A roundup of some of the North American equities making moves in both directions today
On the rise
Air Canada (AC-T) gained after announcing it lost $1.05-billion in the first three months of this year and is burning $14-million of cash each day, results that have newly-named chief executive Michael Rousseau pushing the federal government to ease pandemic-related travel restrictions.
Revenues at the country’s largest airline were down by 80 per cent in the first quarter of 2021, at $729-million, compared to the same period a year earlier, when the COVID-19 pandemic began to curtail travel. Montreal-based Air Canada said on Friday that its operating loss more than doubled, year over year. The airline spent $1.3-billion of cash in the quarter, and said it now has $6.6-billion of liquidity.
“The persistence of COVID-19 and its resurgence in Canada are weighing heavily on the Canadian airline industry, as reflected in Air Canada’s first quarter results,” said Mr. Rousseau, who was named CEO in February following the retirement of predecessor Calin Rovinescu. Mr. Rousseau was previously the airline’s chief financial officer and deputy CEO.
Air Canada struck a $5.9-billion support package with the federal government in April that included low interest rate loans to fund ticket refunds. Rival Transat AT Inc. (TRZ-T) received $700-million in government financing last month, and other Canadian airlines continue to negotiate for financial support.
- Andrew Willis
Telus Corp. (T-T) was higher after it boosted its first-quarter revenue by nearly 9 per cent to $4.02-billion as it added new mobile phone, internet and television customers.
The increased revenue was above the consensus analyst estimate of $3.94-billion and up from $3.69-billion during the same period last year.
Telus’s profit for the three-month period ended March 31 declined 5.7 per cent to $333-million, compared to $353-million a year ago.
The Vancouver-based telecom attributed the lower profit to increased depreciation and amortization, the lingering impacts of the pandemic, lower legacy voice and data services and higher employee benefits expenses.
The earnings amounted to 25 cents per share, down from 28 cents per share during the same quarter last year.
After adjusting for restructuring and other costs, Telus had 27 cents per share of earnings, compared to 32 cents a year ago. That fell slightly below analyst expectations of 28 cents of adjusted earnings per share, according to market researcher S&P Capital IQ.
- Alexandra Posadzki
See also: Telus International revenue climbs 57% in first quarter as public company
Waterloo, Ont.-based OpenText Corp. (OTEX-T) jumped after a slew of new customers and products delivered a 252-per-cent increase in net income in its latest quarter.
The company says its earnings amounted to 33 cents per share on a diluted basis, up from 10 cents per share in the third quarter of last year.
The company says its earnings amounted to 33 US cents per share on a diluted basis, up from 10 US cents per share in the third quarter of last year.
Analysts on average had expected a profit of 29 US cents per share for the period ended March 31, according to Refinitiv.
OpenText says its revenue for the quarter totalled US$833-million, up from US$815-million at the same time last year.
In a research note, Scotia Capital analyst Paul Steep said: “. In our view, Open Text slightly exceeded our expectations given stronger-than-expected performance in Maintenance & Support, partly offset by lowerthan-anticipated Cloud revenue. The firm delivered adjusted EBITDA and EPS ahead of our forecasts given higher-than-anticipated Maintenance and Cloud margins.
“Overall, we see the stock as an attractive option in the Canadian technology landscape given its reasonable valuation and potential upside from its proven acquisition model. Open Text’s expansion of the EIM market to include broader items such as analytics, security, and managed services has significantly expanded the potential universe of acquisitions given the company’s horizontal focus across information in the enterprise. We remain positive on the stock given its (1) strong cash generation, (2) growth potential from M&A + organic initiatives, and (3) reasonable valuation against peers”
Pipeline operator TC Energy Corp. (TRP-T) saw gains after it posted a loss of $1-billion in the first quarter, hit by $2.2-billion impairment charges related to the suspension of its Keystone XL pipeline project.
The Calgary-based company reported net loss attributable to shareholders of $1.1-billion, or $1.11 per share, in the three months ended March 31, compared with a profit of $1.1-billion, or $1.20 per share, in the fourth quarter.
Excluding items, TC Energy earned $1.16 per share.
Martinrea International Inc. (MRE-T) was up after it rebounded from a tough end to 2020 with net income surging 34.5 per cent in the first quarter on higher revenues.
The auto parts manufacturer says it earned $38.7-million or 48 cents per share, compared with $29-million or 36 cents per share a year earlier.
The adjusted profit was $32.6-million or 41 cents per share, up from $30.1-million or 38 cents per share in the first quarter of 2020.
Revenues for the three months ended March 31 increased 14.3 per cent to $997.2-million from $872.7-million in the prior year.
Martinrea was expected to report an adjusted profit of 39 cents per share on $953.7-million of revenues, according to financial markets data firm Refinitiv.
Chief executive Pat D’Eramo says the company is managing through a substantial amount of new business launches as well as the semiconductor shortage that will continue to impact results in the near term.
