A new weekly look at some small-cap stocks making news - or about to.
Canada’s S&P/TSX SmallCap Index is up about 20 per cent over the past 12 months. The Russell 2000 in the U.S. was up about 14 per cent over the same period.
Small-cap spotlight
Here’s one small cap in Canada that investors may want to put on their radar screen.
Corus Entertainment Inc. (CJR-B-T), the company behind Global News and dozens of television and radio stations across Canada, reported a 12-per-cent drop in revenue for its first quarter ended Nov. 30 compared to the year before. The company also this morning reported a big drop in net income, and management warned of more cost-cutting measures ahead.
Toronto-based Corus said its revenue came in at $327.2-million for the quarter compared to revenue of $369.9-million for the same quarter last year. Analysts were expecting revenue of about $329.7-million, according to Refinitive Eikon data.
Net income attributable to shareholders came in at $11.9-million, down 64 per cent from net income of $32.7-million a year ago. Earnings per share came in at 6 cents versus 16 cents last year.
Adjusted net income was $28.4-million or 14 cents per share compared to adjusted net income of $41.2-million or 20 cents per share a year ago. The expectation was for earnings of 10 cents per share.
Free cash flow was reported as negative $10.1-million for the quarter.
In its outlook, Corus said it continues to feel pressure from the competition and lower demand for advertising. It expects year-over-year declines in television advertising revenue in the second quarter to be similar to the first quarter of fiscal 2025.
“The company will continue with its implementation of additional cost reduction initiatives and expects general and administrative expenses to decline in the range of 5 to 10 per cent for the second quarter compared to the prior year,” it stated in a Jan. 10 press release.
John Gossling, co-chief executive officer and chief financial officer, said the company is “encouraged by the emerging strength of our product and audiences but given industry and economic conditions, our commitment to pursue further cost reductions remains an integral part of our more comprehensive plan to right-size our business, increase our focus on high-margin assets with growth potential and take necessary steps to strengthen our balance sheet.”
Corus shares have fallen by nearly 90 per cent over the past year amid investor concerns about the company’s ability to remain solvent. It has more than $1-billion in debt due for repayment between now and 2030. Since early September, Corus has received two extensions from its bank group – which is led by Royal Bank of Canada and Toronto-Dominion Bank – to avoid default.
The company also cut more than 800 jobs in 2024, or about 25 per cent of its workforce, mostly from Global News at television stations it owns across the country. In July, Corus warned that its debt issues “may cast significant doubt about the company’s ability to continue as a going concern.”
In a Jan. 9 note, RBC Dominion Securities analyst Drew McReynolds wrote that the “Corus’ back is against the wall with channel rebranding, cost reductions, balance sheet/liquidity management and regulatory relief remaining four key priorities,” he said, adding that “until more progress is demonstrated on each of these fronts including instituting a more sustainable capital structure, we expect equity value to be under considerable pressure and in flux with the risk profile of the stock notably elevated.”
He expected the company to embark on a broader restructuring “that effectively right-sizes the balance sheet with likely multiple options being considered.”
- with files from James Berkow and David Leeder
Upcoming
Richelieu Hardware Ltd. (RCH-T) will release its fourth-quarter and year-end results on Jan. 16; Goodfood Market Corp. (FOOD-T) will report its first-quarter results on Jan. 21; Guru Organic Energy Corp. (GURU-T) will report its fourth-quarter and year-end results on Jan. 23; Lightspeed Commerce Inc. (LSPD-T) will report its third-quarter results on Feb. 6; Russel Metals Inc. (RUS-T) will report its fourth-quarter and year-end results on Feb. 12; Sienna Senior Living Inc. (SIA-T) will report its fourth-quarter and year-end results on Feb. 19; Pason Systems Inc. (PSI-T) will release its fourth-quarter and year-end results on Feb. 27; Aecon Group Inc. (ARE-T) will release its fourth-quarter and year-end results on March 5; Nexus Industrial REIT NXR-UN-T will release its fourth quarter and year-end results on March 10.
Small-cap summary
Other small caps making news this week:
Tilray Brands Inc. (TLRY-Q, TLRY-T) reported that its revenue increased 9 per cent to US$211-million in the second quarter ended Nov. 30 compared to US$193.8-million in the prior year’s quarter. The expectation was for revenue to come in at US$216.3-million in the latest quarter, according to S&P Capital IQ.
Tilray said its net loss was $85.3-million or 10 cents US per share compared to a loss of US$46.2-million or 7 cents US in the year-ago quarter. Its adjusted net loss was US$2.2-million compared to an adjusted net loss of US$2.7-million a year ago.
The company also said that, as part of its “Project 420″ plan to find US$25-million in cost synergies, it plans to cut some of its roughly two dozen beverage brands (including craft beer, spirits and non-alcoholic options) to “eliminate duplicative and slower growth products, which had the immediate effect of reducing revenue.” The company said it achieved US$17-million of its US$25-million cost-cutting plan as of Nov. 30.
