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On the rise

Sleep Country Canada Holdings Inc. (ZZZ-T) jumped following the late Wednesday release of record quarterly results.

The retailer reported adjusted earnings per share of 56 cents, up 115 per cent year-over-year and almost doubling the Street’s 29-cent forecast. The beat was driven by higher revenues and lower-than-anticipated expenses as same-store sales growth jump 8.8 per cent.

Stifel’s Martin Landry said: “This report represents the company’s tenth consecutive earnings beat, an impressive track record. Sleep Country’s share price weakened in recent months, reflecting concerns amongst investors on the sustainability of demand for mattresses, given the macroeconomic situation. Hence, management’s comments on the outlook could have more importance than the actual results in influencing the direction of the stock price tomorrow. Our recent consumer survey suggests continued strong purchasing intentions for 2022.”

Quebec-based Uni-Select Inc. (UNS-T), a distributor of automotive refinish and industrial paints, soared as it reported first-quarter sales of US$409.6-million, up from $370.1-million a year ago. The result was ahead of expectations of US$399-million.

Net earnings of US$7.7-million or 17 US cents per share compared to net earnings of US$213,000 or a penny per share a year ago.

Calling the quarterly results “excellent,” Desjardins Securities equity analyst Benoit Poirier said: “Overall, we are very pleased with the strong margin performance across all three segments in 1Q, as well as the impressive FCF generation, which opens the door to strategic acquisitions. These results further reinforce our bullish stance on UNS. We believe the stock could reach C$37–57/share if management delivers on our expectations for the business.”

Shares of Twitter Inc. (TWTR-N) rose on news Elon Musk has secured US$7.14-billion in funding from a group of investors that includes Brookfield (BAM.A-T) and Oracle Corp co-founder Larry Ellison to fund his US$44-billion takeover of the social-media platform.

Tesla shares (TSLA-Q) slid after CNBC reported Mr. Musk is expected to become Twitter’s temporary CEO after closing the deal, indicating that investors were concerned about his increased involvement

Mr. Musk, the world’s richest man, is also the CEO at Tesla Inc and heads two other ventures, The Boring Company and SpaceX.

Reuters reported last week that Mr. Musk had lined up a person for the top job at Twitter. Parag Agrawal, who was named Twitter’s CEO in November, is expected to remain in his role until the sale of the company toMr. Musk is completed

Saudi Arabian investor Prince Alwaleed bin Talal, who had initially opposed the buyout, also agreed to roll his US$1.89-billion stake into the deal rather than cashing out, the filing showed.

The move comes as Mr. Musk’s margin loan was reduced to US$6.25-billion from US$12.5-billion announced earlier, according to the filing.

Mr. Musk’s US$21-billion financing commitment was also revised to $27.25 billion.

Mr. Musk will continue to hold talks with existing shareholders of Twitter, including the company’s former chief Jack Dorsey, to contribute shares to the proposed acquisition, the filing showed.

Qatar Holding and Dubai-based Vy Capital, also an investor in Mr. Musk’s other venture The Boring Company, are also part of the investor group.

Kiladze: Twitter is a financial mess. Here’s why Elon Musk and Silicon Valley do not care

Reuters last week reported Mr. Musk was in talks with large investment firms and high net-worth individuals about taking on more financing for his Twitter acquisition and tying up less of his wealth in the deal.

Larry Ellison, a board member at Tesla and a self-described close friend of Mr. Musk has committed US$1-billion for the funding.

On the decline

Shopify Inc. (SHOP-T) reported first-quarter earnings that fell short of analysts’ expectations on profit and revenue, sending shares of the e-commerce company falling.

The Ottawa-based tech firm also announced it will be acquiring San Francisco startup Deliverr for US$2.1-billion, the company’s largest acquisition in its history in a bid to expand its warehousing and delivery services. The Globe reported last month that Shopify expected to finalize the deal ahead of the company’s earnings call.

Shopify said its adjusted net income for 2022′s first quarter was US$25.1-million, down from US$254.1-million in the same period last year. On a per-share basis it reported adjusted earnings of 20 US cents, far short of analyst projections for 64 US cents. Revenue for the company was US$1.2-billion, up 22 per cent, but that also lagged expectations of US$1.25-billion.

