Tortoise Capital Resources Corp. Releases Fiscal 2010 Third 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 its third quarter ended Aug. 31, 2010.
Recent Highlights
-- Net assets of $88.8 million or $9.74 per share as of Aug. 31, 2010, an
increase of 12 percent over last quarter
-- Third quarter 2010 distribution of $0.10 per share paid Sept. 1, 2010
Performance Review
On Sept. 1, 2010, the company paid a distribution of $0.10 per common share, the same amount as the prior quarter. The company determines the amount of distributions paid to stockholders based on distributable cash flow (DCF), which is distributions received from investments less total expenses. In May, the company received additional capital gain proceeds of $585,000 from Mowood, LLC as a result of a contingent payment from the February sale of its Timberline Energy subsidiary. TTO elected to include these capital gain proceeds in its distribution last quarter and this quarter, enabling a distribution of $0.10 per share. The company believes it will have sufficient cash flow to pay a $0.10 per share distribution through the first quarter of 2011, subject to Board of Directors approval, continued portfolio company distributions at current levels, and anticipated non-recurring payments from its portfolio companies.
Net Asset Value
At Aug. 31, 2010, the company's net asset value was $9.74 per share compared to $8.69 per share at May 31, 2010, an increase of approximately 12 percent. The increase in net asset value is largely attributable to the increase in the fair value of International Resource Partners LP (IRP).
Portfolio Review
As of Aug. 31, 2010, the fair value of the company's investment portfolio (excluding short-term investments) totaled $84.6 million, including equity investments of $79.8 million and debt investments of $4.8 million. The company's portfolio is diversified among approximately 45 percent midstream and downstream investments, 10 percent upstream, and 45 percent in aggregates and coal. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of Aug. 31, 2010 was 5.4 percent.
IRP's significant outperformance relative to budget, along with the recent robust pricing in the IPO and M&A markets for coal producers, resulted in an $11.4 million increase in the fair value of IRP this quarter. IRP continues to significantly outperform due in part to the strong metallurgical coal market, and improved production and cost controls. IRP also increased its quarterly distribution from $0.45 per unit to $0.50 per unit this quarter.
The fair value of VantaCore Partners LP (VantaCore) decreased approximately $1.5 million this quarter. VantaCore was unable to meet its minimum quarterly distribution (MQD) in cash for all unit holders for the quarter ended June 30, 2010. Common unit holders received a cash distribution equal to MQD of $0.475 for the quarter, due to preferred unit holders' acceptance of a paid-in-kind distribution. VantaCore's poor performance has been driven primarily by the underperformance of its Southern Aggregates subsidiary, which has experienced lower demand and pricing coupled with higher than expected costs.
The fair value of High Sierra, inclusive of the interest in the general partner, increased by approximately $550,000 this quarter. Monroe Gas Storage (High Sierra's underground gas storage business unit) cured the alleged technical defaults in its credit agreement which required additional capital investments. Based on recent modeling of the reservoir, the project has shown improved storage capacity which should lead towards significant improvement in 2011 EBITDA. High Sierra did not declare a cash distribution again this quarter as a result of its decision to reserve its DCF for anticipated capital expenditures; a decision its board of directors felt was in the best long-term interests of the partnership. High Sierra extended its existing credit facility through Dec. 15, 2010, and continues discussions with its lenders and expects to reach a long-term solution by the end of 2010. High Sierra reported year-to-date operating results through June 2010 below budget. Its crude oil gathering and natural gas liquids marketing companies continue to underperform due to lack of available credit and decreased margins; however the oilfield water recycling and discharge company continues to exceed budget.
Earnings Call
The company will host a conference call at 4 p.m. CDT on Thursday, Oct. 7, 2010 to discuss its financial results for the fiscal quarter ended Aug. 31, 2010. Please dial-in approximately five to 10 minutes prior to the scheduled start time.
U.S./Canada: (877) 941-2333
International: (480) 629-9723
The call will also be webcast in a listen-only format. A link to the webcast will be accessible at www.tortoiseadvisors.com.
A replay of the call will be available beginning at 6:00 p.m. CDT on Oct. 7, 2010 and continuing until 11:59 p.m. CDT Oct. 21, 2010, by dialing (800) 406-7325 (U.S./Canada). The replay access code is 4358570#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through Oct. 7, 2011.
About Tortoise Capital Resources Corp.
Tortoise Capital Resources invests primarily in privately-held and micro-cap public companies operating in the U.S. energy infrastructure sector.
About Tortoise Capital Advisors, LLC
Tortoise is an investment manager specializing in listed energy infrastructure investments, such as pipeline and power companies. As of Sept. 30, 2010, the adviser had approximately $5.2 billion of assets under management in six NYSE-listed investment companies and private accounts. For more information, visit our Web site 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.
