A roundup of some of the North American equities making moves in both directions
On the rise
Canopy Growth Corp. (WEED-T) gained ground after reporting a smaller adjusted core loss in its first quarter on Friday, as it benefited from cost cuts and a rise in cannabis use during the coronavirus pandemic.
People across North America have turned to cannabis for relaxation and entertainment during the months-long isolation caused by COVID-19, lifting sales of pot producers.
The cash-strapped sector has also attracted capital and renewed investor interest in recent months, thanks to a wave of state-level legalization and potential federal marijuana reform in the United States.
In a bid to turn profitable by this fiscal year, Canopy has also continued making deals in its core Canadian market. Earlier in 2021, it bought rival Supreme Cannabis in a deal that made it the owner of four of the top ten cannabis brands in the country.
“While we’re encouraged by regulatory advancement in the U.S., Canopy is not waiting as we continue to scale our business on both sides of the border,” Chief Executive Officer David Klein said in a statement.
The company’s adjusted gross margin expanded by 14 per cent in the quarter ended June 30 to 21 per cent.
Its adjusted core loss narrowed to $63.6-million from $92.2-million a year earlier. Revenue rose 23 per cent to $136.2-million.
Western Forest Products Inc. (WEF-T) was higher after it beat expectations as surging lumber prices strongly boosted its second-quarter results.
The Vancouver-based company says its net income soared to $78.3-million or 21 cents per share, up from $8.5 million or two cents per share a year earlier.
Revenues for the three months ended June 30 rose nearly 62 per cent to $414.4-million from $256.3-million in the second quarter of 2020.
Lumber revenue rose 87 per cent on a 45-per-cent increase in volumes while log revenue declined 23 per cent to $46.3-million.
The company says it realized record quarterly average lumber prices of $1,598 per thousand board feet, up 29 per cent from the prior year.
Analysts on average expected Western Forest Products to earn 17 cents per share on $372-million of revenues, according to financial data firm Refinitiv.
“We successfully increased North American lumber production and shipments in the first half of the year to benefit from record commodity pricing,” stated CEO Don Demens.
“Looking ahead, we will continue to leverage our flexible operating platform by directing volume to the highest margin alternatives.”
Constellation Software Inc. (CSU-T) was narrowly higher after it missed expectations despite posting improved second-quarter results.
The Toronto-based technology firm says its net income attributable to common shareholders was US$88-million or US$4.16 per share, up seven per cent from US$83-million or US$3.90 per share a hear earlier.
Revenues for the three months ended June 30 increased 35 per cent to US$1.25-billion from US$922-million in the second quarter of 2020 and included 14 per cent organic growth.
Analysts on average expected Constellation would report US$6.21 per share on US$1.26-billion of revenues, according to financial data firm Refinitiv.
Cash flows from operations decreased 28 per cent to US$171-million while free cash flow available to shareholders was US$145 million, down from US$190-million in the prior year.
Constellation, which acquires, manages and builds vertical market software businesses. says it would pay a dividend of US$1 per share on Oct. 8 to all shareholders as of Sept. 17.
See also: Friday’s analyst upgrades and downgrades
Uni-Select Inc. (UNS-T) jumped higher on better-than-expected second-quarter results, displaying noticeable margin improvement across its segments.
Before the bell, the Quebec-based distributor of automotive refinish and industrial coating products reported revenue of US$416-million, up 38 per cent year-over-year and exceeding the Street’s forecast of US$403-million. Adjusted earnings per share of 21 US cents also topped analysts’ forecast (13 US cents).
In a research note, Desjardins Securities analyst Benoit Poirier said: “Moving forward, management noted that its near-term focus for UNS is to align the three businesses with its vision while identifying growth opportunities across all of them. While 2021 is expected to be a good year, UNS remains cautiously optimistic as it progresses through the recovery with the continued uncertainty surrounding the pandemic and manages ongoing challenges related to the supply chain.
“Overall, we are very pleased with the strong margin performance across all three segments in 2Q as well as the impressive FCF generation. These results further reinforce our bullish stance on UNS.”