Gross merchandise volume, a figure that shows the value of sales through Shopify’s platform, grew 16 per cent in the first quarter from a year earlier to US$43.2-billion. That’s also behind analyst projections of US$46.5-billion.

David Berman: Netflix and Shopify are struggling and the way ahead is anything but clear

Shopify’s stock price has collapsed by more than half from its late 2021 peak. This year, the company became the worst Canadian performer on the S&P/TSX Composite Index, dropping down about 69 per cent, losing over $155-billion in market value.

- Temur Durrani

BCE Inc. (BCE-T) was narrowly lower after it boosted its first-quarter profit and revenue as it added new wireless and internet customers.

The telecom reported $5.85-billion in revenue for the three-month period ended March 31, up 2.5 per cent from $ 5.71-billion during the same period last year.

Its profit for the quarter came to $934-million, up 36 per cent from $687-million a year ago. The earnings amounted to 96 cents per share, up from 71 cents per share a year ago.

The company attributed the increased profit to higher earnings, higher “other” income and lower severance, acquisitions and other costs compared to the year-ago period.

“This is the first quarter since the start of the pandemic in which our consolidated financial results surpassed pre-COVID levels and I am very proud of the Bell team for their continued focus on operational excellence, and all that they’ve done over the past two years to deliver for our customers,” BCE’s chief executive Mirko Bibic said in a statement.

BCE’s Bell Canada added 34,230 net new postpaid wireless subscribers during the quarter and lost 2,054 prepaid customers. (Postpaid subscribers are billed at the end of the month for the services they used, while prepaid customers pay upfront for wireless services.)

- Alexandra Posadzki

SNC-Lavalin Group Inc. (SNC-T) slid as it reported its first-quarter profit fell compared with a year ago with revenue edging higher to start the year.

The company said its profit from continuing operations attributable to shareholders totalled $24.8-million or 14 cents per diluted share for the quarter ending March 31.

The result compared with a profit of $67.7-million or 39 cents per diluted share in the same quarter last year.

Revenue for the quarter totalled $1.89-billion for the quarter, up from $1.82-billion in the first three months of 2021.

Professional services and project management revenue rose to $1.87-billion compared with $1.8-billion last year, while revenue from its capital business fell to $16.4-million compared with $21.7-million a year earlier.

On an adjusted basis, SNC-Lavalin said its professional services and project management business earned $39.4-million or 22 cents per share for the quarter, down from $83.4-million or 48 cents per share a year ago.

National Bank Financial’s Maxim Sytchev said: “LSTK did not blow up but lower margin in Services will need some questions answered. We continue to grind closer to major fixed-price projects being completed. The future of this company resides with Services, something that all investors are very much in favor. While organic growth is of course welcome (and it was very strong at 8.4 per cent), margin profile was below expectations. Note that management did reaffirm its EBIT margin guidance but there will be some catch-up for the rest of the year given 7.5-per-cent margin for Engineering Services in the quarter. Linxon loss (while immaterial) will also need to be explained amid a 25-per-cent organic growth surge. Growth is nice but (consistent) profitability is more important. Overall, given all the uncertainty around Omicron, etc. at least the bottom has not fallen out.”

Bombardier Inc. (BBD.B-T) declined on Thursday after it reported a smaller quarterly adjusted loss, as the business jet maker generated more margins from sales of its flagship plane to wealthy travelers who are increasingly flying private due to the pandemic.

Corporate jet makers are reporting swelling orders, with more affluent passengers taking charter planes for safety reasons as well as fewer options with airlines cutting routes due to staff shortage and higher fuel costs.

Bombardier said its backlog rose by US$1.3-billion to US$13.5-billion since the beginning of 2022, as affluent passengers continued flying private despite a rebound in airline traffic.

The company said its adjusted earnings before interest, taxes, depreciation and amortization rose 36 per cent in the first quarter on higher profits from sales of its best-selling Global 7500 jet and cost cutting measures.

The company’s first quarter book-to-bill, which measures orders to deliveries, was 2.5 on strong sales activity.

The Montreal-based company’s free cash flow from continuing operations, a metric closely watched by investors, was US$173-million, compared with an outflow of US$405-million a year earlier.

