Tortoise Capital Resources Corp. Releases Fiscal 2007 Results
OVERLAND PARK, Kan.--(BUSINESS WIRE)--
Tortoise Capital Resources Corp. (NYSE: TTO) today announced its financial results for the fiscal year ended Nov. 30, 2007, in its Annual Report on Form 10-K filed Feb. 27, 2008.
Highlights for the Year
-- Fourth quarter 2007 dividend of $0.23 per share paid Nov. 30,
2007 (First quarter 2008 dividend of $0.25 to be paid March 3,
2008)
-- Completed full investment of IPO proceeds and began to deploy
leverage proceeds
-- Funded $116 million in investments during the year ($100.7
million in ten new portfolio companies and $15.3 in follow-on
investments)
-- Net assets of $121.9 million or $13.76 per share
-- Adviser voluntarily agreed to expense reimbursement of 0.25%
of average monthly managed assets from Sept. 01, 2007 through
Dec. 31, 2008 and terminated a portion of the capital gains
incentive fee
-- Distributable cash flow for the year of $4.4 million
Portfolio and Investment Activity
As of Nov. 30, 2007, the value of the company's investment portfolio (excluding short-term investments) totaled $158.4 million including equity investments of $147.6 million and debt investments of $10.8 million. The portfolio represents a strategic mix of 67 percent midstream investments, 13 percent upstream investments, 14 percent in aggregates and coal and 6 percent downstream investments. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of Nov. 30, 2007 was 8.8 percent. The company continues to invest proceeds from its line of credit, which had approximately $9.5 million available at Nov. 30, 2007.
Tortoise Capital Resources closely monitors portfolio performance and rates each investment's risk profile on a scale of one to three. As of Nov. 30, 2007, all portfolio companies achieved a rating of one, meaning portfolio performance is at or above expectations with trends and risk factors that are generally favorable to neutral.
"We are proud of our performance for the quarter and the year, despite the continuing turmoil in the market," said Tortoise Capital Resources' President, Ed Russell. "Our portfolio companies are continuing to report what we believe are strong results which should provide our investors with a growing dividend consistent with our initial objectives. Since our initial public offering we have seen three of our private portfolio companies complete acquisitions and three of our private portfolio companies complete follow-on equity investments to fund acquisitions or organic growth projects."
Performance Review
The company views distributable cash flow (DCF) as the best indicator of its core financial performance and prospects for the future. The company determines the amount of dividends paid to stockholders based on DCF which is defined as distributions received from investments less total expenses. DCF increased from $1.3 million in the second and third quarters of 2007 to $1.7 million in the fourth quarter of 2007 as the company utilized its IPO proceeds and line of credit. DCF for the year ended Nov. 30, 2007 was approximately $4.4 million. In the fourth quarter, the Adviser agreed to reimburse the company expenses in an amount equal to 0.25% of the company's average monthly managed assets through Dec. 31, 2008. This voluntary expense reimbursement reduces expenses and thereby increases DCF.
Unrealized appreciation for the year was $6.2 million after deferred taxes and the provision for the capital gains incentive fee. In the fourth quarter, the Adviser terminated its right to receive the portion of the capital gains incentive fee attributable to normal distributions characterized as return of capital for book purposes, resulting in a $1.3 million reduction in the provision for capital gains incentive fees for the year ended Nov. 30, 2007.
"Tortoise Capital Resources' focus on equity securities distinguishes us from a typical mezzanine BDC, and we believe the equity investments facilitate our ability to provide our stockholders with a growing dividend and capital appreciation," said Russell. "We strive to make investments that have significant distribution coverage on our units and can weather the ups and downs of the economic cycle."
Recent Developments
On Dec. 17, 2007, the company fulfilled its commitment to purchase approximately $1.2 million in additional Class A Common Units from Lonestar Midstream Partners, LP and GP LP Units from LSMP GP LP.
On Jan. 10, 2008, the company invested an additional $2.0 million in equity of Mowood, LLC to fund landfill-to-gas energy projects with Mowood's subsidiary Timberline Energy LLC.
On Dec. 21, 2007, the company withdrew its registration statement for a public offering filed with the Securities and Exchange Commission on Aug. 14, 2007 due to current market conditions and the expected impact on the stock price.
Dividends
As previously announced, on Feb. 11, 2008, the Board of Directors declared the company's first quarter 2008 dividend of $0.25 per share compared to $0.23 in the previous quarter. The dividend will be distributed on March 3, 2008 to stockholders of record on Feb. 21, 2008. The dividend reflects distributions received from investments at the time of the announcement, and is not indicative of targeted annualized dividend. For tax purposes, 100 percent of dividends paid in fiscal year 2007 were characterized as return of capital, and the company expects a substantial amount of dividends paid in 2008 will also be characterized as return of capital.
