A roundup of some of the North American equities making moves in both directions today
On the rise
Organigram Holdings Inc. (OGI-T) jumped with the premarket release of fourth-quarter financial results, including higher-than-expected net sales, and announcing it expects revenue to rise moving forward as market share increases in Canada, shipments to Israel resumes and following an expansion to its edibles production capabilities.
The Moncton-based company reported revenue of $24.9-million, up 22 per cent quarter-over-quarter and ahead of the $23.4-million forecast on the Street. Adjusted EBITDA of a loss of $4.8-million also topped projections (a $9-million loss).
“We are excited for what Fiscal 2022 holds for Organigram. Looking ahead, we expect to continue our momentum as we maintain our focus on increased points of distribution, bringing new, impactful and innovative products such as Edison Jolts, SHRED and SHRED’ems to market, and improve our ability to fulfill the growing demand for our products,” said chief executive officer Beena Goldenberg.
In a research note, ATB Capital Markets analyst Frederico Gomes: “In our view, Organigram is going through a transitional phase as its new leadership, under CEO Ms. Beena Goldenberg, implements corporate and strategic changes. While the Company has been gaining market share (OGI is now the #4 LP in the country), we note that adj. gross margin (before fair value changes) has remained negative, demonstrating the competitive pressures in the Canadian cannabis market and a still uncertain path towards profitability.”
The acquisition includes seven sawmills with a combined annual spruce-pine-fir lumber production capacity of 985 million board feet; an I-Joist plant with an annual production capacity of 70 million linear feet; a remanufacturing plant with an annual production capacity of 60 million board feet and rights to access approximately 3.6 million cubic meters per year of responsibly managed and internationally certified fibre supply.
The company said the purchase price includes $120-million of net working capital. Interfor will also assume Eacom’s countervailing and anti-dumping duty deposits at closing, for consideration equal to 55 per cent of the total deposits on an after-tax basis. As of Sept. 30, Eacom had paid cumulative CV and AD duties of US$150-million.
“This transaction makes Interfor a truly North American lumber producer, with operations in all the key fibre regions on the continent, further diversifying and de-risking our operating platform and enhancing our growth potential and opportunity set,” stated CEO Ian Fillinger.
Parkland Corp. (PKI-T) increased despite announcing it is moving to pause its refinery processing operations in Burnaby, B.C., due to a lack of crude oil supply from the Trans Mountain pipeline, which has been shut down as a precaution due to the flooding in B.C.
The company says it plans to maintain the refinery, which is a key source of gasoline for the Vancouver area, in ready-mode so that it can resume processing quickly once sufficient crude oil feedstocks become available.
Parkland says its blending, shipping, terminal, and rack activities remain operational.
It says this enables fuels to be off-loaded from ships and rail directly into the refinery, from where they can be stored and distributed.
The company that owns the Trans Mountain pipeline has said it is optimistic the pipeline could be restarted by the end of the week.
Trans Mountain Corp. has 350 people working around the clock to restart the pipeline, which has been shut down since Nov. 14.
Enthusiast Gaming Holdings Inc. (EGLX-T) turned positive in the wake of announcing it has acquired Outplayed Inc., owners of U.GG, one of the largest League of Legends fan communities in the world, for US$45-million in cash and stock.
The deal also includes earnouts of potentially up to $12-million subject to certain performance milestones being achieved within a two-year period from the date of closing.
“League of Legends is one of the biggest games in the world, and U.GG is one of the game’s largest fan communities and stats sites,” stated Adrian Montgomery, CEO of Enthusiast Gaming, in a release. “Financially, the Acquisition is accretive and integrates very well within our existing business model, adding new media availability and opportunities for our direct sales team, proprietary content, and subscription offerings. Shinggo, Alan, and the U.GG team have built something special, and we are excited to welcome them to the Enthusiast Gaming family.”
The company, which owns large interests in Loblaw Companies Ltd. (L-T) and Choice Properties Real Estate Investment Trust (CHP.UN-T), says the profit amounted to 82 cents per diluted share for the 16-week period ended Oct. 9, down from $1.96 per diluted share a year ago.
Revenue totalled $16.19 billion, up from $15.81 billion in the same quarter last year.
On an adjusted basis, George Weston says it earned $2.39 per diluted share, up from $2.32 per diluted share a year ago.
Earlier this month, the company signed a deal to sell its Weston Foods ambient bakery business to to Illinois-based Hearthside Food Solutions for $370-million.
The agreement followed a deal in October to sell its fresh and frozen bakery businesses to FGF Brands Inc. for $1.2-billion.
Dollar Tree Inc. (DLTR-Q) was up as it beat quarterly sales estimates on Tuesday, as returning consumer appetite for discretionary items helped counter a tapering in pandemic-driven surge in grocery shopping.
