Tortoise Capital Resources Corp. Releases Fiscal 2011 Second Quarter Financial Results
LEAWOOD, Kan.--(BUSINESS WIRE)-- Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced that it has filed its Form 10-Q for the second quarter ended May 31, 2011.
Recent Highlights
-- Distribution guidance of not less than $0.40 per share annually
-- Acquired first real property asset for $16.1 million - electric
transmission line in New Mexico
-- Invested $9.9 million indirectly in Arc Terminals - a refined products
storage business
-- Net asset value $10.66 per share as of May 31, 2011
Distribution Guidance
On June 1, 2011, the company paid a quarterly distribution of $0.10 per common share, the same amount as the prior quarter. This quarter's distribution of $0.10 per share was in excess of distributable cash flow for the quarter, therefore the company elected to pay out a small portion of the IRP gains. After investing most of the proceeds of the IRP sale, the company expects its earned DCF to support a quarterly distribution of $0.10 per share ($0.40 annually), with upside potential depending on the performance of its private equity investments.
Quarterly Performance Review and Investment Outlook
As of May 31, 2011, the company's net asset value was $10.66 per share compared to $10.46 per share at February 28, 2011. The fair value of the company's securities investment portfolio (excluding short-term investments) totaled $70.1 million, with approximately $43.3 million in private securities and approximately $26.8 million in publicly-traded securities, diversified among 85 percent midstream and downstream, 14 percent aggregates and 1 percent upstream.
High Sierra's fair value increased approximately $4.5 million this quarter. In May, High Sierra completed the sale of Monroe Gas Storage for $148 million. In June, High Sierra acquired the assets of Marcum Midstream, a Colorado-based water disposal company serving the oil and gas industry. The completion of these transactions, along with a new credit facility which closed in March, is expected to result in the resumption of a modest quarterly cash distribution as early as next quarter.
Mowood's fair value decreased slightly this quarter, due to the delay in the completion of construction projects. Mowood expects that revenues from Ft. Leonard Wood-based pipeline assets, managed by its subsidiary, Omega Pipeline, will bolster its performance for the remainder of 2011.
VantaCore's fair value decreased approximately $2.0 million this quarter and VantaCore was unable to earn its minimum quarterly distribution (MQD) of $0.475 per unit for its quarter ended March 31, 2011. Common and preferred unitholders elected to receive their MQD as a combination of $0.12 in cash and the remainder in newly issued preferred units, compared to $0.09 in cash and the remainder in newly issued preferred units in the prior quarter. VantaCore has initiated a number of projects at both locations designed to improve profitability.
Subsequent to quarter end, the company successfully reinvested most of the proceeds from the recent IRP sale into two private investments and public MLPs. In early June, the company purchased a $9.9 million interest in Magnetar MLP Investment LP which was formed solely to invest in Lightfoot Capital Partners LP, the same team that was involved in the IRP investment. This investment in Lightfoot facilitated an indirect investment in its portfolio company, Arc Terminals, an independent operator of above ground storage and delivery services for petroleum products and chemicals including refined products, renewable fuels and crude oil. Since its inception in 2007, Arc's business has grown to more than 3.5 million barrels of storage capacity through acquisitions and development projects. Lightfoot also holds approximately $60 million set aside for other platform investments or additional investments in Arc.
On June 30, 2011, the company acquired its first real property asset with the purchase of a 40 percent undivided interest in the Eastern Interconnect Project for approximately $16.1 million, including the assumption of $3.4 million of debt. The project moves electricity between Albuquerque and Clovis, New Mexico, and is subject to a triple-net-lease with Public Service Company of New Mexico that expires in 2015.
The company plans to utilize liquid assets on its balance sheet, plus leverage and proceeds of equity issuances to fund the acquisition of new REIT-qualifying assets. The company does not expect to make additional investments in securities, other than short term, highly liquid investments to be held pending acquisition of real property assets. If sufficient suitable REIT-qualifying investments are made during 2011 and held for calendar year 2012, TTO expects to qualify as a REIT for the 2012 tax year.
