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A roundup of some of the North American equities making moves in both directions

On the rise

Fertilizer company Nutrien Ltd. (NTR-T) was higher after it raised its full-year adjusted profit outlook, citing robust demand in the global crop and fertilizer markets.

Crop prices continue to be supported by strong demand and less than expected supply, resulting in historically low global inventory and strong grower margins, the company said in a statement.

Nutrien also raised its full-year 2021 adjusted core EBITDA outlook to between US$6-billion and US$6.4-billion, from US$4.4-billion to US$4.9-billion.

The company said the increased forecast reflects higher expected results across business, as well as the benefits of increasing 2021 potash sales outlook by one million tonnes to address global demand.

It now expects potash sales between 13.5 million tonnes and 13.9 million tonnes.

“Global potash shipments are projected to reach a record 69 to 71 million tonnes in 2021, while inventory in key regions are expected to be historically low going into 2022,” Nutrien added.

The Saskatoon-based company now expects adjusted net earnings per share outlook to be between $4.60 and US$5.10 for the year, from a prior forecast of US$2.55 to US$3.25.

Analysts, on average, were expecting US$3.93 per share for full-year 2021, according to Refinitiv IBES data.

Nutrien also said net earnings rose to US$1.11-billion, or US$1.94 per share, for the three months ended June 30, from US$765-million, or US$1.34 per share, a year earlier.

However, on an adjusted basis its profit of US$2.08 per share, fell slightly short of Wall Street’s estimate of US$2.09 per share.

Hydro One Ltd. (H-T) rose after it reported a second-quarter profit of $238-million as its revenue edged higher.

The power utility says the profit for the quarter ended June 30 amounted to 40 cents per diluted share compared.

The result compared with a profit of $1.1-billion or $1.84 per diluted share a year ago when the company recorded a one-time gain of $867-million due to an Ontario court ruling on a deferred tax asset appeal that set aside an Ontario Energy Board decision.

Revenue in the quarter was $1.72-billion, up from $1.67-billion in the same quarter last year.

On an adjusted basis, Hydro One says it earned 40 cents per diluted share for its latest quarter compared with an adjusted profit of 39 cents per diluted share a year ago.

Analysts on average had expected an adjusted profit of 37 cents per share, according to financial markets data firm Refinitiv.

Hudbay Minerals Inc. (HBM-T) was higher after reporting second-quarter results that fell below the Street’s expectations.

Late Monday, the Toronto-based miner reported adjusted EBITDA of US$143-million, below the consensus forecast of US$160-million. Adjusted earnings per share of 2 US cents also missed estimates (9 US cents) as operating costs at its operations in Peru rose.

In a research note, RBC Dominion Securities’ Sam Crittenden said: “: We expect a modest negative reaction to Q2 financial results that were below estimates on higher operating costs, in part due to COVID expenses in Peru, and Manitoba growth capex was increased by $30-million to $105-million. However, production guidance was maintained and we expect a stronger second half as Pampacancha ramps up and New Britannia remains on track for first gold production in August. Exploration continues at Copper World, with an initial inferred resource estimate expected before year-end”

Heroux-Devtek Inc. (HRX-T) increased after it reported a profit of $6.7-million in its latest quarter compared with a loss in the same quarter last year.

The maker of aircraft parts says the profit amounted to 19 cents per diluted share for the quarter ended June 30, compared with a loss of $1.3-million or four cents per share a year ago.

Revenue for what was the first quarter of the company’s financial year totalled $126.2-million, down from $128.3-million in the same quarter last year.

The company says, excluding the impact of foreign exchange rate fluctuations, defence sales rose 21.5 per cent, while civil sales fell 19.0 per cent.

On an adjusted basis, Heroux-Devtek says it earned 19 cents per share in the quarter, compared with an adjusted profit of nine cents per share a year ago.

Analysts on average had expected an adjusted profit of 15 cents per share, according to financial markets data firm Refinitiv.

