A roundup of some of the North American equities making moves in both directions today
On the rise
The retailer says its profit amounted to 29 cents per share for the three-month period ended Jan. 30.
The result compared with a loss of $44.6-million or $1.06 per share a year earlier when the company took a large goodwill charge.
On an adjusted basis, Roots says it earned $16.3-million or 39 cents per share, up from an adjusted profit of $13.3-million or 31 cents per share a year earlier.
Sales in what is traditionally the strongest quarter for the company totalled $99.4 million, down from $127.5 million.
Roots says the drop was due to temporary store closures due to the pandemic, partially offset by strong online sales.
“Despite the fact that most of our retail locations were closed during what is typically our busiest and most productive time of the year, we were able to deliver profitability for the fourth quarter that was in line with the previous year when all of our stores were open,” Roots chief executive Meghan Roach said in a statement.
“While we continue to face government mandated temporary store closures in Q1 2021, we are confident in our capabilities to manage the business through these challenging times.”
In a note, Research Capital analyst Yue Ma said: “Oncidium is one of Canada’s leading health management companies that has built a difficult-to-replicate ecosystem of more than 1,000 health care practitioners and over 500 loyal clients (many are Fortune 500 companies) employing over 2 million employees across the country. Oncidium’s services focus on helping employers optimize employee disability management through offering virtual occupational health, medical assessment and absentee management. This transformative deal not only is financially accretive to DOC but also provides the company with significant cross-selling opportunities via the 2 million employees, expands its national footprint and product offerings, as well as, increases its medical capacity.”
Enerplus said it will buy 78,700 net acres in North Dakota, adjacent to its current core Bakken acreage, with about 6,000 barrels of oil equivalent per day (boepd) of working interest production from Hess.
The acquisition of largely undeveloped land has expanded Enerplus’ drilling inventory in the play by two to three years, Scotiabank analysts wrote in a note, adding its five-year plan to grow production modestly and emphasize free cash flow will likely be well received by investors.
The deal, expected to close in May, will add to Enerplus’ adjusted free cash flow per share and net asset value in the first year, Enerplus said. The company raised its output guidance for the year to between 111,000 and 115,000 boepd, from 103,500 to 108,500 boepd, due to the acquisition as well as strong operating performance in North Dakota and higher-than-expected production in Pennsylvania’s Marcellus region.
It also raised its 2021 spending plans to $360 million to $400 million from $335 million to $385 million.
For Hess, the sale of the acreage, which it was not planning to drill before 2026, strengthens its cash and liquidity position. Last month, the company agreed to sell stakes in the two Danish oilfields to chemicals and energy group INEOS for $150 million.
ATB Capital Markets analyst Patrick O’Rourke said: “Overall, we view the event as positive and anticipate a positive relative performance. The acquisition, in our view, ticks key synergistic boxes, with the assets being a strong fit with existing Bakken footprint, adding meaningful inventory (110 new tier-one locations relative to the prior 440 existing locations), while prior judicious management of the capital structure allows the deal to be funded through a still conservative net debt position (ERF projecting 2021 estimated 1.3 times D/CF, reducing to 1.0 times in 2022) and create per share CF and FCF accretion. The Company also provided an initial look at the five-year plan that projects 3-5-per-cent liquids production growth on the back of $500-million annual capex program that produces an impressive FCF forecast of $1.2-1.8-billion between now and 2025 that points to considerable flexibility for future debt repayment, return of capital (dividend growth path?) and further acquisitions.”
The company reported revenue of $24.5-million, up 66.5 per cent year-over-year and exceeding the Street’s forecast of $16.6-million. EBITDA of $4.4-million was also ahead of the consensus estimate ($2.9-million).
The Vaughan, Ont.-based company will now pay 11 US cents per share, up from 10 US cents previously.
Chip shortages have caused delays in a key step in MacBook production, the report said, adding that some iPad assembly was postponed because of a shortage of displays and display components.
As a result of the delay, Apple has pushed back a portion of component orders for the two devices from the first half of this year to the second half, the report said, citing sources briefed on the matter.
According to the report, Apple’s production plans for iPhones have not been affected by the supply shortage, however, the supply of some components for the devices is “quite tight”.
The shortage of components remains a supply chain issue for Apple, but has not yet impacted any product availability for consumers, Nikkei added.
