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Inside the Market's roundup of some of the Canadian small caps making news and on the move today. This post will be updated through the morning.
Yellow Media Ltd. reported earnings that were slightly less than the Street was expecting, but shares surged today amid signs the company is making further progress in becoming a profitable digital publisher.
The company recorded net earnings of $26.5-million and basic earnings per share of 98 cents, slightly below the $30-million and of 99 cents, respectively, that the Street was expecting. These results were also below net earnings of $41.8-million and earnings per share of $1.51 for the same period last year.
But Julien Billot, Yellow Media's president and chief executive, said the company is making progress on its plan for a return to growth.
"We have hit key milestones during the third quarter of 2014, as digital revenues now represent over 50 per cent of consolidated revenues," Mr. Billot said in a statement. "In addition, we have achieved our 2014 target for customer acquisition, continue to experience steady growth in traffic across our core digital properties, and remain active in optimizing our balance sheet through material debt repayment."
Aravinda Galappatthige, analyst with Canaccord Genuity, called the results "encouraging."
"While the headline numbers were in line, we were very encouraged by the operational metrics," The Canadian Press quoted the analyst as saying in a note. Mr. Galappatthige said the 26 per cent decline in pre-tax operating income (EBITDA) to $75.3 million was anticipated due to heavy investments in brand advertising, IT and sales.
"We believe that these investments are close to a peak and the fourth quarter may well represent the bottom, in terms of margins."
Shares closed up 13 per cent at $18.10.
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Exchange Income Corp. said it agreed to acquire Provincial Aerospace Ltd., a diversified Canadian-based aerospace and aviation company, for a combination of cash and stock totalling $246-million.
The acquisition is expected to be fully funded through Exchange Income's undrawn credit facility and by issuing about $12-million in common shares. According to management, the purchase price represents a multiple of approximately 5.3x historical EBITDA. The acquisition is expected to be immediately and significantly accretive to earnings and free cash flow and is also expected to materially reduce the company's current payout ratio.
AltaCorp Capital Research analyst Chris Murray commented, "The company's return to a more balanced set of income streams and the ability to redeploy capital to more accretive pursuits is supportive of a return to its more historical earnings and risk profile. We continue to expect a sustainable dividend, currently yielding 8.8 per cent. We maintain our Outperform rating and a 12-month target of $25."
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Tahoe Resources Inc. said its production and cost guidance for the year remains unchanged and also announced it will start paying a monthly dividend. The silver producer will pay a dividend of 2 cents a share starting in December. "This dividend complements our 'New Leader in Silver' identity, and is an important part of our commitment to delivering shareholder value," the company said.
Tahoe's adjusted EPS, however, came in at 14 cents (U.S.), which was below the consensus call of 25 cents.
BMO Nesbitt Burns analyst Andrew Kaip commented, "At first glance, the earnings miss ... appears to be attributed to lower revenue owing to lower realized metal prices. BMO Research sees the potential for further downside to Q4/14 EPS estimates if spot metal prices for gold and silver persist. Positively, the announced dividend with a yield of 1.4 per cent underscores the strong cash generating ability of [the] Escobal [project]and management's commitment to return capital to shareholders." He maintained an "outperform" rating and $26 (Canadian) price target.
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Rocky Mountain Dealerships Inc. said its third-quarter revenues fell 15.3 per cent to $230.8-million, while its diluted earnings per share increased by 3.2 per cent to 32 cents. That came in below the Street consensus calling for revenue of $269-million and EPS of 37 cents.
AltaCorp Capital Research analyst John Chu, who has an "outperform" rating and $12.50 (Canadian) price target, said, "Total agriculture equipment sales were lower than we had expected but the mix between used and new equipment was also the driver for increased margins. RME was able to sell almost $10-million more than we had expected of new equipment which brings better gross margins compared to used equipment which sales came-in just over $30-million below what we were expecting."
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Bonterra Energy Corp. reported that its third-quarter cash flow per share was $1.79, ahead of the Street estimate of $1.73. Production of 13,355 barrels of oil equivalent was also above consensus of 13,230.
