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.
-- 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
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).
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.
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.
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