Trinity Capital Inc. 7.875% Notes Due 2029 (TRINI) Q1 2021 Earnings Report, Transcript and Summary

Good afternoon. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Trinity Capital's First Quarter 2021 Earnings Conference Call. Our host for today's call are Steve Brown, Chairman and Chief Executive Officer; David Lund, Chief Financial Officer; and Sarah Stanton, General Counsel. Kyle Brown, President and Chief Investment Officer; Gerry Harder, Chief Credit Officer; and Michael Testa, Chief Accounting Officer are also present. Today's call is being recorded and will be available for replay beginning at 8:00 p.m. Eastern. The replay dial-in number is (404) 537-3406, and the PIN is 4999186. [Operator Instructions] It is now my pleasure to turn the call over to Sarah Stanton. Please go ahead.

Thank you, Lisa, and welcome, everyone, to Trinity Capital's earnings conference call for the first quarter of 2021. Trinity's first quarter 2021 financial results were released just after today's market close and can be accessed from Trinity's Investor Relations website at ir.trincapinvestment.com. We have arranged for a replay of the call at Trinity's web page or by using the telephone number and passcode provided in today's earnings release. Before we begin, I would like to remind everyone that certain statements that are not based on historical facts 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 information reported on this call speaks only as of today, May 6, 2021. And 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.

Thank you, Sarah, and thank you to all of those who are joining us today. I hope that you are all healthy and doing well. We're excited to report our earnings for the first time post-IPO, and we're encouraged by both the financial results and the continued progress in different aspects of our business. Trinity continues to build and grow its platform as we serve the emerging growth venture-backed space. Technology and innovation is a top priority for investors in our markets. And as a result, we are seeing expansion in our opportunities, which is the top category we define in our pipeline funnel. Each of our teams from origination to credit to portfolio management to finance are adding talent and improving systems and process as we scale our business in line with Trinity's plans. The people we have on our team and the relationship-based culture that we prioritize are our most valuable assets. Trinity's goal has always been to differentiate in our space, and our commitment to technology and operational expertise and providing a differentiated product offering is serving us well. Although we've been a public reporting company since January of 2020, this was our first quarter as a publicly listed company on NASDAQ, and we're proud of our Q1 results, which included the closing of our IPO in early February, where we raised over $100 million in equity, and we issued just over 8 million new shares. Investor market support for the emerging growth venture debt niche that we serve in the BDC space appears to be growing, and we believe the timing is just right for Trinity to scale and grow its platform. The following are a few examples and highlights of our accomplishments in the first quarter. We declared a dividend of $0.28 per share, an increase over our prior quarter and in line with our goal of increasing our dividend as we grow our platform. We originated $124 million in new commitments, and we funded $87 million in gross deployments across 19 portfolio companies. Q1 net investment income was $7.3 million or $0.31 per share. This compares to net investment income of $5.3 million or $0.29 per share in Q4 of 2020. Our NAV per share had a meaningful increase of 5%, and we finished the quarter at a NAV of $13.69 per share compared to $13.03 at the end of 2020. Our credit quality in the portfolio remains strong with over 99% of our debt investments at fair value performing. Total liquidity, including cash and availability under our credit facility, was over $108 million. Our debt-to-equity ratio was approximately 0.61 at the end of the quarter as we paid down our credit facility after receiving the IPO proceeds. We'll be using our availability and our cash as we continue to scale and grow with a target ratio back in the desired range of 1.2 to 1.3x. We also expect to declare a dividend for the second quarter of 2021 at the end of June, subject to Board approval. Kyle and Dave will share more detail about our results during the quarter and the strength of the market in general. Again, we're pleased with the progress of our operating results and in particular how we came out of the gate post IPO. We believe we are now well positioned to grow the business and to gain market share within the emerging growth of venture lending and equipment finance space. I'll 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?

