A roundup of some of the North American equities making moves in both directions today
On the rise
The Calgary-based company revealed adjusted earnings before interest, taxes, depreciation and amortization of $466-million, meeting the consensus expectation on the Street ($467-million), while adjusted funds from operations per share of $1.09 was 4 cents shy of the analysts’ forecast.
Raymond James analyst Chris Cox said: “While a largely in-line quarter, we suspect the Street will nevertheless be encouraged by progress on the asset sale front. There’s still a lot more wood to chop for the company to reach its $1.5-$2.0-billion of targeted asset sale proceeds, but this is an important first step. Of increasing focus is also the opportunity for the company to optimize returns across the WGL Utility business; assuming the company is successful in its application to the MPSC, this would represent appreciable upside to the earnings profile of the business over the coming years, with the potential for additional opportunities like this elsewhere across the WGL Utility business.”
Ballard Power Systems (BLDP-T) sat 4.3 per cent higher after it announced that it has reached an agreement with Weichai Ballard Hy-Energy Technologies Co., Ltd. “for the supply of a mix of certain fuel cell products and components that will be used in the assembly of modules to power zero-emission fuel cell electric vehicles (FCEVs) in China.”
“This is a very exciting next step for our Weichai-Ballard joint venture,” stated Ballard CEO Randy MacEwen. “Weichai’s commitment to support the deployment of 2,000 FCEVs in China is the largest to date globally. It will enable further fuel cell cost reductions as we move toward commercial scaling.”
Ballard said the order will have a total value of approximately $44-million to the company.
The company said in the filing that it would seek to raise US$650-million in new shares and US$1.35-billion in debt, with underwriters having the option to buy an additional 15 per cent of each offering, potentially raising the proceeds to US$2.3-billion.
“This was a smart move by Musk and Tesla to rip the band-aid off and go to the capital markets,” Dan Ives, an analyst with Wedbush Securities said in a note.
“The growing worries around capital were a black cloud over the stock on the heels of the company’s troubled March results and the choppy path ahead.”
Under Armour Inc. (UAA-N) shares jumped 3.5 per cent after it raised its full-year earnings forecast following better-than-anticipated quarterly results beat estimates on Thursday, driven by higher sneaker sales in international markets and an improvement in its sluggish North America business
It now expects profit of 33 US cents to 34 US cents per share for the year, up from a previously expected range of 31 US cents to 33 US cents.
On the decline
Bombardier reported first quarter earnings that are largely in line with preliminary results announced last week.
Adjusted core earnings climbed by US$1-million to US$266-million in the three months ending March 31, while revenue fell 13 per cent to US$3.5-billion. Free cash flow usage was $1-billion for the quarter.
Desjardins Securities analyst Benoit Poirier said: “Ehile 1Q19 results were mostly in line with pre-released figures on April 25, we expect a slight positive reaction at first glance given the proposed divestiture of the Belfast and Morocco aerostructures businesses. It is still too early for us to estimate the value of the assets to be sold and the associated cost savings due to limited details on their financial performance, but we believe some investors might view the divestiture favourably considering BBD’s elevated debt level.”
The Calgary-based company reported funds from operations per share of $1.64, which exceeded the consensus forecast on the Street by 6 cents. Production of 764,000 barrels of oil equivalent per day also topped the analysts’ expectation (763,000 boe/d).
On Thursday, Suncor said produced record volumes of synthetic crude oil in the first quarter, as it sought to maximize high-value production to offset the impact of Alberta government curtailments.
While a number of integrated producers, including Suncor, have criticized the government intervention in the market, company profits improved this quarter after a rebound in prices as a result of curtailments.
In a research note, Raymond James analyst Chris Cox said: “Overall, a solid quarter out of Suncor. While cash operating costs in the oil sands were higher than we had been expecting, we believe the Street will look through this figure as being driven primarily by the mandated production cuts in Alberta and some short-term acceleration of overburden removal, which should reverse in the coming quarters. Even with the impact of the mandated production cuts and higher operating costs, Suncor was still able todeliver an impressive $1.7-billion of free cash flow in the first quarter alone. While spending is likely to pick up over the balance of the year, we still see free cash flow eclipsing more than $2 bln per quarter at strip pricing, supporting a top-tier cash return story in the space.”
The Montreal-based company’s adjusted earnings per share were 77 cents, down from 80 cents per share a year earlier and one cent below the average analyst estimate.
Shares of Manulife Financial Corp. (MFC-T) erased early gains and sat 0.3 per cent lower after it beat profit estimates for the first quarter, due largely to a boost from growth in Asia.
The company’s core earnings rose 18.8 per cent to $1.55-billion, or 76 cents per share, in the quarter.