In a research note, Raymond James analyst Michael Glen said: “Martinrea remains a deep-value stock, in our view, and we continue to see some constructive developments within the business. In that regard, although near-term results are being tempered by ongoing launch and investment activity, management has now offered explicit 2023 guidance which calls for sales of $4.6-4.8-billion, an operating margin of 8 per cent, and free-cash flow of $200-million. These are clearly aggressive targets for the business, and we can say quite clearly that once investors are able to gain increased visibility on such an outcome (say by mid 2022), we believe the stock will be valued much higher than it is currently. In the interim however, the business is working through a number of launches, ongoing integration work with respect to the Metals a acquisition, and supply chain disruptions related to chip shortages. On the chip shortage in particular, there continues to be conflicting accounts as to how it will impact production volume through the balance of the year, and we anticipate it will become a much larger investor focal point in coming months for the industry as a whole. Martinrea was fairly clear that there will be disruption to take place in 2Q (similar in scale to 1Q), specifically highlighting the impacts being felt on the Ford Escape and Chevrolet Equinox programs.”
West Fraser Timber Co. Ltd. (WFG-T) reversed course after reporting higher first-quarter sales and earnings on higher prices and production of lumber and building panels after completing its $4-billion all-stock takeover of Norbord Inc. on Feb. 1.
The Vancouver-based company says earnings increased to US$665-million on US$2.3-billion in sales in the first three months of 2021, up from earnings of US$9-million on sales of US$890-million in the same period of 2020.
Earnings were also up from US$282-million on sales of US$1.29-billion in the fourth quarter of 2020.
West Fraser says its lumber segment generated adjusted earnings before interest, taxes, depreciation and amortization of US$646-million, up from $53 million in the year-earlier period, as higher commodity prices were partly offset by lower shipment volumes due to seasonal railcar shortages in Canada and extreme winter conditions in the U.S. South.
Its engineered wood products segment, formed after the Norbord takeover, had adjusted EBITDA of US$353-million, compared with US$6-million from its panels division in the first quarter of 2020, thanks to the addition of Norbord oriented strand board panel volumes and higher prices and demand for plywood.
The company says the outlook for its building and panel products is robust and it plans to maximize capacity utilization this year given ongoing high demand from residential home construction, repair and remodelling.
Dorel Industries Inc. (DII.B-T) saw gains after it reported a first-quarter profit of US$2.7-million as its revenue rose more than 20 per cent compared with a year ago.
The Montreal-based company says the profit amounted to eight cents per diluted share for the quarter ended March 31 compared with a loss of US$57.8-million or US$1.78 per diluted share a year ago.
Revenue totalled US$708.9-million, up from US$580.8-million.
Dorel says revenue in its sports division, which includes its bicycle business, was US$270.3-million, up from US$188.2-million a year ago.
Home products revenue was US$228.7-million, up from US$197.4-million, while its juvenile division revenue was US$209.9-million, up from US$195.2 million.
On an adjusted basis, Dorel says it earned 37 US cents per diluted share in its most recent quarter, up from a loss of 42 US cents per diluted share a year ago
Algonquin Power & Utilities Corp. (AQN-T) jumped after released first-quarter results late Thursday that largely fell in line with the Street’s expectations.
The Oakville, Ont.-based company reported adjusted earnings per share of 20 US cents, up 5 per cent year-over-year and a penny below the consensus forecast. It announced a US$53.4-million impact from the storms in Texas.
Raymond James analyst David Quezada said: “We continue to regard Algonquin as sporting the most attractive growth profile among the utilities we cover with forecasted rate base growth of 11 per cent, EPS growth of 8-10 per cent and an abundance of opportunities for upside. Further, with the stock having declined 11 per cent from Feb-21 highs (vs. the TSX up 5 per cent) we believe shares of AQN have moved into an attractive range.”
On the decline
Enbridge Inc. (ENB-T) was lower in the wake of reporting a better-than-expected quarterly profit on Friday, driven by strong demand for oil and natural gas that its pipelines transport throughout North America.
Global crude prices have rebounded in recent months after a pandemic-driven slump last year as widespread vaccinations in the United States have helped ease restrictions and boost fuel consumption.
Canada’s largest pipeline operator said it transported 2.75 million barrels per day (bpd) of crude oil on its key mainline system across Canada and the United States during the reported quarter, up from 2.65 million bpd in the previous quarter.
Enbridge’s biggest business, liquids pipeline, earned a core profit of $1.88-billion, on an adjusted basis, up from $1.79-billion in the previous three-month period.
The company also said it was seeing renewed interest in both crude and liquefied natural gas exports off the U.S. Gulf Coast as global economic activity ramps back up.
Enbridge, which moves about 20 per cent of the natural gas consumed in the United States, added North American crude demand had not fully recovered to pre-pandemic levels.
The Calgary-based company’s adjusted earnings rose to $1.63-billion, or 81 cents per share, in the first quarter ended March 31, from $1.13-billion, or 56 cents per share, in the fourth quarter.
Analysts had expected a profit 71 cents per share, according to IBES data from Refinitiv.
Cenovus Energy Inc. (CVE-T) declined after it swung to a first-quarter profit swung to a first-quarter profit from the previous three-month period, and said it was actively looking to sell non-core assets to repay debt.