Thank you, Steve. Good afternoon, everyone. On the heels of Q4, during which we set a record for originations, Trinity continued its strong momentum during Q1. While this momentum has been building for some time, it was furthered by the growth of our team. We added 6 new team members during the quarter, including 4 on the investment diligence team. As of today, we stand at 40 full-time employees and are proud of the varied expertise and industry knowledge across the board. We have a strong commitment to knowing as much as we can about the technology and the markets we serve. We not only hire that expertise but have a continual and dedicated process of learning about emerging technologies and trends in the space. Our commitment to diversification by industry type and a wide range of referral partners has played out nicely as we support a diverse set of portfolio companies. As industries like agtech and fintech, foodtech, frontiertech, AI and robotics continue to emerge with committed capital from the venture capital industry, our portfolio correspondingly continues to diversify in the similar industries. Our pipeline of Trinity starts with opportunities reviewed. And these are deals brought in by our originations team and reviewed by our credit team with our proprietary credit rating system. These opportunities are one of our leading indicators regarding our ability to hit our deployment goals. We've gathered statistical data over many years regarding what a certain number of opportunities at the top of our funnel should result in relative to term sheets issued term sheets accepted. And ultimately, this gives us a nice predictive tool for our target funding quarter-to-quarter. 2020 was a record year for Trinity in opportunities. Q1 was another record year -- record quarter for Trinity. This is our best indicator of what future funding will look like coming off of 2 strong back-to-back quarters. Our equipment finance business continues to grow, which provides nice differentiation and diversification in product, industry and risk. We continue to explore ways that we can serve our customers with our stated goal of providing the financial needs to customers in the emerging growth space, other than what they can get in the form of receivable financing and incremental to what they can get from the tech banks in the form of term debt. All of this activity is helping us gain on our goal to be the first thought for venture debt and equipment finance for the markets we serve. Gross deployments during the quarter were $87 million across 19 portfolio companies. This included $44 million in gross deployments across 6 new portfolio companies and $43 million in gross deployments to 13 existing portfolio companies. Gross deployments were partially offset by $67 million in repayments, of which $41 million were from early debt repayments. We finished the quarter with $8.3 million in unfunded commitments to 2 portfolio companies. The composition of our portfolio remained largely unchanged. $336 million of our portfolio was comprised of secured loans, $128 million was in equipment financings and $72 million was in equity and equity-related investments, including warrants. From a sector perspective, our top 3 allocations were manufacturing at 27%, retail trade at 16% and professional scientific and technical services at 13%. Geographically, 49% of our portfolio was allocated to the Western region and about 27% was allocated to the Northeast. Our portfolio credit quality remains solid, and there are emerging liquidity options in the market, including SPAC activity. I'll touch on this briefly. We have 3 portfolio companies in the process of a SPAC transaction. We anticipate there will be other portfolio companies that could also consider this option. SPAC activity has been seen generally as a positive trend for Trinity and our portfolio, where liquidity options are available to a small number of our more mature companies. We are encouraged by our start to the year and optimistic about the continued growth of our portfolio. The VC industry that we serve continues to grow. According to Pitchbook, total Q1 venture capital fundraising of $32.7 billion set a new record. When considering the fundraising for all of 2020, which was considered a banner year for venture capital totaled $79.8 billion, 2021 is off to an impressive start. In terms of deployment of venture capital, $69 billion was deployed. At the venture backed -- capital-backed companies in Q1, a significant year-over-year increase. Growing investment combined with a healthy IPO market makes our target growth-stage company market all the more attractive as companies become encouraged by the success of late-stage exits. We are uniquely positioned to capitalize on this momentum. We believe that our long-standing direct origination network continues to benefit from relationships with institutional equity investors, leading technology banks and entrepreneurs and that these benefits will continue compounding over time. With that, I'll turn the call over to David Lund to discuss our financial performance in more detail. David?