"As demand for energy and the need for capital in this sector continues to rise, we believe we can deliver a high level of total return through a growing dividend with solid total return prospects," said Russell.
Earnings Call
The company will host a conference call at 10:30 a.m. CT on Thursday, Feb. 28, 2008 to discuss its financial results. Please dial-in approximately five to 10 minutes prior to the scheduled start time.
U.S./Canada: 800-257-2101
International: 303-262-2191
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 11:30 p.m. CT on Feb. 28, 2008 and continuing until 11:30 p.m. CT March 13, 2008, by dialing 303-590-3000 (U.S./Canada). The replay access code is 11109564#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through Feb. 27, 2009.
Annual Stockholders' Meeting
The company will discuss financial results at its annual stockholders' meeting on April 21, 2008 at 11 a.m. CT at the Doubletree Hotel, 10100 College Blvd, Overland Park, Kan.
For those unable to attend the meeting, a conference call will be provided. Please dial-in approximately five to 10 minutes prior to the scheduled start time:
U.S./Canada: 800-218-0713
International: 303-262-2139
The meeting will also be webcast in a listen-only format. The link to the webcast and supplemental information will be accessible at www.tortoiseadvisors.com.
A replay of the meeting will be available beginning at 1 p.m. CT on April 21, 2008 and continuing until 11:30 p.m. CT May 6, 2008, by dialing 800-405-2236 (U.S./Canada). The replay access code is 11107205#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through April 21, 2009.
About Tortoise Capital Resources Corp.
Tortoise Capital Resources invests primarily in privately held and micro-cap public companies operating in the midstream and downstream segments, and to a lesser extent the upstream segment, of the U.S. energy infrastructure sector. Tortoise Capital Resources seeks to provide stockholders a high level of total return, with an emphasis on dividends and dividend growth.
About Tortoise Capital Advisors, LLC
Tortoise Capital Advisors, LLC, the adviser to Tortoise Capital Resources Corp., is a pioneer in the capital markets for master limited partnership (MLP) investment companies and a leader in closed-end funds and separately managed accounts focused on MLPs in the energy infrastructure sector. As of Jan. 31, 2008, the adviser had approximately $2.9 billion of energy investment assets under management.
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.
Tortoise Capital Resources Corporation
----------------------------------------------------------------------
STATEMENTS OF ASSETS & LIABILITIES
November 30, November 30,
2007 2006
------------- -------------
Assets
Investments at value, non-affiliated
(cost $31,716,576 and $21,867,831,
respectively) $37,336,154 $22,196,689
Investments at value, affiliated (cost
$95,507,198 and $14,828,825,
respectively) 98,007,275 14,828,825
Investments at value, control (cost
$20,521,816 and $5,550,000,
respectively) 23,292,904 5,550,000
------------- -------------
Total investments (cost $147,745,590
and $42,246,656, respectively) 158,636,333 42,575,514
Income tax receivable 218,935 -
Receivable for Adviser reimbursement 94,181 -
Interest receivable from control
investments 68,686 43,983
Other receivable from affiliate - 44,487
Dividends receivable 1,419 24,262
Prepaid expenses and other assets 154,766 244,766
------------- -------------
Total assets 159,174,320 42,933,012
------------- -------------
Liabilities
Base management fees payable to Adviser 565,086 112,765
Accrued capital gain incentive fees
payable to Adviser (Note 4) 307,611 -
Payable for investments purchased 1,235,994 -
Accrued expenses and other liabilities 419,744 155,303
Short-term borrowings 30,550,000 -
Current tax liability - 86,386
Deferred tax liability 4,182,919 250,156
------------- -------------
Total liabilities 37,261,354 604,610
------------- -------------
Net assets applicable to common
stockholders $121,912,966 $42,328,402
============= =============
Net Assets Applicable to Common
Stockholders Consist of:
Warrants, no par value; 945,774 issued
and outstanding at November 30, 2007
and 772,124 issued and outstanding at
November 30, 2006 (5,000,000
authorized) $1,370,957 $1,104,137
Capital stock, $0.001 par value;
8,858,168 shares issued and outstanding
at November 30, 2007 and 3,088,596
issued and outstanding at November 30,
2006 (100,000,000 shares authorized) 8,858 3,089
Additional paid-in capital 115,186,412 41,018,413
Accumulated net investment loss, net of
deferred tax benefit (1,565,774) -
Accumulated realized gain (loss), net of
deferred tax expense (benefit) 160,474 (906)
Net unrealized appreciation of
investments, net of deferred tax
expense 6,752,039 203,669
------------- -------------
Net assets applicable to common
stockholders $121,912,966 $42,328,402
============= =============
Net Asset Value per common share
outstanding (net assets applicable to
