A roundup of some of the North American equities making moves in both directions today
On the rise
Oil and gas producer Canadian Natural Resources Ltd. (CNQ-T) was higher after it beat analysts’ estimates for fourth-quarter profit on Thursday, as crude prices staged a steady recovery during the period from pandemic-driven lows, also helping boost its dividend.
The company produced 1.2 million barrels of oil equivalent per day (boepd) in the fourth quarter, compared to 1.1 million boepd in third.
Canadian Natural said average realized prices for crude rose 1 per cent to $40.56 per barrel, while realized prices for its natural gas, a byproduct of crude production, was $2.94 in the quarter, excluding hedging, compared to $2.31 in third.
On an adjusted basis, the Calgary-based company posted a profit of $176-million, or 15 cents per share, in the quarter ended Dec. 31, compared with $135-million, or 11 cents, in the third quarter.
Excluding one-items, the company earned 15 cents per share, beating analysts’ average estimate of 13 cents, according to Refinitiv data.
The company also hiked its quarterly dividend to 47 cents per share payable on April 5, compared with the 42.5 cents dividend it paid on Jan 5.
U.S. oil and gas producer Ovintiv Inc. (OVV-T) rose in the wake of saying it has added a nominee of hedge fund Kimmeridge Energy Management to its board, ending a proxy fight and winning the fund’s support at its annual shareholder meeting.
Kimmeridge has a 2.5-per-cent stake and is among Ovintiv’s top 10 shareholders. It launched a proxy fight for three board seats in January and had urged the company to alter its capital spending and focus on governance.
The company said Katherine Minyard, investment principal at Denver, Colorado-based Cambiar Investors, will join the board, while the fund will withdraw the nominations of founder Ben Dell and Columbia University research scholar Erin Blanton as independent directors.
Kimmeridge began its push for changes at Ovintiv in November last year, flagging concerns about executive compensation and lack of board refreshment. In January, the fund expanded its demands to include cut costs and sale of non-core assets.
Since then, Ovinitiv, formerly a Canadian company known as Encana, has announced the sale of its Duvernay assets in Alberta, set new debt reduction goals and aligned its executive compensation with climate change related targets.
Descartes Systems Group Inc. (DSG-T) jumped with the release of better-than-anticipated quarterly results after the bell on Wednesday.
The Waterloo, Ont.-based tech firm reported revenue rose 11 per cent year-over-year to US$93.4-million, exceeding the consensus forecast of US$89.5-million due largely to a strong service performance. Adjusted EBITDA rose 20 per cent to US$38.6-million, also topping the Street’s forecast (US$36.9-million).
In response to the release, several equity analysts raised their target prices for its shares before the bell.
Calfrac Well Services Ltd. (CFW-T) saw gains after it reported a fourth-quarter profit of $125.9-million, boosted by a gain on the settlement of debt.
The oilfield services company says the profit for the quarter ended Dec. 31 amounted to $2.19 per diluted share.
The result included a $226.3-million gain on the settlement of debt and a $54.2-million deferred income tax expense.
Calfrac posted a net loss of $49.4-million or $17.07 per share diluted in the fourth quarter of 2019 when it had fewer shares outstanding.
Revenue totalled $180.7-million, down from $317.1-million a year earlier.
Calfrac underwent a recapitalization plan late last year that saw holders of its senior unsecured notes swap debt for shares, leaving existing shareholders with a reduced stake in the company.
Bombardier Inc. (BBD-B-T) finished higher after saying it expects to turn free cash flow positive next year and generate more than US$500-million in cash annually by 2025 as the the market for private executive jets gradually picks up steam.
It will take several years for industry sales to return to the prepandemic levels of 2019, the Montreal-based company said in a statement Thursday morning ahead of a presentation to investors. But as result of past aircraft investments, Bombardier said it is poised to deliver “solid financial performance, highlighted by strong earnings growth over the next five years.”
The company said it is targeting total revenues of about US$7.5-billion by 2025 and adjusted earnings before interest, taxes depreciation and amortization of US$1.5-billion. It said it expects to achieve an EBITDA profit margin of about 20 per cent and end that year with a ratio of net debt to earnings of 3 times.
Chief executive Eric Martel is steering Bombardier into a new future as a standalone maker of private luxury jets after it sold off its commercial-aircraft manufacturing capability to Airbus, Mitsubishi Heavy Industries Ltd. and Longview Aviation Capital Corp. It then unloaded its train unit to France’s Alstom SA for net proceeds of US$3.6-billion in a transaction that closed this past January.