Thank you, Kyle, and thank you, everyone, for joining us on today's call. As Steve and Kyle mentioned, this quarter has been a very strong start to 2021 with the Trinity team. We are very proud of the successful IPO we closed on February 2, where we raised net proceeds of approximately $104 million and the issuance of approximately 8 million shares of our common stock. In addition, we had solid investment activity and portfolio performance, as I will discuss shortly. I will be focusing my remarks on the following key areas: portfolio growth, operating performance, NAV and return performance, credit performance and liquidity. With that, I will start with portfolio growth. During the first quarter, we entered into $124 million of new commitments and deployed $87 million across 19 portfolio companies. We funded $61.4 million in secured loans to 8 portfolio companies. We funded $14.7 million in equipment loans to 7 companies, and we received $1 million in warrants in connection with this funding activity. We also invested $10 million in direct equity investments in 4 portfolio companies, including the exercise of our warrant in Atieva. As a result of the new investment activity, we continued our goal of transitioning the portfolio to floating rate loans as we ended the quarter with approximately 32% of our debt portfolio in floating rate securities. During the second quarter, we received $67 million in principal repayments, of which $40 million were from early debt repayments, which indicates the quality of our borrowers and their ability to raise additional equity capital or move to more conventional bank lenders to repay our debt. As a result of the $20 million of net investment activity and approximately $7 million of accretive income and realized gains, our portfolio at cost grew by 5.4% to $525 million. On a fair value basis, our portfolio increased from $494 million to $536 million attributed to the increase in costs I just discussed and the $15.5 million of net unrealized appreciation. The increase in net unrealized appreciation of approximately 3.1% was primarily due to valuation changes in our warrant and equity portfolio. I will now turn to our operating results. On a GAAP basis, we recorded total investment income of $17.3 million, comprised of approximately $16.3 million in interest income and $1 million in fee income. This represents a $2 million increase or a 13% increase over the $15.3 million of total investment income in Q4. The increase was primarily related to the increased weighted average balance of our outstanding debt portfolio and higher income from early loan repayments as compared to the prior quarter. Our effective yield on the portfolio for Q1 was 15.5%, which was increased from 14.5% in the prior quarter, driven by accelerated income from early repayments. We incurred $4.6 million of interest and amortization of deferred financing costs on our various debt facilities as compared to $4.3 million in Q4 of 2020. Interest expense under our credit facility was lower in Q1 as we paid down our Credit Suisse facility by $90 million with the proceeds from our IPO. This was offset by higher interest expense on our $50 million of convertible notes, which were outstanding for the full quarter of Q1. Our weighted average cost of debt, including interest and fee amortization, was 7.2%, which increased from the prior quarter due to the higher borrowing costs on the 6% convertible notes and lower debt balance outstanding under our Credit Suisse facility, which has [ delivered ] cost of LIBOR plus 3.25%. We expect the cost of debt to decrease in the future as we borrow under our credit facility to fund future obligations. Compensation expense was $4 million in Q1 compared to $4.5 million in Q4. The decrease as compared to Q4 2020 was due to lower variable compensation expense offset by higher salary costs incurred in connection with the addition of 6 personnel to the Trinity team during the first quarter. Professional fees were slightly lower at $647,000 in Q1 compared to $731,000 during Q4. And this decrease was due to lower accounting and valuation fees in Q1. G&A expense was $808,000 in Q1 compared to $486,000 in Q4. The decrease in G&A -- the increase in G&A expense was primarily driven by higher D&O insurance expense now that we are a public company. We expect G&A expense to increase slightly over Q1 commencing in Q2 as we incur higher rent expense for our new headquarters located in Downtown Phoenix. As a result of the activity noted previously, net investment income for the quarter was $7.3 million or $0.31 per share. This compares to $5.3 million or $0.29 per share in Q4 2020. The NII per share would have been meaningfully higher quarter-over-quarter, except for the impact of the 8 million shares of common stock issued in connection with our IPO. During the quarter, we recognized net realized gains of $2.6 million, primarily related to one portfolio company. We recorded net unrealized appreciation of $15.5 million, primarily driven by appreciation in our equity and warrant portfolios. The increase of $5.6 million in our equity investments was principally driven by an increase of $19.2 million in the fair value of our Atieva investment, offset by $12.6 million of depreciation from mark-to-market adjustments in the balance of the equity portfolio and a flip of unrealized appreciation to realized gain of $1 million. The net appreciation of $8.6 million in our warrant portfolio was primarily driven by a $3.4 million fair value increase in the Matterport warrant. The reversal of $3 million of unrealized appreciation on our Atieva warrant that we exercised in Q1 and $2.2 million of net appreciation from mark-to-market adjustments on the balance of the warrant portfolio. Net assets increased by $123 million to $362 million at the end of Q1, primarily due to the net proceeds from our IPO, net realized gains and net unrealized appreciation. The NAV per share increased by $0.66 per share to $13.69 from $13.03 at the end of Q4, primarily due to the net realized gains and net unrealized appreciation recognized during the quarter. Our credit quality remains strong with over 99% of our portfolio performing. The 3 loans that we had on nonaccrual are the same 3 loans we inherited from the acquired portfolio at the beginning of 2020. So we have had no new nonaccruals. Those 3 loans carry a cost basis of $2.3 million and a fair value of $1.4 million. Turning now to liquidity. Available liquidity as of March 31, 2021, was approximately $108 million, including approximately $36 million in unrestricted cash and cash equivalents and borrowing capacity of $72 million under our credit facility, subject to existing terms and conditions. End-of-period leverage was 61% and our asset coverage ratio was 264%. Lastly, on March 24, 2021, we declared a cash dividend of $0.28 per share for the first quarter of 2021 that was paid on April 16 and which generated 111% coverage by our GAAP NII earnings for the quarter. We anticipate declaring a dividend for the second quarter of 2021 during June, subject to approval by our Board of Directors. With that, I will now open the call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Ryan Lynch with KBW.

