A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of Canada Goose Holdings Inc. (GOOS-T) soared on Friday after it forecast annual earnings above estimates on Friday, signaling strong demand for its luxury parkas ahead of the holiday season as the company benefits from surging sales in China, and topped Wall Street expectations for second-quarter revenue.
Luxury goods makers have seen a strong recovery from the global health crisis, boosted by pent-up demand for everything from high-end clothing to designer bags and shoes, even as travel restrictions continue to dampen demand from tourists.
Chinese consumers, known to splurge on high-end brands, also lifted sales in the quarter as they continued to purchase Canada Goose’s parkas and jackets despite fresh lockdowns in some cities due to the Delta variant.
Canada Goose, which typically makes around half of its annual sales during the holiday quarter, said it expects an adjusted profit of $1.17 to $1.33 per share in fiscal 2022, above analysts’ estimate of $1.13, according to Refinitiv IBES.
The company’s results mirrored that of Michael Kors owner Capri Holdings Ltd. (CPRI-N), which raised its annual revenue and profit outlook on Wednesday after it posted a jump in revenue from Mainland China.
Canada Goose said revenue from its own stores and website in Mainland China rose 85.9 per cent in the reported quarter, while global online sales surged 33.8 per cent.
Revenue rose to $232.9-million in the second quarter ended Sept. 26, from $194.8-million a year earlier, beating analysts’ estimates of $206.1-million.
Net income fell to $9.0-million, or 8 cents per share, from $10.4-million, or 9 cents per share, a year earlier.
Manulife Financial Corp. (MFC-T) increased with the premarket announcement it is raising its dividend after a federal regulator lifted a ban on increases by the country’s banks and insurance companies that was put in place in the early days of the pandemic.
The insurer announced a supplementary dividend of five cents per share in addition to the 28 cents per share it had already announced for the quarter.
The extra payment results in a quarterly dividend of 33 cents per share, an increase of 18 per cent.
Manulife also announced a plan to buy back up to 39 million or about two per cent of its shares.
The Office of the Superintendent of Financial Institutions lifted COVID-19-related restrictions Thursday when it said banks and insurers were free to increase dividends, resume share buybacks and raise executive compensation.
The federal regulator said the financial and economic risks of the pandemic have eased so the restrictions imposed in the early days of the outbreak no longer stand.
Telus Corp. (T-T) saw gains as it raised its dividend and reported a third-quarter profit of $358-million, up from $321-million in the same quarter last year.
The company says it will now pay a quarterly dividend of 32.74 cents per share, up from 31.12 cents per share.
The profit at Telus amounted to 25 cents per share for the quarter ended Sept. 30, up from 24 cents per share a year ago.
Operating revenue and other income rose to $4.25-billion compared with $3.98-billion in the same quarter last year.
On an adjusted basis, Telus says it earned 29 cents per share in its latest quarter, up from 28 cents per share last year.
Analysts on average had expected an adjusted profit of 28 cents per share, according to estimates compiled by financial markets data firm Refinitiv.
Enbridge Inc. (ENB-T) rose after it reported a better-than-expected quarterly profit on Friday, as a rebound in demand for crude oil and products from a pandemic-hit low, boosted volumes on its pipelines.
Pipeline operators have been enjoying a recovery in shipment volumes owing to oil prices touching multi-year highs on the back of strengthening global fuel demand, which lured some drillers back to the wellpad.
Enbridge said it transported 2.6 million barrels per day (bpd) on its Mainline system in the third quarter, 4.6 per cent higher than a year ago.
The company said it expects its Mainline systems’ average throughput to be around about 2.95 million bpd for the current quarter.
Rival TC Energy (TRP-T) also reported higher adjusted earnings in the third quarter, partly due to higher transportation rates on its Columbia gas pipeline.
TC also said it now expects full-year comparable earnings per share to be modestly higher than last year’s record results, while Enbridge maintained its forecast.
Enbridge’s adjusted earnings rose 23.2 per cent to $1.2-billion, or 59 cents per share, in the third quarter. Analysts, on average, were expecting 57 cents, according to Refinitiv IBES.
Interfor Corp. (IFP-T) rose despite saying its net profit plunged in its latest quarter despite record production in which U.S. output offset decreases in British Columbia caused by wildfires.
The Burnaby, B.C., company says it earned $65.6-million or $1.05 per share in the third quarter, down from $121.6-million or $1.81 per share a year earlier.
Adjusted profits were $46.7-million or 74 cents per share, compared with $140-million or $2.08 per share in the third quarter of 2020.
Revenue for the three months ended Sept. 30 increased three per cent to $664.3-million from $644.9-million in the prior-year quarter even though average selling prices fell to US$744 per thousand board feet from US$910 a year ago and US$1,419 in the second quarter.