The Calgary-based company posted net earnings of $220-million, or 10 cents per share, in the quarter ended March 31, from a net loss of $153-million, or 12 cents per share, in the fourth quarter.
Cenovus, which acquired Husky Energy earlier this year for about $5-billion, is focused on repaying net debt this year to a target of $10-billion, from slightly less than $13-billion currently, Chief Executive Alex Pourbaix said.
“Living through the past year has really taught us the advantages and benefits of running with an under-levered balance sheet,” he said on a conference call.
Selling non-core assets will accelerate that process, Mr. Pourbaix said, adding that the company has taken advanced actions toward sales.
He declined to specify which ones are available, but said Cenovus was focusing on divesting some oil and gas production assets.
Mr. Pourbaix has previously said that he canceled Husky’s pending sale of retail fuel stations to see if a better price was available.
Cenovus said its total production rose 64.7% to 769,254 barrels of oil equivalent per day in the quarter.
The company reported downstream throughput of 469,100 barrels per day (bpd), compared with crude runs of 372,000 bpd in the fourth quarter.
See also: ConocoPhillips to sell Cenovus stake
Recipe Unlimited Corp. (RECP-T) slid in the wake of seeing system sales plunge 28 per cent in its most recent quarter as the pandemic continued to be a drag on the restaurant chain amid dining room closures and seating restrictions across Canada.
The Vaughan, Ont.-based company, which operates brands like Swiss Chalet, Harvey’s, St-Hubert and The Keg, says system sales in the first quarter totalled $537.6-million, down from $747.2-million in the same quarter the previous year and $850.7-million in 2019, before the COVID-19 pandemic.
E-commerce sales for the 13 weeks ended March 28 increased 75 per cent from a year earlier to $149.8-million while retail and catering sales were up 15.4 per cent to $87.6 million.
Net earnings in the quarter were $13-million or 22 cents per share, compared with a loss of $41.2-million or 73 cents per share in the prior year.
It attributed the increase to higher operating profits, an increase in the fair value of Exchangeable Keg Partnership units of $43.9-million, lower depreciation and amortization and a decrease in impairment charges of $16.3-million.
Adjusted profits decreased to $3.2-million or six cents per share, from $7.3 million or 13 cents per share in the first quarter of 2020 and $18.3-million or 29 cents per share in the same period in 2019.
The company expects after the pandemic that there will be fewer restaurant seats in the market from competitors that won’t reopen and from changes in consumer behaviour. Recipe also says it will close underperforming locations identified in 2019 earlier than originally planned.
Pembina Pipeline Corp. (PPL-T) dropped after its first-quarter results, released late Thursday, fell narrowly lower than the Street’s expectations.
The Calgary-based company reported Adjusted EBITDA of $835-million and earnings per share of 51 cents, missing the consensus forecasts of $850-million and 57 cents.
“PPL continues to demonstrate the strength of its underpinning contracts and further benefits from new infrastructure assets placed into service; however, despite recovering commodity prices, volumes remain pressured and the marketing segment was limited by previously layered risk management positions,” ATB Capital Markets analyst Nate Heywood said. “The Company maintains a fully funded 2021 capital program of $735mm, which we expect to largely be focussed on the Phase VII Peace Expansion project. PPL reiterated its 2021 Adjusted EBITDA guidance range of $3.2-$3.4-biillion (ATB estimate: $3.37-billion) which should be supported by new projects and recovering upstream volumes.”
See also: Friday’s analyst upgrades and downgrades
Centerra Gold Inc. (CG-T) plummeted after Kyrgyzstan’s parliament has passed a law allowing the state to temporarily take over the country’s biggest industrial enterprise, the Kumtor gold mine operated by the Canadian company, a business lobby group said on Friday.
The bill, passed in three readings late on Thursday, allows the government to take over the management of Kumtor for up to three months in case its activity poses danger to human lives or the environment.
Kumtor accounts for a fifth of the Central Asian nation’s total industrial output.
Centerra said in a statement it was committed to continuing to work with Kyrgyz authorities to resolve any outstanding issues in accordance with existing agreements.
It also said the Kumtor mine’s environmental performance adheres to international standards and it “believes strongly” Kyrgyz claims against it are without merit.
It said, however, no assurances could be given that any of the current or future legal claims could be resolved “without a material impact on the company”.
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Victoria-based Aurinia Pharmaceuticals Inc. (AUP-T) dropped after its quarterly results fell short of expectations and initial sales from its lupus nephritis medication Lupkynis, which was approved in late January, disappointed.
Bloom Burton analyst David Martin said: “$2.1-million is a sizable shortfall, however, Aurinia is too early in the launch of Lupkynis to draw conclusions regarding peak sales (we continue to forecast $1.1-billion by 2025 based on 20-per-cent penetration). Also, COVID-19 is a confounding factor for the launch, and AURORA 2-year extension results, which we expect will further differentiate Lupkynis, are expected within 12 months.”
With files from staff and wires