Analysts on average had expected a profit of 70 cents per share.
“We delivered another quarter of strong core earnings and net income, both of which achieved solid double-digit growth over last year,” said president and chief executive officer Roy Gori in a release. “New business value grew 31 per cent with double-digit increases across all of our operating segments. And while net flows were negative, they improved significantly from the prior quarter.”
“We continue to make progress in the execution of our digital customer-centric strategy, including the roll-out of our electronic claims systems in Asia , as well as an industry-first voice-enabled retirement product in the U.S."
The Hamilton-based company’s revenue rose 7 per cent year-over-year to $517-million, but it fell short of analysts’ forecast of $533-million. Net income rose to $43-million or 48 cents per share versus $29-million or 33 cents a year ago. Analysts were expecting 64 cents.
“In the first quarter of 2019, we continued to demonstrate the benefits of our tactical flexibility business model by delivering year-over-year improvements in revenue, tariff adjusted EBITDA and tariff adjusted EBITDA per net ton,” said chief executive officer David Cheney. “As we look forward, demand from most of our key end markets remains stable and we are utilizing our logistics infrastructure to continue to expand our market footprint.”
After announcing the $342.9-million acquisition of Germany’s C3 Cannabinoid Compound Company, Canopy Growth Corp. (WEED-T) was down 4.4 per cent.
“The acquisition brings together Canopy Growth’s medical business with Europe’s largest cannabinoid-based pharmaceuticals company,” the company said. “C(3) is a leading manufacturer and distributor of dronabinol, a registered pharmaceutical drug in Germany, Austria, Switzerland, and Denmark.”
Great-West Lifeco Inc. (GWO-T) was down 3.1 per cent after first-quarter results that fell short of expectations.
Before the bell, the Toronto-based company reported earnings per share of 67 cents for the quarter, missing the consensus expectation by a dime and falling 7 cents from the same period a year ago.
“Sales growth was strong and business fundamentals remained sound despite the weaker earnings performance in the first quarter,” said president and CEO Paul Mahon in a statement. “We have undertaken a number of strategic actions since the beginning of the year to position the Company for long-term sustainable growth. Our capital position remains robust and we continue to evaluate opportunities, including acquisitions, to advance our business strategies and drive profitable growth.”
“We remain confident that we can deliver our 2019 outlook, despite being disappointed with our first quarter performance. To address the under-performance of Q4, we simplified our structure to four reporting E&C sectors, underpinned by the new Project Oversight function, and intensified our cost reduction program. At the heart of this structure is the appointment of Ian Edwards , our new Chief Operating Officer, who has a mandate to ensure greater collaboration among our business segments and to have laser focus on excellence in execution, which we believe will allow us to deliver more predictable results and cash generation, and grow our business responsibly”, said president and chief executive officer Neil Bruce in a press release.
Desjardins Securities analyst Benoit Poirier said: “Overall, we expect the stock to react negatively this morning considering the weaker-than-expected 1Q19 results and potential higher costs associated with the break fee if the current shareholder exercises its right of first refusal.”
Laurentian Bank Securities analyst Nauman Satti said: “SNC Q1/19 results were well below the estimates as the E&C segment continues to remain under pressure. The Resource segment, which includes mining & metallurgy and oil & gas operations, remains the main culprit in terms of profitability. Although, management has kept its full year guidance for E&C unchanged at $900-$950-million, we take that with a grain of salt as only recently management had revised its guidance downwards in a matter of two weeks. Management is undertaking a cost reduction program that it believes will deliver $250-million in savings annually, with the expectation of $100-million being realized in 2019. We believe the future visibility in the resources segment remains unclear and the negative trend is likely to continue for the remainder of the year.”
The Vaughan, Ont.-based marijuana company is aiming to use the gross proceeds of US$170-million for general corporate purposes, including cultivation and facility expansion, expanded outdoor growing, international expansion, enhanced extraction capacity, upgrades for GMP Certification and biosynthesis development.
Kellogg Co. (K-N) dropped 3.4 per cent after it announced it will replace its chief financial officer and reporting a 36.5-per-cent decline in first-quarter earnings, pointing to a strong U.S. dollar and higher costs.
The packaged food company said CFO Fareed Khan will be replaced on July 1 by Amit Banati, who currently leads its Asia Pacific, Africa and Middle East business.
Net income attributable to Kellogg fell to US$282-million, or 82 US cents per share, in the quarter ended March 30, from US$444-million, or US$1.27 per share, a year earlier.
Excluding items, Kellogg’s earnings were US$1.01 per share, exceeding the Street’s consensus estimate of 95 US cents.
With files from staff and wires