A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of Canfor Corp. (CFP-T) jumped 6.8 per cent after it announced on Monday after the bell that it will be closing its Vavenby sawmill in British Columbia in July “following an orderly wind down.”
Canfor said it has reached an agreement to sell the forest tenure associated with the Vavenby sawmill to Interfor Corp. (IFP-T) for $60-million.
Interfor was up 7.5 per cent.
"Due to the current and long-term log supply constraints we face in the Vavenby region, along with the high cost of fibre, we have made the very difficult decision to permanently close the sawmill and sell the associated forest tenure to Interfor. The ongoing depressed lumber markets have expedited this decision," said Don Kayne, CEO, Canfor. "The B.C. forest industry has recognized for several years that sawmill capacity must be reduced as the annual allowable cut decreases following the end of the Mountain Pine Beetle epidemic,
The Vavenby sawmill has an annual production capacity of approximately 250 million board feet.
In a research note, Raymond James’ analyst Daryl Swetlishoff said: “With benchmark lumber pricing holding well below variable costs, several permanent capacity shuts have been announced in the last few months including West Fraser’s permanent shift reduction (300 mln bf), Tolko’s mill closure and shift reduction (250 mln bf), and Canfor’s closure of the Vavenby mill, this brings the cumulative capacity reduction to 800 mln bf. This represents 7% of 2018 total BC lumber production, while this is meaningful we expect further permanent capacity reductions will be necessary to balance BC lumber capacity with long-term log supply. We see potential for further curtailments as winter log decks are depleted and the July 1 ~$45/mfbm stumpage hikes hit the market.”
Stuart Olson Inc. (SOX-T) jumped 4 per cent on the announcement it has been awarded $100-million in new contracts, which will be added to backlog in the second quarter of 2019.
The Calgary-based company’s Buildings Group has been awarded a construction management project to build a new fire hall in Ontario, while its Industrial Group has been awarded a mine facility construction project with a new client in Saskatchewan. The Commercial Systems Group was recently awarded work on a healthcare facility in Alberta.
“These new contract awards are important wins for each of our operating groups,” said president and CEO David LeMay. “They highlight our success in sector and geographic diversification, underscore our expertise as a proven leader in the construction management delivery model and emphasize our ability to execute as an integrated industrial contractor.”
Drone Delivery Canada Corp. (FLT-X) was up 12.9 per cent after announcing it has entered into a commercial agreement with Air Canada (AC-T).
Under the deal, Air Canada Cargo will market and sell the Toronto-based drone delivery services in Canada using its marketing and sales platforms and resources.
DDC will build and operate up to 150,000 drone delivery routes in Canada. The routes are expected to include timetables, flight schedules, payload capacities, type of drones to be deployed, and payment terms. DDC’s services will be marketed as a premium offering, and Air Canada Cargo has agreed that it shall not use or engage with any other drone delivery service providers.
“This agreement greatly accelerates our commercial roll out in Canada," said DDC chief executive officer Tony Di Benedetto.
"DDC will benefit from Air Canada’s Cargo’s expertise and ability to promote and sell DDC services through Air Canada Cargo’s industry leading marketing and sales technology channels in Canada, which will support our efforts to establish DDC as Canada’s first national drone cargo solution. Next, DDC hopes to pursue even larger markets in the United States and Europe.”
Shares of Air Canada were up 0.6 per cent.
Precision Drilling Corp. (PD-T) was up 3.2 per cent after it announced year-to-date debt repayment of approximately $125-million, reaching the mid-point of its 2019 targeted debt reduction range.
The Calgary-based company had set its 2019 debt repayment target at $100-million to $150-million and increased its longer-term debt reduction target range by $100-million with a new target range of $400-million to $600-million by the end of 2021, inclusive of debt repayments in 2018.
Raymond James’ Andrew Bradford said the pace of repayment surpassed his expectations.
In a research note, Mr. Bradford said: “We had been forecasting that Precision would reach $112-million in repayments by the end of June. Since Precision noted it is targeting $70-million cash balances at quarter-end, it’s possible Precision makes further repayments before the end of the quarter. Precision should be generating about $1-million EBITDA per day through the remainder of June. The $125-million debt repayment to-date is notable given that 40 per cent of Precision’s $169-million 2019 capital budget is front-end loaded. Precision is nearing completion of its US$60-million 3,000-horsepower rig, which is scheduled to begin working in 3Q19 on a 5-year contract in Kuwait. At that point, the Kuwait rig project will flip from consuming capital to generating approximately $15-million EBITDA annually.”
Enbridge Inc. (ENB-T) shares rebounded slightly on Tuesday, sitting up 1 per cent in the wake of a Minnesota court ruling that an environmental impact statement for its Line 3 replacement project was inadequate and raising the risk of lengthy delays for a key pipeline to bring more Alberta crude to U.S. refineries.
The company’s shares fell almost 5 per cent after the Monday announcement.
RBC Dominion Securities analyst Robert Kwan said: “While we expect L3R to eventually go ahead, it is not clear to us whether the final Environmental Impact Statement (EIS) can be amended (as there was only one deficiency flagged; Enbridge believes the additional work could be completed in a few months), if a new EIS must be performed, whether the work can be done in parallel with the ongoing permitting process, or if there are grounds for appeal (particularly as the decision was not unanimous).”
Shares of Uber Technologies Inc. (UBER-N) were rose 3.2 per cent despite the company said in a filing that it is now under under a federal income tax examination by the Internal Revenue Service (IRS) for tax years 2013 and 2014.
The the ride-hailing company said it expects unrecognized tax benefits to be reduced within the next year by at least US$141-million.
At the same time, a large group of equity analysts initiated coverage of its stock following a dark period following its initial public offering.
Tiffany & Co (TIF-N) was up 2.6 per cent despite cutting its profit outlook for the year, blaming blamed “dramatically” lower spending by tourists worldwide for missing quarterly same-store sales estimates on Tuesday.
The company posted a profit of US$125.2-million, or US$1.03 per share, which exceeded the Street’s expectation by 2 US cents.
Canadian National Railway Co. (CNR-T) sat 0.6 per cent higher after reaffirming its financial outlook for the current fiscal year and announcing its aim to deliver earnings per share compound annual growth in the low double digits from 2020 through 2020.
“Our focus is on driving long-term value creation for shareholders and customers,” said president and CEO JJ Ruest. “CN’s ONE TEAM of scheduled railroaders is focused on service and operational excellence to grow faster than the economy, at low incremental cost. Having pioneered Scheduled Railroading roughly 15 years ago, our vision is to be the first railroad to take it to the next level by deploying advanced information technologies."
DHX Media Ltd. (DHX-T) was up 11.8 per cent in the wake of revealing Indian company Sakthi Global Holdings has made an unsolicited offer for the company.
On the decline
Acasti Pharma Inc. (ACST-X) dipped 1.7 per cent after announcing its TRILOGY 2 trial studying CaPre in patients with severe hypertriglyceridemia has achieved 100-per-cent patient randomization.
The Laval, Que.-based pharmaceutical company also announced that its two on-going Phase 3 TRILOGY trials (TRILOGY 1 and TRILOGY 2) have exceeded the target of a combined 500 randomized patients, and more than 60 per cent of the patients in both trials have already completed their 6-month treatment plan.
With files from Brenda Bouw, staff and wires
David Leeder