thank you very much for taking my questions.
spk03: All right, Chris. Thanks, Chris.
spk05: We'll go now to Casey Alexander with CompassPoint. Your line is open.
spk09: Hi. I'm sorry. At one point in time during the prepared remarks, I got distracted a little bit. I didn't hear the explanation of regarding the material exit fee earned in the quarter. Can you go over that again for me, please?
spk07: In particular, we had an exit fee for Rigetti, and we earned $1 million as a result of our investment, and they're actually raising capital and becoming public.
spk11: Upon completion of their D-SPAC.
spk07: Right, their D-SPAC. So there was a $1 million pop that we received in the quarter.
spk09: So that was around $0.03 a share?
spk07: Yeah, just $3, $3.50, right in there.
spk09: Well, I missed what you mentioned that was worth $0.08 a share. I apologize. I mean, I hate that.
spk07: Yeah, no worries. The increase in the interest rates, if they go up 100 basis points with the Fed on the prime, then it would be worth about $0.08 in additional net earnings. Between our portfolio increase as well as the cost on our debt, the net effect would be about $2.5 million or 8 cents on the year.
spk09: All right, great. Great. Thank you very much for clarifying that for me. I appreciate it. Thanks for taking my questions.
spk01: All right. Thanks, Casey.
spk05: And once again, if you would like to ask a question, that is star and 1 on your telephone keypad. We will pause a moment to allow any further questions to queue.
spk00: And it does appear that we have no further questions in queue at this time.
spk03: All right. Well, thank you all for participating in the call. We appreciate your attendance here. We're working hard on your behalf and will continue to do so in good markets and in bad to provide the best return for our shareholders. Thank you for participating today.
spk05: this does conclude today's program thank you for your participation you may disconnect at any time
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