Earnings Call
On July 14, 2011, at 4 p.m. CDT, the company will host its second quarter conference call to discuss its financial results and investment strategy. Corridor Energy's Managing Director Rick Green will join the call to discuss TTO's first real property asset investment. The toll-free conference call number is (800) 762-8779. The call will also be webcast in a listen-only format at www.tortoiseadvisors.com.
A replay of the call will be available beginning at 6:00 p.m. CDT on July 14, 2011 and continuing through July 26, 2011, by dialing (800) 406-7325. The replay access code is 4449508#. A replay of the webcast will also be available at www.tortoiseadvisors.com through July 14, 2012.
About Tortoise Capital Resources Corp.
Tortoise Capital Resources Corp. (NYSE: TTO) invests primarily in the U.S. energy infrastructure sector. Tortoise entered into a consulting agreement with Corridor Energy LLC to identify, analyze and finance potential investments for TTO in real estate investment trust (REIT) qualifying assets. For more information, visit www.corridorenergy.com.
About Tortoise Capital Advisors, LLC
Tortoise Capital Advisors (Tortoise) is an investment manager specializing in listed energy infrastructure investments. Tortoise is considered a pioneer in managing portfolios of MLP securities and other energy companies for individual, institutional and closed-end fund investors. As of June 30, 2011, Tortoise had approximately $6.8 billion of assets under management in six NYSE-listed investment companies, an open-end investment company and private accounts. For more information, visit our website at www.tortoiseadvisors.com.
Safe Harbor Statement
This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.
Forward-Looking Statement
This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are "forward-looking statements." Although the company and Tortoise Capital Advisors believe that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the company's reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, the company and Tortoise Capital Advisors do not assume a duty to update this forward-looking statement. Any distribution paid in the future to our stockholders will depend on the actual performance of the company's investments, its costs of leverage and other operating expenses and will be subject to the approval of the company's Board and compliance with asset coverage requirements of the Investment Company Act of 1940 and the leverage covenants.
STATEMENTS OF ASSETS & LIABILITIES
May 31, 2011 November 30, 2010
(Unaudited)
Assets
Investments at fair value, control (cost $ 8,041,009 $ 23,260,566
$4,593,000 and $18,122,054, respectively)
Investments at fair value, affiliated (cost 35,146,925 49,066,009
$35,424,242 and $31,329,809, respectively)
Investments at fair value, non-affiliated
(cost $54,469,006 and $21,628,965, 54,431,367 22,875,848
respectively)
Total investments (cost $94,486,248 and 97,619,301 95,202,423
$71,080,828, respectively)
Escrow receivable 1,677,052 -
Receivable for Adviser expense reimbursement 120,596 109,145
Receivable for investments sold - 5,198
Interest receivable from control investments - 42,778
Dividends receivable 4,082 83
Deferred tax asset - 656,743