California-based Beyond Meat Inc. (BYND-Q) was up after it said on Thursday that restaurants are placing “more conservative” orders for its plant-based burgers due to uncertainty over to the Delta variant of the coronavirus, leading the company to forecast third quarter revenue below estimates.
“Given the recent uptick of COVID-19 cases, which could disrupt demand patterns, we believe caution for the balance of the year generally remains appropriate,” Chief Executive Officer Ethan Brown said in a statement.
The company said it expects third-quarter net revenue of US$120-million to US$140-million, substantially lower than analysts’ estimates of US$153.3-million, according to IBES data from Refinitiv.
Widespread labour pressure delayed at least one product launch until the first part of next year, Mr. Brown said during a call with analysts.
Restaurants are placing “more conservative” orders due to their own staffing challenges and uncertainty about the Delta variant, which has also prompted European operators to pause or cancel promotions, Brown said.
In the second quarter ended July 3, the faux beef and chicken maker reported that sales in restaurants, dining halls and other food service venues were finally back in growth mode after taking a big hit during the pandemic, when dining rooms shuttered and restaurants streamlined menus.
Increased restaurant sales drove overall net revenues up 31.8 per cent to US$149.4-million in the second quarter, exceeding estimates of US$140.8-million.
Even so, Beyond Meat also reported a bigger-than-expected loss, with earnings per share of negative 31 US cents versus estimates of minus 24 US cents.
On the decline
Magna International Inc. (MG-T), whose offer to buy Swedish rival Veoneer was trumped by chipmaker Qualcomm, was lower as it cut its full-year sales forecast, citing a slowdown in automobile production due to a semiconductor shortage plaguing the sector.
The shortage has hampered automobile production around the world, bringing some assembly lines to a halt. Automakers across the globe have warned that the chip shortage could extend, even as auto demand booms in markets such as the United States.
“The second quarter of 2021 included the production disruptions due to the ongoing global semiconductor chip shortage,” Magna said in a statement.
Chipmaker Qualcomm Inc said on Thursday it had offered to buy Veoneer Inc for US$4.6-billion, an 18.4-per-cent premium to a bid in July by Magna International Inc that was accepted by Veoneer’s board.
Magna’s revenue for the year is now expected to be between US$38-billion and US$39.5-billion, compared to a previous forecast of US$40.2-billion to US$41.8-billion.
Net income attributable to Magna was US$424-million, or US$1.40 per share, in the quarter ended June 30, from a loss of US$647-million, or US$2.17 per share, a year earlier.
Recipe Unlimited Corp. (RECP-T) also dipped after it maintained a profit in its second quarter while completing acquisitions as part of an ongoing retooling of its brands.
The Vaughan, Ont.-based restaurant company reported $19.4-million in net earnings or 34 cents per share for the three months ended June 27.
That compares with a loss of $40.6-million or 72 cents per share in the second quarter of 2020, when pandemic restrictions temporarily shuttered dining rooms across Canada.
On an adjusted basis, the company net $7.0-million or 12 cents per share, up from 11 cents per share in the year-earlier period.
Revenue for the quarter was $207.6-million, compared with $140.4-million in 2020. The current quarter represents an improvement from the early days of COVID-19 restrictions, but it’s still far below the $311.9-million in revenue for the pre-pandemic quarter in 2019.
Recipe Unlimited said restrictions on indoor dining affected more than 96 per cent of its operating weeks for the quarter.
Chinese ride-hailing firm Didi Global Inc. (DIDI-N) slid amid reports it is in talks with state-owned information security firm Westone to handle its data management and monitoring activities, sources said, as part of its efforts to placate domestic regulators.
The sources declined to be named as they were not authorized to speak to the media.
The largest Chinese ride-hailing group became the target of an investigation by regulators in the country just days after it raised US$4.4-billion in an initial public offering in the United States.
The powerful Cyberspace Administration of China (CAC) last month launched a data-related cybersecurity investigation into Didi, citing the need to protect national security and the public interest.
Didi is in discussions with Westone Information Industry Inc, which would be the main third-party company to manage its massive data stored domestically as per domestic regulators’ guidance, said two people with knowledge of the matter.
With files from staff and wires