The company reported an adjusted loss of 3 US cents per share in the reported quarter, compared with a loss of 7 US cents per share, a year earlier.

Revenue fell 7 per cent to US$1.2-billion, as the timing of deliveries slipped to until later this year.

More deliveries are timed for later in the year to meet full-year guidance of more than 120 deliveries.

Canadian Natural Resources Ltd. (CNQ-T) declined after it said on Thursday its quarterly net profit more than doubled, helped by a surge in oil and gas prices after Russia’s invasion of Ukraine stoked global supply concerns.

Crude prices have hit 14-year highs this year in response to sanctions on Moscow and global fuel demand has recovered to near pre-pandemic levels at a time when oil supplies face massive disruptions due to Russia’s invasion.

Canadian Natural Resources, one of the largest oil and gas producers in Canada, said its average realized price for oil rose 77.6 per cent to $93.54 per barrel in the first three months of 2022.

Its quarterly production stood at 1.28 million barrels of oil equivalent per day (boepd), marginally up from 1.2 million boepd a year earlier.

The Calgary-based company said net earnings stood at $3.1-billion, or $2.63 cents per share, for the first quarter ended March 31, from $1.38-billion, or $1.16 per share, a year earlier.

Toymaker Spin Master Inc. (TOY-T) gave back early gains in the wake of hiking its revenue guidance for 2022 after sales increased 34 per cent in its latest quarter, causing profits to surge more than tenfold.

The Toronto-based company says it earned US$45.6-million or 43 US cents per diluted share in the first quarter, up from US$3.2-million or three cents per share a year earlier.

Adjusted profits were US$57.5-million or 55 US cents per share, up from US$8.4-million or eight cents per share in the first quarter of 2021.

Revenues for the three months ended March 31 were US$424.2-million, up from US$316.6-million in the prior-year quarter.

Toy revenues increased 37 per cent to US$350.9-million, digital games was up 49 per cent to US$51.1-million, while entertainment dropped 17 per cent to US$22.2-million.

Spin Master was expected to post 17 US cents per share in adjusted earnings on US$368.6-million in revenues, according to financial data firm Refinitiv.

In a research note, Stifel analyst Martin Landry said: “pin Master increased its 2022 guidance calling for low double digits revenue growth (mid-to-high single digits previously) with 40 per cent of the toy gross product sales expected in H1/22, a higher proportion than the historical average of 33-35 per cent. The company unveiled a new segment disclosure, providing more information on digital games. EBITDA for the Digital Games segment reached $23.1 million, up 48 per cent year-over-year, generating healthy EBITDA margins of 45 per cent. We believe that investors will react favorably to these results, which represent the seventh consecutive earnings beat. Spin Master is included in Stifel GMP’s top picks.”

Gildan Activewear Inc. (GIL-T) dropped after it smashed through expectations as its net profit soared nearly 50 per cent in its latest quarter on record revenue due to stronger demand in North America.

The Montreal-based maker of T-shirts, underwear and socks said it earned US$146.4-million or 77 US cents per diluted share in the first quarter.

That compared with US$98.5-million or 50 US cents per share a year earlier.

Excluding one-time costs, adjusted net income reached US$144.3-million or 76 US cents per share, up from US$95-million or 48 US cents per share in the first quarter of 2021.

Revenues for the three months ended April 3 were US$774.9-million, up 31.4 per cent from US$589.6-million in the year ago period. It included US$667-million of activewear items and US$108-million of underwear.

Gildan was expected to earn 51 US cents per share in adjusted profits on US$664.3-million of revenues, according to financial data firm Refinitiv.

“Record results in the first quarter and a strong start to 2022 reflect the impact of Gildan’s Sustainable Growth (GSG) strategy,” stated CEO Glenn Chamandy in a news release.

The company said the 38-per-cent increase in activewear sales was largely driven by volume growth and net selling price increases, as well as favourable product-mix, which partly offset lower shipments to Europe and Asia.

Still, it noted it is starting to see slowing sales for certain products in the hosiery and underwear category that could be related to broader economic factors, including the termination of government stimulus and support payments last year.

Recipe Unlimited Corp. (RECP-T) dipped after reporting a 62-per-cent increase in net profits last quarter despite 79 fewer restaurants and forced closures because of COVID-19.