Interfor was expected to earn 84 cents per share in adjusted profits on $647.3-million in revenues, according to financial data firm Refinitiv.
Lumber production increased to 731 million board feet with the U.S. south and northwest contributing 567 million board feet thanks to sawmills acquired in July. B.C. production fell 14.6 per cent to 164 million board feet due to sawmill downtime as a result of wildfires.
On the decline
TC Energy Corp. (TRP-T) slid after it reported a third-quarter profit of $779-million, down from $904-million a year ago.
The pipeline company says the profit amounted to 80 cents per share for the quarter ended Sept. 30, down from 96 cents per share for the same period in 2020.
Revenue for the quarter totalled $3.24-billion, up from $3.20-billion.
TC Energy says its comparable profit for the quarter amounted to 99 cents per share compared with 95 cents per share a year ago.
The result matched the average analyst estimate compiled by financial markets data firm Refinitiv.
The earnings came as TC Energy approved an US$800-million project to improve reliability and expand a portion of the ANR Pipeline Co. system to serve markets in the Midwestern U.S.
Baytex Energy Corp. (BTE-T) was lower as it reported a third-quarter profit of $32.7-million and said it expects to generate record cash flow for the year thanks to surging commodity prices.
The Calgary-based oil and gas company says it earned 35 cents per diluted share in the three months ended Sept. 30, up from a net loss of $23-million or four cents per share in the same period a year ago.
Production during the third quarter averaged 79,872 barrels of oil equivalent per day, compared with 81,162 boe/d in the second quarter of 2021.
Baytex says it generated free cash flow of $101-million in the quarter which brings the company’s year-to-date free cash flow to $284-million.
Baytex says it has directed 100 per cent of its free cash flow this year to reduce its net debt, which now sits at $1.56-billion, down from $1.85-billion at the beginning of the year.
The company says at current commodity prices, it now expects to generate record levels of free cash flow for the year in excess of $400-million.
Resolute Forest Products Inc. (RFP-T) declined after saying strong lumber prices will mean a significant increase in border taxes imposed by the U.S. government.
Chief executive Remi Lalonde says the tax will increase to 30 per cent from 20 per cent for most of 2022, according to the U.S. Commerce Department.
Mr. Lalonde says it will take patience before the trade dispute between Canada and the United States over softwood lumber is resolved, but he is “hopeful” that it will be settled in favour of Canadian producers as it has in the past.
While the legal process is slow, strong demand allows the company to compensate for the tariffs with prices.
Prices dropped from more than US$1,000 per thousand board feet to an average of US$573 in the third quarter and should remain above the historical average, Resolute said Thursday.
Resolute beat expectations as its net profit increased to US$80-million or 99 US cents per share, in the quarter, compared with US$57-million or 66 US cents per share a year earlier.
Adjusted profits reached 84 US cents per share, 13 US cents per share better than analyst forecasts and above 72 US cents earned in the third quarter of 2020. Sales climbed 12 per cent to US$817-million.
In a research note, RBC Dominion Securities analyst Paul Quinn said: “Resolute Forest Products Inc. reported Q3 results that were above our forecast but below consensus expectations. For the first time in a while, Resolute is in a strong financial position to improve its asset base and return capital to shareholders. We expect that the company will harvest its Paper business for cash and de-emphasize the tissue business, putting focus on its stronger Wood Products and Pulp business units. While still a business in transition, we think Resolute will utilize capital in a shareholder friendly manner and are reiterating our Outperform rating.”
Martinrea International Inc. (MRE-T) fell after announcing it swung to a loss of $17.1-million in the third quarter compared with earnings of $45.6-million last year as supply chain issues and inflating costs cut into revenue.
The autoparts manufacturer says the net loss worked out to 21 cents per share for the quarter ending Sept. 30, compared with earnings of 57 cents per share for the same quarter last year.
Sales for the quarter came in at $848.5-million, down 12.6 per cent from $971.1-million last year.
Company chief executive Pat D’Eramo says the quarter was a challenge as the combination of supply chain disruptions and inflating costs of labour, materials and energy are “wreaking havoc on the automotive supply base.”
He says that the company has been hit by work stoppages at auto assemblers and that the low visibility on schedules means it’s been difficult to adjust labour costs, especially given the tight labour market.
The company says that it expects production volumes to improve next year, and remains confident in meeting its 2023 objective of reaching total sales of between $4.6-billion and $4.8-billion.
“MRE reported Q3 results that came in below our and consensus expectations,” said CIBC World Markets analyst Krista Friesen. “While Q3 was significantly worse than expected, and we are unlikely to see much improvement in Q4, MRE has maintained its outlook for 2023. Much of MRE’s 2023 outlook is dependent on the industry’s ability to move past the chip issue, which we believe is likely. Once the chip shortage is a thing of the past, the auto industry is set for an extended peak production cycle, which bodes well for MRE’s earnings recovery.”