Conagra Brands Inc. (CAG-N) finished flat after it reported better-than-expected quarterly sales on Thursday, as customers cooking more at home due to the COVID-19 pandemic stocked up their pantries with the packaged food company’s products.
Conagra’s business has been benefiting from rising at-home consumption during the health crisis as lockdowns and other social-distancing restrictions push people to cook more at home.
The restrictions have especially lifted demand for packaged foods with long shelf lives, such as Chef Boyardee Pastas and Birds Eye Frozen vegetables.
Conagra’s sales of groceries and snacks rose 10.8 per cent in the third quarter, while sales of frozen foods jumped 11.7 per cent.
Net sales rose 8.5 per cent to US$2.77-billion in the quarter ended Feb. 28, beating analysts’ estimates of US$2.72-billion, according to Refinitiv IBES data.
On the decline
Canopy Growth Corp. (WEED-T) said on Thursday it will buy rival Supreme Cannabis Co Inc. (FIRE-T) for $323.3-million, as the world’s biggest cannabis producer bolsters its portfolio to tap surging demand.
Shares of Canopy fell after it announced the cash-and-stock deal for Supreme, which owns pot brands including 7ACRES and Blissco.
Easing regulatory hurdles and a rise in weed use during the pandemic has brought back investor dollars for cannabis producers after years of underperformance.
Canada saw legal recreational weed sales surpass illicit channels for the first time in the fourth quarter of last year.
The deal makes Canopy the owner of four out of the top ten cannabis brands in Canada, with an estimated 13.6 per cent of the total recreational market share in the country, the companies said.
Under the terms of deal, Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share and $0.0001 in cash in exchange for each Supreme Cannabis share held.
Including debt, the deal is valued at $435-million.
The company says GRI Investments Inc., a private corporation controlled by the Rossy family, the Rossy Foundation and chief executive Neil Rossy are selling 618,369, 1,205,066 and 376,565 Dollarama shares respectively in block trades to a financial institution.
Dollarama says the sale by the Rossy Foundation will be used to fund its commitments to charitable organizations, while the sales by GRI Investments and Neil Rossy were made for financial diversification purposes.
Once the trades are settled, Dollarama says GRI Investments, the Rossy Foundation and Neil Rossy will still hold a total of nearly 13.1 million shares in the company for a 4.2-per-cent stake.
After falling along with the rest of the stock market in the early days of the pandemic, shares in Dollarama have recovered and have been trading near their 52-week high in recent days.
Box Inc. (BOX-N) dropped after it said on Thursday private equity giant KKR & Co Inc led a US$500-million investment in the cloud services provider, with the company planning to use most of the funds for a stock buyback.
A self-tender for the buyback, whose pricing and amount of shares has not yet been decided, will begin after Box releases its first-quarter results in May this year.
The KKR-led investment will be executed through convertible preferred stock and comes weeks after Reuters reported that Box was exploring a sale amid pressure from hedge fund Starboard Value LP over its stock performance.
“The investment from KKR is a strong vote of confidence in our vision, strategy, and continued efforts to increase growth and profitability,” said Aaron Levie, the chief executive officer of Box.
After the investment, which is expected to close in May, KKR’s Head of Americas Technology Private Equity John Park will join Box’s board, making him its tenth member.
GameStop Corp. (GME-N), which has been part of a recent Reddit-driven trading frenzy, fell after it said it intends to elect Ryan Cohen, the videogame retailer’s biggest shareholder and board member, as chairman following its annual meeting.
Since Chewy co-founder Cohen joined GameStop’s board in January, he has been pushing towards transformation of the brick-and-mortar retailer into an e-commerce firm that can take on big-box retailers such as Target Corp and technology firms such as Microsoft Corp.
The company also said on Thursday it was nominating six people, including Cohen, to stand for election to its board at the annual meeting of stockholders on June 9.
The announcement comes after GameStop on Monday increased the value of the new stock it may sell to US$1- billion from US$100-million, as it seeks to capitalize on a surge in its shares from the Reddit-driven rally.
The GameStop stock has rampaged over 900 per cent higher since January in highly volatile trading as amateur investors organized on social media sites such as Reddit staged a stubborn buying spree, winning out over Wall Street hedge funds that had shorted its shares.
With files from staff and wires