- Nicolas Van Praet
On the decline
Shares of Ottawa-based Kinaxis Inc. (KXS-T) dropped in response to weaker-than-anticipated quarterly earnings and guidance.
“Despite beating sales estimates, KXS under-delivered on EBITDA and introduced lower-than-anticipated 2021 guidance,” said Laurentian Bank Securities analyst Nick Agostino in a note.
Turquoise Hill Resources Ltd. (TRQ-T) fell in the wake of saying on Thursday Chief Executive Officer Ulf Quellmann has resigned after top shareholder Rio Tinto told the Canadian miner it plans to vote against his re-election.
The company said it has appointed Steeve Thibeault as interim CEO.
Turquoise Hill has been locked in a feud with Anglo-Australian miner Rio Tinto Plc, which holds 51 per cent of the company, over the underground expansion of the massive Oyu Tolgoi copper mine in Mongolia, in which Turquoise owns a 66-per-cent stake.
Tensions between mine operator Rio and Turquoise Hill’s management and minority shareholders have spilled into the open in recent months.
Turqoise said that in recent discussions, Rio had informed the company’s board that it plans to vote against Mr. Quellmann’s re-election at the annual shareholders’ meeting in May as the London-listed miner believes new leadership was needed at Turquoise to advance work at Oyu Tolgoi.
Payments firm Square Inc. (SQ-N) fell on news it has agreed to buy a majority ownership stake in Tidal, a music streaming service owned by rapper Jay Z, for US$297-million in cash and stock.
Square, co-founded by Twitter Inc Chief Executive Officer Jack Dorsey, said Jay Z, whose real name is Shawn Carter, would become a member of Square’s board of directors.
“Why would a music streaming company and a financial services company join forces?!... It comes down to a simple idea: finding new ways for artists to support their work,” Dorsey said on Twitter.
Square did not disclose the percentage of the ownership stake.
Tidal calls itself an artist-owned service backed by Kanye West, Beyoncé, Madonna, Rihanna and Nicki Minaj among others, and is available in more than 56 countries.
Tidal will operate independently within Square and existing artist shareholders will be the remaining stakeholders, Square said in a statement.
Walt Disney Co. (DIS-N) was lower after saying late Wednesday it will close at least 60 Disney retail stores in North America this year, about 20 per centof its worldwide total, as it revamps its digital shopping platforms to focus on e-commerce.
The media and entertainment company also is evaluating a significant reduction of stores in Europe, a spokesperson said, adding that locations in Japan and China will not be affected. Disney currently operates roughly 300 Disney stores around the globe.
The company did not say how many people would lose their jobs as a result of the closures.
Consumers have been moving to digital shopping over physical locations, and chains including Walmart Inc and Macy’s Inc have shuttered brick-and-mortar stores. The global coronavirus pandemic accelerated that change when people were forced to stay home.
“While consumer behavior has shifted toward online shopping, the global pandemic has changed what consumers expect from a retailer,” said Stephanie Young, president of Disney’s consumer products, games and publishing.
Shares of Marvell Technology Group Ltd. (MRVL-Q) fell as the designer of 5G networking chips predicted supplies could remain tight through its fiscal 2022.
Marvell forecast revenue and adjusted profits for its current fiscal first quarter with midpoints of US$800-million and 27 US cents per share, respectively, in line with analyst expectations of US$793.3-million and 27 US cents per share, according to IBES data from Refinitiv.
Snapchat-owner Snap Inc. (SNAP-N) was flat as the company’s chief executive, Evan Spiegel said the tech company expects to deliver 50-per-cent annual revenue growth over several years even without growing its user base or engagement.
Mr. Spiegel clarified a previous estimate by saying 50-per-cent annual revenue growth does not depend on further user or engagement growth, and reflects the “steady state” of the current business. He spoke at the virtual Morgan Stanley Technology, Media and Telecom Conference on Wednesday.
Mr. Spiegel said Snap can grow its average revenue per user as it continues to develop augmented reality products like photo filters and add more media content, such as shows within its discover feature.
The company, which owns popular photo-messaging app Snapchat, earns revenue by selling ads on the app and has focused heavily on developing better ad formats for brands, as well as helping advertisers sell products to young audiences throughout the pandemic.
David Leeder