A roundup of some of the North American equities making moves in both directions
On the rise
Before the bell, the Montreal-based manufacturer of pressure treated wood products reported second-quarter EBITDA of $180-million, up 50 per cent year-over-year and easily topping the Street’s forecast of $155-million. Adjusted earnings per share rose 73 per cent to $1.76, also above the consensus estimate of $1.47.
However, management now expects full-year EBITDA in a range of $410-million to $440-million, down from $450-million to $480-million previously due to a price slump that has impacted residential lumber sales. The Street was expecting $455-million.
“Overall, while we believe the guidance revision was somewhat expected by the Street given the recent stock price performance (down 15 per cent from its 52-week high vs a rise of 6 per cent for the S&P/TSX over the same period), we expect some weakness as investors formally absorb these new market conditions,” said Benoit Poirier of Desjardins Securities.
Toronto-based H&R REIT (HR.UN-T) was higher on the premarket announcement it is unloading its ownership in the Bow, Calgary’s signature office tower that was once the pride of Encana Corp., in a multi-part deal designed to decrease its exposure to the city’s troubled office market and to slash its debt burden.
H&R, which owns a mix of office, industrial, residential and retail properties, is selling the Bow along with an office complex in Mississauga to two parties, Oak Street Real Estate Capital and Deutsche Bank Credit Solutions and Direct Lending. The REIT plans to use the roughly $800-million in net cash proceeds to repay corporate debt.
- Tim Kiladze
Conocophillips (COP-N) gained after posting a second-quarter profit that nearly doubled from the first and topped analysts estimates, helped by higher oil and gas prices and production.
A recovery in fuel demand from a pandemic-forced slump has boosted globally-traded crude prices to over $70, raising earnings of oil and gas producers.
In a departure from previous cycles, however, producers have chosen to boost shareholder payout and slash debt rather than spend on production at the higher prices.
ConocoPhillips raised its share buyback plans in June by US$1-billion and increased the expected savings from its US$10-billion acquisition of Permian basin producer Concho for a second time.
The company’s production, excluding Libya, rose 4 per cent to 1.55 million boe per day in the second quarter from the first.
Conocophillips said prices for its oil and gas rose 10.3 per cent to average $50.03 per barrel of oil equivalent (boe) in the three months to June 30.
It expects current-quarter production to be between 1.48 million boe per day and 1.52 million boe per day, including seasonal maintenance plans in Alaska and the Asia Pacific region.
The company had cut its 2021 capital expenditures by US$200-million from its prior forecast of US$5.5-billion in June, and estimates adjusted operating costs to be US$100-million lower at US$6.1-billion
Adjusted earnings rose to US$1.72-billion, or US$1.27 per share, in the second quarter, from US$902-million, or 69 US cents per share, in the first.
Analysts had on average estimated a profit of US$1.10 per share, according to Refinitiv IBES estimates.
Shares of Under Armour Inc. (UAA-N) soared in the wake of raising its annual forecasts on Tuesday after its quarterly results topped estimates on strong demand for its athletic apparel and footwear, while customers return to gyms and yoga classes following easing of coronavirus curbs.
Athletic apparel makers, including Under Armour, Nike and Adidas AG, received a sales boost from customers turning to healthy living and outdoor experiences such as hiking and jogging when gyms were temporarily closed.
Reopening of offices and bars is expected to shift some consumer spending toward dressier apparel, but analysts expect the resumption of team sports in schools and colleges in Europe and North America to help counter the impact of any such shift.
Under Armour forecast 2021 adjusted earnings per share of 50 US cents to 52 US cents, compared with a previous outlook of 28 US cents to 30 US cents, as it expects to benefit from higher prices.
The company also said it expects 2021 revenue to rise in low-20s percentage, compared with a previous outlook of a high-teen percentage increase.
Analysts on average expect profit per share of 35 US cents and revenue growth of 19.5 per cent for 2021.
In the second quarter ended June 30, net revenue at Under Armour’s apparel division more than doubled to US$874.2-million, helping overall net revenue rise 91 per cent to US$1.35-billion.
Analysts on average had expected net revenue of US$1.21-billion, according to IBES data from Refinitiv.
On an adjusted basis, Under Armour earned 24 US cents, crushing estimates of 6 US cents.
On the decline
The Mississauga-based company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $67.4-million, exceeding the Street’s forecast by 9 per cent. The beat was driven by strong revenue of $172.1-million, which was higher than the consensus estimate by 6 per cent.
“Cargojet continues to benefit from a shift in consumer behavior towards online shopping as overnight business demand remained robust,” said Laurentian Bank Securities analyst Nauman Satti in a note. “B2B business remains weak but we expect that to gradually return, albeit with some normalizing of B2C demand. Meanwhile, the international business can gradually add to an additional revenue stream for the company. Net/Net we continue to like CJT’s long-term growth strategy and Q2 results reinforce that thesis.”
Bausch Health Companies Inc. (BHC-T) was lower after saying on Tuesday it planned to pursue an initial public offering of its medical esthetics business Solta Medical, as the company looks to further cut debt and hasten the spin-off of eye care unit Bausch + Lomb.
The Canadian drugmaker, previously known as Valeant Pharmaceuticals, has been shedding non-core assets to pay down debt, which piled up due to aggressive deal-making under former Chief Executive Officer Mike Pearson.