common stock, divided by common shares
outstanding) $13.76 $13.70
============= =============
Distributable Cash Flow
Year ended
November 30, 2007
-----------------
Total Distributions Received from Investments
Distributions from investments $6,520,432
Distributions paid in stock 295,120
Interest income from investments 921,978
Dividends from money market mutual funds 624,385
-----------------
Total from Investments 8,361,915
Operating Expenses Before Leverage Costs and
Current Taxes
Advisory fees (net of expense reimbursement by
Adviser) 1,831,878
Other operating expenses (excluding capital gain
incentive fees) 1,094,677
-----------------
2,926,555
-----------------
Distributable cash flow before leverage costs and
current taxes 5,435,360
Leverage Costs (excluding loss on redemption of
preferred stock) 1,076,171
-----------------
Distributable Cash Flow $ 4,359,189
=================
DCF/GAAP Reconciliation
Adjustments to reconcile to Net Investment Loss,
before Income Taxes
Distributions paid in stock $(295,120)
Return of capital on distributions received from
equity investments (5,031,851)
Capital gain incentive fees (307,611)
Loss on redemption of preferred stock (731,713)
-----------------
Net Investment Loss, before Income Taxes $(2,007,106)
Tortoise Capital Resources Corporation
----------------------------------------------------------------------
STATEMENTS OF OPERATIONS
Period from
December 8, 2005
Year ended (1) through
November 30, 2007 November 30, 2006
----------------- -----------------
Investment Income
Distributions from investments
Non-affiliated investments $1,885,231 $4,122,244
Affiliated investments 4,245,481 100,000
Control investments 389,720 -
----------------- -----------------
Total distributions from
investments 6,520,432 4,222,244
Less return of capital on
distributions (5,031,851) (3,808,154)
----------------- -----------------
Net distributions from
investments 1,488,581 414,090
Fee income - 225,000
Dividends from money market
mutual funds 624,385 1,210,120
Interest income from affiliated
investments - 270,633
Interest income from control
investments 921,978 -
----------------- -----------------
Total Investment Income 3,034,944 2,119,843
----------------- -----------------
Operating Expenses
Base management fees 1,926,059 634,989
Capital gain incentive fees
(Note 4) 307,611 -
Professional fees 727,055 205,018
Directors' fees 84,609 69,550
Administrator fees 81,002 1,322
Reports to stockholders 53,610 15,810
Registration fees 40,660 -
Fund accounting fees 32,183 25,536
Stock transfer agent fees 13,600 17,329
Custodian fees and expenses 10,174 6,647
Other expenses 51,784 18,944
----------------- -----------------
Total Operating Expenses 3,328,347 995,145
----------------- -----------------
Interest expense 847,421 -
Preferred stock dividends 228,750 -
Loss on redemption of preferred
stock 731,713 -
----------------- -----------------
Total Interest Expense,
Preferred Stock Dividends
and Loss on Redemption of
Preferred Stock 1,807,884 -
----------------- -----------------
Total Expenses 5,136,231 995,145
Less expense reimbursement by
Adviser (94,181) -
----------------- -----------------
Net Expenses 5,042,050 995,145
----------------- -----------------
Net Investment Income (Loss),
before Income Taxes (2,007,106) 1,124,698
Current tax benefit (expense) 261,667 (266,455)
Deferred tax benefit (expense) 179,665 (124,967)
----------------- -----------------
Total tax benefit (expense) 441,332 (391,422)
----------------- -----------------
Net Investment Income (Loss) (1,565,774) 733,276
----------------- -----------------
Realized and Unrealized Gain
(Loss) on Investments
Net realized gain (loss) on
investments, before deferred
tax benefit (expense) 260,290 (1,462)
Current tax benefit - 556
Deferred tax expense (98,910) -
----------------- -----------------
Net realized gain (loss) on
investments 161,380 (906)
Net unrealized appreciation of
non-affiliated investments 5,528,064 328,858
Net unrealized appreciation of
affiliated investments 2,262,736 -
Net unrealized appreciation of
control investments 2,771,088 -
----------------- -----------------
Net unrealized appreciation,
before deferred taxes 10,561,888 328,858
Deferred tax expense (4,013,518) (125,189)
----------------- -----------------
Net unrealized
appreciation of
investments 6,548,370 203,669
----------------- -----------------
Net Realized and Unrealized Gain
(Loss) on Investments 6,709,750 202,763
----------------- -----------------
Net Increase in Net Assets
Applicable to Common
Stockholders Resulting from
Operations $5,143,976 $936,039
================= =================
Net Increase in Net Assets
Applicable to Common
Stockholders:
Resulting from Operations Per
Common Share
Basic and diluted $0.66 $0.30
Weighted Average Shares of Common
Stock Outstanding:
Basic and diluted 7,751,591 3,088,596
(1) Commencement of Operations.
Source: Tortoise Capital Resources Corp.
Released February 27, 2008