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A survey of North American equities heading in both directions

On the rise

Shares of pipeline operator Enbridge Inc. (ENB-T) increased 1 per cent after it beat market estimates for first-quarter profit on Friday, as demand remained strong amid an uptick in oil production across North America.

Improvements in technology have driven rapid growth in U.S. oil production over the past few years, benefiting pipeline operators such as Enbridge.

The company recorded strong demand for its Flanagan South Pipeline and the Enbridge Ingleside Energy Center, the largest crude oil storage and export terminal by volume in the United States.

Adjusted core profit at its liquids pipelines segment rose to $2.46-billion from $2.34-billion last year.

Transport volumes at Enbridge’s Mainline - North America’s biggest oil pipeline network - rose marginally from last year, helped by a surge in Canadian oil sands production and a delay in the start-up of a government-owned rival pipeline to the second quarter.

“In Liquids, we saw high utilization across our systems including another quarter of strong Mainline performance,” said CEO Greg Ebel.

The company, which transports nearly a fifth of the natural gas consumed in the U.S., said adjusted core earnings from its gas transmission segment rose 7.1 per cent to $1.27-billion.

On an adjusted basis, Enbridge reported a quarterly profit of 92 cents per share for the three months ended March 31, compared with analysts’ average estimate of 81 cents per share, according to LSEG data.

Pembina Pipeline Corp. (PPL-T) was higher by 0.5 per cent after saying it earned $439-million in the first quarter, up from $369-million a year earlier.

The Calgary-based company says its revenue for the quarter ended March 31 was $1.54-billion, down from $1.62-billion during the same quarter last year.

Diluted earnings per common share were 73 cents, up from 61 cents.

Pembina says it’s increasing its dividend for the second quarter by 3.4 per cent to 69 cents per common share.

On April 1, Pembina closed its $3.1-billion purchase of Enbridge Inc.’s stakes in the Alliance pipeline and Aux Sable gas processing facility.

It also updated its 2024 adjusted EBITDA guidance to between $4.05-billion and $4.30-billion, up from previous guidance of between $3.7-billion and $4.0-billion.

In a research note, Citi analyst Spiro Dounis said: “PPL reported 1Q24 EBITDA of $1.044-billion, above Citi estimate of $1.020-billion and Street mean of $989-million. For some reason the Street was slow to react and adjust to PPL’s updated guidance in early April, which clearly called out stronger marketing performance and implied $40-50-million of outperformance to date. As expected, PPL did not change its ‘24 EBITDA guidance with the release; we expect any changes to accompany the Investor Day next week. PPL declared a 3-per-cent dividend increase to $0.69/share, inline with our expectations. No incremental projects were announced. PPL narrowed the Cedar LNG FID timing to June 2024 from middle 2024 prior. Higher Marketing margins and lower corporate expenses drove the beat. No update to the long-term Marketing EBITDA run-rate of $200-400-million; once again more details may be a ‘24 Investor Day event next week.”

Nvidia (NVDA-Q) gained after Taiwan Semiconductor Manufacturing Co (TSM-N), the world’s largest chipmaker and a major supplier to Nvidia, reported a near 60-per-cent jump in April sales.

On the decline

Canada’s No. 2 life insurer Sun Life Financial (SLF-T) fell 6.7 per cent after it missed core profit estimates for the first time in 12 quarters, hurt by weakness in the U.S., a region where it has been expanding.

The quarterly results were also affected by the sale of Sun Life UK and the end of the public health emergency in the United States, CEO Kevin Strain said in a statement.

Sun Life has established more partnerships in Asia and other key regions as a part of its expansion efforts and acquired firms such as telemedicine company Dialogue Health and U.S. dental benefits company DentaQuest.

However, earnings in the U.S. were hurt by lower dental results driven by the impact of Medicaid redeterminations and market-related impacts largely from real estate investments, the company said.

“The US business was a bit disappointing... it is mostly related to unfavorable underwriting,” Morningstar analyst Suryansh Sharma noting he would watch the segment more closely.

The overall results were in contrast with bigger peer Manulife (MFC-T) which reported bigger-than-expected profit powered by strength in its Asia unit that pushed its stock to over a 15-year high.

For Sun Life, underlying net income in Asia rose 26 per cent while that of U.S. fell 20%. The wealth and asset management unit reported a 1% decrease.

That led to overall underlying net income fall of 2.2 per cent to $875-million. On a per share basis, the company earned $1.50. Analysts were expecting $1.65 per share, according to LSEG data.

Earnings from Sun Life’s group health and protection businesses fell 8 per cent to $280-million.

It posted a 4-per-cent drop in underlying net income from its individual protection business to $278-million, due to the sale of Sun Life UK.

“While Sun Life’s balance sheet remains strong, meriting a lift in the dividend, we do not expect it to be enough to mask the market’s disappointment in the results,” Jefferies analyst John Aiken wrote in a note.

Onex Corp. (ONEX-T) lost 4.7 per cent after it raised US$1.8-billion for private equity and credit funds in the first three months of the year, a show of support from investors after the asset manager paused fundraising on its latest flagship private equity offering last year.

On Friday, Onex announced the company and its institutional clients have committed US$795-million to the company’s fifth fund, known as ONCAP, dedicated to acquiring small to medium-sized businesses, and US$735-million to a new platform, the Onex Partners Opportunities Fund.

Toronto-based Onex raised or extended a total of US$3.5-billion of fee-generating assets at its credit investment platform so far in 2024.