First one just has to do with your view of the venture lending market today. Obviously, there's been a lot of capital raised and is flowing into that space from the equity side. I would think that, that would help you guys from an exit standpoint as well as to support your current company as they look to raise additional rounds. But I would also think that would be a competitor, the venture equity, compared to as an alternative product to venture lending. So can you talk about what you're seeing from an outlook standpoint, from a competitive standpoint and from a capital deployment standpoint in the venture lending space?

Yes. Ryan, this is Steve. Thanks for the question. No question that a robust market from an equity perspective create competition. And we've said this before, I'll always say it, our biggest competition is equity, and I think it always will be because we're a solution to help create savings and dilution. But net-net, we think that more equity in the market is good for the venture debt space. And I believe that we don't -- we really don't see right now a meaningful impact. As Kyle reported, our opportunities are up significantly, all of last year and then another record quarter. And so what you want when you have that kind of capital in the market is to see more opportunities and take advantage of those. So I think net-net, we're seeing that as a positive, but there will always be competition. Kyle, any thoughts on that?

The other thing I'd say is, yes, there's more competition from an equity standpoint, maybe on the debt side as well. Internally, we track term sheet issued, the term sheet accepted ratios and acceptance rates, and we've not seen significant changes quarter-over-quarter over the last few quarters. So there may be more competition, but we're still winning deals at the same rate we're accustomed to.

That's great.

Okay. And then kind of on that, with that competitive environment, are you guys -- how does that impact -- I know that's going to affect probably your term loan product that you guys are going out in the market with. But does increasing VC dollars, does that present a competitive product for your equipment financing? Or is that just sort of a different ballpark where you guys play with that and where you compete from that standpoint?

Yes. I don't think it's much different. I mean obviously, most of our equipment financing deals are involved with companies that do have venture investors. So I think it would be similar in the way that we view that. Again, we are seeing a continued sort of uptick in the equipment finance business and the opportunities that we're bringing, and we're excited about growing that piece of the business. It's still a disorganized sort of market in our space. And so we're encouraged by what we're seeing there but don't know that necessarily there's going to be more competition or competition that's going to hurt us relative to our equipment finance business.

Okay. And then you mentioned you guys are looking to continue to scale the platform. I think you said you guys had 40 people. You hired 6 people in the first quarter. Can you talk about the areas that you guys are focusing on for growing your guys' organization from this point forward?

Yes. We've got, I think, in the budget, another 4 sort of adds for the year. I think 10 total, David, is what we have in the budget. And it's really across the board. But as you know, Ryan, we're looking to grow originations, and so you're going to continue to see growth in that area. We're not necessarily going after any specific markets or we -- as you know, we follow the VCs and where the VCs are investing. That's where we're going to be going. But I do think -- David, what were you saying?

I was saying 4 of the people that were hired in the first quarter are originations. So clearly, we're looking to build out that team as well as the back-office portfolio team as well.

Yes. Our -- on the origination side, 2 were specifically originations and 2 were in sort of the due diligence support. And we have a nice collaborative effort, and we consider all of those our origination team, so that we'll continue to grow that piece of the business.

Next question comes from the line of Christopher Nolan with Ladenburg Thalmann.

Most of your loans are fixed rate. Is that a competitive advantage when you are competing for deals in the market?

So the fixed rate nature of the portfolio relates back to pre-IPO when we had SBA debt that was fixed, and we had sort of matched that portfolio. We're in the process of moving it to more of a floating rate on the loan side. Now our leases are primarily fixed because it's just one payment over the course of life of the deal. So you'll see I think we're up to 32% or so, something like that. And we're continuing to grow that. But the good news is when we set -- we'll set floors relative to what we really want out of the gate, so there's really upside, not a lot of downside as we're moving the portfolio from fixed rate to floating rate on the loan side.