Desjardins Securities analyst Benoit Poirier said: “Overall, we are very pleased with the solid 1Q results, especially the strong FCF generation. We welcome the strong share buyback activity since the launch of the NCIB program alongside 4Q results, which supports our view that the shares are very attractive at current levels (trading at EV/FY2 EBITDA of 8.5 times vs peers at 13.5 times). We believe management’s efforts to improve the cost structure of the business throughout the pandemic will place the company in an ideal position to benefit from the eventual recovery of the Commercial segment and continued strength on the Defence side. HRX remains the only Top Pick in our coverage universe.”

On the decline

Canadian Pacific Railway Ltd. (CP-T) was lower as it renewed the battle for Kansas City Southern (KSU-N) on Tuesday with a new bid that is cheaper than Canadian National Railway Co.’s (CNR-T) but offers what the Calgary railroad says is greater assurance its deal will win regulatory approval.

CP said its new cash-and-stock offer for KCS is worth US$27.2-billion, or US$300 a share, up from the previous offer the two sides agreed to in March worth US$25.2-billion or US$275 a share. The new offer made on Tuesday also includes US$3.8-billion of KCS debt. CP did not raise the cash component of US$90 but increased share exchange ratio to 2.884.

Missouri-based KCS walked away from that deal in May, and accepted CN’s offer worth US$29.8-billion, or US$325 a share. CN’s offer is worth US$200 in cash and 1.126 shares of CN stock.

The CN-KCS deal requires approval of KCS shareholders in an Aug. 19 vote, and the okay of regulators in Mexico and the United States. The U.S. regulator, the Surface Transportation Board must also approve the voting trust in which KCS will be owned and operated during the lengthy approval process for the takeover itself.

- Eric Atkins

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TransAlta Corp. (TA-T) was lower despite better-than-expected second-quarter results and an increase to its 2021 earnings guidance.

Before the bell, the Calgary-based company reported EBITDA of $302-million, up 39 per cent year-over-year and above the Street’s forecast of $273-million. Earnings per share of a 4-cent loss was an improvement on a 22-cent loss a year ago but 2 cents below the consensus estimate.

ATB Capital Markets analyst Nate Heywood said: “In concert with the print, TransAlta materially increased its 2021 Comparable EBITDA guidance midpoint by 13 per cent and FCF guidance midpoint by 22 per cent. The material increases are a result of solid H1/21 financial performance and the strong outlook for power prices heading into the back half of the year. Looking forward, we continue to view TransAlta as well situated to benefit from strong Alberta power pricing given its unique hydro asset base, material Alberta generating exposure and reduced hedging strategy.”

Centerra Gold Inc. (CG-T) slipped as it reported a loss of US$851.7 million in its latest quarter as a result of a move by the Kyrgyz Republic to seize control of the company’s Kumtor mine in the central Asian country in May.

The Toronto-based company says it recorded a US$926.4-million loss on the change of control of the Kumtor operations.

The loss for the quarter ended June 30 amounted to US$2.87 per diluted share compared with a profit of US$80.7-million or 27 US cents per share in the same quarter last year.

Centerra said its adjusted net profit from continuing operations, which excluded Kumtor, amounted to US$49.9-million or 17 US cents per diluted share compared with a loss of US$22.3-million or 8 US cents per diluted share a year ago.

The company initiated binding arbitration in May against the Kyrgyz government in response to actions taken against its subsidiary Kumtor Gold Co. including fines, tax claims and legislation placing its operations under external management.

Centerra says its wholly owned subsidiaries that own and operate the Kumtor Mine have also filed for Chapter 11 bankruptcy protection in the U.S. in a move to protect its interests.

Osisko Gold Royalties Ltd. (OR-T) was down with the release better-than-expected second-quarter results, featuring record revenue and cash flow, after the bell on Monday and raising its quarterly dividend by 10 per cent.

The Montreal-based company reported adjusted earnings per share from royalty/streaming of 14 cents, exceeding the Street’s forecast of 10 cents.

It will now pay a dividend of 5.5 cents per share (or 22 cents annually).

IA Capital Markets analyst Puneet Singh said: “Gold price sentiment has been a headwind this year but gold royalty equities, including OR, have outperfomed senior gold producers year-to-date. Longer term, we believe OR can generate value similar to how sector leading (in returns) peer Franco-Nevada Corp. has, regardless of the gold price, as OR employs the same business model as FNV.”

With files from staff and wires

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