Tortoise Capital Resources Corporation
STATEMENTS OF ASSETS & LIABILITIES
August 31, 2010 November 30, 2009
(Unaudited)
Assets
Investments at fair value, control (cost $ 24,883,047 $ 33,458,046
$19,565,433 and $28,180,070, respectively)
Investments at fair value, affiliated (cost 43,753,715 41,658,847
$31,093,559 and $52,676,299, respectively)
Investments at fair value, non-affiliated
(cost $22,748,896 and $9,568,566, 17,810,327 8,865,047
respectively)
Total investments (cost $73,407,888 and 86,447,089 83,981,940
$90,424,935, respectively)
Receivable for Adviser expense reimbursement 95,587 49,843
Receivable for investments sold 387 -
Dividends receivable 86 87
Deferred tax asset 3,690,739 5,429,391
Prepaid expenses and other assets 42,437 16,792
Total assets 90,276,325 89,478,053
Liabilities
Base management fees payable to Adviser 286,761 299,060
Distribution payable to common stockholders 911,649 -
Accrued expenses and other liabilities 260,223 282,408
Short-term borrowings - 4,600,000
Total liabilities 1,458,633 5,181,468
Net assets applicable to common stockholders $ 88,817,692 $ 84,296,585
Net Assets Applicable to Common Stockholders
Consist of:
Warrants, no par value; 945,594 issued and
outstanding at August 31, 2010 and November $ 1,370,700 $ 1,370,700
30, 2009 (5,000,000 authorized)
Capital stock, $0.001 par value; 9,116,456
shares issued and outstanding at August 31,
2010 and 9,078,090 issued and outstanding at 9,116 9,078
November 30, 2009 (100,000,000 shares
authorized)
Additional paid-in capital 99,170,032 101,929,307
Accumulated net investment loss, net of (3,585,186 ) (3,304,416 )
income taxes
Accumulated realized loss, net of income (18,654,924 ) (14,041,614 )
taxes
Net unrealized appreciation (depreciation) 10,507,954 (1,666,470 )
of investments, net of income taxes
Net assets applicable to common stockholders $ 88,817,692 $ 84,296,585
Net Asset Value per common share outstanding
(net assets applicable to common stock, $ 9.74 $ 9.29
divided by common shares outstanding)
Tortoise Capital Resources Corporation
For the three For the three
Distributable months ended months ended For the nine For the nine
Cash Flow August 31, months ended months ended
2010 August 31, August 31, 2010 August 31, 2009
2009
Total from
Investments
Distributions
from $ 889,895 $ 1,635,662 $ 3,226,050 $ 6,179,444
investments
Distributions 21,746 - 42,718 -
paid in stock
Interest
income from 182,622 201,918 563,675 605,916
investments
Dividends from
money market 230 304 680 1,449
mutual funds
Other income 8,000 15,000 27,080 45,000
Total from 1,102,493 1,852,884 3,860,203 6,831,809
Investments
Operating
Expenses
Before
Leverage Costs
Advisory fees
(net of
expense 191,174 267,982 707,529 877,111
reimbursement
by Adviser)
Other
operating 168,115 266,601 558,860 720,196
expenses
Total
Operating
Expenses, 359,289 534,583 1,266,389 1,597,307
before
Leverage Costs
Distributable
cash flow 743,204 1,318,301 2,593,814 5,234,502
before
leverage costs
Leverage costs - 134,987 45,619 562,945
Distributable $ 743,204 $ 1,183,314 $ 2,548,195 $ 4,671,557
Cash Flow
Capital gain 292,500 - 585,000 -
proceeds
Cash Available
for $ 1,035,704 $ 1,183,314 $ 3,133,195 $ 4,671,557
Distribution
Distributions
paid on common $ 911,646 $ 1,173,679 $ 3,001,701 $ 4,405,226
stock
Payout
percentage for 88 % 99 % 96 % 94 %
period(1)
DCF/GAAP
Reconciliation
Distributable $ 743,204 $ 1,183,314 $ 2,548,195 $ 4,671,557
Cash Flow
Adjustments to
reconcile to
Net Investment
Income (Loss),
before Income
Taxes:
Distributions
paid in stock (21,746 ) - (42,718 ) 56,514
(2)
Return of
capital on
distributions (1,057,882 ) (1,075,398 ) (2,713,281 ) (5,792,784 )
received from
equity
investments
Non-recurring
professional (202,619 ) - (241,500 ) -
fees
Net Investment
Income (Loss), $ (539,043 ) $ 107,916 $ (449,304 ) $ (1,064,713 )
before Income
Taxes
(1)Distributions paid as a percentage of Cash Available for Distribution.
(2)Distributions paid in stock for the three and nine months ended August 31,
2010 were paid as part of normal operations and are included in DCF.