And where does the -- your equipment financing loans sit in seniority relative to other debt? Is it first lien on that equipment?

Yes. Good question. So always first lien on the equipment itself. And the equipment value and security can range deal to deal, but we always get first position on the equipment. And then occasionally, sometimes we'll get a blanket lien as well. So sometimes we'll back that up with a blanket lien or a second blanket lien. Sometimes it's related specifically to the equipment. Gerry and his team, the credit team, do a great job of helping us underwrite the value of that equipment. We'll always take that into account as we're looking at the overall credit and whether or not we should add to the security of our loan relative to an additional lien.

Great. And then are you reiterating your target leverage ratio is 1.25?

David?

Yes. We'll walk back up to that. We're at 0.61 at the end of the quarter. And as we grow the portfolio and put additional funds out, we would target to be back about 1.2 to 1.3.

Great. And final question. David, can you share with us what the repayments are second quarter to date at all?

Second quarter to date, I don't think we've had any early repayments at this point. We did have one.

We did -- yes.

Go ahead. [ Answer ] that.

Yes. We had one early repayment within the first week of the quarter.

Yes.

Yes. That makes you unusual in the venture debt area.

Yes.

Yes.

Congratulations.

Your next question comes from the line of Sarkis Sherbetchyan with B. Riley Securities.

On the last call, you mentioned achieving $280 million of investment originations in '21 and clearly delivered about $90 million or so in originations here in the first quarter alone. So any updates to this metric? Do you think you'd get a little bit more aggressive or kind of pull back on the cadence of deployments here?

I think we're going to keep doing what we're doing, Sarkis. And as we mentioned, we don't -- we're not going to give specific guidance relative to numbers on loans that we're putting on the market as we speak here. But Kyle mentioned the great indicator for ultimately funding deals is our opportunities. And we've got statistical data on how many opportunities it takes to get the term sheets issued and then to term sheets accepted. And we continue to see that perform well all last year and even into Q1. So that bodes well for sort of where we're headed. And you know our goal. Our goal is to grow, and we started that in Q1, and we plan to continue that.

And any kind of updates on where the pipeline sits today?

So as I mentioned, Q1 was a record for opportunities, and that trend has continued into Q2. So I would say so far, so good.

Yes. What was the number of opportunities in Q1?

I'd have to get back to you on that.

Okay. And then one final one for me. Just looking at the watch category and the credit matrix you've displayed, it jumped sequentially. Just wanted to see if there's any more color on that. Is there one credit that's sticking out? Or is it just kind of some movement there?

Yes. I'm going to turn it over to Gerry. I will -- just as a reminder, our watch category -- we watch credits for a number of reasons, not necessarily bad, different reasons that we're watching credits for and putting them into that category. And when they're in the watch category, they are performing. With that, Gerry, do you want to add any color on that?

Sure. Happy to. So we do have 4 credits in the watch category at this quarter. In all 4 cases, these portfolio companies are pursuing equity financing to continue their growth and continue their operations. We've got supportive equity sponsors in all cases and enterprise values and term sheets in excess of Trinity's debt position. So generally speaking, in our watch list, this is often companies that are raising capital, and we're looking at those closely on the portfolio management side. And that's what we're seeing at the end of Q1.

Your next question comes from the line of Finian O'Shea with Wells Fargo Securities.

Just a market question. Would you say that the -- not really development but an increased factor of all the VC inflows, presumably to larger firms, larger funds, does that tilt the demand for venture debt toward the venture banks given these firms are much deeper pockets of capital, finance larger companies are able to provide the credit profile? Would you say that tilts things sort of out of the private venture debt favor?

Yes. That's a good question. Generally speaking, the banks in there -- both, obviously, their term debt product and the receivable product, in particular, they take a different risk than we do typically. And we like to say we don't compete directly with them when we provide incremental capital to what they provide. But we don't think of ourselves in terms of a direct competitor, and we think they take different risks. Now having said that, in markets that become more liquid and more robust, certainly, banks will move credit strategies a little bit. And we'll see them do more in certain markets than they will do in other markets. But generally speaking, we're not going up against banks that are providing 4%, 5%, 6% capital with the kinds of risk, including covenants and other things that they tie to their debt facilities that we don't necessarily have. So there's definitely a reason for them to pay a higher price for more flexible capital and what we can do versus what the banks typically will do. Kyle, any thoughts on that? Is that...

No, you hit it.