Earlier this week, it said its German subsidiary, Tilray Deutschland GmbH, has secured a tender to supply Luxembourg with its cannabis flower. “The granting of this tender by the Ministry of Health and Social Security for the Grand Duchy of Luxembourg highlights the trust placed in Tilray Medical to deliver high-quality medical cannabis consistently across the global medical cannabis industry,” the company stated, adding that it reinforces the company’s commitment of delivering on Europe’s growing demand for premium medical cannabis products.
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Maple Leaf Foods Inc. MFI-T announced a 9-per-cent increase to its quarterly cash dividend to 24 cents from 22 cents, or 96 cents per share annually. The company said it’s the 10th consecutive year it has increased its quarterly dividend.
The company also announced its 2025 operating plan, including forecasted revenue growth in the mid-single digits and “significant year-over-year adjusted EBITDA improvements,” which it said will be driven by capital investments, brand and revenue management, recent restructuring and supply chain cost-saving initiatives and a return of “normalized” market conditions.
“This year will be a significant year of strategic transformation and financial progress for Maple Leaf Foods,” stated CEO Curtis Frank in a release.
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Profound Medical Corp. (PROF-Q, PRN-T), a commercial-stage medical device company, announced that it anticipates fourth-quarter revenue to be in the approximate range of US$4.1-million to US$4.2-million. It said the growth is up by between 105 and 110 per cent compared with the same quarter a year earlier and up by between 45 and 48 per cent compared to the third quarter. Analysts were expecting revenue of US$4.27-million, according to Refinitiv Eikon data.
The company said full-year 2024 revenue is expected to be approximately US$11.1-million to US$11.2 million, compared with approximately US$7.2 million in the prior year period. The expectation is for full-year revenue of US$11.2-million, according to Refinitiv Eikon. The company said the figures are preliminary and unaudited and that actual revenues may differ.
Profound Medical said it released the information in advance of official reporting due to planned investment community meetings and investor events coming up. The company has not yet posted on its investor website when fourth-quarter results will be released. The company also said it’s changing its financial reporting from IFRS to U.S. GAAP starting Jan. 1, 2025.
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Currency Exchange International Corp. (CXI-T), which provides currency exchange, wire transfer, and cheque cashing services, said a special committee of independent directors is “actively considering a range of strategic options” for its wholly-owned subsidiary, Exchange Bank of Canada, which provides foreign exchange and international payment services.
“The strategic review aims to explore opportunities to maximize long-term value for shareholders and focus the company’s resources towards its profitable U.S. operations,” the company stated. It said the review is expected to “enhance performance and improve the return on CXI’s capital.”
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Quarterhill Inc. (QTRH-T) said its chief financial officer, Kyle Chriest, is leaving the company at the end of January to pursue another employment opportunity. The company said it’s searching for a new CFO, and Morgan Demkey, vice-president of operations, has been given the role in the interim.
The company stated that Mr. Chriest’s departure “is not due to any disagreement with the company or the board regarding its operating performance, financial results, accounting principles, practices or financial statement disclosures.”
Also this week, the company said it had been awarded a contract valued at US$40-million to upgrade the Alameda County Transportation Commission I-580 Express Lanes.
Quarterhill operates in the intelligent transportation systems and innovation and licensing industries.
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Big Rock Brewery Inc. (BR-T) announced a “transformative recapitalization transaction” and debt settlement alongside a private placement. The Calgary-based beer company said the debt settlement agreement is with VN Capital, its largest shareholder, which owns a nearly 29-per-cent stake.
Big Rock said the private placement of common shares will be for $1 each, for gross proceeds of a minimum of $6.3-million and maximum of $8-million.
The company said the debt settlement and private placement will provide it with “immediate balance sheet improvement and put Big Rock in a position to be able to work to create a profitable, sustainable and growing company, for the benefit of shareholders, employees and all other stakeholders.”
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Happy Belly Food Group Inc. (HBFG-CN) announced it’s buying Smile Tiger Coffee Roasters Inc., its first acquisition in the coffee sector, for $250,000.
Happy Belly said it would issue common shares equal to $125,000 (based on a 10-day volume average weighted price) at closing together with $125,000 in cash for 100 per cent ownership of Smile Tiger Coffee Roasters. It said the purchase price represents 3.3 times EBITDA based on 2024 sales of more than $1-million. Happy Belly said the closing of the agreement is expected to take place within the next 30 days.
“This cash-flow-positive acquisition offers strong cross-selling potential, with plans to expand Smile Tiger products across Happy Belly’s growing retail footprint, which currently includes 35 locations and is expected to reach 80 by year-end,” Ventum Capital Markets analyst Devin Schilling said in a note. He has a “buy” and $2 price target on the stock.