Bausch said in March it would sell its entire stake in Egypt’s Amoun Pharmaceutical Co SAE and last year announced plans to spin off Bausch + Lomb.
Solta’s IPO will now create three companies including Bausch + Lomb and Bausch’s drug products business Bausch Pharma.
Solta, which reported 2020 revenue of US$253-million, offers anti-aging laser skin treatments such as Clear + Brilliant and is part of Bausch’s ortho dermatologics business.
The company’s current chief strategy officer and president of its ortho dermatologics unit Scott Hirsch has been named as the chief executive officer of Solta, Bausch said.
The IPO, expected in the fourth quarter of 2021 or the first half of 2022, will unlock the value of Solta and give Bausch ownership of an entity that will compare more favorably to other medical esthetic companies, the drugmaker said.
As a publicly traded company, Solta will be domiciled in Canada and there are plans for it to be listed on the Nasdaq stock exchange, Bausch said.
Davis, Polk & Wardwell in the United States and Osler, Hoskin & Harcourt in Canada are acting as lead legal counsels for the IPO.
As of June 30, Bausch Health had total long-term debt of US$23.69-billion, down from US$24.19-billion in December
Hotel operator Marriott International Inc. (MAR-Q) fell as it beat Wall Street estimates for quarterly profit as a recovery in travel began to aid a battered global tourist industry.
Marriott’s results come at a time when a new wave of COVID-19 cases fueled by the Delta variant of the coronavirus is striking countries worldwide, potentially upending travel plans.
The company, which owns hotel brands such as the JW Marriott and the Ritz-Carlton, said second-quarter occupancy in its key U.S. & Canada and Greater China markets rose to 56.1 per cent and 62.4 per cent, respectively, compared to 19.6 per cent and 35.5 per cent a year earlier.
While occupancy has recovered from last year’s lows, it remains well below the rates seen before the pandemic.
The company’s comparable RevPAR – a key performance measure for the hotel industry – fell 43.8 per cent during the reported quarter, compared to the second-quarter of 2019.
“While we are keeping a close eye on the Delta and other variant strains, we are optimistic that the upward trajectory of the global recovery will continue,” Chief Executive Officer Anthony Capuano said.
Excluding items, Marriott earned 79 US cents per share, beating analysts’ average estimate of 45 US cents per share, according to IBES data from Refinitiv.
Revenue rose 115.1 per cent to US$3.15-billion, but fell short of Wall Street’s expectation of US$3.21-billion.
China’s Alibaba Group Holding Ltd. (BABA-N) was lower after it missed analyst estimates for first-quarter revenue on Tuesday, as its e-commerce business was hurt by rising competition from smaller players such as JD.Com Inc and Pinduoduo Inc.
Alibaba’s results mirror those of e-commerce giant Amazon.com Inc in the United States, as the easing of pandemic-related restrictions has led to more consumers visiting physical stores rather than ordering online.
Core commerce revenue for Alibaba rose about 35 per cent to 180.24 billion yuan in the quarter, compared with estimates of 184.23 billion yuan. In the fourth quarter, the unit’s revenue was up more than 70 per cent.
Overall, revenue rose about 34 per cent to 205.74 billion yuan (US$31.83-billion) in the first quarter ended June 30, below estimates for 209.39 billion yuan, according to IBES data from Refinitiv.
Net income attributable to shareholders fell to 45.14 billion yuan, compared with 47.59 billion yuan a year earlier.
On an adjusted basis, the company earned 16.60 yuan per share, above estimates for 14.43 yuan.
Ant Group, the fintech affiliate of Alibaba Group, recorded a profit of about 13.48 billion yuan in the quarter ended March, according to the Chinese e-commerce giant’s filing.
Alibaba, which holds about a third of Ant, posted a profit of 4.49 billion yuan for the quarter ended June 30 from its investments in the financial conglomerate.
The results come amid an ongoing Chinese regulatory crackdown on industry, during which Alibaba has become one of the main targets.
Late last year, regulators halted a planned $37 billion IPO of Ant Group in Shanghai and subsequently called for a restructuring of the financial unit.
Later, in April, China’s anti-monopoly regulator fined Alibaba $2.75 billion for engaging in anti-competitive practices.
During an earnings call with investors, Alibaba CEO Daniel Zhang said the company would continue to monitor the impact of ongoing regulatory changes on the company’s business.
He cited a recent regulatory crackdown on community marketplace platforms letting sellers offer items below market price as one example of a sector the company is monitoring.
Clorox Co. (CLX-N) forecast full-year sales below Wall Street estimates on Tuesday, as demand for its bleaches, wipes and other surface cleaners eased from pandemic highs, sending its shares down
Easing COVID-19 restrictions in the United States are prompting people to reduce purchases of surface cleaners and other sanitation products from last year when cleaning products makers benefited from a pandemic-driven frenzy in demand although demand is still higher than before the pandemic.
Sales in the company’s health and wellness division, its biggest unit by sales and home to Clorox disinfecting wipes, fell 17 per cent.
Net sales fell to US$1.80-billion from US$1.98-billion in the fourth quarter, missing the average analyst estimate of US$1.92-billion, according to Refinitiv IBES data.
The company said it expects fiscal 2022 sales to fall in the range of 2 per cent to 6 per cent, compared with the average analyst estimate of a 1-per-cent decline, according to Refinitiv IBES data.
With files from staff and wires