Yes.

Okay. Very well. And then I guess just sort of a market origination question. One of the names this quarter, quip, we've seen that bounce around the venture growth sphere a little bit. I think you did like about a 5-year term loan, it looks like. Is that a normal -- is that still venture -- growth stage venture at this point? Or is that one of these -- is that more of a term loan to a private for longer company? Any way you'd be able to describe. I understand it's an individual issuer, but more high level, if this is sort of a new arena of opportunity there.

Yes. No, I would say that, that particular financing continues to fall within the realm of what Trinity has historically done and will continue to do. So this is a company that is an omni-channel marketer, and they're expanding their business. So that's the growth that we're finding.

[Operator Instructions] Your next question comes from the line of Brock Vandervliet, UBS.

Just on Slide 16, in terms of the yield profile, it's interesting. Looking at that pickup, just sequentially about 100 basis points. Is there any sort of mix shift? What's causing that step-up in yield?

Yes. The step-up in the yield really is some of the additional fees that we've been getting upfront. And what will also drive some of that yield is when we do lease financings and we'll have a higher upfront fee to that. So it's pushing up the yield on the core basis. And then obviously, as I mentioned, the early payoffs will also drive yield.

Got it. Okay. That's rolling in through there. And shifting over to funding. I know you paid down that -- I think it's Credit Suisse line at 3.25%. What's the long term there? Do you just kind of draw that down? Can you refinance at more favorable terms than LIBOR plus 3.25%? What does that look like to you?

That facility is out through January of next year, so we'll stay with that facility right now. We'll certainly be in discussions with regards to replacing or are we enhancing that one. But obviously, we'll be using a facility such as this because there's a lower cost of capital to it and then potentially using the securitizations and so on and rolling some of the assets into it to drive an overall long-term lower cost of debt than some of the facilities we've entered into recently.

Got it. And lastly, I know you have the target leverage level of 1.25. That's quite a bit higher than where you are now. Your earnings profile is just fine at this level of leverage. Just realistically, intermediate term, should we look for you to move to that level or kind of stay down here given your earnings profile seems pretty good?

No. We're looking to, as Steve said, drive the growth in the portfolio. So we are going to be looking to doing originations, in which case we're going to be drawing against that facility. I would anticipate that as we get -- as the year goes on and we continue to put additional funds to work, we will draw on that facility to where we're back up to the 1.2 to 1.3.

Your next question comes from the line of Casey Alexander with Compass Point.

Can you explain why you went ahead and exercised the warrants on Atieva even though the SPAC deal hasn't closed? Was that to preserve some sort of rights that you have with the stock as opposed to the warrants? And secondly, can you kind of walk me through the fair value changes of Atieva for the quarter? And lastly, I assume that your position in Atieva has some type of illiquidity discount. I'm curious as to what that discount might be.

Yes. So the first question, yes, we did exercise our warrants, and we had to do so to take advantage of a pro rata opportunity we had to purchase additional shares at a round that we felt was at the right valuation prior to the SPAC. So we believe it was the right thing, and we did that. And so we have shares now versus warrants. And then secondly, we have -- as was mentioned by David, we've written that asset up. And we've gone through a process of valuation that we think is correct and is accurate as it can be at this point. And Gerry works very closely with our third-party valuation specialist. And you might just kind of talk Casey through what our third-party valuation specialist went through.

Sure, happy to. So Steve mentioned, we did leverage a third-party valuation provider for this asset at the March quarter and also worked closely with our auditors. We have to base this valuation on what's known and knowable at the end of the quarter. There's still some things about the transaction that are facts that facts not an evidence in Q1. The valuation provided by the specialist was based on at least 3 factors, including the closing price of Churchill at March 31, the price of the PIPE and the possibility that the merger would fail to close. So all those factors and eventualities were taken into account. And there would be a discount for lack of marketability with respect to the Churchill closing price as well. So it's a fairly rigorous analysis. We're comfortable with where the asset was marked. We believe it's -- we struck the fair value.

Okay. Well, the Q isn't out. So can you tell me how much the change in fair value was quarter-over-quarter?

Yes. Our unrealized gain on our position was $19 million in the quarter.

At this time, there are no further questions.

All right. Thank you. Again, we appreciate your support at Trinity. We look forward to working hard on your behalf and reporting to you at the end of the next quarter. Thank you.

This concludes close today's conference. You may now disconnect.