Prepaid expenses and other assets 91,068 25,023
Total assets 99,512,099 96,041,393
Liabilities
Base management fees payable to Adviser 361,789 327,436
Distribution payable to common stockholders 915,701 -
Accrued expenses and other liabilities 167,058 234,784
Deferred tax liability 434,245 -
Total liabilities 1,878,793 562,220
Net assets applicable to common stockholders $ 97,633,306 $ 95,479,173
Net Assets Applicable to Common Stockholders
Consist of:
Warrants, no par value; 945,594 issued and
outstanding $ 1,370,700 $ 1,370,700
at May 31, 2011 and November 30, 2010
(5,000,000 authorized)
Capital stock, $0.001 par value; 9,156,931
shares issued and outstanding at
May 31, 2011 and 9,146,506 shares issued and 9,157 9,147
outstanding at
November 30, 2010 (100,000,000 shares
authorized)
Additional paid-in capital 96,702,793 98,444,952
Accumulated net investment loss, net of (3,264,474 ) (3,308,522 )
income taxes
Accumulated realized loss, net of income (1,175,336 ) (18,532,648 )
taxes
Net unrealized appreciation of investments, 3,990,466 17,495,544
net of income taxes
Net assets applicable to common stockholders $ 97,633,306 $ 95,479,173
Net Asset Value per common share outstanding
(net assets applicable $ 10.66 $ 10.44
to common stock, divided by common shares
outstanding)
Distributable
Cash Flow
(Unaudited)
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
May 31, 2011 May 31, 2010 May 31, 2011 May 31, 2010
Total from
Investments
Distributions
from $ 587,960 $ 847,399 $ 1,319,951 $ 2,336,155
investments
Distributions 24,394 20,972 47,760 20,972
paid in stock
Interest income
from 135,956 189,622 271,286 381,053
investments
Dividends from
money market 4,998 233 5,188 450
mutual funds
Other income 40,000 8,688 40,000 19,080
Total from 793,308 1,066,914 1,684,185 2,757,710
Investments
Operating
Expenses Before
Leverage Costs
Advisory fees
(net of expense 241,193 258,087 475,873 516,355
reimbursement
by Adviser)
Other operating 157,012 216,177 310,855 390,745
expenses
Total Operating
Expenses, 398,205 474,264 786,728 907,100
before Leverage
Costs
Distributable
cash flow 395,103 592,650 897,457 1,850,610
before leverage
costs
Leverage costs - - - 45,619
Distributable $ 395,103 $ 592,650 $ 897,457 $ 1,804,991
Cash Flow
Capital gain 520,590 292,500 520,589 292,500
proceeds
Cash Available
for $ 915,693 $ 885,150 $ 1,418,046 $ 2,097,491
Distribution
Distributions
paid on common $ 915,693 $ 909,904 $ 1,830,344 $ 2,090,055
stock
Payout
percentage for 100 % 103 % 129 % 100 %
period(1)
DCF/GAAP
Reconciliation
Distributable $ 395,103 $ 592,650 $ 897,457 $ 1,804,991
Cash Flow
Adjustments to
reconcile to
Net Investment
Income (Loss),
before Income
Taxes:
Distributions
paid in stock (24,394 ) (20,972 ) (47,760 ) (20,972 )
(2)
Return of
capital on
distributions (475,518 ) (656,759 ) (781,243 ) (1,655,399 )
received from
equity
investments
Non-recurring
professional - (38,881 ) - (38,881 )
fees
Net Investment
Income (Loss), $ (104,809 ) $ (123,962 ) $ 68,454 $ 89,739
before Income
Taxes
(1) Distributions paid as a percentage of Distributable Cash Flow
(2) Distributions paid in stock for the three and six months ended May 31, 2011
and May 31, 2010 were paid as part of normal operations
and are included in DCF.