The Ontario-based restaurant company said it earned $21.1-million or 36 cents per diluted share in the first quarter, compared with $13-million or 22 cents per share a year earlier.

Revenues for the three months ended March 27 were $272.6-million, up 40 per cent from $194.1-million in the first quarter of 2021 as same restaurant sales grew 38.8 per cent.

Recipe was expected to post $254-million in revenues, according to financial data firm Refinitiv.

Total system sales increased to $721.4-million from $537.6-million in the prior-year quarter.

Recipe had 1,251 restaurants at the end of the quarter, down from 1,330 last year. However, it plans to add 30 new locations in 2022 and renovate 40 existing restaurants.

“I am proud of the resilience of our franchise partners and all of our front-line teammates, who once again did a remarkable job managing through a difficult environment,” stated CEO Frank Hennessey in a news release.

“The Omicron variant forced the closure of dining rooms and reduced capacity for 61 per cent of our Operating weeks in Q1. Despite these restrictions, system sales increased 34 per cent as our teams welcomed guests back to our restaurants with strong sales in March as restrictions eased.”

E-commerce sales increased 13.3 per cent to $169.8-million compared with the prior year while retail and catering sales were up 3.3 per cent to $90.5-million.

Recipe Unlimited operates and franchises restaurant brands including Swiss Chalet, Harvey’s, The Keg, St-Hubert, Montana’s and Kelsey’s. The company sold its Milestones restaurant brand on Sept. 26.

Green Thumb Industries Inc. (GTII-CN) decreased in response to reporting a surge in revenue and core profit on Wednesday, as increasing acceptance of marijuana in the United States helped one of the country’s largest weed producers attract more customers.

Eighteen states in the U.S. now allow the sale of cannabis for recreational use, with New Jersey joining the list last month and highlighting a surge in public support and demand for the plant since the onset of the COVID-19 pandemic.

“We now have a $25-billion legal (cannabis) industry and we think over the next several years, or a decade, it will be a $75 billion to $100 billion industry,” Green Thumb Chief Executive Officer Ben Kovler told Reuters.

“We don’t see any other consumer industry with that kind of tailwind at all,” he said, calling the industry’s outlook “incredibly rosy”.

Green Thumb, one of the top three U.S. weed producers by market value, posted a 25-per-cent increase in its first-quarter revenue. Its core profit rose 16.5 per cent to US$77.5-million.

The company saw increased traffic across its 76 open cannabis retail stores, it said in a statement.

“More Americans are buying products. We have new users as a result of state policy, opening up of new markets, as well as higher traffic and increasing user base across current markets,” Ben Kovler noted.

Green Thumb said net income attributable to the company rose to US$28.9-million, or 12 US cents per share, in the three months ended March 31, compared to US$10.4-million, or 5 US cents, a year ago.

U.S. oil producer ConocoPhillips (COP-N) was flat after it reported a five-fold increase in profit versus the same quarter a year ago, beating Wall Street’s estimates, after its strategic focus on oil and gas and decision not to hedge gave it the full benefit of high prices.

Following an oil and gas rally driven by the disruption linked to Russia’s invasion of Ukraine on Feb. 24, it also announced an increase in 2022 targeted returns for its shareholders by 25 per cent to US$10-billion, and said it will raise investments.

While many of the majors have begun to shift their portfolios to lower carbon energy, the Houston-based company is sticking to oil and gas.

It also stands apart in a decision not to hedge its production, a calculated risk that meant it took the full benefit of the rise on international markets.

The Houston-based company adjusted earnings rose to US$4.29-billion, or US$3.27 per share, from US$902-million, or 69 US cents per share, a year earlier, beating Wall Street estimates of US$3.03 per share, according to Refinitiv IBES data.

Its total average realized price was US$76.99 per barrel of oil equivalent (boe), 70 per cent higher than in the first quarter of 2021.

Conoco has a strong presence across conventional and unconventional plays in 16 countries, with big operations in the U.S. Eagle Ford shale, Permian Basin and Bakken shale.

It expects current-quarter production of between 1.67 million boe per day and 1.73 million boe per day, reflecting the impact of seasonal turnarounds planned in Europe and Canada, as well as weather impacts in April in the Bakken.

With files from Brenda Bouw, staff and wires

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