Air Canada’s 1.3-per-cent gain this year trails Canada’s benchmark stock index, signalling the big runup may be over after a quintupling in the company’s shares since chief executive officer Calin Rovinescu announced a cost-cutting strategy in June, 2013.The Globe and Mail
Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.
Air Canada (AC-T) said its costs would fall this year if the Canadian dollar remained unchanged from 2015 levels, and announced plans to buy up to 75 CS300 aircraft from Bombardier Inc as part of a plan to renew its fleet.
A falling Canadian dollar has been weighing on Air Canada because the company makes major purchases such as fuel and planes in dollars.
Canada's biggest airline said it expects adjusted cost per average seat mile, which excludes fuel expenses, to fall 2-3 percent this year, "if the value of the Canadian dollar were at 2015 levels".
Lower fuel costs helped Air Canada boost its operating margins by 1.5 percentage points in the fourth quarter.
Air Canada also said on Wednesday it would purchase 45 of the CS300 aircraft, with an option to buy an additional 30 planes. Deliveries are scheduled to begin in 2019.
The order would be valued at as much as $3.8 billion based on the list price of the aircraft, Bombardier said.
Air Canada's net loss widened to $116 million ($84 million), or 41 Canadian per share, in the quarter ended Dec. 31, from $100 million, or 35 Canadian cents per share, a year earlier.
On an adjusted basis, the company earned 40 Canadian cents per share, matching the average analyst estimate, according to Thomson Reuters I/B/E/S.
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Canadian aircraft and train maker Bombardier Inc (BBD.B-T) said it would slash its work force by about 7,000 over the next two years, while ramping up hiring to support production of its struggling C Series commercial jet program.
The Montreal-based company said on Wednesday it had signed a letter of intent with Air Canada for up to 75 CS300 aircraft for as much as $3.8-billion, based on the list price.
The company has been struggling to find buyers for the 100-150 seat C Series jet, in to which it has sunk billions of dollars, due to fierce competition from Boeing Co and Airbus Group SE.
Bombardier's quarterly results missed analysts' expectations, and it also forecast lower-than-expected revenue for 2016. The company expects to record $250-million-$300-million in restructuring charges in 2016 in connection with the layoffs. The company said it has about 64,000 employees. The job cuts, mainly affecting the company's aerostructures and engineering services and transportation divisions, will be mostly in Canada and Europe, and are set to start in the coming weeks.
The aircraft maker also proposed a reverse stock split on Wednesday, the ratio of which will be decided later, but is targeted to result in an initial post-consolidation share price of $10-$20 per class A share or class B subordinate voting share, the company said.
Bombardier's net loss narrowed to 31 cents per share in the fourth quarter ended Dec. 31 from 92 cents per share a year earlier. The company broke even on an adjusted basis, below analysts' average estimate of a profit of 2 cents per share.
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Torc Oil & Gas Ltd. (TOG-T) is cutting its dividend by 55 per cent, citing "continued volatility and uncertainty in commodity prices."
The energy company said the monthly dividend will drop to 2 cents per share or 24 cents annually, down from 4.5 cents per share or 54 cents annually.
"The reduction of the dividend results in a decrease in Torc's funding requirements of $48 million on an annualized basis, $30 million net of Torc's Share Dividend Program," the company said.
Torc also said it plans to spend about $25 million of its capital budget in the first half of 2016 and the remaining $65 million in the second half, with a focus on southeast Saskatchewan.
"With the capital program more than 70 per cent second half weighted and the continued strong performance of the company's underlying asset base, the company remains positioned to achieve the previously announced 2016 average and exit production guidance of approximately 18,200 boepd (barrels of oil equivalent per day) while maintaining a corporate decline profile of approximately 23 per cent," it said in a statement late Tuesday.
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Newalta Corp. (NAL-T) announced more cost-cutting measures "to withstand a lower for longer oil price environment," including the suspension of its quarterly dividend, reducing capital spending and cutting jobs.
"Newalta remains focused on preserving its financial health in this low commodity price environment and, while recognizing the importance of its dividend to shareholders, maintaining its balance sheet in this environment takes precedence," the company said, adding that it will save $14 million in annual cash flow by cutting the payout.
The capital budget is being cut by at least half to $15 million, down from previous guidance of $30 to $40 million.
The company also said it will save $12 million annually by "eliminating positions" across its operations and consolidating excess office space.
Combined with actions taken in 2015, Newalta said it has reduced its cost base by more than $50 million.
"We are taking the necessary steps during this period of low oil prices to emerge with a stronger financial position when prices and activity recover," stated CEO John Barkhouse. "All of these initiatives are designed to protect our balance sheet by allowing us to better manage our debt position. Combined, the actions announced today will positively impact cash flow by approximately $40 million in 2016."
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Uni-Select Inc. (UNS-T) said its FinishMaster Inc. division has completed a deal to buy Johnson Michigan Automotive & Industrial Coatings for an undisclosed price.
"This acquisition strengthens FinishMaster's footprint in eastern and central Michigan and expands operations in the industrial segment in this market," the company stated.
"This transaction broadens our coverage in the key Michigan market and reinforces our commitment to provide the ultimate experience to all of our partners and customers," stated Uni-Select CEO Henry Buckley.
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Russel Metals Inc. (RUS-T) reported a net loss of $88-million or $1.42 per share on revenues of $3.1 billion, for the year ended Dec. 31, 2015.
It said the loss includes a non-cash impairment charge of $124 million or $1.87 per share. Adjusted net income was $61 million or 99 cents per share, the company said.
The results compare to revenues of $3.9-billion and net earnings of $124-million or $2.01 per share for fiscal 2014. Adjusted net earnings for 2014 were $145-million or $2.36.
The 2015 fourth quarter loss was $135-million or $2.19 per share on revenues of $0.7-billion, the company said.
"The weakness in the energy sector and the decline in steel prices that we experienced in the fourth quarter resulted in after tax inventory write-downs of $32 million and asset impairment and other charges of $115 million," the company said. Adjusted fourth-quarter net earnings were $10 million and adjusted earnings per share was 16 cents.
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Summit Industrial Income REIT (SMU.UN-T) says its operating revenues increased to $9.7-million in the fourth quarter, up from $7.5-million a year earlier.
Net operating income climbed to $6.7-million in the quarter ended Dec. 31, compared to $5.5-million a year earlier.
Funds from operations came in at $4.3-million or 15 cents per unit, up from $3.3-million or 13.9 cents per unit a year earlier.
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Héroux-Devtek Inc. (HRX-T) says is has agreement with South Korea's Hanwha Corp. to jointly develop landing gear for the KF-X fighter aircraft.
The Quebec-based company said engineering, testing and qualification will be done at its engineering facilities located in Runcorn, UK and St-Hubert, Québec.
"Engineering work is expected to begin shortly and should be carried out over several years," the company stated.
Héroux-Devtek said the South Korean government has contracted Korea Aerospace Industry to develop the KF-X, while it and Hanwha have been selected to develop the aircraft's landing gear system. Mass production should start in 2023 and the first production aircraft should be delivered in 2026 with 120 fighters expected to be produced by 2032, the company said.
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Morguard North American Residential REIT (MRG.UN-T) reported a 15-per-cent increase in adjusted net operating income to $103.7-million for the year ended Dec. 31
The REIT also said basic funds from operations of $51.1-million was an increase of 14.3 per cent compared to 2014.
Average monthly rent increased by 4.3 per cent year-over-year, while occupancy fell slightly to 94.8 per cent from 96 per cent.
With files from Reuters