Clarus Securities analyst Robert Paré commented, "Bonterra announced Q3/14 results that were ahead of expectations on robust field activity and consistently strong performance from its Carnwood Cardium unit. Although we expect the current dividend to be maintained, management has noted that with sustained weak oil prices it would look to reduce capital spending and other costs before trimming the dividend in order to remain within its target debt to cash flow of 1.0-1.5x. We view Bonterra as a premium yield name given its top tier prudent management team. We maintain our buy recommendation and target price of $65 per share."
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First Majestic Silver Corp. reported an adjusted loss of 4 cents (U.S.) per share, missing the Street estimate of a loss of 1 cent. Cash flow per share of 8 cents missed the Street's estimate of 11 cents.
"The company's primary focus remains to be cost cutting. Unfortunately, due to the lower production in the third quarter, severance payouts and temporary lower throughput at two of our mines, our costs were modestly higher in the quarter. This trend is anticipated to reverse in the fourth quarter which will benefit from a reduced workforce and lower energy and chemical costs. Due to the fact that the silver price is dropping more quickly than costs, diligence is required to remain focused on bringing all cost structures down to 2006 levels," CEO Keith Neumeyer said in a statement.
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Copper Mountain Mining Corp. said year-to-date copper production remains on track to meet guidance levels of 80-90 million pounds for the 2014 fiscal year. The company reported an EPS loss of 2 cents, below the consensus call of 3 cents.
"Commissioning of the new secondary crusher has gone well and it is operating at rates that allow the mill to reach its design capacity of 35,000 tpd. Additional fine tuning of the crusher and SAG mill is the top mine site priority to reach higher tonnage levels. Post quarter end, we have started to see the mill operate in the 35,000 to 40,000 tpd range."
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Mediagrif reported second-quarter fiscal 2015 revenues of $17.5-million, missing Street estimates of $17.86-million. But it reported adjusted EBITDA of $7.1-million, beating estimates of $6.75-million.
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Firm Capital Property Trust has entered into a binding agreement to acquire a 50 per cent interest in a 135 unit multi-residential complex in Ottawa, Ontario. The purchase price for the property is approximately $11.2-million, of which Firm Capital will pay approximately $5.6-million.
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Canadian Apartment Properties Real Estate Investment Trust announced third-quarter 2014 funds from operations per unit of $0.426, missing Street estimates of $0.437.
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Allied Properties REIT announced third-quarter 2014 funds from operations per unit of $0.54, beating Street estimates of $0.51. Adjusted funds from operations came in at $0.48, beating expectations of $0.45.
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WPT Industrial Real Estate Investment Trust reported third-quarter 2014 sales of $15.2-million, missing Street expectations of $15.9-million. Funds from operations came in at $0.252 per unit, beating expectations of $0.250, while adjusted fund from operations were $0.212 per unit, beating estimates of $0.201.
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Boyd Group Income Fund said third-quarter net earnings were $8.4-million or $0.220 per unit (fully diluted) compared to a net loss of $2.2-million or $0.172 per unit for the same period last year.
"The earnings benefited from fair-value adjustments to financial instruments of $3.7-million offset by $1.7-million in acquisition, transaction and process improvement costs. Excluding the impact of these adjustments as well as the amortization of brand names, adjusted net earnings would have been $6.8-million, or $0.453 per unit. This compares to adjusted net earnings of $4.6-million, or $0.365 per unit for the same period in 2013. The increase in adjusted net earnings is the result of acquisitions as well as new locations and same-store sales growth."
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Jura Energy Corp. said gas supplied to Sui Southern Gas Company Limited from its Zarghun South gas field is no longer being sold at a 30 per cent discount.
"Off-specification gas" was being sold from the field under an interim gas sale arrangement due to a delay in the commissioning of a sweetening unit, the company said. "Following full commissioning of the processing facilities, gas supplied to Sui Southern Gas Company Limited now meets the specification requirements provided under the gas sale and purchase agreement with SSGCL and is no longer being sold at a 30 per cent price discount for off-specification gas."
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Centamin Plc said third-quarter basic earnings per share were 1.39 cents, down 49 per cent on the prior-year period. Its 2014 guidance is for between 370,000 and 380,000 ounces of gold at $700 per ounce cash cost of production.
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Kirkland Lake Gold Inc. said it is on track to meet annual production guidance of between 140,000 and 155,000 ounces.
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TransGlobe Energy Corp. reported diluted earnings per share of 18 cents, down from 22 cents a year earlier.
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Darcy Keith