Magna International Inc. (MG-T) lost ground after it reported its third-quarter profit fell compared with a year ago as auto production around the world fell due the shortage of semiconductor chips.
The auto parts maker says it earned US$11-million or 4 US cents per diluted share for the quarter ended Sept. 30 compared with a profit of US$405-million or US$1.35 per diluted share in the same quarter last year.
Sales fell to US$7.92-billion compared with US$9.13-billion a year ago.
The company says vehicle production was significantly lower than anticipated largely due to the chip shortages which drove unpredictable customer production schedules, resulting in labour and other inefficiencies at its factories.
It also says its results were hurt by higher production costs, including freight and commodity costs, as well as a provision on engineering service contracts with the automotive unit of Evergrande.
On an adjusted basis, Magna says it earned 56 US cents per diluted share, down from US$1.95 per diluted share a year ago. Analysts on average had expected an adjusted profit of 60 US cents per share and US$7.89-billion in revenue, according to financial markets data firm Refinitiv.
Scotia Capital’s Mark Neville said: “Q3 results were in line with our/consensus expectations, as the company provided updated 2021 guidance on October 20. There were no incremental changes to the recent update, and segment results were largely consistent with our expectations. In our opinion, Magna is managing through the supply chain challenges (i.e., lower production volumes, operational inefficiencies caused by unpredictable scheduling, and higher production and commodity costs, etc.) reasonably well, with the company remaining profitable, and generating $400 million of operating cash flow in the Q.”
Canopy Growth Corp. (WEED-T) dropped as it pushed back its target for positive adjusted EBITDA, citing domestic supply challenges and a delayed revenue ramp in the United States, after the pot producer posted a bigger second-quarter adjusted core loss.
Profits have been wearing thin at most cannabis firms despite more than three years of Canada’s legalization of recreational cannabis, weighed down by fewer-than-expected retail stores, cheaper rates on the black market and sluggish overseas growth.
Canopy said it continued to expect a revenue acceleration in the second half of fiscal year 2022 but the magnitude and pace of improvement are expected to be more modest than previously anticipated.
The company said it was focused on stabilizing its market share of Canadian recreational cannabis in the second half of fiscal year 2022. “Achieving profitability remains a top priority,” Chief Financial Office Mike Lee said.
The world’s biggest pot producer said it was taking a number of actions to improve its Canadian performance and remained optimistic about the mid- to long-term outlook.
The company said last month it would buy weed gummies maker Wana Brands for US$297.5-million, as it looked to expand in the U.S. cannabis market.
On an adjusted basis, the company posted a loss before interest, taxation, depreciation and amortization of $163-million for the three months ended Sept. 30, compared with a loss of $85.7-million a year earlier
Constellation Software Inc. (CSU-T) was flat after reporting that its net income attributable to shareholders fell to US$107-million in its latest quarter despite a 30 per cent growth in revenue.
The Toronto-based technology firm says the profit equalled US$5.07 per diluted share, compared with US$5.76 per share or US$122-million a year earlier.
Revenue for the three months ended Sept. 30 was US$1.3-billion, up from US$1-billion in the third quarter of 2020.
Cash flows from operations increased 25 per cent to US$292-million, while free cash flow available to shareholders increased to US$226-million from US$181-million a year ago.
John Billowits, a former CEO of Constellation’s Vela operating group and a current director, has been appointed chairman to replace Mark Leonard, who will remain president.
Constellation, which acquires, manages and builds vertical market software businesses, says it would pay a dividend of US$1 per share on Jan. 11 to all shareholders as of Dec. 20.
Dorel Industries Inc. (DII.B-T) slid as it warned that supply chain disruptions are worse than previously thought will hamper its fourth-quarter results after contributing to a US$37-million loss in its latest quarter.
The Montreal-based maker of home furniture, bicycles and products for young children says its net loss equalled US$1.14 per diluted share in its third quarter, compared with a profit of US$26.2 million or 80 US cents per share a year earlier.
The results included an US$67.1-million charge related to a an unfavourable tax ruling confirmed by the Luxembourg Administrative Court over an internal corporate reorganization in 2015.
The company says its adjusted loss was US$99.8-million or US$3.07 per share, down from a profit of US$28.7-million or 87 cents per share in the third quarter of 2020. Revenue for the three months ended Sept. 30 totalled US$740.9-million compared with US$753.4-million in the same quarter last year.
The company announced last month an agreement to sell the Dorel Sports bicycle business that makes brands such as Cannondale, Mongoose and Schwinn to Dutch mobility group Pon Holdings B.V. for US$810-million.
With files from staff and wires
David Leeder