Onex oversees a total of US$35.1-billion in assets for its clients. A year ago, the company paused fundraising on a new private equity fund, Onex Partners VI, with a multibillion-dollar target due a lack of support from investors such as pension plans and insurers.

The move came during a slowdown in activity across the private equity sector, as investors grappled with rising interest rates, the prospect of a recession and a freeze in the initial public offerings that allow fund managers to cash in on businesses they own.

“Onex is making progress in its plans to drive growth in shareholder value, and we were pleased to see fundraising start to gain momentum in the quarter,” CEO Bobby Le Blanc said in a press release.

Onex is sitting on US$1.4-billion of cash it can commit to new investments. Mr. Le Blanc said: “We continue to focus our capital deployment and resource allocation on areas where we have a proven track record and the right to compete.”

Onex made a US$10-million profit in the three months ended March 31, compared to a US$232-million loss in the same period a year ago, when the company wrote down of its private wealth business. Last May, Onex shut down operations at Gluskin Sheff + Associates Inc., a business it acquired in 2019, after several of the division’s key fund managers departed for Royal Bank of Canada.

- Andrew Willis

Algonquin Power & Utilities Corp. (AQN-T) declined 2.8 per cent after it named Chris Huskilson as its chief executive as it reported a loss in its latest quarter.

Mr. Huskilson has been interim CEO since August 2023.

The Oakville, Ont.-based power utility says its loss attributable to shareholders amounted to US$89.1-million or 13 US cents per share for the quarter ended March 31.

The result compared with a profit attributable to shareholders of US$270.1-million or 39 US centS per share in the same quarter last year.

Revenue for the quarter totalled US$737.1-million, down from US$778.6-million in the first quarter of 2023.

On an adjusted basis, Algonquin says it earned 14 US cents per share in its latest quarter compared with an adjusted profit of 17 US cents per share a year earlier.

Crescent Point Energy Corp. (CPG-T) gave back early gains and finished down 0.8 per cent after reporting a loss of in its latest quarter as it was hit by a non-cash impairment charge related to assets in Saskatchewan it is selling.

The Calgary-based oil and gas producer says it lost $411.7-million or 66 cents per share for the quarter ended March 31 compared with a profit of $216.7-million or 39 cents per share a year earlier.

Oil and gas sales totalled $1.11-billion, up from $762.0 million in the first quarter of 2023.

On an adjusted basis, the company says its net earnings from operations amounted to 30 cents per share, down from 40 cents per share in the same quarter last year.

Earlier this week, Crescent Point announced a $600-million deal to sell some of its non-core oil-producing properties in Saskatchewan to Saturn Oil & Gas.

The company says included in the sale are its Flat Lake and Battrum properties.

Travel company Transat A.T. Inc. (TRZ-T) fell 2.8 per cent after saying it expects to fall short of its financial guidance for the year.

The Montreal-based company says it will likely not achieve its adjusted earnings before interest, taxes, depreciation and amortization margin forecast for its 2024 financial year.

The parent company of Air Transat says operational challenges related to Pratt & Whitney’s GTF1 engines, market dynamics and the consequences of union strike threats have created a volatile environment.

Transat says the current trend puts it on track to achieve an adjusted EBITDA margin of about five per cent for its 2024 financial year.

In March, Transat had said it expected its adjusted EBITDA margin for the full year to be at the lower end of a range of 7.5 to 9.0 per cent.

The company says it will provide an update about its performance and strategies when it reports its second-quarter results on June 6.

Canfor Corp. (CFP-T) slid 2.4 per cent after it announced it is permanently closing its Polar sawmill in Bear Lake, B.C., shutting a production line at its Northwood Pulp Mill in Prince George, and suspending its “planned reinvestment” in Houston, B.C.

The company says in separate news releases that the closures will impact 400 jobs, 180 at its Polar mill and 220 at the Northwood facility.

The company says a shortage of fibre is the reason behind the indefinite curtailment of one production line at the Northwood pulp mill, while Canfor president Don Kayne says timber is critical for its sawmill, but the harvest level has “declined dramatically.”

He says the decline is partly due to natural disturbances, like beetle infestations and wildfires, but also to policy and regulation changes that have “hampered” Canfor’s ability to access enough fibre to support its facilities, forcing the closures.

Canfor announced last September that it was planning to spend $200 million on a state-of-the-art mill in Houston, west of Prince George, shortly after it had announced the closure of its sawmills in Houston and Chetwynd.

The Polar sawmill, about 70 kilometres north of Prince George, had an annual production capacity of about 300 million board feet, but has been shut since January.

Mr. Kayne says in a news release that the company’s ability to reliably access enough timber to run the facilities is critical for the business.

“Unfortunately, while our province has a sufficient supply of timber available for harvest as confirmed by the allowable annual cut set by B.C.’s chief forester, the actual harvest level has declined dramatically in recent years.

“In 2023 the actual harvest was 42 per cent lower than the allowable cut, a level not seen since the 1960s,” Kayne says.

With files from staff and wires

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 14/05/24 4:00pm EDT.

SymbolName% changeLast
Algonquin Power and Utilities Corp
Canfor Corp
Crescent Point Energy Corp
Enbridge Inc
Nvidia Corp
Onex Corp
Pembina Pipeline Corp
Sun Life Financial Inc
Transat At Inc
Taiwan Semiconductor ADR

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