Discount stores have benefited as people turned conservative about their spending during the pandemic and looked for bargain deals, but the retailers might now be forced to raise prices under pressure from supply-chain disruptions and rising costs.
The discount retailer, known for selling wares at the US$1 price-point, said it has begun rolling out items at US$1.25 at all Dollar Tree stores in the United States.
Net income for the company fell to US$216.8-million, or 96 US cents per share, in the third quarter ended October 30 from US$330.0-million, or US$1.39 per share, a year earlier.
Net sales rose 3.9 per cent to US$6.42-billion, beating the average analyst estimate of US$6.41-billion, according to Refinitiv IBES data.
On the decline
Laurentian Bank of Canada (LB-T) fell after it announced that it expects to record certain charges in its fourth quarter and fiscal 2021 results in relation to its strategic review.
The bank estimated it will reduce reported earnings by $209-million pre-tax, or $163-million after-tax, and adjusted earnings1 by $19-million pre-tax, or $14-million after-tax. Reported diluted earnings per share are expected to be impacted by approximately $3.73 and adjusted diluted earnings per share2 by 33 cents, the bank stated.
The expected impact on expenses on a pre-tax basis, is estimated to generate approximately $4-million of cost reductions for the fourth quarter of 2021 and $20-million of ongoing cost reductions starting in 2022, the bank stated, adding these are mainly due to lower amortization charges and lower rent expenses.
“These difficult but necessary changes make us more confident than ever about our future,” said Rania Llewellyn, CEO, in a release. “As an organization, we have never been more unified, with a renewed management team and employees that are focused on our customers. We continue to maintain a strong capital and liquidity position that support our strategic investments in the Bank’s future and reposition us for sustainable, long-term profitable growth.”
The bank said it would unveil its new strategic plan at a virtual investor day on Dec. 10.
Shares of Best Buy Co Inc. (BBY-N), which have gained nearly 40 per cent this year, dropped on Tuesday after it forecast fourth-quarter comparable sales below analysts’ estimates on Tuesday, as the electronics retailer braces for a hit from likely product shortages during the crucial holiday shopping season.
Retailers are under tremendous pressure to keep shelves stocked for the holiday season as shipping logjams, shuttered factories in Asia and a scarcity of raw materials rip through global supply chains.
A shortage of semiconductor chips used in electronic items has dented availability of some high-demand products, including the latest gaming consoles from Sony Corp and Microsoft Corp.
Some analysts have also warned that supplies of Apple Inc’s latest iPhones could take a hit during the holiday season.
IPhones and new gaming consoles are hugely important for Best Buy as they not only sell in large numbers, but also act as magnets for customers who often spend on other products.
“Getting hold of Apple’s latest iPhone or its new laptops is very challenging. These items should, in theory, be providing a nice lift to sales as the holidays approach, but stock levels remain low,” Neil Saunders, managing director of research provider GlobalData said.
The anticipated supply issues led Best Buy to include easier access to the holiday season’s “hardest-to-find” products as a perk in a new US$200-a-year membership program launched last month.
However, costs related to launch of the program and increased expenditure to expedite some shipments have taken a toll on the company’s profit margins, mirroring issues seen at other retailers including Walmart Inc and Target Corp .
Best Buy forecast fourth-quarter comparable sales between a fall of 2 per cent and a rise of 1 per cent, the mid point of which is below estimates of a 0.1-per-cent rise, according to IBES data from Refinitiv.
Zoom Video Communications Inc.’s (ZM-Q) third-quarter revenue growth rate slowed to 35 per cent as demand for its video-conferencing tools eased from the pandemic-fueled heights last year, sending its shares down.
Revenue was at US$1.05-billion in the quarter ended Oct. 31, Zoom said, after rising 54 per cent in the previous quarter and surging 360 per cent a year earlier.
Moreover, stiff competition posed by Cisco’s conferencing tool Webex and Microsoft’s Teams has made it challenging for Zoom to win over enterprise customers.
To retain its users, the company launched a variety of new offerings such as Events platform, where businesses can host large-scale conferences, cloud-calling service Zoom Phone and in-office meetings feature Zoom Rooms.
“Their Rooms and Phone businesses are 5 per cent penetrated or below and that seems to imply plenty of remaining runway for growth even within their existing capabilities only,” said Joe McCormack, senior analyst at Third Bridge said.
Investment bankers and analysts have warned that Zoom faces several hurdles in sustaining growth after its US$14.7-billion bid to buy call center software firm Five9 Inc fell through.
Still, Zoom reported an adjusted profit of US$1.11 per share, beating Wall Street’s estimates US$1.09 per share, according to Refinitiv data.
The company also forecast current-quarter revenue and earnings above expectations, and raised its full-year revenue estimate to around US$4.08-billion from about US$4.01-billion earlier.
With files from Brenda Bouw, staff and wires