STATEMENTS OF
OPERATIONS
(Unaudited)
For the three For the three For the six For the six
months ended months ended months ended months ended
May 31, 2011 May 31, 2010 May 31, 2011 May 31, 2010
Investment
Income
Distributions
from
investments
Control $ 69,544 $ 478,380 $ 139,711 $ 1,034,259
investments
Affiliated 113,279 224,999 497,288 1,081,891
investments
Non-affiliated 405,137 144,020 682,952 220,005
investments
Total
distributions 587,960 847,399 1,319,951 2,336,155
from
investments
Less return of
capital on (475,518 ) (656,759 ) (781,243 ) (1,655,399 )
distributions
Net
distributions 112,442 190,640 538,708 680,756
from
investments
Interest income
from control 135,956 189,622 271,286 381,053
investments
Dividends from
money market 4,998 233 5,188 450
mutual funds
Fee income 40,000 8,688 40,000 19,080
Total
Investment 293,396 389,183 855,182 1,081,339
Income
Operating
Expenses
Base management 361,789 309,704 713,809 619,626
fees
Professional 82,952 153,693 163,828 238,855
fees
Directors' fees 15,396 33,271 29,969 59,432
Stockholder
communication 13,200 16,174 26,112 31,877
expenses
Administrator 9,648 14,456 19,035 28,916
fees
Fund accounting 7,519 7,039 14,847 14,011
fees
Registration 6,296 6,496 12,456 12,851
fees
Franchise tax 5,109 4,958 10,107 7,530
expense
Stock transfer 3,428 3,462 6,781 6,592
agent fees
Custodian fees 900 2,755 2,282 4,330
and expenses
Other expenses 12,564 12,754 25,438 25,232
Total Operating 518,801 564,762 1,024,664 1,049,252
Expenses
Interest - - - 45,619
expense
Total Expenses 518,801 564,762 1,024,664 1,094,871
Less expense
reimbursement (120,596 ) (51,617 ) (237,936 ) (103,271 )
by Adviser
Net Expenses 398,205 513,145 786,728 991,600
Net Investment
Income (Loss), (104,809 ) (123,962 ) 68,454 89,739
before Income
Taxes
Deferred tax
benefit 35,914 (967 ) (24,406 ) (33,661 )
(expense)
Net Investment (68,895 ) (124,929 ) 44,048 56,078
Income (Loss)
Realized and
Unrealized Gain
(Loss) on
Investments
Net realized
gain on control - 585,000 - 2,163,001
investments
Net realized
gain (loss) on 24,096,236 (9,607,112 ) 24,096,236 (9,624,557 )
affiliated
investments
Net realized
gain (loss) on 1,637,300 (1,239,501 ) 2,011,122 (1,211,889 )
non-affiliated
investments
Net realized
gain (loss), 25,733,536 (10,261,613 ) 26,107,358 (8,673,445 )
before income
taxes
Current tax (200,000 ) - (200,000 ) -
expense
Deferred tax
benefit (8,978,436 ) 1,540,708 (8,550,046 ) 1,297,737
(expense)
Income tax
benefit (9,178,436 ) 1,540,708 (8,750,046 ) 1,297,737
(expense), net
Net realized
gain (loss) on 16,555,100 (8,720,905 ) 17,357,312 (7,375,708 )
investments
Net unrealized
appreciation
(depreciation) (695,358 ) (765,835 ) (1,690,503 ) 769,622
of control
investments
Net unrealized
appreciation
(depreciation) (18,813,426 ) 9,841,655 (18,013,517 ) 11,049,729
of affiliated
investments
Net unrealized
depreciation of (1,783,681 ) (5,525,233 ) (1,284,522 ) (5,327,459 )
non-affiliated
investments
Net unrealized
appreciation
(depreciation), (21,292,465 ) 3,550,587 (20,988,542 ) 6,491,892
before income
taxes
Deferred tax
benefit 7,589,272 (1,985,123 ) 7,483,464 (2,435,109 )
(expense)
Net unrealized
appreciation (13,703,193 ) 1,565,464 (13,505,078 ) 4,056,783
(depreciation)
of investments
Net Realized
and Unrealized 2,851,907 (7,155,441 ) 3,852,234 (3,318,925 )
Gain (Loss) on
Investments
Net Increase
(Decrease) in
Net Assets
Applicable to
Common
Stockholders $ 2,783,012 $ (7,280,370 ) $ 3,896,282 $ (3,262,847 )
Resulting from
Operations
Net Increase
(Decrease) in
Net Assets
Applicable to
Common
Stockholders
Resulting from
Operations Per
Common Share:
Basic and $ 0.30 $ (0.80 ) $ 0.43 $ (0.36 )
Diluted
Weighted
Average Shares
of Common Stock
Outstanding:
Basic and 9,156,931 9,099,037 9,151,776 9,088,679
Diluted
Source: Tortoise Capital Resources Corp.
Released July 13, 2011