Distributions paid in stock for the nine months ended August 31, 2009 were paid
in stock as a result of credit
Tortoise Capital Resources Corporation
STATEMENTS OF OPERATIONS
(Unaudited)
For the three For the three For the nine For the nine
months ended months ended
August 31, months ended months ended
2010 August 31, 2009 August 31, 2010 August 31, 2009
Investment
Income
Distributions
from
investments
Control $ 485,379 $ 555,879 $ 1,519,638 $ 1,714,309
investments
Affiliated 250,000 856,891 1,331,891 2,522,267
investments
Non-affiliated 154,516 222,892 374,521 1,999,382
investments
Total
distributions 889,895 1,635,662 3,226,050 6,235,958
from
investments
Less return of
capital on (1,057,882 ) (1,075,398 ) (2,713,281 ) (5,792,784 )
distributions
Net
distributions (167,987 ) 560,264 512,769 443,174
from
investments
Interest
income from 182,622 201,918 563,675 605,916
control
investments
Dividends from
money market 230 304 680 1,449
mutual funds
Fee income 8,000 15,000 27,080 45,000
Total
Investment 22,865 777,486 1,104,204 1,095,539
Income
Operating
Expenses
Base
management 286,761 321,578 906,387 1,052,533
fees
Professional 290,606 176,947 529,461 451,056
fees
Directors' 17,543 22,080 76,975 65,817
fees
Reports to 16,053 15,409 47,930 45,890
stockholders
Administrator 13,382 15,007 42,298 49,118
fees
Fund
accounting 6,442 8,032 20,453 24,772
fees
Registration 6,297 7,891 19,148 23,501
fees
Stock transfer 3,403 3,556 9,995 10,140
agent fees
Franchise tax 2,798 - 10,328 -
expense
Custodian fees 1,457 5,315 5,787 13,075
and expenses
Other expenses 12,753 12,364 37,985 36,827
Total
Operating 657,495 588,179 1,706,747 1,772,729
Expenses
Interest - 134,987 45,619 562,945
expense
Total Expenses 657,495 723,166 1,752,366 2,335,674
Less expense
reimbursement (95,587 ) (53,596 ) (198,858 ) (175,422 )
by Adviser
Net Expenses 561,908 669,570 1,553,508 2,160,252
Net Investment
Income (Loss), (539,043 ) 107,916 (449,304 ) (1,064,713 )
before Income
Taxes
Deferred tax
benefit 202,195 (26,733 ) 168,534 (119,633 )
(expense)
Net Investment (336,848 ) 81,183 (280,770 ) (1,184,346 )
Income (Loss)
Realized and
Unrealized
Gain (Loss) on
Investments
Net realized
gain on - - 2,163,001 -
control
investments
Net realized
loss on - (165,427 ) (9,624,557 ) (338,572 )
affiliated
investments
Net realized
loss on (1,340,452 ) (10,591,042 ) (2,552,341 ) (18,252,872 )
non-affiliated
investments
Net realized
loss, before (1,340,452 ) (10,756,469 ) (10,013,897 ) (18,591,444 )
income taxes
Deferred tax
benefit 4,102,850 (1,468,249 ) 5,400,587 (2,088,966 )
(expense)
Net realized
gain (loss) on 2,762,398 (12,224,718 ) (4,613,310 ) (20,680,410 )
investments
Net unrealized
appreciation
(depreciation) (729,984 ) 1,130,655 39,638 4,288,137
of control
investments
Net unrealized
appreciation
(depreciation) 12,627,879 (311,350 ) 23,677,608 (5,215,233 )
of affiliated
investments
Net unrealized
appreciation
(depreciation) 1,092,409 9,907,190 (4,235,050 ) 15,102,387
of
non-affiliated
investments
Net unrealized
appreciation, 12,990,304 10,726,495 19,482,196 14,175,291
before income
taxes
Deferred tax
benefit (4,872,663 ) 1,319,533 (7,307,772 ) 1,592,760
(expense)
Net unrealized
appreciation 8,117,641 12,046,028 12,174,424 15,768,051
of investments
Net Realized
and Unrealized 10,880,039 (178,690 ) 7,561,114 (4,912,359 )
Gain (Loss) on
Investments
Net Increase
(Decrease) in
Net Assets
Applicable to
Common
Stockholders
Resulting from $ 10,543,191 $ (97,507 ) $ 7,280,344 $ (6,096,705 )
Operations
Net Increase
(Decrease) in
Net Assets
Applicable to
Common
Stockholders
Resulting from
Operations Per
Common Share:
Basic and $ 1.16 $ (0.01 ) $ 0.80 $ (0.68 )
Diluted
Weighted
Average Shares
of Common
Stock
Outstanding:
Basic and 9,116,456 9,014,094 9,098,005 8,997,031
Diluted
Source: Tortoise Capital Resources Corp.
Released October 7, 2010