A roundup of some of the North American equities making moves in both directions today
On the rise
Bausch Health Companies Inc. (BHC-T) soared after Icahn Capital LP reported a 7.83-per-cent stake, representing 27.8 million shares, in the Canadian drugmaker on Thursday after market.
Icahn Capital thinks Bausch shares are undervalued and intends to engage in discussions with representatives of its management and board regarding ways to enhance shareholder value.
“Bausch Health’s Board of Directors and management team welcome open communication with our shareholders and constructive input toward the shared goal of enhancing shareholder value,” said the company in a response. “Our Board of Directors and management team are committed to acting in the best interests of the Company and our shareholders. We continually review the Company’s strategic priorities and capital allocation to evaluate opportunities to maximize long-term shareholder value.”
Separately, Glenview Capital Management, which currently owns more than 21 million shares, or about 6 per cent of the Canadian company, sent a letter to the drugmaker’s chief executive on Friday, saying the spinoff of its eye care unit should be completed by the end of 2021.
Bausch Health, previously known as Valeant Pharmaceuticals, has sought to get past a flurry of investigations into its accounting and pricing practices under its previous management.
In August, Bausch Health said it would spin off its eye care unit, Bausch + Lomb, into a separate publicly listed company.
Since its purchase in 2013, Bausch + Lomb has been a stable source of revenue for the company, especially after the accounting issues led to a steep fall in the share price of the one-time Wall Street darling, compounded by concerns over Bausch’s large debt pile.
Canada’s largest airline said its full-year revenue fell by $13.3-billion to $5.9-billion, compared with 2019, as passenger volume dropped by 73 per cent.
“With today’s release of 2020 fourth quarter and full year results, we close the book on the bleakest year in the history of commercial aviation, after having reported several years of record results and record growth at Air Canada,” said Calin Rovinescu, chief executive officer of Air Canada.
Mr. Rovinescu will retire on Feb. 15, replaced by Michael Rousseau, chief financial officer.
The airline burned through an average of $13-million a day and debt increased by $2-billion to $7-billion, Air Canada said in financial results released on Friday morning. The carrier had $8-billion in liquidity as of Dec. 31.
For the fourth quarter, Air Canada posted a loss of $1.2-billion, or $3.91 per share, compared to a profit of $152-million (56 cents) in the same period in 2019.
- Eric Atkins
In a research note, ATB Capital Markets analyst Nate Heywood said: “Overall, we view the acquisition as positive for Superior given the bolstering of its Canadian energy distribution asset base in a highly residential and competitive region; however, we would note the shift to the Canadian market is a modest surprise given that tuck-ins have largely been focused on the fragmented U.S. market. Using historical acquisition metrics as a proxy, our estimates imply that the 17 million litres of annual propane distributions could generate~$3-million in EBITDA. Given our expectations for the transaction to closely follow historical acquisitions at a multiple of 7-8 times (6 times post-synergies), our estimated acquisition value of $20-$23-million is relatively immaterial.”
On the decline
Enbridge Inc. (ENB-T) was narrowly lower in the wake of forecasting higher costs for its long-contested pipeline replacement project, citing regulatory and permitting delays, winter construction and COVID-19 protocols, among other reasons.
Line 3, built in the 1960s, ships crude from a Canadian oil hub in Edmonton, Alberta, to U.S. Midwest refiners, and carries less oil than it was designed for because of age and corrosion. Replacing the pipeline would allow Enbridge to roughly double its capacity to 760,000 barrels per day.
While the Canadian portion is complete, Enbridge has run into repeated obstacles in Minnesota, where reviews have lasted for about five years.
The updated cost also comes at a time when U.S. President Joe Biden has canceled the permit needed to build TC Energy Corp’s Keystone XL oil pipeline in a blow to Canada’s oil sector, which had already been depressed for years due to high production costs and carbon emissions.
Enbridge now estimates capital costs for the Line 3 replacement project, including the Canadian segment already in service, at $9.3-billion, up from $8.2-billion.
Calgary-based Enbridge said it targeting to put the pipeline in service in the fourth-quarter.
The company, which also missed estimates for quarterly profit on Friday, said volumes on its liquids mainline were impacted by reduced refinery demand.
On an adjusted basis, Enbridge earned 56 cents per share, while analysts had expected 61 cents per share, according to IBES data from Refinitiv.
The St. John’s-based utility reported non-GAAP earnings per share of 69 cents, down 6 cents year-over-year but above the consensus projection on the Street of 67 cents, according to Refinitiv data.
Montreal-based CAE Inc. (CAE-T) was lower after it reported a 50-per-cent drop in third-quarter profit before the bell, as pandemic-battered air travel weighed on demand for the company’s full-flight simulators and pilot training.
CAE, which produces flight simulators for planemakers Boeing Co and Airbus, however, expects to see an uptick in training contracts as more people get vaccinated and resume air travel.
The world’s largest civil aviation training specialist said its net income attributable to shareholders fell to $48.8-million, or 18 cents per share, in the quarter ended Dec. 31, from $97.7-million, or 37 cents per share, a year earlier.
Montreal-based CAE said deliveries of flight simulators fell to 10 units in the third quarter, from 12 units a year earlier.
Revenue fell to $832.4-million from $923.5-million in the year-ago period.
Agnico Eagle Mines Ltd. (AEM-T) was lower after reporting its profit fell in the fourth quarter, as it paid 75 per cent of base salaries to its Nunavut-based workforce, which has been at home under COVID-19 guidelines.
The company says it had fourth-quarter net income of US$205.2-million, or 85 US cents per basic share, compared with net income of US$331.7-million, or US$1.39 per basic share, in the fourth quarter of 2019.
The Canadian gold mining company says revenue from mining operations was US$928.4-million in the three months ending Dec. 31, compared with US$753.1-million in the same period of 2019.
On average, analysts polled by Refinitiv expected Agnico Eagle Mines to report net income of 86 US cents per share on revenue of US$929.27-million in the fourth quarter.
The company says 285 of its employees tested positive for COVID-19 during the fourth quarter, mostly in Mexico, with a majority of cases detected by the company’s screening protocols.
Industrial Alliance Securities analyst Puneet Singh said: “Overall, another strong quarter of production sets up Agnico well to achieve 20-per-cent year-over-year production growth (higher end of its peer group). We would expect Agnico to return to more normalized multiples when gold breaks through its current consolidation phase and investors look for a safe jurisdiction miner that has high projected earnings growth and the strong probability of increasing its dividend.”
Walt Disney Co. (DIS-N) dipped after it reported a smaller-than-expected drop in first-quarter revenue on Thursday, as its fast-growing streaming business helped offset some impact from the COVID-19 pandemic on its theme park and movie studio businesses.
The pandemic’s vice-like grip on the world has forced Disney to shut its theme parks in California and Hong Kong, while limiting the number of visitors at its other properties to enforce social distancing.
Disney’s movie studio has also delayed major releases as many theaters remain shut.
However, investors have welcomed the early success of the company’s video streaming business, which competes fiercely with Netflix Inc. The Disney+ streaming service had reached 94.9 million subscribers as of Jan. 2, the company said.
Operating loss from the parks and consumer products business was US$119-million, compared with a profit of US$2.52-billion a year earlier.
The direct-to-consumer and international segment, which houses Disney+, reported an operating loss of $466 million, compared with an operating loss of US$1.11-billion in the year-earlier quarter.
Overall revenue fell to US$16.25-billion from US$20.88-billion, but was still above analysts’ average estimate of about US$15.93-billion, according to IBES data from Refinitiv.
With files from staff and wires