A roundup of some of the North American equities that made moves in both directions
On the rise
Industrial materials maker DuPont (DD-N) was up 3.6 per cent on Monday after it estimated first-quarter profit above Wall Street’s expectations, as the coronavirus outbreak lifted demand for its products used in personal protection and water filtration.
The company, however, suspended its forecast for full-year sales and adjusted earnings, citing uncertainty caused by the COVID-19 pandemic in some of its end markets.
DuPont, which makes everything from brake fluid to fabric used in protective garments, is expected to have mixed impact from the virus outbreak.
Demand for some of the company’s products, such as Tyvek personal protective garments, has risen, while other key end markets, like the automotive sector, have suffered due to a decline in travel brought by the pandemic.
DuPont said it had idled operations at several manufacturing sites, mainly production plants that fall under its transportation and industrial business, and delayed some capital investment to bolster its cash reserves.
It had also entered a US$1.0-billion revolving credit facility, replacing the US$750-million facility set to expire in June, and secured US$2.0-billion in committed financing to ensure that it can refinance debt maturities in November.
Boston-based Alexion Pharmaceuticals Inc. (ALXN-Q) rose 3.1 per cent after it said on Monday it would start a late-stage study of its rare blood-disorder drug, Ultomiris, in COVID-19 patients hospitalized with severe pneumonia or acute respiratory distress syndrome.
The study is expected to enroll about 270 patients across countries, Alexion said.
Leading U.S. fracking firm Halliburton Co. (HAL-N) increased 0.5 per cent after it reported a US$1-billion first quarter loss and US$1.1-billion in impairment charges on Monday as it gave a bleak outlook for North American oilfields after the coronavirus-driven oil price decline.
Last week, larger rival Schlumberger cut its dividend and recorded an US$8.5-billion charge in the first quarter from writing down assets, while Baker Hughes said it will take a US$1.5 -billion charge, write down the value of its oilfield business and slash spending by 20 per cent in 2020.
Halliburton, which generates most of its business in North America, booked US$1.1-billion in pre-tax impairments and other charges, mostly relating to the value of its pressure pumping assets. It posted a 25-per-cent drop in revenue from the region to US$2.46-billion, while international revenue rose 5 per cent to US$2.58-billion.
For the remainder of 2020, the Company expects a further decline in revenue and profitability, particularly in North America,” Halliburton’s Chief Executive Jeff Miller said.
The company said it was also facing challenges related to coronavirus lockdown measures, including logistical problems from border closures and travel restrictions that have prevented the company from accessing certain facilities and sites, as well as inefficiencies from stay-at-home work arrangements.
Shake Shack Inc. (SHAK-N) gained 6.7 per cent after the burger chain’s chief executive said on Monday it will return the small business loan it received from the U.S. government, making it the first major firm to hand back money aimed at helping small businesses ride out the coronavirus impact.
The company will immediately return the entire US$10-million SBA loan as it was able to raise additional capital, CEO Randy Garutti and founder Danny Meyer said in a blog post on Monday. Last week, it raised about US$150-million in an equity offering.
SBA, which is a key part of the U.S. government’s US$2.2-trillion aid package, is aimed at helping small companies keep paying their employees and their basic bills during the shutdowns, so that they are able to reopen quickly when public health allows.
Shake Shack said the money it received could be reallocated to the independent restaurants “who need it most, (and) haven’t gotten any assistance.”
On the decline
Alimentation Couche-Tard Inc. (ATD.B-T) slid 0.6 per cent after its buyout of petrol station operator Caltex Australia Ltd became the latest victim of the coronavirus outbreak, as fuel demand plunges and as companies look inward to get through the crisis.
The decision means the Canadian firm’s proposed $8.8 billion ($5.6-billion) deal is the biggest buyout of an Australian company to be squashed by the impact of the virus, which has led to 69 deaths in Australia and 1,580 in Canada.
The Canadian convenience store chain, which had secured funding commitments for the deal, said it still saw Caltex as a good fit for its expansion into Asia, and would be willing to re-engage once coronavirus-related uncertainty subsides.
A collapse in oil prices has been of little help for the Australian refiner which has found itself facing vanishing demand due to restrictions on movement by governments looking to contain the spread of COVID-19, the disease caused by the new coronavirus.
As a major supplier of jet fuel, Caltex has also been hit hard by airlines grounding fleets. It has brought forward the scheduled shutdown of its Lytton refinery to May, and plans to re-start it only when pressure on profit margins ease.
Caltex said it was ready to weather market uncertainty, and was deferring capital spending and reviewing fixed costs. It also said its day-to-day spending requirements should be lower given the fall in crude oil prices.
Civil aviation training company CAE Inc. (CAE-T) was down 1.9 per cent after it said on Monday it would recall 1,500 of its employees in Canada furloughed in response to the coronavirus pandemic as a government wage subsidy program helps put workers back on payroll.
The Canadian government on April 11 approved a wage subsidy program, known as the Canada Emergency Wage Subsidy (CEWS), which would cover up to 75 per cent of the workers’ wages for businesses that have suffered due to the pandemic.
Chief Executive Officer Marc Parent said the wage subsidy program will allow the Canadian industry to put staff back on payroll and be “better positioned to rebound when the current challenges have passed”.
The majority of the employees are based in Montreal and will work from home, according to CAE.
The company also said it had signed a contract with the Government of Canada to make 10,000 ventilators, as part of the effort to battle the pandemic.
The first unit of ventilators is expected to be delivered in early May to health authorities for certification.
The Calgary-based company said it now expects to spend between $1.6-billion and $1.8-billion, about half its earlier estimate of $3.2-billion to $3.4-billion.
Husky Energy also said it would also reduce production by more than 80,000 barrels per day, most of which is heavy oil.
Oil and gas producers have been slashing spending, trimming output and rolling back share buybacks and dividends as oil demand slumped due to the coronavirus outbreak that has hampered travel.
Husky had previously cut its 2020 capital spending budget by $900-million in March, citing challenging global market conditions.
Smaller-rival Crescent Point Energy Corp. (CPG-T) also slashed its capital expenditure forecast for 2020 by another $75-million, or 10 per cent, to a range of C$650 million to $700-million. Earlier in March, Crescent had lowered its estimates by 35 per cent.
Crescent Point shares were 4.4 per cent lower.
United Airlines (UAL-Q) dropped 4.5 per cent in the wake of saying it expects to report a pre-tax loss of about US$2.1-billion for the first quarter, hurt by a precipitous drop in travel demand from the coronavirus pandemic.
The U.S. carrier said it expects to borrow up to about US$4.5-billion from the U.S. Treasury Department for a term of up to five years.
That money would come on top of US$5-billion that United is set to receive from a separate government aid package specifically for its employee payroll.
The pre-tax loss reflects US$63-million of special charges, including a US$50-million impairment for its routes in China, where the coronavirus first started to affect travel in January.
United also wrote down the value of its investments in Brazilian carrier Azul Linhas Aereas Brasileiras and allowed for a US$697-million expected credit loss related to its investment in Avianca Holdings in Latin America.
Walt Disney Co. (DIS-N) was down 4.1 per cent amid reports it will stop paying more than 100,000 employees this week, nearly half of its workforce.
The Financial Times said the move will save it US$500-million.
Before the bell, a pair of equity analysts downgraded its stock.
UBS move Disney to “neutral” from “buy,” saying profitability of its theme parks will be impaired for a longer period of time given lingering effects of the coronavirus outbreak.
Credit Suisse lowered the stock to “neutral” from “outperform,” expecting expects growth in its streaming service Disney+ to outweigh the decline in Parks and linear TV revenue.
With files from staff and wires